Non-Standard Finance PLC Trading Update (9602P)
February 23 2021 - 1:00AM
UK Regulatory
TIDMNSF
RNS Number : 9602P
Non-Standard Finance PLC
23 February 2021
Non-Standard Finance plc
('NSF', the 'Company' or the 'Group')
23 February 2021
Trading update
The Board of Non-Standard Finance has this morning issued the
following trading update. The audit of our 2020 results is now
underway and the information given below is unaudited, pending the
completion of the audit process.
Branch-based lending - Whilst there was a strong pick-up in loan
volume during August, September and October 2020 with new cash
issued running at c.GBP10 million per month that stabilised the
loan book, the subsequent tiered lockdowns, which were particularly
severe in our customer heartland, reduced lending volumes in
November and December. As a result, the net loan book at 31
December 2020 was c.20% lower than at the end of 2019. Whilst a
consequence of the COVID-19 pandemic has been a significant
increase in impairment and provisions, it has been most encouraging
that the loans written since the start of the pandemic have
performed better than our historical average and in the second half
of 2020 we also saw an improvement in the collection performance of
the COVID-flagged book. This robust performance of new lending
illustrates the strength of our face-to-face lending model and
augurs well for a return to strong sector growth once the economy
begins to open up again.
Home credit - Loans at Home also experienced a significant
uplift in loan volume during the second half of 2020 with new cash
issued running at c.GBP5m per month. Although growth in lending
volume continued in November and December due to the normal
seasonal pattern, this was down by a third versus 2019 as a result
of the tiered lockdowns and the closure of retail in December 2020.
Collections improved on the whole loan book in the second half and
the number of COVID-19 flagged customers had reduced to less than
1% at the year-end with the result that impairment as a percentage
of revenue in 2020 was significantly lower than in 2019. This
strong collections performance, in conjunction with lower lending
meant that the net loan book ended the year down by a third versus
2019. We expect to see a significant increase in demand once the
economy is opened up as our customers resume their normal
lifestyle. There may also be opportunities to take advantage of
some competitors contracting their business in this sector.
Guarantor loans - Following the FCA's review of the Group's
guarantor loans division as part of a wider review of the guarantor
loan sector, resulting in a GBP16m provision for redress announced
in our 2020 half year results, lending volumes were minimal in the
second half of 2020. Economically, the younger customer base has
been harder hit by the pandemic than our other two divisions and
calls on guarantors have been constrained due to the pandemic,
resulting in a marked increase in impairment. Collections
nevertheless remained robust during the second half of 2020 with
the result that the net loan book reduced by c.40% versus the prior
year. We are working hard on the redress methodology and hope to
have concluded the process with the FCA early in the second
quarter.
Group - Branch-based lending and home credit delivered a solid
trading performance during the second half of 2020 in what were
extremely challenging circumstances and overall, the Group's
combined net loan book declined by c.27% versus the previous
year.
Liquidity and funding
The Group has continued to operate within its financial
covenants. The combination of lower levels of lending with a solid
collections performance meant that as at 31 December, 2020 cash at
bank had increased to GBP78m and gross borrowings were GBP330m.
Capital raise
The Group now needs to strengthen the balance sheet by raising
sufficient new equity capital to support future growth, avoid
future covenant breaches and to address the material uncertainties
regarding going concern. The Board has therefore commenced work on
a substantial capital raise with the support of Alchemy, its
largest shareholder with a view to completing this in the second
quarter of 2021. Once completed, the Group will be in a strong
position to take advantage of what it believes to be an exceptional
market opportunity in the non-standard sector.
For more information:
Non-Standard Finance plc
Peter Reynolds, Director, IR and Communications +44 (0) 20 3869 9020
Maitland/AMO
Neil Bennett
Andy Donald
Finlay Donaldson +44 (0) 20 7379 5151
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