WOODCHESTER Investments is on course for profit growth of over 20 per cent this year. After good results for 1995, group shares rose 2p yesterday to close at 195p, their highest level for three years.
Plans for 1996 include acquiring a major car financing business in Britain, centralising all group back office administration in one location, raising long term capital of about £100 million and getting a banking licence for Gandon capital markets.
Concentration on a small range of core products and careful expansion has now returned Woodchester to the profit levels of the early 1990s. But the profitability of the core business is now stronger. Interest income on surplus funds boosted income in earlier years, but has fallen sharply as interest rates have declined and has been replaced by earnings from operations.
Results for the first two months of 1996 indicate strong increases in business. Advances in Ireland, at £67 million, are 31 per cent ahead of 1995 levels. Advances in Britain, boosted by the acquisition of small equipment lessor Anglo, at £91 million sterling have almost doubled.
A £50 million plus acquisition in Britain is understood to be under active negotiation. The new data processing centre, which would employ about 150 graduates and cost about £8 million, is likely to be, set up in Dublin. But the group is still in negotiations with the IDA and British development authorities.
Centralising back office administration would allow branch offices to concentrate on sales and allow investment in state of the art technology, increasing efficiency and reducing" the group cost/income ratio - according to chairman and chief executive, Mr Craig McKinney. It would facilitate further expansion abroad.
Woodchester's 53 per cent shareholder Credit Lyonnais is expected to contribute some of the Tier 2 capital to be raised in the next three to six months. This shows its continuing commitment to the group, according to Mr McKinney. A banking licence for Gandon would allow the entity to get a credit rating and improve funding capabilities and pricing of funds for the group.
Strong growth is expected in its developing businesses in Portugal and Denmark and in Northern Ireland, where Adelaide Finance was acquired for £3.4 million at the beginning of the year. The takeover was part of a larger deal through which Woodchesters 29.2 per cent associate company, Lookers, took over Northern Ireland's largest for group, Charles Hurst. Adelaide was the financing and insurance broking arm of Charles Hurst.
Woodchester intends to expand "significantly" in Northern Ireland where it says, it can increase business "with only a minimal increase in overheads".
In Britain, Anglo - acquired for £62 million in April 1995 and currently being integrated with Woodchester Lease. Management Services - should make a good contribution this year.
After rationalisation, funding and overhead savings. Anglo is expected to generate profits of about £15 million by 1997.
