14th Oct 2020 10:54
(Alliance News) - International Personal Finance PLC on Wednesday said it has returned to profitability in the third quarter of 2020, driven by continued positive momentum in operational performance.
The home credit business said that collections effectiveness has improved to 95% of pre-Covid expectations.
The relaxation of credit settings resulted in a 55% increase in credit issued compared to the quarter prior.
IPF's "robust" collections performance, the effective management of credit issued, the impact of cost reductions and the receipt of GBP45 million in respect of the finalisation of a Polish tax dispute resulted in net cash-flow generation of GBP143 million during the quarter.
The company is in a strong capital and short-term liquidity position with GBP348 million in cash headroom.
Chief Executive Gerard Ryan said: "I'm very pleased to report that the business returned to profitability in the third quarter. All our key performance metrics continue to improve, with collections effectiveness now at 95% of pre-Covid expectations, higher credit issued, improved underlying impairment and a strengthened equity to receivables ratio."
IPF separately announced an invitation to holders of its EUR397 million Eurobond 5.75% due April 2021 to exchange bonds for a combination of 80% in new bonds and 20% in cash repayment.
The new bonds have an expected maturity of approximately five years.
The purpose of the exchange offer is to extend the maturity profile of part of the company's debt financing.
IPF will announce the interest rate and issue price applicable to the new notes in due course.
Discussion with IPF's banks on covenant amendments is progressing and the company has received credit committee approvals which secure approximately GBP123 million of bank facilities.
Ryan said: "We have previously commented on our impending euro bond maturity and our discussions with our banks on amending our covenants. Today's bond announcements reflect that, and are intended to place our financing arrangements on a firm footing and enable us to continue to serve our loyal customers with confidence during this uncertain period."
IPF shares were up 13% at 59.90 pence each in London on Wednesday morning.
By Greg Roxburgh; [email protected]
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