Final Results for the year ended 31 March 2011
14 November 2011 - 8:01AM
UK Regulatory
TIDMSGG
14 November 2011
Sterling Green Group plc
("Sterling Green" or "the Company")
Final Results for the year ended 31 March 2011
CHAIRMAN'S STATEMENT
Introduction and review of activities
I am pleased to present the financial statements of Sterling Green Group plc
and its subsidiaries ("the Group") covering the year ended 31 March 2011. As
forecast in my Chairman's Statement accompanying the interim results
announcement in November 2010, I am able to report the Group's maiden profit
for the full year ended 31 March 2011.
Results and dividends
Revenue for the year ended 31 March 2011 was GBP2,801,000 (2010 - GBP2,106,000).
Revenue was made up of GBP2,681,000 (2010 - GBP1,977,000) from debt management
services and GBP120,000 (2010 - GBP129,000) relating to mortgage business.
The Group profit after taxation for the year amounted to GBP32,000 (2010 - GBP
238,000 loss). The Directors are not able to recommend the payment of a
dividend.
Trading review
The Group's overall performance during the year showed a significant
improvement on the prior year's results as the Group was able to increase total
revenues by 33%, while maintaining its gross margins and restricting the
increase in total overhead costs to just 2.8%.
Debt management revenues of GBP2,681,000 for the year reflected an increase of
35.6% on the prior year figure of GBP1,977,000. Gross margins on debt management
were only slightly down at 46.4% compared to 47.6% whilst debt management
overheads of GBP983,000 were GBP51,000 or 5.5% higher than the GBP932,000 shown in
the prior year. Overall, debt management activities showed an operating profit
of GBP262,000 compared with an operating profit of GBP10,000 in the prior year.
Re-mortgaging revenues of GBP120,000 were down on the prior year figure of GBP
129,000. However, further cost cutting during the year enabled this activity to
show an operating profit of GBP33,000 compared to GBP12,000 in the prior year.
Current performance and future developments
Disappointingly, the Group's debt management activities have shown a small loss
in the period since the year end.
Whilst the Group has been successful in growing its client base and the
associated revenues derived from those clients, it has struggled in a very
competitive environment, to generate sufficient income and profits to fully
offset the costs associated with the Company being on AIM. The Company has seen
a marked increase in costs associated with acquiring robust client leads and,
in order to grow the business, the Group has taken on debt to fund specific
marketing campaigns and/or payments to lead providers. As a result, the
on-going running costs are now at a level that would require substantial growth
in the Group's client base in order to continue to be able to service the debt
and maintain the Group's lead generation programme. The Directors believe that
the Group does not have the necessary capital or ability to raise sufficient
capital to compete with other larger competitors.
As a result, the Company has entered into a conditional sale and purchase
agreement to dispose of the majority of its debt management book (the "Debt
Books"). DRSP Limited has agreed to acquire the Debt Books for a price of GBP
50,000 plus an amount equal to 12 times the total average monthly fee of the
Debt Books. The Directors estimate that this will be approximately GBP1.05
million on completion, with the consideration being satisfied entirely in cash.
STERLING GREEN GROUP PLC
CHAIRMAN'S STATEMENT (continued)
___________________________________________________________________________
The transaction is dependent upon shareholder approval and a Circular has today
been sent to shareholders outlining the details of the proposed transaction. In
the opinion of the Directors, the proposed disposal represents the best chance
for shareholders to realise some value from their investment.
The proposed disposal constitutes a fundamental change of business under Rule
15 of the AIM Rules and is, therefore, conditional on shareholder approval. If
the transaction is approved by shareholders, the Group will have limited
trading activities, which in the absence of a sale, the Directors anticipate
will continue for the foreseeable future. The proceeds of the disposal will be
used to repay the Group's indebtedness amounting to approximately GBP440,000 and
for working capital generally. Following the disposal the Group will retain
cash balances of approximately GBP500,000 after repaying debt, certain other long
term creditors and expenses relating to the transaction.
J M Edelson
Chairman
14 November 2011
Further enquiries:
Sterling Green Group plc Tel: 0161 975 5757
Michael Edelson
Merchant Securities Limited Tel: 020 7628 2200
Simon Clements/David Worlidge
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011
Note 2011 2010
GBP000 GBP000
Revenue 2,801 2,106
Cost of sales (1,506) (1,128)
Gross profit 1,295 978
Administrative expenses (1,175) (1,143)
Profit/(Loss) from operations 120 (165)
Finance costs (88) (72)
Profit/(Loss) before tax 32 (237)
Income tax charge 2 - (1)
Profit/(Loss) and total comprehensive 32 (238)
income for the year attributable to
equity holders of the parent
Earnings/(Loss) per share 3 0.01p (0.08p)
Basic and diluted
There were no other items of comprehensive income other than the profit for the
year.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2011
Note 2011 2010
GBP000 GBP000
Non-current assets
Intangible assets 1,115 1,115
Property, plant and equipment 89 116
Total non-current assets 1,204 1,231
Current assets
Trade and other receivables 143 108
Cash and cash equivalents 44 28
Total current assets 187 136
Current liabilities
Trade and other payables (243) (361)
Current tax liabilities - (1)
Borrowings (424) (39)
Total current liabilities (667) (401)
Net current liabilities (480) (265)
Non-current liabilities
Borrowings (5) (279)
Total non-current liabilities (5) (279)
Net assets 719 687
Equity attributable to the owners of the
parent
Called up share capital 304 304
Share premium account 1,794 1,794
Capital reserve 6 6
Other reserve 891 891
Accumulated losses (2,276) (2,308)
Total equity 719 687
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011
Note 2011 2010
GBP000 GBP000
Cash flows from operating activities
Profit/(Loss) before tax 32 (237)
Adjustments for:
Depreciation of property, plant and equipment 62 98
Finance costs 88 72
Operating cash flows before movement in working 182 (67)
capital
(Increase)/Decrease in trade and other (35) 34
receivables
(Decrease)/Increase in trade and other payables (118) 42
Corporation tax paid (1) -
Net cash from operating activities 28 9
Cash flows used in investing activities
Purchase of property, plant and equipment (35) (5)
Net cash used in investing activities (35) (5)
Cash flows from/(used in) financing activities
Capital element of lease payments (39) (86)
Loans received 150 -
Finance costs paid (88) (72)
Net cash from/(used in) financing activities 23 (158)
Net increase/(decrease) in cash and cash 16 (154)
equivalents
Cash and cash equivalents at the start of the 28 182
year
Cash and cash equivalents at the end of the 4 44 28
year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2011
Attributable to equity holders of the parent
Share Share Share Capital Other Accum-ulated Total
capital premium capital reserve reserve losses GBP000
GBP000 account to be GBP000 GBP000 GBP000
GBP000 issued
GBP000
At 1 April 2009 288 1,710 100 6 891 (2,070) 925
Loss and total - - - - - (238) (238)
comprehensive
income for the
year
Issue of share 16 84 (100) - - - -
capital
At 31 March 2010 304 1,794 - 6 891 (2,308) 687
Profit and total - - - - - 32 32
comprehensive
income for the
year
At 31 March 2011 304 1,794 - 6 891 (2,276) 719
Other reserve
The other reserve is a merger reserve created on the acquisition of Sterling
Green Limited.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011
1. Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union and
with those parts of the Companies Act 2006 applicable to companies reporting
under IFRS.
The financial information set out above does not comprise the Company's
statutory accounts for the periods ended 31 March 2011 or 31 March 2010.
Statutory accounts for 31 March 2010 have been delivered to the Registrar of
Companies and those for 31 March 2011 will be delivered in due course. The
auditors have reported on those accounts. The accounts did not contain a
statement under the Companies Act 2006 s498(2) or (3), and both received an
unqualified audit opinion. However there was an emphasis of matter in relation
to going concern.
The Board has considered the Group's financial position and trading prospects
using detailed forecasts covering the period ending 31 March 2013, which
incorporate the current drawn down loan facility confirmed as available until
18 December 2011. These forecasts have been drawn up on the basis that the
existing loan will be repaid following completion of the proposed partial
Disposal of the Group's debt management book. On the basis that the partial
Disposal is completed and having made appropriate consideration, the Board
believes that the Group has adequate resources to continue trading for the
foreseeable future, and accordingly, the going concern basis has been adopted
in preparing these financial statements.
Additionally as the partial Disposal is subject to shareholder approval, the
Board has considered the Group's financial position and trading prospects using
detailed forecasts covering the period ending 31 March 2013 on the basis that
the proposed partial Disposal of the Group's debt management book does not
complete. These forecasts have been drawn up on the basis that the existing
loan will not be repaid and accordingly the Group would have to apply for a
further extension of that loan facility. Although the Board is not aware of any
reason why a further extension would not be granted, there is no certainty that
the Group would be able to extend those facilities beyond 18 December 2011.
This represents a material uncertainty related to events or conditions which
may cast significant doubt on the Group's and the Company's ability to continue
as going concerns and, therefore, that they may be unable to realize their
assets and discharge their liabilities in the normal course of business.
However, subject to this uncertainty, the Board believes that the Group has
adequate resources to continue trading for the foreseeable future, and
accordingly, the going concern basis has been adopted in preparing these
financial statements.
2. Income tax charge
2011 2010
GBP000 GBP000
Current year tax:
UK corporation tax - -
Prior year tax:
UK corporation tax underprovided - (1)
- (1)
Corporation tax is calculated at 28% (2010 - 28%) of the estimated assessable
profit for the year.
The tax charge for the year can be reconciled to the consolidated statement of
comprehensive income as follows:
2011 2010
GBP000 GBP000
Profit/(Loss) before tax 32 (237)
Loss on ordinary activities multiplied by 9 (66)
the relevant standard rate of corporation
tax in the UK of 28% (2010 - 28%)
Effect of:
Income not taxable/expenses not deductible (5) 8
for tax purposes
Utilisation of losses (4) -
Losses carried forward - 58
UK corporation tax underprovided in prior - (1)
year
Current tax charge for the year - (1)
Unrecognised deferred tax assets
The following deferred tax assets have not been brought into account as assets:
2011 2010
GBP000 GBP000
Tax losses 532 534
Temporary differences 52 60
3. Earnings/(Loss) per share
The calculation of basic earnings/(loss) per share is based on the following:
2011 2010
Earnings/(Loss) 32 (238)
Earnings/(Loss) for the purpose of basic and
diluted earnings /(loss) per share being the
net profit/(loss) attributable to equity
holders of the parent (GBP000)
Number of shares 303,675,390 303,587,719
Weighted average number of shares for the
purpose of basic earnings/(loss) per share
Effect of dilutive potential ordinary 12,567,280 -
shares:
- Share options
Weighted average number of ordinary shares 316,242,670 303,587,719
for the purpose of diluted earnings/(loss)
per
share
Earnings/(Loss) per share (pence) 0.01 (0.08)
Basic
Diluted 0.01 (0.08)
Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares in issue assuming conversion of all dilutive potential
ordinary shares. During the year the Company's potential ordinary shares
consist of share options. Due to losses in the preceding year there are no
dilutive ordinary shares in that year.
4. Notes to the cashflow statement
Cash and cash equivalents
Cash and cash equivalents consist of bank balances. Cash and cash equivalents
included in the cash flow statement comprise the following balance sheet
amounts:
2011 2010
GBP000 GBP000
Cash at bank 44 28
5. Related party transactions
The services of J M Edelson were provided to the Group under a service
agreement by London & City Credit Corporation Limited. Amounts charged to the
Group during the year for his services amounted to GBP25,000 (2010 - GBP25,000). At
31 March 2011 GBP2,500 (2010 - GBP2,448) of this amount remained outstanding.
S. T. Ali and J. McClean have provided personal guarantees up to a maximum of GBP
250,000 as security for the GBP400,000 loan facility available to the Group.
6. Dividend
The directors are not able to recommend the payment of a dividend.
7. Copies of the Report & Accounts
Copies of the Report & Accounts will be posted to shareholders shortly and are
also available from the Company's registered office at Number 14, The
Embankment, Vale Road, Heaton Mersey, Stockport, Cheshire SK4 3GN and from the
Company's website www.sterlinggreen.co.uk.
38
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