Trading statement
24 May 2007
Since the launch of its first consumer finance products in Estonia on 21 August 2006, Mobile Credit Baltic has also launched its activities in Finland and Lithuania. In its maiden results statement on 21 March 2007, the Company announced positive results from accelerated marketing in Estonia and Finland, an increase in its range of loan products and the gradual lengthening of opening hours in which customers could apply for loans under its Credit24 brand. Growth has been rapid, supported by the IPO on AIM and associated fundraising, on 16 January 2007.
Now, nine months after its launch in Estonia and six months after launching in Finland, the Board is able to provide an update with the benefit of several months of trading data.
Turnover to date has been slightly above budget, and is expected to be broadly in line with expectations for the 12 months to 31 December 2007. Volumes and revenues remain strong despite slight delays in scheduled launches in two countries – Lithuania, which is gaining speed rapidly, and Latvia, which will be launched soon. However, the loss for the year is likely to be greater than market expectations due largely to higher than expected corporate costs and increased loan loss provisioning.
Start-up costs in connection with the establishment of the business in the territories in which we operate, together with central overheads, have proved higher than expected. Some of these additional costs are non-recurring. At country level, operational costs are in line with expectations, reaffirming our low-cost model.
The Board has decided to increase loan loss provisioning for the first half of 2007 to reflect the additional time expected to recover certain outstanding loan receivables, particularly in Finland. The delays in recovery relate primarily to new customers, aged 21 to 25. Our collection partners remain confident of collecting a significant proportion of these amounts, which will result in writebacks in future periods. Since the problem came to light, steps have been taken to enhance loan book performance, and we are pleased to report a clear improvement trend. As a new entrant in the Finnish market, we are building a large database of customer profiles which will inform future credit decisions and further refine our credit extension criteria.
The MasterCard debit card agreement signed with Conister Trust will considerably enhance our offering as a consumer finance company, and the Company is preparing to advance larger, longterm loans in autumn 2007.
Rami Ryhänen, Chief Executive of Mobile Credit Baltic plc, said: “As stated at the time of our IPO, the objective of the Company is to become a leading unsecured credit provider in the Fenno- Baltic region. Since the IPO, the level of business transacted has been in accordance with our expectations and confirms the opportunity identified in the region. Problem areas have been identified and steps have been taken to address them. The market opportunity remains attractive.”
Bertil Rydevik, Chairman, said: “The Company’s current performance confirms the positive longterm outlook for the business. We have met challenges and these have been identified sooner than might otherwise have been the case due to the strength of our business model and the rigour of our monitoring procedures.”
For further information please contact:
| Rami Ryhänen, Chief Executive Officer | +358 50 550 0262 |
Media Enquiries:
| Capital MS&L: | |
| Peter Curtain / James Madsen | +44 (0) 20 7307 5330 |
Nominated Adviser
| Libertas Capital: | |
| Andrew Raca | +44 (0) 20 7569 9650 |