5th Mar 2008 07:01
International Personal Finance Plc05 March 2008 International Personal Finance plc Preliminary announcement of the final results and statement of dividends - year ended 31 December 2007 International Personal Finance plc ("IPF" or "the Group") is a fast growinginternational business offering small sum loans to 1.9 million customers in sixcountries. IPF was created by the demerger of the international division of ProvidentFinancial plc. Its shares were admitted to the Official List and to trading onthe London Stock Exchange's market for listed securities on 16 July 2007. Itsresults as a trading division for the period up to the demerger date form a partof the consolidated final results of Provident Financial plc. Operating and financial highlights • Profit before tax up by 25.6% to £50.1 million (2006: £39.9 million)* • Good growth: o customer numbers up 8.8% to 1.94 million; o average net receivables up 11.8%** to £362.1 million; o period end net receivables up 18.8%** to £443.2 million; o revenue up 8.5%** to £409.8 million • Credit quality significantly improved: Underlying impairment as a percentage of revenue reduced from 29.3% to 21.8% • Earnings per share up by 29.5% to 13.65 pence* • Final proposed dividend of 2.85 pence per share (full year dividend: 4.75 pence) • Strong balance sheet: Gearing low and substantial headroom on committed bank facilities sufficient to fund growth through to 2010 * On a pro forma basis ** At constant exchange rates Chairman, Christopher Rodrigues, commented: "We are very pleased with our first full year results as an independent Group.All our businesses have made good progress and we have a well funded balancesheet. Looking forward, we believe emerging markets provide us with manyopportunities for profitable growth and we have the management and financialresources required to seize them. We expect 2008 to be another year ofsignificant progress." This document provides pro forma results for IPF for the years ended 31 December2007 and 31 December 2006. The pro forma results include the adjustmentsrequired to present the results of IPF as if it had operated as a stand aloneentity throughout the current year and the comparative period and to excludeexceptional demerger costs. This document also includes the statutory results for IPF for the years ended 31December 2007 and 31 December 2006 which have been prepared using the principlesof reverse acquisition accounting (see note 1). The statutory profit beforetaxation for the year is £47.0 million (2006: £34.6 million). Statutory profitafter taxation is £32.5 million (2006: £23.0 million). Statutory earnings pershare have increased by 41.4% from 8.94 pence to 12.64 pence. A reconciliation from the statutory profit after taxation of £32.5 million(2006: £23.0 million) to the pro forma result is provided in note 9. Thestatutory balance sheet for IPF as at 31 December 2007 and 31 December 2006 isincluded within this announcement along with the pro forma balance sheet for 31December 2006. A reconciliation of the statutory and pro forma balance sheets isprovided in note 9. For further information contact: Finsbury +44 (0)20 7251 3801James LevitonVanessa Neill International Personal Finance plcHelen Spivey - Investor Relations +44 (0)113 285 6876Victoria Richmond - Media +44 (0)113 285 6873 Summary Percentage change figures for all performance measures other than profit or lossbefore taxation and earnings per share are quoted after restating prior yearfigures at the average exchange rate (CER) for 2007 in order to present theunderlying performance variances. IPF produced excellent results for the year ended 31 December 2007 with profitbefore tax increasing by 25.6% to £50.1 million and earnings per share up by29.5% to 13.65 pence. Pro forma Pro forma Change 2007 2006 Change Change CER £m £m £m % %Revenue 409.8 365.3 44.5 12.2 8.5Impairment (83.2) (103.1) 19.9 19.3 20.0Revenue less impairment 326.6 262.2 64.4 24.6 19.4 Finance costs (19.2) (18.6) (0.6) (3.2) (0.5)Operating and administration costs (257.3) (203.7) (53.6) (26.3) (22.7) (276.5) (222.3) (54.2) (24.4) (20.7)Profit before taxation 50.1 39.9 10.2 25.6 There were two key drivers of this performance: strong volume growth and muchimproved credit quality. Customer numbers increased steadily in the year, up by 8.8% to 1.94 million.This, together with our focus on providing larger loans over longer terms to ourlowest risk customers, resulted in average net receivables growing by 11.8% to£362.1 million. This generated revenue growth of £44.5 million (8.5%) to £409.8million. The investment made in implementing improvements to our credit managementprocesses proved successful with the impairment charge reducing substantially,by £19.9 million to £83.2 million and underlying impairment as a percentage ofrevenue, calculated before provision releases in the first half of £6.0 million(2006: £3.8 million), reducing from 29.3% to 21.8%. As a result of these factors, revenue less impairment increased by 19.4% to£326.6 million. Operating and administration costs increased by £53.6 million (22.7%),reflecting four main factors. Firstly, the additional costs of implementingenhanced credit control processes, which have supported the reduction inimpairment during the year. Secondly, with credit quality well under control, wealso increased our marketing investment in the year, which has supported thegood growth in customers and net receivables. Thirdly, operating andadministration costs include £8.0 million (2006: £0.5 million) of additionalcosts in Hungary incurred as a result of regulatory changes in November 2006,including employing agents and related administrative changes. And finally, theincrease also reflects the increased scale of the Group, including increasedinvestment in our developing markets of Mexico, Romania and Russia. Performance by market Pro forma Pro forma 2007 2006 Change Change £m £m £m %*Profit before taxation Central Europe 80.6 64.1 16.5 25.7Central costs (12.5) (11.9) (0.6) (5.0)Established businesses 68.1 52.2 15.9 30.5 Mexico (13.3) (9.9) (3.4) (34.3)Romania (4.2) (2.4) (1.8) (75.0)Russia (0.5) - (0.5) -Developing markets (18.0) (12.3) (5.7) (46.3) Profit before taxation 50.1 39.9 10.2 25.6Taxation (15.0) (12.8) (2.2) (17.2)Profit after taxation 35.1 27.1 8.0 29.5 Earnings per share (pence)Established businesses 18.55 13.78 4.77 34.6Developing markets (4.90) (3.24) (1.66) (51.2)Total 13.65 10.54 3.11 29.5 * At actual exchange rates Our Central European businesses have all performed well, combining good customerand receivables growth with significantly improved credit quality. Profit beforetaxation from our established Central European businesses, net of central costsof £12.5 million, increased by 30.5% to £68.1 million, and earnings per shareincreased by 34.6% to 18.55 pence. We firmly believe that investment in taking our home credit model to new,emerging markets will generate substantial shareholder value and so in 2007 weinvested £18.0 million (2006: £12.3 million) in developing our home creditbusinesses in Mexico, Romania and Russia. In Mexico, we have continued to focus on improving business performance througha combination of tightening credit controls, strengthening the management teamand re-training local staff and agents. It is now clear that we havesubstantially improved the credit quality of all lending since September and thebenefit of this will be increasingly reflected in the results as 2008 unfolds.We now have a sound platform on which to grow the business. We previously stated that we would review the viability of seven branches in thePuebla region of Mexico that were performing very poorly and we have now donethis. Six branches have demonstrated much improved performance and are makinggood progress towards profitability. One has not improved and is to be closedwith its outstanding balances collected using neighbouring branches. The lossfor Mexico in 2007 was £13.3 million (2006: £9.9 million). Romania is performing well. Following our decision in June 2007 to progress tonational roll-out, we have begun to increase our management resource and branchcoverage. At the end of 2007 we had 33,000 customers, up from 6,000 at December2006, served from seven branches. As expected, Romania reported a pre-tax lossof £4.2 million in 2007 (2006: £2.4 million). In December 2007 following a rigorous search and extensive due diligence, weacquired a small Russian bank for a consideration of £2.8 million in order toprovide us with a licence to operate. We are now completing the regulatoryfilings and procedures that will allow us to commence lending in the Moscowregion in the first half of this year. We intend to pilot both in Moscow and onefurther major Russian city for about eighteen months to evaluate the market andbuild our local team. If this is successful, we will begin a wider geographicroll-out in mid 2010. The cost in 2007 of preparing for entry into the Russianmarket was £0.5 million (2006: £nil). Taxation The taxation charge for the year was £15.0 million (2006: £12.8 million) which,before taking account of exceptional items, represents an underlying effectiverate of 29.9% (2006: 32.1%). In 2008 we continue to expect the Group's effectiverate of taxation to be around 30%. Dividend At demerger we said that, in the absence of unforeseen circumstances, weintended to declare aggregate dividends in respect of 2007 of 4.75 pence pershare. An interim dividend of 1.90 pence per share was paid on 19 October 2007and, subject to shareholder approval, a final dividend of 2.85 pence per sharewill be paid on 23 May 2008 to shareholders on the register at close of businesson 11 April 2008. The shares will be marked ex-dividend on 9 April 2008. We intend to continue to adopt a progressive dividend policy with a medium-termtarget of reaching a dividend payout ratio of 25% of post-tax profit. Balance sheet IPF is strongly capitalised and well positioned to fund its growth strategy. At31 December 2007 we had net assets of £203.6 million, an increase of £53.4million compared with pro forma net assets at the end of 2006. Balance sheetgearing, calculated as borrowings divided by shareholders' equity, remainedconservative at 1.8 times (2006: 1.6 times). Net receivables grew strongly during the year, particularly during the secondhalf as customer growth accelerated in Central Europe. At 31 December 2007 netreceivables were £443.2 million, which at constant exchange rates representsgrowth of 18.8% during the year. Of the year end receivables, 95% fall due inless than one year. At 31 December 2007 the Group had total committed facilities of £546.2 million,including facilities of £34.3 million that have been agreed since the half yearand, of this, £175.4 million was unutilised at the year end. The maturityprofile of committed facilities comfortably exceeds that of year endreceivables, with 95% of facilities committed for over two years from thebalance sheet date. These facilities are sufficient to support the plannedgrowth of the business through to 2010. New countries Our research programme is progressing well. Following the commencement of thepilot in Russia noted above, our next medium-term targets remain India and theUkraine. Regulation and legislation We previously reported that there had been discussion concerning theintroduction of an interest rate cap in our smallest established market,Slovakia. In January 2008 the Slovakian government passed legislation thatbrings into force a cap on the total amount that can be charged on a loancontract. The precise regulations will be set by a separate decree of theMinistry of Finance which is due to be issued in May. The rate cap is expectedto become effective from July 2008. We operate successfully within a rate cap inPoland with a modified product offering and expect we will be able to do thesame in Slovakia. On 16 January 2008 the European Parliament issued a new Consumer CreditDirective which we expect will pass into law in each of our Central Europeanmarkets and Romania over the course of the next two and a half years. The newDirective focuses on fairness to customers and transparency. There are someareas where the precise details of the law will only be clear when the Directiveis enacted in each member state and, in due course, we may need to make someadjustments, but overall we welcome the changes it will bring. Prospects We are pleased with performance in our first period of trading as an independentlisted company. Our businesses in Central Europe are profitable, growing welland are demonstrating excellent credit quality. We expect them to continue tomake good progress in 2008. In Mexico, we expect the hard work done in 2007 in improving the business tofeed through into reduced losses in 2008 and we continue to target for thebusiness to be profitable in 2009. In Romania, we will continue to expand our branch coverage and grow customernumbers. We continue to expect 2008 to be the peak year of start-up losses, as aresult of the cost of infrastructure expansion, with reduced losses in 2009 anda profit for 2010. We expect to commence trading in Russia in the first half of this year withstart-up losses for the year of around £5 million. Overall, we have many opportunities for profitable growth and have themanagement and financial resources required to seize these opportunities. Weexpect 2008 to be another year of significant progress. Operating review IPF has a proven, successful business model. This model is based on providingsmall sums of credit over short periods. Most of our lending has a duration ofaround one year and at 31 December 2007 the average remaining period ofoutstanding loans was around six months. This means that we are able to respondquickly to changes in the market and, although the economic trends in each ofour markets generally remain positive, we are well positioned to respond quicklyto any deterioration. This ability to respond quickly is supported by our robust approach to creditmanagement. Key to this is the personal relationship between the customer andagent, including weekly face to face contact, which allows us a closeunderstanding of the financial circumstances of our customers. In the past yearwe have added to this through the implementation of application and behaviouralscoring as well as call centre based collections. This has supported thesubstantial improvement in credit quality and impairment in 2007. These systemsand processes will be further enhanced in 2008 as we extend their scope acrossmore markets and upgrade to more sophisticated and powerful credit scoring andcollections management systems. We continue to believe the key challenge to meeting our strategic goals is ourability to develop sufficient skilled and experienced management to be able toseize the opportunities presented by further expansion into new markets. During2007 we continued to augment our senior management pool through externalrecruitment and also developed and introduced a bespoke leadership developmentprogramme to identify and develop the individuals who will manage our businessin the years to come. The key drivers of performance are covered in more detail for each of ourmarkets in the following section, starting with Central Europe. Central Europe Central Europe comprises our operations in Poland, the Czech Republic, Hungaryand Slovakia. Change 2007 2006 Change Change at CER £m £m £m % %Customer numbers (000s) 1,592 1,523 69 4.5 4.5Credit issued 553.8 474.9 78.9 16.6 11.3Average net receivables 336.7 292.9 43.8 15.0 8.7 Revenue 367.1 338.6 28.5 8.4 4.0Impairment (64.3) (90.6) 26.3 29.0 30.4Revenue less impairment 302.8 248.0 54.8 22.1 16.2Agent commission (51.7) (39.7) (12.0) (30.2) (24.9)Finance costs (18.1) (19.8) 1.7 8.6 13.0Other operating costs (152.4) (124.4) (28.0) (22.5) (17.1)Profit before taxation 80.6 64.1 16.5 25.7 The Central European businesses performed well in 2007 with profit before taxincreasing by £16.5 million (25.7%), to £80.6 million. During the second half of2006 our focus was firmly on improving credit quality. In 2007 as the yearprogressed and we saw reduced levels of impairment, we shifted our emphasis tocontrolled customer growth in all markets except Slovakia. This was successfuland we generated improved customer growth whilst continuing to see reducedlevels of impairment. Customer numbers grew by 50,000 in the second half andfinished the year at 1,592,000, an increase on 2006 of 4.5%. This growth, together with the targeted issue of larger loans to better qualitycustomers, led to an increase in credit issued of 11.3% compared with 2006 andan increase in average customer receivables of 8.7%. Revenue grew more slowly, up by 4.0% to £367.1 million (2006: £338.6 million),reflecting a higher proportion of longer-term lending which carries a lowereffective interest rate. In conjunction with the good growth in credit issued and customer receivables,we have seen a substantial improvement in credit quality. This has resulted inthe impairment charge reducing by £26.3 million (30.4%) to £64.3 million. Thisincludes the release in the first half of £6.0 million of impairment provisionsno longer required in Poland because of the improvement in credit quality. Asimilar release of provisions was made in 2006 of £3.8 million, primarily in theCzech Republic. The underlying impairment charge, before provision releases, asa percentage of revenue fell to 19.2%, compared with 19.9% at June 2007 and27.9% at the end of 2006. Revenue less impairment has increased by £54.8 million (16.2%) to £302.8million. Total costs, comprising agent commission, finance costs and other operatingcosts, have increased by 15.5% to £222.2 million. As noted above, this includes£8.0 million (2006: £0.5 million) of additional costs in Hungary resulting fromthe employment of agents and other administrative changes made in November 2006to comply with the requirements of the regulator, the PSZAF. It also reflectsthe additional costs of around £5.0 million of operating enhanced creditmanagement processes throughout Central Europe, which has supported thereduction in impairment during the year. As much of the cost of improved creditmanagement systems and the additional PSZAF costs have now been absorbed, weexpect the rate of growth in costs to be lower in 2008 and for the cost-incomeratio to improve. The performance of each country is reviewed in the following section. Poland Change 2007 2006 Change Change at CER £m £m £m % %Customer numbers (000s) 871 854 17 2.0 2.0Credit issued 270.9 235.6 35.3 15.0 10.8Average net receivables 181.0 159.2 21.8 13.7 7.3 Revenue 183.1 185.0 (1.9) (1.0) (4.3)Impairment (26.4) (56.0) 29.6 52.9 53.3Revenue less impairment 156.7 129.0 27.7 21.5 16.2 Following a strong performance in the first half, Poland made further progressin the second half with continued good credit quality, coupled with strongergrowth in customer numbers, credit issued and receivables. Customers have grownfrom 854,000 to 871,000 at 31 December 2007 with much stronger growth in thesecond half of the year. We have focused on increasing loan sizes to lower riskcustomers and this increased credit issued by 10.8%, well ahead of customergrowth. Average customer receivables also increased strongly, by 7.3%, but achange in product mix towards longer-term products with lower effective interestrates led to a reduction in revenue of 4.3%. This principally relates to thelonger-term 104 week product, which accounted for 17.3% of credit issued in 2007and for 26.9% of average customer receivables. Only customers with the lowestcredit risk profile are offered the longer-term loan. Their credit quality isvery good with the result that, although the effective interest rate is lower,the risk adjusted yield (revenue less impairment) is higher. Impairment reduced significantly from £56.0 million to £26.4 million, areduction of 53.3%. This reflects the full year effect of the substantialimprovements in credit control techniques implemented in 2006. Performance inthe period has also benefited from the extension of the centralised collectionsprocess, from approximately 30% of the Polish operations at the end of 2006 tothe whole country from the first quarter of 2007. As previously noted, thisimproved credit performance enabled a release of prior year impairmentprovisions of £6.0 million in the first half. Underlying impairment as apercentage of revenue, before provision releases, remained good at 17.7%compared with 17.4% at 30 June 2007, and 30.3% at the end of 2006. Revenue net of impairment increased strongly, up by £27.7 million (16.2%) to£156.7 million. We expect further good progress in Poland in 2008 with continued growth incustomer numbers and credit issued accompanied by a small increase in the levelof impairment reflecting this stronger growth. Czech Republic Change 2007 2006 Change Change at CER £m £m £m % %Customer numbers (000s) 271 254 17 6.7 6.7Credit issued 111.7 97.4 14.3 14.7 10.7Average net receivables 64.5 56.8 7.7 13.6 10.5 Revenue 69.4 60.7 8.7 14.3 11.0Impairment (14.1) (9.6) (4.5) (46.9) (46.9)Revenue less impairment 55.3 51.1 4.2 8.2 4.5 The Czech Republic also delivered a strong performance in 2007. Customer numbersgrew by 6.7% to 271,000 at the end of December 2007. As the incomes of our Czechcustomers have risen we have been able to increase our loan sizes and this,combined with good customer growth, has resulted in an increase in credit issuedof 10.7% to £111.7 million. Average net receivables increased correspondingly,up by 10.5% and revenue also rose strongly, up by 11.0% to £69.4 million. Credit quality remained very good with underlying impairment as a percentage ofrevenue at 20.3% for the year to 31 December 2007 (2006: 21.6%, before provisionreleases of £3.5 million). Revenue net of impairment increased by 4.5% to £55.3 million. We expect continued good progress in the Czech Republic in 2008 with a slightincrease in impairment reflecting stronger growth in the business. Hungary Change 2007 2006 Change Change at CER £m £m £m % %Customer numbers (000s) 319 284 35 12.3 12.3Credit issued 130.0 102.7 27.3 26.6 19.7Average net receivables 68.1 57.0 11.1 19.5 12.4 Revenue 87.1 70.6 16.5 23.4 17.1Impairment (17.4) (17.2) (0.2) (1.2) 2.2Revenue less impairment 69.7 53.4 16.3 30.5 23.1 The Hungarian business performed well in 2007 having recovered rapidly from thesuspension of lending imposed by the local regulator, the PSZAF, in the finalquarter of 2006. Customer numbers increased by 35,000 (12.3%) to 319,000 duringthe year. Credit issued increased by 19.7% to £130.0 million, and over the sameperiod average net receivables rose by 12.4% to £68.1 million. Revenue increasedby 17.1% to £87.1 million. Credit quality remained good and impairment decreased by 2.2% to £17.4 million.Impairment as a percentage of revenue reduced to 20.0% (2006: 24.4%). Revenue net of impairment increased by £16.3 million (23.1%) to £69.7 million.However, this was partly offset by an increase in operating costs of £8.0million as a result of the increased costs of employing the agency force and newadministrative processes to meet the requirements of the PSZAF. We expect continued good progress in Hungary in 2008. Slovakia Change 2007 2006 Change Change at CER £m £m £m % %Customer numbers (000s) 131 131 - - -Credit issued 41.2 39.2 2.0 5.1 (5.1)Average net receivables 23.1 19.9 3.2 16.1 5.0 Revenue 27.5 22.3 5.2 23.3 11.3Impairment (6.4) (7.8) 1.4 17.9 24.7Revenue less impairment 21.1 14.5 6.6 45.5 30.2 Our main objective for the Slovakian business during 2007 was to improve creditquality after the implementation of improved credit management systems at theend of 2006. This objective has been achieved, with impairment for the yearended 31 December 2007 falling by £1.4 million (24.7%) to £6.4 million.Impairment now represents 23.3% of revenue, compared with 35.0% at the end of2006. As a result of our tight stance on credit, customer numbers remained steady at131,000, which is the same level as that reported at December 2006 and June 2007and credit issued reduced by 5.1% to £41.2 million. The quality andprofitability of the customer base has, however, improved substantially and wehave been able to extend more credit to better quality customers such thataverage net receivables increased by 5.0% to £23.1 million. Revenue increased by11.3% to £27.5 million. Revenue net of impairment increased by £6.6 million(30.2%) to £21.1 million. We expect to return to customer growth in 2008 and to maintain good creditquality. Central costs Central costs for 2007 were £12.5 million. This represents a small increase on2006, when central costs were £11.9 million. This includes £1.5 million inrespect of new country research costs (2006: £1.5 million). Developing markets Mexico Change 2007 2006 Change Change at CER £m £m £m % %Customer numbers (000s) 312 252 60 23.8 23.8Credit issued 58.1 48.1 10.0 20.8 30.9Average net receivables 22.3 14.5 7.8 53.8 61.0 Revenue 38.8 26.4 12.4 47.0 59.0Impairment (18.4) (12.5) (5.9) (47.2) (58.6)Revenue less impairment 20.4 13.9 6.5 46.8 59.4Agent commission (4.6) (2.6) (2.0) (76.9) (91.7)Finance costs (3.0) (2.6) (0.4) (15.4) (25.0)Other operating costs (26.1) (18.6) (7.5) (40.3) (52.6)Loss before taxation (13.3) (9.9) (3.4) (34.3) In Mexico, we currently operate from two regional centres: Puebla andGuadalajara. At the half year we noted that our main objectives for 2007 were tocontinue to improve performance and, in particular credit quality, in the Pueblaregion whilst maintaining the good performance of the Guadalajara region. Wehave made good progress towards both of these objectives in the year. Enhanced credit management systems were introduced to both regions in the secondhalf of the year, in Puebla in July and in Guadalajara in August. These systemsinclude application scoring for new customers and behavioural scoring for repeatloans. In Puebla, customer numbers reduced in the second half by 25,000 to 224,000 as aresult of the tightening of credit controls, although there was growth for theyear as a whole (2006: 211,000). Impairment as a percentage of revenue for 2007was 51.3%, which is similar to that reported at the half year. Howeversubstantial improvements in credit quality have been seen for credit issued inall months since September 2007. As evidence of this, we forecast the gross cashloss (i.e. the proportion of contractual loan repayments not collected andultimately written off) to have fallen from over 15% on loans issued in thefirst half, to 11.7% on loans issued in the fourth quarter. Our lending inMexico is over very short terms, typically 30 weeks, and so the benefit ofimproved lending in the final quarter of 2007 will quickly be reflected in animproved impairment charge in the first half of 2008. At the half year we identified seven branches in the Puebla region that wereheavily loss making and we said we would apply special measures to improve thesebranches and then evaluate their viability in February 2008. Six branches haveshown substantial improvement, with gross cash loss improving from over 20% inthe first half to 11.7% in the fourth quarter, and are well on the way to makinga positive contribution. We have decided to close one branch that has not shownsufficient improvement. We will collect outstanding receivables fromneighbouring branches. Guadalajara continues to perform satisfactorily and towards the end of 2007 weopened two new branches in the city of Guadalajara. The customer base has grownstrongly, up by 20,000 or 29.4% from 68,000 at June 2007 to 88,000 by 31December 2007 (2006: 41,000). As expected, the increased intake of newcustomers, who carry a higher risk profile, has contributed to a slight increasein impairment, which is now running at 34.4% of revenue (2006: 28.6%). However,the new enhanced credit management systems are now benefiting the region and areexpected to reduce impairment as a percentage of revenue in 2008. As a result of these tightened credit controls, overall customer numbers inMexico reduced by 5,000 in the second half and finished the year at 312,000.This still represents strong growth of 60,000 (23.8%) on December 2006. Creditissued increased by 30.9% to £58.1 million and average net receivables were£22.3 million, which represents growth of 61.0% on 2006. As a result, revenuefor 2007 increased by 59.0% to £38.8 million. Impairment increased in line with revenue up by 58.6% to £18.4 million. At 31December 2007 impairment as a percentage of revenue was 47.4%, which is similarto the level of 47.3% reported at the end of 2006. As noted above, we expect theimproved quality of lending from September 2007 onwards to result in a reducedlevel of impairment in 2008. Revenue net of impairment increased by £6.5 million (59.4%) to £20.4 million.Other operating costs increased by £7.5 million (52.6%) reflecting the increasedsize of the business compared with 2006 and the cost of the credit managementsystems referred to above. Start-up losses for the year were £13.3 million(2006: £9.9 million). Overall, we have made good progress during 2007. We have strengthened themanagement team, re-trained local staff and agents and introduced improvedcredit controls, which are now leading to much better credit quality. We believethat this gives us a sound platform on which to resume growth and build aprofitable business. In 2008 we expect significant improvements in impairment coupled with controlledgrowth in customer numbers and credit issued per customer. As a result weexpect reduced losses in 2008. We continue to target profit from both the Puebla and Guadalajara regions andfor Mexico overall in 2009. Romania 2007 2006 Change £m £m £mCustomer numbers (000s) 33 6 27Credit issued 9.2 1.3 7.9Average net receivables 3.1 0.3 2.8 Revenue 3.9 0.3 3.6Impairment (0.5) - (0.5)Revenue less impairment 3.4 0.3 3.1Agent commission (0.4) - (0.4)Finance costs (0.5) (0.2) (0.3)Other operating costs (6.7) (2.5) (4.2)Loss before taxation (4.2) (2.4) (1.8) Romania continues to perform well and in line with our expectations. During thesecond half of the year we opened two more branches taking our total number ofbranches to seven. This, along with growth in the more established branches,resulted in customer numbers almost doubling in the second half and finishingthe year at 33,000 (June 2007: 17,000; December 2006: 6,000). Impairment is running at 12.8% of revenue, which is in line with our expectationfor the early stages of a developing market, and underlying credit qualityremains good. The loss for the year ended 31 December 2007 was £4.2 million,which was in line with expectations. During 2008 we expect start-up losses to reach a peak as we extend our branchinfrastructure with the opening of around ten new locations. We continue totarget a profit from this market in 2010. International Personal Finance plc Consolidated income statement for the year ended 31 December Unaudited Unaudited Unaudited Unaudited Notes Pro forma* Pro forma* Statutory Statutory 2007 2006 2007 2006 £m £m £m £mRevenue** 2 409.8 365.3 409.8 365.3Impairment 2 (83.2) (103.1) (83.2) (103.1)Revenue less impairment 326.6 262.2 326.6 262.2 Finance costs (19.2) (18.6) (22.3) (24.0)Other operating costs (81.6) (58.2) (81.6) (58.2)Administrative expenses (175.7) (145.5) (175.7) (145.4) (276.5) (222.3) (279.6) (227.6) Profit before taxation 2 50.1 39.9 47.0 34.6Profit before taxation and exceptionaldemerger costs 50.1 39.9 49.8 38.8Exceptional demerger costs 9 - - (2.8) (4.2)Profit before taxation 50.1 39.9 47.0 34.6 Total tax expense 3 (15.0) (12.8) (14.5) (11.6)Profit after taxation attributable toequity shareholders 35.1 27.1 32.5 23.0 * A reconciliation between the pro forma and statutory consolidated incomestatements is provided in note 9. ** All amounts included in revenue are defined as finance income under IFRS 7. Earnings per share Notes Unaudited Unaudited Unaudited Unaudited Pro forma Pro forma Statutory Statutory 2007 2006 2007 2006 pence pence pence pence Basic earnings per share 4 13.65 10.54 12.64 8.94Diluted earnings per share 4 13.63 10.52 12.62 8.93 Dividend per share Notes Unaudited Unaudited 2007 2006 pence penceInterim dividend (per share) 5 1.90 -Final proposed dividend (per share) 5 2.85 - 4.75 - Dividends paid Notes Unaudited Unaudited 2007 2006 £m £mInterim dividend of 1.90 pence per share 5 4.9 -Final proposed dividend of 2.85 pence per share 5 - - 4.9 - Consolidated statement of recognised income and expense for the year ended 31December Unaudited Unaudited Unaudited Unaudited Pro forma Pro forma Statutory Statutory 2007 2006 2007 2006 £m £m £m £mProfit after taxation attributable to equityshareholders 35.1 27.1 32.5 23.0Exchange gains/(losses) on foreign currencytranslations 21.1 (0.2) 21.1 (0.2)Net fair value gains - cash flow hedges 1.4 1.8 1.4 1.8Actuarial losses on retirement benefit asset (2.0) - (2.0) -Tax credit/(charge) on items taken directly toequity 0.1 (0.6) 0.1 (0.6)Net income recognised directly in equity 20.6 1.0 20.6 1.0Total recognised income for the year 55.7 28.1 53.1 24.0 Consolidated balance sheet as at 31 December Notes Unaudited Unaudited Unaudited Statutory Pro forma* Statutory 2007 2006 2006 £m £m £mAssetsNon-current assetsIntangible assets 18.7 14.0 14.0Property, plant and equipment 40.8 30.2 30.2Retirement benefit asset 1.7 0.4 -Deferred tax assets 27.8 15.6 15.7 89.0 60.2 59.9Current assetsAmounts receivable from customers - due within one year 422.7 312.4 312.4 - due in more than one year 20.5 18.6 18.6 6 443.2 331.0 331.0Derivative financial instruments 0.7 0.6 0.6Cash and cash equivalents 88.8 44.6 44.5Amounts due from Provident Financial plc - - 78.3Trade and other receivables 9.0 6.5 6.5 541.7 382.7 460.9Total assets 630.7 442.9 520.8 LiabilitiesCurrent liabilitiesBank borrowings 7 (8.8) (73.1) (218.4)Derivative financial instruments (0.7) (2.3) (2.3)Trade and other payables (50.6) (35.0) (35.0)Current tax liabilities (5.0) (12.7) (13.6) (65.1) (123.1) (269.3)Non-current liabilitiesBank borrowings 7 (362.0) (169.6) (169.6) (362.0) (169.6) (169.6)Total liabilities (427.1) (292.7) (438.9)Net assets 203.6 150.2 81.9 Shareholders' equityCalled-up share capital 8 25.7 25.7 3.2Other reserve 8 (22.5) (22.5) -Foreign exchange and hedging reserves 8 27.8 5.7 5.7Retained earnings 8 172.6 141.3 73.0Total equity 8 203.6 150.2 81.9 * A reconciliation between the statutory and pro forma balance sheets for 2006is provided in note 9. Consolidated cash flow statement for the year ended 31 December Unaudited Unaudited Statutory Statutory 2007 2006 £m £mCash flows from operating activitiesCash generated from operations 45.1 65.8Established businesses 71.2 88.2Start-up businesses (22.2) (18.2)Exceptional demerger costs (3.9) (4.2) 45.1 65.8Interest paid (22.4) (24.1)Income tax paid (29.7) (19.1)Net cash (used in)/generated from operating activities (7.0) 22.6 Cash flows from investing activitiesPurchases of property, plant and equipment (22.7) (17.4)Proceeds from sale of property, plant and equipment 5.9 3.4Purchases of intangible assets (5.1) (12.1)Acquisition of subsidiary (see below) (2.4) -Net cash used in investing activities (24.3) (26.1) Cash flows from financing activities(Repayment of)/proceeds from bank borrowings (70.4) 4.7Net movement in funding from Provident Financial plc 78.3 (4.0)Capital contribution (note 8) 70.0 -Dividends paid to company shareholders (4.9) -Net cash generated from financing activities 73.0 0.7 Net increase/(decrease) in cash and cash equivalents 41.7 (2.8)Cash and cash equivalents at the start of the period 44.5 47.1Exchange gains on cash and cash equivalents 2.6 0.2Cash and cash equivalents at the end of the period 88.8 44.5 Certain companies within the Group are required to keep certain cash andshort-term deposits strictly segregated from the rest of the Group and theseamounts are therefore not available to repay Group borrowings. At 31 December2007 such cash and short-term deposits held by these companies amounted to £36.8million (2006: £21.4 million). Reconciliation of profit after taxation to cash flows from operations Unaudited Unaudited Statutory Statutory 2007 2006 £m £mProfit after taxation 32.5 23.0Adjusted for: Tax expense 14.5 11.6 Finance costs 22.3 24.0 Share-based payment charge/(credit) 3.5 (0.4) Pension credit (3.6) - Depreciation of property, plant and equipment 9.6 7.2 Profit on sale of property, plant and equipment (0.2) (0.2) Amortisation of intangible assets 3.4 -Changes in operating assets and liabilities: Amounts receivable from customers (63.5) (7.0) Trade and other receivables 7.2 (0.7) Trade and other payables 19.8 9.0 Retirement benefit asset (0.1) - Derivative financial instruments (0.3) (0.7)Cash generated from operations 45.1 65.8 On 28 December 2007 the Group acquired a new subsidiary company, OOO MaritimeCommercial Bank of Kaliningrad, in Russia. The amount reflected in the cashflow statement of £2.4 million can be analysed as follows: Unaudited £mPurchase price - paid in cash 2.8Acquisition costs incurred 0.8 3.6Cash acquired with subsidiary (1.2) 2.4 Notes to the financial information for the year ended 31 December 2007 1 Basis of preparation This preliminary announcement has been prepared in accordance with the ListingRules of the Financial Services Authority and is based on the 2007 financialstatements which have been prepared under International Financial ReportingStandards as adopted by the European Union (IFRS) and those parts of theCompanies Act 1985 applicable to companies reporting under IFRS. The preliminary announcement, which is unaudited, does not constitute thestatutory financial statements of the Group within the meaning of Section 240 ofthe Companies Act 1985. The preliminary announcement has been agreed with the Group's auditors forrelease. On 16 July 2007 the international home credit businesses of Provident Financialplc were demerged, a process effected by a dividend in specie. InternationalPersonal Finance plc (IPF plc) acquired these international businesses byissuing one IPF plc share to the shareholders of Provident Financial plc foreach Provident Financial plc share held by them. On the same day the shares ofIPF plc were admitted to listing on the London Stock Exchange. The financialstatements, upon which this preliminary announcement is based, have beenprepared in accordance with the principles of reverse acquisition accounting asrequired by IFRS 3 'Business Combinations'. Although IPF plc is the legalparent, the consolidated financial statements represent the consolidatedfinancial information of the international businesses of Provident Financial plcamended for the acquisition of IPF plc on 16 July 2007. Certain information inrespect of the income statement, balance sheet and earnings per share has beenprepared on a pro forma basis in order to present a consolidated position as ifthe Group (IPF plc and its subsidiaries) had always existed in its current form.A reconciliation of the pro forma and statutory income statements and balancesheets is provided in note 9. The accounting policies used in completing this financial information have beenconsistently applied in all periods shown. These accounting policies, alongwith full details of the demerger, are given in the prospectus which can befound on the Group's website (www.ipfin.co.uk). 2 Segmental information Geographical segments Unaudited Unaudited Unaudited Unaudited Pro forma Pro forma Statutory Statutory 2007 2006 2007 2006 £m £m £m £mRevenueCentral Europe 367.1 338.6 367.1 338.6Mexico 38.8 26.4 38.8 26.4Romania 3.9 0.3 3.9 0.3 409.8 365.3 409.8 365.3ImpairmentCentral Europe 64.3 90.6 64.3 90.6Mexico 18.4 12.5 18.4 12.5Romania 0.5 - 0.5 - 83.2 103.1 83.2 103.1 Profit before taxationCentral Europe 80.6 64.1 79.3 59.2UK - central costs (12.5) (11.9) (11.6) (8.3)Established businesses 68.1 52.2 67.7 50.9Mexico (13.3) (9.9) (13.2) (9.7)Romania (4.2) (2.4) (4.2) (2.4)Russia (0.5) - (0.5) -Profit before exceptional demerger costs 50.1 39.9 49.8 38.8Exceptional demerger costs - - (2.8) (4.2)Profit before taxation 50.1 39.9 47.0 34.6 The Group operates in one business segment and therefore no segmentalinformation is provided for business activities. 3 Taxation The pro forma tax rate for the period is 29.9% (2006: 32.1%). The statutory taxrate excluding exceptional demerger costs is 29.9% (2006: 32.2%). Includingexceptional demerger costs the statutory tax rate is 30.9% (2006: 33.5%). The tax credit on the exceptional demerger costs of £2.8 million (2006: £4.2million) is £0.4 million (2006: £0.9 million). 4 Earnings per share Basic earnings per share (EPS) is calculated by dividing the statutory earningsattributable to shareholders of £32.5 million (2006: £23.0 million) by theweighted average number of shares in issue during the period (2006: number ofshares at the date of demerger of 257.2 million). The directors have elected to show a pro forma EPS excluding the impact of theexceptional demerger costs net of taxation of £2.4 million (2006: £3.3 million)and including the pro forma adjustments, net of taxation, detailed in note 9 of£0.2 million (2006: £0.8 million). The pro forma earnings attributable toshareholders used in the calculation of pro forma EPS are £35.1 million (2006:£27.1 million). Unaudited Unaudited 2007 2006 pence penceBasic EPS 12.64 8.94Exceptional demerger costs, net of taxation 0.93 1.28Pro forma adjustments, net of taxation 0.08 0.32Pro forma EPS 13.65 10.54 The pro forma EPS is attributable to the following defined business units: Unaudited Unaudited Pro forma Pro forma 2007 2006 pence penceCentral Europe 21.95 16.92UK - central costs (3.40) (3.14)Established businesses 18.55 13.78Mexico (3.62) (2.61)Romania (1.14) (0.63)Russia (0.14) -Pro forma EPS 13.65 10.54 For diluted EPS the weighted average number of shares has been adjusted to 257.5million to take account of all potentially dilutive shares. Unaudited Unaudited Unaudited Unaudited Pro forma Pro forma Statutory Statutory 2007 2006 2007 2006 pence pence pence pencePro forma basic/basic EPS 13.65 10.54 12.64 8.94Dilutive effect of options (0.02) (0.02) (0.02) (0.01)Pro forma diluted/diluted EPS 13.63 10.52 12.62 8.93 5 Dividends Unaudited Unaudited 2007 2006 £m £mInterim dividend of 1.90 pence per share 4.9 - The directors are recommending a final dividend in respect of the financial yearended 31 December 2007 of 2.85 pence per share which will amount to a dividendpayment of £7.3 million. If approved by the shareholders at the annual generalmeeting, this dividend will be paid on 23 May 2008 to shareholders who are onthe register of members at 11 April 2008. This dividend is not reflected as aliability in the balance sheet as at 31 December 2007 as it is subject toshareholder approval. 6 Amounts receivable from customers Unaudited Unaudited Statutory Statutory 2007 2006 £m £mCentral Europe 415.0 311.9Mexico 22.9 18.1Romania 5.3 1.0 443.2 331.0 7 Analysis of borrowings Unaudited Unaudited Unaudited Statutory Pro forma Statutory 2007 2006 2006 £m £m £mDue in less than one year 8.8 73.1 218.4 Due between one and two years - 79.5 79.5Due between two and five years 362.0 90.1 90.1 362.0 169.6 169.6 370.8 242.7 388.08 Consolidated statement of changes in shareholders' equity for the year ended31 December Unaudited - Statutory Foreign Called- exchange and up share Other hedging Retained capital reserve reserves Earnings Total £m £m £m £m £m Balance at 1 January 2006 3.2 - 4.7 50.4 58.3Exchange losses on foreign currencytranslations - - (0.2) - (0.2)Net fair value gains - cash flow hedges - - 1.8 - 1.8Tax charge on items taken directly toequity - - (0.6) - (0.6)Net income recognised directly in equity - - 1.0 - 1.0Profit for the year - - - 23.0 23.0Total recognised income for the year - - 1.0 23.0 24.0Share-based payment adjustment toreserves - - - (0.4) (0.4)Balance at 31 December 2006 3.2 - 5.7 73.0 81.9 Balance at 1 January 2007 3.2 - 5.7 73.0 81.9Exchange gains on foreign currencytranslations - - 21.1 - 21.1Net fair value gains - cash flow hedges - - 1.4 - 1.4Actuarial losses on retirement benefitasset - - - (2.0) (2.0)Tax (charge)/credit on items takendirectly to equity - - (0.4) 0.5 0.1Net income/(expense) recognised directlyin equity - - 22.1 (1.5) 20.6Profit for the year - - - 32.5 32.5Total recognised income for the year - - 22.1 31.0 53.1Increase in share capital 437.3 226.3 - - 663.6Capital reorganisation and reverseacquisition adjustment (414.8) (248.8) - - (663.6)Capital contribution - - - 70.0 70.0Share-based payment adjustment toreserves - - - 3.5 3.5Dividends paid - - - (4.9) (4.9)Balance at 31 December 2007 25.7 (22.5) 27.8 172.6 203.6 On 30 May 2007 a special resolution was passed, conditional upon Admission ofthe company to the London Stock Exchange and the approval of the court, toreduce the nominal value of each IPF plc share from £1.70 to £0.10. On 16 July 2007, 257,217,888 shares of £1.70 were issued by IPF plc in exchangefor the entire share capital of Provident International Holdings Limited(renamed as IPF Holdings Limited). The difference between the nominal value ofshares issued and the fair value of the subsidiaries acquired was credited to an'other' reserve in accordance with the reverse acquisition principles of IFRS 3. On 19 July the special resolution was effected resulting in a transfer fromshare capital to retained earnings for IPF plc and to the 'other' reserve forthe Group. In accordance with the principles of reverse acquisition accounting the sharecapital presented is that of the legal parent, IPF plc, but the retainedearnings represent the pre-acquisition reserves of IPF Holdings Limited plus theprofit and other equity movements of the Group post demerger. The differencebetween the equity structure of IPF plc and IPF Holdings Limited has beendebited to the 'other' reserve. Prior to the demerger Provident Financial plc made a capital contribution of£70.0 million to the international businesses that now form IPF. This capitalcontribution comprised an amount of £30.0 million received on 2 March 2007 and£40.0 million received on 20 June 2007. These amounts have been credited toretained earnings. 9 Pro forma adjustments A reconciliation of the statutory result for the years ended 31 December 2007and 31 December 2006 to the pro forma result is presented below. The pro formaadjustments will not form part of the Group's financial statements. 31 December 2007 Demerger Pro forma Statutory costs adjustments Pro forma £m £m £m £mRevenue 409.8 - - 409.8Impairment (83.2) - - (83.2)Revenue less impairment 326.6 - - 326.6 Finance costs (22.3) - 3.1 (19.2)Other operating costs (81.6) - - (81.6)Administrative expenses (175.7) 2.8 (2.8) (175.7) (279.6) 2.8 0.3 (276.5)Profit before taxation 47.0 2.8 0.3 50.1 Analysed as:Central Europe 79.3 - 1.3 80.6UK - central costs (11.6) - (0.9) (12.5)Established businesses 67.7 - 0.4 68.1Mexico (13.2) - (0.1) (13.3)Romania (4.2) - - (4.2)Russia (0.5) - - (0.5)Exceptional demerger costs (2.8) 2.8 - -Profit before taxation 47.0 2.8 0.3 50.1Taxation (14.5) (0.4) (0.1) (15.0)Profit after taxation 32.5 2.4 0.2 35.1 31 December 2006 Demerger Pro forma Statutory costs adjustments Pro forma £m £m £m £mRevenue 365.3 - - 365.3Impairment (103.1) - - (103.1)Revenue less impairment 262.2 - - 262.2 Finance costs (24.0) - 5.4 (18.6)Other operating costs (58.2) - - (58.2)Administrative expenses (145.4) 4.2 (4.3) (145.5) (227.6) 4.2 1.1 (222.3)Profit before taxation 34.6 4.2 1.1 39.9 Analysed as:Central Europe 59.2 - 4.9 64.1UK - central costs (8.3) - (3.6) (11.9)Established businesses 50.9 - 1.3 52.2Mexico (9.7) - (0.2) (9.9)Romania (2.4) - - (2.4)Exceptional demerger costs (4.2) 4.2 - -Profit before taxation 34.6 4.2 1.1 39.9Taxation (11.6) (0.9) (0.3) (12.8)Profit after taxation 23.0 3.3 0.8 27.1 The exceptional demerger costs can be analysed as follows: 2007 2006 £m £mIT separation costs 2.3 2.9Property costs - 0.9Defined benefit pension credit (3.5) -Accelerated share-based payment charge 2.4 -Other 1.6 0.4 2.8 4.2Taxation credit (0.4) (0.9) 2.4 3.3 The pro forma adjustments can be analysed as follows: 2007 2006 £m £mAdditional finance costs due to higher interest rates(note a) (0.8) (1.9)Interest credit on capital contribution (note b) 1.9 4.7Corporate office costs (note c) (2.8) (6.9)Additional property and IT costs (note d) - (2.7)Group interest payable (note e) 2.0 2.6Pension contributions (note f) - 5.3 0.3 1.1Taxation credit (0.1) (0.3) 0.2 0.8 The income statement pro forma adjustments can be explained as follows: (a) An adjustment has been included to increase finance costs to reflect thefact that IPF is subject to higher interest rates now that borrowings are nolonger guaranteed by Provident Financial plc. (b) As part of the demerger IPF received a capital contribution of £70.0million from Provident Financial plc (see note 8). This pro forma adjustmentreflects the interest that would have been earned on this capital contributionhad it been received prior to the start of 2006. (c) An adjustment in respect of additional corporate office costs is includedto reflect that as a stand alone entity with its own corporate office, IPFincurs additional costs compared to when it was a division of ProvidentFinancial plc. (d) As part of the demerger IPF has moved to new premises and undergone aprocess of separating its IT systems. The additional costs in respect of theseitems are included as a pro forma adjustment for 2006. The property and ITchanges had all occurred by the start of 2007 and therefore no adjustment isincluded to the 2007 result. (e) While IPF was part of the Provident Financial plc group it was subject tocertain interest charges that would not have been incurred if it was a standalone entity. These interest charges (which were not included in the reportedprofit for the international division in the Provident Financial plc segmentalanalysis) have therefore been reversed. (f) This pro forma adjustment reverses statutory charges in respect of thepension contributions which were made to the defined benefit pension schemes. Aone-off additional payment was made in 2006 of £5.3 million. As IPF did notacquire the assets and liabilities of the defined benefit schemes until afterthe demerger it is required to charge these contributions to the incomestatement rather than increasing the pension surplus held on the balance sheet.These contributions were not treated as a charge to the income statement in theinternational division result reported in the Provident Financial plc result. Instead they were accounted for as a reduction in the Provident Financial plcpension deficit. A reconciliation of the profit before taxation for the international divisionthat was reported in the segmental analysis of the Provident Financial plcresults for the year ended 31 December 2006 to the statutory profit beforetaxation is presented below: 2006 £mInternational division profit before taxation reported in ProvidentFinancial plc results 46.2Pension adjustment (5.3)Group interest allocation (2.6)Exceptional demerger costs (4.2)Reduced recharge (see below) 0.5Statutory profit before taxation 34.6 The statutory recharge from Provident Financial plc was £0.5 million lower thanthat allocated to the international division for the Provident Financial plcsegmental analysis. A reconciliation of the actual balance sheet as at 31 December 2006 to the proforma balance sheet is presented below: Notes Unaudited Unaudited Statutory Pro forma Pro forma 2006 adjustments 2006 £m £m £mAssetsNon-current assetsIntangible assets 14.0 - 14.0Property, plant and equipment 30.2 - 30.2Retirement benefit asset a - 0.4 0.4Deferred tax assets b 15.7 (0.1) 15.6 59.9 0.3 60.2Current assetsAmounts receivable from customers - due within one year 312.4 - 312.4 - due in more than one year 18.6 - 18.6 331.0 - 331.0Derivative financial instruments 0.6 - 0.6Cash and cash equivalents c 44.5 0.1 44.6Amounts due from Provident Financialplc d 78.3 (78.3) -Trade and other receivables 6.5 - 6.5 460.9 (78.2) 382.7Total assets 520.8 (77.9) 442.9 LiabilitiesCurrent liabilitiesBank borrowings e (218.4) 145.3 (73.1)Derivative financial instruments (2.3) - (2.3)Trade and other payables (35.0) - (35.0)Current tax liabilities f (13.6) 0.9 (12.7) (269.3) 146.2 (123.1)Non-current liabilitiesBank borrowings (169.6) - (169.6) (169.6) - (169.6)Total liabilities (438.9) 146.2 (292.7)Net assets 81.9 68.3 150.2 Shareholders' equityCalled-up share capital g 3.2 22.5 25.7Other reserve g - (22.5) (22.5)Foreign exchange and hedging reserves 5.7 - 5.7Retained earnings 73.0 68.3 141.3Total equity 81.9 68.3 150.2 The balance sheet pro forma adjustments can be explained as follows: (a) Inclusion of defined benefit pension asset. The statutory financialinformation only includes a pension asset from the date of demerger which is thedate at which Provident Financial plc agreed to transfer the scheme assets andliabilities in respect of IPF employees to IPF. (b) Deferred tax on defined benefit pension asset. (c) The cash balances of IPF plc which are excluded from the statutoryconsolidated financial information until the date of demerger. (d) The amounts due from Provident Financial plc have been netted againstborrowings in the pro forma information. (e) This adjustment includes the £78.3 million due from Provident Financialplc which has been reclassified (note (d)), the £70.0 million capitalcontribution which was received as part of the preparation for the demerger (seenote 8) and £3.0 million of demerger costs. (f) This is the expected tax credit on the £3.0 million of demerger costs. (g) This adjustment brings the share capital to that of IPF plc which is thelegal share capital of the Group as at 31 December 2007. The difference betweenthe share capital of IPF plc and the share capital of the internationalbusinesses of Provident Financial plc has been credited to an 'other' reserve. Information for shareholders 1. The shares will be marked ex-dividend on 9 April 2008. 2. The final dividend, which is subject to shareholder approval, will be paidon 23 May 2008 to shareholders on the register at the close of business on 11April 2008. Dividend warrants/vouchers will be posted on 21 May 2008. 3. A dividend reinvestment scheme is operated by Capita Registrars. Forfurther information contact them at The Registry, 34 Beckenham Road, Beckenham,Kent, BR3 4TU (telephone 0871 664 0300 - calls cost 10 pence per minute plusnetwork extras). 4. The 2007 annual report and financial statements, together with the noticeof the annual general meeting, will be posted to shareholders on or around 11April 2008. 5. The annual general meeting will be held on 14 May 2008 at the Kingsway HallHotel, 66 Great Queen Street, London, WC2B 5BX. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Inter. Pers.