TIDMPCF
RNS Number : 3579Y
PCF Group PLC
05 December 2017
5 December 2017
PCF Group plc
("PCF", the "Bank" or the "Group")
Preliminary Results for the year ended 30 September 2017
Inaugural results of PCF Bank ahead of market expectations
PCF Group plc, the AIM-listed specialist bank, today announces
its preliminary results for the year ended 30 September 2017. The
Board is pleased to report strong trading and full year results
ahead of market expectations.
These final results constitute a 12-month period. The previous
Accounting Period was an 18-month period due to a change in
Accounting Reference Date. Therefore, the highlights, narrative and
statement refer to a pro forma unaudited 12-month period to 30
September 2016 to provide a like-for-like comparative.
Business Highlights:
-- PCF Bank commenced banking operations on 27 July 2017
-- New customer deposits of GBP53.0 million were received in the period to 30 September 2017
-- Awarded 2018 Best New Provider by independent savings specialist, Savings Champion
-- 24% increase in new business originations to GBP84.6 million (2016: GBP68.4 million)
-- Portfolio growth of 20% to GBP146 million (2016: GBP122 million)
-- Record low impairment charge of 0.5% (2016: 1.0%)
Financial Highlights:
-- Underlying profit before tax up 25% to GBP5.0 million (2016:
GBP4.0 million), before deducting GBP1.4 million of bank set-up
costs
-- Statutory profit before tax of GBP3.6 million (2016: GBP3.6 million)
-- 90% increase in recommended final dividend to 0.19p (2016: 0.10p)
-- Successful raising of GBP10.5 million of new equity in April 2017
-- Earnings per share 1.5p (2016: 1.7p)
-- After-tax return on equity reduced to 8.7% (2016: 12.9%)
following new equity issuance and investment in banking
infrastructure
-- CET1 capital ratio of 26.3%
-- Overall Liquidity Adequacy Ratio of 126%
-- GBP31.3 million (2016: GBP28.2 million) of unearned finance
charges to contribute to earnings in future years
Tim Franklin, Chairman, commented: "This has been a year of
significant achievement, marked by our successful arrival as a new
entrant bank. These strong results are underpinned by excellent
organic portfolio growth and a record low impairment rate. The
quality of our portfolio and the operational platform we have built
provides the ideal foundation to deliver on a strategy of
accelerated growth through expansion within our existing lending
markets and asset diversification through acquisition."
"We look to the year ahead with confidence in PCF's ability to
deliver profitable and sustainable growth."
- end -
For further information, please contact:
PCF Group Tel: +44 (0)
Scott Maybury, Chief Executive 20 7222 2426
Officer
Robert Murray, Managing Director
David Bull, Finance Director
Tavistock Communications Tel: +44 (0)
Jos Simson / Andrew Dunn 20 7920 3150
Panmure Gordon (UK) Limited Tel: +44 (0)
Atholl Tweedie / Adam James 20 7886 2500
- Corporate Finance
Charles Leigh-Pemberton - Corporate
Broking
Stockdale Securities Tel: +44 (0)
Robert Finlay / Richard Johnson 20 7601 6100
- Corporate Finance
Henry Willcocks - Corporate
Broking
About PCF Group plc (www.pcf.bank)
Established in 1994, PCF Group plc is the AIM-quoted parent of
the new specialist bank, PCF Bank Limited. With the advent of a
banking operation, the Group now has the capability to increase its
lending portfolio significantly, with target portfolio sizes of
GBP350 million in 2020 and GBP750 million in 2022. The Group will
retain its focus on portfolio quality and has the capability to
lend increasingly to prime segments of its existing finance
markets. The Group will also seek to diversify its lending products
and asset classes through acquisition.
PCF Bank currently offers retail savings products for
individuals and then deploys those funds through its two lending
divisions:
-- Consumer Finance which provides finance for motor vehicles to consumers; and
-- Business Finance which provides finance for vehicles, plant and equipment to SMEs.
The Group has a track record of strong financial performance and
an efficient and scalable business model, with significant room to
grow. Utilising its technologically advanced platform, the Bank
provides both depositors and borrowers with a high level of service
and a straightforward, simple range of products tailored to suit
their needs.
For media enquiries please contact media@pcf.bank
Chairman's Statement
For the year ended 30 September 2017
I am very pleased to present my first Results statement as
Chairman of PCF Group plc. The last 12 months have seen continued
progress and success on all fronts. In December of last year, we
received regulatory authorisation to become a bank. This was a
significant achievement as we had to put in place the extensive
systems and processes necessary to gain a banking licence. I am
delighted to say that we started receiving savings deposits from
retail customers as early as July. On behalf of the Board, I would
like to extend my congratulations and thanks to our CEO, Scott
Maybury and all of our staff for achieving this milestone and for
their many other successes as outlined in the rest of my
statement.
PCF Bank
Establishing ourselves as a specialist bank achieves a strategic
goal we set ourselves two and a half years ago. Our operating model
is now diversified across both our lending and funding platforms
and this provides us with resilience, flexibility and opportunity.
Access to the retail deposit market will provide us with the
capability to expand our addressable lending market, generate
portfolio scale and further increase profitability. The attainment
of bank status will be transformational for the Group.
Profits, shareholder return and capital
Statutory profit before tax for the year ended 30 September 2017
was GBP3.6 million (2016: GBP3.6 million). However, this statutory
profit is reported after expensing GBP1.4 million (2016: GBP0.4
million) of costs relating to our banking application. Underlying
profit before tax, adjusted for these costs, increased by 25% to
GBP5.0 million (2016: GBP4.0 million). This strong set of results
is underpinned by a good quality lending portfolio that continues
to perform extremely well.
Substantial investment has been made for the future and, in
preparation for the launch, the Bank received new equity investment
of GBP10.5 million in April 2017. The expenditure on bank
infrastructure and the raising of new equity resulted in earnings
per share falling slightly to 1.5p (2016: 1.7p). Net assets
increased by 57% to GBP38.7 million (2016: GBP24.7 million) and the
Group Common Equity Tier 1 ('CET1') Ratio is very strong at 26.3%.
This capital base provides the financial strength to deliver on our
medium-term growth plans.
The Board recommends the payment of a final dividend of 0.19p
per ordinary share, which is an increase of 90% over the previous
year (2016: 0.10p). If approved, the dividend will be paid on 6
April 2018 to shareholders on the register at 16 March 2018.
Governance and culture
The Board's responsibility to provide strong and effective
governance has been a focus since my appointment in December 2016.
Since then, we have enhanced the framework to be compliant with the
UK Corporate Governance Code 2016. In my capacity as Chairman I
have overseen Board recruitment and committee composition and have
every confidence in the governance framework we now have in
place.
I would like to take the opportunity to welcome Christine
Higgins and David Titmuss to the Board and to thank Tony Nelson and
Andrew Brook for their service as non-executive directors. I would
also like to extend my thanks to David Anthony who preceded me as
Chairman. All three of our former colleagues made valuable
contributions to the Board, its culture and the success of the
Group.
The combined experience of the Board will be a continued
strength as we enhance and maintain a strong corporate culture of
core values, attitudes and behaviours.
Outlook
This has been a year of significant achievement, marked by our
successful arrival as a new entrant bank. The Group has delivered
continued financial success while building the operational,
governance and risk frameworks that provide the foundation for
future growth.
We are an ambitious business, built on these strong foundations.
Our banking licence gives us access to diversified sources of
competitively priced funding. We have a loan book that is
performing well and our initial launch into more prime lending has
been enthusiastically received by brokers and customers.
While the outlook for the wider UK economy remains uncertain as
the Government negotiates Britain's exit from the European Union,
we at PCF remain confident of further progress in the coming year,
as we deliver on our strategy of profitable and sustainable
growth.
T A Franklin
Chairman
Chief Executive's Statement
For the year ended 30 September 2017
A year of significant progress
It has been an excellent year of progress for the Group, having
achieved the milestone of bank authorisation on 6 December 2016.
The Bank successfully mobilised and launched its new brand and
range of retail savings products in July 2017. It is a great credit
to our team that the delivery of this huge undertaking has not
detracted from continued portfolio growth and increased underlying
profit generation.
Our Board recognised that achieving bank authorisation would
entail significant costs and require additional capital, both of
which would, in the short term, reduce earnings per share. However,
we were, and remain, confident of the long-term benefits which will
accrue as a result of this transformational strategy. These
benefits include lower funding costs, the ability to reach and
retain a wider range of customers, greater flexibility to diversify
our business and reduction of the risks of relying on wholesale
funding.
The underlying profit before tax for the year was up 25% to
GBP5.0 million (2016: GBP4.0 million) and ahead of market
expectation. This underlying profit is before the deduction of
GBP1.4 million of expenses (2016: GBP0.4 million) related to the
setting up of the banking operations. The statutory profit before
tax reported after this investment in the banking team and
infrastructure was GBP3.6 million (2016: GBP3.6 million).
The profit after tax for the year was GBP2.8 million (2016:
GBP2.8 million) on an effective Corporation Tax rate of 23.3%
(2016: 22.2%). The higher than standard rate of Corporation Tax is
mainly due to the carrying value of our deferred tax asset being
revalued to the new lower rate of Corporation Tax, 17%.
Portfolio quality
The lending portfolio grew by 20% during the year to GBP146
million (2016: GBP122 million). The portfolio is reported net of
unearned finance charges of GBP31.3 million (2016: GBP28.2
million). These charges, which will be attributed to income over
the next four years, contribute towards greater certainty and
quality of earnings in the forthcoming periods.
This confidence of future earnings is underpinned by the quality
of the portfolio, which continues to perform ahead of our
expectations. The impairment charge was 0.5% (2016: 1.0%) which
represents a 50% reduction in the year. This improved impairment
performance provides comfort, in the event that the broader
economic backdrop deteriorates. For many years, the Group has
placed itself firmly in the prime to near prime sectors of our
respective markets and, by maintaining prudent underwriting
standards, we are confident that we will continue to generate
sustainable returns.
The reduced cost of funding through retail deposits increases
our ability to access a greater part of that prime lending sector
and will provide the driver for accelerated portfolio growth. We
are targeting organic growth of the portfolio to GBP350 million
within three years.
Driving future profitability
Our key profitability metric remains after tax Return on Equity
('RoE') but there will also be a focus on net interest margin to
ensure our capital is being utilised on lending that delivers
increased profitability, not just scale. The costs of operating as
a bank are substantial but so are the benefits. This year's results
have seen both the balance sheet and income statement fully
weighted with both equity and those costs. Additional equity of
GBP10.5 million was raised during the year, GBP2.5 million of fixed
and intangible assets were added to the balance sheet and GBP1.4
million of operating costs were expensed through the income
statement. These factors reduced our earnings per share to 1.5p
(2016: 1.7p) and our RoE to 8.7% (2016: 12.9%) but we expect this
to recover over the coming years as we grow our business. We are
targeting a RoE of 12.5% within three years.
Our cost-to-income ratio for the current year increased to 59%
(2016: 54%) as we incurred those costs. However, after adjusting
for set-up costs, the underlying ratio continued to fall from 51%
to 47%. Over the past four years we have shown continually
increasing profitability as our largely fixed cost base has
benefited from portfolio growth. The same operational gearing will
be seen in regard to the costs of banking and our new savings
platform. We expect that strong organic growth will deliver
increasing profitability and the target RoE as we further leverage
our new model.
The Group generated earnings per share of 1.5p (2016: 1.7p). The
underlying earnings per share adjusting for the new equity and the
cost of investing in the bank was 2.3p (2016: 1.9p), a 21% advance
on the previous year. The net asset value per share is 18.2p (2016:
15.1p).
We intend to operate a progressive dividend policy moving
forward and have recommended a final dividend this year of 0.19p
(2016: 0.10p). The dividend pay-out ratio will balance the
disciplines of paying a dividend with the capital-intensive nature
of banking.
New savings operations
In the short period between launch and balance sheet date, the
Bank received GBP53.0 million of retail deposits. The success of
our deposit activities has been matched with positive feedback from
our new customers on the technology platform and speed of service.
This success was recognised this month by the independent savings
advice specialist Savings Champion who awarded us, 2018 Best New
Provider. Total retail deposits have continued to build since the
financial year end to support new business growth.
Our proposition to our customers is 'Simple Banking. At your
service'. We are very pleased with our achievements to date and
have welcomed over 1,100 new customers to the Bank. To date, our
savings portfolio includes a range of maturities from 100 day to 7
years and an average balance outstanding of approximately
GBP50,000. The savings products are targeted at middle to older
aged savers, providing ease of service by utilising our on-line
application portal or by postal application if they prefer.
The ability to raise significant amounts of retail deposits will
support our growth strategy and allow us to scale the portfolio far
beyond what could be achieved for a company of our size in the
wholesale debt markets. A depositor base also provides the greater
flexibility and the reduced costs of funds needed to launch new
products and diversify asset classes.
Our initial use for the retail deposits has been focussed on
repaying and replacing, wherever possible, our more expensive
wholesale bank debt. The remainder was used for new business
origination. Our funding strategy going forward is to match
business origination with fixed rate, fixed term deposits to lock
in profit margin and reduce market volatility. On the evidence to
date, we are encouraged and by maintaining competitive interest
rates to attract new depositors, believe in the sustainability of
this strategy and our ability to fund both organic growth and
acquisitions.
Strong balance sheet and capital base
The decision to introduce new capital before the launch of the
Bank provides the necessarily robust capital position to deliver
uninterrupted growth which is resilient to the stresses of economic
uncertainty, investor sentiment, market volatility and regulatory
change. The introduction of IFRS 9 and the increase in the
counter-cyclical buffer will also need to be accommodated in 2019.
The Group has a CET1 capital ratio of 26.3% and an Overall
Liquidity Adequacy Ratio ('OLAR') of 126% which exceed regulatory
requirements. OLAR is calculated on a 90-day basis which adequately
covers our liquidity needs. These factors constitute a sensible
starting position for a new bank as it embarks on a growth
strategy. In the medium-term, the Group will achieve a more
efficient capital model as we grow, bed-in our new risk framework
and optimise our treasury strategy.
New business lending up 24%
New business originations increased by 24% to GBP84.6million in
the year (2016: GBP68.4 million). The Group remains committed to
supporting consumers and SMEs in the purchase of motor vehicles,
plant and machinery. We have chosen these markets as they produce
attractive returns and the lending is supported by assets with
strong collateral characteristics.
The strong growth in originations has been driven by our
Business Finance Division where we are best able to match our yield
aspirations with our credit quality criteria and where we were also
able to launch our new competitive prime terms before the year end.
More than half of our total originations in the year were for
business-critical assets for small companies, sole traders and
partnerships. SME lending increased by 45% in the year (2016: 22%).
As at 30 September 2017, the business finance portfolio was GBP73
million (2016: GBP52 million) and the consumer motor portfolio was
GBP72 million (2016: GBP70 million).
Origination growth in our Consumer Finance Division was less
successful with advances falling by 3% (2016: increase of 8%).
Consumer motor finance is a competitive market place and with our
previous more expensive funding model, we were not prepared to
sacrifice margin to compete. In addition, the prevalence of the
Personal Contract Purchase product ('PCP'), which we do not offer,
and a fall in UK new vehicle sales, mean that these results were
not unexpected. This market also faces possible structural changes
and we will be proactive in decisions regarding the future of
diesel engines and the evolution of electric and autonomous
vehicles. We have plans to restore growth to this division and
expect successes in 2018 as we use our cheaper cost of funds to
compete on a level playing field in the prime market. However,
entering this more prime market has required change to our IT
platform, with additional automated functionality, and we expect
this enhanced platform to go live in the first calendar quarter of
2018.
In the short period since the launch of the Bank we have been
able to deploy our new cheaper cost of funds in our Business
Finance Division, for our returning customers in motor finance and
to establish a direct sales presence in the commercial vehicle
market. We have also started offering more attractive terms
on-line, supported by increased digital marketing. These new terms
of business have been enthusiastically received by our broker
network and our returning customers, with record levels of new
business origination in both September and October.
Regulatory environment and risks
We are grateful for the support we have received from our
regulators. They provided invaluable guidance through the
mobilisation process and in bedding-in the increased regulatory
demands of being a bank. We expect that the recently announced
Financial Conduct Authority investigation into the motor finance
market will focus on affordability, transparency, commission
arrangements and the PCP product. We do not expect the outcome to
disrupt our current practices to any great extent. Work is also
underway for adoption of the new General Data Protection Regulation
('GDPR') ahead of the compliance deadline in May 2018.
The Group aims to minimise the adverse impact on net interest
margin caused by any increase in the cost of borrowing. We are a
fixed rate lender and use fixed rate retail deposits and debt to
protect our profit margin. The recent interest rate rise,
therefore, has no effect on our existing portfolio and, as we enter
a higher interest rate environment, our terms for new lending will
need to reflect any increase in borrowing cost.
Our risk management focus will be to embed our risk management
framework, refine credit policy as we move increasingly into the
prime market, monitor the appropriateness of our risk tolerances
and be alert to the ever-present threat of cybercrime.
PCF team and culture
During the year, there have been a number of key recruits. We
welcomed a new Chairman, two new non-executive directors and three
new members to the executive team. The recruitments of Head of Risk
and Compliance, Head of Treasury and Head of Savings have all been
completed, strengthening our management team and broadening its
experience. We now have the required governance structure and
breadth of skills required of a bank. Our staff numbers have
increased to 59 over the course of the year (2016: 54).
We operate to high ethical and professional standards and
conduct our business dealings in a manner of which we can be proud.
Our products and services are fair and simple to both depositors
and borrowers alike and, through these core values, we expect to
deliver beneficial outcomes for all our customers.
The mobilisation of the Bank was a complex and time consuming
process. It is a great compliment to the whole team that the
project was delivered in good time and business-as-usual continued
to flourish. I would like to extend my sincere gratitude to all my
colleagues for their dedication and hard work. Their
professionalism and commitment to excellent customer service is
outstanding.
Strategic initiatives
Our strategic objectives for 2018 give priority to unlocking the
value in our new banking model and delivering accelerated growth,
operational efficiencies and increased profitability. We have
designed a framework that will safeguard the interests of all
stakeholders and will manage risk accordingly in order to maintain
our reputation for sensible and sustainable growth.
Our initial focus has been on broadening our existing
addressable markets and expanding our lending into the prime
segments of those markets through our access to a cheaper cost of
funds. This is a logical and lower risk first move because:
1. We have considerable knowledge of each market place and
already operate successfully within them.
2. Both markets are substantial, providing considerable
potential for growth. We currently have no greater than a 0.5%
share of either market.
3. Execution of the strategy is immediate, putting our capital
to work by utilising our existing routes to market and excellent
relationships with introductory sources.
4. An increasingly prime portfolio will further enhance the
quality of our portfolio and provide the resilience required should
the economic environment become less favourable.
Our plans are well underway and, subject to the above-mentioned
additional systems development for the Consumer Finance Division,
we will be operating fully in the first calendar quarter of 2018.
This strategy is expected to deliver significant portfolio growth
which will be complemented by our direct marketing presence in the
commercial vehicle market, a drive to increase our levels of repeat
and returning customers and an increased digital marketing
presence.
The use of technology has been integral to the success of the
Group and will remain key to our future strategies. Over many
years, we have developed an advanced IT platform based on
efficiency, scalability and customer experience. 2017 has been no
different with the introduction of a core banking system, an
on-line application and savings portal and a data warehouse. These
sit alongside eQuote, our internet-based proposal system for
business origination, our in-house developed e-signature product
and ICS, our loan administration system, as examples of quality
advancements in technology. We recognise the importance of
technology to the sector and the role it plays as an enabler to
success. We will continue to invest in existing systems and will
look to introduce new complementary platforms to take advantage of
the constantly evolving fintech technologies.
Additionally, the banking operations will be extended to offer a
range of deposit products to corporate customers, broadening our
market appeal. We have recently gained membership of the Bank of
England's Sterling Monetary Framework which provides access to
beneficial schemes, such as a Reserve Account and the Discount
Window Facilities.
Finally, we will develop our strategy for asset diversification.
We now have the flexibility to enter new markets and the balance
sheet strength to make these meaningful additions. We will always
be alert to opportunities within our existing organic markets but
the objective will be to diversify our asset classes by type, term,
distribution model and market. We will, at the appropriate time,
execute this strategy through the acquisition of businesses or
teams of people with the appropriate skills. Our ability to expand
initially through organic growth allows us the time to research
products and review the competitive landscape to ensure that our
choices for diversification have the potential to be scaled up to
core business lines within PCF, and ensure an earnings-enhancing
outcome for shareholders.
The execution of these strategies will support growth beyond our
initial organic portfolio target of GBP350 million and onto our
longer-term objectives of a lending portfolio of GBP750 million and
an RoE of 17.5% within five years.
Current trading and outlook
We are currently experiencing a relatively benign environment
for loan defaults and, while our own expectation is that there will
be little change in the near term, we are not complacent about the
possibility of a future economic downturn and the impact this could
have on our business. We have built PCF on sound financial and
operational foundations and remain confident that our prudent
practices, both past and present, stand us in good stead.
Our first steps as a bank have been very encouraging. We have
successfully launched our savings proposition and the more
competitive prime lending terms have been well received. In the
short period from commencing operations as a bank to the end of the
financial year, these successes have provided the momentum to
deliver profits for 2017 ahead of market expectation and provide a
strong start to our new financial year.
The potential for PCF Bank is substantial and our journey has
only just begun. We have clear strategic objectives, have
confidence in their execution and the growth prospects of the Group
are exciting into the long-term.
S D Maybury
Chief Executive
GROUP STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE
INCOME
(GBP'000s) 12 months 12 months 18-month
ended ended period
30 September 30 September 30 September
2017 2016 2016
Unaudited unaudited audited
Interest income and similar
income 19,970 18,254 27,165
Interest expense and
similar charges (8,906) (8,014) (12,288)
-------------- -------------- --------------
Net interest income 11,064 10,240 14,877
Fees and commission income 512 432 677
Fees and commission expense (702) (580) (847)
-------------- -------------- --------------
Net fee and commission
expense (190) (148) (170)
Fair Value (loss)/profit
on financial instruments (4) 16 2
Impairment losses on
financial assets (679) (990) (1,586)
-------------- -------------- --------------
Net operating income 10,191 9,118 13,123
Administration expenses (6,558) (5,516) (7,996)
-------------- -------------- --------------
Profit before taxation 3,633 3,602 5,127
Income tax charge (847) (801) (1,106)
-------------- -------------- --------------
Profit after taxation,
being total comprehensive
income, attributable
to owners 2,786 2,801 4,021
Earnings per 5p ordinary
share - basic 1.5p 1.8p 3.2p
Earnings per 5p ordinary
share - diluted 1.5p 1.7p 2.6p
Underlying adjustments
Profit before taxation 3,633 3,602 5,127
Banking Costs 1,367 439 506
-------- ------ --------
Underlying profit before
taxation 5,000 4,041 5,633
Income tax charge (1,166) (899) (1,212)
-------- ------ --------
Underlying profit after
taxation, being total
comprehensive income,
attributable to owners 3,834 3,142 4,421
GROUP BALANCE SHEET
(GBP'000s)
30 September 30 September
2017 2016
unaudited audited
Assets
Cash and balances at
central banks 17,018 5,904
Loan and advances to
customers 145,718 121,960
Available for sale financial
investments 4,511 -
Property Plant and Equipment 271 147
Intangible assets 2,704 764
Deferred tax assets 1,205 1,424
Trade and other assets 1,041 503
--------------- -------------
Total Assets 172,468 130,702
Liabilities
Due to banks 77,067 103,305
Due to customers 53,120 -
Derivative financial
liabilities - 491
Trade and other liabilities 3,620 2,199
--------------- -------------
Total Liabilities 133,807 105,995
Equity
Share Capital 10,611 7,956
Share premium account 8,524 174
Other reserves - (373)
Own shares (355) (305)
Retained earnings 19,881 17,255
--------------- -------------
Total Equity 38,661 24,707
Total equity and liabilities 172,468 130,702
GROUP STATEMENT OF CHANGES IN EQUITY
(GBP'000s) Twelve
months 18-month
ended period
30 September 30 September
2017 2016
unaudited audited
Profit after tax for
the year / period 2,786 4,021
New share capital subscribed 10,955 9,011
Share-based payments 52 63
Cash dividend (212) -
Transfer to distributable
reserves from derivative
instruments - -
Fair value gain/(loss)
on cash flow hedges 373 (246)
-------------- --------------
Net addition to shareholders'
funds 13,954 12,849
Opening shareholders'
funds 24,707 11,858
-------------- --------------
Closing shareholders'
funds 38,661 24,707
============== ==============
NOTES TO THE FINANCIAL STATEMENTS
1. The preliminary results are unaudited and do not constitute
statutory accounts as defined by section 434 of the Companies Act
2006. The comparative figures for the 18 months ended 30 September
2016 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 498
of the Companies Act 2006.
2. The preliminary results have been prepared on the basis of
the accounting policies set out in the Annual Report &
Financial Statements for the 18 months ended 30 September 2016.
3. These accounts are reported for the first time in banking
format with the main differences in the presentation being:
-- gross profit is reported as 'interest income and similar
income' with a small element reported in the 'fees and commission
income'
-- banking facilities fees and broker commission fees moved from
administration expenses to 'fees and commission expenses'
-- impairment losses separately disclosed from administration expenses
4. 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
European Union. This announcement has been approved and authorised
for issue by the Board of Directors.
5. The Group operates in the principal areas of consumer finance
for motor vehicles and business finance for vehicles, plant and
equipment. All revenue is generated in the United Kingdom.
Profit on ordinary activities before taxation, and loan loss
provisioning charge are detailed below:
(GBP'000s) 12 months 12 months 18-month
ended ended period
30 September 31 September 30 September
2017 2016 2016
Unaudited Unaudited audited
Consumer finance 1,617 1,795 2,722
Business finance 2,016 1,807 2,405
Profit on ordinary activities
before taxation 3,633 3,602 5,127
-------------- -------------- --------------
Consumer finance (384) (609) (964)
Business finance (295) (381) (622)
-------------- -------------- --------------
Loan loss provisioning
charge (679) (990) (1,586)
-------------- -------------- --------------
6. Administration expenses includes GBP1,367k of costs relating
to the set-up and running of a new bank (18-months period ended 30
September 2016: GBP506k). The costs of software and infrastructure
have been included in property, plant and equipment and other
intangible assets.
7. The income tax assessed for the period is higher than the
standard rate of Corporation Tax in the UK of 19.5% (18-months
period ended 30 September 2016 - 20%). The differences are
explained below. The Finance (No.2) Act 2015 enacted a reduction in
the corporation tax main rate (for all profits except ring fence
profits) at 19% for the years starting 1 April 2017, 2018 and 2019.
The Finance Act 2016 enacted a reduction in the corporation tax
main rate at 17% for the years starting the 1 April 2020. Deferred
tax balances should be calculated at the rate which the balances
are expected to be settled, based on tax rates that have been
substantively enacted at the balance sheet date. Therefore, the
deferred tax balances have been calculated with reference to these
rates.
(GBP'000) 12 Months
30 September
2017
Profit on ordinary activities before
tax 3,633
==============
Profit on ordinary activities multiplied
by the standard rate of Corporation Tax
in the UK of 19.5% (2016 - 20%) (709)
Effects of:
Expenses not deductible for taxation
purposes (6)
Adjustments in respect of prior years (80)
Change in tax rate (127)
Deferred tax not previously recognised 59
Utilisation of previously unrecognised
losses 16
Total tax charge for the year (847)
==============
8. The calculation of basic earnings per ordinary share for the
12 months ending 30 September 2017 is based on a profit after
taxation of GBP2,786k for the period on 190,408,720 ordinary
shares, being the weighted average number of ordinary shares in
issue during the period. There were no convertible loan notes in
issue in the period.
The calculation of basic earnings per ordinary share for the 12
months ending 30 September 2016 is based on a profit of GBP2,801k
for the period on 156,654,703 ordinary shares, being the weighted
average number of ordinary shares in issue during the period. The
calculation of diluted earnings per ordinary share is based on
profit of GBP2,966k for the period, before deducting interest on
the convertible loan notes of GBP165k, on 170,425,481 ordinary
shares, being the dilutive weighted average number of ordinary
shares in issue during the period.
The calculation of basic earnings per ordinary share for the 18
months ending 30 September 2016 is based on a profit of GBP4,021k
for the period on 124,288,560 ordinary shares, being the weighted
average number of ordinary shares in issue during the period. The
calculation of diluted earnings per ordinary share is based on
profit of GBP4,467k for the period, before deducting interest on
the convertible loan notes of GBP446k, on 170,378,200 ordinary
shares, being the dilutive weighted average number of ordinary
shares in issue during the period.
9. In other reserves, the Group adopted hedge accounting for
derivative financial instruments. The hedging reserve includes the
effective portion of the change in fair value of cash flow hedging
instruments. These derivative financial instruments matured on 31
March 2017 and during the six months period the cash flow hedge
reserve balance transferred to distributable reserves.
10. The 2017 Annual Report and Financial Statements will be
posted to all shareholders on 6 February 2018 or shortly
thereafter. Further copies can be obtained from the Company
Secretary at Pinners Hall, 105-108 Old Broad Street, London EC2N
1ER or can be downloaded from our website, www.pcf.bank.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCBDDLBGBGRS
(END) Dow Jones Newswires
December 05, 2017 02:00 ET (07:00 GMT)
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