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

Good afternoon, and welcome to the Distribution Finance Capital Holdings plc Full Year Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO, Carl D'Ammassa. Good afternoon, sir.

Good afternoon. Thanks, everyone. Delighted to be here presenting what hopefully, you'll agree at the end of this presentation, are an exceptional set of financial results for the full year ending 31st of December 2024. I'm joined today by Gavin Morris, our CFO, who will be known to a number of you. For those of you that don't know, Gavin is due to retire from the company. He's got a long run though into the end of the year. So this will be his last full year results, and I'm delighted to say that we're very well progressed in finding a suitable replacement for Gavin, which we'll be able to announce in due course. Recognizing that there will be a few people on the call today who don't know the company, I just thought I'd spend a little bit of time just going through the background of DF Capital. We are a specialist lender, and we do work in specialist lending niche. We support U.K.-based -- well, predominantly U.K.-based manufacturers and dealers and distributors with working capital solutions. We were founded in 2016 as a nonbank lender. And unlike a lot of financial services and banks, we aren't headquartered in London. We are headquartered in Manchester. We did receive full authorization as a bank in September 2020. And frankly, we haven't looked back since that point. The firm has gone from strength to strength, as you'll see in the numbers that we'll be talking through today. How we operate, we are what I would describe as a modern digitally enabled bank that accesses the retail deposit market by advertising our rates on the best buy tables and customers who want to deposit funds with us use an online platform to apply. They can manage their account online. They can get support from our Manchester-based telephone sales team as well. And those deposits always liquidity as we call it, supports our lending activities, those working capital solutions that we provide to the dealers, manufacturers and distributors. We've been pretty myopic and like a lot of early-stage banks, we've really looked to get to profitability as quick as we possibly could post authorization. And we managed to do that within 2 years of authorization. So we are reporting this year our third year of profit. And we've been very careful as we've scaled the firm to balance our growth ambitions in line with our available capital, but also managing costs carefully so that we do get to profitability as quick as we possibly could. And what we have done now is grown our lending or as we call it, new loan origination to over GBP 1.4 billion a year. And we're supporting over 1,300 dealers and 88 manufacturer partners. What's really exciting for us, our journey so far has been very much characterized as being a monoline lender very much committed to the working capital product or inventory finance as we call it. But we are at this exciting juncture now where we're poised to launch another scale product, which is asset finance, and I'll talk about that a little bit later on, but that does present a significant growth opportunity for the company. But just you know -- I think it's important before we move on for you to understand how our core products, as we call inventory finance operates because that is the foundation of the firm that's driven the scale and the profit generation. We do sit between manufacturers and dealers. We allow manufacturers to ship finished goods to a dealer and a dealer would operate in some of the sectors that we've laid out here, lodges, holiday homes, motorhomes, caravans, transport, marine, plant machinery, industrial, motorcycles, agriculture equipment and specialist automotive. And those finished goods sit on a dealer's forecourt, you've probably seen as you've driven around [ stock ] as dealers would call it, sits on the forecourt, and we fund that. We have security of each of those individual motorhomes or caravans or light commercial vehicles that would be sitting on the forecourt. So this is a secured lending product. And we do lend a discount on a portfolio basis to the factory gate price and to the retail price. We're typically lending about 70% of the retail price of the product. The dealer would look to repay us when they sell the asset as we call it. And about 60% of what we do in the inventory finance space is through manufacturer relationships or manufacturer programs as we call it, the 88 relationships that we have. And that relationship with the manufacturer gives us access to their dealer network for us to be able to provide working capital solutions to the dealers. But it also gives us some recourse if dealers are perhaps struggling to sell that individual product. We do have redistribution through the network arrangements and we can, in certain circumstances, ask the manufacturer repurchase the asset as well. So that gives us really strong security and the low cost of risk and credit impairments that we talk about, which is typically 1% through the cycle. As a working capital product, it is short in its average tenor or average term. We are typically lending about 150 days in duration. And the product is entirely fee-based. So the dealers will know exactly in [ pound note ] terms, how much it's going to cost them to hold the product on the forecourt pending sale, and they'll know how much of their margin is going to be paid over to us to have that stock on display. As I mentioned earlier, we are a highly digitized bank. We do have old-fashioned relationship managers as well who are speaking to the dealers, but drawing down on the facilities that we pledge to the dealers is done in a digitized way. And that makes it really easy for people to do business with us, and we get really strong customer advocacy scores, and we use our Net Promoter Score to do that. And in the last year, we got plus 38, which is frankly, to die for in the business lending space. So that's a whistle stop tour of the core inventory finance product. So just looking at the full year results for 2024. Well, as I said earlier, it's been an exceptional year. We've grown our lending to over GBP 1.4 billion, which is up 20% or GBP 250 million on the prior year. And that's rolled through to a record loan book of GBP 666 million. We're now supporting more dealers than we have done ever before, 1,334 dealers and 88 manufacturers. And as we've looked to grow, we've had a really disciplined approach to our lending, whether that's making sure that the dealers we onboard and we lend to meet robust credit criteria, but also looking at pricing and not compromising on the net interest margin to provide growth. And we've actually increased our net interest margin through the period to almost 8%. The credit quality of the portfolio has been exceptionally strong. We had 33 dealers out of those 1,300 or so that we had at the end of the year in arrears or in legal recovery, which is -- and we count arrears as one day past due as well. So that's unlike a lot of banks that report 30 days past due. So we believe we're running a very, very clean portfolio, supported by really strong credit oversight from our portfolio management team. And those ingredients have led us to report a stunning profit before tax for the year so just over GBP 19 million, which is on a reported basis, more than 4x what we achieved in 2023. We've looked at things on what we think is perhaps a more sensible basis given that we had quite a significant credit provision write-back in 2024. So if we adjust for that, the profit before tax was GBP 14.4 million, which is 55% up on the adjusted number for 2023. And what's really pleasing is to see that financial performance start to flow through into the return on equity. That myopic focus on getting to profitability is flowing through, and we're almost now on the cusp of double-digit return on equity. The profitability that's flowing through to the balance sheet has delivered a larger tangible net asset value. And we've seen that increase by 8.2p to 63.8p per share. Underpinning what we do is the strength of our deposit raising franchise. And we've managed to increase our deposits by GBP 75 million to GBP 650 million, and that supports our lending, and we've got over 15,000 deposit accounts now. It's also worth noting that we do have maturity through the year as well. So we've managed to replenish the accounts that were maturing to grow overall deposits by GBP 75 million. And as I said earlier, we do that through the digitized platform and application process by putting best buy rates out to the customers. But our customers give us regular feedback. We use Feefo as a measure for that, and we've achieved 4.8 stars in the period, and we have been awarded again by Feefo this year, second year running, a Platinum Trusted Service Award. And I think fundamental as well, we put an awful lot of emphasis in the firm on our culture, creating an environment where our employees can thrive, where they enjoy coming to work, have a smile on the face, spring in the step and are really ambitious for the organization and want to put their best foot forward in supporting our customers. It's no surprise to me that we've been recognized by best companies as offering world-class levels of engagement. We're a 3-star rated firm, the highest rating you could get. And we've also been ranked as #5 best financial services business to work for in the U.K. And if all those financial outputs weren't enough, 2024 has also been very much about getting the foundations in place for future growth, which I'll talk about a little bit later on. But some of the achievements that we've got here, and it's quite a laundry list, but I don't apologize for it being that. We've launched new products and services, software financing, which allows us to fund stock that's serialized assets in warehouses and distribution centers, and we've leveraged technology to be able to do that. It's a twist on the inventory finance proposition that we have today. We've built from the ground up an asset finance or higher purchase capability. And we bring that to market in the second quarter of this year, leveraging the best technology that is out there on a legacy-free basis. And we've designed this to be scalable, but also compliant from launch. So I think some of the read across that people may be aware of in the motor finance challenges, we've made sure that we're fully compliant with all the legal and regulatory requirements. And that's been endorsed actually as we've submitted an application to provide consumer lending to customers of our dealers in the leisure space. And having gone through a 6-month process with the FCA to get those permissions, grueling process of checks, we received approval from them in February 2025. We've diversified our savings proposition as well. We've launched our award-winning savings to small businesses as well. We've extended the British Business Bank's ENABLE Guarantee, which will allow us to be capital efficient moving forward as well, putting our capital to work, to deliver maximum amount of lending we possibly can, and we've extended that to GBP 350 million. We're now able to lend on a multicurrency basis as well, so we can support some of our existing dealers and manufacturer partners with foreign currency transactions. And we have done some lending on a selective basis in euros as well to support some of our Irish and dealers in the Netherlands. We've also launched and implemented a customer relationship management platform, which will not only give us a single customer view, but it will also allow us to be more efficient in how we process things and handle our customer interactions. And it does break the connection with our core banking platform as well so that we're able to interchange to use the latest technology as well as we move forward. And an example of that is keeping ahead of the curve all the time is the upgrade to our data warehouse. We've replaced that, putting new infrastructure in place, and that will allow us not only to meet our regulatory reporting requirements from a data perspective, but it will also allow us to use the data that we have in the firm to provide better outcomes, better solutions, better products, better services for our customers. So I think you can see when you bring all this together, the financials, but also the initiatives that we've rolled out through and delivered on through the year that put the foundations in place for future growth, you can see why I'm really pleased with what the firm has achieved in 2024. I'll hand over to Gavin now just to cover a bit more of the meat on the bones around the financial performance. So Gavin, over to you.

Thank you, Carl. So if I start off with the income statement. So as we walk through the income statement, you'll see the strong underlying sustainable profit growth we have in the business. If I start off with net income, so we've seen a 20% growth in net income. That's due to the significant year-on-year loan book growth, we've seen a 15% loan book growth, together with an increase in net interest margin of 30 basis points to 7.9%. Now the increase in NIM is a function of 2 things. So we've got strong pricing discipline. Contractually with our dealers, as base rates go up, we are able to pass that base rate increase on to the dealers. That's on new business written after the base rate increase, not on any outstanding business they got at that time. So as base rates have gone up, we passed that on to the dealers. And you can see that with the gross yield increasing from 11.1% to 12.2% as that full base rate increase that happened through '23 has rolled through the book. At the same time, we are funding our book from deposits. And as base rates have gone up, deposit rates have gone up. But because the maturity of the deposit book is slightly longer than the loan book, it takes longer for that increase to flow through the book. So there's been a bit of upside in timing of the base rate there. But what we've also seen is as base rates have gone up, Deposit rates haven't gone up to quite the same extent. There's been some embedded upside there as well. So overall, that's flowed through to a very strong net interest margin of 7.9%. We would expect that to come down a little bit as we go forward as some of those factors unwind. If I look at operating expenses, they've increased by 20% year-on-year. A big driver of this is our ongoing IT investment that Carl referred to on earlier slides. We're looking at making sure we have market-leading technology solutions. We've been ensuring that as the bank matures, we're making sure that we continue to enhance our underlying controls. We've had further investment in cybersecurity. And then we've had the investment in new product development. Despite all these significant investments, the cost-income ratio has only increased slightly from 57.5% to 58.6%. I think the key thing to bring out is in our existing inventory finance portfolio, the underlying costs we need to support that portfolio are embedded. So as that book continues to grow, we don't expect the cost to increase. So we'll get operational leverage from that. As we go into the asset finance piece, there will be a drag this year because we've got costs of people on the ground building that, getting ready to go, and it will take some time for the loan book to grow accordingly. So there will be a slight drag this year, but we expect our cost-income ratio to be less than 50% in the medium term. Touching on impairment. We actually have an impairment write-back this year. The net impact was a gain of GBP 200,000, but that includes a GBP 4.7 million one-off write-back. Without that, that was a cost of risk of about 75 basis points that I'll touch on a subsequent slide, but that's well below our through-the-cycle expected loss of just under 1%. So overall, that means we've got profit before tax of GBP 19 million. If we adjust for that one-off recovery, that's GBP 14.4 million. And that gives us a return on equity -- adjusted return on equity of almost 10%, just we're at 9.8%. If we move on to the next slide. So on this slide, I'll just quickly touch on -- obviously, we talked about the loan book growing. The deposit book has grown at a similar level because that is how we fund our loan book. In terms of the ability to raise deposits, it's extremely easy. We've got a great franchise that Carl has referred to. And as we continue to grow, we will continue to use deposits in the same way. What we've been able to do last year is we've now diversified and we're able to get SME lending. SME lending can be anything between 10 to 50 bps cheaper. So not only does it give us access to the new market, potentially gives us some slightly cheaper form of lending. But it's fair to say the retail deposit market is far larger than the SME deposit market. So although we expect the SME portion of our deposit book to grow, it will grow relatively slowly. In terms of capital, although our loan book is growing 15%, our CET1 margin is reduced by only 5%. That's a function of 2 things. We're now generating significant profit that we can recycle as capital and then we've increased the British Business Bank ENABLE Guarantee scheme from GBP 250 million to GBP 350 million. So that makes sure we ensure that we are being efficient in the management of our capital. In addition, we have a GBP 10 million drawn on our GBP 20 million Tier 2 facility. So there's an extra GBP 10 million to go on that. So with the regeneration of capital, the efficient use of our capital base through the ENABLE guarantee and the headroom we've got in our Tier 2, we can grow the loan book in the medium term to about GBP 1.3 billion without the need to raise any additional dilutive Tier 1 capital. In terms of the impairment coverage on our loan book, that's currently running about 1%, and we're very comfortable that we have prudently provided for our loan book based on where we are in the economic cycle. When we talked earlier on about the sort of characteristics of our product, it's highly secured and our loan to wholesale value is currently running about 84%. In terms of what that would mean in terms of loan to retail value, that will be more like 70%. So again, very well secured. The stock days, we look at stock days to understand sort of the vitality and the health of our dealers and how that's performing. That's modestly reduced about 140 days. We're very comfortable with that. In the appendix, we set out what we deem to be -- where we deem stock days to be at a level we'd like to get concerned with, and we're not concerned about that. They're well within those criteria at the moment. So we're very comfortable with stock days. And I'll touch on, on a subsequent slide, a couple of sectors. So what that leaves us with is a tangible net asset value per share has increased by 8.2p to 63.8p compared to today's share price of around 35p. Moving on to the next slide. So we've been very closely focused on the underlying credit quality of our dealers. So we've got the benefit of being choosy in what dealers we bring on to our books. We want to make sure they meet the credit criteria we want. And also, we have exited a number of dealers where we felt they haven't been using the facility as we'd expect or we've had other credit concerns. That has manifested in the fact that of our over 1,300 dealers at the year-end, there are only 33 dealers in arrears. So -- and that is, as Carl said earlier, arrears of 1 day plus or 30 days plus. That's 2% of our dealers in arrears. As a percentage of loan book that comes out at just 0.6% and how that flows through to cost of risk, you can see that through this year, we had a cost of risk of 0.8%. And through the cycle, it's been well under 1% apart from a large obligor provision we had in 2023. Without that, 2023 would have been at 0.6%. So if we look at the diversification of our portfolio, if you look at this chart, on the top left, you've got structured finance, which is about GBP 75 million. That's the only part of this that isn't in our inventory finance portfolio. All the other sectors are part of our inventory finance. So if I just touch on some of the themes that we're seeing in the largest sectors. In motorhomes, caravans, which is our largest sector, end user demand has been particularly high during the second half of '24. And this increase in demand alongside a rebalancing of the production by manufacturers has allowed dealers to adjust stock to align with full demand. However, we have seen the caravan tour market seeing stock overhang from prior years. The holiday home and lodge sector has continued to be more challenging. It has been our most challenging sector more recently. Dealers have been dealing with both severe weather conditions and the impact of the RoyaleLife failure. However, we are seeing customer sales picking up and operators are filling the stock gaps with moving more towards larger units. And then finally, in the marine sector, we've seen manufacturers recalibrate their production levels, looking at larger boat market. And that's where customers are more insulated from ongoing macroeconomic challenges. With that, I'll pass back to Carl.

Thanks, Gavin. So if we just look now to the future, and I get very excited every time I look at this particular page. It's our -- I suppose, our medium-term strategic road map on a single page. Now we have set guidance out to full year 2028. And I think it's important to say that to bring these ambitions to life, and we can't say this enough, the self-generation of profit, the use of Tier 2, the efficiency tools that we have with the British Business Bank ENABLE Guarantee means that we can scale the lending off the back of this strategy without the need to do a capital raise, which frankly, is not often heard of in banks that are early stage and are scaling. And that's a testament to the decision we made on authorization to focus on profitability at the outset, which we achieved within 2 years of authorization. So the guidance really is that we're going to get our loan book to about GBP 1.3 billion of full year 2028. Our assumption is that the mix of products and services that we'll have in place will still deliver a net interest margin well above the 6% that we've proven we can achieve so far. The cohorts of customers that we'll be targeting, particularly in the new product asset finance will fall well within the 1% impairment losses that we talk about. And as we grow our lending and widen the jaws between income generation and cost increase, we'll see our cost-to-income ratio fall below 50%. So putting all of those ingredients in the blender as it were, you can see how we're expecting to get to a mid-teens post-tax return on equity by the end of 2028. Now I'm hoping when I finish on this slide, you take away that DF Capital is not going to be short of opportunity in how to bring those full year 2028 results to life. We've put down here the 3 main areas of lending, which again, are going to be supported by the retail deposit raising that we -- franchise that we've successfully have in operation today. So is there opportunity in the core inventory finance products in existing sectors with existing customers and existing dealers? Yes, there is. We expect it to grow market share across those areas that we operate today, there is more that we can go at, but not quite at the pace that we've seen historically. Stock flow finance, which is the -- that twist on the inventory finance side of things, providing support to other serialized assets that aren't on forecourts in warehouse is really quite exciting. We see that as a growth area, which would, frankly, elbow out invoice discounting, which is a route that a lot of people are using funding to support their stock provision of this nature. Just moving to the far right-hand side, structured finance. Now this is going to be something that is really ancillary to what we do. It's not a deviation from the sectors that we operate. We are still very much committed to supporting manufacturers and dealers in our chosen markets. We're not becoming a challenger bank per se. But what we're looking to do here is where there are existing customers that perhaps have a need for different working capital or invoice discounting to support areas of their business where we've got stock flow financing, invoice discounting sits really well alongside customers who will take the stock flow finance product and we'll leverage the relationship that we've built with Satago using their technology platform to help with that. There are also opportunities where some dealers have spoken to us about plans to develop their business, either perhaps taking on new facilities or parks or refurbishing their existing operations. And we'll be quite happy to draw on the expertise that we have across the firm, built up over many years of business lending to help those needs and build deeper relationships. Even if it's just short term in nature, and we get refinanced by perhaps a clearing bank, we'll be happy to do that because it cements our position in the markets and as I say, deepens the relationships with our customers. What's most exciting is the ginormous opportunity in asset finance or higher purchase. We've estimated across the existing sectors that we work in today that there's a GBP 10 billion annualized sales opportunity for us to look to try and convert. And it will be given the mix of assets that we support today, focused very much on consumer, but we will do some business-to-business lending, supporting the acquisition of plant and machinery or commercial vehicles as an example, by businesses. But we are going to enter this asset finance market by providing end user financing to support the acquisition of motorhomes and caravans. Now we're not going to be slavish to this mix. What you will almost certainly see is us not exceeding 15% of the loan book on the structured finance side of things, and that is going to move over time. As far as 2028 is concerned, I'd expect our inventory finance proposition to be about 50% of our loan book and asset finance to be scaling and being about 40% of our lending. And as we fast forward from mid-teens return on equity to high-teens return on equity and beyond, then you will see us skew more towards asset finance, given the size of that market opportunity. So as I said at the start, I just hope you look at this and think, wow, there is so much opportunity for DF Capital. And what we're going to be really focused on is making sure we allocate our capital to the best place where we can really maximize return and really sweat it hard to deliver the best financial performance off the back of these significant opportunities where we can be hugely, hugely selective. So what's the immediate areas of focus for us? Well, priority #1, we built this. It's ready to go. We'll be launching in short order after the Easter break, asset finance and rolling that out to our existing dealers who are, frankly, poorly served by incumbents who have made decisions perhaps more recently to roll their specialist motorhome and caravan lending operations into motor finance divisions. And I think everybody knows the challenges that's facing lenders in that space. Stock flow financing is building momentum. We've already got a number of customers in that space and the pipeline is looking strong. And concurrently, whilst we develop that and grow the lending, we'll continue to grow our market share and drive out the seasonality that we do see in our book as well in the core inventory finance space. On a -- as they arise basis, we'll continue to look at bespoke structured finance solutions as well to support existing participants and customers in the industry segments that we work with today. Purely to build some additional resilience and optionality in our deposit raising capability, we'll diversify funding by building a deeper relationship with the -- an aggregator platform, gives us different access to different client cohorts as well as further SME deposit raising. It's obvious to say this, and I know everybody will be disappointed if I said we were going to throw caution to the wind, but we're not. We're going to remain vigilant and cautious as we have done throughout our journey in managing customer arrears and making sure that we enter relationships with the right counterparties. And as I say, you're going to hear us talk as we move forward more about return on capital because that's the piece that's going to be critical for us as we now transition from being a monoline lender into a multiproduct lender and making sure we put our capital to work in the right place to drive for our investors, the strongest return on equity. It's worth just spending a few minutes on asset finance. Some of this we have touched on already. We are poised to launch this after Easter, focused initially on motorhomes and caravans. We think that's a great place to start. We understand the market really well. The quality of the obligor is strong. We've been able to use data and analytics to make sure that we're targeting the right customer cohorts, so it falls well within our risk appetite. The dealers, I mean, they've been banging on our door for a good 2 or 3 years to say when are we going to launch something like this. So it won't be a surprise that in having conversations and getting dealers signed up. This has been really welcomed not only as an alternative to the incumbents, but the proposition that we pulled together is modern and it's tech-enabled, and that makes it easy for dealers to support their customers. I can't say this enough, particularly given all of the issues in the motor finance space. We have made sure that we are compliant with all of the elements of both the regulatory and the legal challenges that have been raised in relation to motor finance. So we are confident that we'll be entering this market legacy free, we can focus on delivering great service to the dealers, and we do not have to progress any remediation at all. And as I say, that's been backed by receiving FCA approval to do this after a 6-month grueling process. We don't need new relationships to be able to distribute this. The market opportunity from our existing dealer relationships is estimated at GBP 10 billion worth of sales that we can go after. And frankly, as we scale this, which is going to be over a number of years, our strongest assumption, the biggest amount that we need to originate of that and convert of that GBP 10 billion at today's level is about GBP 400 million. So market share really that we're shooting for is small, and that's where we feel that we can be really selective about the obligors that we enter into relationships with that will meet our credit quality. It's important to note that there is a GBP 2 million drag assumed in our numbers this year that will unwind and will drive profitability next year, and then we'll grow profitability in the asset finance proposition significantly beyond 2026. And that, as I say, is a key contributor to those 2028 plans. So just drawing this part to a close, I mean the outlook for 2025, what are we expecting? No surprise, net interest margin will continue well above the 6% target that we talked about in the past. We're going to continue to invest in technologies as we have done, keep -- making sure everything is up to date and modern. And that will unlock further operational leverage, which we will see an improvement in our cost-to-income ratio, part offset by the drag of the new asset finance capability. We're expecting arrears to continue to normalize, but be well managed through the period. We're not expecting any surprises. We're expecting to operate in the sub 1% cost of risk this year. Loan book by the end of the year, given everything that we've got going on, we think we'll be in the GBP 750 million to GBP 800 million range. And I can't say this enough, but to bring the growth plan to life between now and 2028, we don't need to do an equity raise. There's no dilution here for shareholders. We'll be -- we have optionality as what we do with retained earnings and the plan is for us to reinvest in growth. So I'm hoping you're feeling buoyed by the 2024 performance, but excited as we are about 2025 and what we can unlock here and see that we've made really, really good progress now in getting ourselves fast forwarding to the mid-teens returns that we've talked about, and that really coming to life now at this exciting juncture for the firm as we become a multiproduct lending franchise beyond this year. So that's the end of this part of the presentation. I think we're happy to open this up to some of the questions that have been coming through whilst we've been talking.

Perfect. Well, thank you very much for your presentation. [Operator Instructions] I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via our investor dashboard. As you can see, we have received a number of questions throughout today's presentation, what I'll do is I'll just hand back to you to run through the questions, and I'll pick up from you at the very end.

Great. Well, we've got -- I'll deal with a couple of questions on asset finance. One of the questions is about the rollout and the speed of rollout. I think what we've done historically in our lending is we've been very careful and considered around our growth. What we've always wanted to do is to make sure we provide a really great service to our customers. And this is going to be new. So you are going to see perhaps a slower pace of growth through this year. And we'll look to accelerate things perhaps through the final quarter of the year. One of the other questions here is how long the onboarding process for the dealer will take? Well, we've actually started onboarding a number of dealers. We've got a pipeline of motorhome and caravan dealers that meet our criteria and frankly, some of the FCA criteria of about 100. And a lot of those are going through the onboarding process, which is an assessment of them, their understanding of the process, some training and obviously, the contracting of those. And we will allow the dealers to activate over an extended period of time to manage that continued grade of service. One other question we've had about is the credit quality checks in place for asset finance. This is an area where we've been absolutely blessed with data availability. This is going to be a credit scored solution, automated in nature with obviously some manual intervention to make sure the systems are working correctly at the launch stage, certainly. But the customers, particularly in the motorhome and caravan space are generally higher quality. I mean we need to draw the distinction here between perhaps people who need cars, which frankly is everybody regardless of your creditworthiness. Everybody needs a car -- wants a car these days, whereas those that are wanting motorhomes and caravans are generally the demographic that are stronger from a creditworthiness perspective. So we've been able to pull together using probabilities of defaults and loss given default data, precision around not only the quality of obligor that we want to bring on our book, but also the pricing, the risk-adjusted pricing that we're prepared to take. So we've got a high degree of confidence. We've been working with experts in this area. It will be no surprise that we've -- part of the cost drag is recruiting people that I generally call as ninjas in these arts that are bringing new skills to the team as well. So a high degree of confidence about our ability to bring this to life in a controlled way, but also making sure that we're considered not rushing at this and trying to get funds out as quick as we can. Just to close out on asset finance, somebody said, why now in launching asset finance, don't you need to wait for the motor finance ruling and clarification before really proceeding. I think everybody is clear. The law is clear on what the requirements are, i.e., it will be no surprise, you need to tell people when you're making commission disclose all of that. We've had all of our documentation validated in that regard. What is unfolding now in the motor finance space is what is the redress, if any, that will be required. And clearly, as we are launching with no legacy and everything being legally compliant, we don't need to wait for the outcome at all. The outcome is only dealing with redress for nondisclosure of commission and breach of fiduciary duty. So it's totally unrelated to anything that we'll be doing.

And I think the other point on that is other competitors in the marketplace may be focusing on remediation. So it's another good time for us to be entering with that complete clean slate.

There's a question here on -- in the core product about what happens if a motorhome or caravan dealer goes, I suppose [ the space ] is same for any dealer, assume you reclaim the inventory and try and sell it. That is absolutely right. What we would look to do is repossess those assets as we call them and look to redistribute those through the dealer network. There is a statement here that if a dealer goes [indiscernible] too much industry -- sorry, inventory, then there's too much inventory in the market from a lack of demand. That's not necessarily true actually. There are some geographic challenges in selling. There are some just people that can't -- aren't very good at selling. We've got a great example from last year that there was a well-established motorhome and caravan group that overtraded. And we had an awful lot of assets that we needed to repossess, which we did. And we redistributed those through the existing network, and we did not have to make a single credit loss provision in relation to that. That's the wonders of having a broad network of dealers. And our portal that the dealers transacting does allow us to advertise product for sale, and they can take that and take it into their forecourts and sell them. So yes, I don't think it holds true that a dealer going [indiscernible] because they've got too much stock is because of a market dynamic. What you generally find is dealers, if there is a market dynamic, pretty good at managing their inventory levels. Anyway, it's the odd dealer here or there that doesn't manage things particularly well, and we've got routes to deal with that, which is proven across a number of sectors. Just in relation to the next question, which is customer demand, what does demand look like now for the rest of the year in your end markets? Can you talk about your major areas of lending and what appetite consumer demand is like? So I think if I deal with things in the business-to-business space, I think people were buoyed by a view that there was going to be government investment. That generally means that there will be good demand for stock. I think the latest statements, the budget in October has made people far more cautious about committing themselves to buying new assets. And clearly, that then rolls back through the dealer network. I mean agriculture is one that's always particularly challenging, probably made worse by the government decisions in relation to inheritance tax and the like. On the leisure side of things, I mean motorhomes, caravans still very strong. We've had an awful lot of loan repayments, which is good news because that means dealers are selling products, and we've had an awful lot of new stock coming through as well. So particularly in the motorhomes space, people are buoyed -- the people that are buying these assets aren't really those that are worried about cost of living, interest rates and inflation. It's something that perhaps saved up for over an extended period of time and they're confident they can perhaps extend themselves a bit further by borrowing a little bit of money as well. So that's a big part of our balance sheet is looking strong. Marine is generally quite positive and insulated from most things, particularly at the larger boat end of the market. Motorcycles has been quite tough and is expected to continue in that vein. But I think we've rolled together all of our expectations around the market. And we clearly have navigated a lot of uncertainty since being authorized as a bank, and we've demonstrated that we can continue to grow. But what's super exciting for us is we aren't just a monoline now as we enter 2024. We've got more products and services at our disposal to support our growth ambitions, which we're talking about a loan book at the top end of GBP 800 million, which is not a massive step from where we are now.

So there's then a question on analyst update. Will there be a Q1 trading update this year because there wasn't one last year. So it's all around the timing of our statutory update. So last year, we produced our year-end accounts around the 9th or 10th of April. And therefore, at that time, we've just gone through the end of Q1. So wrapped up in our full year results last year, we did a Q1 trading update. We will be doing a Q1 trading update probably expected towards the back end of next week. And therefore, it's similar timing to last year. It's just last year, we did it as part of the statutory accounts or the full year update. So there will be a Q1 update back end of next week.

And then we've got a couple of questions just on share price. So I mean there's one here about do we have a cure for the common cold, suddenly, suddenly not. And if a fourfold increase in profit isn't enough to the share price jump, you need some big news. I'll take that as a complement. I mean we can only control what we can control. I mean there's an awful lot going on in the stock market. There's an awful lot going on in the world over this period right now. But we're going to continue to deliver on our plan. And our view is that the markets will sort themselves out. That being said, what is key for us given those structural challenges, there are a number of our institutional shareholders who have built their positions up over time. Some have seen outflows given the strength of interest rates, people less interested in holding their investments in the stock market and have decided to put them in savings accounts with people like DF Capital because we know it's fabulous returns and a great service. But -- so some people have had to clip their positions. And that means that have been point sellers in the market. And what is key is for us to continue to get our message out there to meet shareholders of all different shapes and sizes and get our story out there in the retail markets. We brought on a new financial PR company. We've met some press this morning off the back of that new relationship. We're going to continue to use this platform to get our story out there. And we have been tipped [ fairly ] enough in a number of newspapers as well as one to watch. So we're going to continue to do -- control the things that we can, which is financial results, continuing to run the firm really well, deliver on our plan whilst making sure our story is out there. And then you've got to hope as the market starts to stabilize and the global position improves that, that means that we'll see an improvement in the share price. But for those that have bought into the virtues of DF Capital, there's never been a better time at this sort of discount to be getting involved in the company. And if you do, I hope that you, over the medium term, reap the benefits of that belief in our story. So I think that deals with all the questions.

Thanks very much for answering those questions. Of course, the company can review all the questions submitted today, and we will publish responses on the Investor Meet Company platform. But just before redirecting investors to provide you their feedback, which is particularly important to the company, Carl, just wondering if I could ask you for a few closing comments.

Look, I'm hoping it's come across to everybody that not only being super proud of what we've done and what the team have done at DF Capital, we've got so much opportunity ahead of us. I'm excited to be at this point in our journey, looking forward to leading the firm, moving forward. And it'd be remiss of me not to thank Gavin for his contribution to the company as he sees us through the next few months and hands over to our new CFO and then goes off to enjoy retirement.

Thank you, Carl.

Thanks, everyone, for your time.

That's great. And thank you once again for updating investors today. Could I please ask investors not to close the session as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. 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.