Distrib. Fin. Regulatory News (DFCH)

25 January 2021

Distribution Finance Capital Holdings plc

("DF Capital" or the "Company" together with its subsidiaries the "Group")

Full Year Trading Update

Distribution Finance Capital Holdings plc, a newly authorised bank providing working capital solutions to dealers and manufacturers across the UK, announces a trading update for the 12 months ended 31 December 2020.

Having received authorisation as a bank without restrictions from the Prudential Regulation Authority on 29 September 2020, the Group launched its retail deposit products on 14 October 2020. The Company has raised over £145m of deposits during the 12 weeks to 31 December 2020. Its savings products were over-subscribed against the Group's targets soon after launch, which in turn allowed the Group to build a highly diversified savings product maturity profile including 90 day notice, 1 year, 15 month, 18 month and 2 year fixed rate products, each at a competitive deposit rate of below 1.3%. The Group has also been awarded feefo's "Trusted Service Award 2021"in light of the ratings and reviews received from its personal savings customers since launching its retail deposit products.

The Group re-commenced its lending operation fully on 4 November 2020, following the build-up of the required regulatory liquidity buffers as a new bank. The loan book reached £113m at 31 December 2020, up by c36% from a low of £83m in October 2020.

The Group's lending was impacted immediately before Christmas 2020 by Brexit uncertainties and delays at ports in light of the restrictions put in place caused by the new variant of the COVID-19 virus. This restricted or delayed the movement of manufactured products from Europe to UK based dealers. This backlog has now extensively cleared and the Group is seeing strong demand for its lending products as dealers continue to replenish their stock levels following a successful period of trading through the second half of 2020. At 22 January 2021, the Group's loan book stood at approximately £125m.

As previously announced, the successful launch of its deposit strategy enabled the Group to repay early all forms of more expensive debt by 9 December 2020, and the Group's loan book is now entirely supported by retail deposits which significantly improves its anticipated net interest margin to approximately 6% on a look forward basis from 1 January 2021. Given the strength of depositor demand, expected savings rate trend and the short tenor of the Company's current lending products, the Group does not currently anticipate participating in the Bank of England's TFSME scheme. The Group expects to have the infrastructure in place to participate in future Bank of England schemes, should it prove operationally viable to join and should its loan book meet any scheme eligibility criteria at that time.

The Group is pleased to also announce that the quality of its arrears performance has continued the previously reported trend of improvement, now sitting significantly lower than the levels seen in periods prior to the onset of the global pandemic.

Additionally, during December 2020, the Group reached a significant lending milestone, having provided over £1bn of cumulative funding to dealers and manufacturers since it started lending activities in 2017.

Carl D'Ammassa, Chief Executive of the Group commented: "We are delighted, in spite of all the uncertainties and headwinds, with how we closed 2020. We have a growing loan book, a proven capability to raise deposits and carry no pandemic related arrears or losses into 2021.Our savings and lending products resonate well with our customers, who continue to look for great service and a bank that is keen to work with them and is easy to do business with. Now as a bank, we are well placed to better support our dealers and manufacturers through this third national lockdown. We have surety of funding and a clear appetite to support the strong demand for our products."

The Company expects to announce its results for the 12 months ended 31 December 2020 during April 2021.

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This announcement contains (or may contain) certain forward-looking statements, beliefs or opinions, with respect to certain of the Company's current expectations and projections about future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan" "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. These statements are subject to unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and, except as required by applicable law, the Company and any of such persons' respective directors, officers, employees, agents, affiliates or advisers assume any responsibility or obligation to update, amend or revise publicly or review any of the forward-looking statements contained in this announcement. You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement. No statement in this announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. Past performance of the Company cannot be relied on as a guide to future performance and persons reading this announcement are cautioned not to place undue reliance on such forward-looking statements.