Posted on March - 29 - 2010
Ultimate Finance opens up its loan book
Ultimate Finance has seen the size of its north west loan book rocket as demand grows for its factoring, invoice discounting and other services to small and medium-sized firms.
The AIM-listed company, which has a team of eight based in Mosley Street, Manchester, said lending by the branch at the end of 2009 was £8m against £3m a year earlier.
Firms involved in recruitment, manufacturing, transport, IT consultancy and wholesale and distribution were among those which obtained finance from Ultimate last year.
Chief executive Richard Pepler said he sees an opportunity for substantial expansion in the region, adding that its Manchester office has capacity for 22 staff.
“We want to grow it as quickly as possible,” he said. “There is great potential for us in the north west.”
Shares in Bristol-based Ultimate gained more than three per cent after it posted a 36 per cent rise in pre-tax profits for the six months to December 31, up from £140,000 to £191,000, and proposed its first interim dividend of 0.3p.
It said it would maintain a progressive dividend policy, with a plan to return 50 per cent of retained profits to shareholders in each financial year.
Turnover during the first half rose from £2.23m to £2.85m.
The shares climbed 0.5p to a year-high of 15.75p.
Mr Pepler said Ultimate had seen an increase in inquiries from across the north of England and had recently strengthed its team in Manchester with the arrival of Austin Thorp as regional commercial director.
“The prolonged economic downturn is continuing to impact on our core SME market,” he said. “However, we believe that the specialist help we provide brings major benefits to that sector in such conditions.”
The company lends to firms with turnover of up to £20m and competes with rivals such as City Invoice Finance, Bibby and Positive Cash Flow Finance.
Margins were eroded slightly during the first half of the financial year due to increased staff costs and a change in the mix in favour of higher quality and larger businesses that require better terms, but reduce risk and improve retention rates.
Analyst Eric Burns, of broker WH Ireland, is predicting full-year profits of £500,000 on turnover of £5.9m. He said Ultimate’s first interim dividend was “arguably a ringing endorsement of the second-half outlook”. He moved his rating on the stock from ‘speculative buy’ to ‘buy’.
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