Non-Standard Finance PLC (LON:NSF) said it was”cautiously optimistic” about the full-year outlook since it posted a wider first-half reduction because of costs associated with its failed attempt to purchase equal subprime lender Provident Financial.
In June it left a months-long takeover battle for Provident following shareholder resistance.
NSF Requires a charge
NSF took an exceptional charge of 12.7mln connected with the hostile bid in the six months to the end of June.
“Whilst we believe strongly that a mix with Provident Financial plc could have accelerated the delivery of benefits for clients, employees and investors, all our businesses continued to perform well throughout the first half,” said John van Kuffeler, chief executive of NSF and the former chairman of Provident Financial.
“Our strategy remains unchanged and we stay on track to deliver attractive long-term yields through a combination of capital and income growth.”
The interim results were dented by a #12.5mln write-down on the value of this group’s home credit company, Loans in Home.
These one-off costs caused a loss before tax of #22.8mln for the period, compared to a reduction of #2.6mln a year ago.
Excluding these and other items, profit before tax rose 12 percent to #6.3mln as earnings from the house credit unit soared by 110 percent because of marked decrease in impairments.
Underlying earnings grew 12 percent to #88.3mln on the back of a 7 percent growth in customer numbers.
The complete loan book stood at #335.6mln, up 26 percent on a year ago, as a 22% increase in branch-based financing and a 53% jump in guarantor loans offset a 6 percent dip in house credit loans.
NSF ended the period with net debt of 285.3mln but said it was in”advanced discussions regarding an additional, low cost debt facility which will be used to finance additional growth and underpin the group’s long-term strategies”.
The team said current trading was in line with expectations and it is well-placed to satisfy its objectives despite macro-economic doubts.
“Reflecting our cautious optimism about the full-year outlook, we’ve declared a 17% gain in the half-year dividend to 0.7p per share,” stated van Kuffeler.
NSF also touched on the Financial Conduct Authority’s clampdown on the guarantor loans industry over concerns about affordability tests and the exploitation of vulnerable clients.
Such loans are often given to people with difficulty accessing credit and are ensured by a relative or friend who’ll make payments in the event the borrower defaults.
In reaction to the FCA’s increased scrutiny on the industry, van Kuffeler stated:”We remain focused on providing great customer results and continue to track all regulatory developments closely so that we can expect and, if necessary, participate with the relevant authorities, either directly or through business associations.”