Q2 2026 Distribution Finance Capital Holdings Earnings Call

September 10, 2026

Speaker #1: To holdings PLC interim results investor presentation, throughout the Q4 presentation investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen.

Operator: Holdings PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. Before we begin, I would like to submit the following poll. I would now like to hand you over to the management team. Carl, good afternoon.

Speaker #1: Simply type in your questions and press send. Before we begin, I would like to submit the following poll, and I would now like to hand you over to the management team, Carl.

Speaker #1: Good afternoon.

Speaker #2: Good afternoon, everyone. I'm delighted to be here with Samira to share our interim results for the financial year ending the 30th of June 2026.

Carl D'Ammassa: Good afternoon, everyone. I am delighted to be here with Sameera to share our interim results for the financial year ending 30 June 2026. I have got to say that this has been another period of record results for us. We have had record loan origination, resilient margins, and stable funding base, robust credit quality, and a continuing focus on cost management as well. I think what is most exciting for us is that the extent of profitability that we continue to build on year over year really underpins the capital base that supports our growth moving forward. I thought it would be worth just spending just a few minutes, before we launch into the details of the results, just reflecting on our journey since we became a bank back in 2020. I think you can see from this chart how far we have come.

Speaker #2: I've got to say that this has been another period of record results for us. We've had record loan origination, resilient margins, and stable funding base, robust credit quality, and a continuing focus on cost management as well.

Speaker #2: And I think what's most exciting for us is that the extent of profitability that we continue to build on year over year. Really underpins the capital base that supports our growth moving forward.

Speaker #2: So it thought it'd be worth just spending just a few minutes before we launch into the details of the results, just reflecting on our journey since we became a bank back in 2020.

Speaker #2: And I think you can see from this chart how far we've come. And all the things that we've achieved since 2020 have really been on the foundation of us supporting manufacturers, dealers, and distributors.

Carl D'Ammassa: All the things that we have achieved since 2020 have really been on the foundation of us supporting manufacturers, dealers, and distributors. Firstly, as an inventory finance lender, but more recently, as a multi-product lender, helping dealers grow and support their sales beyond the four cores. I think what we have also demonstrated, and you can see from the chart on the right-hand side, is a laser focus on reaching profitability pretty soon after we were authorized as a bank. That has put us in an enviable position as far as capital accretion is concerned, and that has really, really supported our growth. We are now four full years, and four and a half years profitable as a bank. I think for most of you that perhaps have been following our story, and certainly those of other early-stage banks will recognize that achieving profitability so soon after authorization is fairly unique.

Speaker #2: Firstly, as an inventory finance lender, but more recently as a multi-product lender helping dealers grow and support their sales beyond the forecourt. I think what we've also demonstrated is you can see from the chart on the right-hand side, is a laser focus on reaching profitability pretty soon after we were authorized as a bank.

Speaker #2: And that's put us in an enviable position as far as capital accretion is concerned. And that's really, really supported our growth. We're now 4 years 4 full years and a 4 and a half years profitable as a bank.

Carl D'Ammassa: That has put us in an enviable position as far as capital accretion is concerned, and that has really, really supported our growth. We are now four full years, and four and a half years profitable as a bank. I think for most of you that perhaps have been following our story, and certainly those of other early-stage banks will recognize that achieving profitability so soon after authorization is fairly unique.

Speaker #2: And I think, for most of you that will perhaps have been following our story and certainly those of other early-stage banks will recognize that achieving profitability so soon after authorization is fairly unique.

Speaker #2: I think it’s also worth saying that you can see through the numbers here that we have built considerable shareholder value over the last four or five years.

Carl D'Ammassa: I think it is also worth saying that you can see through the numbers here that we have built considerable shareholder value over the last four or five years. That really has supported and earned us the right, frankly, to push on to the other segments that we want to grow as we become a multi-product lender. Just moving on to the interim results. The momentum that we built at the back end of last year, which was, frankly, a record year for us, has continued into the H1. As I said earlier, it has been a period of further record-breaking. As we have continued through the year, it has been pretty clear to us that our financial expectations have materially exceeded those that we thought were going to unfold from when we started 2026.

Speaker #2: And that really has supported and earned us the right, frankly, to push on to the other segments that we want to grow as we become a multi-product lender.

Speaker #2: So, just moving on to the interim results. The momentum that we built at the back end of last year, which was, frankly, a record year for us, has continued into the first half.

Speaker #2: And as I said earlier, it has been a period of further record breaking. And as we've continued through the year, it's been pretty clear to us that our expectations—financial expectations—have materially exceeded those that we thought were going to unfold when we started 2026.

Speaker #2: And so new lending reached a record high of almost 1.1 billion, which was up 31% on the prior year. And that's delivered a significant increase of 27% increase or 200 million increase in our loan book, which closed the period at 932 million.

Carl D'Ammassa: New lending reached a record high of almost GBP 1.1 billion, which was up 31% on the prior year. That delivered a significant increase, a 27% increase or GBP 200 million increase in our loan book, which closed the period at GBP 932 million. That, with the discipline that I mentioned earlier around things like margins, credit quality, and cost, has enabled us to deliver a record profit before tax of GBP 13.4 million, up almost 50% on the prior year. Our statutory return on equity reached 15.3%, which gives us significant confidence about our journey ahead as we look to achieve a 20% equity return. Overall, our tangible net asset per share increased to just over 82%, which is a 17% increase on the prior year. We have set out previously very clear targets through initially to 2028, and onwards to 2030.

Speaker #2: That, with the discipline that I mentioned earlier around things like margins, credit quality, and cost, has enabled us to deliver a record profit before tax of £13.4 million, up almost 50% on the prior year.

Speaker #2: And our statutory return on equity reached 15.3%, which gives us significant confidence about our journey ahead as we look to achieve a 20% equity return.

Speaker #2: Overall, our tangible net asset per share increased to just over 82%, which is a 17% increase on the prior year. So we've set out previously very clear targets through initially to 2028.

Speaker #2: And onwards to 2030, and you can see these laid out on the slide in front of you here. And I think it's the numbers here demonstrate that all of the financial fundamentals we're that underpin our ambitions to 2028 and 2030.

Carl D'Ammassa: You can see these laid out on the slide in front of you here. I think the numbers here demonstrate that all of the financial fundamentals that underpin our ambitions to 2028 and 2030 are being achieved. We are demonstrating delivery across all areas. That fundamentally gives us the confidence about that objective of that 20% equity return as we get to 2030. Loan book growth, our story is very much at the moment about continuing to scale and scaling in our new products and services. Holding margins is important. Opening the jaws between cost and income from a cost-income ratio perspective and managing our credit risk in a disciplined way and holding to less than 1% through the cycle.

Speaker #2: Are being achieved. We're demonstrating delivery across all areas. And that fundamentally gives us the confidence about that objective that that 20% equity return as we get to 2030.

Speaker #2: So loan book growth, our story is very much at the moment about continuing to scale and scaling in our new products and services. Holding margins is important.

Speaker #2: Opening the jaws between cost and income from a cost-income ratio perspective and managing our credit risk in a disciplined way and holding to a less than 1% through the cycle.

Speaker #2: So, you can see we've delivered on all those objectives that we've set out and are well on our way to the targets that we've set for 2028 and 2030.

Carl D'Ammassa: You can see we have delivered on all those objectives that we have set out and are well on our way to the targets that we have set for 2028 and 2030. As I mentioned, so much of our story is really about scale and diversification, and moving from being what we have perhaps been historically, a monoline product just providing inventory finance. We brought more products and services to life, particularly our structured finance and our asset finance proposition, which we will talk about a little bit in more detail later. We have delivered growth across the board, and our loan book, as I mentioned, has increased by 27%, pretty much across every category. On the inventory finance side of things, we have held our market-leading position in the motorhome and caravan space. In transportation, we have rebalanced the portfolio there as well through the period.

Speaker #2: But as I mentioned, so much of our story is really about scale and diversification. And moving from being what we have perhaps been a historically a monoline product just providing inventory, inventory finance, and we brought more products and services to life, particularly our structured finance and our asset finance proposition, which we'll talk about a little bit in more detail later.

Speaker #2: We've delivered growth across the board. And our loan book, as I mentioned, has increased by 27% and pretty much across every category. On the inventory finance side of things, we've held our market-leading position in the motorhome and caravan space in transportation.

Speaker #2: We've rebalanced the portfolio there as well through the period. In the logist space, we've seen a resurgence in the logis and holiday home market.

Carl D'Ammassa: In the lodges space, we have seen a resurgence in the lodges and holiday home market, particularly off the back of an increased demand for staycations, given the global climate at the moment and the geopolitical uncertainties that are out there. I guess what we have been most pleased with is the structured finance delivery, which is a bespoke set of lending products to our existing customers who are operating in the markets that we like to support. This product set, whilst each individual opportunity is bespoke in nature, has a virtuous impact on the rest of our lending and our relationships. Our ambition here really is to increase the vitality of the markets and bring the ambitions of those people that participate in the markets that we operate in, bring those ambitions to life.

Speaker #2: Particularly off the back of an increased demand in for staycations given the global climate at the moment and the geopolitical uncertainties that are out there.

Speaker #2: I guess what we've been most pleased with is the structured finance delivery. Which is a bespoke set of lending products to our existing customers who are operating in the markets that we like to support.

Speaker #2: And this product set, whilst each individual opportunity is bespoke in nature, has a virtuous impact on the rest of our lending and our relationships.

Speaker #2: Now, our ambition here really is to increase the vitality of the markets and bring the ambitions of those people that participate in the markets that we operate in, bring those ambitions to life.

Speaker #2: I think what's been particularly exciting has been the launch of asset finance. And we've been really pleased with the progress that we've made here.

Carl D'Ammassa: I think what's been particularly exciting has been the launch of asset finance, and we've been really pleased with the progress that we've made here. This is a massive market opportunity for us. We've estimated that it's about GBP 10 billion of annualized sales that we can look to convert into funding opportunities, what we call beyond the forecourt financing. The H1 progress has been exceptional. New lending of GBP 28 million, significantly up on the same period last year. Loan book of GBP 40 million as we close the half year. What's really pleasing is that that business unit now is run rate break even. I guess, it's worth sharing with you the snapshot of where we're at at August, because I think that really demonstrates the pace that we're starting to deliver on our ambitions in asset finance.

Speaker #2: This is a massive market opportunity for us. We've estimated that it's about $10 billion that we can look to convert into funding opportunities—what we call beyond the forecourt financing.

Speaker #2: The first half progress has been exceptional. New lending of £28 million, significantly up on the same period last year. Loan book of £40 million as we closed the year.

Speaker #2: Closed the half year but what's really pleasing is that that business unit now is run rate break even. But I guess it's worth sharing with you the snapshot of where we're at at August because I think that really demonstrates the pace that we're starting to deliver on our ambitions in asset finance.

Speaker #2: We've originated about £55 million worth of loans in the year, and that's come from over 1,500 individual transactions in the period. Our reach is extending considerably.

Carl D'Ammassa: We've originated about GBP 55 million worth of loans in the year, and that's come from over 1,500 individual transactions in the period. Our reach is extending considerably. We've got 273 dealers that have signed up to provide us with asset finance, and that represents over 370 unique retail locations where transactions are sold and where ultimately finance can be signed up. The majority of our new loan origination has come from our existing dealer relationships. We're making progress both on the consumer side of things, but also the business side of things, given that we do support what we would describe as leisure assets, but also commercial assets as well. Really pleased with the progress that we've also made in building a direct-to-consumer proposition. We won't need to just originate loans through our dealer network, which is quite extensive already.

Speaker #2: We've got 273 dealers that have signed up to provide us with asset finance. And that represents over 370 unique retail locations where transactions are sold and where ultimately finance can be signed on.

Speaker #2: The majority of our new loan origination has come from our existing dealer relationships. And we're making progress both on the consumer side of things, but also the business side of things, given that we do support what we would describe as leisure assets, but also commercial assets as well.

Speaker #2: Really pleased with the progress that we've also made in building a direct-to-consumer proposition. So, we won't need to just originate loans through our dealer network, which is quite extensive already.

Speaker #2: We're expecting to launch our direct-to-consumer application process in the fourth quarter of this year. So, with the reach that we have through our existing dealers, and with the massive market opportunity in the sectors that we support, it feels like we're well on track to achieve the $100 million milestone in short order.

Carl D'Ammassa: We're expecting to launch our direct-to-consumer application process in Q4 of this year. With the reach that we have through our existing dealers, with the massive market opportunity of at least GBP 10 billion a year across all of the sectors that we support, it feels like we're well on track to achieve GBP 100 million milestone in short order. On that note, I'll hand over to Sameera just to talk around the details of the financials, but also perhaps where we're heading over the next few years.

Speaker #2: So, on that note, I'll hand over to Samira to talk through the details of the financials, and also perhaps discuss where we're heading over the next few years.

Speaker #1: Thank you, Carl. And good morning, everyone. I'm equally delighted to take you through another period of strong financial performance we've delivered across all our key measures while continuing to invest for growth and drive value for our shareholders.

Sameera Khaliq: Thank you, Carl, and good morning, everyone. I'm equally delighted to take you through another period of strong financial performance. We've delivered across all our key measures while continuing to invest for growth and drive value for our shareholders. As Carl said, before I take you through the detail of our P&L balance sheet and credit performance, I want to take a moment to reflect on our roadmap to 2030 as a reminder of our ambition. At the beginning of the year, we extended the targets we had set for 2028 through to 2030. Our strategy is straightforward. It's to remain focused on the dealers, manufacturers, and distributors we know well, and to create significant value by building on those strengths. Underpinning that is our growth strategy and the target to deliver a loan book of GBP 1.5 billion by 2030.

Speaker #1: But as Carl said, before I take you through the detail of our P&L balance sheet and credit performance, I wanted to take a moment to reflect on our roadmap to 2030 as a reminder of our ambitions.

Speaker #1: So at the beginning of the year, we extended the targets we had set for 2028 through to 2030. Our strategy is straightforward. It's to remain focused on the dealers, manufacturers, and distributors we know well and to create significant value by building on those strengths.

Speaker #1: And underpinning that is our growth strategy and the target to deliver a loan book of 1.5 billion by 2030. We now have everything in our armory to deliver that ambition.

Sameera Khaliq: We now have everything in our armory to deliver that ambition. We have the multiple products that Carl just talked about. We have the deep customer relationships. We have the capital and liquidity resources. As we grow, what is really key is the operational leverage that we drive as we continue to scale. So we have invested heavily in our infrastructure, and our digital capabilities will allow us to absorb greater activity in the future without the same rise in costs. Together, we expect this to support P&L growth of 10% to 15% a year and returns on equity of around 20%. It is worth noting today, we have more equity than our regulatory requirements demand. But as the business scales, that excess capital will be deployed, and we expect reported return on equity to move closer to the underlying return.

Speaker #1: We have the multiple products as Carl just talked about. We have the deep customer relationships. We have the capital and liquidity resources. And as we grow, what's really key is the operational leverage that we drive as we continue to scale.

Speaker #1: So, we've invested heavily in our infrastructure, and our digital capabilities will allow us to absorb greater activity in the future without the same rise in costs.

Speaker #1: And together, we expect this to support TNAB growth of 10 to 15 percent a year, and returns on equity of around 20 percent. It's worth noting, today we have more equity than our regulatory requirements demand.

Speaker #1: But as the business scales, that excess capital will be deployed, and we expect reported return on equity to move closer to the underlying return.

Speaker #1: The highest profitability that would come with this trajectory would support us generating capital organically, and creating that flexibility to fund further growth, pursue any opportunities that may fit our strategy and our risk appetite, or return surplus capital to shareholders through share buybacks or indeed dividends.

Sameera Khaliq: The higher profitability that would come with this trajectory would support generating capital organically and creating that flexibility to fund further growth, pursue any opportunities that may fit our strategy and our risk appetite, or return surplus capital to shareholders through share buybacks or indeed dividends. We have already signaled our intention to pay a maiden dividend in 2029, based on 2028 results. That is just a reminder of where we are heading. To just touch on our financial performance for the last six months to the period ending 30 June 2026. The three main drivers of our P&L are net interest income, costs, and impairment charges for credit losses. I will take each of those in turn. So from an income perspective, we have continued to grow strongly period on period, increasing by around 24% from June 2025.

Speaker #1: And we have already signaled our intention to pay a maiden dividend in 2029 based on 2028 results. So that's just a reminder of where we are heading.

Speaker #1: And so, to just touch on our financial performance for the last six months, for the period ending June 30, 2026. Now, the three main drivers of our P&L are net interest income, costs, and impairment charges for credit losses.

Speaker #1: And I'll take each of those in turn. So from an income perspective, we've continued to grow strongly period on period, increasing by around 24 percent from June 2025.

Speaker #1: And the main driver of this has been growth in the loan book. So as Carl mentioned, we've continued to broaden our lending opportunities. And with the book growing by around 20 percent, 27 percent even, that larger and more diverse base has generated materially more income.

Sameera Khaliq: The main driver of this has been growth in the loan book. As Carl mentioned, we have continued to broaden our lending opportunities, and with the book growing by around 27% even, that larger and more diverse base has generated materially more income. At the same time, from a pricing perspective, as we talked about at the year-end, net interest margins have begun to normalize from the exceptional levels that we discussed previously, but remains very strong at 7.5% and still a very significant contributor to our overall income. As the book grows and that lending mix broadens, we continue to expect NIM to move towards that 7% mark that we have previously communicated. I think importantly, both asset yields and cost of funding remains in line with our expectations.

Speaker #1: And at the same time, from a pricing perspective, as we talked about at the year-end, net interest margin has begun to normalize from the exceptional levels that we discussed previously.

Speaker #1: But remains very strong at 7.5 percent. And still a very significant contributor to our overall income. And as the book grows and that lending mix broadens, we continue to expect to move towards that 7 percent mark that we've previously communicated.

Speaker #1: I think importantly, both asset yields and cost of funding remains in line with our expectations. We've continued to direct lending selectively towards the most attractive and profitable segments.

Sameera Khaliq: We have continued to direct lending selectively towards the most attractive and profitable segments, and I think the breadth of the opportunities that we have just talked through now gives us the flexibility to maintain that discipline as we scale. Likewise, on the funding side, despite a competitive savings environment and pricing volatility, we have been able to secure funding required to support our growth at competitive costs. I will return to that when we talk about the balance sheet. Just turning to costs. Outside of the usual inflationary impacts, the increase that you see in costs is reflective of our investment in growth priorities. So that includes technology and core capabilities. But crucially, we have maintained good discipline over underlying costs while continuing to drive efficiencies from those investments.

Speaker #1: And I think the breadth of the opportunities that we've just talked through now gives us the flexibility to maintain that discipline as we scale.

Speaker #1: And then, likewise, on the funding side, despite a competitive savings environment and pricing volatility, we've been able to secure funding required to support our growth at competitive cost.

Speaker #1: And I'll return to that when we talk about the balance sheet. So just turning to costs, outside of the usual inflationary impacts, the increase that you see in costs is reflective of our investment in growth parity.

Speaker #1: So that includes technology and core capabilities. But crucially, we've maintained good discipline over underlying costs while continuing to drive efficiencies from those investments. So as our volumes grow, we expect absolute costs to increase, but at a slower rate than income.

Sameera Khaliq: As our volumes grow, we expect absolute costs to increase, but at a slower rate than income, so effectively widening the jaws between income and costs. You can see that in the cost-income ratio, which has improved from 58.1% at June 2025, down to 53% at the end of this period. We are making our way towards that 2030 target. Just touching very quickly on provisions. Our disciplined credit management and quality of our security, and the recourse arrangements that we have in place, have all helped to keep losses low, and our cost of risk has reduced by 40 basis points to 0.49% at the end of the period. I will cover provisions in a bit more detail when we talk about credit performance. I think bringing those drivers together, pre-tax profit has increased by almost 50% to GBP 13.4 million.

Speaker #1: So, effectively, widening the jaws between income and costs, and your ratio—which has improved from 58.1% at June 2025, down to 53% at the end of this period.

Speaker #1: So we're making our way towards that 2030 target. And then just touching very quickly on provisions, our discipline credit management and quality of our security and the recourse arrangements that we have in place have all helped to keep losses low.

Speaker #1: And our cost of risk has reduced by 14 basis points to 0.49 percent at the end of the period. And I'll cover provisions in a bit more detail when we talk about credit performance.

Speaker #1: So I think bringing those drivers together pre-tax profit has increased by almost 50 percent to 13.4 million. That's ahead of the expectations that we set at the start of the year.

Sameera Khaliq: That is ahead of the expectations that we set at the start of the year, and that stronger performance is translating into improved returns for our shareholders. The return on tangible equity increased by almost four percentage points to 15.4%, and if we remove that excess capital that I spoke about, that is closer to 20%. That has been supported by the exceptional performance on cost of risk, but nevertheless, it reflects the underlying earning power of the business. You can also see that in EPS, which has increased to 6p. Just moving on to the balance sheet, and looking at growth first. Carl has already covered both the profile of our growth and the increasing diversity of our portfolio, which together have driven the loans up to GBP 932 million at the period end.

Speaker #1: And that stronger performance is translating into improved returns for our shareholders. So return on tangible equity increased by almost 4 percentage points to 15.4 percent.

Speaker #1: And if we remove that excess capital that I spoke about, that's closer to 20 percent. Now, that has been supported by the exceptional performance on cost of risk, but nevertheless, it reflects the underlying earning power of the business.

Speaker #1: And you can also see that in EPS, which has increased to 6P. So just moving on to the balance sheet. And looking at growth first, Carl has already covered both the profile of our growth and the increasing diversity of our portfolio.

Speaker #1: Which together have driven the loan book to 932 million at the period end. And that strong momentum has continued even in Q2 despite the usual seasonal reduction in inventory finance.

Sameera Khaliq: That strong momentum has continued even in Q2, despite the usual seasonal reduction in inventory finance. I think importantly, that growth is now coming from an increasingly broad range of opportunities, which means that we are strengthening the resilience and giving ourselves more routes to grow when individual markets are challenging. Retail savings remains fundamental to our growth, and 2026 has been no exception. We grew retail ahead of our lending, in fact, taking advantage of an early window to raise funding before geopolitical tensions led to more market volatility. That early action kept us ahead of a highly competitive savings market and secured the liquidity that we needed to support our growth at a very good cost. Good news there. Our funding has also diversified in the period across fixed and variable products.

Speaker #1: And I think, importantly, that growth is now coming from new opportunities, which means that we're strengthening our resilience and giving ourselves more roots to grow when individual markets are challenging.

Speaker #1: Retail savings remains fundamental to our growth, and 2026 has been no exception. We grew retail ahead of our lending—in fact, taking advantage of an early window to raise funding before geopolitical tensions led to more market volatility.

Speaker #1: And that early action kept us ahead of a highly competitive savings market. And secured the liquidity that we needed to support our growth at a very good cost.

Speaker #1: So, good news there. And our funding has also diversified in the period across fixed and variable products. Early in the year, we attracted a good level of easy access balances following the product's return to the market.

Sameera Khaliq: Early in the year, we attracted a good level of easy access balances following the product's return to the market in Q1. Provision coverage is stable at 1%. It is consistent with our risk appetite and the quality of our borrower profile. Again, I will return to this on the next slide. That leads me to just talk about capital, which again remains in a very strong and stable position, even with the GBP 200 million of balance sheet growth, both CET1 and total capital are comfortably above our regulatory minimums at 17.8% and 20.8% respectively. A very good level. During the H1, we drew the final GBP 5 million of our Tier 2 facility, and we renewed the ENABLE Guarantee programme scheme for a further two years.

Speaker #1: In Q1. Provision coverage is stable at 1 percent. It's consistent with our risk appetite and the quality of our borrower profile. And again, our return to this on the next slide.

Speaker #1: So that leads me to just talk about capital, which again remains in a very strong and stable position even with the 200 million of balance sheet growth.

Speaker #1: Both C21 and total capital are comfortably above our regulatory minimums. At 17.8 percent and 20.8 percent respectively. So a very good level. During the half, we drew the final 5 million of our Tier 2 facility.

Speaker #1: And we renewed the BBB enabled guarantee scheme for a further two years. The renewed scheme supports a 350 million pool. And with the eligibility criteria, now more closely aligned to our lending, we expect to fully utilize that.

Sameera Khaliq: The renewed scheme supports a GBP 350 million pool, and with the eligibility criteria now more closely aligned to our lending, we expect to fully utilize that. Alongside those external levers, our growing profitability is generating capital organically, and combined with that significant capital regulatory headroom, it gives us the confidence that we can fund our growth plan to 2030 without a dilutive capital raise. It also gives us flexibility to pursue strategic opportunities as they arise, and as I said earlier, over time, consider capital returns to shareholders. Finally, TNAV per share increased to 82.2p over the period. That is up 17%, which is consistent with our medium-term target of 10% to 15% growth per annum, and again, demonstrating our focus on generating shareholder value. Finally, I will just spend a few moments on credit performance, which remains a key pillar of our strategy.

Speaker #1: And alongside those external levers, our growing profitability is generating capital organically. And combined with that significant capital regulatory headroom, it gives us the confidence that we can fund our growth plans to 2030 without a diluted capital raise.

Speaker #1: And it also gives us flexibility to pursue strategic opportunities as they arise. And as I said earlier, over time consider capital returns to shareholders.

Speaker #1: And finally, PNAPA share increased to 82.2P over the period. That's up 17 percent, which is consistent with our medium-term targets of 10 to 15 percent growth per annum.

Speaker #1: And again, demonstrating our focus on generating shareholder value. So finally, I'll just spend a few moments on credit performance, which remains a key pillar of our strategy.

Speaker #1: As we grow, we remain just as focused on the quality of the lending we write as well as the volume. And just on impairment, I think disciplined credit management and the quality of our security and recourse arrangements have meant that, despite the geopolitical environment and economic backdrop, our portfolios have remained resilient with no sign of widespread credit deterioration.

Sameera Khaliq: As we grow, we remain just as focused on the quality of the lending we write as well as the volume. On impairment, I think disciplined credit management and the quality of our security and recourse arrangements have meant that despite the geopolitical environment and economic backdrop, our portfolios have remained resilient with no sign of widespread credit deterioration. That reflects the discipline that is embedded across both origination and in live portfolio management. All our lending remains within credit policy and appetite, and we stay close to the customers through regular monitoring of trading activity and repayments. Where accounts do become overdue, we have a specialist credit management team that engages quickly and establishing dialogue with dealers from day one to remediate any arrears as early as possible. The chart that you see on this page reflects that performance.

Speaker #1: That reflects that discipline has been embedded across both origination and in-life portfolio management. All our lending remains within credit policy and appetite, and we stay close to our customers through regular monitoring of trading activity and repayments.

Speaker #1: And where accounts do become overdue, we have a specialist credit management team that engages quickly and establishing dialogue with dealers from day one to remediate any arrears as early as possible.

Speaker #1: So the charts that you see on this page reflect that performance. To the left, it shows the number of dealers in arrears, which reduced to 36 at the end of the period.

Sameera Khaliq: To the left, it shows the number of dealers in arrears, which reduced to 36 at the end of the period, and that represents just 2.5% of our overall dealer base. In the middle, you can see the value of those arrears, which again remains low at 0.7% of the loan book. Together, that has translated into an improved cost of risk, which you see to the right of just 0.49% at the half year, and that 14 basis points less than the previous period. Despite that strong performance, we do remain appropriately cautious. We understand the economic headwinds, and we expect cost of risk to move back towards appetite in the H2 as some of those macroeconomic pressures play through.

Speaker #1: And that represents just 2.5 percent of our overall dealer base. In the middle, you can see the value of those arrears, which again remains low at 0.7 percent of the loan book.

Speaker #1: And together, that's translated into an improved cost of risk, which you see to the right, of just 0.49% at the half-year. And that's 14 basis points less than the previous period.

Speaker #1: Now, despite that strong performance, we do remain appropriately cautious. We understand the economic headwinds. And we expect cost of risk to move back towards appetite in the second half.

Speaker #1: As some of those macroeconomic pressures play through. And just finally, to touch on the arrears table in the bottom left, you can see the profile of our arrears across early arrears all the way through to default, which is where customers are more than 90 days past due.

Sameera Khaliq: Finally, to touch on the arrears table in the bottom left, you can see the profile of our arrears across early arrears all the way through to default, which is where customers are more than 90 days past due. Early and mid arrears remain very low, and we have 30 cases in what we call aged recovery, which is where we continue to work through asset recovery over the necessary period. I think encouragingly, the net realizable value of those assets which we have in our possession for these cases is GBP 2.7 million at the period end, compared to the GBP 4.8 million in default, and that remaining balance is individually assessed and appropriately provided for. We are covered across those balances in arrears. Overall, I would say that it is a strong credit performance, low arrears, improving cost of risk, and proactive resolution to problem cases.

Speaker #1: Earlier mid-arrears remain very low. And we have 30 cases in what we call aged recovery. Which is where we continue to work through asset recovery over the necessary period.

Speaker #1: But I think encouragingly, the net realizable value of those assets, which we have in our possession for these cases, is 2.7 million at the period end, compared to the 4.8 million in default.

Speaker #1: And that remaining balance is individually assessed and appropriately provided for through our covered across those balances, in arrears. So overall, I would say it's a strong credit performance.

Speaker #1: Low arrears improving cost of risk and proactive resolution to problem cases. And where dealers do fail, we protect recovery by redistributing products through our customer network or indeed selling secured assets to third parties.

Sameera Khaliq: And where dealers do fail, we protect recovery by redistributing products through our customer network, or indeed, selling secured assets to those parties.

Speaker #2: Great. Thanks, Samira. So just to wrap everything up, I think you can tell by the enthusiasm that Samira and I have talked through the half-year results, that we're really, really pleased with the performance, which has exceeded the expectations that we set at the start of the year.

Carl D'Ammassa: Great. Thanks, Samira. To wrap everything up, I think you can tell by the enthusiasm that Samira and I have talked through the H1 results, that we are really, really pleased with the performance, which has exceeded the expectations that we set at the start of the year. That being said, it will not be lost on anyone, the challenging macroeconomic and geopolitical environment right now, which does not show any immediate signs of letting up or becoming any easier. We have been through, since authorization, twists and turns. For those of you who have been on the journey, you will know the story very, very well. And we have navigated those uncertainties very well. So we have got a track record of working through these things. But the foundation really is the strong credit disciplines and approach to credit risk management that we have in place.

Speaker #2: That being said, it won't be lost on anyone the challenging macroeconomic and geopolitical environment right now, which doesn't show any immediate signs of letting up or becoming any easier.

Speaker #2: We've been through since authorization, twists and turns, for those of you who've been on the journey, you'll know the story very, very well. And we've navigated those uncertainties very well.

Speaker #2: So we've got a track record of working through these things. But the foundation, really, is the strong credit disciplines and approach to credit risk management that we have in place.

Speaker #2: But we also have a very high-quality customer base. That being said, we're not complacent. We're vigilant, and we will make the necessary calls, whilst trying to be supportive to our manufacturers and dealers.

Carl D'Ammassa: We also have a very high quality customer base. That being said, we are not complacent. We are vigilant, and we will make the necessary calls whilst trying to be supportive to our manufacturers and dealers to make sure that we are managing our credit profile and our asset security. We do have an awful lot of opportunities, as you have seen earlier, as to where to lend to support our growth. And I think that diversification, both from a customer perspective, product perspective, and a sector perspective, gives us enhanced resilience to navigate these uncertain times. As we look through to the balance of year, we are expecting everything to fall into place and for our results to land in line with the latest expectations of the market. We are going to see further growth as we head into the restocking period from our core inventory finance products.

Speaker #2: To make sure that we are managing our credit profile. And our asset security. We do have an awful lot of opportunities, as you've seen earlier, as to where to lend to support our growth.

Speaker #2: And I think that diversification, both from a customer perspective and a product perspective, and a sector perspective, gives us enhanced resilience to navigate these uncertain times.

Speaker #2: So, as we look through to the balance of the year, we are expecting everything to fall into place, and for our results to land in line with the latest expectations of the market.

Speaker #2: We're going to see further growth as we head into the restocking period from our core inventory finance products. We're expecting the pace of growth in asset finance to continue.

Carl D'Ammassa: We are expecting the pace of growth in asset finance to continue through the balance of this year into next year, and us to achieve that milestone of GBP 100 million loan book over the coming months. As Sameera has laid out, the financial fundamentals are all well under control, margins, costs, and we are continuing to widen those jaws between costs and income. So I think in light of what we know at the moment, we are expecting our loan book to fall at the end of the year in the range of GBP 920 million to GBP 950 million. So I guess in summary, you can see from all these results that we are well on track to our journey to 2030. Scaling the asset finance business is absolutely key.

Speaker #2: Through the balance of this year into next year, and for us to achieve that milestone of a £100 million loan book over the coming months. As Samira has laid out, the financial fundamentals are all well under control.

Speaker #2: Margins, costs, and we are continuing to widen those jaws s between costs and income. So I think in light of what we know at the moment, we're expecting our loan book to fall at the end of the year in the range of 920 to 950 million.

Speaker #2: So I guess in summary, you can see from all these results that we're well on track to our journey to 2030. Scaling the asset finance business is absolutely key.

Carl D'Ammassa: We have built excellent momentum so far, and this is a ginormous market opportunity, which we do not need to take an awful lot of market share in. We have demonstrated period on period that we can continue to be disciplined around cost, and unlock latent operational leverage in the business. We have made the investment over the years to ensure that our growth is cost efficient. We do expect to continue to see our cost-income ratio improve and land towards that 45% to 48% range. I think what is most exciting for us, we do not need Tier 1 capital. We have got all the capital firepower that we need from retained earnings, but also the capital instruments that are available to us, whether that is Tier 2. Samira and the team can make some choices for us to make sure that we are capital efficient.

Speaker #2: We've built excellent momentum so far, and this is a ginormous market opportunity, which we do not need to take an awful lot of market share in.

Speaker #2: We've demonstrated period on period that we can continue to be disciplined around cost. And unlock operational, latent operational leverage in the business. We've made the investment over the years to ensure that our growth is cost efficient.

Speaker #2: And so we do expect to continue to see our cost income ratio improve and land towards that 45 to 48 percent range. But I think what's most exciting for us, we don't need tier one capital.

Speaker #2: We've got all the capital firepower that we need from retained earnings. But also, the capital instruments that are available to us, whether that's tier two and Samira and the team, can make some choices for us to make sure that we're capital efficient.

Speaker #2: In fact, with that confidence about our plan, that we believe that from the financial year 2028 onwards, we consider buybacks or distributions back to shareholders.

Carl D'Ammassa: In fact, we are that confident about our plan, that we believe that from the financial year 2028 onwards, we consider buybacks or distributions back to shareholders. Those are something that could be regularized thereafter, whilst still supporting our journey to at least a loan book of GBP 1.5 billion by 2030. Ultimately that equity return of 20%, it genuinely feels as if that is within our sights, within our grasp. Thanks very much for listening to the presentation. What we would like to now do is come back to our host and open up to some questions.

Speaker #2: And those are something that could be regularized thereafter. While still supporting our journey to at least a loan book of one and a half billion by 2030.

Speaker #2: And ultimately, that equity return of 20 percent, it genuinely feels as if that's within our sights, within our grasp. So thanks very much for listening to the presentation.

Speaker #2: What we'd like to now do is hand back to our hosts and open up to some questions.

Operator: That is great. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides from the published Q&A, can be accessed via Investor Dashboard. Carl, at this point, if I may hand over to you to take us through the Q&A session, and I will pick up from you at the end. Thank you.

Speaker #1: That's great. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen.

Speaker #1: While the company take a few moments to review those questions submitted today, I would like to remind you that recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed by our investor dashboard.

Speaker #1: Carl, at this point, if I may hand over to you to take us through the Q&A session, and I'll pick up from you at the end.

Speaker #1: Thank you.

Speaker #2: Thanks. Thanks very much. So we've got a few questions here. So we'll start with Justin's question, which is, and I'll hand it straight over to Samira.

Carl D'Ammassa: Thanks. Thanks very much. We have got a few questions here. We will start with Justin's question, which is, and I will hand this straight over to Sameera, how do we expect net interest margins to evolve as the lending mix continues to change? Over to you, Sameera.

Speaker #2: How do we expect net interest margins to evolve as the lending mix continues to change? So over to you, Samira.

Speaker #3: Thanks, Carl. And thank you for your question, Justin. So, yeah, I think we've set our expectation in terms of what a normalized net interest margin would look like over the long term, which is around 7%.

Sameera Khaliq: Thanks, Carl, and thank you for your question there, Justin. I think we've set our expectation in terms of what a normalized net interest margin would look like over the long term, which is around 7%. Obviously, we have some headroom against that at the moment, 7.5 at the half year. But it definitely is predicated on our lending mix evolving. If you think, historically, we've largely been a monoline, and our margin has been driven off that one product. We've got three different products now, and within that, there's lots of individual segments within those products. Therefore, the mix of that lending overall will be the main driver of that NIM trending towards 7%, particularly as asset finance grows. We know that is a lower margin overall, as you'd expect for consumer lending versus commercial.

Speaker #3: Obviously, we have some headroom against that at the moment, sort of at 7.5 at the half year. But it definitely is predicated on our lending mix evolving.

Speaker #3: So if you think historically we've largely been a monoline and our margin has been driven off that one product. We've got three different products now.

Speaker #3: And within that, there's lots of individual segments within those products. And so therefore, the mix of that lending overall will be the main driver of that new trending towards 7 percent.

Speaker #3: Particularly as our set finance grows, we know that it is a lower margin overall, as you'd expect for consumer lending versus commercial. But the return on that lending is comparable to our other product lines because there's a lower cost to serve.

Sameera Khaliq: But the return on that lending is comparable to our other product lines because of the lower cost to serve. So long term, NIM trending towards 7%, and that's predicated on a more diverse lending base and particularly the growth of asset finance.

Speaker #3: So, long term, new trending towards 7 percent, and that's predicated on a more diverse lending base and particularly the growth of asset finance.

Carl D'Ammassa: Great. Thanks, Sameera. We've had another question about whether the board has ever considered up-listing to Main Market. Being entirely honest, no, we haven't. It's not been something that has even been a feature of our discussions. I think where we're at the moment, we think AIM is the right place for us. Share price is starting to improve, which has taken us through the 100 million market cap now, which feels the right size and shape for an AIM-listed business. So no immediate plans to consider that. Hopefully that answers the question. Another for me, which is, to what extent are the pending class actions against holiday park operators a consideration for you when providing inventory finance to that sector? Well, it is a consideration across all lending because we do provide asset finance as well.

Speaker #2: Great. Thanks, Samira. So we've had another question about whether the board has ever considered uplifting to main market. Being entirely honest, no, we haven't.

Speaker #2: It's not been something that has even been a feature of our discussions. I think where we're at at the moment, we think AIM is the right place for us.

Speaker #2: Share price is starting to improve, which has now taken us through the £100 million market cap, which feels like the right size and shape for an AIM-listed business.

Speaker #2: So no immediate plans to consider that. So hopefully that answers the question. Another for me, which is to what extent are the pending class actions against holding park operators in consideration for you when providing inventory finance to that sector?

Speaker #2: Well, it is a consideration across all lending because we do provide asset finance as well. It will be no surprise to you that we know who to work with in this market and who not to.

Carl D'Ammassa: It will be no surprise to you that we know who to work with in this market and who not to. This is an issue around perhaps some of the lower quality end of the market, and it has been something that the industry body has been very tuned into, and a whole range of transparency around fees, charges, exit options, et cetera, in relation to holiday homes has been laid out. So we only operate both from an inventory perspective, but also from an asset finance perspective with those people that subscribe to the industry body and behave in the right way. We don't provide funding to everybody in the market. We are very careful with, right across all our asset classes, actually, who we want to work with. Another question for Sameera. Do you have any plans to issue further sub-debt, either Tier 2 or AT1?

Speaker #2: This is an issue around perhaps some of the lower quality end of the market. And it has been something that the industry body has been very tuned into.

Speaker #2: And a whole range of transparency around fees charges, exit options, et cetera, in relation to holding homes. It's been laid out. So we only operate both from an inventory perspective but also from a asset finance perspective with those people to the industry body.

Speaker #2: And behave in the right way. We don't provide funding to everybody in the market. We are very careful with right across all our asset classes, actually.

Speaker #2: Who we want to work with. Another question for Samira: Do you have any plans to issue further sub debt, either Tier 2 or AT1?

Speaker #3: Yeah, good question. And definitely, it's on our horizon in terms of optimization of our capital stack. So we already have £20 million of Tier Two on our balance sheet.

Sameera Khaliq: Yeah, good question. It's definitely on our horizon in terms of optimization of our capital stack. We already have GBP 20 million of Tier 2 on our balance sheet. We've got capacity for more, and we've also got opportunities to look at the capital stack between CET1 and AT1. That's very much part of our corporate planning process, which we've commenced and we'll share with our board later this year, which will include a full capital plan and what an optimal capital stack looks like. The short answer is yes, we're looking at that. Yes, we'll be looking to optimize between the different capital instruments. What that looks like just yet, we're still working through, and as I said, that will form part of our corporate planning process.

Speaker #3: We've got capacity for more. And we've also got opportunities to look at the capital stack between CT1 and AT1. So that's very much part of our corporate planning process, which we've commenced and will share with our board later this year, which will include a full capital plan and what an optimal capital stack looks like.

Speaker #3: So the short answer is yes, we're looking at that. Yes, we'll be looking to optimize between the different capital instruments. What that looks like just yet we're still working through.

Speaker #3: And as I said, that will form part of our corporate planning process.

Speaker #2: We've got a question here from David S. Shareholders and time finance seen unhappy with the recent takeover price and low multiple earnings. Does that cap on the valuation for our company?

Carl D'Ammassa: We've got a question here from David S. "Shareholders in Time Finance seem unhappy with the recent takeover price and low multiple earnings. Does that put a cap on the valuation for our company?" Well, look, I genuinely don't know how shareholders are feeling about Time Finance. That is a business that we know reasonably well but has a very different characteristic to DF Capital. It's a non-bank lender. Yes, it's been growing, but our pace of growth is very different. I don't think you can draw a comparison between the two businesses in any way. Regardless, our board is very tuned into driving and ensuring that shareholder value is maximized. We've laid our stall out very clearly that we're going to be looking to enhance shareholder value by 10% or 15% each year over the next few years.

Speaker #2: Well, look, I genuinely don't know how shareholders are feeling about Time Finance. That is a business that we know reasonably well, but it has a very different characteristic to DF Capital.

Speaker #2: It's a non-bank lender. Yes, it's been growing, but our pace of growth is very, very different. So, I don't think you can draw a comparison between the two businesses in any way.

Speaker #2: Regardless, our board is very tuned in to driving and ensuring that shareholder value is maximized. And we've laid our store out very clearly that we're going to be looking to enhance shareholder value by 10 or 15 percent each year over the next few—over the— That should be seen as an exciting opportunity for shareholders.

Carl D'Ammassa: That should be seen as an exciting opportunity for shareholders and anybody that wants to add to the register as well. Those things will all be taken into consideration if we were similarly approached. We want to make sure that the full potential of the organization would be recognized. However, we're not going to be distracted by that, David, because we've got an awful lot to do over the next few years, and the management team and I are very excited about bringing our ambitions through to 2030 to life. You all, as shareholders, feeling the benefits of that. I think that unless there's any other, because there's no other questions that are coming through at the moment, I think that's probably it. Maybe I should just wrap up and say thank you very much for joining us today, listening to our story.

Speaker #2: And anybody that wants to add to the register as well. So those things will all be taken into consideration. If we were similarly approached, we want to make sure that the full potential of the organization would be recognized.

Speaker #2: However, we're not going to be distracted by that, David, because we've got an awful lot to do over the next few years. And the management team and I are very excited about bringing our ambitions through to 2030 to life.

Speaker #2: And you all as shareholders, feeling the benefits of that. So I think that unless there's any other because there's no other questions that are coming through at the moment.

Speaker #2: I think that's probably it. So maybe I should just wrap up and say thank you very much for joining us today, listening to our story.

Speaker #2: For those of you that are shareholders, thank you very much for your support, your continuing support. I hope you are as excited about our journey as we are.

Carl D'Ammassa: For those of you that are shareholders, thank you very much for your support, your continuing support. I hope you are as excited about our journey as we are. If you're a non-holder, hopefully you're excited and want to join the register and be part of the journey as well. We're going to get on now with the balance of year, and we'll catch up with you all in due course at the next update. Thanks very much for joining.

Speaker #2: And if you're a non-holder, hopefully you're excited and want to join the register and be part of the journey as well. So we're going to get on now with the balance of year.

Speaker #2: And we'll catch up with you all in due course at the next update. Thanks very much for joining.

Speaker #3: Thank you.

Operator: Thank you.

Sameera Khaliq: Thank you.

Speaker #1: Fantastic call, Samira. Thank you very much indeed for updating investors today. Could I please ask investors not to close this session as we now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations.

Operator: Fantastic. Carl, Samira, thank you very much indeed for updating investors today. Could I please ask investors now to close this session, as you know you will be automatically redirected to provide your feedback which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you all.

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Q2 2026 Distribution Finance Capital Holdings Earnings Call

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