RNS Number : 0522X
Loanmakers (Holdings) PLC
19 June 2008
Loanmakers (Holdings) Plc
("Loanmakers" or the "Company)
Unaudited Preliminary Announcement for the year ended 31 March 2008
* Challenging year for the business impacted upon by difficult and uncertain financial markets
* Post strategic review, the Debtmatters IVA business successfully disposed of in March 2008
* Core Loanmakers business performed well in H1 but subsequently suffered due to well reported deteriorating markets
* Cost efficiencies have been made subsequently with the management team restructured
* Current trading environment is challenging but longer term opportunities exist as markets improve
Ges Ratcliffe, Loanmakers CEO commented:-
"The market environment in which Loanmakers operates is currently very challenging. Strategically it is important to concentrate on
ensuring that we continue to perform at current levels and consolidate our market position, which we are effectively doing. Once markets
improve, we will have the infrastructure and capabilities in place to capitalise on improved trading conditions."
Ges Ratcliffe CEO, Loanmakers plc 01204 678 200
Richard Thompson / Carl Holmes Charles Stanley Securities 020 7149 6000
Nominated Adviser and
Broker
Shane Dolan Biddicks 020 7448 1000
Chairman's Statement
It has been an extremely difficult year for everyone involved with the Group, which has culminated in an extremely disappointing set of
results.
IVA division
In October of last year we announced that in light of the impact of certain modifications to our core IVA business and the continued
disappointing share price, that the Board would undertake a full strategic review of the business. This review concluded that we would exit
the IVA sector completely and re focus on Loanmakers, the then profitable loan broking part of the business. As a result, in March this
year, the disposal of Debtmatters IVA book and the residual business took place for a total of �7.2million. At the same time the Group
secured �3.5m of banking facilities, to underpin its ongoing business. The disposal of the IVA book also necessitated a major redundancy
programme, and together with the 97 employees that left the Group with the sale of Debtmatters Limited to Creditflex, Loanmakers, the loan
broking subsidiary reduced its number of employees from 125 to 115.
Loanmakers
Our loanbroking subsidiary, which was acquired in June 2006, performed well in the first half to September 2007, and indeed had a record
month in November. However, as foreshadowed in our disposal circular in February, the Board was aware that the 'credit crunch', tighter
lending standards and the general uncertainty in the financial sector may impact the business during 2008. Whilst the business has held up
reasonably well, it is being increasingly impacted by conditions in its sector.
The Board has also taken the opportunity to carry out a number of cost saving measures and restructured the management team to
streamline Loanmakers' operations in line with the lower level of activity.
Outlook
Whilst current trading environment for Loanmakers is challenging, the Board believe business still has the potential to deliver good
growth and accordingly has been examining ways to strengthen the Company's balance sheet.
We are well aware that shareholder confidence is at a low level but in order to deliver value in the future the Board's strategy is to
support the Loanmakers business until confidence returns to the market.
Noel Guilford BA FCA MSI
Non Executive Chairman
Chief Executive's Review
Summary of performance
Turnover for the IVA business was �6.9m for the year to March 2008 compared to �18.1m for the year to March 2007 whilst turnover in loan
broking increased to �16.6m from �11.8m for the same periods respectively. Well publicised issues in the IVA industry led the Board to
undertake a strategic review which concluded that the Group should exit the IVA sector and concentrate its efforts on loan broking which at
the time was performing well.
Following a period of marketing and after reviewing a number of expressions of interest from various parties, the Group accepted an
offer to purchase the IVA "back book" of cases which completed in March 2008. In order to fully exit the sector, the residual Debtmatters
Limited was also sold leaving the Group with just one operating subsidiary, Loanmakers Limited.
Given continuing uncertainty in the IVA industry, the Board considers this to have been the best decision in the circumstances. When the
Board concluded its strategic review Loanmakers was performing well and November 2007 represented its best ever month with total completions
for the month exceeding 600 for the first time.
However, as foreshadowed in the Group's interim results made on 21 December 2007 and reiterated in the disposal announcement made in
February 2008, the 'credit crunch' has inevitably become a factor affecting Loanmakers' performance during 2008. Compared with many
competitors, Loanmakers has performed well in a difficult market. Monthly completions over the first 5 months of 2008 have ranged between
300 and 400, which is currently sufficient to break even.
Despite a good first half performance, the financial performance in the second half of the financial year has resulted in there being no
further earn out for the former owners of the business, Kevin Hindley and Tim Wheeldon.
Kevin and Tim have resigned from the business. I would like to thank them for their efforts and dedication to Loanmakers since
acquisition and wish them well for the future.
Loanmakers is well established and respected in its sector and enjoys a reputation of having one of the highest lead conversion rates
amongst master brokers. It also has industry leading systems and software which enable it to respond rapidly to new enquiries and operate
efficiently. For this reason, Loanmakers continues to perform relatively well in a very difficult market which is testament to the strength
of its relationships with both sources of business and lenders.
Strategy
The market environment in which Loanmakers operates is currently very challenging. Strategically it is important to concentrate on
ensuring that we continue to perform at current levels and consolidate our market position.
In a climate in which we have already seen the demise of several other brokers we must focus on retaining key introducers of business
and staff and maintaining a strong infrastructure to capitalise on the improvement in trading conditions once the 'credit crunch' is over.
Employees
I would like to take this opportunity to thank all of our employees for their hard work and dedication over the year. In common with
many businesses in the current economic climate, it has been an extremely difficult time for staff across the Group yet despite this, they
have remained positive and committed.
2008 Outlook
There are widely differing views on when the 'credit crunch' may end but maintaining levels of completions at between 300 and 400 per
month should ensure that we protect our infrastructure and remain ready to increase volumes when conditions allow. In our view we are
unlikely to see a material improvement in trading volumes during 2008 but remain optimistic that at some stage in 2009 we will return to
growth.
G N Ratcliffe
Chief Executive
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2008
2008 2008 2008 2007
Continuing Discontinued Total Total
(Restated)
Notes � � � �
REVENUE 1 16,624,848 6,927,296 23,552,144 29,832,760
Cost of sales (9,767,250) (6,684,893) (16,452,143) (15,461,367)
-------------------- -------------------- ------------------ --------------------
Gross profit 6,857,598 242,403 7,100,001 14,371,393
Administrative expenses (5,731,029) (3,497,727) (9,228,756) (5,850,009)
-------------------- -------------------- ------------------ -------------------
-
EBITDA 1 1,126,569 (3,255,324) (2,128,755) 8,521,384
========== ========== ========= =========
Amortisation and depreciation1 1 (152,189) (143,195) (295,384) (256,829)
Sale of businesses 1 - (4,250,864) (4,250,864) -
Goodwill impairment 1 (984,900) (174,975) (1,159,875) -
Non trading items 1 (3,923) - (3,923) (6,036)
-------------------- ------------------- ------------------ ------------------
-
(Loss) / profit from 1 (14,443) (7,824,358) (7,838,801) 8,258,519
operations
-------------------- -------------------- ------------------ ------------------
-
Finance costs 1 (262,448) (334,884) (597,332) (446,104)
-------------------- ------------------- ------------------ -----------------
-
(Loss) / profit before (276,891) (8,159,242) (8,436,133) 7,812,415
taxation
Taxation 3 (58,387) 1,682,463 1,624,076 (2,561,632)
-------------------- -------------------- ------------------ ------------------
- -
(Loss) / profit for the (335,278) (6,476,779) (6,812,057) 5,250,783
financial year
========== ========== ========= =========
(LOSS) / PROFIT BEFORE TAXATION
2008 2008 2008 2007 2007 2007
Continuing Discontinued Total Continuing Discontinued Total
(Restated)
Notes � � � � � �
(Loss) / profit before tax
(276,891) (8,159,242) (8,436,133) 2,095,950 5,716,465 7,812,415
EARNINGS PER SHARE (PENCE):
Basic 4 (0.06) p (23.80) p (23.86) p 5.91 p 15.42 p 21.33 p
Fully diluted 4 (0.06) p (23.80) p (23.86) p 5.16 p 13.46 p 18.62 p
CONSOLIDATED BALANCE SHEET
31 March 2008
2008 2007
(Restated)
Notes � �
Non-current assets
Property, plant and equipment 185,344 394,418
Intangible assets 11,178,435 17,094,607
Deferred tax assets 50,357 90,510
-------------------------- ----------------------------
11,414,136 17,579,535
-------------------------- ----------------------------
Current assets
Work in progress 354,358 842,066
Trade and other receivables 1,953,008 14,146,199
Cash and cash equivalents 110,828 665,771
-------------------------- ----------------------------
2,418,194 15,654,036
-------------------------- ----------------------------
Total assets 13,832,330 33,233,571
============= ==============
Current liabilities
Trade and other payables 553,124 4,063,296
Financial liabilities 3,509,136 2,920,255
Current tax liabilities 1,312,733 3,407,876
-------------------------- ---------------------------
5,374,993 10,391,427
Non-current liabilities
Trade and other payables - 1,888,800
Financial liabilities - 6,537,500
-------------------------- ----------------------------
Total liabilities 5,374,993 18,817,727
-------------------------- ----------------------------
Equity
Share capital 6 3,107,150 2,461,539
Contingent share consideration 6 - 4,662,226
Share premium account 6,959,904 1,956,614
Merger reserve - (1,999,996)
Share based compensation 205,393 338,518
reserve
Retained earnings (1,815,110) 6,996,943
-------------------------- ----------------------------
Total equity 8,457,337 14,415,844
-------------------------- ----------------------------
Total liabilities and equity 13,832,330 33,233,571
============= ==============
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2008
GROUP Share Premium Share Based Retained
Share Account Merger Reserve Compensation Reserve Earnings
Capital
Total
� � � � �
�
Equity as at April 1, 2006 2,461,539 1,956,614 (1,999,996) 225,132 2,103,117
4,746,406
Prior year adjustment - - - - (356,957)
(356,957)
------------------ ------------------ ------------------ -------------------- -----------------
------------------
Equity as at April 1, 2006
restated 2,461,539 1,956,614 (1,999,996) 225,132 1,746,160
4,389,449
Contingent consideration 4,662,226 - - - -
4,662,226
Share based payments - - - 113,386 -
113,386
Profit for the period - - - - 6,078,401
6,078,401
------------------ ------------------ ------------------ -------------------- -----------------
------------------
Equity as at 31 March, 2007
restated 7,123,765 1,956,614 (1,999,996) 338,518 7,824,561
15,243,462
Prior year adjustment - - - - (827,618)
(827,618)
------------------ ------------------ ------------------ -------------------- -----------------
------------------
Equity as at 31 March, 2007 7,123,765 1,956,614 (1,999,996) 338,518 6,996,943
14,415,844
Shares issued under contingent 382,839 2,427,203 - - -
2,810,042
consideration
Adjustment to contingent
equity consideration (4,662,226) - - - -
(4,662,226)
Shares issued on placing 262,772 2,706,552 - - -
2,969,324
Share issue costs - (130,465) - - -
(130,465)
Share based payments - - - (133,125) -
(133,125)
Disposal of subsidiary - - 1,999,996 - (1,999,996)
-
Loss for the period - - - - (6,812,057)
(6,812,057)
------------------ ------------------ ------------------ -------------------- ------------------
-------------------
Equity as at 31 March, 2008 3,107,150 6,959,904 - 205,393 (1,815,110)
8,457,337
========= ========= ========= ========== =========
==========
GROUP CASH FLOW STATEMENT
for the year ended 31 March 2008
Cash flows from operating activities
(Loss) / profit from operations (7,838,801) 8,258,519
Impairment of goodwill 1,159,875 -
Loss on sale of business 4,250,864 -
Share based compensation (133,125) 113,386
Depreciation 200,110 195,670
Amortisation of IPS licenses 95,274 61,159
Loss on disposal of property, plant and equipment 3,923 6,036
Decrease / (Increase) in work in progress 307,096 (712,976)
Decrease / (Increase) in trade and other receivables 2,120,929 (7,724,880)
(Decrease) / Increase in trade and other payables (1,278,481) 1,612,277
Cash (used) / generated from operations (1,112,336) 1,809,191
Interest paid (597,332) (446,104)
Income taxes paid (1,377,994) (1,169,977)
Net (used) / generated from operating activities (3,087,662) 193,110
Investing activities
Payments to acquire property, plant and equipment (138,399) (191,359)
Payments to acquire intangible assets (78,661) (119,850)
Receipts from sale of property, plant and equipment 562 2,520
Acquisition of subsidiary undertaking (1,014,395) (10,235,633)
Net cash acquired with subsidiary undertaking - 1,524,251
Net cash disposed with disposal of business (126,628) -
Receipts from disposal of business 7,000,000 -
Net cash generated / (used) from investing activities 5,642,479 (9,020,071)
Cash flows from financing activities
Proceeds on issue of ordinary shares 2,969,324 -
Share issues costs (130,465) -
Capital element of finance lease agreements (31,040) (12,178)
Net movement on short term borrowings (1,250,000) 1,250,000
Net movement on long term borrowings (6,537,500) 6,537,500
Net cash (used in) / generated from financing (4,979,681) 7,775,322
Net decrease in cash and cash equivalents (2,424,864) (1,051,639)
Cash & cash equivalents at the beginning of the financial (973,444) 78,195
year
Cash & cash equivalents at the end of the financial (3,398,308) (973,444)
year
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET
DEBT
for the year ended 31 March 2008
2008 2007
� �
Net (decrease) / increase in cash and cash (2,424,864) (1,051,639)
equivalents
Cash outflow to service debt 7,787,500 -
Cash inflow from debt financing - (7,787,500)
Movement in net debt in the year 5,362,636 (8,839,139)
Net debt at beginning of the year (8,760,944) 78,195
Net debt at the end of the year (3,398,308) (8,760,944)
ACCOUNTING POLICIES
BASIS OF PREPARATION
The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for
use in the European Union (EU) and their interpretations as issued by the International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee (IFRIC) and applicable UK law.
Interpretations and standards which became effective during the year
The following accounting standards and interpretations became effective during the period:
IFRS 7 Financial Instruments: Disclosures
IAS 1 Presentation of financial Statements: Amendments with respect to capital disclosures
IFRIC 10 Interim financial reporting and impairment
IFRIC 11 IFRS 2 Group and treasury share transactions
The Group has adopted the disclosures of IFRS 7 and IAS amended accordingly. The accounting policy amendment affects disclosures only
and has no material impact on the current or preceding periods' financial position and performance.
IFRIC 11: IFRS 2 Group and treasury share transactions and IFRIC 10: Interim financial reporting and impairment also became effective
during the period. The group's accounting policies in the preceding accounting period were consistent with guidance issued in the IFRIC,
therefore implementation has had no effect upon the current or preceding financial period.
Interpretations and standards which have been issued and are not yet effective
At the date of the authorisation of the financial information the following standards and interpretations, which have not been applied
in the financial information, were in issue but not yet effective:
IAS 1 Presentation of financial Statements
IFRS 8 Operating segments
IFRIC 12 Service concession arrangements
IFRIC 13 Customer loyalty programmes
IFRIC 14 IAS 19 - The limit on a Defined Benefit Asset, minimum funding requirement and their interaction
IAS 23 Amendment - Borrowing costs
IAS 27 Amendment - Consolidated and Separate Financial Statements
IAS 32 Amendment - Financial Instruments: Presentation
IFRS 3 Amendment - Business Combinations
IFRS 2 Amendment - Share-based payment
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the
financial information when the relevant standards and interpretations come into effect.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. The results of
subsidiaries acquired or disposed of during the year are included in the Consolidated Income Statement from the date of their acquisition to
their date of disposal.
The purchase method of accounting is used for the acquisition of subsidiaries. The cost of the acquisition is measured at the aggregate
fair values, at the date of exchange, of assets and liabilities assumed or incurred by the Group to obtain control and any directly
attributable acquisition costs.
REVENUE
Revenue represents amounts billed or to be billed in respect of services performed on behalf of clients. The amounts taken to turnover
are calculated as follows:
Nominee fees - on approval of a proposal at a formal creditors' meeting the full amount of the nominee fee is taken less a provision for
cases on which the full fee may not be recoverable.
Supervisory fees - on a monthly basis as earned following the creditors' meeting.
Loan commissions - on approval of loan applications.
Debt management fees - on a monthly basis as earned following receipt of contribution.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost comprises purchase price
and other directly attributable costs. Depreciation is calculated by charging equal annual instalments to the Consolidated Income Statement
so as to write off the costs of the assets over the period of their expected useful lives at the following annual rates:
Fixtures & Fittings - 25% straight line
Motor vehicles - 25% straight line
Equipment - 33% straight line
INTANGIBLE ASSETS
Goodwill
Goodwill represents the difference between the cost of businesses acquired and the aggregate of the fair value values of their
identifiable net assets at the date of acquisition.
Goodwill is recognised as an asset and reviewed for impairment at least annually. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Goodwill is allocated to cash
generating units based on the way that it monitors and derives economic benefit from the acquired goodwill. Any impairment is recognised
immediately in the income statement and is not subsequently reversed.
Other intangible assets
Other intangible assets acquired refer to IPS Licenses, Software Development Costs and Domain Names.
Software Development Costs are capitalised, only when all the criteria of IAS 38 'Intangible Assets' are satisfied.
Domain Names are determined to have an indefinite useful life as there is no foreseeable limit to their expected useful lives. These
assets are not amortised and are subject to an annual impairment review. The classification of Domain Names as intangible assets with
indefinite lives is reviewed annually.
IP Software Licences and Software Development Costs are amortised over their expected useful lives by charging equal annual instalments
to the Consolidated Income Statement as follows:
IPS Licences - 20% straight line
Software Development Costs - 25% straight line
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amounts of
the Group's property, plant and equipment. If any indication exists, an asset's recoverable amount is estimated. Where the asset does not
generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the
greater of the fair value less cost to sell and value in use.
INVESTMENTS
Investments are initially recorded at cost, being the fair value of the consideration given and including acquisition charges associated
with the investment. Subsequently they are reviewed for impairment if events or changes in circumstances indicate the carrying value may not
be recoverable.
WORK IN PROGRESS
Work in progress is valued on the basis of direct costs plus attributable overheads based on normal levels of activity for cases on
which instructions have been received but not yet approved in a creditors' meeting for those cases which, in the opinion of the directors,
will proceed to approval by creditors. Provision is made for any foreseeable losses where appropriate.
LEASING COMMITMENTS
Assets held under finance leases, which are leases where substantially all the risks and rewards of ownership of the assets have passed
to the company are capitalised in the balance sheet and are depreciated over their useful lives. The capital elements of future obligations
under the finance lease contracts are included as liabilities in the balance sheet.
The interest elements of the rental obligations are charged in the Income Statement over the periods of the finance lease contracts and
represent a constant proportion of the balance of capital repayments outstanding.
Rentals payable under operating leases are charged in the Income Statement on a straight line basis over the lease term.
TAXATION
The income taxes charge includes current taxes payable based on taxable profit for the year end and deferred taxes, which have been
calculated on the basis set out in IAS 12 'Income taxes'.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also charged or credited within equity.
Income taxes include all taxes based on the taxable profits of the group. Deferred taxes are calculated based on the temporary
differences that arise between the tax base of the asset or liability and its carrying value in the Consolidated Balance Sheet.
Deferred tax is recognised on all temporary differences in existence at the balance sheet date except as provided under IAS 12. Deferred
tax assets are recognised to the extent that it is probable that they will be recovered.
SHARE-BASED PAYMENTS
The Group has applied the requirements of IFRS 2 Share-based payments.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight
line basis over the vesting period, based on the Group's estimate of share options that will eventually vest.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management's
best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations.
A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance
sheet date for cash-settled share based payments.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes party to the contractual
provisions of the instrument.
Trade receivables are measured at initial recognition at fair value. Appropriate allowances for estimated irrecoverable amounts are
recognised in the income statement where there is objective evidence that the asset is impaired.
Cash and cash equivalents consist of cash at bank held by the Group and are shown within current assets on the Consolidated Balance
Sheet. Bank Overdrafts are shown within financial liabilities on the Consolidated Balance Sheet. The carrying amount of these assets and
liabilities approximates to their fair value.
Debt instruments are initially recorded at the proceeds received, net of transaction costs. Subsequently they are reported at amortised
cost. Any discount between the net proceeds received and the principle value due on redemption is recognised as a finance cost in the
Consolidated Income Statement over the term of the instrument.
Trade payables are measured at fair value.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Preparation of the consolidated financial statements requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities. These assumptions include but are not limited to the following area:
Impairment of goodwill and intangible assets
Determining whether goodwill or intangible assets are impaired requires an estimation of the value in use of the Groups cash-generating
units to which goodwill and intangible assets have been allocated. The key assumptions for the value in use calculations are those regarding
discount rates, growth rates and expected changes to revenue and direct costs during the period.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of money.
PRIOR YEAR ADJUSTMENT
The Company has consistently applied all the relevant accounting standards except for the adoption of a more appropriate policy
following clarification issued by the IASB on IAS 38.
Advertising costs are now recognised when incurred and are not deferred to match them against the income to which they relate. In the
directors' opinion, this treatment of advertising costs more accurately represents the performance of the business in the period.
NOTES TO THE FINANCIAL STATEMENTS
1. SEGMENTAL INFORMATION
Business Segments
Segment information is presented in respect of the Group's business segments, which are based on the Group's management and internal
reporting structure as at 31st March 2008. Segment results include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
Geographical Segments
Revenue originates wholly within the United Kingdom and as a result, no geographical segments are presented within these financial
statements.
Segment Analysis
The business segment results for the year ended 31st March 2008, together with comparative figures are as follows:
Secured loans Insolvency
Group
(Continuing operations) (Discontinued operations)
2008 2007 2008 2007 2008 2007
(Restated) (Restated)
� � � � � �
Segment Revenues 16,624,848 11,770,210 6,927,296 18,062,550 23,552,144 29,832,760
----------------- ----------------- --------------- --------------- ------------------
------------------
EBITDA 1,126,569 2,202,286 (3,255,324) 6,319,098 (2,128,755) 8,521,384
Amortisation and depreciation (152,189) (100,300) (143,195) (156,529) (295,384) (256,829)
Loss on sale of business - - (4,250,864) - (4,250,864) -
Goodwill impairment (984,900) - (174,975) - (1,159,875) -
Non trading items (3,923) (6,036) - - (3,923) (6,036)
----------------- ----------------- --------------- --------------- ------------------
------------------
(Loss) / profit from (14,443) 2,095,950 (7,824,358) 6,162,569 (7,838,801) 8,258,519
operations
Finance costs (262,448) - (334,884) (446,104) (597,332) (446,104)
----------------- ----------------- --------------- --------------- ------------------
------------------
(Loss) / profit before (276,891) 2,095,950 (8,159,242) (5,716,465) (8,436,133) 7,812,415
taxation
Taxation 1,624,076 (2,561,632)
------------------
------------------
(Loss) / profit for the year (6,812,057) 5,250,783
=========
==========
Other Information
Total Segment Assets 13,832,330 15,460,704 - 17,772,867 13,832,330 33,233,571
---------------- ---------------- -------------- --------------- ------------------
------------------
Total Segment Liabilities 5,374,993 10,507,484 - 8,310,243 5,374,993 18,817,727
----------------- ----------------- --------------- --------------- ------------------
------------------
Capital Expenditure 126,534 145,633 9,772 45,726 136,306 191,359
----------------- ----------------- --------------- --------------- ------------------
------------------
2 PARTICULARS OF EMPLOYEES
The average number of staff employed by the Group, including Executive Directors, during the financial year amounted to:
2008 2007
No No
Administration 271 247
Management 41 27
---------------------- ----------------------
312 274
=========== ===========
The aggregate payroll costs, including directors' emoluments, of the above were:
2008 2007
� �
Wages and salaries 7,828,814 6,108,149
Social security costs 870,724 613,743
Other pension costs 3,186 5,995
Share based payment (133,125) 113,386
-------------------- --------------------
8,569,599 6,841,273
=========== ===========
3 TAXATION ON ORDINARY ACTIVITIES
2008 2007
� �
Current tax:
Corporation tax (2,027,415) 2,699,188
Adjustment in respect of prior 451,057 (2,095)
periods
---------------------- ---------------------
Total current tax (1,576,358) 2,697,093
Deferred tax:
Origination of and reversal of (47,718) (138,721)
temporary differences
Adjustment in respect of prior - 3,260
periods
---------------------- -------------------
(47,718) (135,461)
---------------------- -------------------
Income tax expense (1,624,076) 2,561,632
============ ==========
The charge for the year can be reconciled to the profit per the Income Statement as follows:
2008 2007
� �
(Loss) / profit on ordinary (8,436,133) 7,812,415
activities before tax
---------------------- ---------------------
Tax at the UK corporation tax (2,530,840) 2,590,964
rate
Expenses not deductible for tax 52,438 6,428
purposes
Capital allowances in excess of 24,635 37,168
depreciation
Income not taxable for tax - (36,926)
purposes
Unrelieved tax losses and other 488,851
deductions
Adjustments in respect of prior 451,057 (2,095)
periods
Other short term timing (62,499) 101,554
differences
---------------------- ---------------------
Current tax charge (1,576,358) 2,697,093
============ ===========
4 (LOSS) / EARNINGS PER SHARE
Year ended 31 March 2008 Year ended 31 March 2007
(Restated)
� �
(Loss) / profit for the year (6,812,057) 5,250,783
Weighted average number of No. No.
shares in issue:
For basic earnings per share 28,554,090 24,615,385
Executive share options 1,216,802 1,281,980
Contingent share consideration - 2,297,574
------------------------------ ------------------------------
For diluted earnings per share 29,770,892 28,194,939
=============== ===============
(Loss) / earnings per share:
Basic (23.86) p 21.33 p
Diluted (23.86) p 18.62 p
The dilution in number of ordinary shares arises in respect of executive share options outstanding.
5 INTANGIBLE ASSETS
Software
Developme IPS Licences Domain Names 2008 2007
nt Costs Tota Tota
Group Goodwill l l
� � � � � �
Cost:
At beginning of year
16,827,819 175,510 194,739 10,018 17,208,086
311,230
Consideration adjustment
(4,588,106) - - - (4,588,106)
-
Arising on acquisitions
- - - - -
16,777,006
Additions - 40,751 37,910 - 78,661
119,850
Disposals/business disposal
- - (232,649) (10,018) (242,667)
-
------------------ -------------------- -------------------- ------------------ ------------------
--------------------
--
-
At end of year 12,239,713 216,261 - - 12,455,974
17,208,086
------------------ -------------------- -------------------- ------------------ ------------------
--------------------
--
-
Amortisation:
At beginning of year
- 66,620 46,859 - 113,479
16,419
Arising on acquisitions
- - - - -
35,901
Charge / (credit) for the year
- 51,044 44,230 - 95,274
61,159
Disposals/business disposal
- - (91,089) - (91,089)
-
Impairment 1,159,875 - - - 1,159,875
-
----------------- -------------------- -------------------- ----------------- -----------------
--------------------
- ---
-
At end of year 1,159,875 117,664 - - 1,277,539
113,479
----------------- -------------------- -------------------- ----------------- ------------------
--------------------
- ---
-
Net book value
At end of year 11,079,838 98,597 - - 11,178,435 17,094,607
========== =========== ========== ========== ========= =========
At beginning of year 16,827,819 108,890 147,880 10,018 17,094,607 294,811
========== =========== ========== ========== ========= =========
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from
that business combination. A summary of the allocation of the carrying value of goodwill and intangibles with indefinite useful lives by
business segment is as follows:
2008 2007
Cost � �
Insolvency - 184,993
Secured loans 11,079,838 16,652,844
------------------ ------------------
11,079,838 16,837,837
========= =========
Secured loans cost is made up of entirely of Goodwill. Insolvency cost in 2007 included Goodwill with a carrying value of �174,975 and
Intangibles with an indefinite useful life of �10,018.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the cash generating units are determined from value in use calculations. The key assumptions for the value in
use calculations are those regarding the discount rates, growth rates and expected changes to revenue and direct costs during the period.
Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks
specific to the cash generating units. This discount rate has been estimated at 10%. The growth rates are based on industry growth
forecasts. Changes in revenue and direct costs are based on past practises and expectations of future changes in the market.
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and
extrapolates cash flows thereafter in perpetuity based on an estimated growth rate of 2%.
During the year, goodwill impairment of �1,159,875 has been recognised and has been included separately on the face of the income
statement. Included within this goodwill impairment are amounts for �984,900 and �174,975 which relate to goodwill arising from the
acquisition of Loanmakers limited and goodwill arising from the acquisition of Unique Business Finance Limited respectively.
The circumstances which have led to the recognition of goodwill impairment on Loanmakers Limited relates to a down grading of
anticipated future cash flows caused mainly by the impact of the 'credit crunch' in the UK financial market. Following a review of the net
assets of Debtmatters Limited the directors resolved to make an impairment charge of �174,975 against the goodwill of Unique Business
Finance.
The purchase adjustments to goodwill and equity relating to the acquisition of Loanmakers are as follows:
Share capital Share premium
Deferred consideration Cash Total
� � � �
As at 31 March 2007 (4,662,226) - (3,750,267) (8,412,493)
Issued / paid during the year 382,839 2,427,203 1,014,345 3,824,387
Purchase adjustment 4,279,387 (2,427,203) 2,735,922 4,588,106
---------------- ---------------- ---------------- ------------------
As at 31 March 2008 - - - -
========= ========= ========= ==========
On 6th March 2008, Debtmatters limited disposed of the Company's IVA book for a consideration of �6.4m to a consortium comprising of
Grant Thornton UK LLP and Totemic Limited. On 20th March, Loanmakers (Holdings) Plc disposed of Debtmatters Limited for a consideration of
�800,000.
Group
2008
�
(Profit) / loss on sale of company
Intangible fixed assets - goodwill / acquisition 294,456
costs
Other net assets disposed on sale of business 340,278
Cash received (800,000)
-------------------
(Profit) / loss on sale of company (165,266)
-------------------
Loss on sale of IVA book 10,816,130
IVA book disposed 10,816,130
Cash received (6,200,000)
Consideration retention (200,000)
-------------------
Loss on sale of IVA book (4,416,130)
-------------------
Loss on sale of businesses (4,250,864)
=========
6 SHARE CAPITAL
�
Authorised:
35,200,000 (2007: 35,200,000) Ordinary shares of 10p (2007: 3,520,000
10p) each
===========
2008 2007 2008 2007
No No � �
Allotted and called up:
Ordinary shares of 10p (2007: 27,547,603 24,615,385 7,123,765 2,461,539
10p) each
Contingent share consideration - 2,932,218 - 4,662,226
Shares issued under contingent
consideration (note 5) 3,828,394 - 382,839 -
Adjustment to contingent share
consideration (note 5) (2,932,218) - (4,662,226) -
Ordinary shares of 10p each
issued during the period 2,627,720 - 262,772 -
-------------------- -------------------- -------------------- --------------------
31,071,499 27,547,603 3,107,150 7,123,765
========== ========== ========== ==========
Ordinary Shares
On 15 June 2006 Loanmakers (Holdings) plc acquired the entire share capital of Loanmakers (UK) Limited for a total consideration
(including contingent consideration) of �14,060,070. Accordingly the provisional amount booked in 2007 as contingent consideration were
reversed.
On 19th September 2007, 3,828,394 ordinary shares of 10p each were issued at �0.73 per ordinary share as a part of the final
determination of the contingent consideration (note 5).
On 13th July 2007, 2,627,720 ordinary shares of 10p each were issued at a price of �1.13 per ordinary share.
Options
At 31 March 2008 the Company had 1,230,768 (2007: 1,300,698) unissued ordinary shares of 10p each under the Company's share option
schemes, details of which are as follows:
Granted in the year Option Price Date from which
Grant date pence exercisable Expiry date
20/06/05 461,538 65.0 01/07/08 20/06/15
20/06/05 692,307 65.0 01/07/10 20/06/15
15/06/06 76,923 65.0 01/09/08 15/06/16
7 GENERAL INFORMATION
The preliminary financial information does not constitute full accounts within the meaning of section 240 of the Companies Act 1985 but
is derived from accounts for the years ended 31 March 2008 and 31 March 2007. The figures for the year ended 31 March 2008 are unaudited.
The preliminary announcement is prepared on the same basis as will be adopted in the statutory accounts for the year ended 31 March 2008.
While the financial information included in this preliminary announcement have 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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