Distrib. Fin. Regulatory News (DFCH)

This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation (EU no. 596/2014) as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended from time to time).

6 December 2024

Distribution Finance Capital Holdings plc

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

Trading Update

Full year results expected to be significantly ahead of market expectations

Distribution Finance Capital Holdings plc, a specialist bank providing working capital solutions to dealers and manufacturers across the UK, is pleased to provide a trading update for the 12 months ending 31 December 2024.

Trading Update

Loan origination continues to perform in line with expectations and as a result its loan book will end the year in the range of £650-700m.The Group's net interest margin ('NIM') continues to perform ahead of expectations, with operating costs being well managed and cost of risk running well below the Group's target of 1%. Accordingly, the Group expects its full year underlying pre-tax profit (excluding recoveries and write-backs relating to RoyaleLife) to be significantly ahead of market expectations at not less than £14m, more than a threefold increase on its FY23 outturn (FY23: £4.6m).

Additionally, the Group is pleased to confirm that it has updated its expected credit loss provision relating to RoyaleLife, having now successfully secured the previously reported £3m settlement against property that is currently pending sale and is subject to a new counterparty loan. This settlement was originally expected to be recognised in FY25. Accordingly, the Group will write-back a further £3.0m of credit loss provisions bringing the total recovery relating to RoyaleLife for FY24 to £4.7m. As a result, total pre-tax profit for the 12 months ending 31 December 2024 is expected to be significantly ahead of market expectations at not less than £18.7m, more than a fourfold increase on its FY23 outturn.

The Group continues to make good progress in the build of its asset finance/hire purchase lending capability, having now fully completed its application to the Financial Conduct Authority for consumer lending permission. The launch of this product, which remains on track for H1 2025, is expected to result in a significant expansion of our market opportunity with the addressable market for asset finance being several times larger than the Group's existing core lending product. This product will be distributed through the Group's existing dealer and manufacturer customers to end-user obligors. The Group will provide a further update on progress in due course.

The Company expects to announce its full year trading update in mid-January 2025.

Carl D'Ammassa, Chief Executive, commented: "2024 marks another year of strong delivery and execution against our business plan. The Group remains well positioned in its strategy to become a multi-product lender and we remain excited by the level of interest in our asset finance product ahead of its expected launch in the first half of 2025."

The person responsible for arranging the release of this announcement on behalf of the Company is Karen D'Souza (Company Secretary).

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