30 April 2019 – trading update

A trading update has been released covering the year ended 31 March 2019.  Despite the strong underlying trading performance, reported profit before tax (before exceptional items) is expected to be marginally below market expectations of £12.9m profit before tax on revenue of £112m.  Group trading for the year was ahead of expectations, despite the impact of an additional £0.5m of costs relating to investment in the new strategic business plan outlined at the time of interim results.  This was driven by a strong performance from the Corporate business and a broadly stable performance from the Consumer business, reflecting the evolving Christmas Savings market.  However, the particularly strong growth in the more profitable card business means that the financial impact of the new accounting standard IFRS15 is now expected to be approximately £0.5m higher than previously anticipated.  This is due to the fact that a greater proportion of profit will be deferred until the current year.  Having taken the decision to move to new offices, an exceptional impairment charge of approximately £1.25m on the carrying value of the company’s existing site is anticipated.  Additional costs (net of initial expected cost savings) of £2.0m associated with implementing the strategic business plan have also been identified, which will be incurred during the current financial year.  Final results for the financial year ended 31 March 2019 will be released on 12 June 2019.  Ahead of that announcement we still believe the shares are a BUY.