PCF.L Regulatory News (PCF)

26 Jun 2007 07:30

Private & Commercial Fin Group Plc26 June 2007 Private & Commercial Finance Group Plc ('PCFG' or 'the Group') PCF.L / Index: AIM / Sector: Speciality & other finance PRIVATE & COMMERCIAL FINANCE GROUP PLC Final Results for the 15 months ended 31 March 2007 Private & Commercial Finance Group Plc, the AIM quoted finance house, announcesits results for the 15 months ended 31 March 2007. Overview •Major turnaround •Profit before tax of £366,343 (2005: loss £3,774,509) •Portfolio increased by 39% to £107 million (2005: £77 million) •Current trading strong and significantly ahead of the same period in 2006 Chairman's Statement I am delighted to report an impressive turnaround in our fortunes over the 15month period ended 31 March 2007 in which time we have moved from a loss beforetax of £3,774,509 to a profit before tax of £366,343 for the 15 month period. During the period our overall portfolio increased by 39% to £107 million(including finance charges to be recognised in future periods of £17 million),whilst administrative expenses have been contained. The turnaround and substantial growth in our portfolio has been achieved despitea continually competitive environment and as a result of our determination tomaintain and indeed improve the average credit quality of our portfolio andprofit margins and not to sacrifice the profitability of business written inpursuit of sales volume. Business Finance Division This division grew its portfolio of receivables by 52% during the period andsignificantly increased its sources of business. The first calendar quarter of2007 was a record for new business and we are optimistic that we will surpassthis record in the second quarter. I am also pleased to report that margins areconsistently ahead of management expectations. On 1 May 2007 we recruited a highly experienced finance executive to head up ournew Corporate Finance Division, focusing on generating fee income and enhancingour profitability through structuring and packaging larger equipment financetransactions. Consumer Finance Division The portfolio of this division grew by 35% during the period and the creditperformance of the portfolio maintained a steady improvement. Sales through our virtual car showroom, www.pcfshowroom.co.uk, continued to growand we are now adding additional staff to support this venture as a separatebusiness unit. The portfolio of non-prime receivables previously developed on the back of thecredit insurance policy provided by NIG has now almost entirely run off. Debt collection/ portfolio administration We are now beginning to promote the services of our professional and experiencedcredit control staff in the areas of managing portfolios of finance receivablesand wider debt collection as a separate profit centre. Treasury and Accounting I am pleased to report that we have negotiated increased facilities with ourmain bankers, allowing us the headroom to achieve further growth in ourportfolio. While we continue to explore securitisation and other financingoptions, we are reluctant to incur the significant costs which would be involvedunless and until it appears necessary or desirable to do so. During the period the Group adopted three new accounting standards inpreparation for the full adoption of the International Financial ReportingStandards (IFRS) in the current period. These have had no significant impact onthe reported results. Current Trading Trading since the period end has continued to be strong and significantly aheadof the same period in 2006. Although in the first two months of the calendaryear we believed that consumer demand was slowing as a result of recent interestrate increases by the Bank of England, we saw demand pick up strongly in Marchand this has continued, with no further signs of a slowdown so far. When assessing our prospects of achieving a superior return on shareholders'equity, it is important to understand our business model. We derive our businessfrom a national network of finance brokers who receive a fee for theintroduction of finance proposals which meet our criteria instead of maintainingan expensive sales force. This broker network is serviced by a sophisticatedinternet-based proposal system, which processes over 10,000 proposals each monthat high speed and low cost. This model permits us to grow the portfoliosignificantly without proportionate increases in overheads and at the same timeto maintain disciplines of credit quality and documentation. It also means thatonce the portfolio has reached the critical mass at which the income covers thefixed overhead base, the profits on incremental business substantially flowsstraight to the bottom line. Therefore, so long as we can maintain the levels ofgrowth achieved in recent months and continue to manage the portfolioeffectively; there are good grounds for optimism. Summary I am very pleased with the Group's performance during the period under review.Our two problems of recent years, the legal action against the NIG insurancecompany and the unsuccessful Karma Cars venture are now both firmly in the pastand we are totally focused on our future plans. I would like to take this opportunity to express my sincere thanks for thesupport and confidence we have received during a difficult period for the Group,particularly from our shareholders, bankers and our loyal, professional andhardworking staff. I firmly believe that the Group has significant opportunities in its chosenmarkets and will remain focused on delivering controlled growth whilemaintaining the quality of our new business. This will ensure that we return toan acceptable level of earnings for our shareholders. Michael R CummingChairman26 June 2007 Private & Commercial Finance Group plc Group profit and loss accountfor the 15 month period ended 31 March 2007 Continuing Discontinued Total Total operations Period ended operations period ended year ended 31 March period ended 31 March 31 December 31 March 2007 2007 2007 2005 £ £ £ £ Group turnover 49,653,441 - 49,653,441 35,748,095 ------------ ------------ ------------ ------------Cost of sales (33,107,817) - (33,107,817) (25,441,563) ------------ ------------ ------------ ------------ Gross profit 16,545,624 - 16,545,624 10,306,532 Administrative (9,939,734) (21,483) (9,961,217) (10,452,401)expenses ------------ ------------ ------------ ------------ Operating profit/ 6,605,890 (21,483) 6,584,407 (145,869)(loss) Interest 14,030 - 14,030 1,993receivableInterest payable (6,232,094) - (6,232,094) (3,630,633) ------------ ------------ ------------ ------------ Profit/(loss) onordinaryactivities 387,826 (21,483) 366,343 (3,774,509)before taxation Tax (charge)/credit onprofit/(loss) on (155,413) - (155,413) 618,558ordinary activities ------------ ------------ ------------ ------------Profit/(loss) onordinaryactivities 232,413 (21,483) 210,930 (3,155,951)after taxation Ordinary dividends - - - -on equity shares Retained profit/(loss) for the 232,413 (21,483) 210,930 (3,155,951)period/year ============ ============ ============ ============Earnings per 5pordinaryshare - basic and 1.1p (0.1)p 1.0 p (19.4)pdiluted - basic There are no recognised gains or losses other than the profit for the period Private & Commercial Finance Group plc Group balance sheetat 31 March 2007 31 March 31 December 2007 2005 £ £Fixed assetsIntangible assets 356,419 397,149Tangible assets 530,450 819,652 ----------- ----------- 886,869 1,216,801 ----------- -----------Current assets Debtors: amounts falling due:within one year 34,293,794 25,061,224after one year 58,210,631 40,805,784 92,504,425 65,867,008Cash at bank and in hand 200 200Deferred taxation 2,439,866 2,307,329 ----------- ----------- 94,944,491 68,174,537Creditors: amounts falling due within one year 4,693,838 4,551,212 ----------- -----------Net current assets 90,250,653 63,623,325 ----------- -----------Total assets less current liabilities 91,137,522 64,840,126 Creditors: amounts falling due after more than one year 86,403,019 61,893,176 ----------- -----------Total assets less liabilities 4,734,503 2,946,950 =========== =========== Capital and reservesCalled up share capital 1,170,648 4,748,842Share premium account 3,347,488 2,474,051Capital reserve 3,873,467 74,394Other reserve (243,160) (243,160)Profit and loss account (3,413,940) (4,107,177) ----------- -----------Equity shareholders' funds 4,734,503 2,946,950 =========== =========== Private & Commercial Finance Group plc Group statement of cash flowsfor the 15 month period ended 31 March 2007 Period ended Year ended 31 March 31 December 2007 2005 £ £ Net cash outflow from operations (19,187,566) (11,007,934) ------------ ------------ (19,187,566) (11,007,934) ------------ ------------Net cash outflow from returns on investments and servicing of financeInterest paid (6,604,713) (3,308,540)Interest received 14,030 1,993 ------------ ------------ (6,590,683) (3,306,547) ------------ ------------ Tax received 163,075 20,448 ------------------------------ Net cash outflow from capital expenditureand financial investmentPayments to acquire tangible fixed assets (274,957) (437,628)Receipts from sales of tangible fixed assets 86,319 10,678 ------------ ------------ (188,638) (426,950) ------------ ------------Net cashflow from equity dividends - - ------------ ------------ FinancingProceeds from issue of ordinary share capital 692,500 950,000 Proceeds from borrowings 24,911,659 15,231,789Repayments of borrowings (154,861) (1,796,437) ------------ ------------Decrease in cash (354,514) (335,631) ============ ============ Private & Commercial Finance Group plc Notes to the financial statements 1. Financial Information - The financial information set out above does not constitute the Group's statutory accounts as defined in Section 240 of the Companies Act 1985. The comparative financial information is based on the statutory accounts for the financial year ended 31 December 2005. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. The statutory accounts for the 15 month period ended 31 March 2007 will be delivered to the Registrar following the Company's annual general meeting. 2. Basis of Preparation - The figures included in this preliminary announcement have been prepared on the basis of the accounting policies set out in the 31 December 2005 financial statements as updated for new accounting standards adopted in the period. 3. Dividends - The board is not recommending the payment of a final dividend. 4. Earnings per Ordinary Share - The calculation of basic earnings per ordinary share is based on profits of £210,930 (2005 - loss £3,155,951) and on 21,998,317 (2005 - 16,282,585) ordinary shares, being the weighted average number of shares in issue during the period. Due to the level of the exercise prices and exercisable dates of the share options and convertible debt, they are not dilutive of earnings. 5. New Accounting Standards - During the period the Group adopted the new UK accounting standards of Financial Reporting Standard 20 (FRS 20) - 'Share-based Payments'; Financial Reporting Standard 23 (FRS 23) - 'The Effect of Changes in Foreign Currency Rates'; Financial Reporting Standard 25 (FRS 25) - 'Financial Instruments: Disclosure and Presentation'; and Financial Reporting Standard 26 (FRS 26) - 'Financial Instruments: Measurement'. There has been no significant financial impact on the Group's financial statements as a result of the adoption of these accounting standards. Detailed analysis of the transition to new standards will be provided in the Notes to the Financial Statements. The Group has taken advantage of the exemption within FRS 26 that an entity that first adopts the standard for a period that commences before 1 January 2007 need not restate comparative financial information. FRS 26 is the equivalent of International Accounting Standard 39 (IAS 39) which is mandatory for all AIM listed companies for accounting periods commencing after 1 January 2007. Reconciliation of Profit and loss account at 31 March 2007 £'s Brought Forward Profit and loss account at 1 January 2006 (4,107,177)Effect of FRS 26 implementation 482,307 --------------Restated Profit and loss account at 1 January 2006 (3,624,870)Retained profit for the 15 month period 210,930 --------------Carried Forward Profit and loss account at 31 March 2007 (3,413,940) ------------- 6. Share Capital Reorganisation - On 23 May 2006 the Ordinary Shares of 25p of the Company were divided into five new Ordinary Shares of 5p. Four of each of the five newly sub-divided ordinary shares were designated deferred shares. On 27 March 2007 the deferred shares were purchased by the Company and cancelled. Detailed analysis of the movement in called up share capital will be provided in the Notes to the Financial Statements. 7. The 2007 Report & Financial Statements will be posted to all shareholders on 11 July 2007. This information is provided by RNS The company news service from the London Stock Exchange