REG - Non-Standard Fin - 2022 Trading Statement

Non-Standard FinanceAnnouncement

13/02/2023 07:00

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RNS Number : 6457P  Non-Standard Finance PLC  13 February 2023

Non-Standard Finance plc

('Non-Standard Finance', 'NSF', the 'Company' or the 'Group')

2022 Trading Statement

 

(13 February 2023): Non-Standard Finance today issues this update on trading
for the full year 2022, as well as an update on its ongoing discussions with
the FCA and its lenders, ahead of the expected publication of its Full Year
audited results by the end of April.

Operating performance

The Group's operating performance continues to meet expectations and trading
in the Group's remaining operating division, Everyday Loans (branch-based
lending) which sits under Everyday Lending Limited ("ELL"), remains
encouraging and followed the trends that were visible at the half year. ELL's
Everyday Loans (branch-based lending) net loan book grew 6.2% during the year
to £167m as at 31st December 2022, as demand strengthened for its
branch-based lending services. The company continues to operate under tight
lending criteria given the economic backdrop and is pleased to see this
reflected in better than expected delinquency throughout the year.

ELL continues to invest in credit and collections technology improvements
despite the financial constraints it is operating under. It continued its
recovery following the Covid pandemic, opening a further three branches during
the year and increasing operational staff numbers from 355 FTE to 402 FTE.

The NSF Board continues to believe that the business has good growth potential
provided the Group's remaining regulatory issues are resolved, and it can
successfully recapitalise.

Update on scheme of arrangement

Talks with advisors and the FCA regarding a potential scheme of arrangement in
relation to redress liabilities are progressing. As noted in the 2022HY
announcement, although the independent review of the Group's branch-based
lending division carried out in 2021 identified no systemic issues requiring
redress, as this division and the guarantor loans division (now in
collect-out) trade out of the same legal entity (ELL), it is intended that a
scheme of arrangement would encompass potential claims from both divisions in
order to ensure equitable treatment of customers.

Engagement with the FCA is continuing and the Group hopes to obtain greater
clarity from the FCA in the coming weeks as to their views on a potential
scheme, while also concluding negotiations on the terms of such a scheme with
a committee of eligible customers, before it formally launches the process. If
a scheme of arrangement is sanctioned, the Group's intention is to proceed
with a capital raise to generate funds for the payment of redress under a
scheme as well as recapitalise the remaining group and enable Everyday Loans
(branch-based lending) to move forward with its growth plan.

The Group continues to work closely with its secured lenders on an alternative
transaction to be implemented in the event that a scheme of arrangement is
completed but the proposed capital raise is unsuccessful, which would preserve
the branch-based lending business as a going concern.

The proposed capital raise, whilst ensuring the future for the Group, will
materially dilute the interests of existing equity holders, most likely to
negligible value unless they choose to participate in the capital raise. In
the alternative transaction (in the event the capital raise is unsuccessful),
there would be no recovery for the Company's shareholders.

 

In parallel, the Group continues to engage with the FCA with respect to the
business' plan to rely on DISP 1.6.2R(2), pursuant to which, the business is
able to place a temporary hold on the processing of customer complaints
included in the terms of a potential scheme of arrangement as it would not be
in a position to make a final response on these claims until the conclusion of
the court process.

 

Without the successful completion of a scheme of arrangement and subsequent
recapitalisation of the Group, the balance sheet remains deeply insolvent.
In the event that the scheme of arrangement is not sanctioned by the
court, or in the event that the subsequent recapitalisation of the business
fails, there would then be a very significant likelihood of a Group-wide
insolvency (most likely administration), resulting in no return for current
shareholders and a significantly reduced return for secured lenders.
However, the Directors continue to believe there is a reasonable prospect of
resolving this position through a potential scheme of arrangement and a
subsequent recapitalisation, in the form of either a capital raise or the
proposed alternative transaction, with the support of our largest shareholder
and/or principal lenders.

In the meantime, the secured lenders continue to provide short-term waivers of
the Group's loan to value covenant, ensuring the Group has the liquidity to
pursue its plans pending resolution of a potential scheme of arrangement and
subsequent recapitalisation.  As part of these funding discussions, the Group
has reduced its gross borrowings by a further £20 million to £255 million,
following the repayment of its £45 million RCF last July. The Board would
like to express its gratitude for the continued support of both its lenders
and its principal shareholders.

The Board is conscious that discussions regarding the current situation have
now been going on for some considerable time and it is keen to bring the
current situation to a conclusion to enable the management, staff and
customers of ELL to move forward. Further updates will be announced as
appropriate.

Jono Gillespie, Group Chief Executive, said: "Everyday Loans continues to
perform well, despite the considerable constraints it is operating under and
this gives us confidence in the future of the business provided the Group can
successfully complete its planned restructuring. We are making good progress
with our restructuring plans, thanks to the support of our main lenders and
largest shareholder and hope to be in a place to provide more specific details
before too long."

 

 For More Information:

 Non Standard Finance plc                             +44 203 869 9020

 Jono Gillespie, Group Chief Executive Officer

 Sarah Day, Chief ESG Officer and Company Secretary

 H/Advisors Maitland                                  +44 207 379 5151

 Neil Bennett

 Finlay Donaldson

 

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