Final Results
International Personal Finance Plc
05 March 2008
International Personal Finance plc
Preliminary announcement of the final results and statement of dividends - year
ended 31 December 2007
International Personal Finance plc ('IPF' or 'the Group') is a fast growing
international business offering small sum loans to 1.9 million customers in six
countries.
IPF was created by the demerger of the international division of Provident
Financial plc. Its shares were admitted to the Official List and to trading on
the London Stock Exchange's market for listed securities on 16 July 2007. Its
results as a trading division for the period up to the demerger date form a part
of the consolidated final results of Provident Financial plc.
Operating and financial highlights
• Profit before tax up by 25.6% to £50.1 million (2006: £39.9 million)*
• Good growth:
o customer numbers up 8.8% to 1.94 million;
o average net receivables up 11.8%** to £362.1 million;
o period end net receivables up 18.8%** to £443.2 million;
o revenue up 8.5%** to £409.8 million
• Credit quality significantly improved: Underlying impairment as a percentage
of revenue reduced from 29.3% to 21.8%
• Earnings per share up by 29.5% to 13.65 pence*
• Final proposed dividend of 2.85 pence per share (full year dividend: 4.75
pence)
• Strong balance sheet: Gearing low and substantial headroom on committed bank
facilities sufficient to fund growth through to 2010
* On a pro forma basis
** At constant exchange rates
Chairman, Christopher Rodrigues, commented:
'We are very pleased with our first full year results as an independent Group.
All our businesses have made good progress and we have a well funded balance
sheet. Looking forward, we believe emerging markets provide us with many
opportunities for profitable growth and we have the management and financial
resources required to seize them. We expect 2008 to be another year of
significant progress.'
This document provides pro forma results for IPF for the years ended 31 December
2007 and 31 December 2006. The pro forma results include the adjustments
required to present the results of IPF as if it had operated as a stand alone
entity throughout the current year and the comparative period and to exclude
exceptional demerger costs.
This document also includes the statutory results for IPF for the years ended 31
December 2007 and 31 December 2006 which have been prepared using the principles
of reverse acquisition accounting (see note 1). The statutory profit before
taxation for the year is £47.0 million (2006: £34.6 million). Statutory profit
after taxation is £32.5 million (2006: £23.0 million). Statutory earnings per
share have increased by 41.4% from 8.94 pence to 12.64 pence.
A reconciliation from the statutory profit after taxation of £32.5 million
(2006: £23.0 million) to the pro forma result is provided in note 9. The
statutory balance sheet for IPF as at 31 December 2007 and 31 December 2006 is
included within this announcement along with the pro forma balance sheet for 31
December 2006. A reconciliation of the statutory and pro forma balance sheets is
provided in note 9.
For further information contact:
Finsbury +44 (0)20 7251 3801
James Leviton
Vanessa Neill
International Personal Finance plc
Helen Spivey - Investor Relations +44 (0)113 285 6876
Victoria Richmond - Media +44 (0)113 285 6873
Summary
Percentage change figures for all performance measures other than profit or loss
before taxation and earnings per share are quoted after restating prior year
figures at the average exchange rate (CER) for 2007 in order to present the
underlying performance variances.
IPF produced excellent results for the year ended 31 December 2007 with profit
before tax increasing by 25.6% to £50.1 million and earnings per share up by
29.5% to 13.65 pence.
Pro forma Pro forma Change
2007 2006 Change Change CER
£m £m £m % %
Revenue 409.8 365.3 44.5 12.2 8.5
Impairment (83.2) (103.1) 19.9 19.3 20.0
Revenue less impairment 326.6 262.2 64.4 24.6 19.4
Finance costs (19.2) (18.6) (0.6) (3.2) (0.5)
Operating and administration costs (257.3) (203.7) (53.6) (26.3) (22.7)
(276.5) (222.3) (54.2) (24.4) (20.7)
Profit before taxation 50.1 39.9 10.2 25.6
There were two key drivers of this performance: strong volume growth and much
improved credit quality.
Customer numbers increased steadily in the year, up by 8.8% to 1.94 million.
This, together with our focus on providing larger loans over longer terms to our
lowest risk customers, resulted in average net receivables growing by 11.8% to
£362.1 million. This generated revenue growth of £44.5 million (8.5%) to £409.8
million.
The investment made in implementing improvements to our credit management
processes proved successful with the impairment charge reducing substantially,
by £19.9 million to £83.2 million and underlying impairment as a percentage of
revenue, calculated before provision releases in the first half of £6.0 million
(2006: £3.8 million), reducing from 29.3% to 21.8%.
As a result of these factors, revenue less impairment increased by 19.4% to
£326.6 million.
Operating and administration costs increased by £53.6 million (22.7%),
reflecting four main factors. Firstly, the additional costs of implementing
enhanced credit control processes, which have supported the reduction in
impairment during the year. Secondly, with credit quality well under control, we
also increased our marketing investment in the year, which has supported the
good growth in customers and net receivables. Thirdly, operating and
administration costs include £8.0 million (2006: £0.5 million) of additional
costs in Hungary incurred as a result of regulatory changes in November 2006,
including employing agents and related administrative changes. And finally, the
increase also reflects the increased scale of the Group, including increased
investment in our developing markets of Mexico, Romania and Russia.
Performance by market
Pro forma Pro forma
2007 2006 Change Change
£m £m £m %*
Profit before taxation
Central Europe 80.6 64.1 16.5 25.7
Central costs (12.5) (11.9) (0.6) (5.0)
Established businesses 68.1 52.2 15.9 30.5
Mexico (13.3) (9.9) (3.4) (34.3)
Romania (4.2) (2.4) (1.8) (75.0)
Russia (0.5) - (0.5) -
Developing markets (18.0) (12.3) (5.7) (46.3)
Profit before taxation 50.1 39.9 10.2 25.6
Taxation (15.0) (12.8) (2.2) (17.2)
Profit after taxation 35.1 27.1 8.0 29.5
Earnings per share (pence)
Established businesses 18.55 13.78 4.77 34.6
Developing markets (4.90) (3.24) (1.66) (51.2)
Total 13.65 10.54 3.11 29.5
* At actual exchange rates
Our Central European businesses have all performed well, combining good customer
and receivables growth with significantly improved credit quality. Profit before
taxation from our established Central European businesses, net of central costs
of £12.5 million, increased by 30.5% to £68.1 million, and earnings per share
increased by 34.6% to 18.55 pence.
We firmly believe that investment in taking our home credit model to new,
emerging markets will generate substantial shareholder value and so in 2007 we
invested £18.0 million (2006: £12.3 million) in developing our home credit
businesses in Mexico, Romania and Russia.
In Mexico, we have continued to focus on improving business performance through
a combination of tightening credit controls, strengthening the management team
and re-training local staff and agents. It is now clear that we have
substantially improved the credit quality of all lending since September and the
benefit of this will be increasingly reflected in the results as 2008 unfolds.
We now have a sound platform on which to grow the business.
We previously stated that we would review the viability of seven branches in the
Puebla region of Mexico that were performing very poorly and we have now done
this. Six branches have demonstrated much improved performance and are making
good progress towards profitability. One has not improved and is to be closed
with its outstanding balances collected using neighbouring branches. The loss
for Mexico in 2007 was £13.3 million (2006: £9.9 million).
Romania is performing well. Following our decision in June 2007 to progress to
national roll-out, we have begun to increase our management resource and branch
coverage. At the end of 2007 we had 33,000 customers, up from 6,000 at December
2006, served from seven branches. As expected, Romania reported a pre-tax loss
of £4.2 million in 2007 (2006: £2.4 million).
In December 2007 following a rigorous search and extensive due diligence, we
acquired a small Russian bank for a consideration of £2.8 million in order to
provide us with a licence to operate. We are now completing the regulatory
filings and procedures that will allow us to commence lending in the Moscow
region in the first half of this year. We intend to pilot both in Moscow and one
further major Russian city for about eighteen months to evaluate the market and
build our local team. If this is successful, we will begin a wider geographic
roll-out in mid 2010. The cost in 2007 of preparing for entry into the Russian
market was £0.5 million (2006: £nil).
Taxation
The taxation charge for the year was £15.0 million (2006: £12.8 million) which,
before taking account of exceptional items, represents an underlying effective
rate of 29.9% (2006: 32.1%). In 2008 we continue to expect the Group's effective
rate of taxation to be around 30%.
Dividend
At demerger we said that, in the absence of unforeseen circumstances, we
intended to declare aggregate dividends in respect of 2007 of 4.75 pence per
share. An interim dividend of 1.90 pence per share was paid on 19 October 2007
and, subject to shareholder approval, a final dividend of 2.85 pence per share
will be paid on 23 May 2008 to shareholders on the register at close of business
on 11 April 2008. The shares will be marked ex-dividend on 9 April 2008.
We intend to continue to adopt a progressive dividend policy with a medium-term
target of reaching a dividend payout ratio of 25% of post-tax profit.
Balance sheet
IPF is strongly capitalised and well positioned to fund its growth strategy. At
31 December 2007 we had net assets of £203.6 million, an increase of £53.4
million compared with pro forma net assets at the end of 2006. Balance sheet
gearing, calculated as borrowings divided by shareholders' equity, remained
conservative at 1.8 times (2006: 1.6 times).
Net receivables grew strongly during the year, particularly during the second
half as customer growth accelerated in Central Europe. At 31 December 2007 net
receivables were £443.2 million, which at constant exchange rates represents
growth of 18.8% during the year. Of the year end receivables, 95% fall due in
less than one year.
At 31 December 2007 the Group had total committed facilities of £546.2 million,
including facilities of £34.3 million that have been agreed since the half year
and, of this, £175.4 million was unutilised at the year end. The maturity
profile of committed facilities comfortably exceeds that of year end
receivables, with 95% of facilities committed for over two years from the
balance sheet date. These facilities are sufficient to support the planned
growth of the business through to 2010.
New countries
Our research programme is progressing well. Following the commencement of the
pilot in Russia noted above, our next medium-term targets remain India and the
Ukraine.
Regulation and legislation
We previously reported that there had been discussion concerning the
introduction of an interest rate cap in our smallest established market,
Slovakia. In January 2008 the Slovakian government passed legislation that
brings into force a cap on the total amount that can be charged on a loan
contract. The precise regulations will be set by a separate decree of the
Ministry of Finance which is due to be issued in May. The rate cap is expected
to become effective from July 2008. We operate successfully within a rate cap in
Poland with a modified product offering and expect we will be able to do the
same in Slovakia.
On 16 January 2008 the European Parliament issued a new Consumer Credit
Directive which we expect will pass into law in each of our Central European
markets and Romania over the course of the next two and a half years. The new
Directive focuses on fairness to customers and transparency. There are some
areas where the precise details of the law will only be clear when the Directive
is enacted in each member state and, in due course, we may need to make some
adjustments, but overall we welcome the changes it will bring.
Prospects
We are pleased with performance in our first period of trading as an independent
listed company. Our businesses in Central Europe are profitable, growing well
and are demonstrating excellent credit quality. We expect them to continue to
make good progress in 2008.
In Mexico, we expect the hard work done in 2007 in improving the business to
feed through into reduced losses in 2008 and we continue to target for the
business to be profitable in 2009.
In Romania, we will continue to expand our branch coverage and grow customer
numbers. We continue to expect 2008 to be the peak year of start-up losses, as a
result of the cost of infrastructure expansion, with reduced losses in 2009 and
a profit for 2010.
We expect to commence trading in Russia in the first half of this year with
start-up losses for the year of around £5 million.
Overall, we have many opportunities for profitable growth and have the
management and financial resources required to seize these opportunities. We
expect 2008 to be another year of significant progress.
Operating review
IPF has a proven, successful business model. This model is based on providing
small sums of credit over short periods. Most of our lending has a duration of
around one year and at 31 December 2007 the average remaining period of
outstanding loans was around six months. This means that we are able to respond
quickly to changes in the market and, although the economic trends in each of
our markets generally remain positive, we are well positioned to respond quickly
to any deterioration.
This ability to respond quickly is supported by our robust approach to credit
management. Key to this is the personal relationship between the customer and
agent, including weekly face to face contact, which allows us a close
understanding of the financial circumstances of our customers. In the past year
we have added to this through the implementation of application and behavioural
scoring as well as call centre based collections. This has supported the
substantial improvement in credit quality and impairment in 2007. These systems
and processes will be further enhanced in 2008 as we extend their scope across
more markets and upgrade to more sophisticated and powerful credit scoring and
collections management systems.
We continue to believe the key challenge to meeting our strategic goals is our
ability to develop sufficient skilled and experienced management to be able to
seize the opportunities presented by further expansion into new markets. During
2007 we continued to augment our senior management pool through external
recruitment and also developed and introduced a bespoke leadership development
programme to identify and develop the individuals who will manage our business
in the years to come.
The key drivers of performance are covered in more detail for each of our
markets in the following section, starting with Central Europe.
Central Europe
Central Europe comprises our operations in Poland, the Czech Republic, Hungary
and Slovakia.
Change
2007 2006 Change Change at CER
£m £m £m % %
Customer numbers (000s) 1,592 1,523 69 4.5 4.5
Credit issued 553.8 474.9 78.9 16.6 11.3
Average net receivables 336.7 292.9 43.8 15.0 8.7
Revenue 367.1 338.6 28.5 8.4 4.0
Impairment (64.3) (90.6) 26.3 29.0 30.4
Revenue less impairment 302.8 248.0 54.8 22.1 16.2
Agent commission (51.7) (39.7) (12.0) (30.2) (24.9)
Finance costs (18.1) (19.8) 1.7 8.6 13.0
Other operating costs (152.4) (124.4) (28.0) (22.5) (17.1)
Profit before taxation 80.6 64.1 16.5 25.7
The Central European businesses performed well in 2007 with profit before tax
increasing by £16.5 million (25.7%), to £80.6 million. During the second half of
2006 our focus was firmly on improving credit quality. In 2007 as the year
progressed and we saw reduced levels of impairment, we shifted our emphasis to
controlled customer growth in all markets except Slovakia. This was successful
and we generated improved customer growth whilst continuing to see reduced
levels of impairment. Customer numbers grew by 50,000 in the second half and
finished the year at 1,592,000, an increase on 2006 of 4.5%.
This growth, together with the targeted issue of larger loans to better quality
customers, led to an increase in credit issued of 11.3% compared with 2006 and
an increase in average customer receivables of 8.7%.
Revenue grew more slowly, up by 4.0% to £367.1 million (2006: £338.6 million),
reflecting a higher proportion of longer-term lending which carries a lower
effective interest rate.
In conjunction with the good growth in credit issued and customer receivables,
we have seen a substantial improvement in credit quality. This has resulted in
the impairment charge reducing by £26.3 million (30.4%) to £64.3 million. This
includes the release in the first half of £6.0 million of impairment provisions
no longer required in Poland because of the improvement in credit quality. A
similar release of provisions was made in 2006 of £3.8 million, primarily in the
Czech Republic. The underlying impairment charge, before provision releases, as
a percentage of revenue fell to 19.2%, compared with 19.9% at June 2007 and
27.9% at the end of 2006.
Revenue less impairment has increased by £54.8 million (16.2%) to £302.8
million.
Total costs, comprising agent commission, finance costs and other operating
costs, have increased by 15.5% to £222.2 million. As noted above, this includes
£8.0 million (2006: £0.5 million) of additional costs in Hungary resulting from
the employment of agents and other administrative changes made in November 2006
to comply with the requirements of the regulator, the PSZAF. It also reflects
the additional costs of around £5.0 million of operating enhanced credit
management processes throughout Central Europe, which has supported the
reduction in impairment during the year. As much of the cost of improved credit
management systems and the additional PSZAF costs have now been absorbed, we
expect the rate of growth in costs to be lower in 2008 and for the cost-income
ratio to improve.
The performance of each country is reviewed in the following section.
Poland
Change
2007 2006 Change Change at CER
£m £m £m % %
Customer numbers (000s) 871 854 17 2.0 2.0
Credit issued 270.9 235.6 35.3 15.0 10.8
Average net receivables 181.0 159.2 21.8 13.7 7.3
Revenue 183.1 185.0 (1.9) (1.0) (4.3)
Impairment (26.4) (56.0) 29.6 52.9 53.3
Revenue less impairment 156.7 129.0 27.7 21.5 16.2
Following a strong performance in the first half, Poland made further progress
in the second half with continued good credit quality, coupled with stronger
growth in customer numbers, credit issued and receivables. Customers have grown
from 854,000 to 871,000 at 31 December 2007 with much stronger growth in the
second half of the year. We have focused on increasing loan sizes to lower risk
customers and this increased credit issued by 10.8%, well ahead of customer
growth. Average customer receivables also increased strongly, by 7.3%, but a
change in product mix towards longer-term products with lower effective interest
rates led to a reduction in revenue of 4.3%. This principally relates to the
longer-term 104 week product, which accounted for 17.3% of credit issued in 2007
and for 26.9% of average customer receivables. Only customers with the lowest
credit risk profile are offered the longer-term loan. Their credit quality is
very good with the result that, although the effective interest rate is lower,
the risk adjusted yield (revenue less impairment) is higher.
Impairment reduced significantly from £56.0 million to £26.4 million, a
reduction of 53.3%. This reflects the full year effect of the substantial
improvements in credit control techniques implemented in 2006. Performance in
the period has also benefited from the extension of the centralised collections
process, from approximately 30% of the Polish operations at the end of 2006 to
the whole country from the first quarter of 2007. As previously noted, this
improved credit performance enabled a release of prior year impairment
provisions of £6.0 million in the first half. Underlying impairment as a
percentage of revenue, before provision releases, remained good at 17.7%
compared with 17.4% at 30 June 2007, and 30.3% at the end of 2006.
Revenue net of impairment increased strongly, up by £27.7 million (16.2%) to
£156.7 million.
We expect further good progress in Poland in 2008 with continued growth in
customer numbers and credit issued accompanied by a small increase in the level
of impairment reflecting this stronger growth.
Czech Republic
Change
2007 2006 Change Change at CER
£m £m £m % %
Customer numbers (000s) 271 254 17 6.7 6.7
Credit issued 111.7 97.4 14.3 14.7 10.7
Average net receivables 64.5 56.8 7.7 13.6 10.5
Revenue 69.4 60.7 8.7 14.3 11.0
Impairment (14.1) (9.6) (4.5) (46.9) (46.9)
Revenue less impairment 55.3 51.1 4.2 8.2 4.5
The Czech Republic also delivered a strong performance in 2007. Customer numbers
grew by 6.7% to 271,000 at the end of December 2007. As the incomes of our Czech
customers have risen we have been able to increase our loan sizes and this,
combined with good customer growth, has resulted in an increase in credit issued
of 10.7% to £111.7 million. Average net receivables increased correspondingly,
up by 10.5% and revenue also rose strongly, up by 11.0% to £69.4 million.
Credit quality remained very good with underlying impairment as a percentage of
revenue at 20.3% for the year to 31 December 2007 (2006: 21.6%, before provision
releases of £3.5 million).
Revenue net of impairment increased by 4.5% to £55.3 million.
We expect continued good progress in the Czech Republic in 2008 with a slight
increase in impairment reflecting stronger growth in the business.
Hungary
Change
2007 2006 Change Change at CER
£m £m £m % %
Customer numbers (000s) 319 284 35 12.3 12.3
Credit issued 130.0 102.7 27.3 26.6 19.7
Average net receivables 68.1 57.0 11.1 19.5 12.4
Revenue 87.1 70.6 16.5 23.4 17.1
Impairment (17.4) (17.2) (0.2) (1.2) 2.2
Revenue less impairment 69.7 53.4 16.3 30.5 23.1
The Hungarian business performed well in 2007 having recovered rapidly from the
suspension of lending imposed by the local regulator, the PSZAF, in the final
quarter of 2006. Customer numbers increased by 35,000 (12.3%) to 319,000 during
the year. Credit issued increased by 19.7% to £130.0 million, and over the same
period average net receivables rose by 12.4% to £68.1 million. Revenue increased
by 17.1% to £87.1 million.
Credit quality remained good and impairment decreased by 2.2% to £17.4 million.
Impairment as a percentage of revenue reduced to 20.0% (2006: 24.4%).
Revenue net of impairment increased by £16.3 million (23.1%) to £69.7 million.
However, this was partly offset by an increase in operating costs of £8.0
million as a result of the increased costs of employing the agency force and new
administrative processes to meet the requirements of the PSZAF.
We expect continued good progress in Hungary in 2008.
Slovakia
Change
2007 2006 Change Change at CER
£m £m £m % %
Customer numbers (000s) 131 131 - - -
Credit issued 41.2 39.2 2.0 5.1 (5.1)
Average net receivables 23.1 19.9 3.2 16.1 5.0
Revenue 27.5 22.3 5.2 23.3 11.3
Impairment (6.4) (7.8) 1.4 17.9 24.7
Revenue less impairment 21.1 14.5 6.6 45.5 30.2
Our main objective for the Slovakian business during 2007 was to improve credit
quality after the implementation of improved credit management systems at the
end of 2006. This objective has been achieved, with impairment for the year
ended 31 December 2007 falling by £1.4 million (24.7%) to £6.4 million.
Impairment now represents 23.3% of revenue, compared with 35.0% at the end of
2006.
As a result of our tight stance on credit, customer numbers remained steady at
131,000, which is the same level as that reported at December 2006 and June 2007
and credit issued reduced by 5.1% to £41.2 million. The quality and
profitability of the customer base has, however, improved substantially and we
have been able to extend more credit to better quality customers such that
average net receivables increased by 5.0% to £23.1 million. Revenue increased by
11.3% to £27.5 million. Revenue net of impairment increased by £6.6 million
(30.2%) to £21.1 million.
We expect to return to customer growth in 2008 and to maintain good credit
quality.
Central costs
Central costs for 2007 were £12.5 million. This represents a small increase on
2006, when central costs were £11.9 million. This includes £1.5 million in
respect of new country research costs (2006: £1.5 million).
Developing markets
Mexico
Change
2007 2006 Change Change at CER
£m £m £m % %
Customer numbers (000s) 312 252 60 23.8 23.8
Credit issued 58.1 48.1 10.0 20.8 30.9
Average net receivables 22.3 14.5 7.8 53.8 61.0
Revenue 38.8 26.4 12.4 47.0 59.0
Impairment (18.4) (12.5) (5.9) (47.2) (58.6)
Revenue less impairment 20.4 13.9 6.5 46.8 59.4
Agent commission (4.6) (2.6) (2.0) (76.9) (91.7)
Finance costs (3.0) (2.6) (0.4) (15.4) (25.0)
Other operating costs (26.1) (18.6) (7.5) (40.3) (52.6)
Loss before taxation (13.3) (9.9) (3.4) (34.3)
In Mexico, we currently operate from two regional centres: Puebla and
Guadalajara. At the half year we noted that our main objectives for 2007 were to
continue to improve performance and, in particular credit quality, in the Puebla
region whilst maintaining the good performance of the Guadalajara region. We
have made good progress towards both of these objectives in the year.
Enhanced credit management systems were introduced to both regions in the second
half of the year, in Puebla in July and in Guadalajara in August. These systems
include application scoring for new customers and behavioural scoring for repeat
loans.
In Puebla, customer numbers reduced in the second half by 25,000 to 224,000 as a
result of the tightening of credit controls, although there was growth for the
year as a whole (2006: 211,000). Impairment as a percentage of revenue for 2007
was 51.3%, which is similar to that reported at the half year. However
substantial improvements in credit quality have been seen for credit issued in
all months since September 2007. As evidence of this, we forecast the gross cash
loss (i.e. the proportion of contractual loan repayments not collected and
ultimately written off) to have fallen from over 15% on loans issued in the
first half, to 11.7% on loans issued in the fourth quarter. Our lending in
Mexico is over very short terms, typically 30 weeks, and so the benefit of
improved lending in the final quarter of 2007 will quickly be reflected in an
improved impairment charge in the first half of 2008.
At the half year we identified seven branches in the Puebla region that were
heavily loss making and we said we would apply special measures to improve these
branches and then evaluate their viability in February 2008. Six branches have
shown substantial improvement, with gross cash loss improving from over 20% in
the first half to 11.7% in the fourth quarter, and are well on the way to making
a positive contribution. We have decided to close one branch that has not shown
sufficient improvement. We will collect outstanding receivables from
neighbouring branches.
Guadalajara continues to perform satisfactorily and towards the end of 2007 we
opened two new branches in the city of Guadalajara. The customer base has grown
strongly, up by 20,000 or 29.4% from 68,000 at June 2007 to 88,000 by 31
December 2007 (2006: 41,000). As expected, the increased intake of new
customers, who carry a higher risk profile, has contributed to a slight increase
in impairment, which is now running at 34.4% of revenue (2006: 28.6%). However,
the new enhanced credit management systems are now benefiting the region and are
expected to reduce impairment as a percentage of revenue in 2008.
As a result of these tightened credit controls, overall customer numbers in
Mexico reduced by 5,000 in the second half and finished the year at 312,000.
This still represents strong growth of 60,000 (23.8%) on December 2006. Credit
issued increased by 30.9% to £58.1 million and average net receivables were
£22.3 million, which represents growth of 61.0% on 2006. As a result, revenue
for 2007 increased by 59.0% to £38.8 million.
Impairment increased in line with revenue up by 58.6% to £18.4 million. At 31
December 2007 impairment as a percentage of revenue was 47.4%, which is similar
to the level of 47.3% reported at the end of 2006. As noted above, we expect the
improved quality of lending from September 2007 onwards to result in a reduced
level of impairment in 2008.
Revenue net of impairment increased by £6.5 million (59.4%) to £20.4 million.
Other operating costs increased by £7.5 million (52.6%) reflecting the increased
size of the business compared with 2006 and the cost of the credit management
systems referred to above. Start-up losses for the year were £13.3 million
(2006: £9.9 million).
Overall, we have made good progress during 2007. We have strengthened the
management team, re-trained local staff and agents and introduced improved
credit controls, which are now leading to much better credit quality. We believe
that this gives us a sound platform on which to resume growth and build a
profitable business.
In 2008 we expect significant improvements in impairment coupled with controlled
growth in customer numbers and credit issued per customer. As a result we
expect reduced losses in 2008.
We continue to target profit from both the Puebla and Guadalajara regions and
for Mexico overall in 2009.
Romania
2007 2006 Change
£m £m £m
Customer numbers (000s) 33 6 27
Credit issued 9.2 1.3 7.9
Average net receivables 3.1 0.3 2.8
Revenue 3.9 0.3 3.6
Impairment (0.5) - (0.5)
Revenue less impairment 3.4 0.3 3.1
Agent commission (0.4) - (0.4)
Finance costs (0.5) (0.2) (0.3)
Other operating costs (6.7) (2.5) (4.2)
Loss before taxation (4.2) (2.4) (1.8)
Romania continues to perform well and in line with our expectations. During the
second half of the year we opened two more branches taking our total number of
branches to seven. This, along with growth in the more established branches,
resulted in customer numbers almost doubling in the second half and finishing
the year at 33,000 (June 2007: 17,000; December 2006: 6,000).
Impairment is running at 12.8% of revenue, which is in line with our expectation
for the early stages of a developing market, and underlying credit quality
remains good. The loss for the year ended 31 December 2007 was £4.2 million,
which was in line with expectations.
During 2008 we expect start-up losses to reach a peak as we extend our branch
infrastructure with the opening of around ten new locations. We continue to
target a profit from this market in 2010.
International Personal Finance plc
Consolidated income statement for the year ended 31 December
Unaudited Unaudited Unaudited Unaudited
Notes Pro forma* Pro forma* Statutory Statutory
2007 2006 2007 2006
£m £m £m £m
Revenue** 2 409.8 365.3 409.8 365.3
Impairment 2 (83.2) (103.1) (83.2) (103.1)
Revenue less impairment 326.6 262.2 326.6 262.2
Finance costs (19.2) (18.6) (22.3) (24.0)
Other operating costs (81.6) (58.2) (81.6) (58.2)
Administrative expenses (175.7) (145.5) (175.7) (145.4)
(276.5) (222.3) (279.6) (227.6)
Profit before taxation 2 50.1 39.9 47.0 34.6
Profit before taxation and exceptional
demerger costs 50.1 39.9 49.8 38.8
Exceptional demerger costs 9 - - (2.8) (4.2)
Profit before taxation 50.1 39.9 47.0 34.6
Total tax expense 3 (15.0) (12.8) (14.5) (11.6)
Profit after taxation attributable to
equity shareholders 35.1 27.1 32.5 23.0
* A reconciliation between the pro forma and statutory consolidated income
statements is provided in note 9.
** All amounts included in revenue are defined as finance income under IFRS 7.
Earnings per share
Notes Unaudited Unaudited Unaudited Unaudited
Pro forma Pro forma Statutory Statutory
2007 2006 2007 2006
pence pence pence pence
Basic earnings per share 4 13.65 10.54 12.64 8.94
Diluted earnings per share 4 13.63 10.52 12.62 8.93
Dividend per share
Notes Unaudited Unaudited
2007 2006
pence pence
Interim dividend (per share) 5 1.90 -
Final proposed dividend (per share) 5 2.85 -
4.75 -
Dividends paid
Notes Unaudited Unaudited
2007 2006
£m £m
Interim dividend of 1.90 pence per share 5 4.9 -
Final proposed dividend of 2.85 pence per share 5 - -
4.9 -
Consolidated statement of recognised income and expense for the year ended 31
December
Unaudited Unaudited Unaudited Unaudited
Pro forma Pro forma Statutory Statutory
2007 2006 2007 2006
£m £m £m £m
Profit after taxation attributable to equity
shareholders 35.1 27.1 32.5 23.0
Exchange gains/(losses) on foreign currency
translations 21.1 (0.2) 21.1 (0.2)
Net fair value gains - cash flow hedges 1.4 1.8 1.4 1.8
Actuarial losses on retirement benefit asset (2.0) - (2.0) -
Tax credit/(charge) on items taken directly to
equity 0.1 (0.6) 0.1 (0.6)
Net income recognised directly in equity 20.6 1.0 20.6 1.0
Total recognised income for the year 55.7 28.1 53.1 24.0
Consolidated balance sheet as at 31 December
Notes Unaudited Unaudited Unaudited
Statutory Pro forma* Statutory
2007 2006 2006
£m £m £m
Assets
Non-current assets
Intangible assets 18.7 14.0 14.0
Property, plant and equipment 40.8 30.2 30.2
Retirement benefit asset 1.7 0.4 -
Deferred tax assets 27.8 15.6 15.7
89.0 60.2 59.9
Current assets
Amounts receivable from customers
- due within one year 422.7 312.4 312.4
- due in more than one year 20.5 18.6 18.6
6 443.2 331.0 331.0
Derivative financial instruments 0.7 0.6 0.6
Cash and cash equivalents 88.8 44.6 44.5
Amounts due from Provident Financial plc - - 78.3
Trade and other receivables 9.0 6.5 6.5
541.7 382.7 460.9
Total assets 630.7 442.9 520.8
Liabilities
Current liabilities
Bank borrowings 7 (8.8) (73.1) (218.4)
Derivative financial instruments (0.7) (2.3) (2.3)
Trade and other payables (50.6) (35.0) (35.0)
Current tax liabilities (5.0) (12.7) (13.6)
(65.1) (123.1) (269.3)
Non-current liabilities
Bank borrowings 7 (362.0) (169.6) (169.6)
(362.0) (169.6) (169.6)
Total liabilities (427.1) (292.7) (438.9)
Net assets 203.6 150.2 81.9
Shareholders' equity
Called-up share capital 8 25.7 25.7 3.2
Other reserve 8 (22.5) (22.5) -
Foreign exchange and hedging reserves 8 27.8 5.7 5.7
Retained earnings 8 172.6 141.3 73.0
Total equity 8 203.6 150.2 81.9
* A reconciliation between the statutory and pro forma balance sheets for 2006
is provided in note 9.
Consolidated cash flow statement for the year ended 31 December
Unaudited Unaudited
Statutory Statutory
2007 2006
£m £m
Cash flows from operating activities
Cash generated from operations 45.1 65.8
Established businesses 71.2 88.2
Start-up businesses (22.2) (18.2)
Exceptional demerger costs (3.9) (4.2)
45.1 65.8
Interest paid (22.4) (24.1)
Income tax paid (29.7) (19.1)
Net cash (used in)/generated from operating activities (7.0) 22.6
Cash flows from investing activities
Purchases of property, plant and equipment (22.7) (17.4)
Proceeds from sale of property, plant and equipment 5.9 3.4
Purchases of intangible assets (5.1) (12.1)
Acquisition of subsidiary (see below) (2.4) -
Net cash used in investing activities (24.3) (26.1)
Cash flows from financing activities
(Repayment of)/proceeds from bank borrowings (70.4) 4.7
Net movement in funding from Provident Financial plc 78.3 (4.0)
Capital contribution (note 8) 70.0 -
Dividends paid to company shareholders (4.9) -
Net cash generated from financing activities 73.0 0.7
Net increase/(decrease) in cash and cash equivalents 41.7 (2.8)
Cash and cash equivalents at the start of the period 44.5 47.1
Exchange gains on cash and cash equivalents 2.6 0.2
Cash and cash equivalents at the end of the period 88.8 44.5
Certain companies within the Group are required to keep certain cash and
short-term deposits strictly segregated from the rest of the Group and these
amounts are therefore not available to repay Group borrowings. At 31 December
2007 such cash and short-term deposits held by these companies amounted to £36.8
million (2006: £21.4 million).
Reconciliation of profit after taxation to cash flows from operations
Unaudited Unaudited
Statutory Statutory
2007 2006
£m £m
Profit after taxation 32.5 23.0
Adjusted for:
Tax expense 14.5 11.6
Finance costs 22.3 24.0
Share-based payment charge/(credit) 3.5 (0.4)
Pension credit (3.6) -
Depreciation of property, plant and equipment 9.6 7.2
Profit on sale of property, plant and equipment (0.2) (0.2)
Amortisation of intangible assets 3.4 -
Changes in operating assets and liabilities:
Amounts receivable from customers (63.5) (7.0)
Trade and other receivables 7.2 (0.7)
Trade and other payables 19.8 9.0
Retirement benefit asset (0.1) -
Derivative financial instruments (0.3) (0.7)
Cash generated from operations 45.1 65.8
On 28 December 2007 the Group acquired a new subsidiary company, OOO Maritime
Commercial Bank of Kaliningrad, in Russia. The amount reflected in the cash
flow statement of £2.4 million can be analysed as follows:
Unaudited
£m
Purchase price - paid in cash 2.8
Acquisition costs incurred 0.8
3.6
Cash acquired with subsidiary (1.2)
2.4
Notes to the financial information for the year ended 31 December 2007
1 Basis of preparation
This preliminary announcement has been prepared in accordance with the Listing
Rules of the Financial Services Authority and is based on the 2007 financial
statements which have been prepared under International Financial Reporting
Standards as adopted by the European Union (IFRS) and those parts of the
Companies Act 1985 applicable to companies reporting under IFRS.
The preliminary announcement, which is unaudited, does not constitute the
statutory financial statements of the Group within the meaning of Section 240 of
the Companies Act 1985.
The preliminary announcement has been agreed with the Group's auditors for
release.
On 16 July 2007 the international home credit businesses of Provident Financial
plc were demerged, a process effected by a dividend in specie. International
Personal Finance plc (IPF plc) acquired these international businesses by
issuing one IPF plc share to the shareholders of Provident Financial plc for
each Provident Financial plc share held by them. On the same day the shares of
IPF plc were admitted to listing on the London Stock Exchange. The financial
statements, upon which this preliminary announcement is based, have been
prepared in accordance with the principles of reverse acquisition accounting as
required by IFRS 3 'Business Combinations'. Although IPF plc is the legal
parent, the consolidated financial statements represent the consolidated
financial information of the international businesses of Provident Financial plc
amended for the acquisition of IPF plc on 16 July 2007. Certain information in
respect of the income statement, balance sheet and earnings per share has been
prepared on a pro forma basis in order to present a consolidated position as if
the Group (IPF plc and its subsidiaries) had always existed in its current form.
A reconciliation of the pro forma and statutory income statements and balance
sheets is provided in note 9.
The accounting policies used in completing this financial information have been
consistently applied in all periods shown. These accounting policies, along
with full details of the demerger, are given in the prospectus which can be
found on the Group's website (www.ipfin.co.uk).
2 Segmental information
Geographical segments
Unaudited Unaudited Unaudited Unaudited
Pro forma Pro forma Statutory Statutory
2007 2006 2007 2006
£m £m £m £m
Revenue
Central Europe 367.1 338.6 367.1 338.6
Mexico 38.8 26.4 38.8 26.4
Romania 3.9 0.3 3.9 0.3
409.8 365.3 409.8 365.3
Impairment
Central Europe 64.3 90.6 64.3 90.6
Mexico 18.4 12.5 18.4 12.5
Romania 0.5 - 0.5 -
83.2 103.1 83.2 103.1
Profit before taxation
Central Europe 80.6 64.1 79.3 59.2
UK - central costs (12.5) (11.9) (11.6) (8.3)
Established businesses 68.1 52.2 67.7 50.9
Mexico (13.3) (9.9) (13.2) (9.7)
Romania (4.2) (2.4) (4.2) (2.4)
Russia (0.5) - (0.5) -
Profit before exceptional demerger costs 50.1 39.9 49.8 38.8
Exceptional demerger costs - - (2.8) (4.2)
Profit before taxation 50.1 39.9 47.0 34.6
The Group operates in one business segment and therefore no segmental
information is provided for business activities.
3 Taxation
The pro forma tax rate for the period is 29.9% (2006: 32.1%). The statutory tax
rate excluding exceptional demerger costs is 29.9% (2006: 32.2%). Including
exceptional demerger costs the statutory tax rate is 30.9% (2006: 33.5%).
The tax credit on the exceptional demerger costs of £2.8 million (2006: £4.2
million) is £0.4 million (2006: £0.9 million).
4 Earnings per share
Basic earnings per share (EPS) is calculated by dividing the statutory earnings
attributable to shareholders of £32.5 million (2006: £23.0 million) by the
weighted average number of shares in issue during the period (2006: number of
shares at the date of demerger of 257.2 million).
The directors have elected to show a pro forma EPS excluding the impact of the
exceptional demerger costs net of taxation of £2.4 million (2006: £3.3 million)
and including the pro forma adjustments, net of taxation, detailed in note 9 of
£0.2 million (2006: £0.8 million). The pro forma earnings attributable to
shareholders used in the calculation of pro forma EPS are £35.1 million (2006:
£27.1 million).
Unaudited Unaudited
2007 2006
pence pence
Basic EPS 12.64 8.94
Exceptional demerger costs, net of taxation 0.93 1.28
Pro forma adjustments, net of taxation 0.08 0.32
Pro forma EPS 13.65 10.54
The pro forma EPS is attributable to the following defined business units:
Unaudited Unaudited
Pro forma Pro forma
2007 2006
pence pence
Central Europe 21.95 16.92
UK - central costs (3.40) (3.14)
Established businesses 18.55 13.78
Mexico (3.62) (2.61)
Romania (1.14) (0.63)
Russia (0.14) -
Pro forma EPS 13.65 10.54
For diluted EPS the weighted average number of shares has been adjusted to 257.5
million to take account of all potentially dilutive shares.
Unaudited Unaudited Unaudited Unaudited
Pro forma Pro forma Statutory Statutory
2007 2006 2007 2006
pence pence pence pence
Pro forma basic/basic EPS 13.65 10.54 12.64 8.94
Dilutive effect of options (0.02) (0.02) (0.02) (0.01)
Pro forma diluted/diluted EPS 13.63 10.52 12.62 8.93
5 Dividends
Unaudited Unaudited
2007 2006
£m £m
Interim dividend of 1.90 pence per share 4.9 -
The directors are recommending a final dividend in respect of the financial year
ended 31 December 2007 of 2.85 pence per share which will amount to a dividend
payment of £7.3 million. If approved by the shareholders at the annual general
meeting, this dividend will be paid on 23 May 2008 to shareholders who are on
the register of members at 11 April 2008. This dividend is not reflected as a
liability in the balance sheet as at 31 December 2007 as it is subject to
shareholder approval.
6 Amounts receivable from customers
Unaudited Unaudited
Statutory Statutory
2007 2006
£m £m
Central Europe 415.0 311.9
Mexico 22.9 18.1
Romania 5.3 1.0
443.2 331.0
7 Analysis of borrowings
Unaudited Unaudited Unaudited
Statutory Pro forma Statutory
2007 2006 2006
£m £m £m
Due in less than one year 8.8 73.1 218.4
Due between one and two years - 79.5 79.5
Due between two and five years 362.0 90.1 90.1
362.0 169.6 169.6
370.8 242.7 388.0
8 Consolidated statement of changes in shareholders' equity for the year ended
31 December
Unaudited - Statutory
Foreign
Called- exchange and
up share Other hedging Retained
capital reserve reserves Earnings Total
£m £m £m £m £m
Balance at 1 January 2006 3.2 - 4.7 50.4 58.3
Exchange losses on foreign currency
translations - - (0.2) - (0.2)
Net fair value gains - cash flow hedges - - 1.8 - 1.8
Tax charge on items taken directly to
equity - - (0.6) - (0.6)
Net income recognised directly in equity - - 1.0 - 1.0
Profit for the year - - - 23.0 23.0
Total recognised income for the year - - 1.0 23.0 24.0
Share-based payment adjustment to
reserves - - - (0.4) (0.4)
Balance at 31 December 2006 3.2 - 5.7 73.0 81.9
Balance at 1 January 2007 3.2 - 5.7 73.0 81.9
Exchange gains on foreign currency
translations - - 21.1 - 21.1
Net fair value gains - cash flow hedges - - 1.4 - 1.4
Actuarial losses on retirement benefit
asset - - - (2.0) (2.0)
Tax (charge)/credit on items taken
directly to equity - - (0.4) 0.5 0.1
Net income/(expense) recognised directly
in equity - - 22.1 (1.5) 20.6
Profit for the year - - - 32.5 32.5
Total recognised income for the year - - 22.1 31.0 53.1
Increase in share capital 437.3 226.3 - - 663.6
Capital reorganisation and reverse
acquisition adjustment (414.8) (248.8) - - (663.6)
Capital contribution - - - 70.0 70.0
Share-based payment adjustment to
reserves - - - 3.5 3.5
Dividends paid - - - (4.9) (4.9)
Balance at 31 December 2007 25.7 (22.5) 27.8 172.6 203.6
On 30 May 2007 a special resolution was passed, conditional upon Admission of
the company to the London Stock Exchange and the approval of the court, to
reduce the nominal value of each IPF plc share from £1.70 to £0.10.
On 16 July 2007, 257,217,888 shares of £1.70 were issued by IPF plc in exchange
for the entire share capital of Provident International Holdings Limited
(renamed as IPF Holdings Limited). The difference between the nominal value of
shares issued and the fair value of the subsidiaries acquired was credited to an
'other' reserve in accordance with the reverse acquisition principles of IFRS 3.
On 19 July the special resolution was effected resulting in a transfer from
share capital to retained earnings for IPF plc and to the 'other' reserve for
the Group.
In accordance with the principles of reverse acquisition accounting the share
capital presented is that of the legal parent, IPF plc, but the retained
earnings represent the pre-acquisition reserves of IPF Holdings Limited plus the
profit and other equity movements of the Group post demerger. The difference
between the equity structure of IPF plc and IPF Holdings Limited has been
debited to the 'other' reserve.
Prior to the demerger Provident Financial plc made a capital contribution of
£70.0 million to the international businesses that now form IPF. This capital
contribution comprised an amount of £30.0 million received on 2 March 2007 and
£40.0 million received on 20 June 2007. These amounts have been credited to
retained earnings.
9 Pro forma adjustments
A reconciliation of the statutory result for the years ended 31 December 2007
and 31 December 2006 to the pro forma result is presented below. The pro forma
adjustments will not form part of the Group's financial statements.
31 December 2007 Demerger Pro forma
Statutory costs adjustments Pro forma
£m £m £m £m
Revenue 409.8 - - 409.8
Impairment (83.2) - - (83.2)
Revenue less impairment 326.6 - - 326.6
Finance costs (22.3) - 3.1 (19.2)
Other operating costs (81.6) - - (81.6)
Administrative expenses (175.7) 2.8 (2.8) (175.7)
(279.6) 2.8 0.3 (276.5)
Profit before taxation 47.0 2.8 0.3 50.1
Analysed as:
Central Europe 79.3 - 1.3 80.6
UK - central costs (11.6) - (0.9) (12.5)
Established businesses 67.7 - 0.4 68.1
Mexico (13.2) - (0.1) (13.3)
Romania (4.2) - - (4.2)
Russia (0.5) - - (0.5)
Exceptional demerger costs
(2.8) 2.8 - -
Profit before taxation 47.0 2.8 0.3 50.1
Taxation (14.5) (0.4) (0.1) (15.0)
Profit after taxation 32.5 2.4 0.2 35.1
31 December 2006 Demerger Pro forma
Statutory costs adjustments Pro forma
£m £m £m £m
Revenue 365.3 - - 365.3
Impairment (103.1) - - (103.1)
Revenue less impairment 262.2 - - 262.2
Finance costs (24.0) - 5.4 (18.6)
Other operating costs (58.2) - - (58.2)
Administrative expenses (145.4) 4.2 (4.3) (145.5)
(227.6) 4.2 1.1 (222.3)
Profit before taxation 34.6 4.2 1.1 39.9
Analysed as:
Central Europe 59.2 - 4.9 64.1
UK - central costs (8.3) - (3.6) (11.9)
Established businesses 50.9 - 1.3 52.2
Mexico (9.7) - (0.2) (9.9)
Romania (2.4) - - (2.4)
Exceptional demerger costs
(4.2) 4.2 - -
Profit before taxation 34.6 4.2 1.1 39.9
Taxation (11.6) (0.9) (0.3) (12.8)
Profit after taxation 23.0 3.3 0.8 27.1
The exceptional demerger costs can be analysed as follows:
2007 2006
£m £m
IT separation costs 2.3 2.9
Property costs - 0.9
Defined benefit pension credit (3.5) -
Accelerated share-based payment charge 2.4 -
Other 1.6 0.4
2.8 4.2
Taxation credit (0.4) (0.9)
2.4 3.3
The pro forma adjustments can be analysed as follows:
2007 2006
£m £m
Additional finance costs due to higher interest rates
(note a) (0.8) (1.9)
Interest credit on capital contribution (note b) 1.9 4.7
Corporate office costs (note c) (2.8) (6.9)
Additional property and IT costs (note d) - (2.7)
Group interest payable (note e) 2.0 2.6
Pension contributions (note f) - 5.3
0.3 1.1
Taxation credit (0.1) (0.3)
0.2 0.8
The income statement pro forma adjustments can be explained as follows:
(a) An adjustment has been included to increase finance costs to reflect the
fact that IPF is subject to higher interest rates now that borrowings are no
longer guaranteed by Provident Financial plc.
(b) As part of the demerger IPF received a capital contribution of £70.0
million from Provident Financial plc (see note 8). This pro forma adjustment
reflects the interest that would have been earned on this capital contribution
had it been received prior to the start of 2006.
(c) An adjustment in respect of additional corporate office costs is included
to reflect that as a stand alone entity with its own corporate office, IPF
incurs additional costs compared to when it was a division of Provident
Financial plc.
(d) As part of the demerger IPF has moved to new premises and undergone a
process of separating its IT systems. The additional costs in respect of these
items are included as a pro forma adjustment for 2006. The property and IT
changes had all occurred by the start of 2007 and therefore no adjustment is
included to the 2007 result.
(e) While IPF was part of the Provident Financial plc group it was subject to
certain interest charges that would not have been incurred if it was a stand
alone entity. These interest charges (which were not included in the reported
profit for the international division in the Provident Financial plc segmental
analysis) have therefore been reversed.
(f) This pro forma adjustment reverses statutory charges in respect of the
pension contributions which were made to the defined benefit pension schemes. A
one-off additional payment was made in 2006 of £5.3 million. As IPF did not
acquire the assets and liabilities of the defined benefit schemes until after
the demerger it is required to charge these contributions to the income
statement rather than increasing the pension surplus held on the balance sheet.
These contributions were not treated as a charge to the income statement in the
international division result reported in the Provident Financial plc result.
Instead they were accounted for as a reduction in the Provident Financial plc
pension deficit.
A reconciliation of the profit before taxation for the international division
that was reported in the segmental analysis of the Provident Financial plc
results for the year ended 31 December 2006 to the statutory profit before
taxation is presented below:
2006
£m
International division profit before taxation reported in Provident
Financial plc results
46.2
Pension adjustment (5.3)
Group interest allocation (2.6)
Exceptional demerger costs (4.2)
Reduced recharge (see below) 0.5
Statutory profit before taxation 34.6
The statutory recharge from Provident Financial plc was £0.5 million lower than
that allocated to the international division for the Provident Financial plc
segmental analysis.
A reconciliation of the actual balance sheet as at 31 December 2006 to the pro
forma balance sheet is presented below:
Notes Unaudited Unaudited
Statutory Pro forma Pro forma
2006 adjustments 2006
£m £m £m
Assets
Non-current assets
Intangible assets 14.0 - 14.0
Property, plant and equipment 30.2 - 30.2
Retirement benefit asset a - 0.4 0.4
Deferred tax assets b 15.7 (0.1) 15.6
59.9 0.3 60.2
Current assets
Amounts receivable from customers
- due within one year 312.4 - 312.4
- due in more than one year 18.6 - 18.6
331.0 - 331.0
Derivative financial instruments 0.6 - 0.6
Cash and cash equivalents c 44.5 0.1 44.6
Amounts due from Provident Financial
plc
d 78.3 (78.3) -
Trade and other receivables 6.5 - 6.5
460.9 (78.2) 382.7
Total assets 520.8 (77.9) 442.9
Liabilities
Current liabilities
Bank borrowings e (218.4) 145.3 (73.1)
Derivative financial instruments (2.3) - (2.3)
Trade and other payables (35.0) - (35.0)
Current tax liabilities f (13.6) 0.9 (12.7)
(269.3) 146.2 (123.1)
Non-current liabilities
Bank borrowings (169.6) - (169.6)
(169.6) - (169.6)
Total liabilities (438.9) 146.2 (292.7)
Net assets 81.9 68.3 150.2
Shareholders' equity
Called-up share capital g 3.2 22.5 25.7
Other reserve g - (22.5) (22.5)
Foreign exchange and hedging reserves
5.7 - 5.7
Retained earnings 73.0 68.3 141.3
Total equity 81.9 68.3 150.2
The balance sheet pro forma adjustments can be explained as follows:
(a) Inclusion of defined benefit pension asset. The statutory financial
information only includes a pension asset from the date of demerger which is the
date at which Provident Financial plc agreed to transfer the scheme assets and
liabilities in respect of IPF employees to IPF.
(b) Deferred tax on defined benefit pension asset.
(c) The cash balances of IPF plc which are excluded from the statutory
consolidated financial information until the date of demerger.
(d) The amounts due from Provident Financial plc have been netted against
borrowings in the pro forma information.
(e) This adjustment includes the £78.3 million due from Provident Financial
plc which has been reclassified (note (d)), the £70.0 million capital
contribution which was received as part of the preparation for the demerger (see
note 8) and £3.0 million of demerger costs.
(f) This is the expected tax credit on the £3.0 million of demerger costs.
(g) This adjustment brings the share capital to that of IPF plc which is the
legal share capital of the Group as at 31 December 2007. The difference between
the share capital of IPF plc and the share capital of the international
businesses of Provident Financial plc has been credited to an 'other' reserve.
Information for shareholders
1. The shares will be marked ex-dividend on 9 April 2008.
2. The final dividend, which is subject to shareholder approval, will be paid
on 23 May 2008 to shareholders on the register at the close of business on 11
April 2008. Dividend warrants/vouchers will be posted on 21 May 2008.
3. A dividend reinvestment scheme is operated by Capita Registrars. For
further information contact them at The Registry, 34 Beckenham Road, Beckenham,
Kent, BR3 4TU (telephone 0871 664 0300 - calls cost 10 pence per minute plus
network extras).
4. The 2007 annual report and financial statements, together with the notice
of the annual general meeting, will be posted to shareholders on or around 11
April 2008.
5. The annual general meeting will be held on 14 May 2008 at the Kingsway Hall
Hotel, 66 Great Queen Street, London, WC2B 5BX.
This information is provided by RNS
The company news service from the London Stock Exchange
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