Interim Results for the period ended 30 June 2015

RNS Number : 2263X

Non-Standard Finance PLC

27 August 2015

 

Non-Standard Finance plc

("Non-Standard Finance," "NSF," the "Company" or the "Group")

Interim Results for the period ended 30 June 2015

Non-Standard Finance plc (LSE: NSF), the company established to acquire and operate one or more non-standard consumer finance businesses, is pleased to announce its interim results for the period from 8 July 2014 to 30 June 2015.

Financial highlights

§ Successful IPO, raising £102 million, with high quality cornerstone investment of £46 million from Woodford Investment Management LLP, Invesco Limited and Marathon Asset Management LLP

§ Net proceeds are being actively used by NSF to deliver its acquisition and operating strategy

§ Operating costs of £910,000 in the period with a loss for the period of £858,000 after interest income of £52,000

§ Loss per share of 2.20p based on weighted average shares in issue of 38.9 million

Operational highlights

§ First acquisition completed on 4 August 2015: the purchase of the Home Credit Division of S&U plc ("S&U"), which trades as Loansathome4u, for £82.5 million

§ Further acquisition targets identified, capable of adding scale to operations

John van Kuffeler, NSF's Chairman, said:

"I am delighted to announce that NSF has hit the ground running. Having raised significant funds at our successful IPO from a high quality investor base, we have quickly begun implementing our strategy to acquire and operate businesses in the UK's non-standard financial services sector. Our recent announcement of the acquisition of Loansathome4u, a top three participant in the home credit market, from S&U is evidence of this.

"Loansathome4u provides us with a well-established UK wide platform and a growing business that will form a strong base for the Group as we grow organically and acquire new businesses. We remain committed to offering financial services to a disenfranchised part of the UK's population by treating customers fairly, delivering excellent service and lending responsibly."

- Ends -

For more information:

Non-Standard Finance plc John van Kuffeler, Chairman Nick Teunon, Chief Financial Officer & Company Secretary c/o Bell Pottinger	[phone]
Bell Pottinger Olly Scott Molly Stewart	[phone]

About Non-Standard Finance

Non-Standard Finance plc has been established to acquire companies or businesses in the UK's non-standard consumer finance sector. The Company plans to create a sustainable group of businesses offering credit to the approximately 12 million UK adults who do not meet lending criteria for mainstream financial services businesses. It will apply its resources to ensure that the businesses acquired by the Company have access to more or better funding; implement stronger management controls; utilise more rigorous credit standards; improve product pricing; roll out new compliance protocols; and improve IT systems. These changes are designed to deliver improved customer outcomes and support NSF's ambition of creating value for the Company's shareholders.

The Company announced on 7 July 2015 that it had entered into an agreement to acquire the Home Credit Division of S&U plc ("S&U") which trades as Loansathome4u for £82.5 million, payable in cash, subject to approval by S&U's shareholders and customary closing conditions. The acquisition completed on 4 August 2015 following approval by S&U's shareholders.

Chairman's statement

I am delighted to present the maiden interim results of Non-Standard Finance plc, for the period ended 30 June 2015. During the period the Group's shares were admitted, following a successful IPO, to the standard listing segment of the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's main market.

Although we have been a listed company for just over six months, we have already made considerable progress towards the implementation of our strategy. We enter the second half of the year with a strong platform from which to realise our ambition of creating significant shareholder value through acquiring and expertly growing businesses in the non-standard financial services sector.

IPO

In the second half of 2014, we identified a unique opportunity to create value for shareholders through investing in the consolidation of the non-standard financial sector, which includes companies addressing the 12 million UK adults who do not meet lending criteria for mainstream financial services businesses, but who are able to service debt if products are tailored to fit their circumstances. Many businesses in the sector have reached a stage of development where more professional management expertise is required particularly in relation to the new style regulation by the FCA.

Having secured a high quality cornerstone investment base from Woodford Investment Management LLP, Invesco Limited and Marathon Asset Management LLP, the Group raised approximately £102 million before expenses, and 102,283,168 shares at the Placing Price of 100 pence per share were admitted to trading on 19 February 2015. We are delighted with the high quality of our shareholders, which we see as a strong endorsement of our strategy and the opportunities that exist in the non-standard consumer finance sector.

Acquisition of Loansathome4u

On 7 July 2015 we were pleased to announce that we had entered into an agreement to acquire the Home Credit Division of S&U plc ("S&U") which trades as Loansathome4u for £82.5 million, payable in cash, subject to approval by S&U's shareholders and customary closing conditions. The acquisition completed on 4 August 2015 following approval by S&U's shareholders.

Loansathome4u fully meets our acquisition criteria, and is a top three participant in the home credit market where the NSF management team has particularly strong experience. It benefits from strong brand recognition through its doorstep model, a high quality loan book compared to the wider home credit market and experienced management, underwriting and control functions.

Loansathome4u will be run as a standalone business, to be led by Mark Bardsley, former Managing Director of Shopacheck Financial Services Limited and previously a senior executive at Provident Financial plc. Additional management, most of whom we have worked with before, has been hired to support the creation of a larger business, including a Compliance Director, Finance Director and Risk Director. The business's branch network and agent workforce will be expanded to grow the customer base, and NSF will invest in systems and technology to further enhance Loansathome4u's underwriting processes and support increased customer acquisition. An expanded compliance function will help the business as it continues to support best-in-class customer outcomes.

Board

In establishing NSF I am delighted to be joined on the Board by some of the most knowledgeable and experienced professionals in our sector. The Board has a long history of collaboration between team members and extensive experience of non-standard consumer finance, making acquisitions and operational improvements. I firmly believe that our track records of successful management and investment in non-standard consumer lending demonstrate NSF's ability to generate value for investors and complete operational improvements to those companies we target for acquisition.

Ethos

APR levels and the poor conduct of some market participants have led to reputational damage for the non-standard finance industry. However, most customers in the non-standard finance sector are able to service their debt if products are tailored to fit their circumstances and, with founders who have extensive regulatory compliance experience, the Company is confident that it can deliver "best in sector" compliance with regulation, lend responsibly, treat customers fairly and provide good customer outcomes.

Non-standard lending is estimated to account for c.40% of secured and c.30% of the UK's unsecured lending. As non-standard lending volumes by previous market leaders have declined following the 2007/2008 financial crisis, a significant portion of the UK population has found itself with limited credit-raising options. This is the issue which the Group is seeking to address.

Outlook

Having raised funds for acquisitions and completed our first transaction we continue to see a number of value-creating opportunities. We are very pleased to have put a large proportion of our capital raised at IPO to work so quickly and efficiently, and we are confident this will provide significant momentum as we move forward. An initial acquisition such as Loansathome4u gives us a strong platform from which to pursue further organic and inorganic growth opportunities.

We are actively negotiating further opportunities to participate profitably in the consolidation of the non-standard finance sector, whilst growing the existing business following completion.

Financial report

Highlights

The Group was admitted to a standard listing on the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's main market on 19 February 2015 raising £102.3 million. After expenses of £5.1 million the listing generated net proceeds of £97.2 million. This amount was placed on interest bearing deposit with leading UK clearing banks. This amount was in addition to an investment of £1.0 million by the founder Directors in the Group prior to the listing.

During the period between incorporation and 30 June 2015 these funds have been used to fund the Group's operating expenses as it sought to identify target companies and businesses to acquire.

The Group generated a loss before taxation of £858,000 in the period to 30 June and ended the period with cash of £97.3 million from which to fund future operating costs and acquisitions.

Risks and uncertainties

The principal risks and uncertainties for the period to 31 December 2015 relate to the successful completion of the proposed acquisition of Loansathome4u and its subsequent integration, together with continued implementation of the Group's acquisition strategy.

KPIs

Given the nature of the business, management do not currently have any KPIs. However, KPIs have been developed for Loansathome4u and will be reported on in the financial statements for the period to 31 December 2015.

Taxation

No tax is payable for the period.

Dividend

No dividend is proposed for the period.

Financial statements

Consolidated statement of comprehensive income for the period from incorporation to 30 June 2015

		Period from incorporation to 30 June 2015
		£'000
Revenue		-
Administrative Expenses		(909.8)
Operating Loss		(909.8)
Interest Receivable and Similar Income		52.7
Interest Payable and Similar Charges		(0.7)
Loss on ordinary activities before tax		(857.8)
Tax on Profit/(loss) on Ordinary Activities		-
Loss for the period		(857.8)
Total comprehensive loss for the period		(857.8)
Loss attributable to:
-       Owners of the parent		(857.8)
-       Non-controlling interests		-

Loss per share

		Period from incorporation to 30 June 2015
	Note	pence
Basic and diluted	10	(2.20)

There are no recognised gains or losses other than disclosed above and there have been no discontinued activities in the period.

Consolidated Balance Sheet

	Note	30 June 2015
		£'000
ASSETS
Non-Current Assets
Property, plant and equipment	11	56.0
Current Assets
Debtors	12	314.2
Cash and cash equivalents	13	97,303.5
		97,617.7
Total assets		97,673.7
LIABILITIES AND EQUITY
Current Liabilities
Other payables	14	297.8
Total liabilities		297.8
Equity attributable to owners of the parent
Share Capital	16	5,264.2
Share Premium	16	92,714.5
Retained earnings	17	(857.8)
		97,120.9
Non-controlling interests		255.0
Total equity		97,375.9
Total equity and liabilities		97,673.7

Consolidated Statement of changes in equity

	Share Capital	Share Premium	Retained Earnings	Non-controlling interest	Total
	£'000	£'000	£'000	£'000	£'000
At incorporation	-	-	-	-	-
Total comprehensive income for the period	-	-	(857.8)	-	(857.8)
Transactions with owners, recorded directly in equity
Issue of Shares	5,264.2	92,714.5	-	255.0	98,233.7
At 30 June 2015	5,264.2	92,714.5	(857.8)	255.0	97,375.9

Consolidated Statement of cash flows

		Period from incorporation to 30 June 2015
		£'000
Net cash used in operating activities	19	(774.2)
Cash flows from investing activities
Purchase of property, plant and equipment	11	(58.0)
Net cash used in investing activities		(58.0)
Cash flows from financing activities
Interest paid		(0.7)
Interest received		52.7
Proceeds from initial funding loan		50.0
Proceeds from issue of share capital		98,033.7
Net cash used in financing activities		98,135.7
Net (decrease)/increase in cash and cash equivalents		97,303.5
Cash and cash equivalents at beginning of period		-
Cash and cash equivalents at end of period		97,303.5

Notes to the financial statements

1.   General Information

The company was incorporated as a private company limited by shares under the laws of England and Wales under the Companies Act 2006, on 8 July 2014, with number 09122252, under the name Non Standard Finance Limited.

On 20 August 2014, the Company changed its name to Non-Standard Finance Limited and on 4 December 2014, the Company was re-registered as Non-Standard Finance plc, a public company limited by shares. The address of its registered office is 5^th Floor, 6 St Andrew Street, London, EC4A 3AE. The company listed its ordinary shares on the London Stock Exchange on 19 February 2015.

The Company has a subsidiary, Non-Standard Finance Subsidiary Limited ("NSFS"), as a result of holding the only 'A' share which carries 100% of the voting rights. NSFS is incorporated in England and its registered office is the same as the parent entity. A number of key management personnel of Non-Standard Finance plc, known collectively as "The Founders", own 100 'B' shares of par value £1 each which were issued at a premium of £2,549 each. The 'B' shares do not carry any voting rights.

The interim financial statements do not constitute the statutory financial statements of the company within the meaning of section 434 of the Companies Act 2006.

The interim financial statements for the period ended 30 June 2015 have been audited, and were approved for issue by the board of directors on 24 August 2015.

2.   Accounting policies

The principal accounting policies are summarised below.

Basis of preparation

The interim financial statements for the period from incorporation to 30 June 2015 have been prepared in accordance with IFRS as adopted by the European Union and, as regarding the parent company financial statements, applied in accordance with the provisions of the Companies Act 2006.

The interim financial statements have been prepared under the historical cost convention.

Basis of consolidation

The consolidated interim financial statements incorporate the interim results of the Company and its subsidiary. All intra-group transactions are eliminated on consolidation.

Going concern

These interim financial statements have been prepared on a going concern basis. After considering the principal risks and uncertainties noted in the Financial Report and reviewing the budget and cash flow forecast for the next financial period, the directors are satisfied that it is appropriate to adopt the going concern basis.

Changes in accounting policies and disclosures

New and amended Standards and Interpretations issued but not effective for the financial period ending 31 December 2015.

At the date of authorisation of these financial statements, the following new and amended Standards and Interpretations are in issue but not yet mandatorily effective and are expected to have a material effect on the financial statements of the Group when they are adopted:

IFRS 9	Financial Instruments
IFRS 15	Revenue from Contracts with Customers

The effect of all other new and amended Standards and Interpretations which are in issue but not yet mandatorily effective is not expected to be material.

IFRS 10 and IAS 28	Sale of Contribution of Assets between an Investor and its Associate or Joint Venture
IFRS 11	Acquisition of an Interest in a Joint Operation
IAS 16 and 38	Clarification of Acceptable Methods of Depreciation and Amortisation
IAS 19	Defined Benefit Plans: Employee Contributions
IAS 27	Separate Financial Statements
Annual Improvements to IFRS Annual Improvements to IFRS Annual Improvements to IFRS	2010-2012 Cycle 2011-2013 Cycle 2012-2014 Cycle

Management will continue to assess the impact of new and amended Standards and Interpretations on an ongoing basis.

Share Based Payments

The cost of share based employee compensation arrangements, whereby employees receive remuneration in the form of shares or share options, is recognised as an employee benefit expense in the profit and loss account. The expense to be apportioned over the vesting period of the benefit is determined by reference to the fair value at the date of grant. The total expense of the grant is adjusted subsequently to reflect the expected quantity of shares or share options achieving the vesting period.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost of assets to their residual values, over their estimated useful lives, using the straight-line method, on the following bases:

Office equipment - 33%

Motor vehicles - 20%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Financial instruments

Financial assets and financial liabilities are recognised in the Balance Sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

Trade and other receivables are measured on initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method.

Cash and cash equivalents comprise cash at bank.

Financial liabilities and equity

Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

Other financial liabilities are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

Effective interest rate method

The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

3.   Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with generally accepted accounting practice requires management to make estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the year-end date and the reported amounts of revenues and expenses during the reporting period.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimated are revised and in any future periods affected.

Key sources of estimation uncertainty

Fair value of share arrangements

The Founders have committed £255,000 of capital in NSF Subsidiary Limited in the form of 100 Founder Shares. The Founder Shares grant each holder the option, subject to the satisfaction of both the Significant Acquisition Condition and the Performance Condition (which can be satisfied, under certain circumstances, if a Founder is removed from the Board), to require Non-Standard Finance plc to purchase some or all of their Founder Shares. Further detail can be found in note 19.

The fair value of the share arrangements was calculated by a third party as £255,000. The amount paid for the shares was also £255,000 and therefore a charge of nil has been recognised in the profit and loss account.

4.   Segment reporting

The Group manages its operations in one segment, seeking suitable investments. The results of this segment are regularly reviewed by the board as a basis for the allocation of resources, in conjunction with individual investment appraisals, and to assess its performance.

5.   Operating loss for the period is stated after charging/(crediting):

	Period from incorporation to 30 June 2015
	£'000
Depreciation of property, plant and equipment	2.0
Staff costs (see notes 7 and 8)	540.5

6.   Auditors' remuneration

	Period from incorporation to 30 June 2015
	£'000
Fees payable to the Group's auditor for the audit of the annual financial statements	25.0
Fees payable to the Group's auditor for other services to the Group:
Consulting services	74.5

7.   Directors' remuneration

	Period from incorporation to 30 June 2015
	£'000
Short term employee benefits	519.7
Post-employment benefits	15.5

Short-term employee benefits comprise salary/fees, bonus and benefits earned in the year. Post-employment benefits represent contributions by the Group in respect of money purchase pension schemes.

8.   Employee information

a)    The average monthly number of persons employed by the group was as follows:

Average number of employees (including Directors)	Period from incorporation to 30 June 2015
	Number
Staff	6

b)    Employment costs

	Period from incorporation to 30 June 2015
	£'000
Gross wages	4.7
Employers NI	0.6
Pension charge	-

9.   Finance costs and finance income

	Period from incorporation to 30 June 2015
	£'000
Bank charges and interest payable	0.7
Bank interest receivable	52.7

10.  Loss per share

	Period from incorporation to 30 June 2015
Retained loss attributable to ordinary shareholders (£)	(857,788)
Weighted average number of ordinary shares at 30 June	38,937,453
Basic and diluted loss per share (pence)	(2.20p)

The loss per share was calculated on the basis of net loss attributable to ordinary shareholders divided by the weighted average number of ordinary shares. The basic and diluted loss per share is the same, as the exercise of share options would reduce the loss per share and therefore, is anti-dilutive.

	Period from incorporation to 30 June 2015
Weighted average number of potential ordinary shares that are not currently dilutive	5,539,141

11.  Property, plant and equipment

	Office Equipment	Motor Vehicles	Total
	£'000	£'000	£'000
Cost
At incorporation	-	-	-
Additions	2.3	55.7	58.0
At 30 June 2015	2.3	55.7	58.0
Depreciation
At incorporation	-	-	-
Charge for the period	0.1	1.9	2.0
At 30 June 2015	0.1	1.9	2.0
Net book value
At 30 June 2015	2.2	53.8	56.0
At incorporation	-	-	-

12.  Trade and other receivables

	£'000
Accrued Income	2.8
Other Debtors	150.0
Rental Deposit	14.7
Prepayments	146.7
	314.2

The carrying amount is a reasonable approximation of fair value.

13.  Cash and cash equivalents

	£'000
Cash at bank	97,303.5

14.  Trade and other payables

	£'000
Accruals	259.7
Salaries and Social Security	36.0
Pension	2.1
	297.8

The carrying amount is a reasonable approximation of fair value.

15.  Deferred tax

For the period ended 30 June 2015 the Group has unused tax losses of £857,788 available for offset against future profits. However, due to the uncertainty over the likelihood of future profits, the deferred asset has not been recognised on the Consolidated Balance Sheet.

The Group has calculated its un-provided UK deferred tax assets at the end of the reporting period using the most recently substantively enacted corporation tax rate of 20%, and the deferred tax asset is estimated to be £171,558.

16.  Share Capital and Share Premium

On incorporation, the issued share capital of the Company was £1 consisting of one Ordinary Share, fully paid up.

On 5 November 2014, the ordinary share of £1 was subdivided into 20 ordinary shares of £0.05 each.

On 2 December 2014, the share capital was increased by the issuance of 999,980 Ordinary Shares of £0.05 each at par to John van Kuffeler in settlement of a liability of £49,999.

On 4 February 2015 the share capital was further increased by the issuance of 1,960,527 Ordinary Shares of £0.05 each at a premium of £0.33 each to John van Kuffeler, Nicholas Teunon, Miles Cresswell-Turner, Robin Ashton and Charles Gregson.

On 19 February 2015, the share capital was further increased by the issuance of 102,323,918 Ordinary Shares of £0.05 each at a premium of £0.95 each.

The Company's share capital is denominated in Sterling. The Ordinary Shares rank in full for all dividends or other distributions, made or paid on the ordinary share capital of the Company.

Share movements

	Number
Balance at date of incorporation	-
Shares issued during the period	105,284,445
Balance at 30 June 2015	105,284,445

17.  Reserves

Details of the movements in reserves are set out in the Statement of Changes in Equity. A description of each reserve is set out below.

Share premium

The share premium account is used to record the aggregate amount or value of premiums paid when the Company's shares are issued at a premium. Transaction costs of £5,140,199 directly relating to raising finance have been deducted from share premium.

18.  Dividends

No dividends were declared or paid during the period.

19.  Net cash used in operating activities

	Period from incorporation to 30 June 2015
	£'000
Operating loss	(857.8)
Depreciation	2.0
Increase in receivables	(164.2)
Increase in payables	297.8
Finance costs - net	(52.0)
Cash generated used in operating activities	(774.2)

20.  Share Based Payments

Equity settled share option scheme

The Founders have committed £255,000 of capital in NSF Subsidiary Limited in the form of 100 Founder Shares. The Founder Shares grant each holder the option, subject to the satisfaction of both the Significant Acquisition Condition and the Performance Condition (which can be satisfied, under certain circumstances, if a Founder is removed from the Board), to require the Company to purchase some or all of their Founder Shares.

The conditions which must be met in order for the participants to receive any future payout can be summarised as follows:

§ The Company must achieve an admission to the London Stock Exchange

§ The Company must make an acquisition of at least £50m within 2 years of the Admission Date

§ The Ordinary Shares must achieve an internal rate of return of 8.5% per annum from the market capitalisation at the Admission Date

§ The Company's market capitalisation must increase by 25% from the market capitalisation at the Admission Date.

The last two conditions must both be met for a period of 20 out of 30 consecutive days, during the same 30 day period within 5 years of an acquisition.

The purchase price for the exercise of this option may be paid by the Company in Ordinary Shares or as a cash equivalent at the Company's option. The number of Ordinary Shares required to settle all such options is the number of shares that would have represented 5 per cent of the Ordinary Shares of the Company on (or immediately after) listing if such Ordinary Shares had been issued at the time of listing. The equivalent cash value is calculated on exercise of the option as the estimated total price of the Ordinary Shares that would have been issued if the option has been settled in ordinary shares rather than cash, based on the mean of the closing middle market quotations for an ordinary share on the London Stock Exchange over the 30 business days prior to the exercise of the option.

The fair value of the share options was assessed to be £255,000 and therefore the Company recognised total expenses of £nil relating to this share option scheme in the period ended 30 June 2015.

21.  Financial Instruments - Group

The table below sets out the carrying value of the group's financial assets and liabilities in accordance with the categories of financial instruments set out in IAS 39. Assets and liabilities outside the scope of IAS 39 are shown within non-financial assets/liabilities.

	Loans and receivables	Amortised cost	Non-financial assets/ liabilities	Total
	£'000	£'000	£'000	£'000
Assets
Cash	97,303.5	-	-	97,303.5
Trade and other receivables	-	-	314.2	314.2
Property, plant and equipment	-	-	56.0	56.0
Total assets	97,303.5	-	370.2	97,673.7
Liabilities
Trade and other payables	-	(297.8)	-	(297.8)
Total liabilities	-	(297.8)	-	(297.8)

The Group's operations expose it to a variety of financial risks including credit risk, liquidity risk, and interest rate risk. Given the size of the Group, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board. The policies set by the board of directors are implemented by the Group's finance department.

Credit risk

The Group's credit risk is primarily attributable to cash deposits placed with banks. The maximum exposure to credit risk on bank counterparties as at 30 June 2015 was £97.3m.

Counterparty credit risk is managed by ensuring that the group's cash deposits are only made with high-quality counterparties.

Interest rate risk

Interest rate risk is the risk that a change in external interest rates leads to an increase in the group's cost of borrowing.

A 2% movement in the interest rate applied to cash balances during 2015 would not have had a material impact on the group's result for the year.

Liquidity risk

This is the risk that the Group has insufficient resources to fulfil its operations.

The Group monitors its levels of working capital to ensure that it can meet its debt repayments as they fall due.

22.  Related party transactions

On 2 December 2014, the share capital was increased by the issuance of 999,980 Ordinary Shares of £0.05 each at par to John van Kuffeler in settlement of an other payables liability of £49,999.

40,750 shares were issued to two directors on 19 February 2015 in lieu of cash for their first year's director fees. An expense of £40,750 was recognised in the period, reflecting the fair value of the services provided.

23.  Ultimate controlling party

There is no ultimate controlling party.

24.  Events occurring after the reporting period

Acquisition of Loansathome4u

On 4 August 2015, the Group completed the acquisition of the Home Credit Division of S&U plc which trades as Loansathome4u for consideration of £82.5 million, payable in cash.

Further information about the acquisition is available in the Announcement issued 4 August 2015; this document is available on the Group's website (www.nonstandardfinance.com).

The Group is currently performing a fair value review of Loansathome4u's assets and liabilities and will report these within its next published financial statements.

Incorporation of a subsidiary

On 25 July 2015, a second subsidiary, Non-Standard Finance Subsidiary II Limited, was incorporated as a private limited company limited by shares under the laws of England and Wales under the Companies Act 2006. The company has one ordinary share of £1 held by Non-Standard Finance Plc.

Cautionary Statement

This Interim Management Report ("IMR") has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

The IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

Responsibility statement

We confirm that to the best of our knowledge:

a)   The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b)   the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the period from incorporation on 8 July 2014 to 30 June 2015 and description of principal risks and uncertainties for remaining six months of the period); and

c)   the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

John van Kuffeler Executive Chairman

Nick Teunon Chief Financial Officer

24 August 2015

INDEPENDENT AUDITOR'S REPORT TO THE DIRECTORS OF NON-STANDARD FINANCE PLC

We have audited the interim financial statements of Non-Standard Finance plc for the period ended 30 June 2015 which comprise the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated statement of cash flows and the related notes 1 to 22. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards (IFRSs) as adopted by the European Union and the provisions of Disclosure and Transparency Rule 4.2 of the United Kingdom's Financial Conduct Authority.

This report is made solely to the company's directors in accordance with our engagement letter dated 7 August 2015 and solely for the purpose of reporting whether, in our opinion, the interim financial statements give a true and fair view and whether they have been properly prepared in accordance with IFRSs as adopted by the European Union and the provisions of Disclosure and Transparency Rule 4.2 of the United Kingdom's Financial Conduct Authority. Our audit work has been undertaken so that we might state to the company's directors those matters we are required to state to them in an independent auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

§ give a true and fair view of the state of the group's affairs as at 30 June 2015 and of its loss for the period then ended;

§ have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union; and

§ have been properly prepared in accordance with the provisions of Disclosure and Transparency Rule 4.2 of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants

London, United Kingdom

24 August 2015

 

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