PCF.L Regulatory News (PCF)

11 Dec 2007 07:00

Private & Commercial Fin Group Plc11 December 2007 PCF.L / Index: AIM / Sector: Speciality & other finance Private & Commercial Finance Group plc ('PCFG' or 'the Group') Interim Results Private & Commercial Finance Group Plc, the AIM quoted finance house, announcesits results for the six months ended 30 September 2007. Overview • Profit significantly exceeds that of preceding fifteen month period • Interim profit before tax increased to £0.43m (2006: (£0.1m)) • Turnover increased by 26% to £23.4m (2006: £18.6m) • Portfolio of receivables now exceeds £134m - increase of 23% • Over £22m of unearned income in portfolios' to be released over the next three to four years - (31 March 2007 - £16.9m) • Both core operating divisions, Business and Consumer Finance, performing buoyantly • Widening range of finance products and services potentially accelerated by opportunistic acquisitions CHAIRMAN'S STATEMENT It gives me great pleasure to report an excellent trading performance for thesix months ended 30 September 2007 and in particular that the Group's profitduring this period significantly exceeded that for the preceding fifteen monthperiod. The profit before tax for the six month period was £430,040 on turnoverof £23.4m. Furthermore, after a number of months of record new business levels,our portfolio of receivables now exceeds £134 million, an increase of 23% in thesix month period. Our Business Private & Commercial Finance Group is a well established finance group with ahighly efficient infrastructure and business model. We have two core operating divisions: •Business Finance Division which finances equipment, plant and vehicles for SMEs; and •Consumer Finance Division which provides finance for cars for consumers The divisions operate similar business models whereby they receive financeproposals introduced by a well-established national network of finance sourcesvia our proprietary internet-based proposal system, e-Quote. This enables us toprocess a high volume of finance proposals quickly and efficiently at a lowoverhead cost. Strategy Our central business strategy is straightforward - namely to grow our portfoliosof finance receivables organically and achieve increasing returns through"operational gearing", by which we mean generating an increasing level of incomefrom a growing portfolio of finance receivables while continuing to hold downfixed overheads. As our portfolio grows, so our net operating margin improves.This can be seen in these interim results, which show a 24% increase in ouroperating margin. Our use of the e-Quote proposal system, supplemented by teamsof experienced underwriters, enables us to deliver fast and consistent decisionswhile maintaining a high standard of documentation, checks and proofs, thusensuring that the business written meets our standards and has realistic profitmargins. The result is a profitable and diversified portfolio which will deliverearnings over the medium term. Indeed our portfolios have over £22m of unearnedincome (31 March 2007: £16.9m) which will be released over the next three tofour years in accordance with International Financial Reporting Standards(IFRS). Funding We finance our business with term borrowing facilities from major banks andprotect ourselves from increases in interest rates by the use of interest rateswaps and caps with the same banks as our counterparties. I am pleased to reportthat all of our banks have recently increased their facilities and we are inadvanced discussions with additional major banks which will provide us withfurther headroom to continue the growth of our portfolio. Competitive Environment In the period under review we have seen certain competitors tighten theirlending criteria and increase their margins, or indeed curtail their activities.We welcome this more sensible pricing which has created opportunities for usfollowing several years of intense competition, and is allowing us to write anincreasing volume of good quality business with realistic margins. Risks Thanks to our scaleable business model, we avoid the expensive fixed overhead ofa branch network or a large sales force. Our robust portfolio consisting of awell spread range of customers, underpinned by the collateral value of theassets financed, makes us well placed to ride out any downturn in the widereconomy. Whilst we are closely monitoring the possible effects of the higherinterest rate environment which, coupled with recent turmoil in internationalcredit markets, may result in reduced demand or increased payment defaults, wefirmly believe that the beneficial effects on the competitive environment,referred to above, outweigh the less positive aspects. Our Staff We have an outstanding team of people whose personal abilities and energy havebeen enhanced by ongoing training and development. They have workedexceptionally hard in the period under review to achieve these excellentresults. I thank them on behalf of the Board. Future Plans We have plans for both divisions, including widening the range of financeproducts and turning our best in class credit control department into afee-generating business unit, possibly accelerated by one or more acquisitions. The unprecedented, albeit very welcome, levels of demand we have beenexperiencing in both of our core divisions has meant that we felt it sensible toexploit these opportunities rather than divert resources onto new initiatives.As we enter our traditionally quiet Christmas trading period, this will providethe ideal opportunity to progress our plans. The progress we have made is very pleasing and the current economic environmentprovides excellent opportunities for a niche player. I look forward to reportingour continued progress. M R CummingChairman11 December 2007 Group Income Statementfor the six months ended 30 September 2007 Restated Restated IFRS IFRS Six months Six months 15 months ended ended ended 30 September 30 June 31 March 2007 2006 2007 £000's £000's £000's unaudited unaudited unaudited Group turnover 23,402 18,643 49,654Cost of sales (15,242) (12,304) (33,108) Gross profit 8,160 6,339 16,546Administration expenses (4,305) (4,147) (9,939) Operating profit 3,855 2,192 6,607Interest Receivable - - 14Interest Payable (3,425) (2,228) (6,232) Profit on ordinary activities before taxation 430 (36) 389Income tax expense (129) 10 (150) Profit on ordinary activities after taxation 301 (26) 239 Profit for the periodattributable 301 (26) 239to equity holders Earnings per 5p ordinary share - basic and diluted 1.2p 0.0p 1.1p There are no other recognised gains or losses other than the profit reported in the income statement for the period Group Balance Sheetas at 30 September 2007 Restated Restated IFRS IFRS 30 September 30 June 31March 2007 2006 2007 £000's £000's £000's unaudited unaudited unaudited ASSETS Non-current assets Goodwill 397 397 397Other intangible assets 226 204 271Property, plant and equipment 249 453 259Loans and receivables 71,641 59,085 58,211 Deferred tax 2,441 2,239 2,372 74,954 62,378 61,510 Current assets Loans and receivables 40,299 18,846 32,287 Trade and other receivables 806 1,963 1,820Derivative financial instruments - 227 203 41,105 21,036 34,310 Total assets 116,059 83,414 95,820 LIABILITIES Current liabilities Interest-bearing loans and borrowings 274 586 431Trade and other payables 4,841 1,267 2,811 Derivative financial instruments 10 - - Corporation tax 130 32 364Provisions - - 16 Bank overdrafts 1,106 1,283 1,177 6,361 3,168 4,799 Non-current liabilities Interest-bearing loans and borrowings 104,219 76,296 86,403 104,219 76,296 86,403 Total liabilities 110,580 79,464 91,202 Net assets 5,479 3,950 4,618 Capital and reserves Called up share capital 1,298 4,943 1,171Share premium 3,781 2,972 3,348Capital reserve 3,873 74 3,873Own shares (243) (243) (243)Profit and loss account (3,230) (3,796) (3,531) Equity shareholders' funds 5,479 3,950 4,618 Group Cash Flow Statementfor the six months ended 30 September 2007 Restated Restated IFRS IFRS Six months Six months 15 months ended ended ended 30 September 30 June 31 March 2007 2006 2007 £000's £000's £000's unaudited unaudited unaudited Cash flows from operating activities Profit/(loss) before taxation 430 (36) 389 Adjustments for: Amortisation of other intangible assets 85 100 250Depreciation 28 76 185Loss on sale of property, plant and equipment - 2 43Decrease in derivatives 213 - 24Increase in loans and receivables (21,442) (14,043) (26,610) Decrease/(increase) in debtors 1,014 (131) 13Increase/(decrease) in creditors and provisions 1,727 (1,632) (72) Cash outflow from operating activities (17,945) (15,664) (25,778)Tax (paid)/received (145) 124 163 Net cash outflow from operating activities (18,090) (15,540) (25,615) Cash flows from investing activities Purchase of property, plant and equipment (18) (2) (45)Proceeds from sale of property, plant and equipment - - 86 Purchase of other intangible assets (40) (14) (230) Net cash outflow from investing activities (58) (16) (189) Cash flows from financing activities Proceeds from issue of share capital 560 692 692Proceeds from borrowings 17,816 14,403 24,912Repayments of borrowings (157) - (155) Net cash inflow from financing activities 18,219 15,095 25,449 Net increase/(decrease) in cash and cash equivalents 71 (461) (355)Cash and cash equivalents at beginning of the period (1,177) (822) (822) Cash and cash equivalents at end of the period (1,106) (1,283) (1,177) Bank overdrafts (1,106) (1,283) (1,177) The amount of interest paid and received during year is as follows: Interest paid 3,484 2,481 6,605Interest received - - 14 --------------------------------------------------------------------------------Notes: 1. The interim results are unaudited and do not constitute statutory accounts as defined by section 240 of the Companies Act 1985. The comparative figures for the period ended 31 March 2007 are based on the statutory accounts of the Group for that period and have been reported on by the Group's auditor and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The comparative figures have been adjusted for adoption of International Financial Reporting Standards ("IFRS") as reported in the statement released by the Group on 3 December 2007. 2. The interim results have been prepared on the basis of the accounting policies set out in the Annual Report & Financial Statements for the period ended 31 March 2007 as adjusted where necessary for the adoption of IFRS in the current accounting period. 3. These consolidated financial statements have been prepared in accordance with IFRS and its interpretations issued by the International Accounting Standards Board, as adopted by the EU. 4. The calculation of basic earnings per ordinary share is based on a profit of £301,032 for the period and on 24,247,868 ordinary shares, being the weighted average number of ordinary shares in issue during the period. 5. The Group's loans and receivables portfolio of £134,398,335 is reported net of unearned future finance income of £22,458,576. 6. A copy of the Interim Report is being sent to all shareholders and convertible loan note holders. Further copies can be obtained from the Secretary of the Company at 39 Victoria Street, London SW1H 0EU or can be downloaded from our website, www.pcfg.co.uk. * * ENDS * * For further information visit www.pcfg.co.uk or contact: Private & Commercial Finance Group plc Tel: 020 7222 2426Tony Nelson, CEOScott Maybury, Finance Director Hanson Westhouse Limited, Nominated Tel: 0113 246 2610AdvisorTim Feather St Brides Media & Finance Limited Tel: 020 7242 4477Felicity Edwards Notes to Editors: Private & Commercial Finance Group plc, which is authorised and regulated by theFinancial Services Authority, is an independent AIM-listed finance house.Through its operating subsidiaries the Company provides a carefully selectedrange of high quality equipment finance products tailored for both business andpersonal customers. The range extends from financing cars for consumers toleasing a wide range of equipment to businesses. www.pcfshowroom.co.uk the Group's virtual car showroom offers a range ofattractively priced new and pre-registered cars on finance. This information is provided by RNS The company news service from the London Stock Exchange