International Personal Finance Plc Annual Report and Financial
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International Personal Finance plc Finance Personal International International Personal Finance Annual Report and Financial Statements 2012 Statements Financial Report and Annual International Personal Finance plc Number Three Leeds City Office Park International Personal Finance plc Meadow Lane Leeds LS11 5BD Annual Report and Financial Statements 2012 Telephone +44 (0)113 285 6700 Fax +44 (0)113 245 1675 Email [email protected] Website www.ipfin.co.uk Who we are We are a leading international provider of home credit • 2.4 million customers • 28,500 agents and 6,330 employees • operate in six growth markets • well-established, successful business model • publicly recognised for outstanding customer service and employment practices Using the Provident brand, we provide unsecured, short-term credit to consumers wanting smaller loans and who are relatively underserved by existing financial institutions. We promote inclusive and responsible lending. Typically, our customers borrow between £50-£1,000 and repay their loans over a 12-month period with small weekly repayments reflecting their household budget. Read more: Where we operate – see page 08 Contents Directors’ Report: Business Review Directors’ Report: Governance Supplementary Information 01 Performance highlights 2012 36 Our Board and Committees 107 Shareholder Information 02 Message from the Chairman 38 Corporate Governance 04 How we create value Statement 06 A growth business 51 Other Information 08 Where we operate 10 Message from the CEO Directors’ Remuneration Report 12 Our strategy 55 Directors’ Remuneration Report 14 Sustainability 16 Key performance indicators Financial Statements 18 Our customers 69 Independent auditor’s report 20 Operational review 70 Consolidated income 28 Financial review statement 32 Principal risks and 71 Statements of uncertainties comprehensive income 72 Balance sheets 73 Statements of changes in equity 75 Cash flow statements 76 Accounting policies 82 Notes to the Financial Statements Cautionary statement The purpose of this report is to provide information to the members of the Company. The Annual Report and Financial Statements contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of the Annual Report and Financial Statements and the Company undertakes no obligation to update these forward-looking statements (other than to the extent required by legislation; and the Listing Rules and the Disclosure and Transparency Rules of the Financial Services Authority). Nothing in this Annual Report and Financial Statements should be construed as a profit forecast. International Personal Finance plc (‘IPF’). Company number: 6018973. Percentage change figures for all performance measures, other than profit or loss before taxation and earnings per share, unless otherwise stated, are quoted after restating prior year figures at a constant exchange rate (‘CER’) for 2012 in order to present the underlying performance variance. Printed in England by Cousin. Cousin is a carbon neutral company with ISO 14001 accreditation. Both paper and printer are FSC certified. 2011 customer numbers have been restated to show a like-for-like comparison throughout this statement. This reflects the decision announced in our Q3 IMS Designed and produced by www.corporateedge.com to accelerate the transfer of written off customers from the field to our debt recovery department in order to improve the level of debt recoveries. Directors’ Report: Business Review Performance highlights 2012 2.4M 4.0% Customers £ 882.1M 13.2% Credit issued £650.3M 12.7% Net receivables £ 651.7M 8.8% Revenue £ 95.1M (5.4%)* Profit before tax 7.7p 9% Dividend per share *Excluding an exceptional charge of £4.8M. We have an impressive track record of customer growth Romania 2,323 2,415 2,211 Mexico 2,056 1,937 2,029 Hungary 1,777 1,781 Czech-Slovakia 1,559 Poland 1,244 960 708 466 138 16 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Customer numbers (000s) Annual Report and Financial Statements 2012 01 DRAFT – CONTENT TO BE FINALISED, SUBLECT TO BOARD REVIEW AND APPROVAL | 04/02/2013 | Proof 7 DRAFT – CONTENT TO BE FINALISED, SUBJECT TO BOARD REVIEW AND APPROVAL | 04/03/2013 | Proof 7 Message from the Chairman 2012 was a good year as we transitioned successfully to a new CEO, accelerated receivables growth, demonstrated the potential for profitable growth in Mexico and won a variety of awards. Pleasingly, this performance has been accompanied by a significant improvement in the Company’s share price. Gerard Ryan arrived as CEO designate at the During the year, the Polish business celebrated its 15th beginning of the year and took over as CEO when anniversary. As part of our anniversary celebrations, John Harnett left the business at the end of March. we were delighted to receive over 7,500 letters from We are very grateful to John who steered us from the customers in Poland, some past, most present, on how Company’s flotation in July 2007 and through the the business had helped them improve their lives. We financial crisis of 2008-9 to become a consistently now have over 820,000 customers in this market and profitable two million plus customer business. are committed to it becoming a million customer business before too long. During this time we moved forward from being an overseas division of a UK-based parent company I am also delighted to report that the business has to becoming an independent, multi-country won accolades and awards across all its markets – international business built around increasingly awards for customer service, our community work, strong local management teams. as an ethical lender, as a customer friendly company committed to equality and as a great place to work. When Gerard became CEO he set about building These awards reflect the skill and commitment of our on the platform John had created. After a rapid, but local teams and bode well for the future. thorough, review of each of our country businesses and of the head office support they required for the We have sought to further improve our governance future, Gerard developed his strategy for growth with framework and controls. Our progress is detailed in the Senior Management group. the Governance section of this report. We have also completed a review of best practice remuneration reporting, which is reflected in the Directors’ “ I am also delighted to report that Remuneration Report that forms part of this document. the business has won accolades During the year we said goodbye to Charles and awards across all its markets.” Gregson, who had served as a wise and thoughtful non-executive director since our flotation and we welcomed Richard Moat. Richard has extensive Although we continue to operate in an uncertain international financial and operational experience economic environment, Gerard and his senior in Telecoms, an industry which relies heavily on colleagues have set out to take advantage of the extending small sum credit to its customers. He also growth potential identified in our existing country brings experience of the pace of mobile telephony businesses and to refocus the Leeds head office team development which, along with developments in the to reflect the growing managerial maturity of the local digital world, are increasingly part of the ecology of management teams. The review also committed us our business. I am grateful to all our non-executives to delivering product innovation as a priority in our for the time and effort they put in to supporting our existing businesses and to focus our new market entry Company in the UK and overseas. on smaller adjacent markets in the immediate future. Finally, I want to express my gratitude to our employees We made good progress against the key priorities and agents throughout the six international markets of the new strategy and delivered a strong trading and at our head office in Leeds. Ours is a business that performance. We grew revenue by 9% and reported requires a combination of daily attention to detail and profit before tax and exceptional items of £95.1 million longer-term vision. We are well served in both areas reflecting strong underlying growth of £20.3 million and their commitment is what makes this business tick before the impact of higher Early Settlement Rebates and what has enabled us to grow and prosper despite and weaker FX rates. We are committed to delivering the macroeconomic challenges of the world in which good returns to our shareholders and intend to pay a we live. full year dividend of 7.7 pence per share, an increase of 9%. I was also particularly pleased that we delivered total shareholder return for the year of 124% compared to 23% for the FTSE 250 for the same period. Christopher Rodrigues Chairman 02 International Personal Finance plc DRAFT – CONTENT TO BE FINALISED, SUBJECT TO BOARD REVIEW AND APPROVAL | 04/03/2013 | Proof 7 DRAFT – CONTENT TO BE FINALISED, SUBLECTSUBJECT TO BOARD REVIEW AND APPROVAL | 04/03/2013 | Proof 7 Directors’ Report: Business Review “ There is growth potential in our existing businesses and we are committed to delivering product innovation.” Christopher Rodrigues Chairman AnnualAnnual Report Report and and Financial Financial Statements Statements 2012 2012 03 DRAFT – CONTENT TO BE FINALISED, SUBJECT TO BOARD REVIEW AND APPROVAL | 04/03/2013 | Proof 7 DRAFT – CONTENT TO BE FINALISED, SUBLECTSUBJECT TO BOARD REVIEW AND APPROVAL | 04/03/2013 | Proof 7 How we create value Our business model has operated successfully for 130 years. Through the provision of consumer credit we make a difference to our customers’ everyday lives. A typical customer journey 1.