Non-Standard Finance plc
('NSF', the 'Company' or the 'Group')
16 January 2020
FY 2019 trading update and investor day
NSF will host a series of presentations at an investor day to be held later today providing an overview of the Company's strategy and outlook from the executive management team and the senior management of NSF's operating divisions. The Company confirms that no new material information will be provided during the presentations, which will be webcast live and made available later today on the Group's corporate website: https://www.nsfgroupplc.com/.
Trading in the final few months of 2019 was as anticipated and so the results for the year ended 31 December 2019 are expected to be in line with the current consensus of analyst forecasts. The Group's medium-term targets for loan book growth and impairment as a percentage of revenue are unchanged.
In branch-based lending, Everyday Loans has continued to deliver an impressive performance. At 31 December 2019 its net loan book before fair value adjustments had reached £218.3m (2018: £186.2m), a 17% increase versus the prior year. The opening of eight new branches in 2019 took the total number to 73 and this, together with improved productivity from an enlarged workforce, helped to drive customer numbers up by 23% to 75,400 (2018: 61,200). The business also collected well and impairment as a percentage of normalised revenue ended the year at 22.4% (2018: 21.1%), well within our target of 22-24%. We continue to believe that consumer demand for branch-based lending will support a network of over 100 branches in the medium-term and so plan to continue to deploy our successful formula of splitting a limited number of larger branches in order to create additional capacity for future growth.
Having taken the decision to consolidate all of our guarantor loans activities into a single location in October 2019, the net loan book increased by 29%, to £107.4m (2018: £83.1m). The number of customers also grew strongly, up by 30% to 32,600 (2018: 25,100). By continuing to develop our channels of supply and deepening our broker relationships, the volume of leads coming in to both the TrustTwo and George Banco brands remains strong and we are now focused on returning lending volumes to those achieved prior to the consolidation. A concerted effort by the collections team over the past few months meant that the rate of impairment as a percentage of normalised revenue was 22.6% (2018: 20.0%) which was lower than in the first half of 2019 and was within our medium-term target of 22-24%.
In home credit, Loans at Home's performance was slightly better than expected during the peak lending period in November and December. Our drive to shorten the loan book meant that the net loan book ended the year at £39.9m (2018: £41.0m). While sales volumes to existing customers were lower than last year, new customer volumes remained strong with the result that the total number of customers at the end of 2019 was broadly flat at 92,400 (2018: 93,800). A strong collections performance and improving loan book quality meant that impairment as a percentage of normalised revenue was 27.0% (2018: 32.6%) which is below our previous guidance of 30-33%. We now expect a period of relative stability in home credit and more normalised rates of loan book growth, in line with our medium-term targets.
Update on new debt facility
The Group is continuing to make good progress on finalising a new £150-200m, six-year securitisation facility to help fund future loan book growth. We have signed an agreed term sheet and expect to complete the final documentation shortly. It is expected that the terms of the facility will provide a meaningful reduction in funding costs versus the Group's existing long-term funding arrangements that mature in 2023. A further announcement will be made in due course.
As at 31 December 2019 the Group had cash at bank of £14.2m (2018: £13.9m) and gross borrowings of £323.2m (2018: £272.8m).
The person responsible for arranging the release of this announcement on behalf of NSF is Peter Reynolds, Director of IR and Communications.
For more information:
Non-Standard Finance plc
Peter Reynolds, Director, IR and Communications
+44 (0) 20 3869 9020
+44 (0) 20 7251 3801
About Non-Standard Finance
Non-Standard Finance plc is listed on the main market of the London Stock Exchange (ticker: NSF) and was established in 2014 to acquire and grow businesses in the UK's non-standard consumer finance sector. Under the direction of its highly experienced main board, the Company has acquired a sustainable group of businesses offering credit to the c.10-12 million UK adults who are not served by (or choose not to use) mainstream financial institutions. Its three business areas are: unsecured branch-based loans, home-collected credit and guarantor loans. Each business is fully licensed by the FCA and now has access to increased levels of funding and has benefited from stronger management controls; has refined its product pricing in a number of areas; has introduced new compliance protocols; and is investing in new IT infrastructure and systems.
Each of the Group's operating subsidiaries is regulated by the FCA.