‘Difficult and disappointing’ 18 months for listed lender

A failed takeover bid and the COVID-19 outbreak have impacted the 2019 full year results for Leeds-based lender Non-Standard Finance. (NSF)

In its report today, the Group has reported normalised revenue as up 10% to £183.7m (2018: £166.5m), with reported revenue of £180.8m (2018: £158.8m).

Normalised pre-tax profit was £14.7m (2018 restated: £14.0m), with a reported pre-tax loss of £76m (2018: restated loss before tax of £2.4m).

NSF notes the reported statutory loss before tax of £76m was after an exceptional charge of £80.6m, which includes a non-cash charge of £65.8m relating to goodwill impairment; fees and costs associated with its offer for Provident Financial of £12.8m and restructuring costs of £1.9m.

John van Kuffeler, Group chief executive officer, said: “The last 18 months have been difficult and disappointing for Non-Standard Finance with the failure of our offer for Provident Financial; the fall in sector values necessitating large write-downs in the values of our three principal subsidiaries and the COVID-19 pandemic which has paralysed the UK economy.

“These first two events resulted in exceptional and non-cash charges of £80.6m in 2019, while the third has led to a sharp downturn in lending following lock-down in March 2020.

“Yet despite this challenging back-drop, both branch-based lending and guarantor loans delivered good loan book growth in 2019 and home credit delivered a sharp increase in profit, resulting in a 5% increase in normalised Group pre-tax profit.

“In 2020, the immediate impact of COVID-19 was the near cessation of lending from the middle of March together with an increase in expected credit losses.

“While it is clear this will severely impact our 2020 results, our post lock-down collections have remained robust at around 86% of our previous levels and we have generated net cash of £24.6m over the last two months.

“Although we are exercising extreme caution and mindful of the constraints on our debt facilities that are preventing further drawdown on the new securitisation facility, lending volumes are once again increasing, albeit gradually.

“As the recession begins to bite, it is expected more of the UK population will be unable to borrow from either their clearing bank or other mainstream lenders.

“Previous recessions have taught us that prime lenders are likely to become increasingly risk averse and tighten their lending criteria, leaving a large and expanding pool of higher quality applicants who require access to regulated and responsible credit markets.

“The Board believes this could represent an exceptional market opportunity for the Group.

“Accordingly, the Board is considering the most appropriate funding structure, which may include the issue of equity, to strengthen the Group’s balance sheet and to enable the company to capitalise on this opportunity and meet a growing need in the economy.“