26 Nov 2010 07:00
26 November 2010 Sterling Green Group Plc ("Sterling Green" or "the Company") Half-yearly results for the six month period ended 30 September 2010 Highlights * Total revenue increased to £1.32 million (2009: £1.14 million) * Revenue from debt management services increased by 20 per cent to £1.25 million (2009: £1.05 million) * Profit before and after taxation increased to £38,000 (2009: loss of £ 41,000) * Number of debt management clients up to 4,216 (2009: 3,120) * Mortgage revenues decreased but operating profit increased due to cost cutting measures * Positive outlook with expectations of maiden profit for the full year
Michael Edelson, Chairman commented:
"I am very pleased that we have been able to generate a profit in the first half compared with the loss in the first half of the previous year.
"We continue to build the number of active debt management clients which is very encouraging. By focusing on the quality rather than the quantity of leads we hope to maintain the growth we have experienced in the last year.
"I remain hopeful that we will deliver a modest full year maiden profit".
Enquiries:Sterling Green Group plc Tel: 0161 975 5757 Michael Edelson Merchant Securities Limited Tel: 020 7628 2200 Simon Clements/David Worlidge
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the Group's interim results for the six month period ended 30 September 2010.
Results and dividend
The Group generated a profit before and after taxation for the six month period of £38,000 (six months ended 30 September 2009: (loss) £41,000) on revenues of £1,322,000 (2009: £1,139,000). Earnings per share for the six month period were 0.01p (2009: 0.01p loss per share)
The Directors do not recommend the payment of a dividend.
Trading review
Debt management services
Revenues for the six month period were £1,258,000 (2009: £1,052,000) representing an increase of 20 per cent over the corresponding period in the previous year. This improvement was mainly due to an increase in the volume and quality of leads acquired from third parties. The improvement in the quality of the leads has led to a small decline in gross margins from 51 per cent to 47 per cent in the period but we remain confident that the current level of gross margin can be maintained as the Company grows.
Operating profits for the six month period were £133,000 (2009: £55,000) representing an increase of 142 per cent. The Board was able to reduce overheads in the debt management division during the period under review compared with the prior year principally due to savings in accommodation costs following renewal of the lease on the offices in central Manchester..
At 30 September 2010 the Group had 4,216 active debt management clients compared to 3,120 at 30 September 2009 and 3,335 at 31 March 2010, equivalent to an increase of 35 per cent over the last 12 months and 26 per cent in the last six months, respectively.
Re-mortgage services
Revenues for the six month period were £64,000 (2009: £87,000) a reduction of 26 per cent in the period. Operating profits have increased in the period to £ 18,000 (2009: £14,000) as the division was able to significantly reduce its operating costs.
Outlook
The mortgage market remains severely contracted and the Board does not envisage any significant upturn in revenues or profitability in this division for the foreseeable future. However, since this division makes a small positive contribution to the Group's results with minimum operating costs, the Board will continue to trade on the basis that current levels of activity are at the very least maintained.
The growth in new debt management clients since 31 March 2010 and the corresponding increase in revenues and profitability has been very encouraging. Accordingly, the Board believes that the Group is currently well positioned to deliver growth in shareholder value and is hopeful that the Group will be able to report a modest maiden profit for the full year to 31 March 2011.
Michael EdelsonChairman26 November 2010
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2010
Six months e Six months Year nded 30 ended 30 September 20 September ended 31 10 2009 March 2010 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Revenue 1,322 1,139 2,106 Cost of sales (692) (557) (1,128) Gross profit 630 582 978 Administrative expenses (565) (600) (1,143) Profit/(Loss) from operations 65 (18) (165) Finance costs (27) (23) (72) Profit/(Loss) on ordinary activities 38 (41) (237)before tax Income tax charge - - (1) Profit/(Loss) for the period and profit 38 (41) (238)/(loss) attributable to equity holders of the parent Earnings/(Loss) per share 0.01p (0.01p) (0.08p) Basic and diluted
There were no other items of comprehensive income other than the profit/(loss) for the period.
All amounts shown above relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2010
Six months Six months Year ended 30 ended 30 September 20 September ended 31 10 2009 March 2010 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Balance at the beginning of the period 687 925 925 Total comprehensive income for the period Profit/(Loss) for the period 38 (41) (238) Balance at the end of the period 725 884 687
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2010 As at 30 As at As at September 20 10 30 September 31 March 2009 2010 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Non-current assets Goodwill 1,115 1,115 1,115 Property, plant and equipment 89 161 116 Total non-current assets 1,204 1,276 1,231 Current assets Trade and other receivables 226 235 108 Cash and cash equivalents 76 97 28 Total current assets 302 332 136 Total assets 1,506 1,608 1,367 Current liabilities Trade and other payables (340) (364) (361) Current tax liabilities - - (1) Borrowings (24) (86) (39) Total current liabilities (364) (450) (401) Net current liabilities (62) (118) (265) Non-current liabilities Borrowings (417) (274) (279) Total non-current liabilities (417) (274) (279) Total liabilities (781) (724) (680) Net assets 725 884 687 Equity Share capital 304 304 304 Share premium account 1,794 1,794 1,794 Capital reserve 6 6 6 Other reserves 891 891 891 Accumulated losses (2,270) (2,111) (2,308) Total equity 725 884 687
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2010
Six months Six months Year ended 30 ended 30 ended 31 September September March 2010 2009 2010 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Cash flows (used in)/from operating activities Profit/(Loss) before tax 38 (41) (237) Adjustments for: Depreciation of property, plant and 31 49 98equipment Finance costs 27 23 72 Operating cash flows before movement in 96 31 (67)working capital
(Increase)/Decrease in trade and other (118) (93) 34 receivables
(Decrease)/Increase in trade and other (21) 45 42payables Corporation tax paid (1) - - Net cash (used in)/from operating (44) (17) 9activities Cash flow used in investing activities Purchase of property, plant and (4) (1) (5)equipment Net cash used in investing activities (4) (1) (5) Cash flow from/(used in) financing activities Capital element of finance lease (27) (44) (86)payments Proceeds from new loans 150 - - Finance costs (27) (23) (72) Net cash from/(used in) financing 96 (67) (158)activities Net increase/(decrease) in cash and 48 (85) (154)cash equivalents Cash and cash equivalents at the start 28 182 182of the period Cash and cash equivalents at the end of 76 97 28the period
NOTES TO THE HALF-YEARLY REPORT
FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 2010
1. Reporting entity
Sterling Green Group plc (the "Company") is a company incorporated in the United Kingdom under the Companies Act 2006. The interim results of the Company for the six month period ended 30 September 2010 comprise the Company and its subsidiaries (together the "Group").
The annual report and financial statements of the Group for the year ended 31 March 2010 are available upon request from the Company's registered office by writing to the Company Secretary, Sterling Green Group plc, Number 14, The Embankment, Vale Road, Heaton Mersey, Stockport SK4 3GN or can be obtained from the Company's website which is www.sterlinggreen.co.uk.
2. Statement of compliance
These interim results have been prepared on the basis of the recognition and measurement requirements of IFRS anticipated to be in issue as either endorsed by the EU and effective (or available for early adoption) at 31 March 2011.
These interim results should be read in conjunction with the annual report and financial statements of the Group for the year ended 31 March 2010, which were approved for issue by the Board of Directors on 29 September 2010, as it provides an update on previously reported information. The comparative figures for the year ended 31 March 2010 are not the Group's statutory financial statements for the financial year. They are, however, derived from the statutory financial statements for that year which have been delivered to the Registrar of Companies. Those financial statements received an unqualified audit report which did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.
These interim results were approved by the Board on 26 November 2010. The financial information contained therein for the six month period ended 30 September 2010, and similarly the six month period ended 30 September 2009, has neither been audited nor reviewed.
3. Significant accounting policies
The accounting policies used in the presentation of these interim results are consistent with those used in the annual report and financial statements of the Group for the year ended 31 March 2010.
4. Estimates
The preparation of interim results requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these interim results, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements of the Group for the year ended 31 March 2010.
5. Operating segments
The Group's business segments are its debt management division, its re-mortgaging operations and its head office operations. This is the basis on which the Group reports its primary segmental information. In the table below, all revenues are generated by sales to external parties.
Debt Re- Unallocated Total Management mortgages Group items £000 £000 £000 £000 Performance by activity: Revenue: - six months ended 30 1,258 64 - 1,322Sept 2010 - six months ended 30 1,052 87 - 1,139Sept 2009 - year ended 31 March 1,977 129 - 2,1062010 Operating profit/(loss): - six months ended 30 133 18 (86) 65Sept 2010 - six months ended 30 55 14 (87) (18)Sept 2009 - year ended 31 March 10 12 (187) (165)2010 Total assets: - 30 September 2010 1,494 5 7 1,506 - 30 September 2009 1,563 25 20 1,608 - 31 March 2010 1,358 6 3 1,367
The Group operates in a sector where no significant seasonal or cyclical variations in revenues and operating results are experienced during the financial year.
6. Earnings/(Loss) per share
The calculation of earnings/(loss) per share is based on the following:
Earnings/(Loss) Six months Six months Year ended 30 ended 30 ended 31 September September March 2010 2009 2010 Earnings/(loss) for the 38 (41) (238)purpose of basic and diluted earnings/(loss) per share being the net profit/(loss) attributable to equity holders of the parent (£000) Number of shares 303,500,527 303,587,719 303,675,390 Weighted average number of - -ordinary shares for the 12,227,723 purpose of basic earnings/ (loss) per share Effect of dilutive potential ordinary shares - share options Weighted average number of 315,903,113 303,500,527 303,587,719ordinary shares for the purpose of diluted earnings/ (loss) per share Earnings/(Loss) per share (pence) Basic 0.01 (0.01) (0.08) Diluted 0.01 (0.01) (0.08)
The Company's potential ordinary shares, which consist of share options, would not be dilutive in the comparative periods due to the losses incurred.
7. Dividends
No dividend is proposed for the six month period ended 30 September 2010. No dividend was paid in, or proposed for, the year ended 31 March 2010.
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