RNS Number:6417A
Bristol & London PLC
30 March 2006
FOR IMMEDIATE RELEASE
TO ALL CITY EDITORS
30 March 2006
BRISTOL & LONDON PLC
Preliminary Results for the
Year Ended 31 January 2006
Sustained Sales Growth Anticipated
Financial Highlights
- Turnover increases 13% from #7.74 million in 2005 to #8.71 million in 2006
- Profit before tax increases 15% from #1.17 million in 2005 to #1.35 million
in 2006
- Net debt reduced by #0.7 million to #9.5 million giving Bristol & London
one of the lowest risk profiles in the sector
- Recommended final dividend of 1.33p per share and represents an increase in
the previously stated dividend policy from 66.67% to 75% of available
profits
Operations Highlights
- New personal injury referral commission business up and running
- Closer matching of car specifications to customers' expectations has
enhanced profitability
- Recent extraction of low margin business should yield further profitability
improvements
- Continued benefits from expansion in Scotland
Bob Woods, Chairman of Bristol & London PLC, comments:
"We have emerged from a period of restructuring as the leading premium credit
hire company. The sales force is now structured to address corporate business
and retail activities separately. Such a focus has driven sales and
profitability. Our ability to understand the needs of these separate groups is
the platform for expected sustained future sales and profit growth."
For further information:
PGA & Company Limited
Peter Gaze - 0777 589 2544 / 020 7808 7676
Westhouse Securities LLP
Richard Morrison - 020 7601 6100
CHAIRMAN'S STATEMENT
Overview
I am delighted to report that whilst the year to 31 January 2006 has continued
to be challenging in what is a very competitive market place, turnover has
increased by 13% from #7.74m to #8.71m with profit before tax increasing by 15%
from #1.17m to #1.35m.
In achieving these strong results we have introduced a new profit stream of
personal injury referral commission and rationalised our overall business
strategy.
During the early part of 2005 we acknowledged that we were over-specifying on
the purchase of our prestige vehicle hire fleet. The inability to reflect these
higher than necessary specifications in our pricing, coupled with a highly
competitive market place impacted upon our profitability. This has now been
comprehensively addressed by reducing the purchase price of our fleet through
better specification providing us with vehicles more in line with our customers'
demands.
We have also taken the initiative to remove an element of higher volume but very
low margin sales from our business. The impact of these decisions has and will
continue to be extremely positive although the full benefits will be more
reflected in the coming year.
Business levels in Scotland have also increased and earlier in the year we
entered into an agreement with the Eastern Western Motor Group to provide their
accident management programme. This group is Scotland's largest privately owned
prestige dealer group with 25 outlets. To enable us to service the demand for
credit hire in Scotland we expanded our presence there by recruiting a regional
manager and support staff.
Credit Hire
Bristol & London continues to be the largest specialist prestige credit hire
company in the UK and we will maintain this focus. Our research suggests that
this sector is worth up to #500m per annum.
I have already highlighted its competitive nature, but the market also remains
relatively fragmented. We therefore perceive further opportunities to grow our
business as we focus on the quality we provide our customers in combination with
the continuing benefits expected to flow from improved fleet utilisation and
better vehicle purchasing.
Insurance Companies
The substantial majority of Bristol & London's credit hire claims fall within
independently negotiated protocol agreements. This has resulted in a continued
reduction in debtor days, which have steadily improved throughout the year and
as at 31 January 2006 stood at 150 days compared to 182 as at 31 January 2005.
This has produced a fall in outstanding debt in spite of increased sales levels
and, more encouragingly, a reduction in debt more than 12 months old which now
represents just 14% of our overall debtor book.
This has been a significant achievement during a year that has seen several of
our competitors suffering an increasing number of debtor days and aged debt.
Personal Injury Referral Commission
We are now benefiting from this new revenue stream, which was introduced during
the year. The commission comes from our own client base alone and will continue
to grow in line with expanding business levels.
Outlook
During the year we have taken the necessary steps to both improve and increase
the number of sales staff. In doing so we have also separated out major
corporate business accounts from our core retail activities, enabling each part
of the business to become more focused and effective. The results of these
improvements have been extremely encouraging giving us not only a much better
understanding of our customer needs but a platform from which to obtain
sustained future growth.
Dividend
The board is recommending the payment of a final dividend of 1.15p per share to
be paid on 2 May 2006 to shareholders on the register at the close of business
on 18 April 2006. This represents an increase in the previously stated dividend
policy from 66.67% to 75% of available profits. Such an increase has been due
to our excellent relationships with insurance companies and our sector-leading
ability to collect cash.
29 March 2006
Robert Woods
Executive Chairman
FINANCE DIRECTOR'S REVIEW
Results
Turnover for the year to 31 January 2006 amounted to #8.71m, representing a 13%
increase over the previous year of #7.74m.
Cost of sales for the year amounted to #4.21m compared to #3.89m in 2005 an
increase of 8%. This reflects the fact that costs were well controlled in the
period despite the effect of increased charges incurred on commission
arrangements inherent in a more competitive environment.
Administration costs for the year amounted to #2.46m compared with #2.06m in
2005. A significant element of this increase was the loss on vehicle disposals
resulting from the rationalisation of the fleet during year.
Profit before tax increased 15%, up from #1.17m in 2005 to #1.35m in 2006.
Earnings per share for 2006 rose 6% to 3.6p per share from 3.4p per share in
2005.
Dividends
The recommended final dividend for the year is 1.15p per share and represents an
increase in the previously stated dividend policy from 66.67% to 75% of
available profits. Future dividends will consequently be covered one and a third
times and in accordance with FRS 21 will be incorporated in the accounts when
paid, rather than when proposed.
Cash and Debt
A reduction in debtor days has continued to be derived from improved cash
collection processes with debtor days having reduced to 150 days at 31 January
2006 from 182 days at 31 January 2005. Net cash inflow from operations for the
year was #4.49m compared to #4.18m in 2005.
Net debt on all borrowings at 31 January 2006 stood at #9.48m, having reduced
from #10.15m at 31 January 2005.
Efficiency
Efficiencies within the business are beginning to show significant improvement
both through better cash collection procedures and the implementation of a fleet
management software system enabling greatly improved management and control of
the entire hire process from the initial referral to final receipt of payment.
Interest rate risk
The Company borrows in sterling at floating rates of interest. No interest rate
caps or swaps are used to manage exposure to interest rate fluctuations.
Liquidity risk
The Company policy is to finance all new vehicle purchases by way of hire
purchase contracts and the number of vehicles acquired by contract hire is now
minimal. The Company does not "cross hire" vehicles on short term contracts
from hire companies since this could damage the Company's reputation for
quality.
29 March 2006
Lewis Ross
Finance Director
PROFIT AND LOSS ACCOUNT
for the year ended 31 January 2006
2006 2005
Note # #
Turnover 2 8,710,136 7,739,062
Cost of sales (4,211,247) (3,888,124)
Gross profit 4,498,889 3,850,938
Administrative expenses 3 (2,465,298) (2,059,222)
Operating profit 2,033,591 1,791,716
Other interest receivable and similar income 5,071 -
Interest payable and similar charges 6 (690,612) (620,676)
Profit on ordinary activities before taxation 3 1,348,050 1,171,040
Tax on profit on ordinary activities 7 (469,779) (356,703)
Profit on ordinary activities after taxation 878,271 814,337
Earnings per share - basic 9 3.6p 3.4p
- diluted 9 3.5p 3.3p
All of the above amounts arose from continuing operations.
There are no recognised gains or losses other than those noted in the profit &
loss account.
BALANCE SHEET
at 31 January 2006
Note # 2006 # 2005
# (Restated see
note8)
#
Fixed assets
Tangible assets 10 9,669,085 9,324,636
Current assets
Debtors 11 4,807,160 4,918,813
Cash at bank and in hand 14,166 11,879
4,821,326 4,930,692
Creditors: amounts falling due
within one year 12 (3,820,719) (4,032,524)
Net current assets 1,000,607 898,168
Total assets less current liabilities 10,669,692 10,222,804
Creditors: amounts falling due
after more than one year 13 (7,529,738) (7,304,967)
Provisions for liabilities and charges
Deferred tax 16 (483,565) (486,391)
Net assets 2,656,389 2,431,446
Capital and reserves
Called up share capital 19 241,974 241,974
Share premium account 20 725,792 725,792
Profit and loss account 20 1,688,623 1,463,680
Equity shareholders' funds 2,656,389 2,431,446
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 January 2006
2006 2005
# (Restated see
note8)
#
Profit for the financial period 878,271 814,337
Dividends (653,328) (793,673)
Net addition to shareholders' funds 224,943 20,664
Opening shareholders' funds as previously stated 2,158,016 1,885,782
Adoption of FRS21 (note 8) 273,430 525,000
Opening shareholders' funds 2,431,446 2,410,782
Closing shareholders' funds 2,656,389 2,431,446
CASH FLOW STATEMENT
for the year ended 31 January 2006
Note 2006 2005
# #
Net cash inflow from operating activities 17 4,498,571 4,185,796
Returns on investments and servicing of finance 17 (685,541) (620,676)
Taxation paid (79,630) (1,226,815)
Capital revenue 17 2,655,276 1,043,088
Equity dividends paid (653,328) (793,673)
Financing 17 (4,651,557) (4,437,655)
Increase/(decrease) in cash in period 18 1,083,791 (1,849,935)
RECONCILIATION OF NET CASH FLOWS TO MOVEMENTS IN NET DEBT
for the year ended 31 January 2006
Note 2006 2005
# #
Increase/(decrease) in cash in period 18 1,083,791 (1,849,935)
Cashflow from decrease/(increase) in debt less finance
lease repayments 18 4,651,557 4,437,655
New finance leases 18 (5,069,394) (4,419,675)
Movement in net debt in year 665,954 (1,831,955)
Net debt at start of year (10,155,953) (8,323,998)
Net debt at end of year 18 (9,489,999) (10,155,953)
NOTES TO THE ACCOUNTS
(forming part of the financial statements)
1. Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the company's financial
statements.
Basis of preparation
The financial statements have been prepared in accordance with applicable
accounting standards and under the historical cost convention.
After making enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
The financial statements have been prepared on the same basis as the prior year
except that:
- FRS 21, Events after the balance sheet, has been adopted in the year. The
impact of this is discussed in note 8.
- FRS 22, Earnings per share, has been adopted in the year but has had no
significant impact as the Company does not disclose any adjusted EPS measures
- Paragraphs 15-50 of FRS 25, Financial instruments - Disclosure and
presentation, have been adopted in the year. As a result dividends have been
disclosed as a movement in the reserves note rather than on the face of the
Profit & Loss account
- FRS 28, Corresponding amounts, has been adopted in the year but has had no
impact on the financial statements
Fixed assets and depreciation
Depreciation is provided to write off the cost less the estimated residual value
of tangible fixed assets by instalments over their estimated useful economic
lives to the company as follows:
Motor vehicles - 20% straight line
Computers and software - 331/3% straight line
Fixtures and fittings - 15% straight line
Buildings - 2% straight line
Debtors
Trade debtors are discounted to the amount which, in the opinion of the
directors, will be recovered from insurers. The discount estimates are regularly
reviewed and as the business and industry matures they can be calculated to a
greater degree of accuracy.
Leasing and hire purchase commitments
Assets held under finance leases, which are leases where substantially all the
risks and rewards of ownership of the asset have passed to the company, and hire
purchase contracts are capitalised in the balance sheet and are depreciated over
their useful lives. The capital elements of future obligations under leases and
hire purchase contracts are included as liabilities in the balance sheet. The
interest elements of the rental obligations are charged in the profit and loss
account over the periods of the leases and hire purchase contracts and represent
a constant proportion of capital repayments outstanding.
Rentals payable under operating leases are charged in the profit and loss
account on a straight line basis over the lease term.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay more,
or a right to pay less or to receive more, tax, with the following exceptions:
* provision is made for tax on gains arising from the revaluation
(and similar fair value adjustments) of fixed assets, and gains
on disposal of fixed assets that have been rolled over into
replacement assets, only to the extent that, at the balance sheet
date, there is a binding agreement to dispose of the assets
concerned. However, no provision is made where, on the basis of
all available evidence at the balance sheet date, it is more
likely than not that the taxable gain will be rolled over into
replacement assets and charged to tax only where the replacement
assets are sold; and
* deferred tax assets are recognised only to the extent that the
directors consider that it is more likely than not that there
will be suitable taxable profits from which the future reversal
of the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which timing differences reverse, based on
tax rates and laws enacted or substantively enacted at the balance sheet date.
Value added tax
In accordance with industry practice output value added tax is accrued until the
settlement amount of invoices is known with certainty.
Turnover
Turnover represents the amounts invoiced (excluding value added tax) less
estimated discounts on settlement for the provision of vehicle hires to third
parties.
2. Turnover and profit on ordinary activities before taxation
Turnover and profit are entirely derived from one class of business, namely the
hire of vehicles within the United Kingdom. The results disclosed in the profit
and loss account arose solely from continuing operations.
3. Profit on ordinary activities before taxation
2006 2005
# #
Profit on ordinary activities before taxation is
stated after charging
Auditors' remuneration:
Audit 27,500 26,250
Taxation 3,900 4,234
Depreciation of tangible fixed assets:
Leased 1,751,474 1,271,253
Owned 101,374 100,814
Operating lease rentals:
Property 70,152 45,278
Motor vehicles 185,510 470,724
Plant and machinery 57,815 54,062
Loss/(profit) on disposal of fixed assets 216,405 (43,436)
4. Remuneration of directors
Directors' emoluments during the year were as follows:
2006 2005
# #
Directors' emoluments as directors 256,332 261,197
Details of directors' emoluments are given in the remuneration report on page 8.
5. Staff numbers and costs
The average number of persons employed by the company (including directors)
during the period, analysed by category, was as follows:
Number of employees
2006 2005
# #
Sales 12 9
Administration 43 49
Fleet management 34 31
89 89
The aggregate payroll costs of these persons were as follows:
2006 2005
# #
Wages and salaries 1,675,743 1,613,778
Social security costs 152,362 131,238
1,828,105 1,745,016
6. Interest payable and similar charges
2006 2005
# #
Bank loans and overdrafts 138,803 194,347
Other loans - 28,222
Finance charges payable in respect of
finance leases and hire purchase contracts 551,809 370,693
Interest on overdue tax - 27,414
690,612 620,676
7. Taxation
2006 2005
# #
UK Corporation Tax:
Current tax on income for the year 463,713 215,628
Adjustments in respect of prior year 8,892 (8,071)
472,605 207,557
Deferred tax:
Origination and reversal of timing differences (20,518) 142,220
Adjustments in respect of prior year 17,692 6,926
(2,826) 149,146
469,779 356,703
2006 2005
# #
Profit on ordinary activities before tax 1,348,050 1,171,040
2006 2005
# #
Profit on ordinary activities multiplied by standard rate
of corporation tax in the UK of 30% (2005: 30%) 404,415 351,312
Effects of:
Expenses not deductible for tax purposes 38,780 23,220
Capital allowances in excess of depreciation 20,518 (142,220)
Marginal Relief - (16,684)
Other short term timing differences - -
Adjustment to tax charge in respect of prior periods 8,892 (8,071)
Current tax charge for the year 472,605 207,557
8. Dividends
2006 2005
# #
Dividend on equity shares - final paid in respect of 2005 1.13p per 273,430 525,000
share (2004: 2.17)
- interim paid in respect of 2006 1.57p per 379,898 268,673
share (2005: 1.11)
653,328 793,673
FRS21, Events After the Balance Sheet Date, requires that dividends should not
be recognised in the accounts of the Company until such time as they have been
formally declared, or in the case of interim dividends, paid. The proposed
final dividend in respect of the year ended 31 January 2006 of 1.15p per share
has accordingly not been recognised in the financial statements.
The comparative Balance Sheet for the year ended 31 January 2005 has been
restated in accordance with FRS21. The effect of this is to recognise the final
dividend declared for 2005 in 2006 when it was approved by the shareholders.
The impact of this is to reduce the creditors due within one year (note 12) by
#273,430 at 31 January 2005, with the profit and loss reserve (note 20) being
increased by the same amount at that date.
9. Earnings per ordinary share
The calculation of basic earnings per share is based on earnings of #878,271
(2005: #814,337), and on 24,197,352 (2005: 24,197,352) ordinary shares, being
the weighted average number of ordinary shares in issue during the year.
The diluted earnings per share is based on earnings of #878,271 (2005: #814,337)
and on 25,093,147 (2005: 24,904,514) ordinary shares, calculated as follows:
2006 2005
# #
Basic weighted average number of shares 24,197,352 24,197,352
Dilutive potential ordinary shares
Employee share options 895,795 707,162
25,903,147 24,904,514
10. Tangible fixed assets
Motor Computers Other Freehold Total
vehicles # # land and #
# buildings
#
Cost
Brought forward 8,287,600 154,869 127,597 2,383,238 10,953,304
Additions 5,632,660 38,959 5,805 21,671 5,699,095
Disposals (5,108,878) (605) - - (5,109,483)
Carried forward 8,811,382 193,223 133,402 2,404,909 11,542,916
Depreciation
Brought forward 1,458,910 100,780 27,392 41,586 1,628,668
Charge for year 1,751,474 39,419 19,531 42,424 1,852,848
Disposals (1,607,298) (387) - - (1,607,685)
Carried forward 1,603,086 139,812 46,923 84,010 1,873,831
Net book value 7,208,296 53,411 86,479 2,320,899 9,669,085
At 31 January 2005
At 31 January 2004 6,828,690 54,089 100,205 2,341,652 9,324,636
All motor vehicles are held under finance leases or hire purchase contracts. No
depreciation has been provided on freehold land.
11. Debtors
2006 2005
# #
Trade debtors 3,916,395 4,189,840
Other debtors 215,350 23,189
Accrued income - hires in progress 378,099 515,350
Prepayments 228,395 84,530
Director's current account (see note 22) 68,921 7,390
Corporation Tax - 98,514
4,807,160 4,918,813
12. Creditors: amounts falling due within one year
2006 2005
# (Restated see
note8)
#
Bank Overdraft 322,501 1,404,005
Current instalments due on bank loans (see note 14) 199,812 122,230
Obligations under finance leases and hire purchase contracts (see note 15) 1,452,114 1,336,630
Trade creditors 116,687 95,990
Other taxation and social security 868,514 671,417
Other creditors 74,573 68,611
Accruals and deferred income 492,057 333,641
Corporation tax 294,461 -
3,820,719 4,032,524
The bank overdraft of #1.25m in the form of a six monthly revolving facility is
provided and is secured by a debenture over the company's assets together with a
first legal charge over the freehold land and buildings. The overdraft attracts
an interest charge of 1.5% above base rate.
13. Creditors: amounts falling due after more than one year
2006 2005
# #
Bank loans 873,048 1,073,982
Obligations under finance leases and hire purchase contracts 6,656,690 6,230,985
7,529,738 7,304,967
14. Bank loans
2006 2005
# #
Amounts falling due:
in one year or less or on demand 199,812 122,230
in more than one year but not more than two years 199,812 130,648
in more than two years but not more than five years 599,436 448,338
in more than five years 73,800 494,996
1,072,860 1,196,212
Less: included in creditors: amounts falling due within one year (199,812) (122,230)
873,048 1,073,982
The bank loans are secured by a first legal charge over the company's freehold
land and buildings. Interest charges are incurred on the loans at 2% above bank
base rate.
15. bligations under leases and hire purchase contracts
2006 2005
# #
Amounts payable:
within one year 1,452,114 1,336,630
in two to five years 6,656,690 6,230,985
8,108,804 7,567,615
Annual commitments under non-cancellable operating leases are as follows:
2006 2005
Land and Other Land and Other
buildings # buildings #
# #
Operating leases which expire:
within one year -- 4,688 -- 13,014
in two to five years -- 48,112 -- 59,371
in more than five years 35,000 -- -- --
35,000 52,800 -- 72,385
16. Deferred tax provision
2006 2005
# #
Provision brought forward 486,391 337,245
Decrease/Increase in provision (see note 7) (2,826) 149,146
483,565 486,391
The provision for deferred taxation consists of the tax effect of all timing
differences in respect of:
2006 2005
# #
Excess of taxation allowances over depreciation on fixed assets 483,565 486,391
Other timing differences - -
483,565 486,391
There is no unprovided deferred tax in either year.
17. Notes to cash flow statement
2006 2005
# #
(a) Reconciliation of operating profit to net
cash flow from operating activities
Operating profit 2,033,591 1,791,716
Depreciation charges 1,852,848 1,372,067
Decrease in debtors 13,139 1,167,510
Increase/(decrease) in creditors 382,172 (102,061)
Loss/(profit) on disposal of fixed assets 216,821 (43,436)
Net cash inflow from operating activities 4,498,571 4,185,796
(b) Returns on investments and servicing of finance
Interest paid (138,803) (224,512)
Interest element of finance lease and hire purchase rental payments. (551,809) (368,750)
Interest on overdue tax - (27,414)
Interest received 5,071 -
Net cash outflow from returns on investments
and servicing of finance (685,541) (620,676)
(c) Capital expenditure
Purchase of tangible fixed assets (629,701) (772,498)
Proceeds from the sales of fixed assets 3,284,977 1,815,586
Net cash outflow from capital expenditure 2,655,276 1,043,088
(d) Financing
(Repayment)/drawdown of invoice discounting facility - (1,867,656)
Capital repayments of hire purchase and finance lease agreements (4,528,205) (2,411,451)
Loan repayments (123,352) (158,548)
Net cash outflow from financing (4,651,557) (4,437,655)
18. Analysis of net debt
At Net New At
beginning of cash finance end of
year flows leases year
# # # #
Bank overdraft (1,392,126) 1,083,791 (308,335)
Bank loans due less than 1 year (122,230) (77,582) (199,812)
Bank loans due more than 1 year (1,073,982) 200,934 (873,048)
Obligations under finance lease and hire
purchase contracts (7,567,615) 4,528,205 (5,069,394) (8,108,804)
Amounts due on invoice discounting facility -
Cash outflow from decrease in debt and
lease financing 4,651,557
(10,155,953) 5,735,348 (5,069,394) (9,489,999)
19. Called up share capital
2006 2005
# #
Ordinary shares of 1 pence each
Authorised: 30,000,000 (2004: 30,000,000) 300,000 300,000
Allotted, called up and fully paid:
24,197,352 (2004: 24,197,352) 241,974 241,974
20. Reserves
Share Profit Total Reserves
premium and loss #
# account
#
As previously stated 725,792 1,190,250 2,158,016
Adoption of FRS21 - 273,430 273,430
2,
After adoption of FRS21 725,792 1,463,680 2,431,446
Profit for the year - 878,271 878,271
Dividends paid in the year - (653,328) (653,328)
2,
At end of year 725,792 1,688,623 2,656,389
21. Capital commitments
Amounts contracted for but not provided in the financial statements amounted to
#649,651 (2005: #936,607).
22. Related party disclosures
Richard Abel holds 93.6% of the issued share capital of the company and as a
result is the ultimate holding party.
During the year Richard Abel has made available certain cars, which he owns
privately, for use by the company in order to hire these cars to customers in
the usual course of business. These cars are more exclusive than those carried
in the company fleet. The cost to the company was #109,120 (2005: #18,620). The
income generated on hiring the vehicles to customers was accounted for through
the company.
During the year the company entered into a 10 year lease on propertly owned by
Richard Abel. Rent paid by the company under the lease during the year amounted
to #35,000 (2005:#nil).
Richard Abel purchasesd a car from the company during the year for #13,300. The
company incurred a loss on sale on this transaction of #1,984.
At 31 January 2006 Richard Abel owed the company #68,921 (2005: #7,390). The
maximum amount owed to Richard Abel during the year was #54,204 (2005: #3,151)
and the maximum amount owed to the company by Richard Abel during the year was
#68,921 (2005: #8,296). Since the year end #46,000 has been repaid. No interest
was charged on this account.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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