TIDMINVO
RNS Number : 3918U
Invocas Group plc
24 June 2009
24 June 2009
INVOCAS GROUP PLC
("Invocas" or the "Group")
PRELIMINARY RESULTS FOR THE 52 WEEK PERIOD TO 31 MARCH 2009
Invocas, one of the UK's leading providers of personal and corporate debt
solutions, today announces its preliminary results for the 52 week period to 31
March 2009.
HIGHLIGHTS
+--------------------------------------------------------+-----------+----------+
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+--------------------------------------------------------+-----------+----------+
| Revenue | 10,049 | 9,884 |
+--------------------------------------------------------+-----------+----------+
| Operating profit | 2,001 | 3,015 |
+--------------------------------------------------------+-----------+----------+
| Profit before taxation | 2,102 | 3,176 |
+--------------------------------------------------------+-----------+----------+
| Earnings per share | 5.22p | 7.85p |
+--------------------------------------------------------+-----------+----------+
| Final dividend per share | - | 2.50p |
+--------------------------------------------------------+-----------+----------+
| | | |
+--------------------------------------------------------+-----------+----------+
Financial
* Revenue increased by 2% to GBP10.05m (2008: GBP9.88m)
* Operating profit decreased to GBP2.00m (2008: GBP3.01m)
* EPS decreased to 5.22p (2008: 7.85p)
* Strong balance sheet with net cash of GBP1.61m and access to working capital
facilities of GBP0.75m
* Increase in shareholders' equity of 6% to GBP14.26m (2008 GBP13.41m)
Operational
* Improving trends in the level of trading:
* Value of new work won increased by 41% in the period and by 65% in the second
half
* Number of trust deeds signed in the period up by 18% to 921 (2008: 780) and in
the second half by 37% to 493 (2008: 359)
* Number of Individual Voluntary Arrangements (IVAs) signed in the period 222
(2008: 11)
* Number of debt management plans (DMPs) signed in period 434 (2008: 92)
* Number of new corporate cases up 23% to 54 (2008: 44) and in the second half by
75% to 35 (2008: 20)
* Investments made in marketing, sales, process technology and product line
extensions
* Increased self reliance on new business generation with 78% (2008: 70%) of
revenue opportunities through sources other than traditional work providers
* Further progress on the development of the broker service channel with 7,680
network registered brokers November 2008: 3,500)
* Broadening of product base with 25% of revenue coming from services outside the
Scottish personal insolvency market (2008: 10%)
Howard Bell, Chairman, said:
"Whilst it has been a challenging year for Invocas, the Group has re-established
its lead generation sources and retains a strong balance sheet. The business has
a strong foundation and, with our new management team in place, there is
significant scope for improving the operational efficiency of the Group.
The business climate for both personal and corporate insolvency is expected to
continue to be beneficial in the short to medium term. With our sales
initiatives in place, particularly in broker services, our new computer systems
and our newly appointed executive team, I am confident about the prospects for
the business."
For further information:
+----------------------------------------+------------------------------------------+
| Invocas Group plc | Tel: +44(0)131 222 |
| Howard Bell, Chairman | 2460 |
| David Macmillan, CEO | |
| | |
+----------------------------------------+------------------------------------------+
| Kreab Gavin Anderson | Tel: +44(0)20 7554 |
| (Financial PR Adviser) | 1400 |
| James Benjamin | Email: |
| Michael Turner | invocas@kreabgavinanderson.com |
| | |
+----------------------------------------+------------------------------------------+
| Charles Stanley Securities | Tel: +44 (0)20 7149 |
| (Nominated Adviser) | 6000 |
| Philip Davies / Carl Holmes | |
+----------------------------------------+------------------------------------------+
Website: www.invocas.com
Notes to editors
Invocas is one of the UK's leading providers of personal and corporate debt
solutions. Its Personal Insolvency business is firmly established as a leading
provider of Protected Trust Deeds (the Scottish equivalent of IVAs). Invocas'
corporate insolvency business enjoys an excellent reputation in the marketplace.
Invocas applies stringent minimum case acceptance criteria to Trust Deeds and
IVAs. It will only accept a case if it is likely to progress smoothly to
completion and result in a successful outcome which balances the interests of
both the indebted individual and their creditors.
INVOCAS GROUP PLC
Preliminary results for the financial year to 31 March 2009
CHAIRMAN'S STATEMENT
Whilst 2008/09 has been a challenging year for Invocas, the Group has
re-established its lead generation sources and retains a strong balance sheet.
The business has a strong foundation and, with our new management team in place,
there is significant scope for improving the operational efficiency of the
Group.
Revenue for the year at GBP10.05m (2008: GBP9.88m) was marginally ahead of 2008
but the profit before tax was GBP2.10m (2008: GBP3.18m), reflecting an increased
marketing spend and a reduction in gross margin on post 2007 Trust Deed cases.
Strategy
A key part of our strategy during the year has been to continue to build self
reliant lead sources and I am pleased to report that 78% (2008: 70%) of the
Group's revenue opportunities now come through sources other than the
traditional work providers which has required a complete refocus of our sales
strategy. Our direct sales cost in the current year has amounted to GBP2.01m
(2008: GBP0.96m). This has included not only the establishment of our new broker
services sales team (GBP0.23m) but also a number of new sales initiatives. While
the speed at which some of these initiatives have produced tangible results has
been slower than anticipated, our new business from all sources in the second
half of the year had increased by 65% over the same period in 2008.
A further key element to our strategy during the year has been to substantially
increase our penetration into the personal insolvency market in England. Whilst
the new business generated was below our expectations, the new work in respect
of IVAs and bankruptcy amounted to GBP0.71m for the year against GBP0.15m in the
start up period in 2008. The DMP division has now started to produce tangible
results producing an income for the month of April 2009 of GBP30,000.
The most important of our new sales initiatives was the establishment of
Newtomorrow Broker Services. Under the leadership of Brian Ferguson, Director of
Sales and Marketing, and his newly recruited team, approaches have now been made
to a number of the major UK intermediary networks. Again progress has been
slower than anticipated but in recent months contracts have been signed with
some of the biggest network providers and it is anticipated that new work from
this source of business will become more significant.
Following the protocol agreement with creditors and their agents in 2007/08, the
fees generated from both Trust Deed and IVA work have reduced. Whereas this has
had a beneficial effect on the market place in driving out high volume, low
contribution cases it has also had an impact on our margins. This challenge is
being met in part by significant investment being made in workflow software and
process automation which will reduce the labour intensity of the work
undertaken. Our new "debtflow" system has already been implemented in a number
of the key parts of our operation and will become fully operational during
2009/10.
People
The financial results for the year, although at the lower-end of market
expectations, are the result of the hard work and professionalism of the entire
Invocas team. I would like to extend the thanks of the Board to them all for
their skill, enthusiasm and commitment.
We were extremely fortunate some 18 months ago to be able to appoint David
Macmillan as a non-executive director. David, who has extensive sales and
marketing experience, was previously UK Retail Director at Standard Life plc and
was an obvious successor to fill the role when Stephen Lightley stepped aside as
Chief Executive in May. David's experience and enthusiasm will be of great
benefit to the Group and provide all of the necessary skills which are required
in the current challenging environment.
We were pleased to welcome Robbie Drummond as our new Finance Director in
January 2009. He brings with him a wealth of experience in operational financial
management following his recent senior position as Head of Finance for Business
and Payment Services at HBoS plc.
Dividend
The Directors have proposed that no dividend will be payable to shareholders
(2008: 2.5p per share) as the focus will be on investment to restructure and
reposition the business to create value for shareholders.
Outlook
The business climate for both personal and corporate insolvency is expected to
continue to be beneficial in the short to medium term.
With our sales initiatives in place, particularly in broker services, our new
computer systems and our newly appointed executive team, I am confident about
the prospects for the business.
Mr H J Bell
Non-executive Chairman
INVOCAS GROUP PLC
Preliminary results for the financial year to 31 March 2009
OPERATING REVIEW
Having only been in place for a short period of time this review sets out the
achievements and challenges experienced by the previous executive team and also
briefly outlines the key areas of focus and potential value creation for the
Group going forward.
Through 2007 and 2008, the executive team expanded the product range, acquired
an English portfolio, entered new markets and launched a direct marketing
subsidiary, all with the express aim of significantly increasing the
opportunities to capture new work in an economy exhibiting early but clear signs
of imminent distress.
From a sales and marketing perspective, this translated into a clear
objective of rapidly increasing sales across new product lines (IVAs and DMPs)
particularly in England, whilst protecting market share within the core
Protected Trust Deed (PTD) market in Scotland.
From an operational point of view, the strategy introduced new challenges to the
executive team, not least of all the management of unfamiliar channels to market
including direct to consumer advertising, call centre and advice operations, new
product lines and technical procedures, and increased recruitment and training
requirements.
Business performance
New Work
The overall objective for the period of increasing new work volumes was
achieved. The level of total new appointments grew by 56% year on year to 1,818
cases and the value of new business achieved grew by 41% year on year.
The goal of protecting market share in Scotland was also met on the back of an
18% increase in new Trust Deeds signed in the year, giving Invocas a market
share of 10.6% (11.9% in final three months of the period). The IVA and DMP
lines also grew significantly: new DMP cases signed grew to 434 (2008: 92) and
222 new IVA cases were signed (2008: 11).
Volumes, however, were below internal expectations because the market for new
leads proved to be more competitive and conversion times longer than
anticipated. The cost of acquiring these new cases was also higher than expected
and this impacted on the amount of working capital which had to be invested in
the pursuit of new business.
The level of new work won in sequestrations and corporate insolvency was in line
with internal expectations and again made an important contribution to revenue
in the year. New corporate cases won increased by 23% in the period to 54 and
by 75% in the second half of the year compared to the same period last year
Sales and marketing
The Group has traditionally secured business from a range of debt adviser
businesses so the decision to expand into other B2B and B2C channels resulted in
a need to test a range of sales and marketing techniques to identify the most
effective and profitable methods.
The main driver of volume throughout the year was TV advertising in Scotland.
The executive team decided to focus the available marketing budget solely in the
Scottish market under the Newtomorrow brand. This strategy secured additional
PTD and DMP sales as well as providing valuable lessons for future marketing
activities.
Development work also focused on creating a broker services channel for
Independent Financial Advisers (IFAs) and mortgage brokers throughout the UK.
Good progress was made in Q4 with the signing of a number of key distribution
partners (Pink Home Loans, Mortgageshield, The Mortgage Alliance, Tenet Group)
taking our total access to registered business writers to 7,680 across the UK
(November 2008: 3,500). As intermediaries continue to adapt to the new business
process we anticipate further growth through this channel.
Operations
The Group achieved a significant increase in volume alongside the challenges of
embedding new people, products, channels and processes across multiple sites. An
investment of GBP0.61m was made in IT to automate end-to-end processing across
all lines of business. These new processes are now coming online and will enable
operational efficiencies to be exploited in the coming year.
Regulatory changes
Scotland
Bankruptcy and Diligence (Scotland) Act 2007 (BAD Act)
The headline number of sequestrations increased to 14,600 in the year to 31
March 2009 following the introduction of the Low Income, Low Asset (LILA) route
into Bankruptcy as part of the BAD Act; an increase of 134% from the previous
year. However, LILAs accounted for 9,417 of the total cases, being 65% of the
total. Individuals accessing bankruptcy through the LILA route are not part of
Invocas' target market and the size of our target market has remained relatively
stable.
The change to the residency requirement for Insolvency Practitioners which was
introduced by the BAD Act on 1 April 2008 has had no impact on the market. As we
had envisaged, the differences in Scottish Law and practice proved to be a
significant barrier to new entrants.
Agency Scheme
The Accountant in Bankruptcy completed her procurement exercise during the year
and on 1 April 2009 appointed a panel of six firms to handle all future agency
cases in Scotland. Invocas was successful in two out of the seven geographical
areas and, as a result, expects to handle in the region of 240 new cases in the
year to 31 March 2010, an increase of 70% over the level of new cases handled in
the year to 31 March 2009.
Future changes in Scotland
Debt Arrangement Scheme (DAS)
Changes will be made to DAS such that from 1 July 2009 creditors will be obliged
to freeze interest and charges on debts contained within a DAS arrangement. This
change may increase the attractiveness of DAS marginally by shortening debtors'
repayment periods. However, DAS still requires debts to be repaid in full and as
such is not a competitor product to trust deeds or sequestration.
Bankruptcy (Scotland) Bill 2009
The Accountant in Bankruptcy's Business Plan refers to her intention to
introduce another Bankruptcy Bill in 2009. This is planned to focus on changes
to better protect the family home in the event of insolvency and to introduce a
form of trust deed for certain debtors who do not currently meet the criteria to
enter into a trust deed administered by a private sector trustee.
Details of this new and supplementary form of trust deed have not been released
into the public domain by the Accountant. However, we understand that the
probable entry criteria will limit the potential audience to those debtors who
would not normally form part of our target market. Any changes which are
proposed will require full consultation and primary legislation. It therefore
remains to be seen if a Bill will ultimately be introduced and, if so, what
actual changes, if any, will be proposed.
The Callman Commission
The Callman Commission published its report on the devolution process on 15 June
2009. Among the report's recommendations was that all matters relating to
corporate insolvency should be re-reserved to Westminster as quickly as
possible. This recommendation was made on the basis that there was a need to
remove confusion and harmonise certain detailed aspects of existing legislation
and practice between England and Scotland, thereby creating consistency between
the two jurisdictions for the benefit of all.
England and Wales
Student Loans
In the Apprenticeships, Skills and Learning Bill the Government proposes to make
amendments in respect of the treatment of Student Loans in personal insolvency.
The proposals are for loans under an IVA to be treated in a similar way to the
current treatment of loans under Bankruptcy legislation. If passed, the
liability for a student loan will not be a debt for the purposes of the IVA and
the debtor would remain liable to repay the loan in full despite the approval of
the IVA. IVAs approved before the amendments come into force will not be
affected.
Debt Relief Orders
On 6 April 2009 Debt Relief Orders (DRO) came into force. DROs are designed for
people with debts of a maximum of GBP15,000 who have gross assets of not more
than GBP300 and who have disposable income of less than GBP50 per month. In view
of the gross asset level, homeowners are unlikely to qualify for a DRO.
Applications can only be made through an approved intermediary and are
considered by the Official Receiver (OR), not the Court. A non-refundable fee of
GBP90 is payable. The granting of the DRO creates a moratorium for the debtor
and creditors are prevented from taking recovery action. At the end of
moratorium period (usually 12 months) the debts are discharged. Restrictions on
the debtor during the moratorium period reflect those in bankruptcy and include
the taking of credit in excess of GBP500, disclosure of status in business and
requirement to disclose after acquired assets. Similarly, a DRO will not release
the debtor from certain liabilities such as student loans, fines and matrimonial
orders.
Financials
Revenue grew by 2% to GBP10.05m in the period. However, the cost base
increased by 17% to GBP8.05m as investment was required in sales and marketing,
call handling and customer services for new product lines. The costs of winning
cases were higher and conversions slower than expected, resulting in a lower
operating profit of GBP2.00m (2008: GBP3.01m). The cash outflow from operations
was GBP0.67m (2008: inflow of GBP2.01m).
Looking forward
Although I have just recently been appointed as Chief Executive and find myself
in the early stages of reviewing the business and market opportunities, it is
already clear that the activities of the past year have provided the Group with
a broader range of products and channels on which to build future success. This
has provided the new executive team with a strong base upon which to proceed
with a focused development agenda.
The Group's immediate priorities are to grow the business organically
by consolidating our sales and marketing activities around valuable customers,
products and channels and to increase the overall efficiency of our operations.
In addition, we will make more of our core capabilities in the areas of
solutions advice, insolvency, and corporate recovery.
The underlying business remains strong and the application of disciplined
management can now deliver improved shareholder value.
Mr D R Macmillan
Chief Executive Officer
INVOCAS GROUP PLC
Preliminary results for the financial year to 31 March 2009
FINANCIAL REVIEW
Revenue
Revenue for the period increased by 2% to GBP10.05m (2008: GBP9.88m). While the
core activity of the business in the period was the provision of personal
insolvency services in Scotland, the proportion of revenue generated from other
service lines increased from 15% to 25% broadening the revenue base of the
business.
Around 75% (2008: 85%) of total revenue was generated from Trust Deeds, IVAs 7%
(2008: 1%), Corporate and Sequestrations 16% (2008: 14%) and Debt Management 2%
(2008: nil%).
Case numbers won in the period continued to increase on 2008, but growth was
constrained by lower average fees per case in personal insolvency as a result of
tighter fee structures agreed with creditors.
Operating Profit
Gross profit for the period decreased to GBP5.39m (2008: GBP6.36m), a percentage
margin decrease of 10% to 54% (2008: 64%). This was the result of an increase in
direct sales costs of 109% to GBP2.01m (2008: GBP0.96m) and creditor pressure on
personal insolvency fees.
Administration expenses for the period increased by 8% to GBP2.99m (2008:
GBP2.76m), reflecting the investment in property and other overhead costs in
setting up the IVA and debt management business in England.
As a consequence profit from operations decreased to GBP2.00m (2008: GBP3.01m)
and profit before taxation reduced to GBP2.10m (2008: GBP3.18m).
Earnings per share
The basic earnings per share for the period were 5.22p (2008: 7.85p).
Bank
Balances at bank amounted to GBP1.61m (2008: GBP4.26m). In addition the Group
has bank facilities of GBP0.75m available for working capital requirements
renewable 30 June 2010.
Cash flow
The cash outflow from operations was GBP0.67m (2008: cash inflow GBP2.01m). This
reflected lower operating profits and increased investment in working capital of
GBP2.88m (2008: GBP1.22m).
The net decrease in cash for the period was GBP2.66m (2008: increase GBP0.86m).
This included tax payments of GBP0.77m (2008: GBP1.10m), investing activities of
GBP0.46m (2008: GBP0.05m) principally on software development and a dividend
payment in respect of the prior year of GBP0.71m (2008: GBPnil).
Balance Sheet
The net assets of the Group as at 31 March 2009 were GBP15.98m (2008:
GBP15.26m). Trade and other receivables, including amounts recoverable on
contracts, increased to GBP8.89m (2008: GBP6.33m) reflecting an increase in
business in the second half of the year and the impact of a one off change in
billing for Trust Deeds from every six months to annually from 1 April 2008.
Intangible assets of GBP4.86m (2008: GBP4.18m) represented goodwill on
acquisitions GBP4.23m (2008: GBP4.13m) and other intangibles GBP0.63m (2008:
GBP0.05m) which included GBP0.61m of software development costs capitalised in
the period in respect of debtflow.
As at 31 March shareholders funds stood at GBP14.26m (2008: GBP13.41m), of which
GBP5.46m (2008: GBP4.53m) were retained earnings.
Mr R L Drummond
Finance Director and Company Secretary
INVOCAS GROUP PLC
GROUP INCOME STATEMENT for the year ended 31 March 2009
+------------------------------------------------+-------+---------------+------+---------------+
| | Notes | For the | For the year |
| | | year | ended |
| | | ended | 31 March 2008 |
| | | 31 March | GBP000 |
| | | 2009 | |
| | | GBP000 | |
+------------------------------------------------+-------+---------------+----------------------+
| Revenue | 2, 3 | 10,049 | 9,884 |
+------------------------------------------------+-------+---------------+----------------------+
| Direct costs | (4,661) | (3,529) |
+--------------------------------------------------------+---------------+----------------------+
| | ------------- | ------------- |
+--------------------------------------------------------+---------------+----------------------+
| Gross profit | 5,388 | 6,355 |
+--------------------------------------------------------+---------------+----------------------+
| Marketing expenses | (330) | (225) |
+--------------------------------------------------------+---------------+----------------------+
| Administrative expenses | (2,986) | (2,764) |
+--------------------------------------------------------+---------------+----------------------+
| Share-based payment | (71) | (104) |
+--------------------------------------------------------+---------------+----------------------+
| Payment in lieu of notice and related costs | - | (247) |
+--------------------------------------------------------+---------------+----------------------+
| | | ------------- | ------------- |
+------------------------------------------------+-------+---------------+----------------------+
| Profit from operations | | 2,001 | 3,015 |
+------------------------------------------------+-------+---------------+----------------------+
| Investment income | | 101 | 161 |
+------------------------------------------------+-------+----------------------+---------------+
| | ------------- | ------------- |
+--------------------------------------------------------+----------------------+---------------+
| Profit before taxation | 2,102 | 3,176 |
+--------------------------------------------------------+----------------------+---------------+
| Income tax expense | 4 | (611) | (933) |
+------------------------------------------------+-------+---------------+----------------------+
| | | | |
+------------------------------------------------+-------+---------------+----------------------+
| | ------------- | ------------- |
+--------------------------------------------------------+---------------+----------------------+
| Profit for the year attributable to the equity | 1,491 | 2,243 |
| holders of | | |
| the parent company | | |
+--------------------------------------------------------+---------------+----------------------+
| | ========= | ========= |
+--------------------------------------------------------+---------------+----------------------+
| Basic earnings per share | 5 | 5.22p | 7.85p |
+------------------------------------------------+-------+---------------+----------------------+
| Diluted earnings per share | 5 | 5.02p | 7.67p |
+------------------------------------------------+-------+---------------+----------------------+
| | | |
+------------------------------------------------+-------+---------------+------+---------------+
INVOCAS GROUP PLC
GROUP BALANCE SHEET as at 31 March 2009
+------------------------------------------------+--------+----------------+---------------+
| | Notes | 2009 | 2008 |
| | | GBP000 | GBP000 |
+------------------------------------------------+--------+----------------+---------------+
| Assets | | | |
+------------------------------------------------+--------+----------------+---------------+
| Non-current assets | | | |
+------------------------------------------------+--------+----------------+---------------+
| Property, plant and equipment | | 298 | 362 |
+------------------------------------------------+--------+----------------+---------------+
| Intangible assets | | 4,861 | 4,180 |
+------------------------------------------------+--------+----------------+---------------+
| Deferred tax assets | | 25 | 51 |
+------------------------------------------------+--------+----------------+---------------+
| | ------------- | ------------- |
+---------------------------------------------------------+----------------+---------------+
| Total non-current assets | | 5,184 | 4,593 |
+------------------------------------------------+--------+----------------+---------------+
| | | ========= | ========= |
+------------------------------------------------+--------+----------------+---------------+
| Current assets | | | |
+------------------------------------------------+--------+----------------+---------------+
| Inventories | | 295 | 75 |
+------------------------------------------------+--------+----------------+---------------+
| Trade and other receivables | | 8,891 | 6,329 |
+------------------------------------------------+--------+----------------+---------------+
| Cash and cash equivalents | | 1,605 | 4,265 |
+------------------------------------------------+--------+----------------+---------------+
| | ------------- | ------------- |
+---------------------------------------------------------+----------------+---------------+
| Total current assets | 10,791 | 10,669 |
+---------------------------------------------------------+----------------+---------------+
| | ------------- | ------------- |
+---------------------------------------------------------+----------------+---------------+
| Total assets | 15,975 | 15,262 |
+---------------------------------------------------------+----------------+---------------+
| | ========= | ========= |
+---------------------------------------------------------+----------------+---------------+
| | | |
+---------------------------------------------------------+----------------+---------------+
| Equity and liabilities | | |
+---------------------------------------------------------+----------------+---------------+
| Equity attributable to equity holders | | |
| of Parent Company | | |
+---------------------------------------------------------+----------------+---------------+
| Share capital | 7 | 71 | 71 |
+------------------------------------------------+--------+----------------+---------------+
| Share premium | | 8,642 | 8,642 |
+------------------------------------------------+--------+----------------+---------------+
| Share-based payment reserve | | 83 | 164 |
+------------------------------------------------+--------+----------------+---------------+
| Retained earnings | | 5,460 | 4,531 |
+------------------------------------------------+--------+----------------+---------------+
| | ------------- | ------------- |
+---------------------------------------------------------+----------------+---------------+
| Total equity | 14,256 | 13,408 |
+---------------------------------------------------------+----------------+---------------+
| | ------------- | ------------- |
+---------------------------------------------------------+----------------+---------------+
| | | |
+---------------------------------------------------------+----------------+---------------+
| Non-current liabilities | | | |
+------------------------------------------------+--------+----------------+---------------+
| Deferred tax liabilities | | 2 | 8 |
+------------------------------------------------+--------+----------------+---------------+
| Finance lease | | 48 | - |
+------------------------------------------------+--------+----------------+---------------+
| | | ------------- | ------------- |
+------------------------------------------------+--------+----------------+---------------+
| Total non-current liabilities | | 50 | 8 |
+------------------------------------------------+--------+----------------+---------------+
| | | | |
+------------------------------------------------+--------+----------------+---------------+
| Current liabilities | | | |
+------------------------------------------------+--------+----------------+---------------+
| Trade and other payables | | 1,375 | 1,424 |
+------------------------------------------------+--------+----------------+---------------+
| Finance lease | | 48 | - |
+------------------------------------------------+--------+----------------+---------------+
| Current tax payable | | 246 | 422 |
+------------------------------------------------+--------+----------------+---------------+
| | ------------- | ------------- |
+---------------------------------------------------------+----------------+---------------+
| Total current liabilities | 1,669 | 1,846 |
+---------------------------------------------------------+----------------+---------------+
| | ------------- | ------------- |
+---------------------------------------------------------+----------------+---------------+
| Total liabilities | 1,719 | 1,854 |
+---------------------------------------------------------+----------------+---------------+
| | ------------- | ------------- |
+---------------------------------------------------------+----------------+---------------+
| Total equity and liabilities | 15,975 | 15,262 |
+---------------------------------------------------------+----------------+---------------+
| | ========= | ========= |
+------------------------------------------------+--------+----------------+---------------+
INVOCAS GROUP PLC
GROUP STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2009
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| | Share | Share | Share | Retained | Total |
| | Capital | Premium | Based | Earnings | |
| | | Account | Payment | | |
| | | | Reserve | | |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Balance at 31 March 2007 | 71 | 8,642 | 60 | 2,288 | 11,061 |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Profit for the period | - | - | - | 2,243 | 2,243 |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Share-based payment | - | - | 104 | - | 104 |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Balance at 31 March 2008 | 71 | 8,642 | 164 | 4,531 | 13,408 |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Dividend paid | - | - | - | (714) | (714) |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Profit for the year | - | - | - | 1,491 | 1,491 |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Share-based payment | - | - | 71 | - | 71 |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Transfer in respect of | - | - | (152) | 152 | - |
| expired options | | | | | |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| Balance at 31 March 2009 | 71 | 8,642 | 83 | 5,460 | 14,256 |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
| | ========= | ========= | ========= | ========= | ========= |
+----------------------------+---------------+---------------+---------------+---------------+---------------+
INVOCAS GROUP PLC
GROUP CASH FLOW STATEMENT for the year ended 31 March 2009
+---------------------------------------------------------------+------------+
| | |
+---------------------------------------------------------------+------------+
| 2009 | 2008 |
+---------------------------------------------------------------+------------+
| GBP'000 | GBP'000 |
+---------------------------------------------------------------+------------+
+----------------------------------+-----------------------------+---------------------+
| Cash flow from operating | | |
| activities | | |
+----------------------------------+-----------------------------+---------------------+
| Profit before tax | 2,102 | 3,176 |
+----------------------------------+-----------------------------+---------------------+
| Adjustments for: | | |
+----------------------------------+-----------------------------+---------------------+
| Depreciation of property, plant | 118 | 97 |
| and equipment | | |
+----------------------------------+-----------------------------+---------------------+
| Amortisation of intangibles | 22 | 11 |
+----------------------------------+-----------------------------+---------------------+
| Share-based payment charges | 71 | 104 |
+----------------------------------+-----------------------------+---------------------+
| Interest received | (101) | (161) |
+----------------------------------+-----------------------------+---------------------+
| | ------------- | ------------- |
+----------------------------------+-----------------------------+---------------------+
| Operating cash flow before | 2,212 | 3,227 |
| movement in working capital | | |
+----------------------------------+-----------------------------+---------------------+
| | | |
+----------------------------------+-----------------------------+---------------------+
| Increase in inventories | (220) | ( 7) |
+----------------------------------+-----------------------------+---------------------+
| Increase in trade and other | (2,539) | ( 1,087) |
| receivables | | |
+----------------------------------+-----------------------------+---------------------+
| Decrease in trade and other | (123) | ( 121) |
| payables | | |
+----------------------------------+-----------------------------+---------------------+
| | ------------- | ------------- |
+----------------------------------+-----------------------------+---------------------+
| Movement in working capital | (2,882) | (1,215) |
+----------------------------------+-----------------------------+---------------------+
| | ------------- | ------------- |
+----------------------------------+-----------------------------+---------------------+
| | | |
+----------------------------------+-----------------------------+---------------------+
| Cash (used in)/generate from | (670) | 2,012 |
| operations | | |
+----------------------------------+-----------------------------+---------------------+
| Income taxes paid | (767) | (1,104) |
+----------------------------------+-----------------------------+---------------------+
| | ------------- | ------------- |
+----------------------------------+-----------------------------+---------------------+
| Net cash (used in)/generated | (1,437) | 908 |
| from operating activities | | |
+----------------------------------+-----------------------------+---------------------+
| | | |
+----------------------------------+-----------------------------+---------------------+
| Investing activities | | |
+----------------------------------+-----------------------------+---------------------+
| Purchase of property plant and | (55) | (171) |
| equipment | | |
+----------------------------------+-----------------------------+---------------------+
| Purchase of intangibles | (463) | (38) |
+----------------------------------+-----------------------------+---------------------+
| Purchase of shares in subsidiary | (44) | - |
+----------------------------------+-----------------------------+---------------------+
| | | |
+----------------------------------+-----------------------------+---------------------+
| Interest received | 101 | 161 |
+----------------------------------+-----------------------------+---------------------+
| | ------------- | ------------- |
+----------------------------------+-----------------------------+---------------------+
| Net cash used in investing | (461) | (48) |
| activities | | |
+----------------------------------+-----------------------------+---------------------+
| | | |
+----------------------------------+-----------------------------+---------------------+
| Financing activities | | |
+----------------------------------+-----------------------------+---------------------+
| Dividends paid | (714) | - |
+----------------------------------+-----------------------------+---------------------+
| Finance Leases | (48) | - |
+----------------------------------+-----------------------------+---------------------+
| | ------------- | ------------- |
+----------------------------------+-----------------------------+---------------------+
| | | |
+----------------------------------+-----------------------------+---------------------+
| Net cash used in financing | (762) | - |
| activities | | |
| | | |
+----------------------------------+-----------------------------+---------------------+
| Net (decrease)/increase in cash | (2,660) | 860 |
| and cash equivalent | | |
| | | |
+----------------------------------+-----------------------------+---------------------+
| Cash and cash equivalent at | 4,265 | 3,405 |
| beginning of period | | |
+----------------------------------+-----------------------------+---------------------+
| | ------------- | ------------- |
+----------------------------------+-----------------------------+---------------------+
| Cash and cash equivalents at end | 1,605 | 4,265 |
| of period | | |
+----------------------------------+-----------------------------+---------------------+
| | ___________________ | ___________________ |
+----------------------------------+-----------------------------+---------------------+
INVOCAS GROUP PLC
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The financial statements of the Group and Company have been prepared in
accordance with International Financial Reporting Standards as endorsed by the
EU (IFRS), IFRIC interpretations and in accordance with those parts of the
Companies Act 1985 applicable to companies reporting under IFRS.
Invocas Group plc is incorporated and domiciled in the United Kingdom.
The financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are set out in the financial statements.
Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and enterprises controlled by the Company (its subsidiaries) made up
to 31 March each year. The excess of cost of acquisition over the fair values of
the Group's share of identifiable net assets acquired is recognised as goodwill.
Any deficiency of the cost of acquisition below the fair value of identifiable
net assets acquired (i.e. discount on acquisition) is recognised directly in the
income statement.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially measured at fair
value at acquisition date irrespective of the extent of any minority interest.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate; the effective date being
the date that control is obtained or transferred to a third party.
All intra-group transactions, balances, and unrealised gains on transactions
between Group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
INVOCAS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March 2009
1PRESENTATION OF FINANCIAL STATEMENTS
The financial statements have been prepared in accordance with International
Financial Reporting Standards, as adopted by the EU.
2REVENUE
An analysis of the Group's revenue all of which arose in the United Kingdom
is as follows:
+----------------------------------------------+---------------+---------------+
| | Year ended | Year ended |
| | 31 March | 31 March |
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+----------------------------------------------+---------------+---------------+
| Continuing operations: | | |
+----------------------------------------------+---------------+---------------+
| Insolvency services | 10,049 | 9,884 |
+----------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+----------------------------------------------+---------------+---------------+
| | 10,049 | 9,884 |
+----------------------------------------------+---------------+---------------+
| | ========= | ========= |
+----------------------------------------------+---------------+---------------+
3BUSINESS AND GEOGRAPHICAL SEGMENTS
The business segment of the Group is insolvency services. This is the sole
primary segment used for internal reporting purposes and reviewed by the
Executive Directors to assess performance and allocate resources. As overheads
and the assets and liabilities of the Group are not separately allocated to
sub-segments for internal reporting purposes, it is not practical to report on
this separately.
4 INCOME TAX EXPENSE
+--------------------------------------------------+---------------+---------------+
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+--------------------------------------------------+---------------+---------------+
| Current tax: | | |
+--------------------------------------------------+---------------+---------------+
| UK Corporation tax | 597 | 1,005 |
+--------------------------------------------------+---------------+---------------+
| Deferred tax | 23 | (26) |
+--------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+--------------------------------------------------+---------------+---------------+
| | 620 | 979 |
+--------------------------------------------------+---------------+---------------+
| | ========= | ========= |
+--------------------------------------------------+---------------+---------------+
| Prior year adjustments: | | |
+--------------------------------------------------+---------------+---------------+
| UK Corporation tax | (6) | (28) |
+--------------------------------------------------+---------------+---------------+
| Deferred tax | (3) | (18) |
+--------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+--------------------------------------------------+---------------+---------------+
| | (9) | (46) |
+--------------------------------------------------+---------------+---------------+
| | ========= | ========= |
+--------------------------------------------------+---------------+---------------+
| Tax attributable to the Company and its | 611 | 933 |
| subsidiaries | | |
+--------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+--------------------------------------------------+---------------+---------------+
| UK Corporation tax is calculated at 28% (2008: 30%) of the estimated |
| assessable profit for the year. The charge for the year can be |
| reconciled to the profit per the income statement as follows: |
+--------------------------------------------------+---------------+---------------+
+--------------------------------------------------+---------------+---------------+
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+--------------------------------------------------+---------------+---------------+
| Profit before tax | 2,102 | 3,176 |
+--------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+--------------------------------------------------+---------------+---------------+
| Tax at the domestic income tax rate 28% (2008: | 589 | 953 |
| 30%) | | |
+--------------------------------------------------+---------------+---------------+
| Tax effect of expenses that are not deductible | 31 | 26 |
| in determining taxable profit | | |
+--------------------------------------------------+---------------+---------------+
| Prior year adjustments | (9) | (46) |
+--------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+--------------------------------------------------+---------------+---------------+
| Tax expense for the period | 611 | 933 |
+--------------------------------------------------+---------------+---------------+
| | ========= | ========= |
+--------------------------------------------------+---------------+---------------+
5 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the
following data:
+-------------------------------------------------+---------------+---------------+
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+-------------------------------------------------+---------------+---------------+
| | | |
+-------------------------------------------------+---------------+---------------+
| Profit for the year | 1,491 | 2,243 |
+-------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+-------------------------------------------------+---------------+---------------+
| Weighted average no. of shares in issue: | No. | No. |
+-------------------------------------------------+---------------+---------------+
| For basis earnings per share | 28,566,585 | 28,566,585 |
+-------------------------------------------------+---------------+---------------+
| Effect of share options issued | 1,109,408 | 661,283 |
+-------------------------------------------------+---------------+---------------+
| For diluted earnings per share | 29,675,993 | 29,227,868 |
+-------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+-------------------------------------------------+---------------+---------------+
| Earnings per share: | Pence | Pence |
+-------------------------------------------------+---------------+---------------+
| Basic | 5.22 | 7.85 |
+-------------------------------------------------+---------------+---------------+
| Diluted | 5.02 | 7.67 |
+-------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+-------------------------------------------------+---------------+---------------+
Profit for the year has been used for calculating both basic and diluted
earnings per share. The basic and diluted earnings per share figures relate to
all operations, all of which are continuing.
6 ACQUISITIONS
On 31 May 2008, the Company acquired 100% of the issued share capital and voting
rights of Netchwood Networks Limited (renamed NT Client Services Limited on 28
November 2008) a business providing debt advisory services in England. The
assets and liabilities acquired were as follows:
+----------------------------------+-----------+---------------+---------------+
| | | Book | Fair value |
| | | value | |
+----------------------------------+-----------+---------------+---------------+
| | | GBP'000 | GBP'000 |
+----------------------------------+-----------+---------------+---------------+
| Property, plant and equipment | | 2 | 2 |
+----------------------------------+-----------+---------------+---------------+
| Other receivables | | 23 | 23 |
+----------------------------------+-----------+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------+-----------+---------------+---------------+
| | | 25 | 25 |
+----------------------------------+-----------+---------------+---------------+
| Trade payables | | (40) | (40) |
+----------------------------------+-----------+---------------+---------------+
| Other payables | | (36) | (36) |
+----------------------------------+-----------+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------+-----------+---------------+---------------+
| | | (76) | (76) |
+----------------------------------+-----------+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------+-----------+---------------+---------------+
| Net liabilities | | (51) | (51) |
+----------------------------------+-----------+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------+-----------+---------------+---------------+
| | | | |
+----------------------------------+-----------+---------------+---------------+
| Goodwill | | | 95 |
+----------------------------------+-----------+---------------+---------------+
| | | | ------------- |
+----------------------------------+-----------+---------------+---------------+
| | | | 44 |
+----------------------------------+-----------+---------------+---------------+
| | | | ========= |
+----------------------------------+-----------+---------------+---------------+
| Satisfied by: | | | |
+----------------------------------+-----------+---------------+---------------+
| Cash consideration | | | 25 |
+----------------------------------+-----------+---------------+---------------+
| Costs of acquisition | | | 19 |
+----------------------------------+-----------+---------------+---------------+
| | | | ------------- |
+----------------------------------+-----------+---------------+---------------+
| | | | 44 |
+----------------------------------+-----------+---------------+---------------+
| | | | ========= |
+----------------------------------+-----------+---------------+---------------+
7SHARE CAPITAL
+------------------------------+---------------+---------------+---------------+---------------+
| Group and Company | 2009 | 2009 | 2008 | 2008 |
+------------------------------+---------------+---------------+---------------+---------------+
| | Number | GBP'000 | Number | GBP'000 |
+------------------------------+---------------+---------------+---------------+---------------+
| Ordinary shares of 0.25 | | | | |
| pence each | | | | |
+------------------------------+---------------+---------------+---------------+---------------+
| Authorised: | 39,000,000 | 97 | 39,000,000 | 97 |
+------------------------------+---------------+---------------+---------------+---------------+
| | | | | |
+------------------------------+---------------+---------------+---------------+---------------+
| Issued and fully paid: | 28,566,585 | 71 | 28,566,585 | 71 |
+------------------------------+---------------+---------------+---------------+---------------+
| | | | | |
+------------------------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- |
+------------------------------+---------------+---------------+---------------+---------------+
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and maintain an optimal capital structure to reduce the cost of
capital.
7SHARE CAPITAL (continued)
Options
During the period, options were granted over 926,305 ordinary shares (2008:
110,000). Options over 58,000 shares were forfeited (2008: 15,900), and 420,180
shares were cancelled (2008: nil). At 31 March 2009 the Company had 1,109,408
unissued ordinary shares of 0.25p each (2008: 661,283) under the Company's share
option scheme, details of which are as follows:
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| Grant | No. | Option | Date from | Expiry date |
| date | | price | which | |
| | | (p) | exercisable | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| 17 | 69,700 | 111 | 17 March | 17 March |
| March | | | 2008 | 2016 |
| 2006 | | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| 16 | 27,625 | 182 | 16 June | 16 June 2016 |
| June | | | 2009 | |
| 2006 | | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| 27 | 27,778 | 180 | 27 June | 27 June 2016 |
| June | | | 2009 | |
| 2006 | | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| 3 | 85,000 | 136 | 3 April | 3 April 2017 |
| April | | | 2010 | |
| 2007 | | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| 7 | 321,500 | 66 | 7 April | 7 April 2018 |
| April | | | 2011 | |
| 2008 | | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| 1 | 5,000 | 51.5 | 1 May 2011 | 1 May 2018 |
| May | | | | |
| 2008 | | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| 16 | 125,000 | 40 | 16 February | 16 February |
| February | | | 2012 | 2019 |
| 2009 | | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| 26 | 447,805 | 45 | 26 March | 26 March |
| March | | | 2012 | 2019 |
| 2009 | | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| | _______________________ | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| | 1,109,408 | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
| | _______________________ | | | |
+-----------------------------------------+-------------------------+------------+-------------+--------------+
8Status of Preliminary Announcement
The financial information set out in this Preliminary Announcement, which has
been extracted from the audited accounts, does not constitute the Company's
statutory accounts for the year ended 31 March 2009.
The statutory accounts for the year ended 31 March 2009, which were approved by
the Directors on 23 June 2009, will be delivered to the Registrar of Companies,
following the Company's Annual General Meeting. The Auditors reported on the
accounts for the year ended 31 March 2009; their report was unqualified and did
not contain a statement under s237 (2) or (3) of the Companies Act 1985. A copy
of the Annual Report and Financial Statements will be sent to all shareholders
shortly and will be available from the Company at Capital House, 2 Festival
Square, Edinburgh EH3 9SU and will be available to download from the Company's
website www.invocas.com.
While the financial information included in this Preliminary Announcement has
been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRS), as adopted by the European
Union, this Announcement does not in itself contain sufficient information to
comply with IFRS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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