âIn the UK Egg has had a solid start to the year. First quarter profits were Â£15 million and we added a further 148,000 net new customers. Unsecured lending balances continued to grow strongly, with record personal loan drawdowns of Â£563 million in the period. Total balances outstanding on credit cards and personal loans are now over Â£5 billion.
“In France, as previously reported, we are managing discretionary expenditure tightly as we await the conclusion of the ongoing process whereby Prudential is considering proposals for its shareholding in Egg. As a result losses in France for the quarter reduced to Â£16 million.â
Paul Gratton, CEO, Egg plc
Analysis of Group Profit and Loss Account:
Q1 2004 Q1 2003
Egg UK Operating Profit 15.2 17.3
Egg France Operating Loss (15.8) (23.9)
Other International – (2.3)
Subsidiaries/Associates/JV’s (0.7) (1.6)
Transaction Costs (1.3) –
Restructuring Costs (2.3) (5.2)
Group Loss before Tax (4.9) (15.7)
Â·Group operating income up 26% to Â£120.3 million (Q1 2003: Â£95.2 million)
Â·Group loss before tax of Â£4.9 million (Q1 2003: Â£15.7 million)
Â·Group loss per share was 0.7p (Q1 2003: 2.2p)
Â·Total group assets of Â£11.2 billion (Q1 2003: Â£10.5 billion)
Â·Egg UK delivered an operating profit of Â£15.2 million (Q1 2003: Â£17.3 million)
Â·148,000 net new customers acquired in the first quarter (Q1 2003: 165,000)
Â·Unsecured lending balances grew by Â£238 million (Q1 2003: Â£200 million) leading to quarter end balances of Â£5.0 billion (31 March 2003: Â£3.5 billion)
Â·Strong sales growth in personal loans with drawdowns of Â£563 million, up 164% on Q1 2003 (Â£213 million).
Â·Credit quality remains strong and benchmarks continue to show Eggâs card portfolio significantly outperforming industry norms.
Â·Operating loss of Â£15.8 million (â¬23.2 million) for Q1 reduced from Â£19.6 million (â¬27.6 million) in Q4 2003.
Â·Card balances growing to â¬186 million, up 9% on Q4 2003
Â·71,000 cards in issue with 85% of card balances now revolving
Chief Executive Paul Gratton said:
âThe UK business has performed solidly in the first quarter. Profits were Â£15 million and we have grown our customer base by a further 148,000.
âWithin unsecured lending in the UK we have seen net lending growth of Â£238 million this quarter which is encouraging compared to the Â£200 million growth in the same period last year. Total balances now exceed Â£5 billion with credit cards contributing Â£3 billion and personal loans Â£2 billion. We continue to successfully cross sell personal loans into our credit card customer base which has helped Egg to grow unsecured lending balances in a traditionally quiet period for the card market.
âThe UK operating profit of Â£15 million was in line with internal forecasts. Revenues grew almost 6% compared to Q4 2003 and 24% compared to the same period last year. Net interest income growth has slowed as expected this quarter given the margin pressures created by base rate increases. We expect revenues to grow strongly again over the rest of the year as card balances grow. Credit quality remains good and provision levels reflect the continuing growth in the unsecured lending portfolio, the stage in life cycle of the card and loan books and the increasing proportion of personal loans in the book. The bad debt charge for Q1 was 2.4% of average assets, in line with our plans, and as we outlined within our preliminary results we expect the charge to stay at this level for the rest of 2004.
âIn Egg France, as previously reported, our search for a strategic partner has been superseded by Prudential considering proposals for its shareholding in Egg. In the meantime we are managing discretionary expenditure tightly as we await the conclusion of this process. This is reflected in the reduction in quarterly losses from Â£20 million to Â£16 million.”
For complete details on Egg’s first quarter performance visit CardData ([www.carddata.com])