Alternative lender Non-Standard Finance (NSF), which is backed by veteran UK equity income manager Neil Woodford, has had a tough time since floating last year if the share price is anything to go by.
The stock is down more than a quarter since its initial public offering in February last year in spite of doing exactly what it planned to do. The company started out as a cash shell with the aim of buying businesses in the home credit, branch-based and guaranteed loan market.
And this is what it did. It snapped up Loansathome4u in August and the company generated revenue of £14.7m from its acquisition in August and adjusted operating profit of £2.1m for its new parent in its maiden results. It also bought Everyday Loans last year and this deal is set to complete next month.
The £6.1m in acquisition-related costs as well as a £9.5m write-down in the acquired intangibles meant Non-Standard Finance recorded a £16.1m pre-tax loss in just less than 18 months to 31 December last year.
But it is early days. Management plans to double the size of its Loansathome4u business over the next three to five years. The business increased customer numbers by 6 per cent to 92,000 by the end of the year. From acquisition, management has increased the business' agents by a quarter to more than 700 at the end of the first quarter of this year and opened new branches in locations including north Manchester and Kirkcaldy.
Management raised £160m in new equity to finance its purchase of Everyday Loans from Secure Trust Bank (STB) at the start of the year. Operating via 36 branches, the business focuses on in-depth interviews with prospective borrowers. In the 12 months to 30 June, its historical adjusted operating profit was £16.2m, while its loan book has averaged growth of a fifth over the past two years. Around £6m of the business's loan book comes via guaranteed loan business Trusttwo, which caters to younger customers often trying to improve their credit rating.
