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Group News ReleasesEgg plc 2005 Interim Results (Half Year to 30 June 2005)27 Jul 2005 “Operating profit in the second quarter was £13 million for the core UK business on the new IFRS basis of reporting leading to a half year profit of £23 million. The overall Group profit, including discontinued activities, was £15 million for the six months ended 30 June 2005.
“Egg’s UK credit card business has performed well, with balance growth of 5% in the first half compared with 2% growth in the industry. As planned, personal loan sales have reduced in the period from the record levels seen in 2004 following our actions last December to tighten our lending criteria.
“Revenues in the UK for the half year grew by 5% compared with the same period last year with the higher card income from the bigger book being offset somewhat by our deliberate reduction in personal loan sales volumes and hence the lower income generated from selling associated insurances. Costs are falling, reducing by £10 million (8%) when compared with the first half in 2004 and our cost/income ratio has improved to 44% in the first six months this year from 51% in the same period last year. This is in part due to the restructuring exercise completed this quarter which has aligned our cost base to our strategy which is re-focused on the core business and the needs of the UK consumer. We intend to launch a number of innovative propositions aimed at helping customers to benefit from managing, using and understanding their money more effectively. “Credit quality remains strong and as expected the impairment charge reduced slightly in the second quarter. Also, as we noted in April, we expect a lower charge in the second half of the year as the benefits from the changes we made to our loans scorecard in December 2004 and in our collections function continue to emerge. “Overall the result for the first half was in line with our expectations and we remain confident about the remainder of the year.” Paul Gratton, CEO, Egg plc Highlights: Analysis of Group Income Statement (adopted IFRS Basis):
(i) UK GAAP comparatives restated to IFRS basis (excluding IAS 32 and IAS 39 which are only effective from 1 January 2005). Group
Chief Executive Paul Gratton said: “Operating profit in the second quarter was £13 million for the core UK business on the new IFRS basis of reporting leading to a half year profit of £23 million. The overall Group profit before tax, including discontinued activities, was £15 million for the six months ended 30 June 2005.
“Egg’s UK credit card business has performed well, with balance growth of 5% in the first half compared with 2% for the industry. MasterCard continues to perform well and contributes to the good growth rates seen over the past year since its launch. “As planned, following our tightening of lending criteria, personal loan sales have reduced in the first half from the record levels seen in 2004 and we expect a similar trend for the remainder of the year. “Revenues in the UK in the first half at £251 million were up 5% compared with the same period last year. This reflected good growth in card income offset by less up front income in terms of the commission earned from selling associated insurances on loans due to the tactical reduction in sales. “Costs are falling, reducing by £10 million (8%) when compared with the first half of 2004 and our cost/income ratio has improved to 44% in the first six months this year from 51% for the same period last year. This is in part due to the restructuring exercise completed this quarter which has aligned our cost base to our strategy which is re-focused on our core business and the needs of the UK consumer. We intend to launch a number of innovative propositions aimed at helping customers to benefit from managing, using and understanding their money more effectively. “Credit quality remains strong and as expected the impairment charge reduced slightly in the second quarter and as we noted in April we expect a lower charge in the second half of the year as the benefits from the changes we made to our loans scorecard and in our collections function continue to emerge.“Our exit from non-core businesses continues and we are confident existing provisions are adequate. “Overall the result for the first half was in line with our expectations and we remain confident about the remainder of the year.” To download the full results in PDF format click here. In order to view the document you have downloaded you will need Adobe Acrobat Reader. If you do not have this program please click here.
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