REG - Distribution Finance - Trading Update

Distribution Finance Capital HoldingsAnnouncement

04/07/2024 07:00

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RNS Number : 0669V  Distribution Finance Cap. Hldgs PLC  04 July 2024

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).

 

4 July 2024

 

Distribution Finance Capital Holdings plc

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

 

 

Trading update for six months ended 30 June 2024

 

Continued momentum with full year results now 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 six months ended 30 June 2024.

·    The Group has continued to see strong momentum during the period with
new loan origination exceeding a record £709m, up c17% on the prior year (H1
2023: £607m).

·    The Group's loan book at 30 June 2024 reached £600m, up c16% on the
prior year (H1 2023: £519m) and which is in line with seasonal expectations.
Whilst new loan origination remains strong, the Group has seen a normalisation
of the seasonality in loan repayments during the year (i.e. an acceleration of
dealer sales during the period March to September), a first since the onset of
the global pandemic.

·    The Group now supports 90 manufacturer partners and its dealer
customers total 1,250 on a net basis (H1 2023: 1,152) having added 165 new
dealers in the period. Credit lines reached a record c£1.1bn, up c21% on
prior year (30 June 2023: £926m).

·    Average stock days, which measures the average age of loans
outstanding, remains well within sector tolerances, extending marginally on a
portfolio basis to 149 days (31 December 2023: 148 days) at the period end.

·    In spite of the challenges of the macro-economic and higher interest
rate environment, the Group's overdue accounts have continued to perform well
and ahead of expectations through the period. 20 dealers (H1 2023: 29),
including 10 cases in legal recovery, had arrears one day past due,
representing c1.6% (H1 2023: c 2.5%) of the Group's dealer base. The Group's
total arrears balance represented c0.5% (H1 2023: 2.5%) of its entire loan
book.

In light of the strong performance during the six month period, the Group's
underlying trading performance is expected to be ahead of market expectations
for the full year, driven by stronger net interest income, lower impairments
and loss provisions and stronger cost control.

Additionally, having prudently written off approximately £10m in respect of
the RoyaleLife balance, the Group has continued in its pursuit of the fullest
possible level of financial recovery. The Group is pleased to announce, having
now exhausted all opportunities, that it has now recovered assets and cash and
agreed legal settlement with related parties to the aggregate sum of c£4.7m,
of which c£1.7m is expected to be recognised in H1 2024. The remaining £3m
of this settlement amount is subject to the sale of assets (including
property) by a third party and it is therefore anticipated that this will be
recovered in the financial year ending 31 December 2025.

Given the Company's strong underlying operational and financial momentum and
the financial recovery in relation to RoyaleLife, the Group expects to report
a pre-tax profit for the six month ended 30 June 2024 of no less than £9.0m,
which is significantly ahead of its expectations and more than the entire FY23
outturn of £4.6m. Accordingly, the Group expects its full year outturn for
2024 to significantly exceed market expectations.

The Group has also continued with the organic build of a hire purchase lending
capability, which unlocks entry into significantly larger addressable markets
than the Company's current offering, supporting the sales of its existing
dealers and manufacturers to end-user consumers. The Group does not expect to
start lending in this market adjacency until 2025, which is subject to
regulatory approval.

The Company expects to provide a fuller update when it announces its interim
results for the six months ended 30 June 2024 in September 2024.

 

Carl D'Ammassa, Chief Executive, commented: "2024 has started exceptionally
well, with strong operational and commercial execution as well as portfolio
management and control. Our products and services clearly resonate with our
customers and seeing continued record new loan origination is a testament to
the entire team's focus on providing high quality service and the deep
relationships we have with our dealer and manufacturer partners. I am pleased
with the Group's trading performance so far this year and this gives us
confidence for the rest of the year. It is pleasing to see our efforts in
working through the RoyaleLife situation deliver significant recoveries and
upside potential to our financial expectations."

 

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

 

For further information contact:

 Distribution Finance Capital Holdings plc
 Carl D'Ammassa - Chief Executive Officer                                  +44 (0) 161 413 3391
 Kam Bansil - Head of Investor Relations                                   +44 (0) 7779 229508
 http://www.dfcapital-investors.com (http://www.dfcapital-investors.com/)

 Panmure Liberum Limited (Nomad and Broker)                                +44 (0) 203 100 2000
 Chris Clarke

 William King

 Anake Singh

 

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