Interim Results

RNS Number : 7026D

Accuma Group PLC

18 September 2008

 



18 September 2008

Accuma Group Plc

('Accuma' or 'the Group')

Unaudited interim results to 30 June 2008

Chairman's Statement

Although trading conditions in our industry have remained difficult, I am pleased to confirm a return to operating profitability (as measured by EBITDA*) for the first half of this financial year.  

This is in part a result of the operational review that was completed at the beginning of 2008. This significantly reduced the cost base of our IVA division and has enabled us to report EBITDA profitability for the Group of £185,418. In the same period, turnover reduced by 7.6% to £6.1m (£6.6m for the extrapolated 6 months to 31 December 2007). This fall in revenue is the result of a very poor performance in the period by our loan broking division, following which the Board has now taken the decision to review the strategic options of this business. In addition, the IVA business suffered reduced per case fees and a drop in the number of new IVA cases being taken on

Our gross profit more than doubled in the period to £2.4m due to the benefits of the operational changes made in the 5 month period to December 2007 coming through, improved control of marketing expenditure and the continued run-off of the supervisory book. 

Our diluted adjusted earnings per share were 0.04p (0.0p).

Cash inflow from operations for the period was healthy at £424,000 (5 months to 31 December 2007: inflow: £454,000), with our balance sheet showing net £1.5m of cash at the end of June. During the period £1.49m was paid to the vendors of Byrom Keeley, the debt management business we acquired in August 2006, in respect of the second earn out payment.  The Group has no further earn out commitments for the remainder of the current financial year although the third and final earn out payment for this business is due in March 2009.  Whilst it is too early to be specific about the likely quantum of this final payment, we expect it to be significantly less than the payment this year, and we are confident we will be able to settle it using our existing cash resources.

On a divisional basis, our revenues and EBITDA can be analysed as follows:

                                                    Turnover        EBITDA

                                                        £'000s            £'000s 

Debt Management                              1,745                570

Insolvency Division                             3,019                449

Loan/Mortgage Broking                      1,362              (196)

Referral /other                                         8                (10)

Group Overheads                                                     (628)

Total                                                 6,134                 185

Debt Management Division

Byrom & Keeley, our debt management business, posted a profit  of £570,000 (5 months Dec 2007: £589,000) for the period despite average new client payments decreasing from £261 in January 2008 to £217 in June 2008, which can be directly attributed to general economic conditions affecting household disposable incomes. Turnover was £1,745,000 (5 months Dec 2007: £1,423,000).  

As monthly management fees are based on a percentage of the client payment, which we expect to continue to fall, we anticipate a negative effect on margins in this business, albeit mitigated by an anticipated increase in the number of clients as more people struggle to cope with the full impact of the credit crunch.   

Insolvency Division

The Insolvency Division posted a profit of £449,000 (2007:£1,885,000), with 5,406 cases under management. Turnover was £3,019,000 (5 months Dec 2007: £2,029,000)  

New cases agreed in the period averaged 77 per month with an average client contribution, on which the set up and management fees are now based, of £324. The average contribution by new cases has declined during the period in line with the reduction seen within our debt management division, again as a result of inflationary pressure impacting household disposable incomes. It would be prudent to assume that this will also adversely affect the delinquency rate of our existing case bank, which stood at £13.3m gross (i.e. before any provision for delinquency) at the end of August 2008 and thus the future revenue there from. Within this division there is surplus office space, with an annual charge of £210,000, for which we have provided an additional £115,000, to represent a total of approximately 11 months' charge. The lease has seven years to run, and we are actively seeking a tenant for this space

In March 2008 we announced that the Group had received some indications of interest in the IVA Division; however no credible offer materialised and with the operational streamlining in this division complete, our intention is to retain this Division.

Loan broking division 

Our loan broking division, Loan Line, has experienced very difficult trading conditions throughout the period under review, posting a loss of £196,000 (5 months Dec 2007: £(375,000).)  Lenders have withdrawn from the market, cut commissions and toughened their acceptance criteria.  In particular First Plus, a major lender representing some 30% of Loan Line's business, announced its intention in July 2008 to withdraw from the market: consequently the Board are currently examining various strategic options for Loan Line given the continued losses and ongoing requirements for working capital.  A further announcement will be made in due course. 

In the December 2007 accounts full impairment was made for the goodwill of Loan Line at £11.8m.

Summary

In summary, conditions in our market places remain challenging and the return to profitability of the Group is to be welcomed. The losses within the loan broking division and the limited growth prospects in the IVA Division means that our strategy is now focused on the potential growth in the debt management division. The ongoing effects of the credit crunch should provide an opportunity to increase client numbers within this division particularly as the impact of increases in utility bills are realised in the new year. 

Charles Taylor

Chairman

18 September 

* Calculated as profit before interest, tax, amortisation and depreciation.

For further information, please contact: 

Charles Howson

Chief Executive 

Accuma Group Plc                             Tel: [phone]

Lindsay Mair/Stewart Dick

Daniel Stewart & Company plc           Tel: [phone]

Simon Rothschild/Oliver Winters

Bankside Consultants                          Tel: [phone]

Consolidated Income Statement
Period ended 30th June 2008
		6 Months ended		5 Months ended		6 Months ended
		30-Jun-08		31-Dec-07		31-Jan-07
		Unaudited				Unaudited
		£		£		£
Revenue		6,134,157		5,546,953		10,578,446
Cost of sales		(3,723,422)		(4,602,806)		(7,081,071)
Gross profit		2,410,735		944,147		3,497,375
Administrative expenses		(2,225,317)		(3,687,420)		(1,794,061)
Earnings before interest, tax, depreciation, amortisation and impairment losses		185,418		(2,743,273)		1,703,314
Depreciation		(192,229)		(202,016)		(148,192)
Amortisation		(6,021)		(4,963)		(5,955)
Provision for impairment losses		0		(11,774,764)		0
(Loss)/Profit from operations		(12,832)		(14,725,016)		1,549,167
Finance income		62,336		106,814		118,356
Finance costs		(36,418)		(165,084)		(24,178)
Profit/(Loss) before tax		13,086		(14,783,286)		1,643,345
Taxation		0		253,186		(533,014)
Profit/(Loss) for the period		13,086		(14,530,100)		1,110,331
Earnings/(Loss) per share - basic		0.04p		(44.43)p		1.99p
Earnings per share - diluted		0.04p		N / A		1.98p

Consolidated Balance Sheet
As at 30th June 2008
		30 June 2008			31 December 2007			31 January 2007
		Unaudited						Unaudited
		£	£		£	£		£	£
Assets
Non-current assets
Intangible assets			15,554,919			15,560,940			23,638,089
Property, plant and equipment			636,146			789,630			826,142
Total non-current assets			16,191,065			16,350,570			24,464,231
Current Assets
Trade and other receivables		3,162,582			6,637,148			7,350,127
Deferred tax asset		309,807			309,807			0
Cash and cash equivalents		1,656,244			3,367,340			5,772,401
Total current assets			5,128,633			10,314,295			13,122,528
Total assets			21,319,698			26,664,865			37,586,759
Equity and liabilities
Current liabilities
Trade and other payables		2,080,107			2,271,596			2,142,035
Financial liabilities		75,596			2,259,027			0
Provision for onerous lease commitment		530,486			510,687			0
Current tax liabilities		154,341			246,709			941,811
Total current liabilities			2,840,530			5,288,019			3,083,846
Non-current liabilities
Trade and other payables		0			2,898,536			2,000,000
Financial and other liabilities		53,717			78,911			238,320
Total non-current liabilities			53,717			2,977,447			2,238,320
Total liabilities			2,894,247			8,265,466			5,322,166
Capital and reserves - equity
Share capital		3,269,673			3,269,673			3,269,673
Share premium account		28,407,877			28,407,877			28,412,004
Share option reserve		409,194			396,228			329,056
Retained earnings		(12,398,698)			(12,411,784)			1,516,455
Other reserve		(1,262,595)			(1,262,595)			(1,262,595)
Total equity			18,425,451			18,399,399			32,264,593
Total equity and liabilities			21,319,698			26,664,865			37,586,759

Consolidated Cash Flow Statement
Period ended 30th June 2008
						6 Months ended		5 Months ended		6 Months ended
						30-Jun-08		31-Dec-07		31-Jan-07
						Unaudited				Unaudited
						£		£		£
Operating activities
Profit / (Loss) from operations						(12,832)		(14,725,016)		1,549,167
Impairment provision						0		11,774,764		0
Depreciation						192,229		202,016		148,192
Amortisation						6,021		4,963		5,955
Decrease / (Increase) in trade and other receivables						3,474,566		1,901,165		(802,157)
( Decrease ) / Increase in trade and other payables						(3,253,434)		1,267,584		(247,104)
Provision for share options						12,966		28,977		47,242
Cash inflow from operations						419,516		454,453		701,295
Interest paid						(58,832)		(73,216)		(14,118)
Income taxes paid								(110,000)		(566,024)
Interest element of finance leases						(7,000)		(8,113)		(9,067)
Net cash inflow from operating activities						353,684		263,124		112,086
Payments to acquire property, plant and equipment						(38,742)		(136,100)		(197,366)
Acquisition of subsidiary companies						0		0		(15,997,178)
Deferred consideration in respect of acquisitions						(2,004,530)		0		0
Interest received						25,914		106,814		119,387
Net cash used in investing activities						(2,017,358)		(29,286)		(16,075,157)
Cash flow from financing activities
Capital element of finance lease agreements						(47,422)		(33,040)		(38,047)
Cash deposit in respect of loan notes						0		(164,960)		0
Proceeds of issue of ordinary shares						0		0		17,968,000
Share issue costs						0		0		(579,257)
Net cash (used in) / received from financing activities						(47,422)		(198,000)		17,350,696
Net change in cash equivalents						(1,711,096)		35,838		1,387,625
Cash and cash equivalents at the beginning of the period						3,367,340		3,331,502		2,041,515
Cash and cash equivalents at the end of the period						1,656,244		3,367,340		3,429,140
Reconciliation of net cash flow to movement in net funds
Net (decrease) / increase in cash and cash equivalents						(1,711,096)		35,838		1,387,625
Movement in lease financing						54,422		41,154		(108,226)
Movement in net (debt) / funds during the period						(1,656,674)		76,992		1,279,399
Net funds at the beginning of the period						3,183,605		3,106,613		1,779,743
Net funds at the end of the period						1,526,931		3,183,605		3,059,142

Notes to the Interim Accounts

1.    Basis of Preparation of Interim Accounts

The unaudited interim accounts have been prepared in accordance with International Financial Reporting Standards and International Accounting Standards (collectively IFRS) as adopted by the EU and the accounting policies set out in Accuma Group PLC's Annual Report for the year ended 31 December 2007. These interim accounts have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' they do not include all the statements required for full annual accounts, and should be read in conjunction with the consolidated accounts of the Group as at 31 December 2007.

The interim accounts have been prepared on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future.

The financial information contained in these interim accounts are unaudited and do not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2007 has been extracted from the Group's published accounts for that year. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.

2. Earnings Per Share

Earnings per share has been calculated by dividing the earnings attributable to ordinary shareholders 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 take account of the dilutive effect of share options at that date.

3. Distribution of the Interim Report

Copies of the Interim Report will be available on the Company's website, www.accumair.com

 

END

 

 

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