PCF.L Regulatory News (PCF)

14 Mar 2006 14:33

Private & Commercial Fin Group Plc14 March 2006 Private & Commercial Finance Group Plc ('PCFG' or 'the Group') PCF.L / Index: AIM / Sector: Speciality & other finance PRIVATE & COMMERCIAL FINANCE GROUP PLC FINAL RESULTS Private & Commercial Finance Group Plc, the AIM quoted finance house, announcesits results for the year ended 31 December 2005. Overview • Concentrating on expanding core businesses • Both divisions (consumer and business finance) delivering strong growth • Loss for the period, principally due to the trading losses and closure costs of Karma Cars and the need to rebuild the portfolio of finance agreements • Confidence in delivering further growth underpinned by £950,000 share placing • Current trading strong with new business volumes over 60% ahead in January and February compared to the same period last year Chairman's Statement This has been a year of retrenchment for the Group. We have centred our effortson developing our core activities of business and consumer finance andrebuilding our portfolio of finance agreements, which was allowed to reduce, asa matter of prudence, during the NIG litigation, which was settled in 2004. As aresult of this and as reported in our trading update in December, both divisionsare now growing well with the business finance side, in particular, generatingstrong underlying growth. I believe the work we have done in the last 12-18 months positions us well togrow the business by acquisition as well as organically. We closed our lossmaking motor retailing venture, Karma Cars, in April 2005 and the disposal inJanuary 2006 of its leasehold premises brings this venture to a complete end.This, coupled with the rebuilding of the Group's portfolio, means that thereturn to profit is now well underway. In line with the successfulre-positioning of the business and subsequent growth we have also moved tolarger premises. We received favourable relocation terms, which mean that themove has not impacted on our results. The move was successfully completed in thequiet period between the Christmas and New Year holidays with no disruption toour business. Consumer Finance Division We continue to see improvements in this division which has proved its resilienceagainst a challenging and highly competitive environment, with new businessvolumes in 2005 showing an increase of 17% over 2004. January and February,traditionally quiet months, were extremely encouraging. There have beensignificant changes in the motor finance market place which we consider willbenefit our business in the longer term. In addition to the well publicisedclosure of Yes Car Credit, at least five other more direct competitors haveeither withdrawn from our marketplace or re-focussed their activities. We arewell positioned to pick up additional business and maintain a strong presencewithin this market. Additionally our internet-based proposal system is very popular with introducersof finance proposals. This not only attracts business to us but also allows usto give fast and consistent decisions on finance proposals at low unit cost. Weaim to continue to innovate in our business, to streamline our offering and tolook for new areas of opportunity where we feel our model can be applied. We are also examining a number of portfolio acquisitions that not onlycomplement our existing business but would also provide the critical mass toenhance earnings per share. Business Finance Division We are currently accelerating the growth of the business finance division. Wecontinue to successfully generate new business and are building a strong brandwithin the business finance arena. The success of this division, which doubled new business volumes to £17.1million in 2005, has been built on high service levels and strong, long-standingrelationships with many of our sources of business. We anticipate further strong growth of the division in 2006 and will befocussing further resources to ensure that this is achieved. In order to maintain our service levels, and contain costs, whilst growing thedivision, we will be releasing a Business Finance version of our internet basedproposal system in the second quarter of 2006. Results As a consequence of re-organisation costs, coupled with trading losses andclosure costs relating to Karma Cars and Karma Vehicle Contracts, results foryear ended 31 December 2005 show a net loss of £3.2 million (2004: loss of £2.2million) on turnover of £35.7 million (2004: £31.1 million). The loss per sharewas 19.4p (2004: loss of 15.0p). On 1 August 2005 we announced that we had raised £950,000 through the placing of3,800,000 shares with Aberdeen Holdings Limited (formerly called FincorpInvestments Limited). This brought its holding in the Group to 23%. Theadditional capital provides a platform for the continuing growth of our businessfinance division, as well as a strong vote of confidence by Aberdeen Holdings inthe future prospects of the Group. Dividend It is not the Board's intention to recommend the payment of a final dividend. Board Appointments Following the investment by Aberdeen Holdings Limited, Faisal Al Yousef wasappointed to the board as a non-executive director. Summary I believe we are finally through an exceptionally difficult period. New businessvolumes are strong in both divisions, Karma Cars and the NIG litigation arecompletely behind us and I feel that we can grow our position within ourmarkets. We are looking at a number of acquisitions both in the business andconsumer finance divisions which we consider will help us accelerate the growthof the portfolio, the size of which is key to achieving a satisfactory level ofearnings per share. I would also like to thank the team at Barclays Bank (who fund our ConsumerFinance Division) who have demonstrated an in-depth knowledge of our businessand supported us through this difficult period. We have also had strong support from our shareholders and I hope that we canreward them with a return to our heyday when for three consecutive years we werein the Deloitte & Touche Top 100 growing businesses. Finally I would like tothank all the employees of the Group for their commitment and hard work and Ilook forward to what I hope and believe will be a successful 2006, representinga substantial turnaround on 2005. Michael CummingChairman14 March 2006 GROUP PROFIT AND LOSS ACCOUNTfor the year ended 31 December 2005 Continuing Discontinued Total Total operations operations 2005 2005 2005 2004 £ £ £ £ Group turnover 32,684,309 3,063,786 35,748,095 31,123,906 ------------ ----------- ------------ ------------Cost of sales (22,060,462) (3,381,101) (25,441,563) (21,080,594) -------------- ------------- -------------- -------------- Gross profit 10,623,847 (317,315) 10,306,532 10,043,312 Administrativeexpenses (9,039,336) (1,413,065) (10,452,401) (9,679,679) ------------- ------------- -------------- ------------- Operatingprofit/(loss) 1,584,511 (1,730,380) (145,869) 363,633 Interest 1,993 - 1,993 3,877receivableInterest payable (3,606,033) (24,600) (3,630,633) (3,068,006) ------------- ---------- ------------- ------------- Loss on ordinaryactivities beforetaxation (2,019,529) (1,754,980) (3,774,509) (2,700,496) Tax credit onloss on 618,558 - 618,558 493,166ordinary --------- --- --------- ---------activities Loss on ordinaryactivities aftertaxation (1,400,971) (1,754,980) (3,155,951) (2,207,330) Ordinarydividends on - - - (38,315)equity shares Retained loss forthe (1,400,971) (1,754,980) (3,155,951) (2,245,645)year ============= ============= ============= ============= Earnings per 25pordinary share -basic (8.6)p (10.8)p (19.4)p (15.0)pand diluted There are no recognised gains or losses other than the loss for the year GROUP BALANCE SHEETat 31 December 2005 2005 2004 £ £ Fixed assetsIntangible assets 397,149 437,879Tangible assets 819,652 1,437,798 --------------- --------------- 1,216,801 1,875,677 --------------- --------------- Current assetsStock - 1,324,925 Debtors: amounts falling due:within one year 25,061,224 21,318,224after one year 43,113,113 33,071,186 68,174,337 54,389,410 Cash at bank and in hand 200 1,353 --------------- --------------- 68,174,537 55,715,688 Creditors: amounts falling due within one year 4,551,212 5,055,014 --------------- --------------- Net current assets 63,623,325 50,660,674 --------------- --------------- Total assets less current liabilities 64,840,126 52,536,351 Creditors: amounts falling due after more than one year 61,893,176 47,383,450 --------------- --------------- Total assets less liabilities 2,946,950 5,152,901 --------------- --------------- Capital and reserves Called up share capital 4,748,842 3,798,842 Share premium account 2,474,051 2,474,051 Capital reserve 74,394 74,394 Other reserve (243,160) (243,160) Profit and loss account (4,107,177) (951,226) --------------- --------------- Equity shareholders' funds 2,946,950 5,152,901 --------------- --------------- GROUP STATEMENT OF CASH FLOWSfor the year ended 31 December 2005 2005 2004 £ £ Net cash (outflow)/inflow from operations (11,007,934) 4,175,924 --------------- --------------- (11,007,934) 4,175,924 --------------- --------------- Net cash outflow from returns on investments andservicing of finance Interest paid (3,308,540) (2,988,041) Interest received 1,993 3,877 --------------- --------------- (3,306,547) (2,984,164) --------------- --------------- Tax received/(paid) 20,448 (102,589) --------------- --------------- Net cash outflow from capital expenditureand financial investment Payments to acquire tangible fixed assets (437,628) (1,344,633) Receipts from sales of tangible fixed assets 10,678 209,076 --------------- --------------- (426,950) (1,135,577) --------------- --------------- Net cash outflow from equity dividends - (87,106) --------------- --------------- FinancingProceeds from issue of ordinary share capital 950,000 - Payments to acquire ordinary shares in Employee Share Option Plan - (73,799) Proceeds from borrowings 15,231,789 3,872,242 Repayments of borrowings (1,796,437) (5,265,715) --------------- --------------- Decrease in cash (335,631) (1,600,765) --------------- --------------- NOTES TO THE FINANCIAL STATEMENTSat 31 December 2005 1. Financial Information - The financial information set out abovedoes not constitute the Group's statutory accounts as defined in Section 240 ofthe Companies Act 1985. The comparative financial information is based on thestatutory accounts for the financial year ended 31 December 2004. Thoseaccounts, upon which the auditors issued an unqualified opinion have beendelivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2005 will be delivered tothe Registrar following the Company's annual general meeting. 2. Basis of Preparation - The figures included in this preliminaryannouncement have been prepared on the basis of the accounting policies set outin the 31 December 2004 financial statements. 3. Dividends - The board is not recommending the payment of a final dividend. 4. Earnings per Ordinary Share - The calculation of basic earningsper ordinary share is based on losses of £3,155,951 (2004 - loss £2,207,330) andon 16,282,585 (2004 - 14,747,310) ordinary shares, being the weighted averagenumber of shares in issue during the year. Due to the level of the exercise prices and exercisable dates of the shareoptions and convertible debt, they are not dilutive of earnings. 5. The 2005 Annual Report & Financial Statements will be posted toall shareholders on 7 April 2006. This information is provided by RNS The company news service from the London Stock Exchange