Final Results

RNS Number : 3645R

1PM PLC

20 August 2010

 



1PM PLC

(AIM: OPM)

Preliminary Results For The Year To 31 May 2010

1pm plc ("1pm" and "the Company") the AIM quoted independent provider of asset finance facilities to the SME sector announces its results for the year ended 31 May 2010.

CHAIRMAN'S STATEMENT

I am pleased to report the results for the year ended 31 May 2010.  Despite the continuing difficult economic environment the Company has put in a resilient performance assisted by our business model and diverse portfolio.  Revenue has been maintained although the overall performance for the year has been affected by a significantly higher level of bad debt write-offs.  Pleasingly the second half has seen an increase in the level of new leases being written and this improvement has continued into the current year.

Results

Group turnover in the year to 31 May 2010 was 2% lower at £1.331 million (2009: £1.365 million).

Bad debt write-offs during the year were £349,843 (2009: £82,200). 

Operating profit before bad debt write-off and provisioning was £16,500 (2009: £99,828).

The loss before taxation for the year was £402,416 (2009: £3,085 profit).

Levels of new business in the second half of the year were an improvement on the first half.  The value of new business written in the second half of the year was £1,519,250 compared with £975,601 in the first half.  As at 30 May 2010 the total lease book amounted to £6.55 million (2009: £7.13 million, 30 November 2009: £6.42 million).

Operating review

During the financial year we made significant operational changes.  These include a tightening of our underwriting criteria, a prudent change in our provisioning policy and a drive to enhance our relationships with the broker network.  A number of these changes have been implemented following a review of the trading environment and a desire to reduce operational risk.

The level of bad debt write-offs during the year has been disappointing.  These have largely resulted from customers bankruptcies for which it is the Company's policy to write-off immediately any amounts due as bad debt.  The majority of the bad debts relate to leases that were relatively mature and large and, more significantly, pre dated the company's decision during the year to reduce its average deal size.  In light of continuing difficult economic environment we have implemented a new provisioning system that should more accurately link provisions with the lease portfolio.

The positive impact of our meetings with brokers has already been seen in the second half through the increase in new business and a much more efficient conversion rate of proposals submitted.  Our willingness and ability to support our brokers and customers through difficult times is significantly appreciated in our designated marketplace and bodes well for the future relationships.

I remain proud of our performance in light of prevailing conditions in the wider economy, which led to the exit from our market of a number of our competitors.  We believe we are well positioned to take advantage of the prevailing market opportunities resulting from reduced competition without compromising our standards.

Staff

During the year a number of operational changes were made to the structure of the Board.  Maria Hampton became Managing Director and Helen Walker became Finance Director effective from 1 February 2010.  In addition, Rod Channon, the previous Finance Director, became a non-executive director.

I want to thank the dedicated staff of 1pm who have demonstrated extraordinary commitment.  The hard work of our highly trained and experienced staff has been a major factor in our resilient performance.

Financing

In March this year we announced a successful placing raising £1.15 million, before expenses, which significantly strengthened our balance sheet.  The proceeds of the placing have allowed us to accelerate the levels of new business written.  In addition, the extra capital has reduced the gearing on the lease portfolio by increasing the proportion of Company funding of new leases and thereby increase the margin on lending.

Outlook

I am pleased to report that the new financial year has started positively helped by the March fundraising.  In the first two months of trading we have written levels of new business in excess of budget.  This is reflected in the loan book which as at 31 July 2010 has increased to £7.4m.  The challenge remains accessing funds to support portfolio growth and to that extent we are in constructive discussions with a number of funders.

Turning to the economic outlook there are signs that the asset finance market is showing a return to growth.  We are cautiously optimistic having emerged in robust shape from the last two years and believe we are well positioned to take advantage of the emerging opportunities in our designated market sector.

Contacts:
1pm plc	www.1pm.co.uk
Mike Johnson, Chairman	[phone]
WH Ireland Limited	www.wh-ireland.co.uk
Mike Coe / Marc Davies	[phone]

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MAY 2010

	Note	2010	2009
		£	£
REVENUE		1,331,922	1,365,172
Cost of sales		(1,184,547)	(791,399)
GROSS PROFIT		147,375	573,773
Administrative expenses		(516,978)	(556,145)
OPERATING (LOSS) / PROFIT	2	(369,603)	17,628
Finance income		303	63
Finance costs		(33,116)	(14,606)
(LOSS) / PROFIT BEFORE TAX		(402,416)	3,085
Income tax expense	5	64,656	-
(LOSS) / PROFIT AND COMPREHENSIVE INCOME FOR THE YEAR		(337,760)	3,085
Attributable to equity holders of the company		(337,760)	3,085
Profit per share attributable to the equity
holders of the company during the year
- basic and diluted	6	(0.017678)p	0.000436p

All of the activities of the company are classed as continuing.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 MAY 2010

	Notes	2010	2009
		£	£
ASSETS
NON CURRENT ASSETS
Deferred income taxes		159,964	78,861
Property, plant and equipment		36,478	54,651
		196,442	133,512
CURRENT ASSETS
Trade and other receivables	7	6,548,773	7,127,592
Cash and cash equivalents		305,211	1,783
TOTAL CURRENT ASSETS		6,853,984	7,129,375
TOTAL ASSETS		7,050,426	7,262,887
EQUITY
Share capital	10	2,153,791	1,035,639
Share premium account	10	1,565,035	1,640,867
Retained earnings	11	(426,383)	( 88,623)
TOTAL EQUITY		3,292,443	2,587,883
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	8	1,997,834	2,428,547
NON CURRENT LIABILITIES
Trade and other payables	9	1,760,149	2,246,457
Deferred tax liabilities		-	-
TOTAL LIABILITIES		3,757,983	4,675,004
TOTAL EQUITY AND LIABILITIES		7,050,426	7,262,887

CONSOLIDATED CASH FLOW STATEMENT

YEAR ENDED 31 MAY 2010

	Notes	2010	2009
		£	£
CASH FLOWS FROM OPERATING ACTIVITIES
Operating (Loss)/Profit before income tax for the year		(369,603)	17,628
Adjustment for:
Depreciation		24,232	27,695
Trade and other receivables		578,819	(2,196,034)
Trade and other payables		(495,847)	1,463,502
Consumed by operations		(262,399)	(687,209)
Taxation		(16,447)	-
Net cash generated from operating activities		(278,846)	(687,209)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received		303	63
Purchase of property, plant and equipment		(6,058)	(16,255)
Net cash generated from investing activities		(5,755)	(16,192)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid		(33,116)	(14,606)
Issue of shares net of cost		1,042,320	565,688
Net cash generated from financing activities		1,009,204	551,082
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS		724,603	(152,319)
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE YEAR		(499,716)	(347,397)
CASH AND CASH EQUIVALENTS AT THE
END OF THE YEAR	12	224,887	(499,716)

 

STATEMENTS OF CHANGES IN EQUITY

YEAR ENDED 31 MAY 2010

CONSOLIDATED GROUP

	Share	Share	Retained	Total
	Capital	Premium	Earnings	Equity
	£	£	£	£
Balance at 1 June 2009	1,035,639	1,640,867	(88,623)	2,587,883
Loss for the year			(337,760)	(337,760)
Movement in share capital (note 14)	1,118,152	(75,832)		1,042,320
Other movements	-	-	-	-
Balance at 31 May 2010	2,153,791	1,565,035	(426,383)	3,292,443

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 31 MAY 2010

1.     ACCOUNTING POLICIES

The financial information set out in this announcement does not constitute the company's statutory accounts.

Statutory accounts for the year ended 31 May 2010 will be delivered to shareholders and to the Registrar of Companies in due course and will be available on the Company's website (www.1pm.co.uk). The report of the auditors on the statutory accounts for the year ended 31 May 2010 was unqualified and did not contain a reference to any matters which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under section 498 (2) or section 498 (3) of the Companies Act 2006.

Basis of preparation

The financial statements have been prepared in accordance with IFRS as adopted by the European Union and with the Companies Act 2006. The company is a UK domiciled public limited company.

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to May each year. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

        Leased assets and turnover recognition

        Assets leased to customers on finance leases are recognised in the Statement of Financial Position at the amount of the Company's net investment in the lease. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company's net investment outstanding in respect of the leases.

        Funding payables and cost of sales - interest

        Finance received from funding providers is classified as payables in the Statement of Financial Position. Payments to the funding providers contain a capital element which reduces the creditor and an interest charge is debited to the cost of sales using the "rule of 78". Due to the relatively short term of the funding creditors the directors are satisfied that this method of apportioning interest is not materially different to the effective interest method.

       Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risk and rewards of ownership to the lesee. All other leases are classed as operating leases.

Assets held as finance leases are recognised as assets at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease.

The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Operating lease rentals are charged to the income statement on a straight-line basis over the term of the lease.

2.     OPERATING PROFIT

Operating profit stated after charging:

		2010	2009
		£	£
Depreciation of property, plant and equipment		24,232	27,695
Auditors remuneration (see below)		11,900	11,850
Staff costs (see note 3)		334,174	336,913
Operating lease costs:
Rent		29,911	28,703

Auditors' remuneration:

		2010	2009
		£	£
Audit services
Statutory audit		8,500	8,500
Non audit  services
Other services pursuant to legislation		3,400	3,350
Total		11,900	11,850

3.     STAFF COSTS

		2010	2009
		£	£
Wages and salaries		317,786	319,479
Social security costs		15,338	16,384
Other pension costs		1,050	1,050
		334,174	336,913

The average number of staff employed by the company during the financial period amounted to:

		2010	2009
		No	No
Administrative		6	6
Management		1	1
		7	7

4.     DIRECTORS' REMUNERATION

The directors' aggregate emoluments in respect of qualifying services were:

		2010	2009
Aggregate Emoluments		£	£
M Johnson		85,547	93,454
M Hampton		70,000	72,181
H Walker		37,240	22,294
R Channon		17,816	15,000
R Russell		10,776	-
P O'Connell - resigned 29.05.09		3,000	12,000
		224,379	214,929
Value of company pension contributions to money purchase scheme
M Hampton		1,050	1,050
		225,429	215,979

The number of directors who accrued benefits under company pension scheme was as follows:

		2010	2009
		No	No
Money purchase schemes		1	1

5.     INCOME TAX EXPENSE

(a)		2010	2009
Current tax		£	£
UK corporation tax charge		-	-
Movement in deferred taxation		(81,103)	-
Under provision in prior years		16,447	-
Current tax		(64,656)	-

Corporation tax is calculated at 21% (2009: 21%) of the estimated assessable profit for the year.

The charge for the year can be reconciled to the Income Statement as follows:

(b)		2010	2009
		£	£
(Loss) / profit on ordinary activities before tax		(402,416)	3,085
Profit on ordinary activities by rate of tax		(84,507)	648
Capital allowances for the period in excess of depreciation		2,363	585
Unused tax losses		82,144	(1,220)
Movement in deferred taxation		(81,103)	-
Under provision of current tax		16,447	(13)
Total current tax (note 5(a))		(64,656)	-

6.     EARNINGS PER SHARE

The calculations of earning per share are calculated by dividing the earnings attributable to ordinary shares by the weighted average number of shares in issue during the year. For diluted earnings per share, the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary shares. There are no dilutive ordinary shares.

		2010	2009
		£	£
(Loss) / Profit attributable to equity shareholders		(337,760)	3,085
Weighted average number of shares		1,910,595,524	707,144,061
Basic & Diluted Earnings per Share		(0.017678)p	0.000436p

7.     TRADE AND OTHER RECEIVABLES

		2010	2009
		£	£
Trade receivables		6,174,025	6,208,032
Unpaid share capital		-	508,933
VAT recoverable		33,233	-
Other receivables		301,255	375,939
Prepayments and accrued income		40,260	18,241
Corporation tax		-	16,447
		6,548,773	7,127,592

Trade receivables wholly represent finance lease debtors.

		2010	2009
Gross receivables from finance leases		£	£
No later than 1 year		3,319,001	2,997,621
Later than 1 year and no later then 5 years		4,382,015	5,079,270
Later then 5 years		-	-
Unearned future finance income on finance lease		(1,526,991)	(1,868,859)
Net investment in finance leases		6,174,025	6,208,032
The net investment in finance leases may be analysed as follows:
No later than 1 year		2,392,623	2,342,881
Later than 1 year and no later then 5 years		3,781,402	3,865,151
Later then 5 years		-	-
		6,174,025	6,208,032

The cost of assets acquired for the purpose of letting under finance leases were as follows; 2010: £2,484,952 (2009: £4,157,196).

Included within Trade receivables are the following receivables that are past due but not impaired as they are considered recoverable: less than three months old £67,917 (2009: £54,127), more than three months old £51,801 (2009: £90,740), all amounts are secured on the asset to which they relate. No other assets are past due or impaired.

8.     CURRENT LIABILITIES

		2010	2009
		£	£
Bank overdrafts		80,324	501,499
Trade payables		1,787,867	1,804,196
VAT payable		-	13,279
Other taxation and social securities		5,613	4,676
Other payables		103,090	70,610
Accruals and deferred income		20,940	34,287
		1,997,834	2,428,547

Trade payables wholly represent funding creditors, which are secured on the value of finance leases.

The trade payables figure is made up of numerous funding blocks that are repaid by monthly

instalments. The length of the repayment term varies from 33 to 42 months and interest rates from 7.75% to 10%.

The company's banking facilities are secured by a mortgage debenture, dated 7 December 2007 incorporating a fixed and floating charge over all current and future assets of the company.

9.     NON CURRENT LIABILITIES

		2010	2009
		£	£
Other loans		250,000	-
Accruals and deferred income		36,300	-
Trade payables		1,473,849	2,246,457
		1,760,149	2,246,457

Other loans are £250,000 from UK Private Healthcare Ltd, which is repayable in June 2011, and is secured by a debenture over the assets of the company.

Trade creditors are secured as noted above, with the same repayment and interest rates.

Maturity analysis

The following analysis shows the contractual undiscounted cash flows (which differ from the discounted cash flow totals shown in Current and Non current liabilities above).

		2010	2009
		£	£
Trade payables:
On demand or within one year		1,996,111	2,088,513
More than one year but less than two years		1,264,900	1,554,697
More than two years but less than five years		284,554	881,775
Total		3,545,565	4,524,985

10. SHARE CAPITAL AND PREMIUM

Authorised:

The Articles of Association of the company say that there is an unlimited authorised share capital.

Issued:

	No of Shares	Ordinary Shares	Share Premium	Total
		£	£	£
At 1 June 2009	1,518,979,086	1,035,639	1,640,867	2,676,506
Movement	1,639,999,999	1,118,152	(75,832)	1,042,320
At 31 May 2010	3,158,979,085	2,153,791	1,565,035	3,718,826

Allotted and fully paid:

		No of Shares	Nominal Value	Total
			£	£
Ordinary Shares		3,158,979,085	0.0006818	2,153,791

Issue of shares

On 17 March 2010 the company issued 572,000,001 ordinary shares of nominal value £0.0006818 at £0.0007 per share and on 1 April 2010 the company issued 1,067,999,998 ordinary shares of nominal value £0.0006818 at £0.0007 per share.

The funds raised were used in 1pm (UK) Limited to finance continuing operations.

11.     RETAINED EARNINGS

		Group	Company
		£	£
At 1 June 2009		(88,623)	-
Loss for the year		(337,760)	-
Equity dividends		-	-
At 31 May 2010		(426,383)	-

12. CASH AND CASH EQUIVALENTS

		2010	2009
		£	£
Cash at bank and in hand		305,211	1,655
Bank overdrafts		(80,324)	(501,371)
Cash and cash equivalents		224,887	(499,716)

13.   TRANSACTIONS WITH DIRECTORS

A director Mr M R Johnson has given personal guarantees to: Svenska Handelsbanken plc of £350,000, Hitachi Capital Limited of £1,000,000, Venture Finance of £500,000, & Kingston Asset Finance Limited to the outstanding debt at the time of the agreement being terminated.

During the year the following directors invoiced the company for services rendered:

R Russell invoiced the company for £10,776

M R Johnson invoiced the company for £85,547

R Channon invoiced the company for £17,816

H Walker invoiced the company for £37,240

At the year end, included within Current liabilities are; £3,508 due to H Walker and £7,000 due to M R Johnson.

R Russell is a director and 25% shareholder of UK Private Healthcare Ltd who loaned the company £250,000 during the year. At the year end the full amount is outstanding and included in non-current liabilities.

 

END

 

 

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