RNS Number : 6086Z
Prestbury Holdings PLC
22 July 2008
22 July 2008
Prestbury Holdings PLC
("Prestbury" or "the Company")
Final results for the 14 month period ended 31 December 2007
Prestbury Holdings PLC, the AIM-listed financial services company, announces its final results for the period ended 31 December 2007.
Highlights
* Average monthly turnover reduced by 9.5 per cent to �770,000 (2006: �851,000)
* Average monthly gross profit falls by 16 per cent to �160,000 (2006: �191,000)
* Average monthly EBITDA falls to �10,000 (2006: �53,000)
* �1 million loss for the group including full provision for related party loan of �850,000 (31 December 2006: �0.25 million
profit)
* Employee numbers reduced by an average of 23 per cent
* Loss per share of 3.4p (31 December 2006: earnings per share 0.98p)
* Shareholders funds reduced to �1.23 million (31 December 2006: �1.44 million)
* 33 per cent overhead reduction implemented in July 2008 down to �96,000 per month, average for the period was �150,000 per month
(2006: �139,000)
The 2008 Report and Accounts are available from the Company's website www.prestbury.com and are expected to be posted to shareholders
tomorrow. Following which, the Company will make a request to the London Stock Exchange for the restoration of trading in the Company's
shares.
Chairman and Chief Executive's statement
Overview
The second half of the period proved intensely challenging for reasons that have been well publicised in the financial and other press.
The number of new mortgages being completed measured on a monthly basis has fallen sharply since August 2007 and this fall has continued in
2008.
Operating review
In our second interim results for the six month period ended 31 October 2007, which were announced in January this year, we reported
that the industry had been hit hard by the Northern Rock debacle and subsequent credit crunch. There has been a noticeable difference
between conditions in the eight months to 30 June 2007 and the six months to 31 December 2007. The first period saw a number of developments
and improvements in the Prestbury business and your Chairman and CEO stated that we had confidence in the outlook for the business; however
the credit crunch in the second half of 2007 and the subsequent fall out has inevitably led to a property market downturn and consequential
reduction in new mortgage transactions. The Prestbury management team has handled this downturn well against a continuing difficult
backdrop.
We reported in January 2008 that the business would be subject to intense pressure and this has materialised. The downturn in the second
half of 2007 has naturally impacted the results for the entire financial period, as the effects of the credit crunch became more apparent in
the last four months of 2007. We expect continuing difficult conditions throughout 2008.
Current Trading
Since January this year, the effects of the reduced liquidity have flowed fully through to the mainstream lending market. Most banks and
building societies are currently seeking minimal new net lending and many of these are struggling to finance existing clients' financing
needs. The Council of Mortgage Lenders expects new net lending figures to drop by 57 per cent from �108 billion in 2007 to �55 billion in
2008, with first time buyers and home movers being the main victims of the reduction in the availability of new mortgages.
We reported in our last interims that 65 per cent of our mortgage revenues came from the re-mortgage activities undertaken by our
advisers for their existing clients. This is still the case, but the ability to move clients to a better mortgage with a new lender has
become ever more challenging.
Financial review
In the 14 months ended 31 December 2007, turnover was �10,784,937 (12 months ended 31 October 2006: �10,216,920). Losses after taxation
for the 14 month period were �1,000,996 of which �853,483 related to a provision against a related party loan (12 months ended 31 October
2006: profit �245,778). Shareholders funds at 31 December 2007 were �1,237,214 (31 October 2006: �1,448,745) which included cash of �304,919
(31 October 2006: �24,394).
Your Directors have taken steps to reduce its overheads significantly in the light of these trading conditions. Monthly overheads have
been reduced to approximately �96,000 as compared to the average monthly overheads for the period under review of �150,000. The changes
required to generate these savings have had a short term effect on Prestbury's ability to service its advisor base expeditiously but these
issues are now being addressed.
Developments
The prudent approach continually being taken by management has positioned us well against a backdrop of failing businesses and should
provide us with opportunities to recruit new advisers and grow the business.
It has been tough to recruit new Moneybrain AR franchisees, in light of the current economic climate, and it was unforeseen by the
directors that this would be such a bad time for these new AR businesses to be launched. We are committed to working with the business
owners and to get them up to their planned new business levels by finding new ways of generating business and new clients for them.
The industry is currently in a weak condition and the number of advisers, lending and insurance staff have been reduced dramatically.
One thing however that we should not forget is that we still have the same population needing mortgage and insurance products. The industry
is now ensuring that its business model is fit for the future, as is Prestbury.
One positive to come out of the credit crunch is that our advisers are now selling more insurance than ever and, for the first time ever
last month, the gross written commission for insurance sales (life and buildings and contents) exceeded mortgage sales. This change in
product mix confirms that the Prestbury model is more capable than most to weather the current storm.
We are very pleased to report that the time and intellectual investment made by the Prestbury team into our IT platform "Ascent" over
the last ten years is now starting to deliver tangible value. Our lending and insurance partners are recognising this as a valuable trading
platform and are enhancing our commercial terms accordingly. The directors believe that the operating platform is now extremely scalable and
is at a level whereby we could double the number of advisers with only a handful of new members of staff.
Prestbury Investment Management Limited
PIM specialises in providing Prestbury advisers with access to a mortgage product via a specialist lender. To complete a specialist
mortgage requires the expertise of the persons within the PIM business. Even following resolution of the current economic situation, this is
still an important function of the Prestbury Financial Limited Network proposition. With the downturn in activity your directors have
prudently decided to fully provide against the recoverability of the debt of �853,483 due from PIM. Further details are given in the related
party notes to the accounts.
PIM is now operating in a niche, low volume and high margin market and will continue to do so for the foreseeable future.
Board
Steve Keenan, one of the founders of Prestbury, resigned from the board in June 2008 to pursue other business opportunities. The Board
would like to thank him for his contribution in the year under review and for his valuable contribution over the 15 years he worked for the
Company.
As Prestbury Financial Limited, a wholly-owned subsidiary of the Company, carries out regulated business the trading operations are
governed by specific rules laid down by the FSA. The Board is required to monitor compliance with these rules on an ongoing basis and the
Board take these responsibilities very seriously. To assist the board in meeting these regulatory obligations Maggie Cresswell was appointed
to the board in her role as Compliance Director in June 2008.
Outlook
There can be little doubt that the trading outlook remains extremely challenging. We will continue to monitor the level of the Company's
overheads closely whilst simultaneously looking to recruit new advisors who have the necessary skill sets to grow the business.
In light of the current market and trading conditions the Company's revenue is likely to be significantly reduced in the year ending 31
December 2008 and we anticipate that these adverse conditions will continue in the first half of 2009.
We are fully committed as always to the growth of Prestbury Holdings PLC and delivering shareholder value.
Francis Maude Lee Birkett
Chairman Chief Executive Officer
22 July 2008
Further enquiries:
Prestbury Holdings plc
Lee Birkett (Chief Tel: 01625 591 400
Executive)
John East & Partners Limited
David Worlidge/Simon Tel: 020 7628 2200
Clements
Consolidated Profit and Loss Account
For the 14 month period to 31 December 2007
14 month
period
to
31 December Year ended
2007 31 October
� 2006
�
Notes
Turnover 10,784,937 10,216,920
Cost of sales (8,543,011) (7,918,327)
Gross profit 2,241,926 2,298,593
Net operating expenses (2,097,324) (1,664,173)
Exceptional item 2 (853,483) -
(Loss)/Profit before interest, depreciation (708,881) 634,420
and amortisation
Depreciation and amortisation (209,003) (192,443)
Operating (loss)/profit 2 (917,884) 441,977
Interest receivable and similar income 18,264 339
(899,620) 442,316
Interest payable and similar charges (2,342) (15,645)
(Loss)/Profit on ordinary activities before (901,962) 426,671
taxation
Tax on loss on ordinary activities 3 (99,034) (180,893)
(Loss)/Profit for the financial period after (1,000,996) 245,778
taxation
(Loss)/Earnings per share expressed in pence 4
per share:
Basic (3.47) 0.98
Diluted (3.47) 0.98
Continuing operations
None of the group's activities were acquired or discounted during the current period or previous year.
Total recognised gains and losses
The group has no recognised gains or losses other than the loss for the current period and the profit for the previous year.
Consolidated Balance Sheet
As at 31 December 2007
Note At 31 December 2007 At 31 October 2006
� � � �
Fixed assets
Intangible assets 5 815,933 942,855
Tangible assets 100,043 141,773
915,976 1,084,628
Current assets
Debtors - due within one year 6 414,110 743,152
Debtors - due after one year 6 - 774,692
Deferred tax asset due after 6 849,530 870,331
one year
Cash at bank 304,919 24,394
1,568,559 2,412,569
Creditors
Amounts falling due within one 7 (1,168,953) (1,933,839)
year
Net current assets 399,606 478,730
Total assets less current 1,315,582 1,563,358
liabilities
Creditors
Amounts falling due after more
than one year (4,678) (9,115)
Provisions for liabilities (73,690) (105,498)
Net assets 1,237,214 1,448,745
Capital and reserves
Called up share capital 1,517,389 1,267,389
Share premium 4,840,006 4,197,789
Treasury shares (133,457) (30,705)
Profit and loss account (4,986,724) (3,985,728)
Shareholders' funds 9 1,237,214 1,448,745
Cash Flow Statement
For the 14 month period ended 31 December 2007
Note 14 month period ended 31 December 2007 Year ended
31 October 2006
� � � �
Net cash (outflow)/inflow from
operating activities 1 (462,100) 79,462
Returns on investments and
servicing of finance 2 15,922 (15,306)
Capital expenditure 2 (50,685) (36,404)
(496,863) 27,752
Financing 2 777,388 (10,455)
Increase in cash in the period 280,525 17,297
Reconciliation of net cash
flow to movement in net funds 3
Increase in cash in the period 280,525 17,297
Cash outflow from decrease in
debt and lease financing 12,077 10,455
Change in net funds resulting
from cash flows 292,602 27,752
Movement in net funds in the 292,602 27,752
period
Net funds/(debt) at beginning 4,070 (23,682)
of period
Net funds at end of period 296,672 4,070
Notes to the Cash Flow Statement
1. Reconciliation of operating (loss)/profit to net ash (outflow)/inflow from operating activities
14 month period
to Year ended
31 December 31 October
2007
� 2006
�
Operating (loss)/profit (917,884) 441,977
Depreciation and amortisation charges 209,003 192,443
Profit on disposal of fixed assets (523) -
Decrease in provisions (31,808) (26,236)
Provision against related party debt 853,483 -
Impairment of website costs 10,857 -
Decrease/(Increase) in debtors 172,018 (813,721)
(Decrease)/Increase in creditors (757,246) 284,999
(462,100) 79,462
2. Analysis of cash flows for headings netted in the cash flow statement
14 month period
to Year ended
31 December 31 October
2007
� 2006
�
Returns on investments and servicing
of finance
Interest received 18,264 339
Interest paid (1,550) (14,159)
Interest element of hire purchase (792) (1,486)
payments
Net cash inflow/(outflow) for returns
on investments and servicing of 15,922 (15,306)
finance
Capital expenditure
Purchase of tangible fixed assets (56,457) (36,404)
Sale of tangible fixed assets 5,772 -
Net cash outflow for capital (50,685) (36,404)
expenditure
Financing
Capital repayments in year (12,077) (10,455)
Share issue 897,248 -
Issue costs (107,783) -
Net cash inflow/(outflow) from 777,388 (10,455)
financing
3. Analysis of changes in net funds
As at
As at 1 November 2006 31
� Decembe
r
2007
Cash flow �
�
Net cash:
Cash at bank 24,394 280,525 304,919
24,394 280,525 304,919
Debt
Hire purchase (20,324) 12,077 (8,247)
(20,324) 12,077 (8,247)
Total 4,070 292,602 296,672
Notes to the Financial Statements
1. Basis of preparation
The financial information has been prepared on the basis of the accounting policies set out in the accounts for the period ended 31
December 2007.
The financial statements have been prepared under the historic cost convention.
The financial information set out in these financial statements does not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. The consolidated balance sheet as at 31 December 2007 and the consolidated profit and loss account, consolidated cash
flow statement and associated notes for the 14 month period then ended have been extracted from the Group's financial statements. Those
financial statements have received an unqualified report from the auditors but have not yet been delivered to the Registrar of Companies.
Statutory accounts for the 14 months ended 31 December 2007 will be delivered to the Registrar of Companies in due course.
2. Operating (loss)/profit
14 month period
to Year ended
31 December 31 October
2007
� 2006
�
Hire of plant and machinery 36,773 29,517
Depreciation - owned assets 76,750 73,902
Depreciation - assets on hire purchase 5,331 14,750
contracts
Profit on disposal of fixed assets (523) -
Goodwill amortisation 126,922 103,791
Auditors' remuneration 6,667 8,791
Auditors' remuneration in respect of 19,847 16,854
the audit of associates
Auditors' remuneration for non audit 12,151 4,744
work
Exceptional item - provision against 853,483 -
related party debt
Directors' emoluments 348,996 218,027
Fees paid to third parties on behalf of directors' services 224,000 -
Directors' pension contributions to money purchase schemes 24,518 21,016
The number of directors to whom retirement benefits were
accruing was as follows:
Money purchase schemes 3 3
Auditors' remuneration for non-audit work includes fees in respect of taxation services of �4,263 (year ended 31 October 2006: �1,807);
fees in respect of accountancy services of �3,055 (year ended 31 October 2006: �Nil) and fees in respect of other services �4,833 (year
ended 31st October 2006: �2,937).
Information regarding the highest paid director is as follows:
14 month period Year
to ended
31 December 31 October
2007 2006
� �
Emoluments etc 85,997 90,600
Fees paid to third parties on behalf 130,600 -
of directors services
Pension contributions to money 10,752 -
purchase schemes
The fees paid to third parties in respect of directors services relate to management charges of �224,000 paid to Prestbury Investment
Management Limited, a company owned by Messrs L J Birkett and S J Keenan, in lieu of directors' remuneration.
None of the directors exercised share options in the period.
3. Taxation
Analysis of the tax charge
The tax charge on the loss on ordinary activities for the period was as follows:
14 month period
to Year ended
31 December 31 October
2007
� 2006
�
Current tax:
UK Corporation tax - 38
Deferred tax 99,034 180,855
Tax on (loss)/profit on ordinary 99,034 180,893
activities
Factors affecting the tax charge
The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The difference is explained below:
14 month period
to Year ended
31 December 31 October
2007
� 2006
�
(Loss)/Profit on ordinary activities (901,962) 426,671
before tax
(Loss)/Profit on ordinary activities
multiplied by the standard rate of (180,392) 128,001
corporation tax in the UK of 20 per
cent. (2006 - 30 per cent.)
Effects of:
Excess deprecation over capital 40,012 57,733
allowances
Allowable goodwill amortisation (25,384) (31,137)
Permanent disallowable expenses 8,154 3,560
Losses utilised in the period (31,047) (201,763)
Losses carried forward 17,961 43,707
Marginal relief - (63)
Related party debt provision not 170,696 -
allowed
Current tax charge - 38
4. (Loss)/Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive
potential ordinary shares.
Reconciliations are set out below.
14 month period ended 31 Weighted Average
December 2007 number of shares Per share amount pence
Earnings
�
Basic EPS
Earnings attributable to (1,000,996) 28,856,757 (3.47)
ordinary shareholders
Effect of dilutive securities - - -
Diluted EPS
Adjusted earnings (1,000,996) 28,856,757 (3.47)
Year ended 31 October 2006 Weighted Average
number of shares Per share amount pence
Earnings
�
Basic EPS
Earnings attributable to 245,778 25,019,011 0.98
ordinary shareholders
Effect of dilutive securities - - -
Diluted EPS
Adjusted earnings 245,778 25,019,011 0.98
5. Intangible fixed assets
Goodwill
�
Cost
At 1 November 2006 and 31 December 2007 1,077,910
Amortisation
At 1 November 2006 135,055
Amortisation for period 126,922
At 31 December 2007 261,977
Net book value
At 31 December 2007 815,933
At 31 October 2006 942,855
6. Debtors
As at
31 As at
December 31
2007 October
� 2006
�
Amounts falling due within one year:
Trade debtors 233,769 361,273
Amounts owed by related undertaking - 76,667
Other debtors 7,253 33,382
Deferred tax asset 100,377 178,610
Prepayments and accrued income 72,711 93,220
414,110 743,152
Amounts falling due after more than one year:
Amounts owed by related undertaking - 774,692
Deferred tax asset 849,530 870,331
849,530 1,645,023
Aggregate amounts 1,263,640 2,388,175
The Company's subsidiary undertaking, Prestbury Financial Limited, has taxable losses of �3,195,099 (31 October 2006: �3,382,887)
available for utilisation against future profits. A deferred tax asset has been recognised in respect of these losses together with �197,425
(31 October 2006: �96,262) of decelerated capital allowances.
The Company has taxable losses of �531,831 (31 October 2006: �424,419) available for utilisation against future profits. A deferred tax
asset has not been recognised in respect of these losses on the grounds that the availability of future profits remains uncertain.
The amount due from related undertaking relates to a balance due from Prestbury Investment Management Limited, further details of which
are disclosed in note 8.
7. Creditors: amounts falling due within one year
As at As at
31 31
December October
2007 2006
� �
Hire purchase contracts 3,569 11,209
Trade creditors 859,375 1,295,259
Amounts owed to related undertaking 56,554 -
Corporation tax 38 38
Social security and other taxes 166,840 109,757
Other creditors 39,835 474,905
Accrued expenses 42,742 42,671
1,168,953 1,933,839
8. Related party disclosures
The Company has taken advantage of the exemptions provided by FRS 8 from disclosing transactions with its wholly owned subsidiary.
The Group receives commission from Prestbury Investment Management Limited, a company owned and controlled by L J Birkett and S J
Keenan, based on agreed terms. During the period the total net income receivable by the group was �748,313 (year ended 31 October 2006:
�792,248).
The balance outstanding from Prestbury Investment Management Limited at the year end was �853,483 (31 October 2006: �851,359). This debt
was repayable over 60 months commencing May 2007 and interest of 7 per cent. per annum was being charged from that date. As a result of a
downturn in the business of Prestbury Investment Management Limited full provision against this debt has been made in these financial
statements.
Trumpo Limited, a company owned and controlled by L J Birkett, acts as a lead generation and media promotion business for Prestbury and
its advisers. Prestbury is not Trumpo Limited's only client. Trumpo Limited arranges affinity type arrangements for adviser recruitment for
Prestbury and client recruitment for Prestbury advisers.
During the period, Trumpo Limited, provided intermediary preparatory services costing �27,600 (year ended 31 October 2006: �nil) and
advertising services of �16,899 (year ended 31 October 2006: �nil) to the group.
The balance outstanding to Trumpo Limited at the year end was �56,554 (31 October 2006: �1,525).
9. Reconciliation of movements in shareholders' fund
As at 31 As at 31
December October
2007 2006
� �
(Loss)/Profit for the financial period (1,000,996) 245,778
Share capital issued 250,000 50,000
Premium on issue of shares 750,000 240,000
Issue costs (107,783) -
Issue of treasury shares (102,752) -
Net (reduction)/addition to shareholders' funds (211,531) 535,778
Opening shareholders' funds 1,448,745 912,967
Closing shareholders' funds 1,237,214 1,448,745
10. Posting of Report and Accounts
The 2008 Report and Accounts are available from the Company's website www.prestbury.com and are expected to be posted to shareholders
tomorrow. Following which, the Company will make a request to the London Stock Exchange for the restoration of trading in the Company's
shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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