“I am delighted to report another strong performance in the first half of 2004. New business volumes were over £1 billion and the mortgage portfolio stands at over £3.5 billion, supporting strong growth and earnings momentum. Kensington also continues to generate a strong positive cash flow and we are pleased to
confirm that we will be raising the interim dividend, in line with a progressive dividend policy that increases returns to shareholders as the business grows. Based on its leading position in a specialist growth market, broad distribution, efficient operating platform and disciplined risk management, Kensington is well placed to prosper for the rest of 2004 and beyond.”
John Maltby, CEO Kensington Group plc
Financial Highlights
•Profit before tax and goodwill amortisation up 46% to £22.8 million (1H 2003: £15.6 million)
•Earnings per share before goodwill amortisation up 45% to 29.5p (1H 2003: 20.4p)
•Annualised post tax return on average equity (before goodwill amortisation) of 30.1% (1H 2003:
25.0%)
•Interim dividend per share up to 5.0p (1H 2003: 3.0p)
Profitable new business growth based on strong distribution and an efficient cost platform
•New business originations increased to £1.04 billion (1H 2003: £860 million) in a more competitive
market where the industry is preparing for mortgage regulation.
•The average gross product margin reduced from 3.74% in 1H 2003 to 3.69% in 1H 2004, in line with
expectations
•Cost: income ratio (Kensington Mortgages business) down to 36.4% (1H 2003: 38.4%) despite the
significant investment in preparation for regulation and for future growth
Continued policy of careful and disciplined risk management
•Consistently low new business loan-to-value ratio of 77% (1H 2003: 77%)
•Average income multiples well below industry levels at 2.5 times primary borrower’s income
•The number of accounts 90 days or more in arrears as a percentage of total customer accounts rose,
in line with management expectations, to 6.4% (31 May 2004) from 5.8% at 31 May 2003. The arrears
levels are now similar to late 2002 when interest rates were at similar levels to today
•Annualised loan losses continue to be very low and remain below 0.1% of total advances
Successful funding and securitisation programme
•Issued £1.55 billion of bonds into the global capital markets during 2004 to date
•Sold £200 million of mortgage loans in 1H 2004, further diversifying Kensington’s funding base
Strong prospects for continued growth in Kensington’s specialist market
•New business offer pipeline at the end of June 2004 above £420 million, over 30% above the level at
the end of 1H 2003
