Caledonian Consumer Finance Ltd

There has been no change to the principal activities of the company during the year ended 31 October 2022. These activities continue to be as follows: Unsecured Consumer Lending Acquiring Unsecured Loan Books or Lending Businesses Loan Administration and Collection Services Review of the Year Ended 31 October 2022 The year to 31 October 2022 marked a period where the ongoing impact of the COVID-19 pandemic gradually reduced to be replaced over the second half of the year by the growing threat created by inflation and the associated cost of living challenges. Whilst our consumer credit lending volumes continued to be robust in the early months of the trading year there was a noticeable slowing of credit applications from around June 2022 through to the end of the financial year and this was exacerbated by a tightening of our own credit risk appetite linked to the ongoing cost of living pressures. As a consequence of the tightening of lending volumes from June 2022 onwards our core consumer lending book actually reduced marginally over the year to 31 October 2022 which is the first time in the history of the business that this has happened. In respect of our loan administration activity we can report a similar outcome where reduced new business activity from our active Clients wasn’t sufficient to offset the reducing activity levels from Clients where the lending activity had ceased and these loan books were effectively in collect out mode. In addition a combination of the economic and regulatory environment resulted in a delay in the launch of our most recent new Client gain although we can now report that this Client has now commenced its planned lending activity and we will see a growth in accounts under management moving forward. The impact of all of the above resulted in gradual reduction in our loan administration activity throughout the year although this had largely bottomed out by the end of the trading year even in spite of the continuing cost of living challenges and their impact on credit appetite and credit quality. Based on the above analysis it comes as no surprise to report that our finance subsidy income and our loan administration income both reduced “year on year” with a fall off in consumer credit appetite, a tightening of our own credit risk appetite and the growing impact of higher energy prices and the associated cost of living challenges being the key reasons, however, we were able to control our administrative expenses that helped to protect our Operating Profit. Outside of the comments above in respect of our Operating Profit the completion of the merger of Honeycomb Investment Trust plc with Pollen Street Capital in the final quarter of the trading year resulted in a circa 20% reduction in the share price of the merged businesses and as we continue to hold a significant number of shares in the merged business this had a significant impact on our Profit Before Tax which fell from £1,336,704 in 2021 down to £680,399 in 2022 largely as a result of the associated drop in the value of our investments shortly before the financial year end. Prospects for the Year Ending 31 October 2023 Our view on our prospects for 2023 mirror the comments expressed above in respect of our trading activity over the second half of 2022, namely, that we anticipate further short term challenges driven largely by cost of living pressures that will continue to result in a gradual reduction in customers appetite to borrow for the services we finance leading to a fall in our consumer lending activities and consequently the size of our consumer loan book, however, the outlook for our loan administration activities is a little more positive where we do expect the growth in accounts under management from our active Clients to at least offset the reducing account activity in respect of the collect out loan books that we manage. As with a significant number of finance related businesses we continue to operate utilising a “hybrid” approach to work with colleagues currently working 2 days per week in the office and the remaining 3 days per week from home, although from April 2023 we anticipate that this will evolve to become 3 days per week in the office with Monday’s/Friday’s becoming the work from home days.