RNS Number:1220E
Diamond Lifestyle Holdings PLC
20 September 2007
Diamond Lifestyle Holdings Plc
("Diamond" or the "Group")
unaudited half yearly report
Diamond Lifestyle Holdings Plc, the financial and advisory intermediary,
specialising in the provision of mortgage broking and related services to the
sub-prime market under the Governments 'Right to Buy' scheme, announces its
unaudited half yearly results for the period ended 30 June 2007.
Financial highlights
* Turnover for 6 months to 30 June 2007 #3.6 million and #2.9 million on a
pro forma* basis (6 months to 30 June 2006: #3.5 million)
* Gross profit margin for 6 months to 30 June 2007: 53.5% and 57.0% on a pro
forma* basis (2006: 60.4%)
* Administrative costs for the 6 months to 30 June 2007 were #2.0m and #1.7m
on a pro forma* basis (6 months to 30 June 2006: #1.5 million)
* Loss before interest and tax for 6 months to 30 June 2007 #9,291 and
profit of #89,000 on a pro forma* basis (2006: profit #622,111)
* as a result of the Company adopting reverse acquisition accounting the 2007
pro forma figures reflect the activity of Diamond Lifestyle Limited to which the
comparative 2006 figures relate.
Chairman's Statement
At the time of writing, the Board is clearly aware and sensitive to media
coverage in both the banking and sub-prime sectors, but against this challenging
background the Board remains confident in the Groups medium and long term
prospects.
In my statement to the market 31 July 2007 I noted that the sub prime lenders
had reviewed their financial arrangements with suppliers that had led to a
reduction in lending fees and commissions. It was also noted that the Group had
made significant progress in reducing administrative costs, associated with the
cost of conveyancing, and had ceased to operate in areas where acceptable
financial returns could not be achieved. Furthermore, I stated that the Group
had renegotiated its fees and commission arrangements with lenders so as to
restore them to historic levels. The adverse market events of the past number
of weeks has resulted in further downward pressure being experienced by the
Group on fee and commission rates.
The adverse impact on the UK banking sector in 2007 has been driven by loan
defaults in the United States, causing related funding and balance sheet
pressures in the UK. Inevitably, this has translated into a tightening of
lending criteria, raising of interest rates and reduction in fees and
commissions paid to the Group.
Financial review
Turnover for the 6 months to 30 June 2007 was #3,554,003 and #2,941,000 on a pro
forma* basis (2006: 3,468,883). In the six months to 30 June 2007 the Group
recorded a loss before interest and tax of #9,291 and a profit of #89,000 on a
pro forma* basis. (2006: profit #622,111).
As at 30 June 2007 the Group had cash resources of #118,361 (2006: #870,075).
During the 6 month period to 30 June 2007 the Group repaid #750,000 of loans to
Clydesdale Bank Plc (2006: #nil).
The Loss per Share for the 6 month period to 30 June 2007 amounted to 0.05 pence
per share (2006: Earnings per Share 0.38 pence per share).
Future Strategy
Against this background, the board has implemented the following strategies to
re-establish profitability and enhance cash generation in the current year:
* Reducing administration fees in particular in respect to conveyancing
costs;
* A new supplier of leads providing a high number of remortgage
opportunities; and
* Ongoing negotiations with lenders to improve commercial terms, whilst
maintaining a broad based panel of lenders.
Given the difficult economic climate for mortgage finance, at this time, the
business remains focused on providing appropriate mortgage finance to its client
base. However, the board remains actively engaged in identifying and pursuing
appropriate acquisition opportunities, to further exploit the Group's strong
position in the sector.
Paul Hughes
19 September 2007
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE 6 MONTHS ENDED 30 JUNE 2007
6 months to 30 6 months to 30 Year ended 31
June 2007 June 2006 December 2006
Unaudited Unaudited Audited
#'000 #'000 #'000
Revenue 3,554 3,469 6,708
Cost of sales (1,653) (1,363) (2,704)
Gross profit 1,901 2,106 4,004
Investment revenue - 22 38
Administrative expenses (1,984) (1,484) (3,038)
(Loss) / Profit before exceptional items (83) 644 1,004
Exceptional goodwill impairment - - (1,390)
(Loss) / Profit before tax (83) 644 (386)
Income tax expense 23 (195) (309)
(Loss) / Profit after tax (60) 449 (695)
(LOSS) / EARNINGS PER SHARE (pence)
Basic EPS (earnings after tax) (0.05) 0.38 (0.55)
Diluted EPS (0.03) 0.26 (0.38)
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 3O JUNE 2007
June 2007 June 2006 December 2006
Unaudited Unaudited Audited
#'000 #'000 #'000
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 245 130 188
Total non-current assets 245 130 188
CURRENT ASSETS
Inventories 99 95 44
Trade, other receivables and prepayments 1,381 853 1,312
Cash and bank balances 118 870 1,022
Total current assets 1,598 1,818 2,378
TOTAL ASSETS 1,843 1,948 2,566
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Issued capital and capital to be issued 1,233 1 1,233
Convertible loan stock 55 - 55
Share premium 742 - 742
2,030 1 2,030
Reverse Acquisition Reserve (3,431) - (3,431)
Retained earnings 14 1,218 74
Total equity (1,387) 1,219 (1,327)
NON CURRENT LIABILITIES
Borrowings 1,250 - 1,500
Deferred tax liabilities 28 20 28
Total non-current liabilities 1,278 20 1,528
CURRENT LIABILITIES
Trade and other payables 1,174 227 1,064
Borrowings 500 - 1,000
Current tax liabilities 278 482 301
Total current liabilities 1,952 709 2,365
TOTAL LIABILITIES 3,230 729 3,893
TOTAL EQUITY AND LIABILITIES 1,843 1,948 2,566
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE 6 MONTHS ENDED 30 JUNE 2007
6 months to 6 months to Year ended 31
30 June 2007 30 June 2006 December 2006
Unaudited Unaudited Audited
#'000 #'000 #'000
(Loss) / profit for the year before tax (83) 644 (386)
Adjustments for non-cash and similar items 58 35 78
Movements in working capital (13) (113) 317
Income taxes paid - 2 (288)
Net cash (outflow) / inflow from operating activities (38) 568 (279)
Investing activities (116) (15) (115)
Financing Activities
Net proceeds from issue of shares - - 673
Notional issue of shares on reverse acquisition - - 425
Repayment of debt (750) - -
Dividends paid - (500) (500)
(Decrease) / Increase in cash and cash equivalents (904) 53 204
Cash and cash equivalents at 1 January 1,022 818 818
Cash and cash equivalents at 30 June 118 871 1,022
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTHS ENDED 30 JUNE 2007
Issued Capital, Share Reverse Acquisition Retained Earnings Total Equity
Premium and Reserve
Convertible
Loan Stock
#'000 #'000 #'000 #'000
Balance at 1 January 2006 558 (557) 1,269 1,270
Profit for the period - - 449 449
Equity dividends - - (500) (500)
Balance at 30 June 2006 558 (557) 1,218 1,219
Balance at 1 January 2007 2,030 (3,431) 74 (1,327)
Loss for the period - - (60) (60)
Balance at 30 June 2007 2,030 (3,431) 14 (1,387)
NOTES TO THE ACCOUNTS
1. Basis of preparation
The condensed financial statements have been prepared using accounting policies
consistent with International Financial Reporting Standards and in accordance
with International Accounting Standard (IAS) 34 Interim Financial Reporting.
The financial information set out here does not constitute statutory accounts as
defined by S240 of the Companies Act 19845.
These interim results have not been subject to a review by the Company Auditors.
2. Significant accounting policies
The condensed financial statements have been prepared under the historical cost
convention.
The financial statements for the year ended 31 December 2006 explain the
business combination of the Company and Diamond Lifestyle Limited and its
treatment as a reverse acquisition. As a consequence the interim results for the
6 months ended 30 June 2007 are those of the combined entity and the comparable
results for the period ended 30 June 2006 are those of Diamond Lifestyle Limited
only.
The same accounting policies, presentation and method of computation are
followed in these condensed financial statements as were applied in the
preparation of the financial statement for the year ended 31 December 2006.
3. Earnings (loss) per share
6 months 6 months
ended 30 June ended 30 June
2007 2006
Unaudited Unaudited
pence per pence per
share share
Basic earnings / (loss) per share (0.05) 0.38
Diluted earnings / (loss) per share (0.03) 0.26
Basic earnings per share
Profit / (loss) for the year attributable to equity holders of the parent (59,891) 448,958
Weighted average number of ordinary shares for the purposes of basic 126,650,814 118,750,000
earnings per share (all measures)
The share numbers are for year on year comparison only
Diluted earnings per share
The earnings used in the calculation of all diluted earnings per share measures
are the same as those for the equivalent basic earnings per share measures, as
outlined above.
The weighted average number of ordinary shares for the purposes of diluted
earnings per share reconciles to the weighted average number of ordinary shares
used in the calculation of basic earnings per share as follows:
6 months 6 months
ended 30 June ended 30 June
2007 2006
Unaudited Unaudited
shares shares
Weighted average number of ordinary shares used in the calculation of 126,650,814 118,750,000
basic earnings per share
Shares deemed to be issued for no consideration in respect of:
Employee options 2,600,000 0
Convertible notes 2,750,000 2,750,000
Deferred consideration 48,750,000 48,750,000
Weighted number of ordinary shares used in the calculation of diluted 180,750,814 170,250,000
earnings per share (all measures)
4. Post balance sheet events
There are no material post balance sheet date events.
5. Interim report
The Group's website is www.diamondlifestyleholdings.co.uk and a copy of this
Interim Statement is available on this website.
6. Cautionary Statement
Diamond Lifestyle Holdings plc has made forward looking statements in this
release, including statements about the market for and benefits of its products
and services, financial results and business strategies. These statements about
future events are subject to risks and uncertainties that could cause Diamond's
actual results to differ materially from those that might be inferred from the
forward-looking statements. Diamond can make no assurances that any
forward-looking statements will prove correct.
Contact details
Paul Hughes, Chairman - 01480 422160
Nigel Hodges, Finance Director - 01480 422160
Liam Murray, City Financial Associates Limited - 020 7492 4777
End
Notes to the editor:-
DIAMOND LIFESTYLE
Diamond, which was incorporated on 17 September 2001, is a financial
intermediary principally providing advice and brokering finance to tenants of
council houses in England and Wales under the 'Right to Buy' scheme, with a
focus in providing mortgages for the UK sub-prime or credit impaired sector. The
profile of Diamond has now broadened to include remortgages and second charge
loans. Diamond also advises upon and sells related insurance products to its
customer base. Diamond is authorised and regulated by the FSA.
The Group is not just a mortgage broker, but a packager and a branded lender.
This means that as well as being an intermediary who liaises with the customer
and the lender, as a packager it has been appointed as an outsourced
administration centre on behalf of the lenders to underwrite mortgage cases. The
Group operates a panel of 6 lenders at any one time. This provides the
flexibility to determine a mortgage that suits the financial circumstances of
individual clients. As a packager it also instructs the valuation on the
property and applies for relevant references.
As a mortgage company Diamond Lifestyle is one of the leading Right to Buy
Mortgage companies in the UK. Given the historic level of Right to Buy activity,
it is also building the number of Remortgages and 2nd Charge Loans in order to
achieve critical mass in those sectors. It is able to help those customers with
either a perfect credit history or those customers that have issues such as
CCJ's, defaults, mortgage or rent arrears, ex bankrupts and customers on various
State benefits.
Diamond Lifestyle offers a unique service whereby it sponsors clients on Right
to Buy and Remortgage Facilities. It pays all of the customer's upfront fees,
such as, solicitors, including disbursements, brokers, processing, referencing
and the valuation. These charges are only covered when the application completes
and the mortgage or loan provided to the client. In addition it acts for the
customer in dealings with all third parties including the local Council on a
Right to Buy.
Added to this unique service is the unrivalled customer service of handling the
whole process from beginning to end, even helping its customers apply for the
Right to Buy, appointing the company's in-house completions team and ensuring
that it holds the hand of each and every customer from beginning to end until
the mortgage completes.
In addition to securing the mortgage for any client the Group also offers a
range of other products for clients to consider. These include Accident,
Sickness and Unemployment Insurance, Life Insurance, Buildings and Contents
Insurance, Will preparation and Home Improvements. This range can be added to
over time but does provide some breadth to the product and service clients can
be offered.
Diamond predominately operates within the 'sub-prime' lending market. The
Directors view this market as comprising mortgages, secured loans and other
forms of finance that are designed for consumers who fall outside the standard
parameters of high street lenders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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