ELEP.L Regulatory News (ELEP)

11 Dec 2006 07:01

Elephant Loans & Mortgages PLC11 December 2006 ELEP.L ELEPHANT LOANS & MORTGAGES PLC ("Elephant" or "the Group") Maiden interim results for the six months to 30 September 2006 Elephant is a packager of secured loans and mortgages to the UK sub-primemarket. It has entered the IVA market. As a packager, Elephant does not itself provide loans but acts as a distributionchannel for sub-prime lenders in the UK market. The Group solicits customers andperforms most of the administration of the loan application process, includingall necessary applicant due diligence. Highlights * National infrastructure now in place - seven regional branches - new branch openings & establishment of DebtSmashers, IVA business, resulted in increased administrative expenses - benefits of investment will be reflected in results at year-end * Total commission income increased by 29% to £1.397m (2005: £1.082m) * No. of agreements packaged for onward loans by lenders rose by 75% to 305 (2005: 174) * Five new affinity partners signed - will drive customer leads * Improved commission terms agreed with key lenders * Entry into IVA market with establishment of DebtSmashers subsidiary * Placing to raise £0.965m (post-period-end in early October) - majority of funds will be used to develop DebtSmashers * Prospects remain very encouraging Don Hammond, Chairman, commented, "I am pleased to report that the Group continues to make excellent progress. Therise in total commissions demonstrates that the four regional branches we openedin the final quarter of the last financial year, in Ashford, Peterborough,Cardiff and Glasgow, are all performing in line with our expectations at thetime. The second half of the year, covering October to March, is seasonally our busierperiod and we expect trading results to be weighted accordingly. We look forwardto reporting further progress and believe that the Group is well-positioned toachieve an outcome for the full year, which is in line with current marketexpectations." For further information please contact: Elephant Loans & Mortgages plc T: 020 8892 2777Gary Miller-Cheevers, Chief Executive http://www.elephantloans.co.uk Katie Tzouliadis T: 020 7448 1000Biddicks Chairman's Statement Introduction I am pleased to report that the Group continued to make excellent progress inthe period under review. Results Total commission income over the first half of the year to 30 Septemberincreased by 29% to £1.397m (2005: £1.082m) and the number of finance agreementswe packaged for onward loans by lenders increased by 75% to 305 (2005: 174). Half year results reflect the impact of scaling the business for growth andestablishing the DebtSmashers business. This included branch openings and therecruitment of staff. As a consequence, administrative expenses increased by 90%to £1.5m against £0.8m last year. The full benefit of our investment in thebusiness will be reflected in the trading results for the company for the fullyear. Dividend Policy It remains the intention of the Board to pay a final dividend to shareholdersnext year. Business Progress The rise in total commissions demonstrates that the four regional branches weopened in the final quarter of the last financial year, in Ashford,Peterborough, Cardiff and Glasgow, are all performing in line with ourexpectations at the time. The opening of these branches takes our branch networkto seven sites and provides us with a national presence. Our branch-basedapproach allows us to have face-to-face contact with customers while discussingtheir personal finances, enabling our sales managers to establish a betterrelationship with customers compared to the alternative telephone approach. As aresult, we believe we establish closer relationships with our customers and thatour customer conversion rate is significantly above the industry average. The full benefits of these four additional branches will be felt in the secondhalf of the year which includes the busiest months. Continuing our strategy of building affinity partners, we have signed a furtherfive new affinity partner agreements over the first half. These are now alloperational and they should drive increased leads through the second half of theyear and beyond. It is important for Elephant as a packager of secured loans and mortgages to beable to demonstrate to lenders that we not only effectively solicit customersand perform most of the administration of the loan application processefficiently but also that we maintain the highest levels of due diligence andcompliance. It is therefore pleasing to report that we have agreed improvedcommission terms with key lenders based on both the high degree of trust we haveestablished with them and our increasing success as an effective distributionchannel. The improved terms will have a positive impact on results in the secondhalf. In the first half, we also established our 'Elephant Academy' which will enableus to maintain the highest standards of training and compliance for our salesteams and to develop a structured career path for selected graduates. Post-Balance Sheet Events An important corporate development was completed after the period end in earlyOctober, when we successfully raised £0.965m (gross) via a share placing. Themajor part of the proceeds is being applied to the development of the Group'ssubsidiary, DebtSmashers, which is focused on the IVA market. The establishmentof DebtSmashers enables us to advise customers on a comprehensive range of debtmanagement solutions, covering secured loans, remortgages, commercial mortgagesand IVAs. The approach we are taking with IVAs mirrors the packaging model wehave established in our existing loans and mortgages business. This means thatwe will advise individuals on their suitability for an IVA and complete thenecessary qualification process while working closely with practices who willtake candidates through the actual IVA process. We also see synergies betweenDebtSmashers and our existing core loans packaging business. Prospects The Group continues to make encouraging progress and has taken significant stepsforward over the first half. The second half of the year, covering October toMarch, is seasonally our busier period and we expect trading results to beweighted accordingly. We look forward to reporting further progress and believethat the Group is well-positioned to achieve an outcome for the full year, whichis in line with current market expectations. Don HammondChairman Elephant Loans & Mortgages plcUnaudited Consolidated Profit and Loss AccountFor the six months ended 30 September 2006 6 months to Period to 30 31 March September 2006 2006 (unaudited) (audited) Notes £'000 £'000 Turnover 1,397 1,133 ------------------------- Direct costs 531 352 -------------------------Gross profit 866 781 Administrative expenses 1,514 796 -------------------------Operating profit/(loss) (648) (15) Other operating income/charges:Interest payable and similar charges 19 12 -------------------------Profit/(Loss) on ordinary activities before (667) (27)taxation Tax on profit/(loss) on ordinary 3 activities (7) ------------------------- Profit/(Loss) for the financial period (667) (20) ------------------------- Full (loss) per share (in pence) 5 (0.32) (0.01) ------------------------- Diluted (loss) per share (in pence) 5 (0.32) (0.01) ------------------------- There were no recognised gains or losses other than those passing throughthe profit and loss account. The profit and loss account has been prepared on the basis that alloperations are continuing operations. Elephant Loans & Mortgages plcUnaudited Consolidated Balance SheetAt 30 September 2006 30 31 March September 2006 2006 (unaudited) (audited) Notes £'000 £'000 Fixed assets:Tangible assets 2 302 209Goodwill on consolidation 4,861 4,861 -------------------------- 5,163 5,070 -------------------------- Current assets:Debtors 590 641Cash at bank and in hand - 87 -------------------------- 590 728 Creditors:Amounts falling due within one year (1,351) (891) --------------------------Net current assets/(liabilities) (761) (163) -------------------------- Creditors:Amounts falling due after one year (225) (64) --------------------------Net Assets 4,177 4,843 -------------------------- Capital and reservesCalled up share capital 63 63Share premium account 4,800 4,800Profit and loss account (686) (20) --------------------------Shareholders' funds - Equity 4,177 4,843 -------------------------- Elephant Loans & Mortgages plcUnaudited Consolidated Cash Flow StatementFor 6 months ended 30 September 2006 6 months Period ended ended 30 September 31 March 2006 2006 (unaudited) (audited) Notes £'000 £'000 Reconciliation of operating profit/(loss) to operating cash (outflow)/inflow from operating activitiesOperating profit/(loss) (648) (15)Depreciation of tangible assets 43 30(Increase)/Decrease in debtors 51 (298)(Decrease)/Increase in creditors 385 19 ------------------------Net cash (outflow)/inflow from operating activities (169) (264) ------------------------ Returns on investments and servicing offinanceInterest paid (19) (12) ------------------------Net cash inflow/(outflow) from returns of investments and servicing of finance (19) (12) Taxation (3) - Capital expenditure and financialinvestmentsPayments to acquire tangible assets, including hire purchase instalments (70) (77)Payments to acquire investments - (23) ------------------------Net cash outflow from capital expenditure (70) (100) ------------------------ Net cash outflow before management ofliquid resources and financing (261) (376) ------------------------FinancingIssue of share, net of costs - 354Net increase/(decrease) in loans (18) 109 ------------------------Net cash inflow from financing (18) 463 ------------------------Increase/(decrease) in cash (279) 87 ------------------------ Elephant Loans & Mortgages plcNotes to the Unaudited Interim Financial StatementsFor the six months ended 30 September 2006 1 Basis of Preparation The interim financial for the six months ended 30th September 2006 is neither audited nor reviewed, but has been prepared in accordance with accounting policies set out in the annual report and accounts for the period ended 31st March 2006. This interim financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The figures for the period ended 31st March 2006 have been extracted from the annual audit report and accounts. The audit report on these accounts was unqualified. 2 Fixed Asset Purchases During the six months ended 30th September 2006 the Group acquired fixed assets with an aggregate cost of £136,000 of which £114,000 was acquired by means of finance leases. During the period ended 31st March 2006 the Group acquired fixed assets with an aggregate cost of £74,000 of which £51,000 was acquired by means of finance leases. 3 Taxation There is no charge to taxation for the period as the Group reported a loss 4 Dividend The Directors do not propose to pay a dividend for the period. 5 Earnings per share The basic loss per share has been calculated on the loss for the six months to 30th September 2006 (£667,000) and the weighted average number of shares in issue during the period (209,609,729). The company has granted options to Directors and employees to subscribe for 24,113,292 ordinary shares at prices varying from 3 to 3.75 pence per share exercisable at varying times up to April 2011. The diluted loss per share is the same as the basic loss per share due to the loss for the period. This information is provided by RNS The company news service from the London Stock Exchange