Acg Metals Regulatory News (ACG)

18 Oct 2005 07:01

Accuma Group PLC18 October 2005 Press Release 18 October 2005 Accuma Group Plc ("Accuma" or "the Group") Preliminary Results Accuma Group Plc, a leading provider of personal debt advice specialising inIndividual Voluntary Arrangements (IVAs), announces its maiden results for theyear ended 31 July 2005. Highlights • Admission to AIM on 9 March 2005 and placing to raise £4.1m• Turnover increased 191% to £2.85m (2004: £977k)• Gross profit increased 83% to £642k (2004: £349k)• Loss before tax of £473k - better than expectations• Strong balance sheet with net cash of £1.8m• Acquisition of Wilson Phillips and associated placing to raise £3m• Future contracted revenue now stands at £8.8m at the end of September 2005• IVA cases completed in the period increased 232% to 734 (2004: 221)• Strengthened senior management and operational resource• Significant investment in IT to ensure scalability and robustness of systems• Group market share increased significantly - currently 11% Commenting on the results, Charles Howson, Chief Executive of Accuma Group,said:"I am pleased to report Accuma Group's maiden results since listing on AIM inMarch 2005. The Group has made significant progress, both operationally andfinancially, in the period since flotation. Accuma has benefited from investmentin marketing and resources and our increased profile has enabled us to build ourstrategic referral relationships. This will ensure highly efficient clientacquisition and enable us to maintain our competitive advantage. "The current, and indeed widely forecast, macro indicators point to furtherstrong growth for our industry. Given the significant increase in new casevolumes and future contracted revenues, together with investment in bothmanagement and operational resources, I am confident that we have establishedthe momentum for strong earnings growth for the year ahead and beyond." For further information:Accuma Group PlcCharles Howson, Chief Executive Tel: +44 (0) 161 235 6408charles.howson@accumagroup.com www.accumagroup.com Daniel Stewart & Company PlcTom Jenkins/Marc Young Tel: +44 (0) 20 7776 6550tom.jenkins@danielstewart.co.uk Media enquiries:AbchurchChris Lane / Sarah Hollins Tel: +44 (0) 20 7398 7700chris.lane@abchurch-group.com www.abchurch-group.com Chairman's Statement I am delighted to be reporting Accuma's maiden results as an AIM quoted company.The last year has been an exceptionally busy period in our history, a period inwhich the Group listed on AIM, raised new funds to grow our business, andacquired Wilson Phillips whose activities are highly complementary to ours. Wehave achieved significant levels of growth since flotation. The Board took the decision to list on AIM earlier this year to raise Accuma'sprofile and accelerate the Group's expansion. Accuma floated in March 2005raising £4.1 million in an oversubscribed issue to institutional shareholders.The funds raised are enabling Accuma to reach the next stage in its developmentand target selective value-adding acquisitions to complement the strong organicgrowth that we have witnessed so far. We operate in a market which is growing significantly and whose growth shows nosigns of abating in the short to medium term. We intend to take advantage of theopportunity this affords us, and we are accordingly optimistic about theprospects for the current financial year and beyond. I would like to thank my fellow directors and all of our staff for their hardwork during the year. Finally, I would like to extend my thanks to ourshareholders for supporting Accuma. Charles Taylor B Comm. CANon Executive Chairman Chief Executive's Statement Introduction We are delighted to present Accuma Group's maiden set of results since ourflotation on the AIM market. The Group has made significant progress over thepast year and I am pleased to report that, over this period, turnover hasincreased to £2.85 million from £978k in 2004. Moreover, our market share has grown significantly since flotation and continuesto outpace that of the IVA market generally. This has been further enhanced bythe additional 2.2% market share of Wilson Phillips, which we acquired for £3.3million at the end of August 2005. We estimate that Accuma's share of the IVAmarket now stands at 11%. The credibility, increased profile and strong financial position that Accuma'slisting has provided are already reaping benefits in line with our strategy forfuture growth. The Group has as a result been able to broaden its routes tomarket and, in addition to the growth we are achieving organically, we now havethe opportunity, where appropriate, to grow both market share and earningsthrough strategic acquisitions as demonstrated by the acquisition of WilsonPhillips. Our strong performance is attributable to several factors. Firstly, we operatein a market that is growing significantly, with well publicised record levels ofconsumer debt with aggregate secured and unsecured consumer debt having breached£1 trillion in July 2004. One of the key drivers in our sector is the £190billion of this which is unsecured on credit cards, store cards and personalloans. Accuma's principal product, an Individual Voluntary Arrangement (IVA), is ahighly attractive alternative to bankruptcy, both for the debtor and his or hercreditors. For the debtor, it affords the opportunity to regain control of theirfinances, with interest frozen and a proportion of the debt written off, and forcreditors it affords above average recovery rates - all detailed in a legallybinding contract and operated in a highly regulated environment. Our "client first" philosophy of providing best advice, at no cost to thedebtor, based on the debtor's particular circumstances, has allowed the Group togain a strong foothold in this expanding market in a relatively short period oftime. The Group has invested in its IT infrastructure and the development andimplementation of proprietary software, which will provide more robust systemsand ensure future scalability along with further efficiencies in our operatingprocesses. Strategy Our focus is on the provision of personal debt solutions, based on unbiasedadvice appropriate to an individual's circumstances. We operate in a clearlydefined core market and we believe that we have built a reputation for beingamongst the best in our sector and at the same time have achieved strong growthin our market share. The Group intends to continue to increase its share of the IVA market, whilstensuring efficient client acquisition and effective client management. We willcontinue to seek ways of capitalising on our marketing expenditure withoutprejudicing our core activity and in addition will continue to explore sensibleacquisition opportunities within our sector. Financial results These results demonstrate the Group's strong growth from the equivalentfinancial period last year. The Group has achieved a turnover increase of 191%,from £978k in 2004 to £2.85 million in 2005, with gross profit increasing 83% to£642k over the same period. The loss on ordinary activities before taxation of£473k, an increase from £311k in 2004, is primarily due to significantlyincreased marketing expenditure post flotation, the benefits of which will bereflected in 2006. As summarised under "People" below, the Group now has the infrastructure inplace to service the anticipated strong growth in our business. Due to the five year life cycle of an average case, the Group had £5.4 millionof future contracted revenues at the period end, up from £1.3 million at 31 July2004. This strong growth in future contracted revenues is continuing and, as atthe end of September 2005, the figure stood at £8.8 million. Acquisition On 31 August 2005, Accuma acquired a smaller competitor, Wilson Phillips, for amaximum consideration of £3.35 million. In the year ended 31 May 2005, thebusiness had a turnover of £1.13 million on which it achieved a gross profit of65% and a pre-tax profit of £0.23 million. At the time of acquisition, thebusiness was completing approximately 38-40 IVAs per month with 23 staff. Webelieve the acquisition will be immediately earnings enhancing, pre-goodwill andexceptional items, and in addition it increased our market share from 6.2% to8.4%. In order to finance the cost of the acquisition and to provide workingcapital to develop the business, we raised £3 million at 155p per share, througha placing with new and existing shareholders. Wilson Phillips is complementary to Accuma in that it does not compete in routesto market having historically acquired its clients solely through referralrelationships. In line with Accuma's stated strategy, these relationships can beexploited given our more sophisticated infrastructure and financial resource. Weare confident this will increase case volumes whilst lowering average clientacquisition costs throughout the Group. Wilson Phillips is based in Blackburn, Lancashire and it is intended that thebusiness will operate independently of Accuma, save for systems and operationalsupport. The business will be relocated in December 2005 to modern officepremises locally in order to accommodate the anticipated increase in staffnumbers and case volumes. This relocation will also aid more efficient businessflows throughout the various departments. It has a lower fee structure than Accuma due to its lower cost base and as suchis able to handle cases with lower debt levels, which Accuma has historicallyforegone but will now be able to refer to Wilson Phillips thus generating highmargin incremental income. Wilson Phillips had £2.4 million of future contractedrevenues at the date of acquisition. People Our business is underpinned by the quality of our people and we have investedsignificantly in building a highly experienced management team; our recruitmentpolicy has been to select only those personnel with relevant sector experiencewho share with us the vision and commitment to deliver on our core philosophy.The Group has continued to build on the strength of our existing team. During the period since flotation we have recruited two additional licensedinsolvency practitioners to ensure that we have the capacity to accommodate ourfuture growth. In addition we have added to our advisory, research andsupervisory teams and made key appointments in our IT department. Today the group employs 110 people (87 Accuma, 23 Wilson Phillips) and iscurrently handling over 200 new IVA clients per month, with capacity to handleapproximately 350 per month, after further training of recent appointments. Outlook We are successfully building a client referral program through strategicrelationships with other financial intermediaries and we expect to see thebenefits of these relationships in the second half of 2006 through increasedcase volumes and margins. The building of such relationships will enhance ourroutes to market, reducing our reliance on more expensive media campaigns. Thisstrategy should, at the very least, minimise our client acquisition costsalthough over time as our referrals increase, we would expect to see areduction.The economic outlook will provide significant growth opportunities for ourbusiness and we believe that we have the energy, commitment and expertise tocapitalise on these opportunities; we aim to clearly demonstrate ourdifferentiation to our competitors during 2006 and beyond.Your Board is confident that having achieved our objectives to date, we willcontinue to achieve excellent growth and deliver further shareholder value. Thesignificant progress we have achieved would not have been possible without ourpeople and on behalf of the Board I extend my sincere appreciation to them fortheir efforts throughout the year. Finally, I would like to take thisopportunity, on behalf of the Board, to thank our new shareholders for theirsupport both at flotation and at the time of the acquisition of Wilson Phillips.Charles HowsonChief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNTPERIOD ENDED 31 JULY 2005 Note 31 July 31 July 2005 2004 £ £TURNOVER 2,846,201 977,959Cost of sales (2,203,943) (628,306) ------------- -----------GROSS PROFIT 642,258 349,653 Administrative expenses (1,125,464) (650,091) ------------- ----------- OPERATING LOSS (483,206) (300,438) Interest receivable 39,720 947Interest payable and similar charges (29,939) (11,240) ---------- ---------- LOSS ON ORDINARY ACTIVITIES (473,425) (310,731)BEFORE TAXATION Taxation 1 83,300 50,841 -------- -------- LOSS ON ORDINARY ACTIVITIES (390,125) (259,890) ----------- ----------- Loss per share - basic 2 (2.28p) (1.73p) The Group has no recognised gains or losses other than the results of the yearas set out above.All the activities of the Group are classed as continuing. CONSOLIDATED BALANCE SHEET31 JULY 2005 31 July 31 July 2005 2004 £ £ £FIXED ASSETSIntangible assets 113,571 -Tangible assets 111,496 27,633 --------- -------- 225,067 27,633CURRENT ASSETSDebtors 2,111,960 636,724Cash at bank 2,041,518 64,311 ----------- -------- 4,153,478 701,035 CREDITORS : Amounts falling due within one (816,485) (450,384)year ----------- ----------- NET CURRENT ASSETS 3,336,993 250,651 ----------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 3,562,060 278,284 CREDITORS : Amounts falling due after morethan (178,491) (249,292)one year ----------- ----------- NET ASSETS 3,383,569 28,992 =========== ======== CAPITAL AND RESERVESCalled-up equity share capital 2,042,408 1,500,000Share premium account 3,212,795 -Merger reserve (1,262,595) (1,252,094)Profit & Loss (609,039) (218,914) ----------- ----------- SHAREHOLDERS' FUNDS 3,383,569 28,992 =========== ======== CONSOLIDATED CASH FLOW STATEMENTPERIOD ENDED 31 JULY 2005 31 July 31 July 2005 2004 £ £NET CASH OUTFLOW FROM OPERATING ACTIVITIES (1,528,778) (410,777) RETURNS ON INVESTMENTS AND SERVICING OFFINANCEInterest received 39,720 947Interest paid (26,420) (8,296)Interest element of finance lease rental (3,519) (2,944)payments --------- --------- NET CASH INFLOW (OUTFLOW) FROM RETURNS ONINVESTMENTS 9,781 (10,293)AND SERVICING OF FINANCE CAPITAL EXPENDITUREPayments to acquire tangible fixed assets (109,949) (27,012)Proceeds from sale of fixed assets - (109,949) 12,005 ----------- -------- NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (109,949) (15,007) TAXATION - (5,508) ACQUISITIONSAcquisition of Debt Solver Limited (23,895) - ---------- --- CASH OUTFLOW BEFORE FINANCING (1,652,841) (441,585) FINANCINGIssue of ordinary share capital 4,140,243 272,500Issue costs charged to the share premium (495,541) (24,595)accountCapital element of finance lease rental (8,701) (4,722)paymentsRepayment / (Proceeds) of loans (5,953) 250,000 --------- --------- NET CASH INFLOW FROM FINANCING 3,630,048 493,183 ----------- --------- INCREASE IN CASH 1,977,207 51,598 ----------- -------- RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 31 July 31 July 2005 2004 £ £Operating loss (483,206) (300,438)Amortisation 10,324 -Loss on disposal of fixed assets - 1,939Depreciation 33,653 18,849(Increase) in debtors (1,391,936) (492,104)Increase in creditors 302,387 360,977 --------- --------- Net cash outflow from operating activities (1,528,778) (410,777) ============= =========== CONSOLIDATED CASH FLOW STATEMENT (continued)PERIOD ENDED 31 JULY 2005RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 31 July 31 July 2005 2004 £ £Increase in cash in the period 1,977,207 51,598Cash outflow/(inflow) from repayment/(proceeds) ofloans 5,953 (250,000)Cash outflow from decrease in lease financing 8,701 4,722 ------- ------- Change in net debt resulting from cash flows 1,991,861 (193,680) New hire purchase agreement (7,567) (23,584) --------- ---------- Change in net funds 1,984,294 (217,264) Net (debt) funds at 31 July 2004 (204,551) 12,713 ----------- -------- Net funds (debt) at 31 July 2005 1,779,743 (204,551) ----------- ----------- NOTES TO THE FINANCIAL STATEMENTSPERIOD ENDED 31 JULY 2005 1. TAXATION 31 July 31 July 2005 2004 £ £Current Tax UK corporation tax based on the results for the periodat 19% - (3,227)Deferred taxation charge/(credit)- origination and reversal of timing differences (16,528) -- unrelieved tax losses (66,772) (47,614) ---------- ---------- Total tax credit (83,300) (50,841) ========== ========== 2. LOSS PER SHARE The calculation of basic loss per share is based on the loss of £390,125 (2004:loss of £(259,890)) and a weighted average number of ordinary shares in issueduring the period of 17,160,935 (2004 : 15,000,000). The share options in issuewould decrease the loss per share and are therefore anti dilutive. 3. STATUS OF FINANCIAL INFORMATION The financial information set out in this report does not constitute thecompany's statutory accounts for the period ended 31 July 2005, but is derivedfrom those accounts. Statutory accounts for the year ended 31 July 2005 will bedelivered to the Registrar of Companies shortly. The auditors have reported onthe statutory accounts for the period ended 31 July 2005 and their opinion wasunqualified for these financial statements. The annual report and accounts willbe dispatched to shareholders as soon as practicable. 4. APPROVAL OF ACCCOUNTS These accounts were approved by the Board of Accuma on 17 October 2005. This information is provided by RNS The company news service from the London Stock Exchange