Group News Releases

Egg plc Results for the Six Months to 30 June 2003

23 Jul 2003

Egg UK has delivered strong growth in customer numbers, lending balances and profits during the first half of the year. In France, as highlighted in April, sales volumes have been slower than expected and we continue to monitor progress closely.”

Paul Gratton, CEO, Egg plc

Highlights:

Analysis of Group Profit and Loss Account

Group

• Group operating income up 30% to £200.9 million (H1 2002: £154.4 million)
• Group loss before tax of £22.8 million (H1 2002: £1.2 million profit)
• Group loss per share 3.0p (H1 2002: 0.1p)
• Total group assets of £11.2 billion (H1 2002: £9.7 billion)

UK

• Egg UK delivered a profit before tax for the half year of £36.7 million (H1 2002: £11.6 million)
• Q2 2003 profit before tax was £19.4 million up from £17.3 million in Q1 2003
• 175,000 net new customers acquired in the second quarter (Q1 2003: 165,000) taking the total to 2.9 million
• Unsecured lending balances grew by £650 million (H1 2002: £422 million) leading to period end balances of £3.95 billion (30 June 2002: £2.78 billion)
• Strong sales growth in personal loans with drawdowns of £711 million, almost three times the levels achieved in H1 2002 (£266 million)
• Credit quality remains strong and benchmarks continue to show Egg’s card portfolio significantly outperforming industry norms

France

• Total French customer base now 115,000
• Increase in brand awareness (77%) and consideration (29%) are encouraging
• 42,000 cards in issue with balances of €68 million (Q1 2003: €34 million)
• 70% of card balances are now revolving (up from 41% in Q1)
• Loss before tax of £48.7 million (€71.3 million) for H1

Chief Executive Paul Gratton said:

“The UK business is growing strongly, attracting another 340,000 customers in the first half of the year. In addition Egg UK contributed a profit before tax of £36.7 million in the period. This represents excellent progress in an increasingly competitive marketplace.

“Unsecured lending balances increased by over £650 million in the first half of 2003, up 86% on the same period last year. Personal loan sales have been particularly successful with disbursements of £711 million and net balance growth of £340 million, almost five times the level of net balance growth achieved in the first half of 2002.

“Looking at Q2 in particular, revenues exceeded £100 million in the quarter for the first time with strong growth in fees and commissions, especially from cross selling insurance products to new loan and card customers. Margins tightened slightly as expected due to the successful card acquisition campaign which saw 196,000 new card customers join Egg, our biggest quarter ever, exceeding even Q2 last year when we refreshed the Egg brand. Furthermore, we are actively managing operational and administrative costs and we have seen no deterioration in the credit quality of our retail asset portfolio which remains well above industry average for credit cards.

“With regards to France, while there are encouraging signs with both card usage and percentage of balances that revolve trending upwards in line with our forecasts and brand awareness now being a very creditable 77%, sales volumes are lower than plan. We continue to closely monitor performance having regard to our planned €300 million profit and loss investment”.

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Notes to Editors:

1. Egg plc is the world’s largest online bank, providing financial services products through its Internet site and other distribution channels.
2. Egg plc floated on 12 June 2000 raising proceeds of approximately £150 million and is listed on the London Stock Exchange. Prudential plc continues to hold 79% of the share capital.

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