Was it worth it? That is the question shareholders in Non-Standard Finance (NSF) will ponder on confirmation that this year’s failed bid for Provident Financial (PFG) cost the sub-primed lender £12.7m. Throw in a £12.5m goodwill impairment of the Loans at Home division and you get to the first-half statutory loss in the table below. During that time, total equity has also tumbled 14 per cent to £182m.
The Loans at Home adjustment has been made despite a doubling in the subsidiary’s pre-tax profit to £4.2m, as a shrinking loan book and customer base were more than offset by lower impairments, better collections and a decline in overheads. Still, NSF felt it prudent to slash the carrying value of the division following declining peer group multiples since the end of last year.
It’s a move that will strike some investors as strange, particularly as management is “cautiously optimistic” about trading for the rest of 2019. But look outside the home credit division, and reasons for actual caution are apparent: growth in guarantor loans has been outpaced by a rising impairment ratio, while profit in the Everyday Loans business has been dented by higher finance costs.
Analysts at Peel Hunt forecast adjusted earnings per share of 5.6p this year, rising to 7.5p in 2020.
| NON-STANDARD FINANCE (NSF) | ||||
| ORD PRICE: | 33.7p | MARKET VALUE: | £105m | |
| TOUCH: | 33.5-33.9p | 12-MONTH HIGH: | 70.2p | LOW: 32.1p |
| DIVIDEND YIELD: | 8% | PE RATIO: | na | |
| NET ASSET VALUE: | 58.1p | NET DEBT: | 153% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 75.1 | -2.6 | -0.66 | 0.6 |
| 2019 | 87.1 | -22.8 | -7.44 | 0.7 |
| % change | +16 | - | - | +17 |
| Ex-div: | 19 Sep | |||
| Payment: | 17 Oct | |||
| *Includes intangible assets of £139m, or 44.7p a share | ||||
