Peer past the predictably weak headline figures for International Personal Finance’s (IPF) six months trading to June, and the tone is upbeat. Management asserted the foundations for “a quick return to profitability and long-term growth” are in place, while analysts at broker Numis cited a “rapidly improving picture”.
Investors were not buying it. Shares in the high-cost credit provider fell sharply on these numbers, as the market swallowed a 42 per cent contraction in credit issued alongside an uptick in the annualised impairment-to-revenue ratio from 27.7 to 37.5 per cent, on an annualised basis. Given the ‘annualised’ part of this metric is trailing, it effectively includes nine months of revenues before the Covid-19 pandemic rattled IPF’s home collection markets from Mexico to Eastern Europe.
Indeed, once exceptional items are added, accounting rules forced the group to book £185m-worth of impairments. That is equivalent to just over half the period’s top line, though management expects some impairments to reverse over the coming year as missed payments are collected from customers.
The faithful will hope that happens soon, ahead of the imminent refinancing of the 2021 Eurobond. Risks around a new debt issuance, together with the need for covenant amendments, mean there is now “material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern”.
Numis expects to make upgrades to the current forecasts of a 30.7p per share loss for 2020, and earnings of 7.7p in 2021.
| INTERNATIONAL PERSONAL FINANCE (IPF) | ||||
| ORD PRICE: | 66.4p | MARKET VALUE: | £149m | |
| TOUCH: | 66-68.7p | 12-MONTH HIGH: | 180p | LOW: 32.6p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 174p | NET DEBT: | 137% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 447 | 56.1 | 14.8 | 4.6 |
| 2020 | 362 | -53.3 | -27.7 | nil |
| % change | -19 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a |
