RNS Number:9037O
Cattles PLC
21 August 2003
Thursday 21 August 2003
CATTLES plc
Interim Results for the six months ended 30 June 2003
CATTLES REPORTS 30 PER CENT PROFITS GROWTH IN FIRST HALF
"The group has achieved excellent results in the first half of 2003, reflecting
the benefits of continuing volume growth and improving returns. We have
continued to develop our distribution channels whilst maintaining our focus on
credit quality and arrears management. I am particularly pleased that, during a
period of further expansion, our bad debt charge has remained unchanged from the
comparable period last year. We remain confident of our ability to deliver
further disciplined growth for the group and that 2003 will prove to be another
successful year for Cattles."
Sean Mahon, Chief Executive
Highlights:
Strong financial performance
* Profit before tax up 29.9% to #49.2 million
* Earnings per share up 18.6% to 10.82p
* Interim dividend up 16.2% to 3.95p
* Consumer Division receivables up 22.7% to #1.3 billion
Profit and earnings per share are stated before goodwill amortisation of #1.5
million
Credit quality
* Consumer Division bad debt charge stable at 8.6% of net receivables
* Consumer Division arrears levels stable at 11%
Business development
* Focus on profitability and disengagement from uneconomic sources of business
continues
* Investment in new distribution channels, including successful launch of
Welcome Car Finance
* Funding in place to support future growth with new bank syndication of #370
million
* Encouraging start to the group's five year plan
For further information:
On 21 August 2003
Sean Mahon, Chief Executive, Cattles plc 07733 124226
Mark Collins, Director - Treasury, Cattles plc until 3pm today
James Corr, Finance Director, Cattles plc
Geoffrey Pelham-Lane, Financial Dynamics 020 7269 7194
Emma Buchanan, Financial Dynamics 020 7269 7294
22 August 2003 onwards
Cattles plc 01924 444466
Financial Dynamics 020 7269 7194
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
Chairman's Statement
I am pleased to report an interim profit before tax and goodwill amortisation of
#49.2 million, representing an increase of 29.9% compared to #37.9 million for
the first half of last year. On the same basis, earnings per share increased by
18.6% to 10.82p. Profits, excluding the contribution of acquisitions made in
October 2002, have increased by 20.2% to #45.5 million.
After charging goodwill amortisation of #1.5 million, profit before tax
increased by 29.3% to #47.7 million compared to #36.9 million last year, with
earnings per share increasing by 18.1% to 10.38p.
The directors have declared an interim dividend of 3.95p per share, representing
an increase of 16.2% over last year. The interim dividend will be paid on 24
October 2003 to shareholders on the register on 5 September 2003. Shareholders
will again be offered the opportunity to reinvest their cash dividend in shares
in the company through the Dividend Reinvestment Plan.
Consumer Division
The Consumer Division has made strong progress in the period, increasing its
pre-tax profits by 29.2% to #48.0 million. This reflects the benefits of
continuing volume growth, improving returns and further developments in our
consumer credit distribution channels.
Further enhancements to our bespoke customer management systems have enabled us
to continue to improve the quality of our consumer credit underwriting. I am
pleased to report that arrears levels have remained stable over the past six
months and that the bad debt charge, at 8.6% of net receivables, has shown a
small improvement from the corresponding period in 2002. Responsible lending,
credit quality and arrears management remain fundamental to the success of our
business.
The Consumer Division had 725,000 customers at 30 June 2003, of which 290,000
comprised direct repayment customers and 435,000 were home collected customers.
Our policy of identifying and disengaging from those sources of business and
products where the level of return or arrears do not meet our internal
requirements has continued. There has been a managed reduction of 38,000
customers since the beginning of the year, with the objective of improving our
future return and arrears levels, in line with the group's five year plan.
As a consequence of these planned reductions and the traditional seasonal fall
from the Christmas peak, home collected receivables have reduced by #38 million
to #204 million since 31 December 2002. Direct repayment receivables increased
by #73 million during the period to #1.1 billion. At 30 June 2003, total net
customer accounts receivable amounted to #1.3 billion, an increase of 22.7% over
the previous period.
The integration of our direct repayment and home collected activities within the
consumer credit business continues to progress. During the last six months, a
further 18 new branches were opened with three branches merged, increasing our
national network to 510 branches at 30 June 2003. The expansion of our local
collection units has also continued and there are now 34 units supporting our
national branch network.
Progressive, our reinsurance company, has now been operational for two years and
continues to deliver the benefits expected at the time of its establishment. At
30 June 2003, funds under management had increased since the year end by 18.4%
to #39.6 million.
Our consumer credit support functions have, until recently, operated from four
different premises in Nottingham. We are pleased to have acquired a modern,
53,000 sq.ft, business support centre in Ruddington, Nottingham, at a cost of #8
million. The relocation of our staff to this new facility, which also
incorporates a purpose built training centre and a fully operational consumer
credit branch, has now been successfully completed. This new facility will
provide the required capacity for the future expansion of the group's consumer
credit activities.
Dial4aloan, our specialist consumer credit broker, has reported an increase of
118% in its pre-tax profits to #1.5 million, after absorbing all costs
associated with the broader development of its brand and the relocation of its
call centre from Harrogate, to a new enlarged operation in Sale. Dial4aloan's
business volumes have increased by over 25% since acquisition, of which #2
million per month is currently being generated for the Consumer Division.
The motor loan portfolio we acquired in October 2002 was fully integrated into
the Consumer Division in January this year and has since been transferred into
our branch network. Personal contact is now being established with these new
customers to introduce them to our broader range of products. Early results
are positive.
We recently announced our entry into the direct distribution motor finance
business through the acquisition of Hathgap Limited. This business is trading
under the Welcome Car Finance brand and currently operates from four sites
located in Edinburgh, Glasgow, Manchester and Birmingham. Initial trading is
encouraging and we look forward to introducing further customers to our branch
network by developing this route to market.
We continue to pursue other initiatives to develop our distribution capability,
including a pilot scheme with Barclays Bank PLC which is in the early stages of
development. The concept has been well received and this initiative will
remain in pilot stage until 31 December 2003, in line with our original plans.
Lewis, the group's debt recovery specialist, has produced good results with
pre-tax profit increasing by 24.0% to #1.6 million. Lewis continues to provide
a full recovery service to both our consumer credit business and to external
clients, the latter of which account for around 75% of its activity.
Corporate Services
The Corporate Division has again reported strong results with an increase in
pre-tax profits of 25.6% to #3.1 million. Trading has continued to improve at
both the invoice finance and asset finance businesses and net receivables have
increased by 9.1% to #118 million since the beginning of the year.
Funding
In July 2003, the group successfully completed a new bank credit facility for
#370 million to replace maturing facilities of #237 million and to provide
additional funding to support the on going expansion of the group. We were again
delighted with the strong support we received from our existing bank-ing
relationships and were particularly pleased to establish relationships with
several other banks for the first time.
The group's gearing of 2.7 times at 30 June 2003, remains unchanged from the
previous year end.
Prospects
Current trading is in line with our expectations and we look forward to the
completion of another successful year in 2003.
Barrie Cottingham
Chairman
21 August 2003
Consolidated Profit and Loss Account
For the six months ended 30 June 2003 based on unaudited figures
6 months to 6 months to 12 months to
30 June 30 June 31 December
2003 2002 2002
Notes #'000 #'000 #'000
Turnover 2 279,380 233,409 499,192
________ ________ ________
Profit before taxation and goodwill 49,167 37,864 95,693
amortisation
Goodwill amortisation (1,453) (965) (2,084)
________ ________ ________
Profit before taxation 2 47,714 36,899 93,609
Taxation 3 (13,837) (10,701) (26,957)
________ ________ ________
Profit after taxation 33,877 26,198 66,652
Dividends 4 (12,906) (10,146) (32,993)
________ ________ ________
Retained profit for the period 20,971 16,052 33,659
________ ________ ________
Earnings per share - basic 5 10.38p 8.79p 21.95p
- diluted 5 10.36p 8.76p 21.90p
________ ________ ________
Adjusted earnings per share, before
goodwill - basic 5 10.82p 9.12p 22.64p
amortisation - diluted 5 10.80p 9.08p 22.58p
________ ________ ________
The results shown in the profit and loss account above derive wholly from
continuing operations. The only recognised gains and losses for the period are
those dealt with in the profit and loss account above. There is no material
difference between the profit before taxation and the retained profit for the
period as shown above and their historical cost equivalents.
Consolidated Balance Sheet
As at 30 June 2003 based on unaudited figures
30 June 30 June 31 December
2003 2002 2002
Notes #'000 #'000 #'000
Fixed assets
Intangible assets 54,702 33,389 50,663
Tangible assets 39,841 39,281 35,563
Investments - own shares held 3,366 2,948 3,740
________ ________ ________
97,909 75,618 89,966
________ ________ ________
Current assets
Customers' accounts receivable:
Amounts falling due after more than one year 768,880 594,530 725,546
Amounts falling due within one year 658,563 582,248 656,602
________ ________ ________
6 1,427,443 1,176,778 1,382,148
Less: deferred revenue (222,082) (196,938) (237,518)
________ ________ ________
1,205,361 979,840 1,144,630
Stocks 1,293 3,541 1,526
Debtors 18,915 25,518 25,195
Investments 10 39,558 33,309 33,421
Cash at bank and in hand 8,973 8,037 7,395
________ ________ ________
1,274,100 1,050,245 1,212,167
Creditors - amounts falling due within one year (424,778) (207,331) (334,059)
________ ________ ________
Net current assets 849,322 842,914 878,108
________ ________ ________
Total assets less current liabilities 947,231 918,532 968,074
Creditors - amounts falling due after more than one (580,212) (672,543) (622,414)
year ________ ________ ________
367,019 245,989 345,660
Provisions for liabilities and charges - (160) -
________ ________ ________
Net assets 367,019 245,829 345,660
________ ________ ________
Capital and reserves
Called up equity share capital 32,788 29,941 32,766
Share premium account 139,656 58,896 139,258
Revaluation reserve 251 271 251
Profit and loss account 194,324 156,721 173,385
________ ________ ________
Equity shareholders' funds 7 367,019 245,829 345,660
________ ________ ________
Consolidated Cash Flow Statement
For the six months ended 30 June 2003 based on unaudited figures
6 months to 6 months to 12 months to
30 June 30 June 31 December
2003 2002 2002
Notes #'000 #'000 #'000
Net cash inflow/(outflow) from operating 8 3,479 (11,291) (25,130)
activities
Taxation (11,380) (7,371) (21,591)
Capital expenditure and financial investment (9,564) 10,543 8,612
Acquisitions (136) (906) (59,141)
Equity dividends paid (22,847) (18,015) (28,161)
________ ________ ________
Cash outflow before use of liquid resources
and financing (40,448) (27,040) (125,411)
Management of liquid resources (6,137) (28,654) (28,766)
Financing (16,326) (4,574) 74,481
________ ________ ________
Decrease in cash in the period (62,911) (60,268) (79,696)
________ ________ ________
Reconciliation of net cash flow to movement in net debt
Decrease in cash in the period (62,911) (60,268) (79,696)
Cash outflow from increase in liquid resources 6,137 28,654 28,766
Cash outflow from movement in debt and lease
financing 16,714 6,056 9,225
________ ________ ________
Movement in net debt in the period resulting
from cash flows (40,060) (25,558) (41,705)
Loan notes issued on acquisition of subsidiaries - - (11,500)
New finance leases (603) (268) (497)
Accrual for finance cost of debt (87) (87) (175)
Net debt at start of period (771,241) (717,364) (717,364)
________ ________ ________
Net debt at end of period 9 (811,991) (743,277) (771,241)
________ ________ ________
Notes on the Financial Information
For the six months ended 30 June 2003 based on unaudited figures
1 Basis of preparation
The financial information included in this interim statement for the six months
ended 30 June 2003 does not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985 and is unaudited. The financial
information has been prepared in accordance with the accounting policies used in
the group financial statements for the year ended 31 December 2002.
This interim statement will be published on the company's website, in addition
to the paper version posted to shareholders. The maintenance and integrity of
the Cattles plc website is the responsibility of the directors. The work
carried out by the auditors does not involve consideration of these matters.
Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Comparative figures for the year ended 31 December 2002 have been extracted from
the group financial statements on which the auditors gave an unqualified opinion
and which have been filed with the Registrar of Companies.
2 Segmental analysis
6 months to 6 months to 12 months to
30 June 2003 30 June 2002 31 December 2002
Profit Profit Profit
before before before
Turnover taxation Turnover taxation Turnover taxation
#'000 #'000 #'000 #'000 #'000 #'000
Consumer Division 268,436 47,997 222,897 37,136 477,856 93,169
Corporate Division 10,944 3,122 10,512 2,486 21,336 5,314
Central Support
Services - (3,405) - (2,723) - (4,874)
________ ________ ________ ________ ________ ________
Group 279,380 47,714 233,409 36,899 499,192 93,609
________ ________ ________ ________ ________ ________
The company and its subsidiary undertakings operate wholly in the United
Kingdom.
3 Taxation
The taxation charge has been calculated by applying the directors' best estimate
of the effective tax rate for the year, which is 29% (30 June 2002: 29%), to the
profit before taxation for the period.
4 Dividends
6 months to 6 months to 12 months to
30 June 2003 30 June 2002 31 December 2002
Pence #'000 Pence #'000 Pence #'000
Interim 3.95 12,906 3.40 10,146 3.40 10,146
Final - - - - 7.00 22,847
________ ________ ________ ________ ________ ________
3.95 12,906 3.40 10,146 10.40 32,993
________ ________ ________ ________ ________ ________
5 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders of #33.9 million (30 June 2002: #26.2 million) by the
weighted average number of ordinary shares in issue during the period, excluding
'own shares held' which are treated, for this purpose, as being cancelled.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares.
Adjusted basic and diluted earnings per share have been calculated after adding
back goodwill amortisation of #1.5 million (30 June 2002: #1.0 million), to
provide additional analysis of the underlying performance of the group.
The weighted average number of shares used in the calculations is set out as
follows:
6 months to 6 months to 12 months to
30 June 30 June 31 December
2003 2002 2002
Weighted average number of shares '000 '000 '000
In issue during the period 327,752 299,078 304,680
Held by the QUEST (1,242) (1,114) (1,080)
________ ________ ________
Used in basic EPS calculation 326,510 297,964 303,600
Issuable on conversion of outstanding options 514 1,071 754
________ ________ ________
Used in diluted EPS calculation 327,024 299,035 304,354
________ ________ ________
6 Customers' accounts receivable
Customers' accounts receivable, after deducting 30 June 30 June 31 December
provisions for bad and doubtful debts, analysed 2003 2002 2002
by division, is as follows: #'000 #'000 #'000
Consumer Division 1,309,633 1,067,603 1,274,180
Corporate Division 117,810 109,175 107,968
________ ________ ________
1,427,443 1,176,778 1,382,148
________ ________ ________
Gross customers' accounts receivable, analysed
by product, is as follows:
Hire purchase contracts 613,659 520,818 620,405
Other instalment credit agreements 853,975 658,861 791,290
Default debt 25,602 25,160 24,814
Finance leases 28,667 30,517 29,516
Factoring 51,558 43,223 43,649
________ ________ ________
1,573,461 1,278,579 1,509,674
Provision for bad and doubtful debts (146,018) (101,801) (127,526)
________ ________ ________
1,427,443 1,176,778 1,382,148
________ ________ ________
6 months to 6 months to 12 months to
The charge for bad and doubtful debts in the 30 June 30 June 31 December
profit and loss account, analysed by 2003 2002 2002
division, is as follows: #'000 #'000 #'000
Consumer Division 55,393 46,207 94,366
Corporate Division 733 1,132 2,263
________ ________ ________
56,126 47,339 96,629
________ ________ ________
7 Reconciliation of movements in equity shareholders' funds
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Profit after taxation for the period 33,877 26,198 66,652
Dividends (12,906) (10,146) (32,993)
Contribution to the QUEST (32) (59) (1,022)
Increase in share capital and share premium 420 1,541 84,728
account ________ ________ ________
21,359 17,534 117,365
Equity shareholders' funds at beginning of 345,660 228,295 228,295
period
________ ________ ________
Equity shareholders' funds at end of period 367,019 245,829 345,660
________ ________ ________
8 Reconciliation of profit before taxation to operating cash flows
6 months to 6 months to 12 months to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Profit before taxation 47,714 36,899 93,609
Depreciation charges 5,676 5,451 11,478
Amortisation of goodwill 1,453 965 2,084
Loss on disposal of tangible fixed assets 213 119 162
Increase in customers' accounts receivable (63,966) (70,072) (179,882)
Decrease/(increase) in stocks 233 (1,216) 799
Decrease in debtors 6,412 4,918 7,760
Increase in creditors 5,744 11,645 38,860
________ ________ ________
Net cash inflow/(outflow) from operating activities 3,479 (11,291) (25,130)
________ ________ ________
9 Analysis of net debt
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Cash at bank and in hand 8,973 8,037 7,395
Overdrafts (11,840) (5,752) (6,851)
________ ________ ________
(2,867) 2,285 544
________ ________ ________
Investments realisable within one year 39,558 33,309 33,421
Debt due after more than one year (301,300) (395,300) (343,300)
Debt due within one year (263,437) (92,250) (161,937)
Debentures and other loan capital due
after more than one year
(271,272) (269,597) (271,185)
Debenture loans due within one year (6,000) (12,103) (20,998)
Finance leases (6,673) (9,621) (7,786)
________ ________ ________
(809,124) (745,562) (771,785)
________ ________ ________
Total (811,991) (743,277) (771,241)
________ ________ ________
10 Current asset investments
At 30 June 2003, the managed fund investments held by Progressive Insurance
Company Limited amounted to #39.6 million (30 June 2002: #33.3 million).
The Regulators and the Trust Deed of this company require #29.2 million (30 June
2002: #18.7 million) of these investments to be retained within the company.
These monies, which are invested and held on deposit pending future claims
payments, cannot be applied to finance other parts of the group or to repay
group borrowings.
21 August 2003
Shareholder Information
The interim dividend will be paid on 24 October 2003 to shareholders on the
register on 5 September 2003. Shareholders can again reinvest their cash
dividend in shares through the Dividend Reinvestment Plan ('the plan').
Shareholders who have not previously completed a mandate and who require details
of the plan should contact the Registrars. New mandates must be received by
close of business on 7 October 2003 to be included in the plan for the interim
dividend.
This announcement will be sent to the shareholders of Cattles plc. Further
copies are available on request from the company's registered office, Kingston
House, Centre 27 Business Park, Woodhead Road, Birstall, Batley WF17 9TD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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