2018 Full Year Results 8 March 2019 1
John van Kuffeler Founder and Group Chief Executive 2
Summary ▪ NSF is a market leader in three segments of the UK’s non -standard finance market ▪ Since IPO in 2015, NSF has delivered strong growth in loan book, operating profit and dividends ▪ This continued in 2018: ▪ Loan book up by 29% ▪ Impairment down to 25.6% of normalised revenue (2017: 27.1%) ▪ Underlying EPS 1 growth of 20% ▪ 18% increase in the recommended full year dividend of 2.60p per share ▪ Each of our three business segments has the potential to deliver a 20% return on assets ▪ The Board believes the acquisition of Provident Financial can unlock substantial value for shareholders 1 Normalised EPS (before £1.4m of deferred consideration for George Banco) 3
NSF’s successful record of growth since IPO Sub-sector Branch-based lending Guarantor loans Home credit Acquisition date April 2016 April 2016 / August 2017 August 2015 #1 #2 #3 Market position 331 employees Employees 1 406 employees 115 employees 897 self-employed agencies Net loan book 1 £186m £83m £41m Loan book growth 1 24.7% 61.0% 2.0% Impairment/norm. revenue 1 21.5% 20.0% 32.6% Three market leading businesses with an established record of growth Year to 31 Dec 2018 Source: company information 4
2018 – financial highlights 1 ▪ We have delivered strong growth in all key performance metrics versus 2017: Net loan book 1 Revenue 2 Operating profit 3 Earnings per share 4 £400m 5.00p £200m £40m £37m £167m 4.14p £350m £175m £310m 4.00p 3.44p £300m £150m £30m 3.09p £241m £120m £24m £250m £125m 3.00p £191m £200m £100m £20m £81m £16m 2.00p £150m £75m +20% +29% +39% +57% £100m £10m £50m 1.00p £50m £25m £0m £0m 0.00p £0m 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 Dividend per share • Major investment in infrastructure is delivering strong growth 2.60 p +18% • Transition to IFRS 9 means that our payout ratio is above 50% • Recommended full year dividend is c.63% of normalised EPS 4 2017: 2.20p 1 on a like-for-like basis, assuming George Banco had been owned since 1 January 2016 2 excluding fair value adjustments 3 Normalised operating profit before £1.4m of deferred consideration for George Banco 4 Normalised EPS before £1.4m of deferred consideration for George Banco 5
2018 - a further period of investment-led growth ▪ Everyday Loans ▪ 12 new branches opened ▪ Three more opened this week (Wigan, Scunthorpe and Bristol Kingswood) ▪ Guarantor loans ▪ All new loans now being booked on single loan management platform ▪ Move to new premises in Trowbridge ▪ Home credit: ▪ Back-office infrastructure now all cloud-based ▪ 93% of all home credit loans in 2018 were booked through the lending app ▪ Streamlined management structure in Loans at Home ▪ £70m of additional funding secured 6
Branch-based lending - 2018 operational highlights Increased network capacity ✓ 12 new branches opened as planned ✓ 99 new staff added New branches in 2019 Lead volumes and quality ✓ 1.6m leads in 2018 +59% ✓ 18% increase in applications to branch Productivity ✓ Improved conversion rate to 9.0% (2017: 7.3%) ✓ Over 44,800 loans written Delinquency management ✓ Impairment steady at 21.5% of revenue (2017: 21.5%) 7
Guarantor loans - 2018 operational highlights Value of new cash by channel Well-balanced channel mix 2% 4% 4% ✓ Leads up 39% to over 2.3m Broker ✓ Better quality leads - 32% passed through our Top Ups 11% scorecard (2017: 27%) Organic PCW ✓ Top-ups now count for less than 20% 8% 53% ELL Online Decline ELL Branch Decline Conversion steady Lead Generator 18% ✓ Conversion at 2.3% (2017: 2.4%) ✓ 62% increase in number of loans written £ 000 Loan volumes Conversion Single loan management platform 7,000 9% 8% 6,000 ✓ All new loans now being booked on one system 7% 5,000 6% ✓ Staff can book loans for either brand in different 4,000 5% locations 4% 3,000 3% 2,000 2% Move to new premises 1,000 1% ✓ Capacity for 40 more staff 0 0% Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 8
Home credit - 2018 operational highlights Gross Lending Product Mix % Move to cloud-based infrastructure 100% ✓ Increased stability and reliability 90% ✓ Improved, real time management information 80% Digitisation of lending and collecting 70% ✓ 93% of loans in 2018 were on the app 60% (2017: 25%) 50% ✓ 98% so far in 2019 40% Process to shorten loan book has begun 30% ✓ 63-week loan to replace 78 and 75-week loan 20% ✓ Increasing issue of core 45-week product 10% 0% Focus on quality customers remains Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 24 33 45 63 75 9 1 Customers that have made 70% of their due payments over the previous 13-week period
We remain on course to achieve our medium-term targets Branch- versus versus versus Year ended 31 Dec 2018 based medium Guarantor medium Home medium lending term target loans term target credit term target ✓ ✓ ✓ Loan book growth 24.7% 61.0% 2.0% ✓ ✓ ✓ Revenue yield 1 46.8% 32.2% 171.5% ✓ ✓ ✓ Risk adjusted margin 2 36.7% 25.8% 115.6% ✓ ✓ ✓ Impairments/revenue 21.5% 20.0% 32.6% ✓ ✓ ✓ Impairments/average net loan book 10.1% 6.4% 55.9% Return on assets 3 15.8% 13.3% 17.7% 1 Revenue as a percentage of average loan book excluding fair value adjustments 2 Revenue less impairments as a percentage of average loan book excluding fair value adjustments 3 Normalised operating profit (before £1.4m of deferred consideration in guarantor loans) as a percentage of average loan book excluding fair value adjustments Whilst not yet at 20% ROA, we are already meeting most of our medium-term targets 10
Nick T eunon Co-Founder and Group Chief Financial Officer 11
2018 normalised 1 divisional breakdown 100% 41.0 6.7 90% 65.2 80% 83.1 9.0 70% 60% 21.7 50% 40% 26.9 30% 186.2 79.6 20% 10% 0% Operating profit Loan book Revenue Branch-based lending Guarantor loans Home credit 1 Adjusted to exclude fair value adjustments, amortisation of acquired Intangibles, deferred consideration and exceptional items. 12
2018 normalised 1 divisional breakdown Loan book 1 ▪ Loan book up by 29% to £310.3m £350m ▪ Driven by strong growth at our two largest £300m 41.0 divisions £250m ▪ Branch-based lending +25% 83.1 40.2 ▪ Guarantor loans +61% £200m 51.6 ▪ Home credit returning to more normalised £150m rates of growth £100m 186.2 149.4 £50m £m 2017 2018 Branch-based lending Guarantor loans Home credit 1 Adjusted to exclude fair value adjustments and restating 2017 loan book under IFRS 9. 13
2018 normalised 1 divisional breakdown Revenue 1 ▪ Revenue up by 39% to £166.5m £175m ▪ Good growth across all three divisions: £150m 65.2 ▪ Branch-based lending +31% £125m ▪ Guarantor loans +169% £100m 50.7 21.7 ▪ Home credit + 28% £75m 8.1 £50m 79.6 60.9 £25m £m 2017 2018 Branch-based lending Guarantor loans Home credit 1 Adjusted to exclude fair value adjustments. Note 2017 is as reported under IAS 39 14
2018 normalised 1 divisional breakdown Normalised operating profit 1 ▪ Normalised operating profit 1 +57% to £37.2m £50m ▪ Returns from previous investments starting to feed through into performance: £40m 6.7 ▪ Branch-based lending +19% 9.0 £30m ▪ Guarantor loans +228% 3.1 2.7 ▪ Home credit + 116% £20m 26.9 22.7 £10m £m 2017 2018 Branch-based lending Guarantor loans Home credit 1 Before central costs, fair value adjustments, amortisation of acquired intangibles, deferred consideration and exceptional items. Note 2017 is under IAS 39 while 2018 is under IFRS 9. 15
2018 normalised 1 divisional breakdown Branch- Guarantor Home Central T otal % Change Year ended 31 December 2018 based loans credit costs Versus lending £000 £000 £000 £000 2017 £000 Revenue 79,579 21,748 65,175 - 166,502 +39% Other revenue 1,397 229 - - 1,626 -16% Modification loss (482) - - - (482) n/a Impairments (17,099) (4,342) (21,247) - (42,688) +48% Revenue less impairments 63,395 17,635 43,928 - 124,958 +35% Admin expenses (36,488) (8,616) (37,214) (5,397) (87,715) +27% Normalised operating profit before deferred consideration 26,907 9,019 6,714 (5,397) 37,243 +57% Deferred consideration -(( (1,367) -(( -(( (1,367) n/a Normalised operating profit 26,907 7,652 6,714 (5,397) 35,876 +51% Finance cost (12,778) (5,833) (2, 461) (35) (21,107) +101% Profit (loss) before tax 14,129 1,819 4,253 (5,432) 14,769 +12% Taxation (2,612) (645) (774) 834) (3,197) +38% Profit after tax 11,517 1,174 3,429 (4,598) 11,572 +6% 1 Adjusted to exclude fair value adjustments, amortisation of acquired Intangibles and exceptional items. 16
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