This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation (EU no. 596/2014) as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended from time to time).

10 January 2024

Distribution Finance Capital Holdings plc

("DF Capital" or the "Company" together with its subsidiaries the "Group")

Full Year Trading Update

Distribution Finance Capital Holdings plc, a specialist bank providing working capital solutions to dealers and manufacturers across the UK, provides a trading update for the financial year ended 31 December 2023.

The momentum seen during the year continued throughout the fourth quarter, with the Group reporting its tenth consecutive quarter of loan book growth. The Group's loan book at 31 December 2023 reached £581m, up more than 32% over the course of the year, with new loan origination for the year increasing by almost 20% to a record £1.2bn (2022: £1.0bn).

The Group has grown its dealer customers to 1,182 (2022: 998), with total credit lines up 26% exceeding a record £1bn (31 Dec 2022: £817m). The Group now supports 89 manufacturer partners.

Average stock days for the year extended in line with management expectations to 148 days versus the Group's historical average of 150 days. In Q4 2023, stock days extended in line with seasonal expectations to 174 days, but still below historical norms for the dealer restocking period.

Notwithstanding the macro-economic challenges and higher interest rate environment, the Group's overdue accounts have performed consistently well through the year, with 30 dealers having arrears one day past due, (H1 2023: 29) representing less than 3% of the Group's dealers base, which includes 20 cases in legal recovery. The Group's total arrears balance represents less than 3% of its entire loan book, which includes c£10m relating to RoyaleLife. Excluding RoyaleLife, the Group's arrears balance equates to less than 1% of its entire loan book.  

In light of the Company's strong underlying operational and financial performance during the year and despite the assumed prudent credit loss provision for RoyaleLife offset by recent progress in making partial recovery, the Group now expects to report a pre-tax profit of no less than £3.0m, ahead of its prior expectations and more than double its FY22 outturn of £1.3m.

The Group also completed the annual "Best Companies to Work For" employee engagement survey. 97% of employees participated in the most recent survey and the Group is delighted to confirm that it has achieved 3-star accreditation (Prior year: 2-star), the highest award possible, demonstrating world class levels of employee engagement.

The Company expects to announce its audited results for the year ended 31 December 2023 in April 2024.

Carl D'Ammassa, Chief Executive, commented: "2023 has been another strong year of growth and demonstrable sustainability in profitability. Our products and services continue to resonate with our borrowers and depositors, allowing us to achieve ten consecutive quarters of loan book growth. We have the capital capacity to grow our loan book to more than £800m without the need for a Tier 1 equity raise, underpinning our confidence about our medium-term growth path as we look to support more customers and become a multi-product lender across the niche sectors in which we operate. Making significant strides forward in our strategy whilst also being a world class place to work is a testament to the commitment and dedication of the entire DF Capital team".

The person responsible for arranging the release of this announcement on behalf of the Company is Karen D'Souza (Company Secretary).

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