AIM-listed alcohol wholesaler and distributor Conviviality was under pressure again as it confirmed that adjusted earnings for the current year will come in between £55.3m and £56.4m, 20% below market expectations.
The company had already said last week that it expected earnings before interest, tax, depreciation and amortisation to be 20% lower than market views, but had not given a range. It said at the time that the change in expectations reflected a "material error" in the financial forecasts of the Conviviality Direct business and it confirmed on Tuesday that this was in fact an arithmetic error in the compilation of the forecast.
Conviviality said the guidance reflects trading for the current financial year to the date of the announcement, combined with the current expectation for the likely trading performance of the business for the remainder of the current financial year.
"This includes the impact of the error in the financial forecasts of the Conviviality Direct business and the assumption that the margin weakness seen in January and February continues for the remainder of the current financial year," it said.
Non-Standard Finance posted its results for the year ended 31 December on Tuesday, with normalised and reported revenue both rising 48%, to £119.8m and £107.8m respectively.
The London-listed firm said its normalised operating profit before temporary additional commission was up 72% at £26.9m, while on a reported basis it made profits of £3.8m, swinging from 2016’s operating loss of £5.2m.
Normalised profit after tax, also before temporary additional commission, rose 42% to £13.5m.
The company’s reported loss after tax widened to £10.3m from £8.0m, however, which the board pointed out was after fair value adjustments, amortisation of acquired intangibles and exceptional items.
It recommended a final dividend of 1.70p per share, up from 0.9p, making a total dividend for the year of 2.20p per share, compared to 1.2p a year ago.
On the operational front, Non-Standard Finance reported a combined loan book of £247.9m - up 30% on a like-for-like basis - before fair value adjustments, and £259.8m after fair value adjustments as at 31 December.
It also claimed a reduced rate of impairment for the group as a whole of 24.0% of normalised revenue, down from 29.2%.
During the year, a total of 34 new offices were opened and more than 650 new staff and self-employed agents were added, with the company also reporting a 24% improvement in the total number of customers to 169,000 - up 16% on a pro forma basis.
The acquisition of George Banco was completed during the period, which the board said was intended to create the “clear number two” in the UK's guarantor loans market.
It said each of its three divisions had a fully-scalable operating platform to support future growth plans, adding that £260m in long-term debt funding was now in place.
Looking at current trading, Non-Standard Finance said each of its businesses had made a “good start” to the year, with continued strong loan book growth, whilst maintaining 2tight control" of impairment.
22017 was a year of delivery with significant organic loan book growth whilst impairment reduced from 29% to 24% of normalised revenue,” said group chief executive John van Kuffeler.
2I am pleased to say that these trends have continued into the current year.
"With strong market positions in each of our chosen segments, a clear plan for growth and long-term funding in place, we remain confident in the full year outlook and are pleased to recommend a final dividend to 1.70p per share making 2.20p for the year as a whole, an increase of 83% over the prior year."