RNS Number:6925E
Conister Trust PLC
28 September 2007
CONISTER TRUST PLC
Unaudited Interim Results 2007
Conister Trust is a licensed, independent bank headquartered in the Isle of Man.
Since its inception in 1935, Conister Trust has specialised in providing finance
for personal and business use. The bank is now actively developing additional
business opportunities, including premium finance, fiduciary deposit management
and prepaid card provision under the name, TransSend. These results are now
reported under International Financial Reporting Standards for the first time.
Financial Highlights
* Total operating income up 9% to #2.5m (2006: #2.3m) - 2006 full year #4.7m
* Premium finance income up 284% to #265,000 (2006: #69,000)
* Investment income #106,000 (2006: nil)
* Litigation funding income down 40% to #280,000 (2006: #469,000)
reflecting withdrawal from this difficult market
* Strongly capitalised with a Risk Asset Ratio of 26.7%.
* Cash balances of #10.6m (2006: #10.9m)
* Loans and receivables #51.9m (2006: #53.3m)
* Customer deposits #48.9m (2006: #50.7m)
* Shareholder equity #14.0m (2006: #14.2m)
* Operating costs up 53% to #1.2m (2006: 0.4m) reflecting the continued
investment in pre-paid card distribution
* Personnel costs up 23% to #1.4m (2006: #1.2m) reflecting the continued
investment in pre-paid card distribution
* Pre-tax loss of #0.4m (2006: loss #0.4m)
* Basic loss per share of 1.11p (2006: loss 1.20p)
Operating Highlights
* TransSend global prepaid card programmes now live.
* Built one of the strongest prepaid card teams in the market.
* A new office has been set up in Windsor in the UK for our prepaid card
business.
* Additional appointments to Isle of Man office reflecting commitment as a
Manx Bank.
* Started to build fiduciary deposits.
* Insurance premium finance continues to offer attractive growth prospects.
* Our HP loan book is stable with low bad debts experience.
* No wholesale loans, therefore no debt on the balance sheet.
* Moving to modern office in November 2007.
* Continue to make good progress collecting outstanding litigation funding
receivables.
In commenting on future prospects Jim Mellon, Chairman, said:
"With the continuing investment in the development of the pre-paid cards
business and successful launch, Conister Trust is using its Isle of Man banking
base to become a truly international player in this exciting arena. We have now
recruited a strong team to fulfil our strategy and firmly believe that this
activity alone is capable of generating significant returns for the company, and
hence shareholders. We are also developing other significant business
opportunities, leveraging off our banking licence, especially in the areas of
premium finance and fiduciary deposit management."
Contacts:
Conister Trust Plc Pelham Public Relations Ltd
Jerry Linehan, CEO Charles Vivian, Director
Tel: 01624 694677 Tel: 0207 743 6672
Karl Grieves, Company Secretary
Tel: 01624 694675
Beaumont Cornish Limited
Roland D Cornish
Tel: 020 7628 3396
Copies of the Companies Interim results for the period ended 30 June 2007 have
been posted to shareholders and can be obtained from the Company's website
www.conistertrust.com.'
Conister Trust plc
Unaudited Interim Results for the six months ended 30 June 2007
Chairman's Statement
Outlook
________________________________________________________________________________
As I write, the well-publicised turmoil in the world's banking system is
headlined in the media. The issues following the securitisation of sub-prime
loans affect a number of banks and licensed deposit takers, many who are
household names. Northern Rock, Alliance and Leicester, Bradford and Bingley all
have considerable and varying exposure to the wholesale market. I am pleased to
confirm that your Bank has no exposure whatsoever to the wholesale market and
thus no debt on the balance sheet. Conister Trust will continue to avoid any
risk or exposure to these wholesale market sensitivities.
Conister remains very strongly capitalised and soundly financed. Our risk asset
ratio, which reflects the underlying strength of the Bank, remains at over 26%
which is well over twice the Isle of Man regulatory minimum ratio.
Your Bank has achieved considerable progress during 2007 in the prepaid cards
market and our priority is to continue to build on this success and achieve our
goal of delivering long term profit and capital growth to our shareholders.
This will require continued investment to seize the significant opportunities
this market offers.
Financial Review
________________________________________________________________________________
The Bank made a loss of #0.4 million before tax (2006 : #0.4 million loss) in
the six months to 30 June 2007. The prudent decision to expense rather than
capitalise costs incurred building our prepaid cards division has reduced the
underlying profitability of the Bank.
Prepaid Cards
________________________________________________________________________________
TransSend was formed in late 2006 to enter the prepaid market. We have made
significant progress developing this division with some notable successes
achieved during 2007. A number of prepaid cards programmes have gone live,
including a major global programme, and we are generating a growing number of
new business leads.
Within the next few months we expect to finalise the agreement to issue cards
for a major US based corporation to support its entry into the UK and European
card market. The corporation is a speciality finance company and marketer of
branded credit cards and related financial services that anticipates issuing
650,000 cards over the next three years.
The prepaid card market in Europe is set for a period of dramatic expansion.
Successful entry into the market requires a high level of expertise within the
Bank; TransSend's Managing Director, Richard Jones, has built one of the
strongest prepaid card teams in the market. TransSend will provide a range of
payment solutions across many business sectors, from the banking components of a
prepaid programme, such as access to the MasterCard network, through to fully
integrated payment solutions such as payroll applications.
A new office has been set up in Windsor in the UK with commercial, business
integration and compliance capabilities intrinsic to every successful card
programme. This is managed by the operations team based in the Isle of Man,
reflecting our commitment to the Island as a Manx Bank.
We are unique in being the only European Bank whose primary focus is prepaid
cards. We have invested in a strong team that has the expertise required to
deliver success. It is our five year strategy to become the leading provider of
prepaid payment solutions in Europe.
Banking
________________________________________________________________________________
The banking division consists of our premium finance, fiduciary, asset and
personal finance and litigation funding businesses.
Insurance premium finance continues to offer attractive growth prospects and
will become an increasingly important part of our banking business.
We have started to build fiduciary deposits utilising our treasury expertise to
secure attractive rates for large international depositors. We anticipate
significant growth in this segment.
The general market background for asset and personal finance remained
satisfactory during the first half of 2007. Our loan book is stable with low
bad debts experience. We do not see significant opportunities for growth in
this segment and maintain conservative credit criteria in anticipation of the
changing economic environment and competitive trading conditions.
We continue to make good progress collecting outstanding litigation funding
receivables.
Board Changes
________________________________________________________________________________
I am delighted with the appointment of Denham Eke to the Board, subject to
approval from the Financial Supervision Commission. He brings to the Board a
breadth of experience and vision that will play a significant role in achieving
our ambitions for the Bank.
International Financial Reporting Standards
________________________________________________________________________________
As required by AIM, the financial statements reflect the application of
International Financial Reporting Standards ("IFRS") for the first time.
Comparative figures have been adjusted accordingly.
Dividend
________________________________________________________________________________
The Board has resolved that an interim dividend will not be paid (2006 : nil).
It is the Board's intention to invest resources to deliver long term profit and
capital growth for the Bank for the benefit of shareholders.
People
________________________________________________________________________________
The excellent progress we have made would not have been achieved without the
hard work and dedication of our staff and my fellow directors; I thank them for
all their efforts.
Jim Mellon 28 September 2007
Chairman
Condensed Consolidated Interim Income Statement
6 months to 12 months to
30.6.2007 30.6.2006 31.12.2006
Restated Restated
#000 #000 #000
Interest receivable on loans and receivables 3,529 3,408 6,989
Interest payable on deposit accounts (1,213) (1,183) (2,403)
------- ------- -------
Net interest income 2,316 2,225 4,586
Other operating income 64 55 100
Investment income/(loss) 106 - (25)
------- ------- -------
Total operating income 2,486 2,280 4,661
Commissions (394) (308) (754)
------- ------- -------
Gross profit 2,092 1,972 3,907
Operating costs (1,243) (425) (1,663)
Personnel costs (1,429) (1,162) (2,370)
Depreciation (27) (45) (83)
Impairment recoveries (losses) 230 (317) (557)
Project costs (64) (389) (562)
Profit on sale of property - - 356
------- ------- -------
Loss before taxation (441) (366) (972)
Taxation (25) - 143
------- ------- -------
Loss after taxation attributable to equity
shareholders (466) (366) (829)
==== ==== ====
Basic loss per share restated (1.11)p (1.20)p (2.41)p
==== ==== ====
Diluted loss per share restated (1.11)p (1.20)p (2.41)p
==== ==== ====
The provision for taxation is based upon the estimated rate at which provision
will need to be made in the financial statements for the full year.
The directors have resolved that no interim dividend shall be paid (2006: nil).
The Directors consider that all results derive from continuing activities.
Condensed Consolidated Interim Statement of Recognised Income and Expense
6 months to 12 months to
30.6.2007 30.6.2006 31.12.2006
Restated Restated
#000 #000 #000
Gain on pension scheme 186 58 95
Deferred tax associated with gain on pension scheme (21) - (12)
------- ------- -------
Income and expense recognised directly in equity 165 58 83
Loss for the financial period (466) (366) (829)
------- ------- -------
Total recognised expense for the period
attributable to equity holders (301) (308) (746)
==== ==== ====
Condensed Consolidated Interim Balance Sheet
As at As at
30.6.2007 30.6.2006 31.12.2006
Restated Restated
#000 #000 #000
ASSETS
Cash and cash equivalents 10,630 10,912 12,768
Financial assets at fair value through profit or loss 552 - 446
Loans and receivables 51,913 53,273 53,791
Property, plant and equipment 102 826 118
Deferred tax 160 80 184
Trade and other receivables 476 600 500
--------- --------- ---------
Total assets 63,833 65,691 67,807
========= ========= =========
LIABILITIES
Customer accounts 48,888 50,724 52,398
Creditors and accrued charges 728 320 768
Pension liability 209 452 416
--------- --------- ---------
Total liabilities 49,825 51,496 53,582
EQUITY
Called up share capital 10,515 10,111 10,486
Share premium account 3,312 3,169 3,304
Share option reserve 162 159 115
Profit and loss account 19 756 320
--------- --------- ---------
Total equity 14,008 14,195 14,225
--------- --------- ---------
Total equity and liabilities 63,833 65,691 67,807
========= ========= =========
The interim financial statements were approved by the Board of Directors on 28
September 2007.
The Condensed Consolidated Interim Balance Sheet has been presented in order of
liquidity which is in accordance with IAS1 Presentation of financial Statements.
Although this Bank is an Isle of Man Company, it has chosen as best practice
to present the balance sheet in the required format for Banking Institutions
under Schedule 9 to the UK Companies Act 1985.
The interim financial statements are unaudited but have been reviewed by the
Auditors and their report is set out in the Interim Statement for the Six months
ended 30 June 2007. The financial information included in this interim
financial report for the six months ended 30 June 2006 was also subject to a
review opinion. The comparative figures under UK GAAP for the year ended 31
December 2006 (as detailed in note 1) have been extracted from the group's
financial statements, on which the auditors gave an unqualified opinion and
which have been filed with the Financial Supervision Commission. The audited
comparative figures as disclosed in note 1 have been restated to reflect
adjustments required on transition to IFRS; the adjustments have been subject to
a review opinion.
Condensed Consolidated Interim Cash Flow Statement
6 months to 12 months to
30.6.2007 30.6.2006 31.12.2006
Restated Restated
#000 #000 #000
Reconciliation of loss before taxation to operating cash flow
Loss before taxation (441) (366) (972)
Movement in financial assets held at fair value through profit
and loss (106) - 25
Profit on sale of fixed assets - - (356)
Depreciation charge 27 45 83
Shares to be issued 47 84 40
Pension scheme (43) (21) (27)
Decrease/(Increase) in trade debtors 24 (431) (361)
Increase/(Decrease) in trade creditors 44 (280) 264
------- ------- -------
Net cash outflow from trading activities (448) (969) (1,304)
Increase in customers accounts receivable 1,878 1,819 1,301
Decrease in deposit accounts (3,510) (2,160) (486)
------- ------- -------
Cash outflow from operating activities (2,080) (1,310) (489)
==== ==== ====
CASH FLOW STATEMENT
Cash flows from operating activities
Cash outflow from operating activities (2,080) (1,310) (489)
Taxation - - (1)
------- ------- -------
Net cash outflow from operating activities (2,080) (1,310) (490)
Cash flows from investing activities
Purchase of tangible fixed assets (11) (5) (13)
Sale of tangible fixed assets - - 1,034
Purchase of investment - - (471)
------- ------- -------
Net cash (outflow)/ inflow from investing activities (11) (5) 550
Cash flows from financing activities
Issue of ordinary share capital 37 5,400 5,910
Equity dividends paid - - -
------- ------- -------
Net cash inflow from financing activities 37 5,400 5,910
------- ------- -------
(Decrease)/Increase in cash and cash equivalents (2,054) 4,085 5,970
Cash and cash equivalents at the start of the period/year 12,684 6,714 6,714
------- ------- -------
Cash and cash equivalents at the end of the period/year 10,630 10,799 12,684
======= ======= =======
Group Accounting Policies
Significant Accounting Policies
Conister Trust PLC is a company domiciled in the Isle of Man. The condensed
consolidated interim financial statements of Conister Trust PLC (referred to
hereafter as the "Bank") for the six months ended 30 June 2007 comprise the Bank
and its subsidiaries (together referred to as the "Group").
(a) Statement of Compliance
The condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRSs") for
interim financial statements, and International Financial Reporting
Interpretations Committee ("IFRIC") interpretations applicable to companies
reporting under IFRS. These are the Group's first IFRS condensed consolidated
interim financial statements for part of the period covered by the first IFRS
annual financial statements. IFRS 1 First-time Adoption of International
Financial Reporting Standards and IAS 34 Interim Financial Reporting have been
adopted for the first time, with prior year comparatives restated on a
consistent basis.
An explanation of how the transition to IFRSs has affected the reported
financial position, financial performance and cash flows of the group is
provided in note 1.This includes reconciliations of equity and profit or loss
for comparative periods reported under United Kingdom Generally Accepted
Accounting Principles ("UK GAAP") to those reported for those periods under
IFRS.
(b) Basis of Preparation
The financial statements are presented in Sterling, rounded to the nearest
thousand. They are prepared under the historical cost convention, as modified by
the revaluation of financial assets at fair value through profit or loss.
Non-current assets are stated at the lower of carrying amount and fair value
less costs to sell.
The preparation of interim financial statements in conformity with IAS34 Interim
Financial Reporting requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. Actual results may differ from
these estimates.
These condensed consolidated interim financial statements have been prepared on
the basis of IFRSs in issue that are effective or available for early adoption
at the Group's first IFRS annual reporting date, 31 December 2007. Based on
these IFRSs, the Board of Directors have made assumptions about the accounting
policies expected to be adopted (accounting policies) when the first IFRS annual
financial statements are prepared for the year-ended 31 December 2007.
The IFRSs that will be effective or available for voluntary early adoption in
the financial statements for the period ended 31 December 2007 are still subject
to change and to the issue of additional interpretations(s) and therefore cannot
be determined with certainty. Accordingly, the accounting policies for that
annual period that are relevant to this interim financial information will be
determined only when the first IFRS financial statements are prepared at 31
December 2007.
The preparation of the condensed consolidated interim financial statements in
accordance with IAS 34 resulted in changes to the accounting policies as
compared with the most recent annual financial statements prepared under
previous UK GAAP.The accounting policies set out below have been applied
consistently to all periods presented in these condensed consolidated interim
financial statements. They have also been applied in preparing an opening IFRS
balance sheet at 1 January 2006 for the purposes of the transition to IFRSs, as
required by IFRS 1. The impact of the transition from previous UK GAAP to IFRSs
is explained in note 1.
Notes to the Condensed Consolidated Interim Financial Statements
1.EXPLANATION OF TRANSITION TO IFRS
These financial statements for the interim period to 30 June 2007 are the first
interim financial statements that have been prepared using accounting policies
that are consistent with IFRS. The date of transition from UK GAAP to IFRS for
the Group and Company was 1 January 2006.
In order to show the effect of the transition from UK GAAP to IFRS on the
Group's reported financial position and financial performance, IFRS 1 requires
the following reconciliations to be presented and explained:
(i) A reconciliation of equity (i.e. net assets) at 1 January 2006 and 31
December 2006, together with the comparative interim period to 30 June 2006.
(ii) A reconciliation of profit for the year ended 31 December 2006, together
with the comparative interim period to 30 June 2006.
In addition, in order to show the effect of the transition from UK GAAP to IFRS
on the group's cash flows, reconciliations of cash flows have also been given.
The IFRS adjustments included in the reconciliation of equity are explained as
follows:
(a) IAS 17 Leases and IAS 39 Financial instruments: Recognition and Measurement
Customer accounts receivable as presented in the Condensed Consolidated Balance
Sheet includes amounts due for both customer borrowings and finance leases. IFRS
requires these to be classified as 'loans and receivables' and for these
balances to be held at amortised cost using the effective interest method.
The effective interest method of income recognition differs to that which had
been adopted by the Group under UK GAAP. Previously the interest was allocated
over the duration of each agreement to give a constant periodic rate of return
on the "rule of 78 basis" after deducting initial costs and estimated costs of
collection.
In addition an initial amount of the gross charge was credited to the profit and
loss account to cover the costs associated with the setting up of the
transaction. Under IFRS, only the amount of gross charge which corresponds to
the commission payable (or other directly attributable costs such as legal fees)
upon a customer entering into a financing agreement is recognised immediately in
income, with the remaining income being deferred and recognised under the
effective interest method.
Previously commissions payable were similarly deferred, and other charges
including document and option fees were deferred and recognised as income on a
straight line bases. Under IFRS commission is recognised immediately as an
expense.
(b) IAS 19 Employee benefits
The scope of employee benefits which have to be accounted for under IAS 19 is
broader than under UK GAAP. Consequently, the Group has recognised a new accrual
for holiday pay entitlement earned but not yet taken as at 1 January 2007 of
#21,000.
Deferred tax attributable to the pension liability has previously been offset
against the pension liability. As part of conversion to IFRSs, the pension
liability and the deferred tax asset have been grossed up accordingly.
(c) Impact of IFRSs on the Cash Flow Statement
The impact of the adjustments described above has resulted in changes to the
figures presented on the 'Reconciliation of loss before taxation to operating
cash flow' from those previously presented under UK GAAP. The changes are in
line with those presented in the 'reconciliation of equity' and the '
reconciliation of profit'. As a result 'increase in loans
receivables','Increase/(decrease) in trade creditors' and 'loss before taxation'
have been restated. There are no other material changes required to be made to
the Cash Flow Statement as a result of the implementation of IFRSs.
1.EXPLANATION OF TRANSITION TO IFRS (continued)
RECONCILIATION OF EQUITY
Effect of Effect of Effect of
Previous transition Previous transition Previous transition
GAAP To IFRS IFRS GAAP To IFRS IFRS GAAP To IFRS IFRS
Note 1 Jan 1 Jan 1 Jan 30 June 30 June 30 June 31 Dec 31 Dec 31 Dec
2006 2006 2006 2006 2006 2006 2006 2006 2006
#000 #000 #000 #000 #000 #000 #000 #000 #000
Assets
Cash and cash 6,827 - 6,827 10,912 - 10,912 12,768 - 12,768
equivalents
Financial - - - - - - 446 - 446
assets at fair
value through
profit or loss
Loans and 1(a) 55,739 (647) 55,092 53,888 (615) 53,273 54,442 (651) 53,791
receivables
Property, plant 866 - 866 826 - 826 118 - 118
and equipment
Deferred tax 26 53 79 35 45 80 142 42 184
Trade and other 143 - 143 600 - 600 500 - 500
receivables
Total assets 63,601 (594) 63,007 66,261 (570) 65,691 68,416 (609) 67,807
1.EXPLANATION OF TRANSITION TO IFRS (continued)
RECONCILIATION OF EQUITY (continued)
Effect of Effect of Effect of
Previous transition Previous transition Previous transition
GAAP To IFRS IFRS GAAP To IFRS IFRS GAAP To IFRS IFRS
Note 1 Jan 1 Jan 1 Jan 30 June 30 June 30 June 31 Dec 31 Dec 31 Dec
2006 2006 2006 2006 2006 2006 2006 2006 2006
#000 #000 #000 #000 #000 #000 #000 #000 #000
Liabilities
Customer 52,884 - 52,884 50,724 - 50,724 52,398 - 52,398
accounts
Creditors and 1(b) 554 11 565 294 26 320 747 21 768
accrued
charges
Pension 1(c) 484 53 537 407 45 452 374 42 416
liability
Total 53,922 64 53,986 51,425 71 51,496 53,519 63 53,582
liabilities
Equity
Share capital 7,111 - 7,111 10,111 - 10,111 10,486 - 10,486
Share premium 769 - 769 3,169 - 3,169 3,304 - 3,304
Shares option 75 - 75 159 - 159 115 - 115
reserve
Profit and 1(c) 1,724 (658) 1,066 1,397 (641) 756 992 (672) 320
loss account
Total equity 9,679 (658) 9,021 14,836 (641) 14,195 14,897 (672) 14,225
Total 63,601 (594) 63,007 66,261 (570) 65,691 68,416 (609) 67,807
liabilities
and Equity
Notes to the Condensed Consolidated Interim Financial Statements (continued)
1.EXPLANATION OF TRANSITION TO IFRS (continued)
RECONCILIATION OF PROFIT
Effect of Effect of Effect of
Previous transition Previous transition Previous transition
GAAP To IFRS IFRS GAAP To IFRS IFRS GAAP To IFRS IFRS
Note 31 Dec 31 Dec 31 Dec 30 June 30 June 30 June 31 Dec 31 Dec 31 Dec
2005 2005 2005 2006 2006 2006 2006 2006 2006
#000 #000 #000 #000 #000 #000 #000 #000 #000
Interest
receivable on
loans and 7,461 (19) 7,442 3,465 (57) 3,408 7,082 (93) 6,989
receivables
Interest payable (2,492) - (2,492) (1,183) - (1,183) (2,403) - (2,403)
on deposit
accounts
Net interest 1(b) 4,969 (19) 4,950 2,282 (57) 2,225 4,679 (93) 4,586
income
Other operating 56 - 56 55 - 55 100 - 100
income
Investment income - - - - - - (25) - (25)
Total operating 5,025 (19) 5,006 2,337 (57) 2,280 4,754 (93) 4,661
income
Commissions (848) 38 (810) (397) 89 (308) (843) 89 (754)
Gross profit 4,177 19 4,196 1,940 32 1,972 3,911 (4) 3,907
Operating 1(c) (1,262) (11) (1,273) (410) (15) (425) (1,653) (10) (1,663)
expenses
Personnel costs (1,845) - (1,845) (1,162) - (1,162) (2,370) - (2,370)
Depreciation (103) - (103) (45) - (45) (83) - (83)
Impairment (873) - (873) (317) - (317) (557) - (557)
recoveries/
(losses)
Project costs - - - (389) - (389) (562) - (562)
Profit on sale of - - - - - - 356 - 356
property
Profit/(Loss) on 94 8 102 (383) (17) (366) (958) (14) (972)
ordinary
activities before
taxation
2. LOSS PER SHARE
11.
6 months to 12 months to
30.06.2007 30.06.2006 31.12.2006
#000 #000 #000
Loss for the period/ year 466 366 829
No No No
Weighted average number of ordinary shares in 41,976,212 30,433,093 35,946,198
issue
Basic or diluted loss per share (1.11)p (1.20)p (2.41)p
The basic loss per share calculation is based upon loss for the period after
taxation and the weighted average of the number of shares in issue throughout
the period.
The diluted loss per share calculation is based upon loss for the period after
taxation and the weighted average of the number of shares in issue after
adjustment to assume conversion of all dilutive potential shares. Other than
the employee share option scheme, there are no other potentially dilutive
instruments.
This information is provided by RNS
The company news service from the London Stock Exchange
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