Distribution Finance Capital Holdings plc (LON:DFCH), the specialist bank providing working capital solutions to dealers and manufacturers across the UK, has announced its audited results for the 12 months ended 31 December 2021.
Highlights
| 2021 | 2020 | Change % | |
| Performance | |||
| Loan Book (£m) | 249 | 113 | +120 |
| New loans advanced to customers (£m) | 690 | 253 | +173 |
| No of dealer customers | 805 | 623 | +29 |
| Financial | |||
| Gross Revenue | 13.6 | 11.5 | +19 |
| Net Income | 11.3 | 2.3 | +384 |
| Cost of Risk (%) | 0.32 | 0.86 | -63 |
| Loss before tax (£m) | (3.7) | (13.6) | -72 |
| Net Assets (£m) | 86.1 | 50.9 | +69 |
• Transformational impact on the Group’s performance in light of its subsidiary, DF Capital Bank Ltd, receiving full authorisation as a bank in September 2020.
• The Group’s loss before tax significantly improved by approximately £10m at £3.7m (FY20: £13.6m), marginally ahead of Board expectations.
• The loan book more than doubled driven by record loan originations of £690m.
• Despite significant growth, net interest margin (NIM) maintained in excess of 6% target.
• The pace of growth has been constrained due to continued supply chain issues, macro-economic factors and high dealer sales, which has seen stock turn accelerate through the year from historic average of 150 days to 105 days.
• Arrears continue to operate well below through the cycle expectations at 0.4% (2020: 0.2%), with an associated low cost of risk at 0.32% (2020: 0.86%).
• The Group has raised c£164m of new deposits during the year and now has over 8,000 retail deposit accounts at 31 December 2021.
• The Group completed a £40m fundraise in February 2021 increasing its net assets to £86.1m, which should support a loan book in excess of £0.5bn.
Current Trading (unaudited)
• The Group has seen record loan origination during Q1 2022, with new lending of approximately £220m, £100m in March 2022 alone.
• The loan book has increased c20% to £302m at the end of Q1 2022 with more than 850 dealers now being provided with over £680m of facilities.
• The Group is on the cusp of profitability: fees and lower cost of risk saw the Group achieve a profit in March, however strong dealer sales expected through the middle of the year and building loss provisions as the book grows is expected to delay full year profitability.
• The pace of stock turn has continued throughout Q1, running ahead of historical normal of 150 days at 105 days.
• Board expects to end 2022 with a loan book in the region of £400 – 500m and subsequently the net result for the year to range between a loss of £2m and breakeven.
• The Group intends to prioritise a non-equity Tier 2 raise and/or participation in the British Business Bank’s ENABLE guarantee scheme to support its growth plans beyond a £0.5bn loan book; together these are expected to unlock a loan book of up to £0.8bn through to 2024 without the requirement of any additional equity capital.
Carl D’Ammassa, Chief Executive, commented: “It is pleasing to report a strong set of financial results that clearly demonstrate the positive impact receiving the banking licence has had on the Group’s performance. I’m very proud of the entire team, our products and services are resonating with our customers and their hard work is what has enabled our significant growth and underpins the depth of relationship and quality of service we offer our customers.
“It has been a transformational year, with momentum in new lending that has continued into 2022. We continue to see many opportunities ahead of the Group to support more dealers, enter new sectors and provide more products and services. These factors support our route to full-year profitability, which we now expect in 2023, given macro-economic factors and supply chain challenges.”
The Group’s full Annual Report and Financial Statements have today been published and are available on its investor website at www.dfcapital-investors.com.
Annual General Meeting
DF Capital will hold its Annual General Meeting in June 2022. The Notice of AGM and Form of Proxy will be posted to shareholders in due course and a copy will be available at www.dfcapital-investors.com. The AGM will be held at the Company’s registered office in Manchester.
