RCS - Together Fin. Svc. - Q1 2022/23 Results

Max Financial ServicesAnnouncement

24/11/2022 08:15

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RNS Number : 4189H  Together Financial Services Limited  24 November 2022

Together Financial Services Limited

Q1 2022/23 Results

24(th) November 2022

Together Financial Services Limited ('Together' or 'the Group'), one of the
UK's leading non-bank relationship lenders, is pleased to announce its results
for the quarter ended September 30, 2022.

Commenting on today's results, Gerald Grimes, Group CEO Designate of Together,
said:

"Together delivered another strong performance in the quarter to 30 September,
growing the loan book to £5.7bn while maintaining very low LTVs and arrears.
The Group also remained highly profitable and cash generative, with underlying
profit before tax of £34.7m and cash receipts of £541.8m.

 "We continue to shape our business for the future, with a focus on
optimising our distribution strategies, maintaining lending quality and
sustainable pricing, and supporting our customers through this challenging
economic climate. During the quarter we raised or refinanced over £800m to
further strengthen and diversify our funding, leaving us with significant
facility headroom to support our growth plans. We also made good progress with
our sustainability agenda, achieving silver accreditation from Investors in
People 18 months ahead of our plan, maintaining excellent customer reviews and
improving our car fleet to 64% electric or hybrid.

 "The UK's economic outlook has become increasingly uncertain with high
levels of inflation and rising interest rates causing economists to forecast a
prolonged recession. Against this backdrop, many more customers may find
themselves underserved by mainstream lenders and look to specialists to help
them to solve problems and realise opportunities. With a clear purpose, a
multi-cycle track record, our transformation programmes well underway and
strong diversified funding base, we believe Together remains well placed to
deliver on our strategy, to help increasing numbers of underserved customers
realise their ambitions and to play our part in supporting the UK economy."

Financial highlights: quarter ended September 30, 2022

·      Strong loan book growth at conservative LTVs with low arrears

-       Average monthly loan originations of £289.7m, up 61.9% on Q1'22
(£179.0m) down 1.4% on Q4'22 (£293.8m)

§ Conservative weighted average origination LTVs of 62.0% (Q1'22: 60.1%;
Q4'22: 61.8%)

-       Group net loan book increased to £5.7bn, up 34.5% on Q1'22
(£4.2bn) and up 8.3% on Q4'22 (£5.2bn)

§ Weighted average indexed LTV remains very low at 51.9% (Q1'22: 52.5%;
Q4'22: 51.5%)

§ Arrears profile remains benign, reflecting robust loan book quality

§ Impairment coverage increased slightly from previous quarter at 1.63%
(Q1'22: 2.15%; Q4'22: 1.61%) due to increased impairment provisioning
resulting from future macroeconomic uncertainty in forward-looking IFRS 9
modelling

·      Robust and sustainable financial performance

-      Interest receivable and similar income of £119.0m, up 27.5% on
Q1'22 (£93.3m) and up 11.9% on Q4'22 (£106.3m)

-      Underlying net interest margin of 4.9% (Q1'22: 6.1%; Q4'22: 5.3%),
with compression during the period reflecting the impact of the extent and
timing of rising interest rates

-      Annualised cost of risk of 0.9% (Q1'22: 0.1%; Q4'22: 0.2%), with
change due to an increased impairment charge as a result of increased IFRS 9
provisioning

-      Group remains highly profitable and cash generative

§ Underlying profit before tax of £34.7m, down 10.6% on Q1'22 (£38.8m) and
down 12.4% on Q4'22 (£39.6m) primarily due to higher impairment charges

§ Cash receipts of £541.8m (Q1'22: £419.4m; Q4'22: £522.2m) as redemptions
remained strong

 

                                                                           Q1                        Q1       Q4
 Key metrics                                                               2023                      2022     2022

 Interest receivable and similar income (£m)                               119.0                     93.3     106.3
 Underlying interest cover ratio(( 1 ))                                    1.7:1                     2.3:1    2.0:1
 Interest cover ratio                                                      1.8:1                     2.3:1    1.9:1
 Underlying net interest margin(( 2 )) (%)                                 4.9                       6.1      5.3
 Net interest margin (%)                                                   4.9                       6.1      5.3
 Underlying cost-to-income ratio(1) (%)                                    32.3                      36.9     37.8
 Cost-to-income ratio (%)                                                  28.0                      37.1     44.4
 Underlying cost-to-asset ratio(1) (%)                                     1.6                       2.1      1.9
 Cost-to-asset ratio (%)                                                   1.3                       2.1      2.2
 Cost of risk (%)                                                          0.9                       0.1      0.18
 Underlying profit before taxation(1) (£m)                                 34.7                      38.8                39.6
 Profit before taxation (£m)                                               37.7                      38.7                35.2
 Underlying EBITDA                                                         88.3                      70.9     77.8
 Loans and advances to customers(4) (£m)                                   5,684.9                   4,227.8          5,247.9
 Net debt gearing (%)                                                      81.2                      76.2     79.7
 Shareholder funds(( 3 )) (()£m)                                                   1,093.6           942.8               1,030.0
 Underlying return on equity(1) (%)                                        11.1                      13.6     12.0
 Return on equity (%)                                                      12.0                      13.5     14.7

 

Operational highlights

·      Further strengthened and diversified funding to support growth
plans

-       Over £800m raised or refinanced across three transactions

-       £1.4bn facility headroom and £389.9m immediately available
liquidity at 30 September

-       In October, credit rating agency S&P upgraded Together to
'BB' (previously 'BB-') citing our resilient earnings, capital buffers and
asset quality. S&P also upgraded Together's Senior Secured Notes to 'BB'
(previously 'BB-') and Bracken Midco1 PLC's PIK Toggle Note to 'BB-'
(previously 'B+')

·      Continued progress against Sustainability targets

-       Achieved 75% 5 star customer reviews during quarter(5)

-       Awarded silver accreditation from Investors in People, 18 months
ahead of plan

-       Funded a further 56 social housing properties securing homes for
187 tenants

-       64% of car fleet now electric or hybrid

Q1 2022/23 results presentation

Together will be presenting its Q1 2022/23 results via audio webcast today at
14:00 GMT (9:00 EST), for the quarter ended September 30, 2022.

 

The presentation for analysts and investors is expected to last for
approximately 30 minutes, followed by a Q&A.

 

The slides will be available on the Investor Relations website
(https://investors.togethermoney.com/ (https://investors.togethermoney.com/) )
ahead of the presentation.

 

The live audio webcast will be available via the following link:

https://www.investis-live.com/together/637231ab757dae0c007ad3fb/refss
(https://www.investis-live.com/together/637231ab757dae0c007ad3fb/refss)

 

It will also be accessible via a live conference call:

·      Access code: 842450

·      From the UK: +44 (0) 20 3936 2999/ 0800 640 6441

·      From outside the UK: +44 20 3936 2999

 

For further enquires please contact:

 Together
 Mike Davies, Director of Corporate Affairs  + 44 7753 138185

                                             mike.davies@togethermoney.com (mailto:mike.davies@togethermoney.com)

 Abena Affum, Corporate Affairs Manager      +44 7542 862956
                                             abena.affum@togethermoney.com (mailto:abena.affum@togethermoney.com)

 Camarco (Financial PR)

 Ben Woodford

                                             +44 2037818333

 Eddie Livingston-Learmouth                  ben.woodford@camarco.co.uk (mailto:ben.woodford@camarco.co.uk)

                                             +44 2037574993

                                             Edward.Livingstone-Learmonth@camarco.co.uk
                                             (mailto:Edward.Livingstone-Learmonth@camarco.co.uk)

About Together

One of the UK's leading non-bank relationship lenders, Together has been
making finance work to help our customers realise their ambitions for nearly
50 years.

A strong, diverse and financially inclusive lender, we support a wide range of
underserved customers including the self-employed, those with more complex
incomes, in later life or with thin or impaired credit, landlords and SME and
business customers. We offer our customers a wide range of flexible lending
products including short-term finance, auction finance, residential,
buy-to-let and commercial mortgages, secured loans and development finance.

Our expertise in lending means we can look beyond mainstream lending criteria
to consider individual circumstances and treat each application on its own
merits to help our customers solve problems and realise opportunities.

Together is the trading name of Together Financial Services Limited, which has
its registered office address at Lake View, Lakeside, Cheadle, Cheshire SK8
3GW.

 

 

 1  September 30, 2022 excluded a £3.0m release of costs accrued in a prior
period relating to the group's strategic options review (Q1'22: £0.1m
customer redress provision charge, whilst Q4'22 excluded a £0.2m share based
payment charge and £4.2m costs associated with a strategic review of the
business.

 2  There are no exceptional items impacting upon net interest income recorded
in the current or comparable prior periods.

 3  Includes subordinated shareholder loans of £32.0m (Q1'22: £29.8m, Q4'22:
£31.4m)

4 Net loan book is the net of gross loans and advances to customers and
impairment allowances

5 Based on 220 reviews collated by Feefo, Trustpilot and Google Reviews during
Q1'23

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