Distribution Finance Capital Holdings plc (DFCH) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Distribution Finance Capital Holdings plc Interim Results Investor Presentation. [Operator Instructions] And I would now like to hand over to CEO, Carl D'Ammassa. Good afternoon.

Thanks very much, Alex. Welcome, everyone, to our interim results. just introducing myself again for anybody that hasn't been here before. I'm Carl D'Ammassa. I'm the CEO of DF Capital. And Gavin Morris, our CFO, will be presenting with me today. Before we launch into the full year -- sorry, the half year results, I thought it might be just worth for anybody that these reminder of what we do and what we're about to start a couple of minutes overview on the -- I mean we were found in 2016 as a nonbank lender, providing working capital solutions to dealers and manufacturers predominantly based in the U.K. and we pursued a banking license, some were authorized 4 years ago, actually into -- just coming out of COVID in September 2020. And we've stayed true to the principles and the segments that we were founded to support, i.e., those manufacturers and those dealers. That being said, we have scaled the bank since authorization over the last 4 years. We support an array of dealers and manufacturers across a significant number of sectors now, motorhomes, caravans, lodges, holiday homes, commercial vehicles, plant and machinery, industrial equipment, motorcycles, marine, automotive, now as well is in our armory. So we are a very diverse lender. We do lend against individual assets that allow manufacturers to ship products to a dealer's forecourt so that they have product to display that are available to purchase by their end users. We take individual title of those assets. And we are repaid in full once the dealer sells the asset and what we hope happens is that vacant plot on the forecourt is filled with another motor or caravan or boat or commercial vehicle. Our lending is in short in tenor. It's typically about 150 days. And you'll hear a little bit later on that whilst we are a floor plan or inventory finance or stock finance provider, we do have ambitions to support our dealers and our manufacturer partners in a significant way, unlocking other routes to sell their products, but I'll talk about that a bit later on. So this is my -- I'm finally calling this my happy slide because we've had an amazing start to the year once we received authorization in September 2020. We became almost myopic in looking to get to breakeven and through profitability. And we were breakeven very shortly after authorization. So it's great for us to be reporting now that almost at that 4-year milestone that we now are at a significant and sustainable profitable run rate for the first half of this year. We achieved a profit before tax of GBP 9.2 million, which is 180% up on the same period last year and [indiscernible] the full year out the GBP 4.6 million in 2023. That GBP 9.2 million did include a GBP 1.7 million recovery in relation to any paid loan that we took last year. But even if you remove that GBP 1.7 million to have an underlying GBP 7.5 million worth of profit before tax is really, really pleasing to see. In relation to impaired loan, we are looking to also see a potential upside next year in relation to additional GBP 3 million worth of recovery, but that hasn't been captured in this year's accounts anywhere that we'd expect that to roll through next year. What's been really pleasing and I guess, is the route to profitability has been the scaling of the bank and the growth in our new lending. We're now a record GBP 710 million worth of lending in the first half of the year which is up 17% on the same period in 2023. And the loan book reached over GBP 600 million as well, which is up 16%. Additionally, our net interest margin, which is our gross revenue in simple terms, minus our cost of funding, which we raised via deposits has been strong at 7.88%, and that's really been off the back of Bank of England base rate changes, efficiency in how we raise our retail deposits and continued, I guess, pricing discipline and how we allocate our capital across the firm. It's always easy as a lender to push money out to borrowers and we've been very focused on credit quality and ensuring that we bring on high-quality to dealers and that across our 1,200 or so dealers, we do see a continued improvement in the overall quality and that will be no surprise that our level of arrears is very low. We've got about 0.5% to 0.5% of the loan book, which is 1 day past due. I think those of you that are used to financial stocks will know that most lenders report arrears 1 month down, we reported 1 day past due. And our arrears numbers also include those accounts that are in legal workout as well. If we adjust for the recovery in relation into RoyaleLife, which we were tough last year. Our cost of risk, which is provisions and impairments remains very low, well below our 1% through the cycle at 0.61%. As we scale the firm as well, we've continued to see cost efficiency. So our cost-to-income ratio has improved by almost 3 points. And that's despite ongoing inflationary pressures, whether that's wage inflation or the suppliers pushing through rate increases. And that's largely because our platform is highly digital. We have latent capacity in our operating model. And we've continued to invest in technology solutions that will make us more efficient. It's also worth pointing out as well that cost efficiency also includes investments in some of the new products and services that we'll talk about a little bit later on. Really pleased to also report the return on equity to be over 10%, and that's adjusted for the -- that one-off recovery. That's the first time that we've tipped over a 10% ROE. But you can see that we're now really building momentum towards the mid- to high-teens returns target that we've talked to you and the wider investor community about. And I guess what's also really pleasing is that the retained earnings has enabled us to self-generate capital that supports growth. So our tangible net assets have increased by GBP 9 million year-on-year, which pushes our tangible net assets to GBP 107 million and the tangible net asset per share to almost GBP 60. Just comparing the half years with the half year. I won't go through all of these numbers, but you can see the growth in loan book, the growth in gross yields. The stable position in relation to the net interest margin and the growth in shareholder value as far as tangible net asset value is concerned. It's also worth noting just on the -- in relation to the cost of risk that whilst that is slowly to be up over the years, it is very much below that 1% through the cycle and is also much lower than where we were in 2020 when we were at 86 bps as a percentage of the overall portfolio. So you can see why I've sort of described the first line, and I guess this one as the happy slide given the extent of performance across the group. Just looking at in a little bit more detail about originations. There's no doubt to us that our products and services continue to resonate with dealers. We have -- we're supporting more dealers than ever before. We have more credit lines touch to dealers than ever before, whilst also being very choosy who we choose to operate with. And that has seen quarter-on-quarter over an extended period of time that our new loan origination has grown significantly. And we have a CAGR of almost 40% in relation to that loan book growth. I think it's fair to say for those of you that have tuned into the story for quite a while, but since the pandemic, there has been a fair amount of in supply chain that has at some point for dealers. It's been bonanza seasons with strong sales because they've struggled to get stock, there's been scarcity in stock and elements of the supply chain have really, really struggled. We're now starting to come into a period that we believe is actually more a normalization, i.e., more like the pre-pandemic period. So as I mentioned when I introduced the business, we are seeing our stock days extend, which is good news for our lending balance. But it actually is not an extreme that we need to be worried. It is more, more at normalized levels, which is about 150 days. And we do, by sector, keep an eye on this and actually by dealer as well and take any action that we need to. I just wanted to talk about some of the extremities that we're seeing across the sectors that we operate. And we have seen in the Motorhome & Caravan market that there has been very, very strong loan origination, which means lots of stock hitting the dealer forecourt. But we've also seen quite significant sales despite the cost of living crisis despite the higher interest rates. Motorhomes and caravans have been in very, very strong demand and continue to be. Conversely, at the other extreme, the lodges, the holiday home space are -- these are all prefabrication, I should say, holding homes and residential units. That has perhaps struggled more significantly on a relative basis. Dealers have an adequate stock that's been minimal new products being taken onto the forecourt. And some actually of the holiday parks have been converting stock for sale to rental units, which we've been happy to support. It seems a sensible thing to do. So stock days have extended in that lodge space, up to 288 days seems to have stabilized that. But that's well within our appetite of 300 days. And as I say, we are worried about a particular dealers we do take early action as well. So I just wanted to talk through those extremities as far as the markets are concerned. What I'll do now is I'll hand over to Gavin just to talk through the financial statements and the performance of the group in a bit more detail. So over to you, Gavin.

Great. Thank you, Carl. So I'll drill down more into the income statement and the balance sheet. So if we start off with the income statement, this clearly shows a strong underlying sustainable profit we're generating, starting off at net income. We've seen a 24% growth in net income, that's a function of both loan book growth and the very strong net interest margin of 7.8%. The driver of that high net interest margin, one, we've got strong pricing discipline, and we've been able to pass on base rate movements to our dealer customers as base rates have gone up. The loan book matures more quickly at about 150 days than our deposit book. And therefore, although deposit rates have also gone up as base rates have gone up, they've gone up more slowly, and therefore, we've benefited from that. Additionally, deposit rates haven't gone up to the same extent as base rates that's given us further upside. We're now in a sort of rates downward cycle and therefore, you would expect some of that to reverse as we go through that, but we would expect NIM to reduce over the medium term. We don't expect it to reduce very quickly at this stage. I'll move on to staff costs. I think it's key to highlight that at the moment in the business, we've got the people resource we require over the near term to scale our existing lending and existing products, and our retail deposit propositions. We've got what we need in the business now to do that. So we don't really need to be adding on many more heads to do that. Therefore, that allows us to unlock further operational leverage as we grow the loan book. This is reflected in the -- we've had a 9% increase in staff costs, which obviously include wage inflation, and that compares against the 24% increase we've seen in our net income. In respect to other operating expenses. This increase reflects us continuing to invest in IT. This is both in ongoing automation, which will give us efficiencies going forward, but also in our IT infrastructure as we grow and mature as a bank. It also reflects the investment we've made in our HP product that we will continue to invest in back end of this year through the start of next year. Therefore, despite the inflationary pressures, we further reduced our cost-to-income ratio as Carl highlighted at start from 61.5% to 58.8%. In respect to the impairment charges, Carl really covered this. The underlying cost of risk is GBP 1.8 million, which is running at 61 bps. And although it has gone up on the prior half year, it's still a very low number that we very happy with. So what that gives you is an adjusted profit before tax of GBP 7.5 million, and that's a 25% increase compared to prior year. And again, as Carl said, I would just, I guess, highlight the fact that is now a double-digit post-tax return on equity on that as at 10.3%. If you then add in the write-back we got on the rollout case, that's a GBP 9.2 million profit before tax for the first half, which, again, we're delighted with. If I move to the balance sheet. We've touched on the growth in the loan book, up 16% to just over GBP 600 million. Deposits have grown accordingly and they're now at GBP 579 million, and that's across about 15,000 different depository accounts. And I just thought I spent a bit of time highlighting deposit proposition because we are delighted with the performance of it to date. We had a strong retention rate. So when our products mature, we have about 60% retention rate. Earlier this year, we received Feefo's Platinum and Trusted Service Award. Our Feefo scores have increased during the period from 4.7 out of 5 to 4.8 out of 5, which shows a great customer satisfaction we're getting. And we've recently launched our first business savings account. So our expectation is on business savings. We can get raised deposits slightly lower rate than the retail deposit accounts, probably in the range of 30 to 60 basis points, but it is a smaller market. So the growth in the business deposits is going to build over time. It's not going to be sudden. But that just, again, gives us further product diversification as we grow the loan book and therefore raise deposits accordingly. In respect of our risk-weighted assets, you can see that these have increased significantly less than the loan book increase, and this is a reflection of the capital efficiency we're getting from our BBB ENABLE Guarantee scheme. As a reminder, we further upsized that scheme from GBP 250 million to GBP 350 million in July. So that's now we're using that to its full capacity. Our capital position, therefore, means we're well positioned for future growth ambitions. At this stage, given our current capital, the BBB ENABLE Guarantee scheme and our Tier 2 funding, which we currently drawn GBP 10 million, and there's a further GBP 10 million to go, we can grow the loan book to around GBP 850 million slightly higher. But the expectation is at that point, we're generating sufficient profitability to reinvest that in the business to grow the loan book at another GBP 100 million of a year. And then just to bring out again, what we've seen is our tangible net asset value has increased by over 4.0p over the last 6 months. So that makes now almost 60p. Moving on to our credit performance. At this stage, we're not seeing any signs of a weakened cash flow position. But as Carl said, we are myopic not just on profitability, but on keeping our arrears down, so myopic [indiscernible] portfolio. And our strong portfolio management and focus has meant that June, there were just 19 dealers out and our total dealer base of 1,250, there were 19 dealers on day in arrears. And that translates to just about 0.5% of the loan book. And that has translated to cost of risk in the first half of 0.6%. Again, it's well below our through-cycle appetite of 1%. Moving on to the next slide. This shows the diversity of certification and the strong asset security across our portfolio, and we split that into sort of the 3 main segments in the way we look at the portfolio. As a reminder, we have a fund against home sale value, not retail value. And on average, there's around a 20% retail markup. So when we talk here about we've got an LTV against wholesale of about 83% against retail, that will be more like 70%. The reduction in LTV we've seen over the period, that's a function of because we're seeing our stock base extend back to what we see as the more historical norm of 150 days from circa 120 days. That's an extra month. It's on our books. And as a reminder, our dealers are paying principal repayments every month. So that means additional principal repayments, which brings down the loan to value. If we look at the trends we're seeing in these sectors, I think Carl has touched on the leisure sector with some issues we've seen with lodges, high interest rate environment has driven reduced demand. Counter to that, we've seen some very strong both originations and sales in respect to motorhome and caravan. Motorhome & Caravan is now our largest sector at GBP 163 million. Moving on to Powersport. In Marine, we've seen strong demand at the luxury end of the market and therefore slight shorting of stock days. And we've onboarded new customers in this area and increasing utilization, which is helping us grow the loan book. The launch of our specialist automotive is progressing well, and you can see it's growing substantially in H1 from relatively low [indiscernible], almost tripled in size to GBP 22 million at the half year. In respect of the commercial segment, the general economic uncertainties need to demand in industrial and agriculture. So we've seen those stay fairly flat. And in transport, and when we talk about transport, we're talking sort of like commercial vehicles, we're not talking cars here. Demand has been muted. We've seen product discounting across manufacturers. Dealers are carefully managing the inventory and how much they want from their forecourt, but we expect this to improve as we head into 2025. So Carl, can I hand back to you on the outlook.

Thanks, Gavin. So I think one of the things that I think you can see is that we're -- we've been building a very strong capability, but have been talking for an extended period of time. about how are we going to get to the mid- to high teens return on equity and that comes through further scaling the bank and becoming a multiproduct lender -- supporting those as the dealers and the manufacturing partners. And we have on our journey for those of you that have been following us for the next period of time, look at how we could enhance our product suite, develop our products suite further by looking at M&A opportunities, acquiring capabilities. And if I'm honest, we haven't found the right fit. We are quite a cautious firm in how we want to bring things onto it for our customers. And we want to make sure that any acquisition was going to be successful and have the right characteristics -- financial characteristics and performance characteristics. So we decided at the back end of last year that actually developing products and services organically was the right route forward. And as I mentioned earlier, we have been investing through this year. And we've been investing on 2 fronts to look at new sectors that we can transaction from an inventory finance perspective. So we've built a technology-based product capability. It's very early stage in its rollout at the moment that will allow us to support and serialized assets in warehouse and alike with sophisticated integration with stock management systems of distributors whilst we still maintain the level of returns and security in the underlying assets. So we think that will work really well in technology-based and things like renewables -- the renewables market. And we've already got a relationship in that regard. So that universe, that market is quite sizable. So we can be quite choosy about where we look to play. I think the biggest player and probably the most in demand for us is sales aid financing. So I think you'll recognize that when a motorhome and caravan or a light commercial vehicle piece and plant machinery leaves the forecourt, generally, it's financed by a bank and some guys. So we built a HP asset finance capability. We're expecting that to be a system ready by the end of this year. And then we look to start lending to the end users of the product in the early parts of 2025, certainly in the first half. And that is a significant market for us to operate in. As I say, I can't come quick enough for a number of our larger dealer, dealer partners. So I think one of the -- we'll come to the question shortly, but we've really worked hard to continue to scale the bank and use capital-efficient tools to support that growth. So we've worked with the British Business Bank on the ENABLE Guarantee and ENABLE Guarantee has extended GBP 350 million. We've also raised Tier 2 capital alongside the Tier 1 on capital 10 million utilized, a further GBP 10 million available for us to draw on from British Business investments. And that aggregate position allows us to get from that GBP 600 million that we reported to about GBP 850 million, which we think will probably be by the end of next year. Getting to GBP 850 million will -- we don't need Tier 1 capital to do that. But it does give us optionality then because we are throwing off adequate retained earnings to consider what we do with those retained earnings, and we could plow all of that into support or further organic growth without Tier 1 capital growing at roughly GBP 100 million a year across the array of lending products that we're looking to develop. We're really pleased with where we're at the half year. Performance is strong as we look forward now towards the end of the year. We're expecting our loan book to land at the end of the year in a GBP 650 million to GBP 700 million range, which is in line with the current expectations of the Board for the full year performance, which clearly will be significantly up on prior years, and we'll continue to deliver that double-digit ROE that you've seen in the first half. So I think what we can do now is thanks very much because we've had quite a few questions. So what I'll try to do is perhaps bring some of these together.

[Operator Instructions] I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed by dashboard. And Carl, Gavin, as you mentioned, we have received a number of questions throughout today's presentation. And if I may now hand back to you kindly ask you to read out the questions, give responses for appropriate to do so, and I'll pick up from you both at the end.

Okay. Thanks very much, Alex. So I won't address it as I say, I'll try and cluster these together by a common theme. So let me deal with -- we've got a couple of questions in relation to RoyaleLife and general recoveries. So I think we perhaps covered this last time, what have been the lessons learned. I mean RoyaleLife was in itself unique in our portfolio from an ownership structure from a size and from a shape perspective. And we've learned an awful lot from that in how we manage those. That being said, we've also determined having learned the lessons of that going through all the detail, we have made some sizable adjustments to our credit risk appetite in relation to group similar complexity and similar ownership structures that makes the movement of cash across the group entities, very difficult to track and monitor. So I'm confident on an existing portfolio base on a go-forward basis that we won't have anything that has the characteristics of RoyaleLife. I think one of the other questions then really is what you record in making recovery. And I think one of the things that because we've got such a good story on losses, it doesn't actually present what actually goes on in the business intra-period. The individual asked the question side. Yes, we are asset backed. We have full security and we do quickly run in, repossess assets, use our relationships across the sectors to redistribute those assets. Often we call on the manufacturer because we have repurchase arrangements in place. And in some cases, our loan-to-value is quite low. So on a net basis, we actually will find that we can actually maybe make some money and a considerably clear our position. So the cleanness of our portfolio and the output metrics that you see really doesn't demonstrate the amount of work and the strength of security that we have in place across our lending products. There's been a few questions around deposit raise, I think. So you recently launched a business savings accounts. Can you explain the strategic value of diversifying your deposit base and how you plan to scale this new product. And then next question is, can you explain your customer deposit strategy? I noticed at the moment, you would deposit offering the shorter-dated term deposits, how the customers tend to learn about the bank. And then the final question on deposits is what percentage of your total deposit funding falls in the FSCS guarantee. So I'll -- I think, Gavin, you could probably answer all that in one go.

Yes, absolutely, absolutely. So if I start with strategy in general. So effectively, the way we raise deposits is we have something we call a great rate strategy. So at the point, so obviously, we're forecasting, we're understanding the growth in our loan book, the maturity of the existing deposits, so we can clearly see what deposits we need to raise. And the way we raise deposits, it's very simple. We will go at the top or in the top 3 of the best buy tables and the money comes in very quickly. The level depends on which market you're going to, say, for example, about a year ago, we went into easy access, and we were at the top of the table. And I think within about a day or we pulled the product after 36 hours and we had 50 million applications, and we normally get about 80% of that ends up turning into cash coming in the door over the next 10 days. So it's really being top of the best buy table. I think we've now got brand recognition and we've got the very strong Feefo scores that have come through, which helps sort of strengthen that. In terms of deciding -- there's a question about at the moment on deposits short-term raise deposits. When we're looking to raise deposits, we're looking at the maturity profile of our asset repayments, the maturity profile of our deposits, and also the pricing in the market. And we're weighing that all up to decide what's the most appropriate, but we have to carefully manage our deposit maturity profile to make sure we've got no repayment. If we then move on to further diversification of business savings. As we just said, business savings has gone live in the last couple of months. The strategy there is very similar that we would look to be top of the best buy tables. But it's fair to say that just off the best buy tables, the money comes in far more slowly than retail. So we see this as an opportunity to get some cheaper funding in. There is a little bit more work to do upfront to bring that deposit on your books because of the onboarding we have to do and therefore, we see that as being slow, steady great growth to help diversify our deposit product portfolio going forward, but it's not going to happen overnight, that will take some time. And then finally, on FSCS. The vast majority of our customers hold less than 85,000. I think the number is around 98% is FSCS, but it's certainly north of 95%.

I suppose the root of the question may also be then you don't seem to be in the market graph. We've worked really hard to retain our retail deposit customers. So we do have a number of loyalty products as we would call them, that are happening behind the scenes. And anybody that happens to be on this call is the deposits as low, you probably see us offering loyalty products that aren't there in the European market. It's far better for us to retain an existing customer. Gavin, I think on the business savings side effect you had an example [indiscernible] retail and business.

Today, we've got 2 products out there. We've got two 90-day products, one is retail, and that's top of the market paying 5.3% combines business, and that's top of the market paying 4.76%. That's a 54 basis point differential for effectively the same product compared business to retail.

I think we'd love the market to be huge for business, but it reality it's not. So we've got to have a whole nice mix of all this to bring the...

Absolutely, absolutely.

Different from the cost down. One of the questions then is around higher purchase and what's your targets. I mean, look, -- the opportunity is huge. But as I said, we are very conservative in launching new things. We're probably in the early stages of anything, very cautious about our growth ambitions. Where I would see this unfolding is it could be quite a significant play for us. But what we do need to just keep an eye on is returns. And particularly if we are -- we do find that we're not wanting to raise further capital to next year. What I want to be doing is putting the capital to work at the highest returning lending channels. So I don't want to be vague in saying what the targets are, but they're sensible. The opportunity is huge. But regardless any product that we're in, it will be the strongest risk-adjusted return that we'll be looking to deliver on that. Another...

Just on HP, I think it's just worth stressing. So I guess one of the beauties of the HP product is, at the moment, our inventory products, as I said, it turns about 150 days. So last year, about GBP 1.3 million origination and the loan book was about GBP 600 million. If we convert a small portion of those assets when they sold off the forecourt into HP, the HP product is going to sit on our balance sheet for sort of 4, 5, 6, 7 years. So that's the great thing about HP. It just gives us far longer maturity of assets once they're on...

The capital characteristics of lending are different. Clearly, HP proposition will be more diversified for us as well. So there's a whole array of things that you clearly would be expecting us to take a look at as we look to push on with growth. As far as loan to values are concerned, we'd be expecting against new units, which is obviously the dominance of our lending to be taking what is customary a 10% deposit upfront. And then clearly, the product is fully amortizing from there. On used assets, clearly, there's a much bigger deposit required in relation to that lending, although our starting point would always be against new. Just looking at some of the questions around capital. So one of the questions is around an equity raise. When might you expect to fully utilize loan facility? And will an equity raise be necessary soon to fund further growth? Well, we've got enough runway to get to GBP 850 million. The firm does not need to raise capital. However, the opportunities that are ahead of us are quite significant, and we could decide if we wanted to accelerate our growth journey to Tier 1 placing. If we did not do a Tier 1 pacing, then I said earlier, we can grow a nice healthy rate of retained earnings of about GBP 100 million a year, which is great. I think we've got a similar question. Tier 2, we are maxed out in relation to our Tier 2 borrowing at the moment. But as we look to grow Tier 1, capital will be able to take incremental amounts of Tier 2 capital could unlock some further growth, but that is encapsulated in that GBP 100 million a year that I talked about. In relation to other non-dilutive capital to accelerate growth. Tier 2 is an option as said, but that's very small numbers. ENABLE Guarantee, I think we're probably maxed out in relation to that. There are other conversations with the British Business Bank in relation to other ideas that they may have. But I would say that we're probably maxed out and on all those other things, it will be retained earnings that support an organic growth plan without Tier 1 capital. A question around dividends and maybe -- sorry, dividends generally. Look, I mean, I think it's the wrestle. And I think now we're at this point of generating sizable profits. We do have optionality as to what we do with those retained earnings and it may well be that dividend is something that the Board determines is the right course of action while supporting perhaps a slower rate of growth. So rest assured, it is something that the Board keeps on the constant review and we'll determine when it's the right time to do that. Thus far, it has not made sense, but it's right. I think Mark the way he asked the question it's right for you to be raising that right now given the extent of profitability that the firm is generating. Impact sort of base rate movement on profitability. And I think also the NIM direction of travel. Gavin, do you want to pick that one up?

Yes. So I guess with respect to NIM, we saw in the first half, it was 7.8%. As base rates have started to come down, we expect that to start to drop in the second half of the year. We're still going to be well above 7% by the year-end, given the 7.8% we've got locked in already. I would expect next year, it will reduce, I think still high 6s. So I think it's going to be to '26 maybe '27 before it gets close to about 6%. It's some way -- I think it's some way down the track. The only caveat I would say is that the one uncertainty is with respect to deposits and the cost of deposits. When we get certainly to the second half of next year, there's quite a lot of banks who took out TFSME funding that becomes due for repayment. And we're not quite sure what that will do to the competitiveness of the deposit market and therefore, whether that might push up across the deposits and we're keeping a close eye on that. In terms of profitability, I mean, we're clearly very profitable. That may bring down our NIM slightly, but it doesn't alter our aiming for our mid- to high teens ROE in the medium term.

It's fair to say that TFSME point that it has to be extremely competitive for us to get anywhere near 6%....

I think so. It just might accelerate that reduction to an extent.

Yes. But we talk about the 6%. That 6% was when base rates were really, really low. So it's got a long way to come back at selling back down before that fully in with 6% again. A new deal of acquisition, how are you sourcing new dealers? Or are you winning market share? And if so, who from. Look, I think, yes, we are winning market share. We've seen in the motorhome and caravan space, we do tend to transact with most of the high-quality names. We'll win market share, not on price, not on credit appetite, but on the quality of service that we offer relative to our competitors. Some of those competitors are the bigger banks, Black Horse, which is owned by Lloyds Bank is a big competitor in the motorhome and caravan space as an example. We have some of the French banks that are in some of the commercial assets as well. But it is a service that we will win market share with existing dealers. We sourced new dealers largely from the manufacturer introductions. So when we bring on a new manufacturer, they give us access to their entire dealer network. It's on us to go and convert them. And a lot of those dealers will provide multi-asset classes or multi-manufacturer brands. And we look to build a relationship of offering great service through those dealer introductions. There's no obligation on us as a firm to -- because of the manufacturing relationship to work with every dealer. But we do look to try and work with as many that we can that fall within our credit appetite. So why have average stock days not yet fully normalized? I think if you look across sectors, you can probably see some which are normalized, so much and I've talked about most Caravan earlier, very strong market demand at the moment for the end product and a lot of new loans being originated. So it's a story by sector. And then I think the last question here that we've got, which will be no surprise is one that's front of our mind and thank you very much whoever wrote this. The share price is not reflecting -- share price not reflecting the current business. But you do an amazing job running the business, but the stock market is not reflecting this performance. Yes, we see that for our tangible net assets per share to be almost 60p and for the current share price to value the firm of 30, I mean it isn't great. And -- we've -- we do spend an awful lot of time talking to our corporate broker. For those of you that followed us for an extended period of time, you know what we're working with Liberum and Investec originally as a joint broker. I don't think having 2 materially helped us. And we have been plagued by a number of or institutional shareholders having quite significant outflows in the funds. Someone have to sell their entire position. Others have had to sell quite sizable blocks and that has created an overhang. That being said, we -- a list of examples here that the question is asked -- how we can share buybacks, dividends, potentially new research coverage, maybe a change in broker other M&A. Well, we've looked at the M&A route. We're not going to bring something into the bank that could cause organ rejection, stroke, some form of allergic reaction that would materially impact the firm's financial performance. Nobody would want to do that. So we've moved on from that having dated a few frogs, I would say, over the last few years. Research, we're looking at. We're looking at financial PR. The Board, as I said earlier, around dividends, are looking at dividends, share buybacks, whether those things would make sense in the context of us building that, the journey to the mid to high teens are. We get it that shareholders do want to see a movement in the share price. We do -- we're doing everything we can control as far as execution, delivery of the plan. And I hope for those of you that have been on this journey with us for an extended period of time, we'll see that what we say we do, we do, and that comes through in the results that we present to you right now. So I think that's the end of the questions. And Alex can I hand back to you?

That's great. Carl, Gavin, thank you very much, indeed, for addressing all those questions for our investors today. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor company platform. But before redirecting investors to provide you with their feedback, which is particularly important to the company, carl, can I please ask you for a few closing remarks.

Yes. Thanks, Alex. Look, I think we -- I hope it comes across where -- we're passionate about the business. We've done what we say we're going to do. We're 4 years into this journey is as a bank and unlike an awful lot of early-stage banks, where we've got some profitability early. We're using the retained earnings support growth. It's not going after all sorts of development opportunities. We're not continuing to make losses. And you've seen in the results that we've posted for the first half, the strength of the business here. Absolutely delighted with the performance. Very proud of the DF Capital team and really pleased with the culture that we're building here at DF Capital and the support that we're seeing from our shareholders, notwithstanding the current share price. So looking forward to the run up now to the end of the year and catching up with you early in the new year with a further update on our performance.

Fantastic Carl, Gavin. Thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete. I'm sure it will be greatly valued by the company. On behalf of the management team of Distribution Finance Capital Holdings plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.