20 Jul 2011 07:00
20 July 2011 AIM: OPM
1PM PLC
("1pm" or the "Company")
FINAL RESULTS FOR THE YEAR ENDED 31 MAY 2011
1pm plc (AIM: OPM), the AIM listed independent provider of asset finance facilities to the SME sector, announces final results for the year ended 31 May 2011.
Financial Highlights:·; Revenues up 43% to £1.91m (FY10: £1.33m)
·; Profit before tax of £0.20m (FY10: £0.40m loss)
·; Bad Debts and Provisions down 46% to £0.19m (FY10: £0.35m)
·; Lease portfolio up 66% to £10.10m from £6.10m
Operations Highlights:
·; 64% of lease portfolio now under £10,000
·; Number of unique customers up 79%
·; Robust lending and collection criteria
·; Improved relationships with broking partners
·; Reduced exposure to individual bad debts
Regarding outlook, Michael Johnson, Chairman, said:
"The board believes that an increasing amount of good quality business is available to be written, especially as larger banks continue to restrict lending to our customer base. This is evident from the quantity of business the company is processing month on month.
"We have strong relationships with our existing funders and will continue to look for new and alternative funding options. The more resources available to the Company the more it can lend on to customers. The Directors believe that the Company's return to profitability should facilitate the agreement of additional funding lines.
"In summary, the Company is in a great position to take full advantage of the constraints currently placed on the UK banking industry and is confident that, with the right support, it will continue to gain strength."
Contacts:
1pm plc |
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Mike Johnson, Chairman Maria Hampton, Managing Director | 0844 967 0944 0844 967 0944 | |
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WH Ireland (NOMAD) |
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Mike Coe Marc Davies | 0117 945 3470 | |
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Walbrook PR Ltd | 020 7933 8780 | |
Paul McManus/Helen Westaway (Media Enquiries) |
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Paul Cornelius (Investor Enquiries) |
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CHAIRMAN'S STATEMENT
The last few years has seen one of the most challenging trading environments for many years Weak consumer confidence, combined with constrained bank lending has made for an uncertain business climate. However, I am pleased to report that this year your Company has delivered a resilient, consistent and much improved performance.
1pm has returned to an annual profit of £202k (FY2010: £402k loss) and revenue is 43% up on FY2010. The level of new business written during the year was £6.1m (FY2010: £2.4m) and the lease portfolio has risen to £10.1m (FY2010: £6.1m). As a result of the increased portfolio the Company is now able to fund a proportion of its new lending from its own receivables.
Business
The Company lends between £1,000 and £30,000 over an average term of three years. The Company's average lease agreement is £7,500 and around 64% of the lease portfolio consists of lends under £10,000. In recent years the Directors have made a decision to reduce the average lease value as this reduces the Company's exposure to significant, individual bad debts.
The number of unique customers has increased by 79% and the Company hopes to continue this trend by improving its relationships with its lease broking partners and customers, and by continuing to improve its incentives and services available, whilst maximising margins.
All customers must meet our very strict underwriting criteria which is reviewed regularly. Our collection procedures are also continually assessed and I'm pleased to report that since 2007 the Company has collected £1.8m of the bad debts that had previously been written off.
The strength of the business model ensures that we are able to continue our organic growth without over-stretching our resources. The reputation we have formed has proved instrumental in the success of the business. We are delighted with the progress of the business this year and look forward to the future.
Staff
As always the enthusiasm from 1pm staff has been constant and their passion for, and belief in, 1pm is admirable. The Board is grateful for their continued commitment.
Shareholders
Our focus towards shareholders remains fixed on building a financially secure platform, which will enable the business to grow further in the coming years. Tight financial controls are in place and lessons have been learned from the recent economic down turn.
Looking ahead, you can be sure that the Board will continue both to support and challenge the Company, ensuring that the long-term interests of the Company and its shareholders are looked after.
Outlook
The board believes that an increasing amount of good quality business is available to be written, especially as larger banks continue to restrict lending to our customer base. This is evident from the quantity of business the company is processing month on month We have strong relationships with our existing funders and will continue to look for new and alternative funding options. The more resources available to the Company the more it can lend on to customers. The Directors believe that the Company's return to profitability should facilitate the agreement of additional funding lines.
In summary, the Company is in a great position to take full advantage of the constraints currently placed on the UK banking industry and is confident that, with the right support, it will continue to gain strength.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2011
| Note | 2011 | 2010 |
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| £ | £ |
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REVENUE |
| 1,906,262 | 1,331,922 |
Cost of sales | (1,122,283) | (1,184,547) | |
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GROSS PROFIT | 783,979 | 147,375 | |
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Administrative expenses | (555,357) | (516,978) | |
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OPERATING (LOSS) / PROFIT | 2 | 228,622 | (369,603) |
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Finance income | 152 | 303 | |
Finance costs | (26,444) | (33,116) | |
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(LOSS) / PROFIT BEFORE TAX | 202,330 | (402,416) | |
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Income tax expense | 5 | (48,083) | 64,656 |
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(LOSS) / PROFIT AND COMPREHENSIVE INCOME FOR THE YEAR | 154,247 | (337,760) | |
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Attributable to equity holders of the company | 154,247 | (337,760) | |
Profit per share attributable to the equity |
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holders of the company during the year |
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- basic and diluted | 6 | 0.00483p | (0.017678)p |
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All of the activities of the company are classed as continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 MAY 2011
| Notes | 2011 | 2010 |
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| £ | £ |
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| ASSETS |
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NON CURRENT ASSETS |
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Deferred income taxes |
| 111,881 | 159,964 |
Property, plant and equipment |
| 30,253 | 36,478 |
| 142,134 | 196,442 | |
CURRENT ASSETS |
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Trade and other receivables | 7 | 9,289,129 | 6,548,773 |
Cash and cash equivalents | 353 | 305,211 | |
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TOTAL CURRENT ASSETS |
| 9,289,482 | 6,853,984 |
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TOTAL ASSETS | 9,431,616 | 7,050,426 | |
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| EQUITY | |||
Share capital | 10 | 2,236,725 | 2,153,791 |
Share premium account | 10 | 1,567,249 | 1,565,035 |
Retained earnings | 11 | (272,136) | (426,383) |
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TOTAL EQUITY | 3,531,838 | 3,292,443 | |
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LIABILITIES |
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CURRENT LIABILITIES |
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Trade and other payables | 8 | 2,786,056 | 1,917,510 |
Bank overdrafts | 94,248 | 80,324 | |
Interest bearing loans and borrowings |
| 130,000 | 250,000 |
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| 3,010,304 | 2,247,834 |
NON CURRENT LIABILITIES |
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Trade and other payables | 9 | 2,889,474 | 1,510,149 |
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| TOTAL LIABILITIES |
| 5,899,778 | 3,757,983 |
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TOTAL EQUITY AND LIABILITIES | 9,431,616 | 7,050,426 |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2011
Notes | 2011 | 2010 | |
| £ | £ | |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Cash generated from operations |
| (242,227) | (528,845) |
Interest Paid |
| (26,444) | (33,116) |
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Net cash from operating activities |
| (268,671) | (561,961) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of tangible fixed assets |
| (15,411) | (6,059) |
Interest received |
| 152 | 303 |
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Net cash generated from investing activities |
| (15,259) | (5,756) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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New loans in year |
| - | 250,000 |
Loan repayments in year |
| (120,000) | - |
Share Issue |
| 85,148 | 1,042,320 |
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NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
| (318,782) | 724,603 |
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CASH AND CASH EQUIVALENTS AT THE |
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BEGINNING OF THE YEAR |
| 224,887 | (499,716) |
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CASH AND CASH EQUIVALENTS AT THE |
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END OF THE YEAR | 12 | (93,895) | 224,887 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2011
CONSOLIDATED GROUP
| Share | Retained | Share | Total |
| Capital | Earnings | Premium | Equity |
| £ | £ | £ | £ |
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Balance at 1 June 2009 | 1,035,639 | (88,623) | 1,640,867 | 2,587,883 |
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Changes in equity | ||||
Issue of share capital | 1,118,152 | - | (75,832) | 1,042,320 |
Total comprehensive income | - | (337,760) | - | (337,760) |
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Balance at 31 May 2010 | 2,153,791 | (426,383) | 1,565,035 | 3,292,443 |
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Changes in equity |
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Issue of share capital | 82,934 | - | 2,214 | 85,148 |
Total comprehensive income | - | 154,247 | - | 154,247 |
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Balance at 31 May 2011 | 2,236,725 | (272,136) | 1,567,249 | 3,531,838 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 31 MAY 2011
1. ACCOUNTING POLICIES
The financial information set out in this announcement does not constitute the company's statutory accounts.
Statutory accounts for the year ended 31 May 2011 will be delivered to shareholders and to the Registrar of Companies in due course and will be available on the Company's website (www.1pm.co.uk). The report of the auditors on the statutory accounts for the year ended 31 May 2011 was unqualified and did not contain a reference to any matters which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under section 498 (2) or section 498 (3) of the Companies Act 2006.
Basis of preparation
The financial statements have been prepared in accordance with IFRS as adopted by the European Union and with the Companies Act 2006. The company is a UK domiciled public limited company.
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to May each year. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefit from its activities.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Leased assets and turnover recognition
Assets leased to customers on finance leases are recognised in the Statement of Financial Position at the amount of the Company's net investment in the lease. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company's net investment outstanding in respect of the leases.
Funding payables and cost of sales - interest
Finance received from funding providers is classified as payables in the Statement of Financial Position. 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". Due to the relatively short term of the funding creditors the directors are satisfied that this method of apportioning interest is not materially different to the effective interest method.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risk and rewards of ownership to the lesee. All other leases are classed as operating leases.
Assets held as finance leases are recognised as assets at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease.
The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Operating lease rentals are charged to the income statement on a straight-line basis over the term of the lease.
2. OPERATING PROFIT
Operating profit stated after charging:
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| 2011 | 2010 |
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| £ | £ |
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Depreciation of property, plant and equipment |
| 21,636 | 24,232 |
Auditors remuneration (see below) |
| 12,200 | 11,900 |
Staff costs (see note 3) |
| 360,019 | 334,174 |
Operating lease costs: |
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Rent |
| 19,800 | 29,911 |
Auditors' remuneration:
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| 2011 | 2010 |
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| £ | £ |
Audit services |
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Statutory audit |
| 8,750 | 8,500 |
Non audit services |
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Other services pursuant to legislation |
| 3,450 | 3,400 |
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Total |
| 12,200 | 11,900 |
3. STAFF COSTS
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| 2011 | 2010 |
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| £ | £ |
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Wages and salaries |
| 338,866 | 317,786 |
Social security costs |
| 20,103 | 15,338 |
Other pension costs |
| 1,050 | 1,050 |
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| 360,019 | 334,174 |
The average number of staff employed by the company during the financial period amounted to:
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| 2011 | 2010 |
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| No | No |
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Administrative |
| 6 | 6 |
Management |
| 1 | 1 |
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| 7 | 7 |
4. DIRECTORS' REMUNERATION
The directors' aggregate emoluments in respect of qualifying services were:
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| 2011 | 2010 |
Aggregate Emoluments |
| £ | £ |
M Johnson |
| 65,000 | 85,547 |
M Hampton |
| 70,000 | 70,000 |
H Walker |
| 46,143 | 37,240 |
R Channon |
| 15,000 | 17,816 |
R Russell |
| 10,000 | 10,776 |
P O'Connell - resigned 29.05.09 |
| 0 | 3,000 |
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| 206,143 | 224,379 |
Value of company pension contributions to money purchase scheme |
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M Hampton |
| 1,050 | 1,050 |
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| 225,429 | 215,979 |
The number of directors who accrued benefits under company pension scheme was as follows:
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| 2011 | 2010 |
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| No | No |
Money purchase schemes |
| 1 | 1 |
5. INCOME TAX EXPENSE
(a) |
| 2011 | 2010 |
Current tax |
| £ | £ |
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UK corporation tax charge |
| - | - |
Movement in deferred taxation |
| 48,083 | (81,103) |
Under provision in prior years |
| - | 16,447 |
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Current tax |
| 48,083 | (64,656) |
Corporation tax is calculated at 21% (2010: 21%) of the estimated assessable profit for the year.
Factors affecting the tax charge:
The tax assessed for the year is lower (2010 higher) than the standard rate of corporation tax in the UK. The difference is explained below:
(b) |
| 2011 | 2010 |
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| £ | £ |
(Loss) / profit on ordinary activities before tax |
| 202,330 | (402,416) |
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Profit on ordinary activities by rate of tax |
| 42,489 | (84,507) |
Capital allowances for the period in excess of depreciation |
| (144) | 2,363 |
Unused tax losses |
| (42,345) | 82,144 |
Under provision of current tax |
| - | 16,447 |
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Total current tax (note 5(a)) |
| - | 16,447 |
6. EARNINGS 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 year. For diluted earnings per share, the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary shares. There are no dilutive ordinary shares.
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| 2011 | 2010 |
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| £ | £ |
Profit / (loss) attributable to equity shareholders |
| 154,247 | (337,760) |
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Weighted average number of shares |
| 3,195,491,908 | 1,910,595,524 |
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Basic & Diluted Earnings per Share |
| 0.004827p | (0.017678)p |
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7. TRADE AND OTHER RECEIVABLES
2011 | 2010 | ||
£ | £ | ||
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Trade receivables | 8,752,542 | 6,174,025 | |
VAT recoverable | 25,807 | 33,233 | |
Other receivables | 478,936 | 301,255 | |
Prepayments and accrued income | 31,844 | 40,260 | |
Corporation tax | - | - | |
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9,289,129 | 6,548,773 | ||
Trade receivables wholly represent finance lease debtors.
2011 | 2010 | ||
Gross receivables from finance leases |
| £ | £ |
No later than 1 year |
| 4,411,197 | 3,319,001 |
Later than 1 year and no later then 5 years |
| 6,885,757 | 4,382,015 |
Later then 5 years |
| - | - |
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Unearned future finance income on finance lease |
| (2,544,412) | (1,526,991) |
Net investment in finance leases |
| 8,752,542 | 6,174,025 |
The net investment in finance leases may be analysed as follows: |
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No later than 1 year |
| 2,927,584 | 2,392,623 |
Later than 1 year and no later then 5 years |
| 5,824,958 | 3,781,402 |
Later then 5 years |
| - | - |
8,752,542 | 6,174,025 |
The cost of assets acquired for the purpose of letting under finance leases were as follows; 2011: £6,105,899 (2010: £2,484,952).
Included within Trade receivables are the following receivables that are past due but not impaired as they are considered recoverable: less than three months old £67,984 (2010: £67,917), more than three months old £56,545 (2010: £51,801), all amounts are secured on the asset to which they relate. No other assets are past due or impaired.
8. CURRENT LIABILITIES
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| 2011 | 2010 |
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| £ | £ |
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Trade payables |
| 2,669,208 | 1,787,867 |
Other taxation and social securities |
| 7,170 | 5,613 |
Other payables |
| 109,678 | 124,030 |
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| 2,786,056 | 1,917,510 |
Trade payables wholly represent funding creditors, which are secured on the value of finance leases.
The trade payables figure is made up of numerous funding blocks that are repaid by monthly
instalments. The length of the repayment term varies from 33 to 42 months and interest rates from 7.75% to 11%.
The company's banking facilities are secured by a mortgage debenture, dated 7 December 2007 incorporating a fixed and floating charge over all current and future assets of the company.
9. NON CURRENT LIABILITIES
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| 2011 | 2010 |
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| £ | £ |
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Accruals and deferred income |
| 24,000 | 36,300 |
Trade payables |
| 2,865,474 | 1,473,849 |
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| 2,889,474 | -1,510,149 |
Other loans are £130,000 from UK Private Healthcare Ltd, which is repayable in June 2012, and is secured by a debenture over the assets of the company.
Trade creditors are secured as noted above, with the same repayment and interest rates.
Maturity analysis
The following analysis shows the contractual undiscounted cash flows (which differ from the discounted cash flow totals shown in Current and Non current liabilities above).
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| 2011 | 2010 |
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| £ | £ |
Trade payables: |
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On demand or within one year |
| 3,029,901 | 1,996,111 |
More than one year but less than two years |
| 2,012,699 | 1,264,900 |
More than two years but less than five years |
| 1,067,111 | 284,554 |
Total |
| 6,109,711 | 3,545,565 |
10. SHARE CAPITAL AND PREMIUM
Authorised:
The Articles of Association of the company say that there is an unlimited authorised share capital.
Issued:
| No of Shares | Ordinary Shares | Share Premium | Total |
|
| £ | £ | £ |
At 1 June 2010 | 3,158,979,085 | 2,153,791 | 1,565,035 | 3,718,826 |
Movement | 121,639,686 | 82,934 | 2,214 | 85,148 |
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At 31 May 2011 | 3,280,618,771 | 2,236,725 | 1,567,249 | 3,803,974 |
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Allotted and fully paid:
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| No of Shares | Nominal Value | Total |
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| £ | £ |
Ordinary Shares |
| 3,280,618,771 | 0.0006818 | 2,236,725 |
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Issue of shares
During the year the company issued 121,639,686 ordinary shares with a nominal value of £0.0006818 at £0.0007 per share.
The funds raised were used in 1pm (UK) Limited to finance continuing operations.
11. RETAINED EARNINGS
|
| Group | Company |
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| £ | £ |
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At 1 June 2010 |
| (426,383) | - |
Profit for the year |
| 154,247 | - |
Equity dividends |
| - | - |
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| At 31 May 2011 |
| (272,136) | - |
12. CASH AND CASH EQUIVALENTS
|
| 2011 | 2010 |
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| £ | £ |
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|
Cash at bank and in hand |
| 353 | 305,211 |
Bank overdrafts |
| (94,248) | (80,324) |
Cash and cash equivalents |
| (93,895) | 224,887 |
|
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13. TRANSACTIONS WITH DIRECTORS
A director Mr M R Johnson has given personal guarantees to: Svenska Handelsbanken plc of £350,000, Hitachi Capital Limited of £1,000,000, Venture Finance of £500,000, & Kingston Asset Finance Limited to the outstanding debt at the time of the agreement being terminated.
During the year the following directors invoiced the company for services rendered:
R Russell invoiced the company for £42,844
M R Johnson invoiced the company for £66,511
R Channon invoiced the company for £16,283
H Walker invoiced the company for £46,143
At the year end, included within Current liabilities are; £4,038 due to H Walker, £3,703 due to M R Johnson, £31 due to R Channon and £17,638 due to R Russell.
R Russell is a director and 25% shareholder of UK Private Healthcare Ltd, a company which has an outstanding loan balance of £130,000 (2010 £250,000), included within financial liabilities.
R Russell (Director loaned the company £600,000, interest is charged at 11%. The gross amount of £744,350 is repayable in forty eight monthly payments.