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NSF posts wider loss after failed attempt to buy Provident Financial

NSF said current trading is in line with expectations and added it was well-placed to meet its objectives despite macro-economic uncertainties.

Non-Standard Finance PLC -
NSF hiked its interim dividend by 17%

Non-Standard Finance PLC (LON:NSF) said it was “cautiously optimistic” about the full-year outlook as it posted a wider first-half loss due to costs related to its failed attempt to buy rival subprime lender Provident Financial.

In June it abandoned a months-long takeover battle for Provident following shareholder resistance.

NSF takes a charge 

NSF took an exceptional charge of £12.7mln associated with the hostile bid in the six months to the end of June.

"Whilst we believe strongly that a combination with Provident Financial plc would have accelerated the delivery of benefits for customers, employees and shareholders, each of our businesses continued to perform well during the first half," said John van Kuffeler, chief executive of NSF and the former chairman of Provident Financial.

"Our strategy remains unchanged and we remain on course to deliver attractive long-term returns through a combination of income and capital growth."

The interim results were also dented by a £12.5mln write-down on the value of the group’s home credit business, Loans at Home.

Wider loss 

These one-off costs led to a loss before tax of £22.8mln for the period, compared to a loss of £2.6mln a year ago.

Excluding these and other items, profit before tax rose 12% to £6.3mln as earnings from the home credit unit surged by 110% due to a marked reduction in impairments.

Underlying revenue grew 12% to £88.3mln on the back of a 7% rise in customer numbers.

The total loan book stood at £335.6mln, up 26% on a year ago, as a 22% rise in branch-based lending and a 53% jump in guarantor loans offset a 6% dip in home credit loans.

NSF ended the period with net debt of £285.3mln but said it was in “advanced discussions regarding an additional, lower cost debt facility that will be used to fund further growth and underpin the group's long-term plans”.

Cautious optimism

The group said current trading was in line with expectations and that it is well-placed to meet its objectives despite macro-economic uncertainties.

"Reflecting our cautious optimism about the full-year outlook, we have declared a 17% increase in the half-year dividend to 0.7p per share," said van Kuffeler.

NSF also touched on the Financial Conduct Authority’s clampdown on the guarantor loans sector over concerns about affordability checks and the exploitation of vulnerable customers.

Such loans are usually given to individuals with difficulty accessing credit and are guaranteed by a family member or friend who will make repayments if the borrower defaults.

In response to the FCA’s increased scrutiny on the sector, van Kuffeler said: "We remain focused on delivering good customer outcomes and continue to monitor all regulatory developments closely so that we can anticipate and, if necessary, engage with the relevant authorities, either directly or through industry associations."

Quick facts: Non-Standard Finance PLC

Price: 5.5815 GBX

LSE:NSF
Market: LSE
Market Cap: £17.44 m
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