RNS Number:1168Z
Conister Trust PLC
27 June 2007
Conister Trust PLC
27 June 2007
Conister Trust PLC Year-end results
Audited results announcement for the year ended 31 December 2006
Chairman's statement
Introduction
As your new chairman, I am very aware that Conister is a fundamental component
of the Manx financial scene, with a loyal and diverse local shareholder base.
Since its foundation in 1935, Conister has provided successive generations of
Island residents with fairly priced credit facilities.
However, in today's increasingly competitive marketplace, the provision of
consumer finance and related products provides an inadequate return on capital
employed for both the company and its shareholders. In recent years Conister has
struggled to maintain a reasonable level of profitability from its core
products. It became patently clear to the Board that the company required a
radical strategic re-think and re-capitalisation, whilst still maintaining the
important role of being the only truly independent Manx banking institution.
Your Board recognised that the Conister banking licence, held in a stable, well
regulated AAA rated domicile is an underutilised asset that could, and should,
provide greater shareholder value.
As part of the strategic review, Conister Trust PLC has implemented a number of
major developments in 2006. Firstly, we were able to strengthen our balance
sheet by injecting substantial new capital via Burnbrae Ltd, a Manx based
investment company with which I am connected. As a result, your Bank is now very
strongly capitalised. Secondly, this new capital has allowed us to create
TransBank, Conister's new E-commerce banking division, which has the ability to
generate a significant return. Our vision is to become the leading supplier of
prepaid card payment solutions through global business-to-business partnerships.
We are pleased to announce that we have six contracts signed for programs in
Australia, Canada, the Baltic States, the Isle of Man and the United Kingdom. In
addition, we have established a strong and healthy pipeline and we are
developing a significant number of new potential programs.
The performance of our traditional asset and personal finance business in the
Isle of Man has shown improvement due to focused management in this area. This
underlines our continued commitment both to the Isle of Man and to our
traditional customer and depositor base. We have also successfully launched a
new business stream - insurance premium financing.
The Bank is also focusing on attracting larger deposits from High Net Worth
Individuals and their enterprises. These individuals will provide us with an
opportunity to offer new and highly profitable products in the future.
Strategy - New Business
- Prepaid Cards
Conister Trust PLC has diversified into the E-commerce sector with the
establishment of TransBank, the new E-commerce division of Conister Trust PLC,
which will focus specifically on the prepaid card market.
The global opportunity for prepaid cards is estimated to be US$2.1 trillion+ and
the European market, whilst still in its infancy, has predicted annual growth of
110% till 2010. By this time, an estimated 360 million prepaid cards are
expected to have been issued in Europe, generating over 2.3 billion
transactions. The prepaid card market will only have reached 10% of its
potential by 2010.
We will develop business-to-business contracts with large global customers
seeking to deliver open-loop prepaid cards to their significant consumer bases.
+ Source: Visa (global prepaid market size across all segment types) - Personal
Consumption Expenditure
Our membership of MasterCard(TM)enables us to issue chip and pin prepaid cards,
branded with MasterCardTM, Maestro(TM)or Maestro InternationalTM, in # sterling,
Euro Euro and US$.
We have established partnerships with a number of proven processors and
operating companies. This model enables us to deliver tailor made programs to
our customers in a variety of market sectors.
This is a market which offers tremendous growth potential and I believe we will
build on the success we have already achieved.
- Premium Finance
A significant achievement in 2006 has been the launch of insurance premium
financing which has made a strong contribution to the Bank's results. This has
been achieved through an agreement with Group Direct.
Strategy - Existing Revenue Streams
- Asset and Personal Finance
The Bank's core business was focused on traditional hire purchase markets in the
Isle of Man and the UK. These markets are suffering from strong competition,
declining volumes and low profitability. Our strategy has been to focus on
improving performance and capitalising on new business opportunities following
the loss of a Manx competitor.
- Litigation Funding
Following a review of the litigation funding business, we have begun a planned
withdrawal from this market. There has been an increase in bad debt expenses and
costs associated with recovery; however we are making good progress collecting
outstanding receivables.
New Premises
Our current business premises in the Isle of Man are not suitable for a modern
operation. A new corporate head office is now under construction which will
better serve our future requirements. These leasehold premises should be
available for occupation towards the end of 2007. The current premises were
sold, realising a profit of #356,000.
Overview of Results
Our net operating income has declined to #3.9 million (2005: #4.2 million)
reflecting our withdrawal from litigation funding and the revenue generated by
litigation funding has reduced to #0.9 million (2005: #1.3 million).
Our overheads have increased by 28% to #4.1 million since 2005 reflecting the
strategy to transform the Bank and invest in new revenue streams. The increase
primarily comprises of the costs associated with the development of our prepaid
card offering. In addition, in order to drive the transformation of the Bank,
Conister Trust PLC has appointed a new Chief Executive and Senior Management
team. Severance payments were incurred with the departure of two directors and
additional costs have also been incurred associated with our withdrawal from
litigation funding.
In our traditional HP business net assets stand at #44.2 million (2005: #45.9
million). This generated income of #5.5 million (2005: #5.9 million). Looking
forward, trading conditions are expected to remain competitive in our
traditional markets.
Premium finance generated gross revenue in 2006 of #288,000 (2005: nil). It is
anticipated that the agreement with Group Direct will deliver lending of at
least #5 million annually over four years.
The Bank incurred a number of significant expenses during 2007. #300,000 was
incurred as part of a planned corporate restructuring which we expect to
complete in the latter part of 2007. A #262,000 loss was incurred due to aborted
acquisitions prior to our concentration on the prepaid card market. These have
been offset by a #356,000 profit generated from the sale of the premises in the
Isle of Man.
Thus the Bank incurred a loss on ordinary activities after tax of #815,000
(2005: #78,000 profit) in the year ending 31 December 2006. The results are in
line with the Board's expectations as we transform the Bank, building the
foundations for future success.
The underlying trading performance in the second six months of 2006, after
removing transformation costs and significant expenses, has shown an improvement
on the first six months.
Board and Executive Changes
During the year a number of non-executive directors have departed - Peter
Hammonds (former Chairman), Neil Kennedy, Simon Lee - and the executive director
Gareth Jones. I would like to express my, and the Board's, appreciation to all
for their service to Conister Trust PLC.
As previously announced Jerry Linehan joined Conister Trust PLC in March 2006 as
Chief Executive Officer. He has been joined by Ilyas Khan, Don McCrickard, Dr
Christopher Fay and Philip Stamp as non-executive directors. They have brought
to Conister considerable financial and banking expertise, supporting our new
strategy, providing strong leadership and creating an experienced Board.
International Financial Reporting Standards ("IFRS")
The results for the year ended 31 December 2006 are the last to be prepared
under UK Generally Accepted Accounting Principles. The 2007 interim results will
be the first prepared under IFRS.
Dividend
The Board has resolved that a dividend will not be paid (2005: final dividend of
#nil and interim dividend of #0.3p per share).
Summary
I am pleased to report that the underlying trading performance is showing signs
of improvement.
We have made significant progress towards our strategic aim of establishing a
strong global position in the prepaid card market. The signing of six contracts
for programs in Australia, Canada, the Baltic States, the Isle of Man and the
United Kingdom is evidence of this ambition. Our pipeline is strong, with leads
being progressed in a number of different market sectors.
The Bank has been strongly recapitalised to support the strategic transformation
and during 2007 we will continue to invest strongly in our prepaid card division
and exploit the opportunities that we have generated.
Finally, I would like to express my personal thanks, and that of the Board, to
the staff at Conister Trust PLC who have worked extremely hard throughout the
year to ensure that the business is well positioned for the future.
For further information, please contact:
Conister Trust plc
Jeremiah Linehan
Tel +44 (0) 1624 694 694
Beaumont Cornish Limited
Roland Cornish
Tel +44 (0) 20 7628 3396
Consolidated Profit and Loss Account
for the year ended 31 December 2006
2006 2005
Restated
#000 #000
Interest receivable and similar income 7,082 7,461
Interest payable (2,403) (2,492)
______ ______
Net interest income (gross income) 4,679 4,969
Commissions (843) (848)
Other operating income 75 56
______ ______
Net operating income 3,911 4,177
Operating expenses (4,106) (3,210)
Project costs (562) -
Bad and doubtful debts - specific (496) (586)
- general (61) (287)
Profit on sale of property 356 -
______ ______
(Loss)/profit on ordinary activities before (958) 94
taxation
Taxation 143 (16)
______ ______
(Loss)/profit on ordinary activities after (815) 78
taxation
Dividends - (85)
______ ______
Retained loss for the year (815) (7)
===== =====
Basic and fully diluted (loss)/earnings per (2.27)p 0.28p
share
===== =====
Balance Sheets
as at 31 December 2006
Group Company
2006 2005 2006 2005
Restated Restated
#000 #000 #000 #000
Assets
Cast at bank 12,768 6,827 12,708 6,811
Customer accounts receivable 54,442 55,739 53,997 54,471
Current asset investment 446 - 446 -
Tangible fixed assets 118 866 85 807
Investment in subsidiary - - 10 10
undertakings
Other debtors and prepayments 642 169 843 940
______ ______ ______ ______
Total assets 68,416 63,601 68,089 63,039
===== ===== ===== =====
Liabilities
Deposit accounts 52,398 52,884 52,398 52,884
Creditors and accrued charges 747 554 1,497 1,023
______ ______ ______ ______
53,145 53,438 53,895 53,907
Capital resources
Called up share capital 10,486 7,111 10,486 7,111
Share premium account 3,304 769 3,304 769
Share option reserve 115 75 115 75
Profit and loss account 992 1,724 (85) 693
______ ______ ______ ______
Equity shareholders' funds 14,897 9,679 13,820 8,648
______ ______ ______ ______
Total liabilites and equity 68,042 63,117 67,715 62,555
shareholders' funds excluding
pension liability
Pension liability 374 484 374 484
______ ______ ______ ______
Total liabilities and equity 68,416 63,601 68,089 63,039
shareholders' funds including
pension liability
===== ===== ===== =====
Consolidated Cash Flow Statement
for the year ended 31 December 2006
Reconciliation of (loss)/profit before 2006 2005
taxation to net operating cash flow Restated
#000 #000
(Loss)/profit before taxation (958) 94
Profit on sale of fixed assets (356) (60)
Provision on fixed assets - 120
Depreciation charge 83 103
Share option expense 40 30
Pension scheme (27) (31)
Increase in trade debtors (361) (32)
Increase/(decrease) in trade creditors 254 (206)
Loss on current asset investment 25 -
______ ______
Net cash (outflow)/inflow from trading (1,300) 18
activities
Decrease in customer accounts receivable 1,297 1,656
(Decrease)/increase in deposit accounts (486) 183
______ ______
Net cash (outflow)/inflow from operating (489) 1,857
activities
===== =====
Cash flow statement 2006 2005
#000 #000
Net cash (outflow)/inflow from operating (489) 1,857
activities
Taxation (1) (49)
Management of liquid resources:
Purchase of investment (471) -
Financing:
Issue of share capital 5,910 -
Capital Expenditure:
Purchase of tangible fixed assets (13) (109)
Sale of tangible fixed assets 1,034 150
______ ______
5,970 1,849
Equity dividends paid - (222)
______ ______
Increase in cash 5,970 1,627
===== =====
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 2006
2006 2005
Restated
#000 #000
(Loss)/profit for the financial year (815) 78
Gain/(loss) on pension scheme 95 (33)
Current tax associated with loss on pension - 3
scheme
Deferred tax associated with loss on (12) -
pension scheme
-------- -------
Total recognised gains and losses relating (732) 48
to the year
Prior period adjustment
Adoption of Financial Reporting Standard 17 - (482)
"Retirement Benefits"
Adoption of Financial Reporting Standard 20 (75) -
"Share based payments"
--------- -------
Total gains and losses recognised since (807) (434)
last annual report
===== ====
(Loss)/earnings per share
(Loss)/earnings per share figures are stated on the net basis, calculated on the
(loss)/profit on ordinary activities after taxation.
2006 2005
Restated
(Loss)/profit after tax for the year #(815,000) #78,000
========= ========
Weighted average number of shares in issue 35,946,198 28,317,308
========= ========
There is no difference between basic and fully diluted (loss)/earnings per
share.
The adoption of Financial Reporting Standard 20 'Share based payment' ("FRS 20")
has required a change to the accounting treatment of share options and the prior
year Balance Sheet and results have been restated as shown.
The financial information set out in this statement is extracted from the
statutory financial statements which have been audited.
Report and Accounts
A copy of these results contained in the annual report and accounts for the year
ended 31 December 2006 will be posted to shareholders by 27 June 2007 and will
be available from that date from the Company's registered office, Conister
House, 16-18 Finch Road, Douglas, Isle of Man, IM1 2PT and will be posted on the
Company's web-site www.conistertrust.com.
This information is provided by RNS
The company news service from the London Stock Exchange
This information is provided by RNS
The company news service from the London Stock Exchange
END
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