Final Results
1PM PLC
("1PM" or the "Company")
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MAY 2007
Dated: 10 September 2007
CHAIRMAN'S STATEMENT
It is a pleasure to present my first report as Chairman of 1pm Group.
I was appointed Chairman on 9 February 2007.
Overview
Whilst it is disappointing to report a loss for the period to 31 May 2007 I can
categorically state that your board looks forward to the future with optimism as
a result of the decisive action taken to restructure the group.
The focus of the business from inception in 1998 through to February 2007 was
directed predominantly at the sub prime market, i.e. customers with historic
credit difficulties.
Following the AIM flotation during August 2006 the group found itself
experiencing escalating levels of delinquencies which demanded a detailed
evaluation of the underwriting and collection process together with the
provisioning policy and recovery potential.
Through this process it became clear that the underwriting criteria and the
credit control procedures required an extensive revision if the performance of
the Company was to improve.
The board has conducted a comprehensive case by case review.
The results of this review are reflected in a bad debt write off of £482,518,
which contributed to the posted loss for the period ending 31 May 2007 of
£330,907.
After careful consideration the decision was taken to withdraw from offering Sub
prime finance and reposition into the traditional small ticket leasing market
specialising in providing funding for small and emerging businesses that have a
proven payment history and are professionally controlled by experienced owner
managers who have a vested interest in success of the business.
It is essential that the company is an "open book" and we are not carrying
forward year upon year aged delinquencies that will continue to adversely impact
on the balance sheet.
Current trading and future prospects
We have created a "clean" and operationally slick vehicle expertly positioned in
a thriving £5bn market that the new management team have successfully performed
in for many years.
The key factors that are fundamental to maximising this opportunity are:
· Structured withdrawal from the Sub Prime market
· Definitive new underwriting policy implemented and designed specifically to
exclude any form of adverse credit.
· All Sub Prime brokers terminated.
· Thirty new brokers all known personally by the new management team
appointed.
· Two new funding lines now in place.
· New finance director appointed with proven leasing background
· Robust consistent collection policy implemented including the appointment
of two proven specialist legal collections firm of lawyers.
· Recoveries February to June of £145,000
· Recoveries June to October anticipated to achieve £170,000
· Provisioning policy of 3% "across the board " immediately implemented
I am delighted to report that there is now the opportunity for a "new start"
based on the sound foundations we have established that are now commencing to
generate strong income margins in their own right and the added advantage of the
recent restructuring already beginning to contribute positively to the bottom
line.
The group is also now able to aggressively promote our "Simple Finance for Smart
Business" philosophy based exclusively on the success of the repositioning
programme and comfortable in the knowledge we are operating from a proven,
consistent and most importantly a secure administrative and operational
platform.
Board and Employees
On behalf of the board, I would like to express my sincere thanks to our loyal
and brilliant staff for their amazing support, confidence and dedication during
the recent difficult months for the group.
The appointment of Rod Channon as Finance Director of the group is an important
factor in strengthening a key area of the board as a result of his significant
experience in the leasing industry.
Finally I have agreed to continue as Chairman to spearhead the restructuring
programme the new Board has put in place and I am sure that my many years
experience in this market will have an ongoing positive impact on future
performance and most importantly the financial success of the group.
Mike Johnson
Chairman
For further information, Contact:
1pm plc Mike Johnson 08707 397 397
Chairman
ARM Corporate Finance Limited Nick Harriss 020 7512 0191
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 31 MAY 2007
2007
Note £
TURNOVER 871,965
Cost of sales 792,711
_______
GROSS PROFIT 79,254
Administrative expenses 403,760
_______
OPERATING LOSS 2 (324,506)
Interest payable and similar charges (12,372)
Interest receivable 5,971
_______
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (330,907)
Tax on profit on ordinary activities 5 83,238
_______
LOSS FOR THE FINANCIAL PERIOD (247,669)
=======
Earnings per share - Basic 7 (0.19p)
=======
- Diluted 7 (0.19p)
=======
All of the activities of the company are classed as continuing.
The company has no recognised gains or losses other than the results for the
period as set out above.
No profit or loss has been recognised in the individual accounts of 1pm plc
CONSOLIDATED BALANCE SHEET
31 MAY 2007
Note 2007
£ £
FIXED ASSETS
Tangible assets 8 42,512
Intangible assets 9 (107,200)
_______
(64,688)
CURRENT ASSETS
Debtors 10 2,826,951
Cash at bank and in hand 6,104
_________
2,833,055
CREDITORS: Amounts falling due 11 (1,382,366)
within one year _________
NET CURRENT ASSETS 1,450,689
_________
TOTAL ASSETS LESS CURRENT LIABILITIES 1,386,001
CREDITORS: Amounts falling due 12 (662,376)
after more than one year _________
723,625
PROVISIONS FOR LIABILITIES
Deferred taxation 13 -
_________
723,625
=========
CAPITAL AND RESERVES
Called-up equity share capital 16 99,925
Share premium account 16 871,369
Profit and loss account 17 (247,669)
_________
SHAREHOLDERS' FUNDS 18 723,625
=========
CONSOLIDATED CASH FLOW STATEMENT
PERIOD ENDED 31 MAY 2007
Note 2007
£
Net cash inflow / (outflow) from 21 (430,653)
operating activities
Returns on investments and 21 (6,401)
servicing of finance
Taxation 21 (54,783)
Capital expenditure and 21 (34,756)
financial investment
Equality dividends paid -
________
Cash inflow before financing (526,593)
Financing 21 689,925
________
Increase/(decrease) in cash 21 163,332
========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED 31 MAY 2007
1. ACCOUNTING POLICIES
Basis of accounting
The financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting policies.
The consolidated financial statements comprise the audited financial
statements of the company and its subsidiary undertakings made up to 31 May
2007.
The separate net assets of subsidiary undertakings acquired and accounted
for under acquisition accounting are included in the group financial
statements at their fair values to the group at the date of acquisition.
A separate profit and loss account for the parent company has not been
prepared as permitted in Section 230(2) of the Companies Act 1985.
Leased assets and turnover
Assets leased to customers on finance leases are excluded from the fixed
assets of the company, and are reported as a debtor in the Balance Sheet.
Receipts from finance lease contracts contain a capital element which
reduces the debtor and an interest charge which is credited to revenue using
the "rule of 78". In addition 5% of total interest charges are credited to
revenue in the year of inception of each lease to cover initial
administration costs.
All turnover arose within the UK.
Funding creditors and cost of sales - interest
Finance received from funding providers is classified as creditors in the
Balance Sheet. 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".
Fixed assets
All fixed assets are recorded at cost on acquisition.
Depreciation
Depreciation is calculated so as to write off the cost of an asset, less its
estimated residual value, over the useful economic life of that asset as
follows:
Fixtures & fittings - 25% on cost
Assets held under finance leases and hire purchase contracts
Fixed assets held under hire purchase contracts, and those financed by
leasing agreements which give rights approximating to ownership (i.e. finance
leases) are treated in accordance with Statement of Standard Accounting
Practice No 21 as if purchased outright. The corresponding obligations are
included in creditors.
Depreciation is provided, depending on the type of fixed asset , by the rates
and methods set out above.
Operating lease agreements
Rentals applicable to operating leases where substantially all of the
benefits and risks of ownership remain with the lessor are charged against
profits on a straight line basis over the period of the lease.
Pension costs
The company operates a defined contribution pension scheme for employees.
The assets of the scheme are held separately from those of the company. The
annual contributions payable are charged to the profit and loss account.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay
more, or a right to pay less or to receive more tax:
Deferred tax assets are recognised only to the extent that the directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences
can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which timing differences reverse, based
on tax rates and laws enacted or substantively enacted at the balance sheet
date.
Financial instruments
Financial instruments are classified and accounted for, according to the
substance of the contractual arrangement, as either financial assets,
financial liabilities or equity instruments. An equity instrument is any
contract that evidences a residual interest in the assets of the company
after deducting all of its liabilities.
Provision for doubtful debts
Provision is made for contracts in arrears after taking into account
expected recovery proceeds. All outstanding amounts on contracts passed to
collection agents are written off in full, less expected subsequent recovery
proceeds. During the period the company's provisioning policies were
reconsidered and additional provisions made as required.
Intangible Assets - Goodwill
Goodwill arising on the acquisition of subsidiary undertakings and
businesses representing any excess of the fair value of the consideration
given over the fair value of the identifiable assets and liabilities
acquired is capitalised and written off on a straight line basis over its
useful economic life.
Negative Goodwill is similarly included in the balance sheet and is credited
to the profit and loss account in the periods in which it is acquired. Non-
monetary assets are recovered through depreciation or sale.
Negative goodwill in excess of the fair values of the non-monetary assets
acquired is credited to the profit and loss account in the period expected
to benefit.
Investments
Fixed asset investments are shown at cost less impairment.
For investments in subsidiaries acquired for consideration by the issue of
shares and where the requirements of 131 of the Companies Act 1985 have been
satisfied, the group has utilised the merger relief provisions available and
the issue of shares have been recorded at the nominal value, any difference
being taken to a merger reserve.
2. OPERATING (LOSS)
Operating (loss) is stated after charging:
2007
£
Amortisation of negative goodwill (107,200)
Depreciation of owned fixed assets 10,644
Auditor's fees 9,087
Operating lease costs:
Other 15,000
=======
3. PARTICULARS OF EMPLOYEES
The average number of staff employed by the company during the financial
period amounted to:
2007
No
Number of administrative staff 5
Number of management staff 4
__
9
==
The aggregate payroll costs of the above were:
2007
£
Wages and salaries 313,869
Social security costs 24,755
Other pension costs 31,792
_______
370,416
=======
4. DIRECTORS' EMOLUMENTS
The directors' aggregate emoluments in respect of qualifying services
were:
2007
£
Aggregate emoluments 186,559
Value of company pension contributions to
money purchase schemes 31,792
_______
218,351
=======
The number of directors who accrued benefits under company pension schemes
was as follows:
2007
No
Money purchase schemes 2
==
Emoluments disclosed above include the following amounts paid to the
highest paid director:
£
Emoluments for qualifying services 77,754
Company pension contributions to money
purchase schemes -
======
5. TAXATION ON ORDINARY ACTIVITIES
(a) Analysis of charge in the period
2007
£
Current tax:
In respect of the period:
UK Corporation tax based on the results
for the period at 19% (2006 - 19%) (3,683)
______
Total current tax (3,683)
Deferred tax:
Origination and reversal of timing
differences (note 12)
Other (79,555)
______
Tax on profit on ordinary activities (83,238)
======
(b) Factors affecting current tax charge
The tax assessed on the profit on ordinary activities for the period is
lower than the standard rate of corporation tax in the UK of 19% (2006 -
19%).
2007
£
Loss on ordinary activities before
taxation (330,907)
=======
Loss on ordinary activities by rate of (62,872)
tax
Capital allowances for period in excess (1,864)
of depreciation
Operating income non-taxable (20,366)
Unrelieved losses 61,499
Other short term timing differences 19,920
_______
Total current tax (note 5(a)) (3,683)
=======
6. DIVIDENDS
Dividends on equity shares
2007
£
Paid
Equity dividends paid on ordinary shares -
===
7. EARNING 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 period. For diluted earnings per share, the
weighted average number of ordinary shares is adjusted to assume conversion
of all dilutive potential ordinary shares.
2007
£
Loss for the period
(247,669)
=======
Weighted average number of shares 133,082,373
===========
8. TANGIBLE FIXED ASSETS (Group only)
Fixtures &
fittings
£
COST
At acquisition of subsidiary 31,873
Additions 34,756
______
At 31 May 2007 66,629
======
DEPRECIATION
At acquisition of subsidiary 13,473
Charge for the period 10,644
______
At 31 May 2007 24,117
======
NET BOOK VALUE
At 31 May 2007 42,512
======
Assets held under finance leases and hire purchase contracts, included in the
relevant heading in the above table are;
Cost Accumulated Charge for
Depreciation the Period
At 31 May 2007 5,475 570 570
===== ===== =====
9. INTANGIBLE FIXED ASSETS (Group only)
Goodwill
£
COST
Additions (214,400)
_______
At 31 May 2007 (214,400)
=======
AMORTISATION
Credited during the period 107,200
_______
At 31 May 2007 107,200
=======
NET BOOK VALUE
At 31 May 2007 (107,200)
=======
10. DEBTORS (Group only)
2007
£
Trade debtors 2,625,960
VAT recoverable 36,580
Other debtors 68,983
Prepayments and accrued income 16,567
Deferred tax 78,861
_________
2,826,951
=========
Included in trade debtors is an amount of £1,787,923, which is due after
more than one year (2006 - £1,401,771).
Trade debtors wholly represent finance lease debtors.
The cost of assets acquired for the purpose of letting under finance leases
were as follows; 2007: £1,886,398 (2006: £2,101,420).
11. CREDITORS: Amounts falling due within one year (Group only)
2007
£
Bank loans and overdrafts 106,731
Trade creditors 1,184,607
Corporation tax 3,542
Other taxation and social security 9,086
Other creditors 7,330
Accruals and deferred income 71,070
_________
1,382,366
=========
Trade creditors wholly represent funding creditors, which are secured on the
value of finance leases written during the financial period.
The trade creditors figure is made up of numerous funding blocks that are
repaid by monthly instalments. The length of the repayment term varies from
24 to 36 months and interest rates from 6.1% to 10.66%.
12. CREDITORS: Amounts falling due after more than one year (Group only)
2007
£
Bank loans and overdrafts -
Trade creditors 662,376
_______
662,376
=======
Trade creditors are secured as noted above, with the same repayment and
interest rates (note 11).
13. DEFERRED TAXATION (Group only)
The deferred tax included in the Balance sheet is as follows:
2007
£
Included in debtors (note 10) 78,861
Included in provisions -
======
The movement in the deferred taxation account during the period was:
2007
£
At acquisition of subsidiary 694
Profit and loss account movement arising (79,555)
during the period ______
Balance carried forward (78,861)
======
The balance of the deferred taxation account consists of the tax effect of
timing differences in respect of:
2007
£
Other timing differences (78,861)
======
14. COMMITMENTS UNDER OPERATING LEASES (Group only)
At 31 May 2007 the company had annual commitments under non-cancellable
operating leases as set out below.
Land & Buildings
2007
£
Operating leases which expire:
After more than 5 years 15,000
======
15. RELATED PARTY TRANSACTIONS
A director Mr A F Williams and a former director Mr J D G Stickley have given
personal guarantees of £160,000 each to Barclays Bank plc, which are
supported by second charges over their personal domestic properties limited
to £160,000 each. Also Mr J D G Stickley and Mr A F Williams have each given
personal guarantees of £70,000 to Barclays Bank plc, which are unsupported.
Mr J D G Stickley is a director of and shareholder in Online Leasing
Limited. During the period 1 pm (UK) Limited incurred the following
commission charges; 2007: £415 (2006: £1,743). There were no balances due
at the year ends.
Included within other creditors (Note 9) are amounts owed to directors
being, Mr J Stickley of £nil (2006: £29,788) and Mr A Williams of £Nil
(2006: £29,788).
During the period the following directors invoiced the company for services
rendered:
J Benson invoiced the company for £25,233.
S Grey invoiced the company for £2,250.
M Johnson invoiced the company for £20,779.
R Channon invoiced the company for £4,278.
16. CALLED UP SHARE CAPITAL
2007
£
AUTHORISED: NOMINAL
NUMBER: CLASS: VALUE:
440,011,734 ORDINARY 0.0006818 300,000
=======
2007
ALLOTTED AND FULLY PAID: NOMINAL £
NUMBER: CLASS: VALUE:
146,561,469 ORDINARY 0.0006818P 99,925
The Company was incorporated on 14 June 2006 with an authorised share
capital of £300,000 divided into 1,000,000,000 ordinary shares of £0.0003p
each of which 6,664 shares were issued.
On 3 July 2006 ordinary shares of £0.0003p were consolidated into ordinary
£1 shares, and the authorised share capital was increased to £300,000
ordinary £1 shares.
On 3 July 2006 49,998 ordinary £1 shares were issued to acquire the entire
share capital of 1pm plc (UK) Limited, trading company.
On 4 July 2006, the authorised and issued share capital was converted from
ordinary shares of £1 each to ordinary shares of £0.0006818p each.
Authorised share capital increased to 440,011,734 ordinary shares.
On 4 July 2006, the company issued 8,228,135 ordinary shares at a price of
£0.0006818 per share.
On 2 August 2006, a further 65,000,000 ordinary shares were issued at a
price of 2p per share in order to raise £1.3M proceeds. The funds raised
less costs resulted in £915,335 which was transferred to 1pm (UK) Limited
(1pm plc owns 100% of the share capital in 1pm (UK) Limited).
The funds raised were used in 1pm (UK) Limited to finance continuing
operations.
16.CALLED UP SHARE CAPITAL (CONT)
SHARE PREMIUM
2007
£
Premium on shares issued 1,256,717
Expenses on shares issued (385,348)
_________
As at 31 May 2007 871,369
=========
17.PROFIT AND LOSS ACCOUNT
2007
£
(Loss) for the financial period (247,669)
Equity dividends (note 6) -
_______
Balance carried forward (247,669)
=======
18. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (Group only)
2007
£
(Loss) for the financial period (247,669)
Share capital issued 99,925
Share premium 871,369
_______
Net addition to shareholders' funds 723,625
Opening shareholders' funds -
_______
Closing shareholders' funds 723,625
=======
19. FIXED ASSET INVESTMENTS
2007
£
COST
At 31 May 2007 50,000
______
NET BOOK VALUE
At 31 May 2007 50,000
======
2007
£
UNLISTED INVESTMENTS 50,000
======
The company's investments at the balance sheet date in the share capital of
unlisted companies include the following:
1PM (UK) LIMITED
Nature of business: Provision of equipment lease rental finance to UK
businesses
%
Class of shares holding
Ordinary 100.00
2007
£
Aggregate capital and reserves (90,469)
Loss for the period (354,869)
=======
20. DEBTORS (Company only)
2007
£
Inter-company loan accounts 915,335
=======
21. NOTES TO THE STATEMENT OF CASH FLOW (Group only)
RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
2007
£
Operating (loss) (324,506)
Depreciation 10,644
Amortisation of goodwill (107,200)
Increase in debtors 75,364
Increase in creditors (5,400)
Movement in deferred tax provision (79,555)
_______
Net cash inflow / (outflow) from
operating activities (430,653)
=======
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
2007
£
Interest paid (12,372)
Interest received 5,971
_____
Net cash outflow from returns on
investments and servicing of finance (6,401)
=====
TAXATION
2007
£
Taxation
(54,783)
======
CAPITAL EXPENDITURE
2007
£
Payments to acquire tangible fixed assets (34,756)
______
Net cash outflow from capital expenditure (34,756)
======
FINANCING
2007
£
Repayment of bank loans (55,265)
Proceeds from issue of ordinary shares 1,306,640
Expenses in connection with issue of (385,346)
share capital
Net outflow from short-term creditors 150,945
Net inflow from long-term trade creditors (327,049)
_______
Net cash inflow from financing 689,925
=======
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2007
£
Increase / (decrease) in cash in 163,332
the period
Net cash inflow from bank loans 55,265
Net cash inflow / (outflow) from
long-term trade creditors 327,049
_______
Change in net debt 545,646
Net debt at acquisition of (1,308,648)
subsidiary _________
Net debt at 31 May 2007 (763,002)
=========
ANALYSIS OF CHANGES IN NET DEBT
At At
acquisition of 31 May
subsidiary Cashflows 2007
Net cash: £ £ £
Cash in hand and at 942 5,162 6,104
bank
Overdrafts (214,242) 158,170 (56,072)
_______ _______ ______
(213,300) 163,332 (49,968)
Debt:
Debt due within 1 (55,264) - (55,264)
year
Debt due after 1 year (1,040,084) 382,314 (657,770)
_________ _______ _______
Net debt (1,308,648) 545,646 (763,002)
========= ======= =======
22. SUBSIDIARY UNDERTAKINGS
Details of subsidiary undertakings at the balance sheet date are as follows:
Name of company % Holding Nature of company
1 PM (UK) Limited 100% Ordinary Provision of equipment
lease/rental finance.
On 3 July 2006 1 PM Plc acquired the whole of the issued share capital of 1
PM (UK) Limited for a consideration of £50,000.
£
Fixed assets 18,400
Current assets 2,741,159
Liabilities (2,495,159)
_________
Net assets 264,400
Purchase cost (50,000)
_________
Negative goodwill 214,400
=========
23. FINANCIAL INSTRUMENTS
The groups' financial instruments comprise cash and liquid resources that
arise directly from operations. The main purpose of the financial
instruments is to fund the groups operations. As a matter of policy the
Group does not trade in financial instruments, nor does it enter into any
derivative transactions
The operations of the group have principally been financed to date through
the funds raised on the placing of its shares. The group has an overdraft
facility in place with the group's bankers, and an overdraft facility
totalling £106,731 as at 31 May 2007.
The main risks to the group, and the policies adopted by the directors to
minimise the efforts on the group are as follows:
Credit Risk - The directors believe that credit risk is limited due to debts
being spread over a large number of debtors. No individual debtor poses a
significant risk.
Interest rate and liquidity risk - All of the groups cash balances and short
term deposits are held in such a way that enables the correct balance of
access to working capital and a competitive rate of interest is achieved.
Working capital requirements are constantly monitored.
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