Final Results

RNS Number : 9165S

Accuma Group PLC

28 May 2009

 



Accuma Group plc

('Accuma' or 'the Group')

Final results for the year ended 31 December 2008

Chairman's statement

In the interim statement released on 18 September 2008, the Board reported to the market that the level of new IVA cases in the financial period ended 30 June 2008 was significantly lower than numbers achieved in prior periods, partly due to the general market conditions affecting the numbers of IVAs approved by lenders and partly due to the streamlining by Accuma of its IVA division. However, as such, following a thorough strategic review, and recognising the fact that the IVA books have remained well run and profitable businesses, the Board concluded that it should divest the IVA books as the public equity markets were not ascribing a fair value to these businesses. 

As announced on 1 May 2009, Accuma's insolvency division, comprising Wilson Phillips Limited and Accuma Insolvency Practitioners Limited entered into conditional agreements in relation to the sale of their business and certain of their assets for an aggregate consideration of £5.6m. As a result of this proposed disposal, and in accordance with IFRS, these businesses are shown as discontinued operations in the financial statements. Revenue for the year for these two subsidiaries on this basis was approximately £5m with EBITDA of £1m. The General Meeting to approve the disposal takes place on 1 June 2009, as detailed in the circular to shareholders dated 14 May 2009.

In accordance with IFRS, continuing operations in the Group's accounts comprise Byrom & Keeley Financial Services Limited, Thomas Charles & Co Limited and also include the Group's overheads. Revenue and gross profit, on this basis, for the year is £3.72m and £1.12m respectively, giving a gross profit margin of approximately 30 per cent.

The EBITDA loss for the period was £0.87m comprising £1.09 million profit in Byrom & Keeley Financial Services Limited, head office overheads of £1.25 million and a £0.73m loss in Thomas Charles & Co. Ltd. 

Cash inflow from operations for the year to 31 December 2008, was £2.78m. (5 months 31 December 2007: £0.45m). However as a result of deferred consideration paid earlier in the year to the vendors of Loan Line (Holdings) Limited (£2.8m) and Byrom & Keeley Financial Services Limited(£1.45m), there was an overall net outflow of £1.79m. The cash balance at the year end was £1.58m (31 December 2007: £3.37m). As the profit threshold (as stipulated by the Byrom & Keeley Financial Services Limited acquisition agreement) of £1.35m was not achieved, and accordingly the final earn-out payment did not become payable.There are no further earn-out payments due within the Group. 

Following a review of the carrying value of intangible assets, the Board has written down the carrying value of the goodwill relating to Byrom & Keeley Financial Services Limited in the Group's balance sheet to £3.5m and as a result the Group has incurred an impairment charge of £6.58m in its results for the year ended 31 December 2008. This has resulted in a loss after tax for the year of £7.49m.

Operational review 

Following the disposal of the IVA businesses the Group, the existing operations in the Groups accounts in accordance with IFRS accounting, will comprise Byrom & Keeley Financial Services Limited, Thomas Charles & Co Limited and also includes the Group's overheads. 

Insolvency Division

We have previously commented in detail on the impact of significant changes to the IVA sector over the past eighteen months. Thomas Charles & Co Limited, as part of our IVA division was impacted by those changes as its primary income was received from marketing services and set-up costs of new IVAs. In line with Group strategy to reduce direct marketing expenditure Thomas Charles & Co Limited ceased to trade in the first quarter of 2009, thus stemming any continuing losses in this division  

Debt management division

Byrom & Keeley Financial Services Limited, the informal debt management solutions business, produced an EBITDA of £1.09m (5 months 31 December 2007: £0.59m). 

Strategic changes that were made within the Insolvency business have impacted on this division, primarily as a result of the material reduction in direct marketing expenditure from which Byrom & Keeley Financial Services Limited had historically derived considerable benefit. In addition, following a deterioration in the number of enquiries generated from a major lead supplier towards the end of 2008, alternative lead suppliers were engaged. This led to a reduction in new debt management cases signed on a monthly basis from an historic average of 301 in the first half of 2008 to 181 in the second half of 2008. The average, on a monthly basis, of new management cases for the first quarter 2009 was 145.

Loan broking division

As a result of the difficulties faced by the sub-prime market caused by the banking crisis, the loan broking division, Loan Line (Holdings) Limited, was placed into liquidation on 14 October 2008. The impact in the financial statements, as shown in discontinuing operations is a loss of £0.63m. 

Outlook 

The economic climate continues to favour debt management businesses as a more viable option for creditors and debtors alike, and recent further agreements for the supply of clients will increase our average monthly new client signings. We remain confident of the prospects for this division. 

The Group remains debt-free and at the end of April had a cash position of £1.9m, which is expected to increase to approximately £6m following completion of the disposal of the insolvency division.

The funds realised from the disposals will be retained by the Group whilst the Board considers its strategic options, and the best way of delivering value to shareholders.

Charles Taylor

28 May 2009

For further information please contact: 

Accuma Group plc Charles Howson, Chief Executive		[phone]
FinnCap (Nominated Adviser and Broker) Marc Young / Geoff Nash		[phone]
Bankside Consultants Simon Rothschild/Oliver Winters		[phone]

CONSOLIDATED INCOME STATEMENT

YEAR ENDED 31 DECEMBER 2008

		Year ended			5 months ended
		31 December 2008			31 December 2007
		£			£
REVENUE
Existing operations		3,720,888			1,695,352
Cost of sales		(2,605,766)			(986,698)
Gross profit		1,115,122			708,654
Administrative expenses		(1,988,975)			(1,614,041)
EARNINGS BEFORE INTEREST, TAX, DEPreciation, AMORTISATION AND
IMPAIRMENT LOSSES		(873,853)			(905,387)
Depreciation		(92,662)			(53,500)
Amortisation		(11,985)			(4,963)
Provision for impairment losses		(6,580,289)			(11,774,764)
OPERATING LOSS		(7,558,789)			(12,738,614)
Finance income		57,454			92,371
Finance costs		(27,624)			(60,913)
LOSS BEFORE TAX		(7,528,959)			(12,707,156)
TAXATION		199,170			253,186
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS		(7,329,789)			(12,453,970)
Discontinued operations and non-current assets held for sale		(164,429)			(2,076,130))
LOSS FOR THE YEAR		(7,494,218)			(14,530,100)
LOSS PER SHARE - basic and diluted
From continuing operations		(22.42)p			(38.09)p
From discontinued operations		(0.50)p			(6.34)p
From continuing and discontinued operations		(22.92)p			(44.43)p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER 2008

	Share capital		Share premium	Other reserve	Share  option reserve	Accumulated Losses	Total
	£		£	£	£	£	£
Balance at 31 July 2007	3,269,673		28,407,877	(1,262,595)	367,251	2,118,316	32,900,522
Prior period adjustment	-		-	-	-	(123,939)	(123,939)
At 31 July 2007 as restated	3,269,673		28,407,877	(1,262,595)	367,521	1,994,377	32,776,583
Changes in equity for five month period ended 31 December 2007
Loss for the period	-		-	-	-	(14,530,100)	(14,530,100)
Share option charge	-		-	-	28,977	-	28,977
At 1 January 2008 as restated	3,269,673		28,407,877	(1,262,595)	396,228	(12,535,723)	18,275,460
Changes in equity for year ended 31 December 2008
Loss for the year	-		-	-	-	(7,494,218)	(7,494,218)
Share option charge	-		-	-	21,666	-	21,666
Balance at 31 December 2008	3,269,673		28,407,877	(1,262,595)	417,894	(20,029,941)	10,802,908

Other Reserve 

The other reserve at 31 December 2008 is a merger reserve created on the establishment of Accuma Insolvency Practitioners Ltd as a subsidiary of Accuma Group PLC.

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2008

		31 December 2008				31 December 2007
						(restated)
ASSETS		£		£		£		£
NON-CURRENT ASSETS
Intangible assets				8,627,251				15,829,001
Property, plant and equipment				443,956				789,630
Deferred tax asset				561,847				309,807
Total non-current assets				9,633,054				16,928,438
CURRENT ASSETS
Trade and other receivables		788,164				6,805,148
Cash and cash equivalents		1,577,135				3,367,340
Current assets held for resale		1,387,550				-
Total current assets				3,752,849				10,172,488
TOTAL ASSETS				13,385,903				27,100,926
EQUITY AND LIABILITIES
CURRENT LIABILITIES
Trade and other payables		1,605,090				2,831,596
Financial liabilities		89,215				2,259,027
Provision for onerous lease commitment		750,000				510,687
Current tax liabilities		111,965				246,709
Total current liabilities				2,556,270				5,848,019
NON-current liabilities
Contingent consideration		-				2,898,536
Financial liabilities		26,725				78,911
Total non-current liabilities				26,725				2,977,447
Total liabilities				2,582,995				8,825,466
CAPITAL AND RESERVES - EQUITY
Share capital		3,269,673				3,269,673
Share premium account		28,407,877				28,407,877
Share option reserve		417,894				396,228
Accumulated losses		(20,029,941)				(12,535,723)
Other reserve		(1,262,595)				(1,262,595)
Total Equity				10,802,908				18,275,460
TOTAL EQUITY AND LIABILITIES				13,385,903				27,100,926

CONSOLIDATED CASH FLOW STATEMENT

YEAR ENDED 31 DECEMBER 2008

			Year ended		5 months ended
			31 December 2008		31 December 2007
					(restated)
OPERATING ACTIVITIES			£		£
Loss from continuing operations			(7,558,789)		(12,738,614)
Loss from discontinued operations			(164,429)		(2,076,130)
Impairment provision			6,580,289		11,774,764
Depreciation			585,182		202,016
Amortisation			11,985		4,963
Decrease in trade and other receivables			4,582,319		1,901,165
(Decrease)/Increase in trade and other payables			(1,281,103)		1,351,339
Provision for share options			21,666		28,977
Cash inflow from operations			2,777,120		448,480
Interest paid			(26,387)		(55,857)
Income taxes paid			-		(110,000)
Interest element of finance leases			(1,237)		(5,056)
Net cash inflow from operating activities			2,749,496		277,567
Payments to acquire property plant and equipment			(201,946)		(136,100)
Interest received			57,454		92,371
Acquisition of subsidiaries			(2,133,034)		-
Net cash used in investing activitites			(2,277,526)		(43,729)
Cash flow from financing activities
Capital element of finance lease agreements			(107,972)		(33,040)
Repayment of loan notes			(2,154,203)		-
Cash deposit in respect of loan notes issued			-		(164,960)
Net cash used in financing activities			(2,262,175)		(198,000)
Net change in cash equivalents			(1,790,205)		35,838
Cash and cash equivalents at the beginning of the year			3,367,340		3,331,502
Cash and cash equivalents at the end of the year			1,577,135		3,367,340

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2008

1.    TAXATION

	Year ended 31 December 2008			5 months ended 31 December 2007
	£			£
Current tax expense
UK corporation tax credit on income for the year		-			(8,739)
Tax charge relating to prior periods		52,870			62,939
		52,870			54,200
Deferred tax credit
Changes in deferred tax balances arising from:
Origination or reversal of timing differences		(231,548)			(307,386)
Changes in tax rate		(20,492)
Income tax credit		(199,170)			(253,186)

The credit for the year can be reconciled to the loss per the income statement as follows;
	Year ended 31 December 2008		5 months ended 31 December 2007
	£		£
Loss for the year from continuing operations	(7,528,959)		(12,707,156)
Loss for the year from discontinued operations	(164,429)		(2,076,130)
Loss for the year from operations	(7,693,388)		(14,783,286)
Loss on ordinary activities multiplied by the rate of corporation tax of 28% (2007: 30%)	(2,154,149)		(4,434,986)
Adjusted for the effects of;
Impairment provision	1,842,481		3,532,429
Expenses not deductible for tax purposes	59,628		383,932
Losses of overseas operations not available for relief in UK	-		202,500
Adjustment to prior period tax charge	52,870		62,939
Current tax credit for the year	(199,170)		(253,186)

2.    DISCONTINUED OPERATIONS

In February 2008, a subsidiary undertaking, Assist Financial Solutions Limited, went into creditors voluntary liquidation.

In October 2008 Loan Line (Holdings) Limited and LL Processing (UK) Limited went into creditors voluntary liquidation.

On 30 April 2009 a conditional offer was accepted from Grant Thornton for the IVA books of Wilson Phillips Limited and Accuma Insolvency Practitioners Limited. The IVA books were available for immediate sale in their present condition at the year end and the sale was considered highly probable by the board of directors.

The results of the discontinued operations which have been included in the consolidated income statement are as follows:

Year ended			Wilson
31 December 2008	AFS	Loanline	Phillips	AIP	Total
	£000	£000	£000	£000	£000
Revenue	8	1,498	2,400	2,670	6,576
Cost of sales	(12)	(1,319)	(1,442)	(836)	(3,609)
Gross profit	(4)	179	958	1,834	2,967
Administrative expenses	(42)	(814)	(508)	(1,279)	(2,643)
Depreciation	-	-	(96)	(391)	(487)
Interest income	-	2	16	-	18
Interest expense	-	-	(7)	(12)	(19)
Loss for discontinued operations	(46)	(633)	363	152	(164)

5 months ended			Wilson
31 December 2007	AFS	Loanline	Phillips	AIP	Total
	£000	£000	£000	£000	£000
Revenue	66	2,025	907	853	3,851
Cost of sales	(156)	(1,744)	(541)	(1,175)	(3,616)
Gross profit	(90)	281	366	(322)	235
Administrative expenses	(166)	(656)	(244)	(1,007)	( 2,073)
Depreciation	(1)	-	(19)	(128)	(148)
Interest income	-	6	6	3	15
Interest expense	-	(92)	(4)	(9)	(105)
Loss for discontinued operations	(257)	(461)	105	(1,463)	(2,076)

    Analysis of cash flow movements:

Year ended			Wilson
31 December 2008	AFS	Loanline	Phillips	AIP	Total
	£000	£000	£000	£000	£000
Operating	(13)	(369)	316	(163)	(229)
Investing	-	2	16	-	18
Financing	-	(29)	(22)	(87)	(138)
	(13)	(396)	310	(250)	(349)

5 months ended			Wilson
31 December 2007	AFS	Loanline	Phillips	AIP	Total
	£000	£000	£000	£000	£000
Operating	(64)	(359)	(45)	25	(443)
Investing	-	6	(10)	(91)	(95)
Financing	-	-	(4)	(9)	(13)
	(64)	(353)	(59)	(75)	(551)

    Analysis of assets and liabilities:

Year ended				Wilson
31 December 2008	AFS	Loanline		Phillips	AIP		Total
	£000	£000		£000	£000		£000
Property, plant & equipment	-		-	-		-		-
Other receivables	-		-	978		410		1,388
Cash & cash equivalents	-		-	-		-		-
	-		-	978		410		1,388
Other current liabilities	-		-	-		-		-

5 months ended				Wilson
31 December 2007	AFS	Loanline		Phillips	AIP		Total
	£000	£000		£000	£000		£000
Property, plant & equipment	4		2	119		650		775
Other receivables	24		806	1,412		1,975		4,217
Cash & cash equivalents	14		396	263		305		978
	42		1,204	1,794		2,930		5,970
Other current liabilities	(13)		(1,226)	(99)		(667)		(2,005)

3.     LOSS PER SHARE

    Loss per share statistics disclosed are calculated by dividing the losses attributable to ordinary share holders by the weighted average number of shares in issue during the year. 

Basic and diluted	Year ended 31 December 2008		5 months ended  31 December 2007
	£		£
Loss for the year - continuing operations	(7,329,789)		(12,453,970)
Loss for the year - discontinued operations	(164,429)		(2,076,130)
Loss for the year - continuing and discontinued operations	(7,494,218)		(14,530,100)
Weighted average number of shares	32,696,734		32,696,734
Loss per share - continuing operations	22.42p		38.09p
Loss per share - discontinued operations	0.50p		6.34p
Loss per share - continuing and discontinued operations	22.92p		44.43p

    There are 580,295 potentially issuable shares that have not been included in a diluted EPS calculation as they are anti-dilutive.

4.    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 December 2008 but is derived from those accounts. Statutory accounts for the year ended 31 December 2008 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 which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under the Companies Act 2006, s498(2) or (3).

5.    The Report and Financial Statements for the year ended 31 December 2008 will be sent to shareholders in due course. 

 

END

 

 

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