Earnings Presentation Half year ended June 2020 Replay Replay - - PowerPoint PPT Presentation

Earnings Presentation

Half year ended June 2020

5 August 2020 10:30 GMT

Confidential

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Disclaimer

Confidential 1

This presentation has been prepared by NewDay Cards Limited on behalf of NewDay Group (Jersey) Limited (the “Company”) on a confidential basis solely for information purposes. For the purposes of this notice, the presentation that follows shall mean and include the slides that follow, the oral presentation of the slides by the Company or any person on behalf of the Company, any question and answer sessions that follows the oral presentation, printed copies of this document and any materials distributed at, or in connection with the presentation (collectively, this “Presentation”). By attending the meeting at which this Presentation is made, or by reading this Presentation, you will be deemed to have (i) agreed to the following restrictions and made the following undertakings and (ii) acknowledged that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of this Presentation. All financial information contained in this Presentation relates to the unaudited consolidated financial results of the Company (and not, except where expressly stated to the case, NewDay BondCo plc). Due to rounding, numbers presented throughout this Presentation may not add up precisely to the totals indicated and percentages may not precisely reflect the absolute figures for the same reason. All non-financial information contained in this Presentation relates to the business, assets and operations

• f the Company together with its subsidiaries and subsidiary undertakings (the “Group”). Certain financial

data included in this presentation consists of “non-IFRS financial measures”. These non-IFRS financial measures, as defined by the Company, may not be comparable to similarly-titled measures as presented by other companies, nor should they be considered as an alternative to the historical financial results or

• ther indicators of the Company’s cash flow based on IFRS. Even though the non-IFRS financial measures

are used by management to assess the Company’s financial position, financial results and liquidity and these types of measures are commonly used by investors, they have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of the Company’s financial position or results of operations as reported under IFRS. The inclusion of such non-IFRS financial measures in this Presentation or any related presentation should not be regarded as a representation or warranty by the Company, any member of the Group, any of their respective affiliates, advisors or representatives or any other person as to the accuracy or completeness of such information’s portrayal of the financial condition or results of operations of the Company and should not be relied upon when making an investment decision. References to Adjusted EBITDA throughout this Presentation are references to “Consolidated EBITDA” as defined in the legal documentation relating to the £425m Senior Secured Notes issued by NewDay BondCo plc on 25 January 2017 (the Senior Secured Debt) and the Super Senior Revolving Credit Facility entered into by the Company on 25 January 2017 (the Revolving Credit Facility) based on IFRS as in force as at 30 June 2020 (or, in respect of periods ending prior to 30 June 2020, IFRS at the relevant time). However, all ratios, baskets and calculations required under the terms of the Senior Secured Debt and Revolving Credit Facility are based on IFRS as in force as at 25 January 2017. As a result, such ratios, baskets and calculations may differ significantly from any ratios or figures which are contained in this

• Presentation. In particular, references to EBITDA leverage and EBITDA interest cover contained in this

Presentation have been calculated (subject to certain adjustments) in accordance with IFRS as in force as at 30 June 2020 (or, in respect of periods ending prior to 30 June 2020, IFRS at the relevant time). As a result, such figures will differ significantly from the calculation of Consolidated Senior Secured Net Leverage Ratio and Fixed Charge Corporate Debt Coverage Ratio (as defined under the terms of the Senior Secured Debt and Revolving Credit Facility). This Presentation may contain forward-looking statements. All statements other than statements of historical fact included in this Presentation are forward-looking statements. Forward-looking statements express the Company’s current expectations and projections relating to their financial condition, results of

• perations, plans, objectives, future performance and business. These statements may include, without

limitation, any statements preceded by, followed by or including words such as “aim,” “anticipate,” “believe,” “can have,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “project,” “should,” “target,” “will,” “would” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company’s control (including, but not limited to, the effects of the COVID-19 pandemic and uncertainties about its impact and duration) that could cause the Company’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed

• r implied by such forward-looking statements. Such forward-looking statements are based on numerous

assumptions regarding the Company’s present and future business strategies and the environment in which it will operate in the future. You acknowledge that circumstances may change and the contents of this Presentation may become outdated as a result. Further information on the primary risks of the business and the Group’s risk management process is set out in the Risk Management and Mapping Our Risks sections of the Annual Report and Accounts 2019 (as updated by the quarterly reports produced throughout the year); these documents are available at http://www.newday.co.uk/ All forward-looking statements made on or after the date of this Presentation and attributable to the Company or any member

• f the Group are expressly qualified in their entirety by the primary risks set out in these documents. Many
• f these risks are, and will be, exacerbated by the COVID-19 pandemic and any further disruption to the

consumer credit market and economic environment as a result. The information contained in this Presentation should be considered in the context of the circumstances prevailing at the time and will not be updated to reflect material developments that may occur after the date

• f this Presentation. The information and opinions in this Presentation are provided as at the date of this

Presentation and are subject to change without notice. None of the Company, any member of the Group, any of their respective affiliates, advisors or representatives or any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation

• r its contents or otherwise arising in connection with this Presentation, or any action taken by you or any
• f your officers, employees, agents or associates on the basis of the information in this Presentation.

This Presentation is not for publication, release or distribution in any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction nor should it be taken or transmitted into such jurisdiction.

1 Business update John Hourican (CEO) 2 Credit performance Rob Holt (CCCO) 3 Portfolio performance Ian Corfield (CCO) 4 Financial results Paul Sheriff (CFO) 5 Q&A

Agenda

Confidential 2

H1 2020 Highlights

Confidential 3

422k

(H119: 554k)

new accounts

Fully cloud native platform Ongoing support for customers affected by COVID-19

67%

(H119: 56%)

customers registered for e-servicing

100% of customer acquisitions are now digital

£2.8bn

(H119: £2.7bn)

total receivables

Cash £66m higher than Dec-19 at £218m 440bps increase in balance sheet impairment coverage to 18.4%

+69

(H119: 67)

Net Promoter Score

716 954 2019 H120 410 425 514 15.1% 14.0% 18.4% H119 2019 H120 Expected Credit Loss Allowance (£m)* Coverage rate (%)** 59 (35) Adjusted H120 Impact of economic

• utlook*

H120 152 218 2019 H120 1,646 1,753 1,645 986 1,160 1,039 92 113 108 2,724 3,026 2,791 H119 Q419 H120 UPL* Co-brand Own-brand

Financial overview

Confidential

Receivables flat vs H119 despite spend headwinds during H120 £66m increase in cash and c£1bn funding headroom EBITDA suppressed by provision for economic outlook 440bps increase in coverage rate driven by economic outlook

Total cash* (£m) Closing receivables (£m)

H1 results reflect a slow down in customer activity and balance sheet strengthening

4 Adjusted EBITDA (£m)

↑11% ↓8%

Funding Headroom† (£m)

† 2019 includes £30m RCF

*Excludes restricted cash and cash held for ABS refinance

↑90

(94)

↑66

68 H119

*UPL closed to new originations in Q120 * Impairment provision ** Calculated as ECL / gross receivables *Own-brand (78), Co-brand (14), UPL (2)

Flexible digital integration

Seamless customer journeys within our partners’ infrastructure

Scalable digital capability

Confidential 5 Multi-channel

The platform supports all channels

Multi-tenant and Multi-brand

The platform is inherently multi- tenant and currently supports 18 scale brands

Covers complete product lifecycle

The platform covers the complete lifecycle of revolving credit

Cost-efficient, scalable, fully automated and secure by design

Platform components are cloud-based, cost effective and scalable

Our core digital capabilities help our retail partners to excite their customers and unlock the potential of their financial services programmes

We have built a highly scalable, brand agnostic in-house digital platform

Professionally engineered

Deep technology expertise from 200+ engineers allowing the build and evolution of sector-leading technology solutions

Data innovation

Leading edge retail analytics data science platform

Digital Loyalty

Integrated points and gift card redemption functionality both

• nline and in-app

Modern, scalable, feature rich technology platform

Confidential 6

Technology platform supporting all NewDay employees working from home Developed and supported by +200

• engineers. Adding

new partners or brands is timely and cost efficient

May 2020 Self-service feature for additional information requests Customers can better self serve if their application requires further supporting documents which has increased conversion rates and reduced calls May 2020 Digital Letters All customer correspondence available online Card Freeze Customers can block

• r unblock a card
• nline

Online Disputes Self-service customer transaction disputes via app and online June 2020 Full In-house Digital Completion of migration to in-house acquisition platform May 2020 Full customer application replaced by quotation journey Customers who have filled out details for a soft search have an easier transition to full application resulting in a 18% conversion rate from application page to acceptance July 2020 Digital loyalty Implementation of digital loyalty functionality allowing customers to earn, manage and spend their loyalty points within the mobile app April 2020 COVID Response Clear messaging for customers and the self-service ability to set up a payment freeze Enhanced Digital Collections Payment holidays, payment plans and no fee arrangements for customers in difficult financial situations April 2020 Chatbot Containment More than 50% of all conversations (over 10k a month) are handled by the bot and there is no need to transfer to a human January 2020 Save and return feature during application process This has resulted in converting 12% of customer applications that were previously abandoned

Net Easy Score

+72

Digital customer acquisition

100%

Transactions digitally fulfilled

98%

1.4% 0.6% 0% 1% 2% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 PH (%) PF (%) % of total card customers*

• Pre-existing collections toolkit solution
• Aimed at customers in arrears but also available to up to date customers who

are suffering temporary difficulties due to COVID-19

• 1 to 3 months in length
• Spend capabilities frozen
• No interest or fees charged
• Introduced in line with FCA guidance
• Aimed at up to date customers
• 3 months in length (can be extended if extension taken before 31st October)
• Customers can continue to spend
• Interest accrues on account but is not settled during the 3 month period
• Default fees are not charged

Payment holidays and payment freezes

After an initial spike, payment holiday and payment freeze volumes stabilised at the end of Q2 and have declined in July

5% 2% 0% 4% 8% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 PH (%) PF (%)

*Excludes UPL

% of total card receivables*

In line with our manifesto, we continue to support customers during the crisis

7 Confidential

Continued commitment to supporting our customers Payment holiday and payment freeze product features

Payment Freeze Payment Holiday

In line with FCA guidance we:

• Launched payment freeze solution on 14th April
• Extended the application window to 31st October, a further 3 month extension

is being offered to customers where appropriate

Timelines Further customer support

• In July we have seen a significant number of customers roll off the payment

holiday and payment freeze products

• Customers are able to extend Payment Freeze/Payment Holiday or may be

granted a Payment Holiday or alternative forbearance treatment where appropriate

(£126m) (£63m)

10.9% 11.9% 0.2% 0.6% 0.3% 0.2% H119 One off DCA exit debt sale Insolvencies Co-brand portfolio mix H120 15.2% 15.1% 16.2% 4.0% 4.4% 5.5% 10.9% 11.0% 11.9% H119 2019 H120 Own-brand Co-brand Group 11.4% 18.5% 1.0% 7.6% (1.5%) H119 Charge-offs Impact of economic

• utlook

Underlying performance H120

Credit: Impairment rates

Confidential 8

100bps increase in charge-off rate vs H119 H119 charge-offs favourably impacted by one off debt sale Impairment rate increase of 710bps in H120 vs prior year IFRS 9 economic outlook requirements driving 760bps increase

15.3% 15.6% 24.2% 4.3% 4.6% 9.6% 11.4% 11.6% 18.5% H119 2019 H120 Own-brand Co-brand Group

400 492 447 535

• 100

200 300 400 500 600 Q419 H120 Base scenario and sensitivities (£m) Base scenario Upside Downside 425 514 94 17 12 33 2019 Impact of economic

• utlook

Debt Sale price impact Underlying Volume* H120 20.7% 25.8% 4.4% 7.3% 14.0% 18.4% 2019 H120 OB CB Group

Credit: Expected Credit Loss impairment provision

Confidential 9

440bps increase in coverage rate since year end 340bps of coverage rate increase due to the economic outlook

Confidential 9

21% increase in ECL † during H120 driven by a £92m increase in the base scenario as peak unemployment expectation rises to 9.5%

↑£92m

† ECL: Expected Credit Loss (Impairment provision)

Average 5Y unemployment in H120 baseline

• f 6.2% (4.1% in Q419 baseline)

2020 peak 2020 closing 5 year Average Jun-20 Upside 8.5% 7.0% 5.0% 447 5% Base 9.5% 8.1% 6.2% 492 65% Downside 10.5% 9.5% 7.7% 535 30% ECL (£m) assuming 100% weighting Probability weighting Unemployment Q419 H120 Base scenario 400 492 Macro uplift 25 22 ECL allowance 425 514 14.0% 3.4% 0.6% 0.4%

• 18.4%

Coverage rate (%) £90m

* Volume calculated as £234m reduction in group receivables x 14% Dec-19 coverage rate

Coverage rate % (ECL † / gross receivables)

0% 25% 50% 75% 100% 125% 150% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

Active reduction in risk-taking on new customers

Confidential 10 Co-brand new accounts (k)

Own-brand new accounts reduced by 50% in Q220 Own-brand credit limits and exposure reduced in Q220 Co-brand new customers risk exposure reduced by 74% in Q220 Co-brand new accounts reduced by 47% in Q220

0% 25% 50% 75% 100% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Own-brand exposure on new customers (indexed to 2019) Co-brand exposure on new customers (indexed to 2019) Own-brand new accounts (k) ↑3%* 10 20 30 40 50 Jan Feb Mar Apr May Jun 2019 2020 10 20 30 40 50 60 70 Jan Feb Mar Apr May Jun 2019 2020 ↓44%†

*compared to Q119 *compared to Q119

↓24%* ↓74%†

†compared to Q219 † compared to Q219

100 200 300 Supermarket Retail Holidays & Recreation Services Other Jan/Feb Mar/Apr May/Jun

Spend and Payments

Confidential 11

Own-brand retail spend is showing signs of recovery Co-brand holiday spend has reduced to almost zero Reduced Own-brand spend with modest reduction in payments Co-brand spend reduced with modest reduction in payments

0% 5% 10% 15% Q119 Q219 Q319 Q419 Q120 Q220 Spend (%) Payments (%) 0% 10% 20% 30% Q119 Q219 Q319 Q419 Q120 Q220 Spend (%) Payments (%) 2020 Own-brand retail spend (£m) 2020 Co-brand retail spend (£m) 50 100 150 Supermarket Retail Holidays & Recreation Services Other Jan/Feb Mar/Apr May/Jun Own-brand average spend and payment rates (%) Co-brand average spend and payment rates (%)

↑3% ↓1% ↓43% ↓15% ↑23%

Variance to H119 Variance to H119

↑13% ↓2% ↓50% ↓11% ↑14%

986 1,160 1,039 827 895 726 160 265 313 H119 2019 H120 E-tailer High street 98 13 78 91 H119 H120 Impact of economic outlook Risk Adjusted Income 1,646 1,753 1,645 H119 2019 H120

Portfolio performance

Confidential 12

6% decrease in Own-brand receivables since year end Economic outlook impacts Own-brand RAI in H120

Own-brand closing receivables (£m)

↑6% ↓6%

Online retailers driving Co-brand YoY receivables increase

Co-brand closing receivables (£m)

↑18% ↓10%

Economic outlook impacts Co-brand RAI in H120

77 50 14 63 H119 H120 Impact of economic outlook Risk adjusted income Own-brand risk adjusted income (£m) Co-brand risk adjusted income (£m)

228 30 150 275 197 757 703 46 195 375 73 2020 2021 2022 2023 2024 Cash held to repay OB 2017-1 ABS Senior Secured Debt Asset-backed term debt Drawn VFN 425 425 425 425 1,863 1,885 1,863 1,657

228

1,425 1,725 739 771 30 30 30 716 954 3,743 4,065 3,743 4,065 2019 H120 2019 H120 Commitment Drawings Undrawn capacity RCF VFN Cash held to repay OB 2017-1 ABS Asset-backed term debt Senior Secured Debt Balance sheet debt (£m)

Drawn: £3,111m Drawn: £3,027m

Funding

Confidential 13

Diverse funding portfolio with substantial capacity Funding maturity profile spread across multiple years

Drawn balance sheet debt (£m) Of 2021 maturities, all but £244m have 1Y extension option

†excludes £82m UPL facility †

Funding position strengthened during H120

• £300m additional VFN funding secured
• £244m CB 2015-1 ABS extended by 12 months to Apr-21
• £228m OB 2017-1 ABS defeased with cash raised by VFN and corporate cash
• Delivered a reset notice (effective from 17 August 2020) on the £76m OB 2018-1

Class A1 Notes to reset the scheduled maturity to Aug-21

Asset-backed term debt £m 2020 OB 2017-1 228 OB 2018-1 (Class A1) 76 OB 2018-2 (Class A1) 122 Dec-20 (with 1Y extension option) Total 425 Notified investors that maturity is being reset to Aug-21 (with 1Y exenstion option) Jul-20 defeased with cash raised by VFN and corporate cash Asset-backed term debt £m 2021 OB 2018-1 213 Aug-21 (with 1Y extension option) OB 2018-2 133 Dec-21 (with 1Y extension option) OB 2019-2 (Class A) 167 Sep-21 (with 1Y extension option) CB 2015-1 244 Scheduled maturity April-21 Total 757

520 502 118 409 48 44 2019 H120 Own-brand Co-brand UPL 54 59 152 218 228 206 505 2019 H120 Cash held to repay OB 2017-1 ABS Cash (£m) Restricted cash (£m)

Funding and liquidity

Confidential 14

Significant year on year cash increase Substantial VFN headroom across all portfolios (£954m) Healthy excess spread despite yield and charge-off headwinds Advance rates have remained broadly stable year on year Own-brand

86.2%

(2019: 83.0%) Co-brand

89.5%

(2019: 92.3%) Group

87.0%

(2019: 86.0%) Own-brand

11.6%

(H119: 13.4%) Co-brand

11.5%

(H119: 12.1%) Group

11.6%

(H119: 13.0%)

Excess spread: Key trigger across funding vehicles, broadly defined as debited interest and fee income and recoveries, less gross charge-offs, funding costs and senior fees including senior servicing fees, calculated on a 3 month average basis. Excess spreads shown exclude VFNs and Secondary Funding facilities as they are not directly

• comparable. Excess spread figures for these facilities are broadly similar with the exception of NP Secondary Funding

Facility VFN at c9%

VFN headroom (£m) Total Cash (£m)

Advance rates excluding cash held for ABS refinance

47 50 3.5% 3.4% H119 H120 Servicing Costs Servicing costs / average receivables 324 333 110 101 34.1% 30.4% H119 H120 Income Costs Cost-income ratio

Costs

Confidential 15

370bps decrease in cost-income ratio Continued investment in digital capability (£17m in H120) Leading digital capability driving excellent customer service

53%

(H119: 41%) Customers registered for e-statements

67%

(H119: 56%) Customers registered for e-servicing

Cost-income ratio

Ongoing reduction in servicing costs as % average receivables

2.8m

(H119: 1.8m) Total app downloads

+72

(H119: +71) Net Easy Score

£m H119 H120 2019 LTM H120 Interest income 323 342 674 692 Cost of funds (31) (33) (64) (65) Fee and commission income 31 23 66 58 Total income 324 333 676 685 Impairment (150) (270) (318) (438) Risk-adjusted income 174 62 358 247 Servicing costs (47) (50) (95) (98) Change costs (12) (17) (25) (30) Value Creation Plan implementation costs (7)

• (13)

(6) Marketing and partner payments (30) (22) (60) (53) Collection fees 14 14 29 29 Contribution 93 (13) 194 88 Salaries, benefits and overheads (30) (26) (59) (55) Add back: depreciation and amortisation 5 4 9 9 Adjusted EBITDA 68 (35) 144 42 Average gross receivables 2,642 2,928 2,752 2,883 Gross interest and fee yield (%) 26.8% 24.9% 26.9% 26.0% Impairment (%) 11.4% 18.5% 11.6% 15.2% RAM (%) 13.2% 4.2% 13.0% 8.5% EBITDA leverage* 1.9x 5.7x EBITDA interest cover 4.5x 1.3x

Income statement

Confidential 16

Total income

£333m

(H119: £324m)

Income has remained broadly flat year on year despite market headwinds

Impairment rate

18.5%

(H119: 11.4%)

Impairment rate increase driven by increased provisioning

Adjusted EBITDA

£(35m)

(H119: £68m)

EBITDA reduction predominantly driven by impairment *Excluding cash held for ABS refinance

55 62 290 228 (14) (14) (1) 36 Adjusted EBITDA excl. provision Working capital Capex/Tax PPI Movement in receivables FCF available for Senior Secured Debt interest* Cash held for ABS refinance FCF available for Senior Secured Debt interest 152 218 2019 H120

Cash flow statement

Confidential 17 **Year on year cash flow is impacted by the payment for in-store House of Fraser customer spend relating to the period 10/08/18 to 05/03/19 that was settled post novation of the contract to Sports Direct in Q119. £15m of this payment related to customer spend from 10/08/18 to 31/12/18

‡ Payment to the Group’s immediate parent company, Nemean

MidCo Limited, which was used by Nemean MidCo Limited to fund its purchase, and other related costs, of a controlling stake in Pay4Later Limited (trading as Deko)

H120 cash bridge

*Excluding cash held for ABS refinance

£66m increase in cash during H120

*Excludes restricted cash and cash held for ABS refinance

Total cash* (£m)

↑66

£m H119 H120 2019 LTM H120 Adjusted EBITDA 68 (35) 144 42 Change in impairment provision 4 90 18 104 Adjusted EBITDA excl. provision 72 55 163 146 Change in working capital (18) (14) (7) (3) One-off House of Fraser payment** (15)

• (15)
• PPI provision utilisation

(7) (1) (15) (10) Capital expenditure (4) (7) (10) (13) Tax paid (2) (6) (10) (14) FCF available for growth and debt service 26 26 106 106 (Increase)/decrease in gross receivables (111) 232 (423) (80) Net financing cash flow 89 32 367 310 FCF available for Senior Secured Debt interest 4 290 50 336 Drawdown of RCF

• 30
• 30

Repayment of shareholder loan ‡

• (10)
• (10)

Debt service - cash payments (16) (16) (32) (32) Net (decrease) / increase in cash and cash equivalents (12) 294 18 324 Net (decrease) / increase in cash and cash equivalents excl. cash held for ABS refinance (12) 66 18 96

Appendix

Confidential

£m H119 H120 2019 LTM H120 Adjusted EBITDA 68 (35) 144 42 Senior Secured Debt interest and related costs (17) (17) (34) (34) Impairment of retail partner relationships intangible assets arising on the Acquisition

• (6)
• (6)

Customer refund provision

• (0)

(0) Fair value unwind (0) 1 Depreciation and amortisation including amortisation of Acquisition intangibles (29) (31) (60) (62) Statutory (LBT)/PBT 22 (88) 50 (60)

Statutory earnings

Confidential 19

• Senior Secured Debt interest and related costs:

includes the interest charge and other costs associated with the issuance and servicing of Senior Secured Notes and the Revolving Credit Facility

• Impairment of retail partner relationships intangible

assets arising on the Acquisition: primarily represents a write-down of the carrying value of the Group’s retail relationship with Laura Ashley following its administration

• Customer refund provision: represents the expected

costs to be refunded, net of third party contributions to customers following an operational incident which arose due to NewDay receiving incomplete information from a third party

• Fair value unwind: reflects the amortisation of fair

value adjustments on the Group’s acquired portfolios and debt issued

• Depreciation and amortisation: includes the

amortisation of the intangible assets recognised on the acquisition of the Group by funds advised by Cinven and CVC in January 2017

Own-brand income statement Co-brand income statement UPL income statement £m £m £m Interest income 218 226 Interest income 98 105 Interest income 7 10 Cost of funds (20) (20) Cost of funds (9) (12) Cost of funds (2) (1) Fee and commission income 22 15 Fee and commission income 10 8 Fee and commission income

• Total income

220 222 Total income 98 102 Total income 6 9 Impairment (122) (208) Impairment (21) (52) Impairment (7) (10) Risk-adjusted income 98 13 Risk-adjusted income 77 50 Risk-adjusted income (1) (1) Servicing costs (20) (22) Servicing costs (26) (27) Servicing costs (0) (2) Change costs (7) (10) Change costs (5) (6) Change costs (1) (1) Value Creation Plan implementation costs (4)

• Value Creation Plan

implementation costs (3)

• Value Creation Plan

implementation costs (0)

• Marketing costs

(8) (5) Marketing costs (21) (17) Marketing costs (0) (0) Collection fees 9 9 Collection fees 5 6 Collection fees

• Contribution

69 (14) Contribution 28 5 Contribution (3) (4) Average gross receivables 1,596 1,721 Average gross receivables 965 1,092 Average gross receivables 80 115 Gross interest and fee yield (%) 30.1% 28.0% Gross interest and fee yield (%) 22.2% 20.8% Gross interest and fee yield (%) 17.8% 17.9% Impairment (%) 15.3% 24.2% Impairment (%) 4.3% 9.6% Impairment (%) 17.3% 17.0% RAM (%) 12.3% 1.6% RAM (%) 16.0% 9.1% RAM (%) (3.5)% (1.6)% H119 H120 H119 H120 H119 H120

Contribution by segment

Confidential 20

£m H119 H120 2019 Gross receivables 2,724 2,791 3,026 Impairment provision (410) (514) (425) Other 97 112 109 Net receivables 2,412 2,389 2,710 Restricted cash 51 59 54 Cash 122 446 152 Intangible assets 290 237 266 Goodwill 280 280 280 Other assets 114 88 81 Total assets 3,268 3,499 3,542 Asset-backed term debt 1,818 1,887 1,865 Variable funding notes 523 772 740 Senior Secured Debt 435 466 435 PPI provision 18 9 10 Other provisions 9 7 11 Other liabilities* 89 57 86 Total liabilities 2,892 3,196 3,147 Net assets 376 303 396

Balance sheet

Confidential 21

• Fair value of total assets following the Acquisition in 2017

introduced £396m of intangible assets, primarily relating to the customer and retailer relationships, the brand, trade names and intellectual property. The carrying value of these assets was £218m at Jun-20

• Asset-backed term debt represents the term series notes

issued by the Own-brand and Co-brand master trust structures

• Variable funding notes represents the debt drawn down under

the five VFNs across the Group

• Senior Secured Debt has increased due to the drawdown of

the RCF (£30m)

*Other liabilities includes capitalised debt funding fees

£m H119 H120 2019 LTM H120 Adjusted EBITDA 68 (35) 144 42 Senior Secured Debt 425 455 425 455 Cash* (122) (218) (152) (218) Net corporate Senior Secured Debt 303 237 273 237 EBITDA leverage* 1.9x 5.7x Senior corporate interest expense 32 33 EBITDA interest cover 4.5x 1.3x

Leverage and interest ratios

Confidential 22

• The movement in leverage and interest cover ratios is

predominantly driven by reduced EBITDA

* Excludes restricted cash and cash held for ABS refinance

Glossary

Confidential 23

ABS: Asset-backed security Adjusted EBITDA: Earnings before Senior Secured Debt interest (and related costs), tax, depreciation and amortisation Advance rate: (ABS + VFN drawn debt)/Gross receivables CCMS: Credit Card Market Study ECL: Expected Credit Loss Excess spread: Key trigger across funding vehicles, broadly defined as debited interest and fee income and recoveries, less gross charge-offs, funding costs and senior fees including senior servicing fees, calculated on a 3 month average basis FCF: Free cash flow NP Secondary Funding Facility: NewDay Partnership Secondary Funding Facility Retail spend: Total spend excluding cash, balance transfers, money transfers and refunds RAI: Risk-adjusted income RAM: Risk-adjusted margin RCF: Revolving credit facility UPL: Unsecured Personal Loans VCP: Value Creation Plan – business-wide review highlighting areas for accelerated investment VFN: Variable funding note

Investor Relations Team investor.relations@newday.co.uk