Trading update – Achievement of break-even
10 June 2008
MCB Finance Group plc (‘MCB’ or the ‘Company’), the consumer finance provider serving the growing markets of Estonia, Latvia, Lithuania and Finland, has now reached break-even (earnings before tax) on a monthly basis, as planned. In announcing this important milestone, the Company is also taking the opportunity to provide an update on trading.
Highlights
- Lending volumes for short-term loans have continued to grow;
- The business has reached EBT break-even on a monthly basis;
- A larger loans product range is now available in all markets to selected customers;
- Credit performance is in line with expectations;
- Few signs that economic pressures are affecting performance to date;
- Encouraging start for the year and confidence for significant growth during 2008;
- Expect profitable full-year 2008;
- H1 interim results to be published first week of September.
Business and financial update
In line with its expectations, MCB has continued to experience significant continued growth in 2008. This, combined with the efficient management of its low-cost business model, has enabled the Company to achieve EBT break-even on a monthly basis. The achievement of monthly break-even, less than two years from the launch of its business, is a major milestone for the Company.
Demand for MCB’s short-term loans, of between €100 and €800 and with repayment terms up to six months, remains as strong as ever. Larger loans between €800 and €2,000 with repayment terms up to 24 months, launched on a trial basis in late 2007, have proved popular with carefully selected customers and are now available in all four of the Company’s markets. The introduction of longer term and larger loans, in accordance with the business plan, will over time provide access to a larger addressable market and represents a significant long-term opportunity. MCB plans to grow this product segment gradually while carefully monitoring its performance.
During the first quarter of this year the Company extended approximately €10m of loan principal, and to date has served over 80,000 individual customers. The Company's Credit24 brand is increasingly well established as a provider of flexible loan products, supported by its advertising activities, attractive product offering and high levels of customer service. MCB continues to see a high and growing level of repeat business which, given the superior repayment records of repeat customers, feeds through to profitability.
Credit performance is in line with expectations and the Company is seeing few signs of pressure from the widely reported credit problems in the global economy. While concerns have been expressed about the Baltic economies, employment levels are high and consumer debt remains comparatively low. MCB will continue to monitor these trends carefully and take a robust approach to its risk management.
At a corporate level, the Company took the opportunity at its AGM on the 29th of May to change its corporate name to MCB Finance Group plc in order better to reflect its business focus and widening range of services.
Breaking even is a strong confirmation of MCB’s business plan, developed in advance of the Company’s start-up in late 2006. It is increasingly clear that the four markets in which the Company operates offer substantial opportunities for continued growth. The Company has been able to achieve increased efficiencies as it builds the brand locally, refines its credit scoring models, and establishes sound relationships with repeat customers. It also sees encouraging prospects to apply its business model in other central and eastern European countries, and will consider these opportunities in due course.
MCB will provide a further, more detailed update at the time of the Interim results in the first week of September.
Rami Ryhänen, Chief Executive of MCB Finance Group plc, said: ‘In less than two years we have established an international consumer finance business with an attractive brand, a high degree of customer loyalty, strong lending volumes and good repayment performance. We are well placed to build on this. The year to date has been a crucial period for us and achieving break-even provides further confirmation of our business model.'
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 |
| Media enquiries: | |
| Allerton Communications: | |
| Peter Curtain / Jennifer Thomas | +44 20 7812 6477 |
| Nominated Adviser: | |
| Libertas Capital: | |
| Matthew Hindhaugh | +44 20 7569 9669 |
Notes to editors
MCB Finance Group plc is a consumer finance company providing fast, convenient, easily understood and flexible credit solutions under the Credit24 brand name to retail customers in Finland and the rapidly growing Baltic countries of Estonia, Latvia and Lithuania (the Fenno-Baltic Region). 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. The Company currently provides unsecured loans between €100 and €2,000 to qualifying customers, with maturities ranging from one month to two years.
The markets for unsecured consumer credit in the countries where the Company operates are relatively under-developed and experiencing rapid growth. Since launching the business in late 2006, the Company has become one of the leading participants in the non-standard lending market. This segment is typically under-served by larger financial institutions, and attracts customers who value the flexibility and simplicity of the products offered.