11th Apr 2007 07:01
Accuma Group PLC11 April 2007 Press Release 11 April 2007 Accuma Group Plc ("Accuma" or "the Group") Interim Results Accuma Group Plc, a leading provider of consumer financial solutions, todayannounces its Interim Results for the six months ended 31 January 2007. Highlights • Turnover more than doubled to £10.6 million (£4.1 million) • Fourfold increase in: O EBITDA, to £1.7 million O Adjusted profit (profit before tax and amortisation), to £1.6 million O Pre-tax profit, to £1.17 million • Diluted adjusted E.P.S. increased 258% to 3.47p (0.97p) • Future contracted revenue £15.5 million at period end (£11.9 million) • Strong balance sheet with £5.8 million of cash at period end • Management team strengthened Commenting on the results, Charles Howson, Chief Executive of Accuma Group said: "Given the difficult trading conditions in the IVA sector in the past sixmonths, we believe that these results demonstrate the effectiveness of ourstrategy of broadening the range of our services to over-indebted consumers.Whilst we believe the IVA market will continue to experience significant growth,our ability to provide a full platform of solutions, from IVAs through toinformal debt management and loans and mortgages, gives us a competitiveadvantage and will in due course maximise earnings for the Group". - ends - For further information:Accuma Group PlcCharles Howson, Chief Executive Tel: +44 (0) 161 751 [email protected] www.accumagroup.com Daniel Stewart & Company PlcLindsay Mair Tel: +44 (0) 20 7776 [email protected] www.danielstewart.co.uk Media enquiries:AbchurchChris Lane / Emma Johnson Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com CHIEF EXECUTIVE'S STATEMENT Financial Overview Despite difficult trading conditions, the first half of this financial year hasseen significant progress. In particular we increased adjusted profit to £1.6m(pre goodwill amortisation), giving an operating margin of 15.5% (6.9%), onturnover which increased 157% from £4.1m to £10.6m. Our gross profit increased144% to £3.5m and our diluted adjusted earnings per share increased 258% to3.47p (0.97p). Cash inflow from operations for the period was £701k (31 January 2006: outflow£970k) and our balance sheet is strong with £5.8m of cash at the end of January.Since the period end an amount of £2.4m has been paid to the vendors of ByromKeeley, the debt management business we acquired in August 2006, in respect ofthe first earn out payment. We estimate our other earnout commitments toamount to £1.2m for the remainder of the current financial year, payable inOctober this year. On a divisional basis , our revenues can be analysed as follows: Turnover - £'000s EBITDA - £'000s2006 Acquisitions • Byrom Keeley 1,293 648 • Loan Line 2,523 730 • Thomas Charles 909 146Existing business 5,853 565Group overheads - Total 10,578 1,703 Operational Review Following the acquisitions of Loan Line and Byrom Keeley, the Group now providesa full platform of consumer financial solutions from IVAs, to informal debtmanagement, consolidation loans and re-mortgaging. At present the Group companies continue to operate their own marketingactivities and referral relationships from a range of sources and our ITdevelopment team are currently enhancing the systems and processes of exchangingleads within the Group in order to provide the most appropriate solution to ourclients in a timely manner. We are already experiencing positive outcomes fromthe synergies within the Group and are confident that significant benefits arestill to be derived. The reasons for building a full consumer financial solutions platform werepredominantly to maximise earnings by increasing the proportion of enquiries towhich we could provide appropriate debt solutions. However, given recent tradingconditions, creditor pressure and increased competition, it is clear that ourrecent acquisitions will mitigate the impact on the Group of what we believewill be more short-term pressure on the IVA sector. Prior to the acquisitionsof Loan Line and Byrom Keeley, the conversion ratio of enquiries to IVAs wasapproximately 4%: we are now seeing overall conversion ratios of calls receivedby Accuma across the Group's business of approximately 24 %. Given increased competition, particularly with direct advertising, the Group'splatform is becoming an attractive model with which we are able to buildstronger referral relationships. Our client acquisition strategy moving forwardwill have more emphasis on building such relationships because, compared todirect advertising, costs are only incurred on success. Acquisitions Byrom Keeley was successfully relocated to our Group head office in March. Thiswill provide a more efficient referral process of Group leads thus increasingrevenue opportunities. It is expected that full integration of this businesswill be complete within this financial year. Following a review of Accuma's in-house mortgage division, we have transferredall this activity to Loan Line, the FSA regulated loan and mortgage broker weacquired in August 2006. This will reduce compliance costs, should increaserevenue through volume overrides and by other operating efficiencies. In ourtrading update of February 1st we noted that, due to lower referral volumesreceived and in view of a tighter lending environment, we had revised ourexpectations for the business downwards for the second half of the financialyear. We intimated at this time that discussions with a number of new referralsources were in progress and we are pleased that one such discussion, whichcould provide a significant volume of referrals, has progressed to a pilotoperation. This business is materially integrated and with the transfer of alllending opportunities from within the Group, control and management informationwill become more streamlined. Thomas Charles, the web based IVA packager, we acquired in July 2006 istrading in line with our expectations despite competitive pressure on marketingactivity. IVA Business As reported earlier this year and in common with our competitors, our IVAbusiness suffered from a much more competitive environment and increasedcreditor pressure which resulted in lower approval rates, together with a poorlyexecuted marketing strategy. We have reacted by making significant changes to our marketing and businessdevelopment strategy and in particular have implemented more robust and moretimely reporting systems. Whilst it is too early to comment on the efficacy ofour renewed marketing campaign, we believe that it will have a positive impactfrom the final quarter of this financial year. The lower approval rates from creditors experienced during the latter part ofthe period together with lower call volumes resulted in our quarterly run rateof new IVA cases falling from 271 average per month in the first quarter to 221average per month in the second quarter. The current average for February andMarch is 206 and moreover with the actions we have taken and widely expectedchanges in the IVA process, we expect our run rate to recover later thisfinancial year. Recent meetings orchestrated by the Insolvency Service and the British BankersAssociation have enabled creditors and insolvency firms to engage in frankdialogue to address their concerns. Whilst we do not envisage the outcome ofthese meetings impacting as early as has been intimated by all parties (Easter),positive progress is being made on all fronts and it is particularly comfortingto note that creditor organisations have now become involved at a more seniorlevel than in previous discussions. We now have six Insolvency Practitioners, which is a reduction of two from thesame period last year, six Insolvency Practitioners give us a capacity of420-480 cases per month which is ample given our current run rates. Thus,whilst that the number of IP practitioners determines our capacity, we are notseeking to hire replacements at this stage. Competition in the sector has grownwith a number of new entrants seeking to recruit IPs and this has lead to salaryinflation which we have offset by efficiencies in our operational processes. Management Changes We have made a number of appointments during the period to add strength anddepth to our management team including Ian Campbell as Finance Director andCompany Secretary on January 26th. Ian has spent the last 17 years working inthe financial services sector and has held a number of senior appointmentsincluding most recently for a leading debt purchase specialist, Link Financial. Outlook Future prospects for the Group remain positive despite trading conditionsremaining difficult within the IVA division. The Group is now less reliant onits IVA revenues having widened its service offering in order to maximise itsmarketing spend and referral relationships through the addition of informal debtmanagement services and loan consolidation and mortgage broking. We are actively engaging in the high level discussions taking place in the IVAsector and believe that we will benefit in due course from resulting changes.Given our comprehensive profiling and verification of each case coupled withproviding creditor returns higher than the industry average at 42p in the £,Accuma remains well positioned to take advantage of such changes. The market for informal debt management services and loan consolidation andmortgage broking remains strong. In particular in the area of debt managementgiven the economic outlook together with adverse creditor sentiment towardsIVAs, an informal debt management solution will be more attractive in most casesto the over-indebted consumer and indeed creditors, than bankruptcy. In summary, the IVA division will continue to form a strategic and profitablepart of the Group's future. Our client bank at the end of the period stood at5,228 cases providing future contracted revenues for this division of £15.5million. Moreover, given the breadth of our financial solutions platform, and inparticular, our ability to offer a comprehensive range of solutions to overindebted consumers, we are positive about the outlook for the Group. Accuma Group PlcInterim Results for the six months ended 31 January 2007Consolidated Profit & Loss Account Unaudited Unaudited Year ended 6 months ended 6 months ended 31 July 2006 Notes 31 January 2007 31 January 2006 (as restated) (as restated) £000's £000's £000's Turnover From continuing and acquired 10,578 4,110 9,980operations Cost of sales 7,081 2,678 5,500 Gross Profit 3,497 1,432 4,480 Administrative expenses 1,747 1,020 2,463 Share based compensation 47 87 186 EBITDA 1,703 325 1,831 Amortisation & Depreciation 629 127 324 Operating Profit From continuing and acquired 1,074 198 1,507operations Interest Receivable 118 35 124Interest Payable -24 -16 -37 Profit on ordinary activities before taxation 1,168 217 1,594 Taxation 533 65 482 Retained profit for the period 635 152 1,112 Earnings per share Basic 1.99 0.68 4.71 Diluted 1.98 0.66 4.64 Diluted and adjusted 3.47 0.97 5.35 There were no recognised gains or losses for the period. Accuma Group PlcInterim Results for the six months ended 31 January 2007Consolidated Balance Sheet Unaudited Unaudited Year ended 6 months ended 6 months ended 31 July 2006 Notes 31 January 2007 31 January 2006 (as restated) (as restated) £000's £000's £000'sFixed Assets Intangible Assets 23,163 3,155 6,940 Tangible Assets 826 589 726 23,989 3,744 7,666 Current Assets Debtors 7,350 4,280 6,064 Cash at bank and in hand 5,772 1,345 4,441 13,122 5,625 10,505 Creditors: amounts falling due within one year 5,083 2,297 2,121 Net current assets 8,039 3,328 8,384 Total assets less current liabilities 32,028 7,072 16,050 Creditors: amounts falling due after one year 235 322 328 Provisions for liabilities and charges 3 0 1,503 Net Assets 31,790 6,750 14,219 Capital & Reserves Share Capital 3,270 2,252 2,573 Share premium 28,412 6,130 11,720 Other Reserve -1,262 -1,262 -762 Capital Reserve on share options 329 183 282 Profit & Loss Account 1,041 -553 406 Total shareholders' funds 31,790 6,750 14,219 Accuma Group PlcInterim Results for the six months ended 31 January 2007Group Cashflow Statement Unaudited Unaudited Year ended 6 months ended 6 months ended 31 July 2006 Notes 31 January 2007 31 January 2006 (as restated) (as restated) £000's £000's £000'sOperating Activities Operating profit 1,074 198 1,507 Loss on sale of fixed assets 0 0 13 Amortisation of intangible fixed assets 481 70 171 Depreciation of tangible fixed assets 148 57 154 (Increase) in -802 -1,681 -3,153 debtors (Decrease)/Increase in -247 299 212 creditors Share option charge (FRS20) 47 87 186 701 -970 -910 Returns on investment & servicing of finance Interest Received 119 35 124 Interest Paid -14 -15 -26 Interest element of hire purchase -9 -1 -11 96 19 87 Taxation -566 0 0 Capital Expenditure Payments to acquire tangible fixed assets -197 -169 -518 Sale of tangible fixed assets 0 0 275 -197 -169 -243 Acquisitions Purchase of subsidiary companies -15,997 -2,495 -4,138 Financing Proceeds of issue of ordinary shares 17,968 3,000 8,162 Share Issue costs -579 -124 -374 Movement in long term borrowing -57 -19 -144 Capital element of finance lease rentals -38 -7 -41 17,294 2,850 7,603 Increase/(decrease) in cash 1,331 -765 2,399 Reconciliation of Net Cash Flow to Movement in Net Funds Increase/(decrease) in cash 1,331 -765 2,399 Net cash inflow from debt and lease financing 95 -92 -108 Loans & Leases acquired with subsidiaries 0 -29 -154 Change in net funds 1,426 -886 2,137 Net funds at start of period 3,917 1,780 1,780 Net funds at end of period 5,343 894 3,917 Accuma Group PlcInterim Results for the six months ended 31 January 2007Notes to the Interim Accounts 1. Basis of Preparation The Group profit and loss accounts, balance sheets and cashflow statements forthe six month periods ended 31 January 2007 and 31 January 2006 have beenprepared on a basis consistent with the accounting policies disclosed in thegroups annual accounts for the year ended 31 July 2006, with the exception ofthe adoption of FRS 20, Share Based Payments, which has been applied from 1August 2006. 2. Earnings Per Share The calculations of earnings per share are calculated by dividing the earningsattributable to ordinary shares by the weighted average number of shares inissue during the period/year. For diluted earnings per share, the weightedaverage number of ordinary shares is adjusted to take account of the dilutiveeffect of share options at that date. The diluted adjusted EPS number uses the same number of shares as above, but isbased on profit before tax, as adjusted by adding back amortisation and chargingtax at the relevant tax rate. Unaudited Unaudited Year ended 6 months ended 6 months ended 31 July 2006 31 January 2007 31 January 2006 (as restated) (as restated) £000's £000's £000's Profit for the period/year 635 152 1,112 No No No For basic earnings per share 31,901,618 22,144,813 23,592,884For diluted earnings per share 32,135,646 23,047,210 23,986,881 3. Status of Financial Information The accounts of the Group for the six months to 31 January 2007 were approved bythe Board on 10 April 2007. The interim financial information contained in thisinterim statement has not been audited and does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985. The financialinformation has been prepared in accordance with applicable accounting standardsand is consistent with those adopted and disclosed for the year ending 31 July2006, except for the adoption of FRS 20 (as noted above). The interim results include the impact of the FRS 20 charge and both comparative2006 results have been restated to reflect the change in accounting policy. Theaccounts for the year ended 31 July 2006, upon which the auditors issued anunqualified opinion have been delivered to the Registrar of Companies. 4. Distribution of the Interim Report Copies of the Interim Report are being sent to shareholders. Further copies ofthe Interim Report and Accounts may be obtained from the Company's RegisteredOffice, City Tower, Piccadilly Plaza, Manchester, M1 4BT. In addition, anelectronic version will be available on the Company's website, www.accumair.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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