NSF.L Regulatory News (NSF)

Non-Standard Finance plc

('NSF', the 'Company' or the 'Group')

22 January 2019

2018 year-end trading update

The Group continued to perform well during the second half of 2018, a year that marked the conclusion of a period of significant investment and structural change. The Group is now delivering sustained earnings growth and the results for the year ended 31 December 2018 are expected to be in line with market consensus.

In branch-based lending, Everyday Loans delivered impressive growth and as our biggest business remains the largest contributor to the Group's overall financial performance. At 31 December 2018 its net loan book, before fair value adjustments, had increased by 24.8% to £181.8m (2017: £145.6m)1, driven by a combination of 12 new branches in 2018 and a high level of productivity. Impairment ended the year at 21.1% of normalised revenue, well within our previous guidance of 20-22%, reflecting our proven underwriting and collections process. We plan to open seven new branches in 2019, all of which should open during the first half, increasing our network to 72 branches. 

Our guarantor loans division continued to benefit from strong market demand driving a record number of leads into our two brands. Improved lead quality meant that we increased the rate of conversion of those leads into loans and these loans are now being written on a single loan management platform across our two brands. We also increased productivity and wrote more loans per employee through a combination of improved training and sharing of best practice. At 31 December 2018 the net loan book had reached £77.4m (2017: £47.9m), an increase of 61.7% compared to the prior year. Impairment as a percentage of normalised revenue was 19.5%, below our previous guidance of 20-22%. 

In home credit, the addition of large numbers of self-employed agents and management staff during 2017 delivered a good performance in 2018. We took the opportunity to improve the quality of our customer base and many of our new, higher quality customers took out larger, longer-term loans and the net loan book increased by 2.1% to £41.0m (2017: £40.2m). At the same time, impairment as a percentage of normalised revenue equalled 32.6%, again below our previous guidance of 33-37%. After 18 months of structural change we now expect a period of relative stability in home credit and more normalised rates of loan book growth. 

We increased our committed debt facilities to £330m in September 2018 and as at 31 December 2018 the Group had cash at bank of £13.9m (2017: £11.0m) and gross borrowings of £272.8m (2017: £208.1m) leaving total headroom on the Group's debt facilities of £57.2m (2017: £51.9m). 

The full year results for 2018 will be announced on 12 March 2019.

The person responsible for arranging the release of this announcement on behalf of NSF is Peter Reynolds, Director of IR and Communications.

1 All key performance indicators have been provided on the basis that IFRS 9 had been adopted for the full reporting period in both 2018 and 2017.

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About Non-Standard Finance

Non-Standard Finance plc is listed on the main market of the London Stock Exchange (ticker: NSF) and was established in 2014 to acquire and grow businesses in the UK's non-standard consumer finance sector. Under the direction of its highly experienced main board, the Company has acquired a sustainable group of businesses offering credit to the c.10-12 million UK adults who are not served by (or choose not to use) mainstream financial institutions. Its three business areas are: unsecured branch-based loans, home-collected credit and guarantor loans. Each business is fully licensed by the FCA and now has access to increased levels of funding and has benefited from stronger management controls; has refined its product pricing in a number of areas; has introduced new compliance protocols; and is investing in new IT infrastructure and systems.

Each of the Group's operating subsidiaries is regulated by the FCA.