Operational review
Developing markets
Customer numbers 85,000
+157.6%
Average net receivables
£11.9 million
+262.3%
Impairment as a % of revenue
25.8%
We opened 9 new branches in Romania in 2008, taking our network to 16 branches and we now reach 65% of our target market.
Romania
| 2008 £m |
2007 £m |
Change £m |
Change % |
Change at CER % |
|
|---|---|---|---|---|---|
| Customer numbers (000s) | 85 | 33 | 52 | 157.6 | 157.6 |
| Credit issued | 33.5 | 9.2 | 24.3 | 264.1 | 244.1 |
| Average net receivables | 11.9 | 3.1 | 8.8 | 283.9 | 262.3 |
| Revenue | 15.5 | 3.9 | 11.6 | 297.4 | 274.9 |
| Impairment | (4.0) | (0.5) | (3.5) | (700.0) | (667.9) |
| Revenue less impairment | 11.5 | 3.4 | 8.1 | 238.2 | 218.2 |
| Finance costs | (2.4) | (0.5) | (1.9) | (380.0) | (391.2) |
| Agent commission | (1.5) | (0.4) | (1.1) | (275.0) | (228.5) |
| Other operating costs | (15.4) | (6.7) | (8.7) | (129.9) | (118.5) |
| Loss before taxation | (7.8) | (4.2) | (3.6) | (85.7) | (77.3) |
During the year we continued our branch roll-out in Romania and we now have 16 branches, up from 7 at the end of 2007. As a result, growth was rapid, with customer numbers rising from 33,000 to 85,000 and credit issued during the year reaching £33.5 million. Average net receivables and revenue almost quadrupled to £11.9 million and £15.5 million respectively.
Credit quality remains good, with impairment as a percentage of revenue at 25.8%, which is in line with our expectations for a business at this stage of development.
Total costs also increased significantly as a result of the expansion in the branch network and growth in customer numbers and net receivables. This has resulted in increased losses for the year of £7.8 million. We expect a significant reduction in losses in 2009 as revenue per branch increases and the business is well placed to make a profit in 2010.
John A Harnett
Chief Executive Officer