RE: Re IFRS 9 - assets may be fully collectible !30 Jul 2023 10:12
Per Vanquis interims
----
The Group's focus on enhancing asset quality, whilst operating in growing mid-cost and near-prime markets, enabled the Group to deliver attractive but disciplined receivables growth of 26% year on year. This resulted in an adjusted loss before tax of £5.5m (H1'22: adjusted profit before tax £54.3m) reflecting primarily the IFRS 9 impact of strong loan book growth, together with unplanned inflation driving higher costs. Given the focus on lower-risk mid-cost and near-prime markets in recent years, delinquency and arrears rates were broadly stable during the period despite a more challenging macroeconomic backdrop than anticipated at the start of the year.
----
Impairment for the period increased to £19.2m (H1'22: £17.8m), reflecting higher expected credit losses from the IFRS 9 impact of strong loan book growth, partly mitigated by the continued shift to lower risk customers. The annualised cost of risk decreased to 5.2% from 5.6% in H1'22, and the risk-adjusted margin reduced to 11.5% (H1'22: 12.9%).
------
2. Accounting policies
Group principal accounting policies under IFRS have been consistently applied to all the periods presented.
In the current year, as part of the Group's continual focus on improving the precision of its IFRS 9 impairment models, it was identified within vehicle finance that recovery cash flows were being discounted to the date of default rather than the reporting date. This led to cashflows being discounted too heavily and therefore a higher core model impairment provision being historically recognised. In 2021, this would have resulted in a reduction in Group loss after tax of £7.5m, an increase in vehicle finance receivables of £9.3m and a reduction in the current tax asset of £1.8m. Management consider that a prior period restatement is appropriate and has retrospectively restated the 2022 balance sheet which has resulted in an increase in vehicle finance receivables of £9.3m, a reduction in the current tax asset of £1.8m and a corresponding increase of £7.5m through retained earnings.
Sign In
Follow the stocks
