REG - Inspired Capital PLC - Interim Results <Origin Href="QuoteRef">INSCI.L</Origin>

InspiredAnnouncement

29/10/2014 15:02

RNS Number : 7978S
Inspired Capital PLC
29 September 2014
29 September 2014
Inspired Capital plc
("Inspired" or the "Group")
Interim Results 
Inspired Capital plc, a challenger provider of customer-focused financial solutions to SMEs, is pleased to announce its interim results for the six months ended 30 June 2014.
Financial highlights
 Number of clients up 24.7% to 1,085 (H1 2013: 870*) and loan book increased by 27.6% to 48.6m (H1 2013: 38.1m*) since 30 June 2013
 Revenue up 14% to 7.2m (H1 2013: 6.3m*)
 Gross Profit up 12% to 6.5m (H1 2013: 5.8m*)
 Trading Profit of 1.6m** (H1 2013: 1.2m*)
 Profit before tax of 218,000*** (H1 2013: 349,000)
* H1 2013 comparatives are those of Ultimate Finance Group although this period was prior to its acquisition by the Group and remains unaudited. They are included to enable a better understanding of the Group's performance during the period.
** before Group costs, reorganisation costs, amortisation and tax
*** before one off reorganisation costs of 186,000 
Operational Highlights
 Positive marketing and branding progress, including Group name changed to Inspired Capital plc
 Key senior management appointments made including CEO, COO and Head of Sales
 Tripled Invoice Finance sales team
 Strong initial growth across all products
 Additional new products in trial phase 
 Independent assessment of the technology platform has determined the scalability of the existing infrastructure to 8x current business (400m loan book)
 Banking licence application initiated
Post Period End Highlight
 Encouraging start to H2 2014 with 10% increase in total loan book achieved in August 2014 and gross lending reaching 56m at 31 August 2014
Matt Cooper, Chairman of Inspired Capital plc said: "We acquired Ultimate Finance Group in September last year with a clear long term strategy to be the leading supplier of a broad range of financial products catering specifically to the SME market. These results are just the start and indicate that with increased resources allocated to growing the sales force, the core business can be significantly grown.
"The appointment of Brian Cole as CEO in May 2014 has been a major step for the Group, he will be responsible for driving the business and implementing the strategy and is already achieving results. We have also strengthened the senior management team with a newly appointed Head of Sales, confirming Jeremy Coombes as COO as well as a new Head of Marketing and Credit who will be joining shortly.
"There is clear demand for a provider of innovative, flexible financial services for SMEs and the Board is confident that we are well positioned to continue to grow significantly."
Brian Cole, Chief Executive Officer of Inspired Capital plc, further commented: "The results prove that we are well on our way to achieving a step change in the business. The Group's trading performance in the six months ended 30 June 2014 has been strong and, during the period, significant milestones have been achieved. There is however still much to be done to build a large-scale, transformational SME lender and we will continue to reinvest profits to achieve our aim. I look forward to updating on further progress as we continue to execute our stated strategy."
For further information please contact:
Inspired Capital plc
Matt Cooper, Chairman
Brian Cole, Chief Executive Officer
David Blain, Chief Financial Officer
+44 (0) 7721 978 218
Altium (financial adviser and nominated adviser)
Paul Lines
Phil Adams
Adam Sivner
+44 (0) 845 505 4343
Panmure Gordon (broker)
Dominic Morley
+44 (0) 20 7886 2500
Newgate Threadneedle
John Coles
Fiona Conroy
Caroline Forde
Jasper Randall
+44 (0) 20 7653 9850
About Inspired Capital plc
Inspired Capital is building by organic growth and acquisition a new customer-friendly force in SME lending by deploying long term capital. There is an opportunity to grow considerably in an underserved sector, with SMEs traditionally finding credit difficult to access from the major clearing banks that often focus on the security and stability of retail and larger corporate lending.
For more information please visit http://www.inspiredcapitalplc.com. 
H1 2014 Overview
The Group's trading performance in the six months ended 30 June 2014 has been strong and, during the period, significant milestones have been achieved including the recruitment of the new Chief Executive Officer, Brian Cole, who will lead the business in its exciting development as we implement our business plan. Additionally, in line with the intentions upon which the acquisition of Ultimate Finance Group were originally based, significant resources applied to increasing the sales force of the business have resulted in step change increases to monthly new client relationships and as such, overall lending volumes. Since the acquisition of Ultimate, Inspired has grown loans by 41% overall including 10% growth in total lending in August 2014 to 56m.
Client and loan growth rates reflect immediate increase in origination volume and provide an indication of how revenue, which is generated over the course of the relationship, will increase in subsequent periods.
The Group's profit before tax was 218,000 (before a one off reorganisation charge of 186,000) compared with 349,000 in the first half of the previous year. The Group's stated strategy is to reinvest the increasing profit base generated by the newly acquired business in seizing the opportunity management sees to build a large-scale, transformational SME lender. As such, the Group will not pay an interim dividend for the period (H1 2013: Nil).
During August 2014, the Group changed its name to Inspired Capital plc to better reflect its vision to transform the SME lending space through a customer-centric brand, innovative products and a modernised operating model. 
Strategy
The first step-change phase of growth has begun and is yielding results. With the additional resources available through the acquisition, the invoice finance sales force has tripled, enabling rapid scaling of the historically largest Ultimate product range. Further increases to the sales force supporting the asset, trade and construction products will boost these already growing diversification strategies. With a proven range of products and a scaled up, experienced and geographically distributed sales force in place, the Group will begin to increase marketing spend in the next period.
With several senior appointments, including the retention of Ultimate co-founder, Jeremy Coombes the newly confirmed COO, and the hiring of Nick Smith, formerly Regional Managing Director - Northern Region of Aldermore as Head of Sales, who both contribute considerable SME experience to the team, Inspired Capital is already executing on its intention to establish a management team unlike that of any competitors in the SME lending space. During the period, the team has moved forward with plans regarding future branding, marketing and funding strategies, positioning the business for its future as a large-scale, market leading lender. In the final quarter of 2014 the Group will be announcing the appointment of a Chief Marketing Officer, who will be responsible for penetrating unsecured SME lending with the Business Cash product, currently in test phase.
Review of Operations
An independent assessment of the technology platform was conducted to determine the scalability of the existing infrastructure. It was verified that the current platform could scale up to 8x the current business size (circa 400m loan book) in the same products and segments Inspired currently offers through its Ultimate brand. 
As the Ultimate Finance Group operation in Bristol shifts toward much greater ambitions, investment in various elements of infrastructure will be required. Investment plans include strengthening the overall governance and risk management processes in the business, automation of various manual processes and hiring across compliance and credit-oriented roles, to ensure application underwriting and service quality remain robust in support of much more significant client and loan volumes. 
Change of Registered Office 
From today, 29 September 2014, we have moved our registered office to Ultimate's headquarters at 1 Westpoint Court, Great Park Road, Bradley Stoke, Bristol BS32 4PY.
Financial Review
The Group was an investing company during H1 2013 and the results for that period reflect various one off gains, whereas from H2 2013 the Group became a trading company following the acquisition and, as a result, no meaningful comparison can be made between the financial results for the two periods.
Trading profits before group costs (included in administrative expenses in the consolidated income statement), reorganisation costs, amortisation and tax were 1.6m on revenues of 7.2m for the first half of 2014. Lending and client numbers at 30 June 2014 are 16.3% and 11.5% higher than at 31 December 2013 respectively. Growth during the period has been achieved across all products. Ultimate was not owned by the Group and so is not included in the comparatives for the previous period. 
Operating costs reflect the operating costs of the Ultimate operation and the Group. The Group's underlying trading business was profitable during the period and the Group continues to invest its trading profits in its development plans in order to achieve its future goals.
The Group achieved a profit before amortisation, reorganisation costs and tax of 0.7m. During the period to 31 December 2013 the Group incurred acquisition costs of 0.7m and made a gain on its initial investment in UFG of 0.6m.
The following proforma financial information is provided to enable review of the Group's financial performance by including unaudited results of Ultimate for the period to 30 June 2013 (prior to acquisition by the Group):

H1 2014
H1 2013
Growth

Unaudited
Unaudited
Unaudited
Number of clients
1,085
870
24.7%
Loan book ('m)
48.6
38.1
27.6%
Revenues ('m)
7.2
6.3
14.4%
Trading profit* ('m)
1.6
1.2
41.6%
*before Group costs, reorganisation costs, amortisation and tax
Review of Funding
We continue to have strong relationships with our key funding providers and are looking to increase the levels of funding available to us as well as diversify our funding partners in order to support future growth. 
The principal risks and uncertainties affecting the Group are unchanged from the position reported in our last financial statements and management continue to employ appropriate actions to mitigate those risks and uncertainties.
Management has applied for government funding from the Department of Business Innovation and Skills ("BIS") as part of the government's initiative to support lending to UK small businesses.
The Group has also initiated the banking license application process which, subject to regulatory approval, would enable it access additional and very affordable funding. 
Outlook
Inspired Capital has made significant progress in all areas of its business strategy during the period, increasing business volumes, successful recruitment, branding and IT strategy. Activity across all products has increased strongly with further lending growth expected in the second half of the year. The Board remains confident of the Group's prospects for the remainder of the current financial year and beyond. 
Mr Matt Cooper
Chairman
Mr Brian Cole
Chief Executive Officer
29 September 2014
Condensed consolidated income statement
Six months
Six months
15 months
ended
ended
ended
30 June
30 June
31 December
2014
2013
2013
(unaudited)
(unaudited)
(audited)
Note
'000
'000
'000
Continuing operations
Revenue
7,192
-
4,384
Cost of sales
(682)
-
(624)
Gross profit
6,510
-
3,760
Operating expenses
Administrative expenses
(5,849)
(318)
(3,916)
Gain on initial UFG investment
-
517
597
Acquisition costs
-
-
(726)
Reorganisation costs
(186)
-
-
Amortisation
(491)
-
(396)
Total operating expenses
(6,526)
199
(4,441)
Operating (loss)/profit
(16)
199
(681)
Financial items
Finance income
61
109
280
Finance expense
(13)
-
(14)
Dividend income
-
41
41
Profit/(loss) before taxation
32
349
(374)
Taxation
3
(56)
-
(113)
(Loss)/profit for the period from continuing operations
(24)
349
(487) 

Discontinued operations
Profit for the period from discontinued operations
-
102
408
(Loss)/profit for the period 
(24)
451
(79)


(Loss)/earnings per share from continuing operations
Basic and diluted
5
0.0p
0.2p
(0.3)p
(Loss)/earnings per share from continuing and discontinued operations
Basic and diluted
5
0.0p
0.3p
(0.0)p
There were no recognised income and expenses other than the result for the period and the previous period. Accordingly a separate condensed consolidated statement of comprehensive income has not been presented.
Condensed consolidated balance sheet 

30 June
30 June
31 December
2014
2013
2013
(unaudited)
(unaudited)
(audited)
'000
'000
'000
Assets
Non-current assets
Financial investment

-
2,217
-
Intangible assets
6
14,480
-
15,036
Property, plant and equipment
785
3
570
15,265
2,220
15,606
Current assets
Loans and other receivables
46,773
37
40,362
Investments
-
17,500
-
Cash and cash equivalents
14,282
8,970
21,748
61,055
26,507
62,110
Liabilities
Current liabilities
Bank borrowings and overdrafts
(31,828)
-
(30,402)
Bank loans
(400)
-
(400)
Trade and other payables
(2,570)
(226)
(4,696)

(34,798)
(226)
(35,498)
Non-current liabilities



Other payables
(711)
--
(1,355)
Deferred tax liability
(195)
-
(223)

(906)
-
(1,578)
Total liabilities
(35,704)
(226)
(37,076)
Net assets
40,616
28,501
40,640
Equity
Capital and reserves attributable to the equity holders of the parent
Share capital
26,449
19,505
26,449
Share premium
6,076
-
6,076
Own shares 
(7,595)
(7,595)
(7,595)
Retained earnings
15,686
16,591
15,710
Total equity
40,616
28,501
40,640
Condensed consolidated cash flow statement

Six months
Six months
15 months
ended
ended
ended
30 June
30 June
31 December
2014
2013
2013
(unaudited)
(unaudited)
(audited)
Note
'000
'000
'000
Net cash outflow from operating activities
7
(7,017)
(115)
(827)
Investing activities
Interest received
61
135
515
Dividend received
-
41
41
Finance expense
(13)
-
(14)
Acquisition of property, plant and equipment
(244)
-
(20)
Acquisition of intangible assets
(53)
-
(147)
Cash outflow on acquisition of Ultimate Finance Group plc
-
-
(4,916)
Purchase of own shares
-
(282)
(282)
Funds placed on term deposits
-
-
(76,000)
Funds returned from term deposits
-
7,000
100,500
Net cash (outflow)/inflow from investing activities
(249)
6,894
19,677
Financing activities
Loans received
-
-
607
Loan repayments
(200)
-
(1,056)
Net cash (outflow) from financing activities
(200)
-
(449)
Net (decrease)/increase in cash and cash equivalents
(7,466)
6,779
18,401
Cash and cash equivalents at beginning of period
21,748
2,191
3,347
Cash and cash equivalents at end of period
14,282
8,970
21,748
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2014
Share
Share
Own
Retained
Total
capital
premium
shares
earnings
equity
'000
'000
'000
'000
'000
Balance at 1 January 2014 (audited)
26,449
6,076
(7,595)
15,710
40,640
Comprehensive income for the period
-
-
-
(24)
(24)
At 30 June 2014 (unaudited)
26,449
6,076
(7,595)
15,686
40,616
For the six months ended 30 June 2013
Share
Share
Own
Retained
Total
capital
premium
shares
earnings
equity
'000
'000
'000
'000
'000
Balance at 1 January 2013 (unaudited)
19,505
-
(7,313)
16,140
28,332
Comprehensive income for the period
-
-
-
451 
451
Shares acquired for Treasury
-
-
(282)
-
(282)
At 30 June 2013 (unaudited)
19,505
-
(7,595)
16,591
28,501
For the 15 months ended 31 December 2013
Share
Share
Own
Retained
Total
capital
premium
shares
earnings
equity
'000
'000
'000
'000
'000
Balance at 1 October 2012 (audited)
19,505
-
(7,313)
15,789
27,981
Loss for the period
-
-
-
(79)
(79)
Purchase of own shares
-
-
(282)
-
(282)
Increase in share capital
6,944
6,076
-
-
13,020
At 31 December 2013 (audited)
26,449
6,076
(7,595)
15,710
40,640
1. General information
The condensed financial statements for the six months ended 30 June 2014 and for the six months ended 30 June 2013 have not been audited.
The figures shown above for the year ended 31 December 2013 are not statutory accounts. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those statutory accounts and their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain an adverse statement under sections 498 (2) or 498 (3) of the Companies Act 2006.
Sections of this half-yearly report, including but not limited to the Interim Management Report, may contain forward-looking statements with respect to certain of the plans, current goals and expectations relating to the future financial condition, business performance and results of the Group. These have been made by the directors in good faith using information available up to the date on which they approved this report. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the Group and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual future financial conditions, business performance, results or developments to differ materially from the plans, goals and expectations expressed or implied by these forward-looking statements and forecasts. Nothing in this document should be construed as a profit forecast.
2. Basis of preparation
The condensed financial statements are presented in accordance with the requirements of International Accounting Standard 34 - 'Interim Financial Reporting'. The Group prepares its annual financial statements in accordance with International Financial Reporting Standards as endorsed by the European Union. Except as noted below, the condensed financial statements have been prepared on the basis of the accounting policies set out in the Annual Report and Accounts of the Group for the period ended 31 December 2013, which are expected to be used in the preparation of the financial statements of the Group for the year ending 31 December 2014.
New accounting standards
IFRS 10 - 'Consolidated Financial Statements' and IFRS 12 - 'Disclosure of Interests in Other Entities' form part of the new IFRS regime for consolidation, and are applicable to the Group's accounts for the first time in the year ending 31December 2014. The adoption of these standards does not change the entities included within the consolidated accounts from those presently consolidated, nor do consolidated results presented under the new standards differ from how they would formerly have appeared.
IFRS 11 - 'Joint Arrangements' is applicable to the Group's accounts for the first time in the year ending 31December 2014. The adoption of this standard does not change the entities included within the consolidated accounts from those presently consolidated, nor do consolidated results presented under the new standards differ from how they would formerly have appeared.
IFRS 13, which has been adopted in the preparation of the condensed financial information, applies to the Group's accounts from the year ending 31 December 2014. It sets out new guidance on the establishment of fair value for accounting purposes and applies to all amounts in the Group's financial statements presented at fair value. The adoption of this standard has had no material impact on the Group's results or financial position.
Copies of the interim results for the six months ended 30 June 2014 are being sent to all shareholders. A copy can also be found on the Group's website at www.inspiredcapitalplc.com.
3. Taxation
30 June
30 June
31 December
2014
2013
2013
(unaudited)
(unaudited)
(audited)
Note
'000
'000
'000
Current tax
Charge for the period
(56)
-
(113)





The charge can be reconciled to the result for the period per the income statement as follows:




Profit/(loss) for the period from continuing operations
32
349
(374)


Tax on ordinary activities at standard UK corporation tax rate of 22.0% (23.5%: 23.4%)
(7)
(82)
87
Effects of:


Expenses not deductible for tax purposes
(32)
-
(238)
Income not taxable
-
-
245
Accelerated capital allowances
(28)
-
(16)
Losses utilised
11
82
(191)
Current tax charge for the period
(56)
-
(113)
Deferred tax is provided as follows:


Accelerated capital allowances
(44)
-
(72)
Other timing differences
(151)
-
(151)
(195)
-
(223)
No deferred tax asset has been recognised in respect of excess tax losses of 62.0 million on the basis that it is not anticipated that these losses will be utilised in the foreseeable future.
4. Segmental analysis
All of the Group's turnover and operating results arose from the sole base of operations in the United Kingdom from its principal activity. All net assets are in one geographical area, being the United Kingdom.
5. (Loss)/earnings per share
The calculation of basic and diluted loss/earnings per ordinary share is based on the following data:
Six months
Six months
15 months
ended
ended
ended
30 June
30 June
31 December
2014
2013
2013
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share ('000)
219,040
149,881
167,188
6. Intangible assets
Cost
Goodwill

Product
development

Customer
relationships

Total

'000

'000

'000

'000








Balance at 30 June 2013
-

-

-

-








Expenditure incurred in the period
-

147

-

147
Acquired through business combinations
13,361

139

1,785

15,285
Balance at 31 December 2013 
13,361

286

1,785

15,432








Expenditure in the period
-

53

-

53
Written off in the period
-

(96)

-

(96)
Balance at 30 June 2014
13,361

243

1,785

15,389








Amortisation







Balance at 30 June 2013
-

-

-

-
Charged in the period
-

-

396

396
Balance at 31 December 2013
-

-

396

396
Charged in the period
-

22

491

513
Balance at 30 June 2014
-

22

887

909








Net book value







At 30 June 2013
-

-

-

-
At 31 December 2013
13,361

339

1,389

15,036
At 30 June 2014
13,361

317

898

14,480
7. Notes to the cash flow statement
Six months
Six months
15 months
ended
ended
ended
30 June
30 June
31 December
2014
2013
2013
'000
'000
'000
Operating loss from continuing operations
(16)
199
(681)
Profit from discontinued operations
-
102
408
Depreciation, amortisation and impairment charges
638
-
467
Profit on initial investment in UFG
-
(517)
(597)
Operating cash flows before movements in working capital
622
(216)
(403)
(Increase)/Decrease in receivables
(6,411)
-
(3,130)
(Decrease)/increase in payables
(2,654)
101
(369)
Increase in bank borrowings and overdrafts
1,426
-
2,987
Net cash utilised by operations
(7,017)
(115)
(915)
Tax recovered
-
-
88
Net cash (outflow) from operating activities
(7,017)
(115)
(827)
8. Going concern
The Directors confirm that they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than twelve months from the date of approval of this report, based on its anticipated annual outflow of funds and current cash position. Accordingly, they have continued to adopt the going concern basis in preparing these condensed financial statements.
9. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. There were no transactions with key management personnel requiring to be disclosed under Schedule 6 of the Companies Act 2006 or IAS 24.

This information is provided by RNS
The company news service from the London Stock Exchange
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