June 25, 2020 / 11:25 AM / 8 days ago

Subprime lender NSF warns of going concern risks

(Reuters) - Non-Standard Finance on Thursday highlighted risks to its ability to continue as a going concern, as the coronavirus crisis hit its subprime lending business, sending the group’s shares down 27%.

The company, which abandoned a bid for rival Provident Financial in June last year, reported a 76 million pounds ($94.29 million) pretax loss for the year ended Dec. 31 from 2.4 million pounds a year earlier, partly due to costs relating to the failed takeover.

The company also did not declare a final dividend for the past year and said it was considering issuing new equity to bolster its balance sheet.

“Whilst the directors believe the group and company will remain a going concern, a material uncertainty exists that may cast significant doubt on the group and company’s ability to continue as a going concern,” NSF said.

Chief Executive Officer John van Kuffeler said that the COVID-19 pandemic led to large write-downs in NSF’s businesses.

“The last 18 months have been difficult and disappointing for Non-Standard Finance with the failure of our offer for Provident Financial,” he said.

Since the failed Provident takeover attempt, NSF has warned on profits and downgraded its loan book growth targets, hitting its shares.

Goodbody analyst John Cronin said: “NSF needs more capital to continue to pursue its previously expressed strategic ambitions – and, potentially, to avoid a wind-down scenario.”

NFS said that its board was in discussions with its lenders regarding possible future covenant waivers, whilst also looking at all funding options to ensure a strong and liquid balance sheet.

The company said overall basic collections in April and May averaged 86% of the level in January and February, and was better than earlier expectations.

($1 = 0.8061 pounds)

Reporting by Muvija M in Bengaluru; Editing by Ramakrishnan M. and Jane Merriman

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