Trading update
19 December 2008
MCB Finance Group plc (AIM: MCRB.L) (the "Company" or "MCB"), the consumer finance company providing flexible credit solutions to retail customers in Finland, Estonia, Latvia and Lithuania, announces this trading update.
Highlights
- Company on track to achieve full year results in line with market expectations;
- Lending volumes stable during second half of year, with increased lending margins;
- Credit performance stable as a result of tightening of credit extension criteria and close monitoring of credit quality;
- Company well positioned to cope with weaker economic conditions in the Baltic region;
- Extension of credit facility ensures sufficient debt financing for business going forward;
- The outlook for 2009 is for a continued improvement in financial performance, despite the weaker economic environment.
Business update
Lending volumes have remained stable in the period starting 1 July 2008, growing less than expected in the second half of the year as a result of the implementation of tighter credit criteria in all markets. However, lending margins have increased, with positive results for group revenues and profitability.
We have continued to monitor and adapt our business to the changing economic environment in the Baltic states and Finland. Economic conditions in the Baltic states have worsened, and we expect slower economic growth and higher levels of unemployment in all Baltic markets during 2009. In Finland conditions are more stable, although we expect weaker economic conditions in line with the global slow-down.
MCB operates in a segment of consumer finance that is well suited to these conditions, benefiting from short maturities below six months on average, very high visibility on loan performance and the ability to adjust credit criteria rapidly to changing market conditions. The Company has maintained a conservative approach to lending and remains focused on preserving credit quality. The tightening of credit extension criteria has proved effective as credit quality has been stable during the second half of the year, and we will continue to adjust our credit extension criteria as needed.
Financial performance
Profitability has continued to improve in all markets. As a result we expect a significant improvement in second half 2008 results compared to prior periods, and remain on track to achieve full year results in line with market expectations of a modest profit for the year.
Financing
The extension of the Company's €15 million credit facility with Rietumu Bank to the end of March 2010, announced on 11 December 2008, provides sufficient debt financing for expected lending volumes going forward.
Based on our planning for 2009, the extension of our credit facility, and the continued profitable development of the business, we have decided to postpone our previously announced intention to raise additional equity financing. The Board may revisit the matter next year, depending on the Company's expansion plans, financing needs and overall market conditions.
Business outlook
We shall continue to focus on growing profitability during 2009 and preparing for further expansion once market conditions improve. We believe we can do this successfully, in line with our performance to date.
The announcement of our full year 2008 results will be published in early March 2009.
Rami Ryhänen, Chief Executive of MCB, said: "The achievement of our goals for 2008, in this uncertain economic environment, confirms the strength of our business model. We will continue to develop MCB carefully going forward while maintaining a focus on credit quality and profitability. We are confident of our ability to manage the business in a downturn, and expect to be well placed for a return to more stable markets, whenever this occurs."
Further information:
MCB Finance Group plc:
| Rami Ryhänen, Chief Executive rami@mcbfinance.com |
+372 5300 8332 |
| Henry Nilert, CFO henry@mcbfinance.com |
+358 451 370 065 www.mcbfinance.com |
Nominated Adviser:
Libertas Capital:
| David Rae | +44 20 7569 9650 |
Media enquiries:
Allerton Communications:
| Peter Curtain / Beatriz Bailey | +44 20 3137 2500 |
| peter.curtain@allertoncomms.co.uk |
Notes to editors:
MCB Finance Group is a consumer finance company providing fast, convenient, easily understood and flexible credit solutions under the Credit24 brand to retail customers in Finland and the Baltic countries of Estonia, Latvia and Lithuania (together, the Fenno-Baltic Region). The Company provides unsecured loans of between €100 and €2,000 to qualifying customers, with maturities ranging from one month to two years. Loan products are designed to suit customers' needs with simple and transparent terms and flexible repayment schedules.
Loans are offered online through the Company's Credit24-branded websites in Estonia, Finland, Lithuania and Latvia, as well as through certain distribution partners in the Baltic countries.
The company is a leading participant in the non-standard segment of the consumer credit market. This segment typically provides small denomination loans with maturities up to one year or more, and attracts customers who value the flexibility and simplicity of the products offered. The non-standard market is typically under-served by larger financial institutions.