Non-Standard Finance has cast doubt on its ability to continue as a going concern due to the impact of coronavirus on business.
The lender said it had been a “difficult and disappointing” 18 months which included its failed bid for Provident Financial.
Non-Standard Finance reported a £76m loss in the year to 31 December 2019, compared with a £2.4m in the previous year.
It came after an exceptional charge of £80.6m, which included a non-cash charge of £65.8m relating to goodwill impairment. Non-Standard Finance was also charged £12.8m for its failed bid for Provident Financial, and £1.9m in restructuring costs.
Reported revenue rose from £158.8m to £180.8m, while reported operating profit jumped 71 per cent to £32.1m.
Why it’s interesting
Non-Standard Finance began lending in May after the pandemic essentially stopped all lending. The firm said basic collections had remained robust, averaging 86 per cent of pre-lockdown levels.
However the board has noted a “material uncertainty exists relating to going concern primarily due to Covid-19”. There was a sharp downturn in lending once lockdown was imposed and an increase in expected credit losses.
Non-Standard Finance has said that as the post-pandemic recession bites, it is unlikely consumers will be able to borrow from their clearing bank or other mainstream lenders. It could therefore present an “exceptional market opportunity for the group”.
What Non-Standard Finance said
Chief executive John van Kuffeler said:
The last 18 months have been difficult and disappointing for Non-Standard Finance with the failure of our offer for Provident Financial; the fall in sector values necessitating large write-downs in the values of our three principal subsidiaries and the COVID-19 pandemic which has paralysed the UK economy.
In 2020, the immediate impact of COVID-19 was the near cessation of lending from the middle of March together with an increase in expected credit losses. While it is clear this will severely impact our 2020 results, our post lock-down collections have remained robust at around 86% of our previous levels and we have generated net cash of £24.6m over the last two months.