(Alliance News) - Non-Standard Finance PLC on Thursday said a "material uncertainty exists" for the business to continue as a going concern primarily due to the Covid-19 pandemic.
The subprime lender also reported a sharply widened loss for 2019 due to a large exceptional charge relating to a failed bid for larger rival Provident Financial PLC.
Shares in the company were trading 30% lower at 8.10 pence each in London, valuing the company at GBP25.31 million. Year-to-date the stock has shed 64% in value.
Chief Executive Officer John van Kuffeler 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 GBP80.6 million in 2019 while the third has led to a sharp downturn in lending following lock-down in March 2020."
The Leeds, England-based company reported a pretax loss of GBP76.0 million for 2019, significantly widened from GBP2.4 million loss a year ago.
The large loss was attributed to an exceptional charge of GBP80.6 million which included a non-cash charge GBP65.8 million relating to goodwill impairment, fees and costs associated with the offer for Provident Financial of GBP12.8 million and restructuring costs of GBP1.9 million. Non-Standard Finance did not record any exceptional charges in 2018.
Stripping out exceptional charges, pretax profit increased 5% year-on-year to GBP14.7 million.
Reported revenue for 2019 increased 14% year-on-year to GBP180.8 million from GBP158.8 million.
Non-Standard Finance has decided against paying a final dividend, leaving its total payout for 2019 at 0.7 pence per share, down from 2.6 pence paid in 2018.
At May 31, the company had cash of GBP60.3 million and gross borrowings of GBP345.0 million.
Non-Standard Finance said it is looking to raise new funds including issuing new shares to strengthen balance sheet and capitalise on potential increased demand for loans.
"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," CEO van Kuffeler said.
By Tapan Panchal; tapanpanchal@alliancenews.com
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