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Share Name | Share Symbol | Market | Type |
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Asanko Gold, Inc. | AMEX:KGN | AMEX | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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RNS Number:2711N Kensington Group PLC 08 July 2003 8 July 2003 Kensington Group plc Half-year results ended 31 May 2003 Kensington beats expectations again and is confident of further growth "I am pleased to report another strong set of results from Kensington. New business volumes have more than doubled, reflecting strong demand in the specialist mortgage market as well as the benefits of our increased distribution. Costs are under control and credit quality remains sound, supported by a continuing focus on prudent lending, which includes avoiding concentration in the higher risk areas of the housing market. We are a leading specialist in an attractive and growing specialist market and with a new business offer pipeline that is over 70 per cent higher than a year ago, we are confident of future growth." John Maltby, CEO Kensington Group plc Financial Highlights * Profit before tax and goodwill amortisation* up 17% to #15.6 million (1H 2002: #13.3 million) * Earnings per share before goodwill amortisation* up 17% to 20.4p (1H 2002: 17.4p) * Annualised post tax return before goodwill amortisation on average equity of 25% (1H 2002: 26%) * Interim dividend per share of 3.0p (1H 2002: 1.5p) Excellent new business growth supported by increased distribution and a growing and profitable mortgage book * New business originations rose 107% to #860 million (1H 2002: #415 million), including a strong contribution of #244 million from The Mortgage Lender ("TML"), a direct distributor acquired in September 2002. * The mortgage assets under management+ increased by 47% to #2.42 billion (1H 2002: #1.65 billion). Strong and prudent risk management * The average new business loan to value ratio ("LTV") was 77%. Reflecting house price inflation using the Nationwide House Price Inflation index, the average LTV on assets under management was 66%. * The number of accounts in arrears as a percentage of total customer accounts fell to 11.8% (1H 2002: 13.7%). Reflecting the strengthening mortgage portfolio performance and the change in business mix towards lower risk products, provisions for bad and doubtful debts reduced to 0.54% of managed assets (1H 2002: 0.60%). Successful funding and securitisation programme * Successfully completed #450 million transaction (RMS 14) in March 2003, at the outset of the Iraqi conflict. More recently (July 2003), completed RMS 15 at #650 million. Maintaining growth momentum * New business offer pipeline at 31 May 2003 was above #320 million, over 70% above 31 May 2002. FINANCIAL HIGHLIGHTS Six months Six months Year ended 30 ended 31 May ended 31 May November 2002 2003 2002 #m #m #m Net interest income 25.7 20.8 43.5 ____ ____ ____ Total operating income 38.6 26.4 60.6 Operating expenses (20.7) (10.3) (25.2) Provisions for bad and doubtful debts (2.3) (2.8) (5.2) ____ ____ ____ Profit before taxation and goodwill amortisation 15.6 13.3 30.2 Goodwill amortisation (0.8) - (0.4) ____ ____ ____ Profit before taxation 14.8 13.3 29.8 Tax on profit (4.5) (3.3) (7.5) ____ ____ ____ Profit after taxation 10.3 10.0 22.3 ____ ____ ____ Mortgage assets under management+ 2,419.6 1,645.7 1,907.9 Shareholders' funds 91.1 80.4 86.8 Six months Six months Year ended 30 ended 31 May ended 31 May November 2002 2003 2002 p p p Earnings per share - basic 19.0 17.4 39.3 Earnings per share - basic before goodwill amortisation* 20.4 17.4 40.0 Earnings per share - diluted 18.9 17.2 38.9 Dividend per share - interim 3.0 1.5 1.5 Dividend per share - final - - 3.5 * Figures are before goodwill amortisation - see note 2 in interim report. + See note 6 in interim report. ENDS. Enquiries John Maltby, Group Chief Executive Geoffrey Pelham-Lane Kensington Group plc - 020 7368 5218 Financial Dynamics - 020 7269 7194 Notes to Editors Kensington Group plc, ("Kensington")which trades as Kensington Mortgages and The Mortgage Lender, is a leader in the UK specialist residential mortgage market. Kensington provides mortgages to borrowers who do not conform to the underwriting criteria of traditional suppliers of mortgages in the UK such as the self-employed, contractors, older borrowers, temporary employees, borrowers who require larger loans and those with an adverse credit history. Kensington is the only independent lender in the non-conforming mortgage market listed on the London Stock Exchange. CHIEF EXECUTIVE'S STATEMENT The first half of 2003 has seen another strong performance from Kensington. New business volumes were up over 100% against the same period last year, helped by a good performance from The Mortgage Lender (TML). Costs remain under control and loan losses and arrears are low and have continued to fall. The outlook remains positive with the pipeline of new business at record levels, and Kensington continues to perform well across all areas of the business. Results for 1H 2003 - excellent new business growth supported by a growing and profitable mortgage book New business originations increased by 107.2% to #860m (1H 2002 - #415m), of which TML contributed #244m and Kensington Mortgages (the intermediary sourced lending business) delivered #616m up 48.4% on 1H 2002. Origination costs (as a proportion of total new business completions in the period) were stable at 2.51% (1H 2002 - 2.53 %). Efficiency remained high with the cost/income ratio (for the Kensington Mortgages business#) stable at 38.4% (1H 2002 - 39.0%). New business quality has improved further with the average new business loan-to-value (LTV) reducing to 77% for 1H 2003 (1H 2002 - 79%). Reflecting the lower risk of new business and in line with expectations, the average gross product margin reduced from 3.93% for 1H 2002 to 3.74%. The mortgage book continued to grow strongly with mortgage assets under management+ increasing by 47.0% to #2,419.6m (31 May 2002 - #1,645.7m) of which #596.0m remained on balance sheet as at 31 May 2003 awaiting securitisation. Since then, the latest securitisation transaction, RMS 15, has been completed as noted below. After reflecting first year new business acquisition costs in TML, profit before tax and goodwill amortisation* increased by 17.3% to #15.6m (1H 2002 - #13.3m). After a charge for goodwill amortisation of #0.8m (1H 2002 - #nil) that related to the acquisition of TML in the second half of 2002, profit before tax was #14.8m. Earnings per share pre goodwill* rose by 17.2% to 20.4p (1H 2002 - 17.4p) and earnings per share after goodwill increased by 9.2% to 19.0p. Total operating income grew by 46.2% compared to 1H 2002 and net interest income rose 23.6% to #25.7m, reflecting growth in new business originations and mortgage assets under management. Non interest income rose 104.3% to #28.8m. Following the acquisition of TML, the Group has a growing source of fee and commission income and as a result the proportion of non interest income from early redemption fees was 52% compared with 82% in 1H 2002. Kensington delivered strong positive cash flows with #13.6m of cash generated from operating activities taking the total cash balance of the business to #66.1m. A resilient business underpinned by strong and prudent risk management and a successful funding and securitisation programme Risk management remains at the core of Kensington's business. By avoiding high LTV lending, maintaining prudent income multiples and avoiding concentration in higher risk areas of the housing market, new business quality remains high. The level of arrears has continued to fall and the number of accounts in arrears as a percentage of total customer accounts as at 31 May 2003 fell to 11.8% (down from 13.7% in May 2002). Reflecting house price inflation using the Nationwide House Price Inflation index, the average loan-to-value on the assets under management was 66%. Annualised loan losses have also fallen and are below 0.1% of total advances. The number of unsold repossessed properties has continued to fall and is now over 50% lower than the position 18 months ago despite the 61.3% increase in the size of the assets under management As a result of strengthening portfolio performance and the change in business mix towards lower risk products, the provisions for bad and doubtful debts, using our prudent provisioning methodology have reduced to 0.54% of managed assets (1H 2002 - 0.60%). In March 2003, Kensington completed its sixteenth securitisation (RMS14). This #450m transaction was completed at an initial average weighted cost of funds of 0.45% over LIBOR, slightly higher than recent deals reflecting the more volatile conditions in the bond markets as well as the start of the Iraqi conflict. Kensington securitisations continue to be well received. We remain confident that the securitisation market will continue to provide Kensington with low-cost funds. For example, RMS 15, which completed in July 2003 at #650m, was our largest issue to date. The quality of our mortgage servicing and commitment to providing timely and transparent information to our bond investors have again recently been recognised. Kensington has been upgraded by Fitch to the highest mortgage special servicer rating in Europe to date, and Kensington was also voted "Best Issuer for Investor Reporting" by "Structured Finance International" for the second year running. In addition, subordinated tranches from the first ten securitisation issues (RMS1 to RMS10) have now been upgraded reflecting that portfolio performance has been better than anticipated. Distribution - Increasing the reach of the Kensington Group The Mortgage Lender was acquired in September 2002 and is making a valued contribution to Kensington. In line with expectations, the mortgages sourced by TML have been of good quality, at an average LTV of 72% and an average gross product margin of 3.5%. The majority of TML's business has been remortgages (93%) and the average loan size has been #76,000. In line with our expectations and as a result of all origination costs being expensed at the point at which the associated TML sourced loans complete, the acquisition of TML has suppressed Group earnings slightly during the first half of 2003. For the year as a whole we expect TML to be mildly earnings enhancing followed by a significant profit contribution from 2004 onwards. Kensington continues to be recognised as a leader in sourcing mortgages through intermediaries. We were delighted to be awarded joint 2nd place recently in a national survey of "Overall Lender of the Year". Kensington has added to its distribution through new national accounts including Lloyds TSB/C&G and Zurich, and in 1H 2003 over 1,000 more intermediaries recommended Kensington products than during the same period last year. The outlook remains positive - Maintaining the Momentum Kensington is a strong business and is well positioned for future profitable growth in its attractive and growing specialist mortgage market. New business growth prospects remain healthy and the offer pipeline at the end of May 2003 was above #320m and over 70% above the level at the end of 1H 2002. Kensington continues to generate a strong positive cash flow. During the last six months Kensington has purchased over 2.5m shares for cancellation at a weighted average price of #1.76. We are also pleased to confirm that we will be increasing the dividend significantly and will be paying an interim dividend of 3.0p per share (1H 2002 - 1.5p) on 31 July 2003, to shareholders on the register as at 18 July 2003. Going forward we intend to continue a progressive dividend policy that increases returns to shareholders as the business grows. Kensington's focus remains on managed and sustainable growth to deliver a well managed, high quality portfolio of mortgage assets. Kensington will carefully consider opportunities to broaden its business either through acquisition or organic growth. Overall, we are pleased with the performance and position of the business and the Directors remain confident about the trading prospects for the remainder of the financial year. John Maltby Chief Executive 7 July 2003 * Figures are before goodwill amortisation - see note 2. + See note 6. # Excludes TML income of #5.7m and TML costs of #8.1m. CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 31 May 2003 (unaudited) Six months Six months to Year to 30 31 May 2003 31 May 2002 November 2002 #m #m #m Interest receivable 81.7 66.5 138.8 Interest payable (56.0) (45.7) (95.3) ____ ____ ____ Net interest income 25.7 20.8 43.5 Fees and commissions receivable 28.8 14.1 37.8 Fees and commissions payable (15.9) (8.5) (20.7) ____ ____ ____ Total operating income 38.6 26.4 60.6 Operating expenses (20.7) (10.3) (25.2) Goodwill amortisation (0.8) - (0.4) ____ ____ ____ Total operating expenses (21.5) (10.3) (25.6) Provisions for bad and doubtful debts (2.3) (2.8) (5.2) ____ ____ ____ OPERATING PROFIT BEING PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 14.8 13.3 29.8 Tax on profit on ordinary activities (4.5) (3.3) (7.5) ____ ____ ____ PROFIT FOR THE FINANCIAL PERIOD 10.3 10.0 22.3 Dividend proposed (1.6) (0.9) (2.9) ____ ____ ____ RETAINED PROFIT FOR THE FINANCIAL PERIOD 8.7 9.1 19.4 ____ ____ ____ Dividend per share - interim 3.0p 1.5p 1.5p ____ ____ ____ Dividend per share - final - - 3.5p ____ ____ ____ Earnings per ordinary share - basic 2 19.0p 17.4p 39.3p ____ ____ ____ Earnings per ordinary share - basic (before goodwill amortisation) 2 20.4p 17.4p 40.0p ____ ____ ____ Earnings per ordinary share - diluted 2 18.9p 17.2p 38.9p ____ ____ ____ There are no recognised gains and losses other than the profit for the periods shown above. The results for the periods shown above relate entirely to continuing operations. CONSOLIDATED BALANCE SHEET At 31 May 2003 (unaudited) 30 November 31 May 31 May 2002 Note 2003 2002 #m #m #m #m #m #m ASSETS EMPLOYED FIXED ASSETS Intangible assets 14.8 - 15.6 Tangible assets 1.2 0.5 1.3 Mortgage loans Unsecuritised balances 596.0 87.3 135.4 Securitised balances 2,017.9 1,687.6 1,948.2 less non recourse finance (1,953.6) (1,624.2) (1,878.9) ____ ____ ____ 64.3 63.4 69.3 ____ ____ ____ 676.3 151.2 221.6 CURRENT ASSETS Debtors 54.5 40.8 50.7 Cash at bank and in hand 66.1 56.8 64.4 ____ ____ ____ 120.6 97.6 115.1 ____ ____ ____ 796.9 248.8 336.7 ____ ____ ____ FINANCED BY EQUITY SHAREHOLDERS' FUNDS Called up share capital 3 5.3 5.8 5.6 Share premium account 3 48.9 48.7 48.8 Capital redemption reserve 3 0.5 - 0.2 Other reserves 3 0.5 0.3 0.5 Profit and loss account 3 35.9 25.6 31.7 ____ ____ ____ 3 91.1 80.4 86.8 CREDITORS Amounts falling due within one year 627.6 100.5 162.8 Amounts falling due after more than one year 78.2 67.9 87.1 ____ ____ ____ 705.8 168.4 249.9 ____ ____ ____ 796.9 248.8 336.7 ____ ____ ____ The interim financial information was approved by the Board of Directors on 7 July 2003. CONSOLIDATED CASH FLOW STATEMENT For the six months ended 31 May 2003 (unaudited) Restated 30 Note 31 May 31 May November 2003 2002 2002 #m #m #m Cash inflow from operating activities 4 13.6 15.4 29.5 Taxation (2.5) (4.2) (6.7) Capital expenditure and financial investment 5 (532.9) (109.0) (420.5) Acquisitions - - (15.9) Dividends (1.9) (1.1) (2.0) ____ ____ ____ Cash outflow before use of liquid resources and financing (523.7) (98.9) (415.6) Management of liquid resources 5 39.2 (9.8) (8.1) Financing 5 525.4 101.8 426.1 ____ ____ ____ Increase/(decrease) in cash in the period 40.9 (6.9) 2.4 ____ ____ ____ Reconciliation of net cash flow to movement in net debt Restated 30 31 May 31 May November 2003 2002 2002 #m #m #m Increase/(decrease) in cash in the period 40.9 (6.9) 2.4 Cash (inflow)/outflow from (increase)/ decrease in liquid resources (39.2) 9.8 8.1 Cash inflow from increase in debt financing (529.8) (101.2) (429.5) ____ ____ ____ (528.1) (98.3) (419.0) Hire purchase loans acquired with - - (0.2) subsidiary New loan notes issued - - (0.3) ____ ____ ____ Movement in net debt in the period (528.1) (98.3) (419.5) Net debt brought forward (2,043.5) (1,624.0) (1,624.0) ____ ____ ____ Net debt carried forward (2,571.6) (1,722.3) (2,043.5) ____ ____ ____ NOTES TO THE INTERIM FINANCIAL INFORMATION For the six months ended 31 May 2003 (unaudited) 1. BASIS OF PREPARATION The interim financial information has been prepared in accordance with applicable accounting standards. The accounting policies applied are those set out in the Group's Annual Report for the year ended 30 November 2002. All relevant standards during the period have been complied with. The 31 May 2002 comparative figures have been stated on the same accounting basis adopted by the Group in the 30 November 2002 accounts except for the consolidated cashflow statement which has been restated to separately analyse the management of liquid resources. Comparative figures for the year ended 30 November 2002 are an abridged version of the Group's full accounts and are not statutory accounts as defined by the Companies Act 1985. The statutory accounts carried an unqualified audit report and have been delivered to the Registrar of Companies. 2. EARNINGS PER SHARE Earnings per share is calculated using the following: Six months Six months Year ended ended ended 30 31 May 31 May November 2003 2002 2002 #m #m #m Profit before tax and goodwill amortisation 15.6 13.3 30.2 Goodwill amortisation (0.8) - (0.4) ____ ____ ____ Profit before tax 14.8 13.3 29.8 Tax (4.5) (3.3) (7.5) ____ ____ ____ Profit for the financial period 10.3 10.0 22.3 ____ ____ ____ No No No Basic weighted average number of shares during the period 54,341,923 57,660,471 56,736,130 Dilutive effect of the weighted average number of share options in issue during the period 251,482 768,547 646,833 ____ ____ ____ Diluted weighted average number of shares during the period 54,593,405 58,429,018 57,382,963 ____ ____ ____ ____ ____ Underlying earnings per share are calculated by dividing the profit after tax before goodwill amortisation by the weighted average number of shares used in the basic earnings per share calculation. Six months Six months Year ended ended ended 30 31 May 31 May November 2003 2002 2002 p p p Basic earnings per share 19.0 17.4 39.3 Effect of goodwill amortisation 1.4 - 0.7 ____ ____ ____ Underlying earnings per share 20.4 17.4 40.0 ____ ____ ____ 3. Movements in Equity Shareholders' funds Share Capital Profit and Equity premium redemption loss shareholders Share account reserve Other account funds Capital reserves #m #m #m #m #m #m Balance at 1 December 2002 5.6 48.8 0.2 0.5 31.7 86.8 Buy back of shares (0.3) - 0.3 - (4.5) (4.5) Exercise of options - 0.1 - - - 0.1 Profit for the period - - - - 8.7 8.7 ____ ____ ____ ____ ____ ____ Balance at 31 May 2003 5.3 48.9 0.5 0.5 35.9 91.1 ____ ____ ____ ____ ____ ____ 4. Reconciliation of operating Profit to operating cash flows Six months Six months Year ended ended ended 30 31 May 31 May November 2003 2002 2002 #m #m #m Operating profit 14.8 13.3 29.8 Depreciation charges and assets written off 0.3 0.2 0.3 Provision for share option discount - 0.1 0.2 Provision for bad debts 2.3 2.8 5.2 Amortisation of deferred origination costs and mortgage incentives 12.8 9.9 21.0 Goodwill amortisation 0.8 - 0.4 Increase in debtors (16.6) (12.0) (32.1) (Decrease)/increase in creditors (0.8) 1.1 4.7 ____ ____ ____ Net cash inflow from operating activities 13.6 15.4 29.5 ____ ____ ____ 5. Analysis of cash flows for headings netted in the cash flow statement Restated Six months Six months Year ended ended ended 30 31 May 31 May November 2003 2002 2002 #m #m #m Capital expenditure and financial investment Purchase of tangible fixed assets (0.2) (0.1) (0.5) Net increase in securitised mortgage loans (67.0) (118.8) (379.7) Net (increase)/decrease in unsecuritised mortgage loans (465.7) 9.9 (40.3) ____ ____ ____ Net cash outflow for capital expenditure and financial investment (532.9) (109.0) (420.5) ____ ____ ____ Acquisitions Acquisition of subsidiary - - (16.5) Net cash acquired with subsidiary - - 0.6 _____ ____ ____ Net cash outflow for acquisition - - (15.9) _____ _____ _____ Management of liquid resources Changes in cash deposits with maturities over 24 hours 39.2 (9.8) (8.1) _____ _____ _____ Net cash inflow/(outflow) from management of liquid resources 39.2 (9.8) (8.1) _____ _____ _____ Financing New share capital issued 0.1 0.6 0.8 Share buy backs (4.5) - (4.2) New bank loans 29.4 28.3 66.0 Repayment of bank loans (25.9) (19.0) (37.2) Net movement in non-recourse finance 62.0 111.6 366.3 Net movement in short-term loan facilities 464.3 (19.7) 34.4 _____ _____ _____ Net cash inflow from financing 525.4 101.8 426.1 ____ ____ ____ 6. MORTGAGE ASSETS UNDER MANAGEMENT Mortgage assets under management are calculated as follows: Restated Six months Six months Year ended ended ended 30 31 May 31 May November 2003 2002 2002 #m #m #m Unsecuritised balances 596.0 87.3 135.4 Securitised balances 2,017.9 1,687.6 1,948.2 Less securitised cash balances (194.3) (129.2) (175.7) _____ _____ _____ 2,419.6 1,645.7 1,907.9 _____ _____ _____ 7. OTHER INFORMATION A copy of the Interim Report will be sent to all shareholders and will also be available from the registered office at 1 Derry Street, London W8 5HY. INDEPENDENT REVIEW REPORT TO KENSINGTON GROUP PLC Introduction We have been instructed by the company to review the financial information for the six months ended 31 May 2003 which comprises the consolidated profit and loss account, the consolidated balance sheet, the consolidated cash flow statement, the reconciliation of net cash flow to movement in net debt and related notes 1 to 7. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting polices and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 May 2003. Deloitte & Touche Chartered Accountants Birmingham 7 July 2003 registered office and head office 1 Derry Street London W8 5HY registrars Lloyds TSB Registrars Antholin House 71 Queen Street London EC4N 1SL financial calendar Announcement of interim results July 2003 Announcement of 2003 final results January 2004 Annual report issued February 2004 Annual General Meeting March 2004 website address Kensington Group plc has an internet web site which contains information about the Group. The address is www.kmc.co.uk. This information is provided by RNS The company news service from the London Stock Exchange END IR ILFFTDTIDIIV
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