NON-STANDARD FINANCE PLC — Proxy Solicitation & Information Statement 2019

Mar 8, 2019

THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this Document or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 ("FSMA"), as amended, if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

This Document comprises: (i) a notice of General Meeting set out at the end of this Document; and (ii) a prospectus relating to the New Ordinary Shares prepared in accordance with the Prospectus Rules of the FCA made under section 73A of FSMA. This Document has been approved by the UKLA in accordance with section 87A of FSMA, has been filed with the UKLA and has been made available to the public in accordance with paragraph 3.2.4 of the Prospectus Rules.

The Existing Ordinary Shares are admitted to the Official List of the UKLA (the "Official List") (by way of a standard listing under Chapter 14 of the listing rules published by the UKLA under section 73A of FSMA as amended from time to time (the "Listing Rules")) and to the London Stock Exchange Plc (the "London Stock Exchange"). The proposed acquisition (the "Acquisition") of Provident Financial Group PLC ("Provident Financial") is classified as a Reverse Takeover under the Listing Rules. Admission of the Enlarged Share Capital of Non-Standard Finance plc (the "Company") to trading on the London Stock Exchange's Main Market for listed securities ("Admission") is expected to commence at 8.00 am on the Closing Date.

The Company and the Directors, whose names appear on page 90 of this Document, accept responsibility for the information contained in this Document. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Document is in accordance with the facts and does not omit anything likely to affect the import of such information.

Except in the United Kingdom, no action has been taken or will be taken in any jurisdiction that would permit possession or distribution of this Document in any country or jurisdiction where action for that purpose is required. The release, publication or distribution of this Document, in whole or in part, in, into or from jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and, therefore, persons into whose possession this Document comes should inform themselves about and observe any applicable requirements. Any failure to comply with these restrictions may constitute a violation of the securities laws of one or more of such jurisdictions. In particular, this Document must not be forwarded, distributed, transmitted, released or published (including by custodians, nominees and trustees) in whole or in part, directly or indirectly, in, into or from the United States or any other Restricted Territory (as defined herein).

The New Ordinary Shares are not being, and may not be, offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in, into or from the United States or any other Restricted Territory, or to, or for the account or benefit of, any resident of the United States or any other Restricted Territory. Notwithstanding the foregoing, the Company may permit certain institutional shareholders of Provident Financial to participate in the Offer, in which case New Ordinary Shares will be issued to such institutional shareholders in reliance upon one or more exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended (the "Securities Act"). For further information, see Part IV (Important Information) below.

NON-STANDARD FINANCE PLC

(a public company incorporated in England and Wales with registered number 09122252)

Issue of up to 2,270,935,376 New Ordinary Shares in connection with the Offer

Admission of the Enlarged Share Capital to the Official List (by way of standard listing under Chapter 14 of the Listing Rules) and to trading on the London Stock Exchange's Main Market for listed securities

Notice of General Meeting

Joint Financial Advisers

Deutsche Bank Ondra

The whole of the text of this Document should be read in its entirety. Your attention is drawn to Part II (Risk Factors) of this Document which sets out certain risks, uncertainties and other factors relating to the Enlarged Group's business, the Acquisition and the Ordinary Shares. No person has been authorised to give any information or make any representations other than those contained in this Document and, if given or made, such information or representations must not be relied upon as having been authorised by NSF or the Joint Financial Advisers.

Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank) and, in the United Kingdom, by the PRA. It is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority, and is subject to limited regulation in the United Kingdom by the PRA and FCA. Neither Deutsche Bank nor any of its subsidiaries, branches or affiliates will be responsible to any person other than NSF for providing any of the protections afforded to clients of Deutsche Bank nor for providing advice in relation to any matters referred to in this Document. Neither Deutsche Bank nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Deutsche Bank in connection with this Document, any statement contained herein, or otherwise. Deutsche Bank is acting as financial adviser to NSF and no other person in connection with the contents of this Document.

Ondra, which is authorised and regulated by the FCA in the United Kingdom, is acting solely for the Company and no one else in connection with this Document, the Acquisition and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Ondra, nor for providing advice in relation to this Document, the Acquisition or Admission. Neither Ondra nor any of its respective subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Ondra in connection with this Document, the Acquisition, the Admission, the contents of this Document or any other transaction, arrangement or other matter referred to in this Document.

Save for the responsibilities and liabilities, if any, of the Joint Financial Advisers under FSMA or the regulatory regime established under FSMA, neither of the Joint Financial Advisers nor any of their respective affiliates, directors, officers, employees and advisers assumes any responsibility whatsoever and makes no representations or warranties, express or implied, in relation to the contents of this Document, including its accuracy, completeness, verification or sufficiency or for any other statement made or purported to be made by the Company, or on the Company's behalf, or by either of the Joint Financial Advisers, or on their behalf, and nothing contained in this Document is, or shall be, relied on as a promise or representation in this respect, whether as to the past or the future, in connection with the Company or the Acquisition. Deutsche Bank, Ondra and each of their respective affiliates disclaims to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which it might otherwise be found to have in respect of this Document or any such statement.

Application will be made for the New Ordinary Shares to be admitted to a Standard Listing on the Official List. A Standard Listing will afford investors in the Company a lower level of regulatory protection than that afforded to investors in companies with Premium Listings on the Official List, which are subject to additional obligations under the Listing Rules.

It should be noted that the UKLA will not have authority to (and will not) monitor the Company's compliance with any of the Listing Rules which the Company has indicated herein that it intends to comply with on a voluntary basis, nor to impose sanctions in respect of any failure by the Company to so comply.

Notice to Overseas Shareholders

This Document is not and does not constitute or form part of any invitation or offer to exchange, or any solicitation of any offer to acquire or subscribe for, the New Ordinary Shares or any other securities in any jurisdiction. The New Ordinary Shares have not been, and will not be, registered under the Securities Act or under the relevant laws of any state, province or territory of the United States or any other Restricted Territory and may not be offered or sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into or within the United States or any of the Restricted Territories except in transactions exempt from, or not subject to, the registration requirements of the Securities Act or any other applicable registration requirements, and in compliance with any applicable securities laws of any state or other jurisdiction of the United States or any other Restricted Territory.

Any reproduction or distribution of this Document in whole or in part, and any disclosure of its contents or use of any information in this Document for any purpose other than considering an investment in the New Ordinary Shares is prohibited, except to the extent such information is available publicly. By accepting delivery of this Document, each offeree of the New Ordinary Shares agrees to the foregoing.

Notice of General Meeting

Notice of a General Meeting of the Company, to be held at 11.30 a.m. on 26 March 2019 at the offices of Maitland/AMO, 3 Pancras Square, London, N1C 4AG is set out at the end of this Document. A Form of Proxy for use by Shareholders in connection with the meeting is enclosed. To be valid, Forms of Proxy, complete in accordance with the instructions printed thereon, must be received by the Registrars as soon as possible, but in any event no later than 48 hours prior to the meeting. Completion and return of Forms of Proxy will not preclude Shareholders from attending and voting at the General Meeting should they wish to do so.

Capitalised terms have the meanings ascribed to them in the Definitions set out at the end of this Document. This Document is dated 8 March 2019.

TABLE OF CONTENTS

	Page
PART I SUMMARY .	1
PART II RISK FACTORS .	13
PART III CONSEQUENCES OF A STANDARD LISTING .	41
PART IV IMPORTANT INFORMATION	42
PART V EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND ADMISSION STATISTICS	46
PART VI DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS	48
PART VII LETTER FROM THE CHAIRMAN .	49
PART VIII INFORMATION ON THE OFFER AND THE DEMERGER	61
PART IX INFORMATION ON THE NEW ORDINARY SHARES .	68
PART X INFORMATION ON THE NSF GROUP .	70
PART XI INFORMATION ON THE PROVIDENT FINANCIAL GROUP .	81
PART XII OPERATING AND FINANCIAL REVIEW OF THE NSF GROUP	84
PART XIII CAPITALISATION AND INDEBTEDNESS .	86
PART XIV HISTORICAL FINANCIAL INFORMATION RELATING TO THE NSF GROUP .	88
PART XV HISTORICAL FINANCIAL INFORMATION RELATING TO THE PROVIDENT FINANCIAL GROUP .	89
PART XVI UNAUDITED PRO FORMA FINANCIAL INFORMATION RELATING TO THE ENLARGED GROUP	90
PART XVII THE DIRECTORS, THE BOARD, SENIOR MANAGERS AND CORPORATE GOVERNANCE .	91
PART XVIII SUPERVISION AND REGULATION .	98
PART XIX TAXATION	114
PART XX ADDITIONAL INFORMATION	117
PART XXI INFORMATION INCORPORATED BY REFERENCE .	148
PART XXII DEFINITIONS AND GLOSSARY	152
NOTICE OF GENERAL MEETING .	160

PART I SUMMARY

Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in Section A – Section E (A.1 – E.7).

The summary contains all the Elements required to be included in a summary for this type of issuer and securities. Because some Elements are not required to be addressed there may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted into the summary because of the type of issuer and securities, it is possible that no relevant information can be given regarding the Element. In this case, a short description of the Element is included in the summary with the mention of "not applicable".

Element	Disclosure requirement	Disclosure
A.1	Warning	This summary should be read as an introduction to this Document. Any decision to invest in the securities should be based on consideration of this Document as a whole by the investor. Where a claim relating to the information contained in this Document is brought before a court, the plaintiff investor might, under the national legislation of a Member State, have to bear the costs of translating this Document before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation of the summary, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Document or it does not provide, when read together with the other parts of this Document, key information in order to aid investors when considering whether to invest in such securities.
A.2	Any consents to and conditions regarding use of this Document for subsequent resale or final placement of securities by financial intermediaries	Not applicable. The Company is not engaging any financial intermediaries for any resale or final placement of securities after publication of this Document.

Section A—Introduction and warnings

Section B—Issuer

Element	Disclosure requirement	Disclosure
B.1	Legal and commercial name	Non-Standard Finance plc (NSF or the Company and, together with its subsidiaries, the NSF Group).
B.2	Domicile and legal form, legislation and country of incorporation	NSF was incorporated and registered in England and Wales on 8 July 2014 with registered number 09122252 as a private company limited by shares under the Companies Act 2006, and re-registered as a public limited company on 4 December 2014. NSF's registered office is at 7 Turnberry Park Road, Gildersome, Morley, Leeds, England, LS27 7LE.
B.3	Current operations and principal activities	The core business of both the NSF Group and the Provident Financial Group is to supply credit to non-standard credit market customers, being those with lower incomes, those with no credit history or a very limited credit history and those who have had problems with credit in the past.

Element	Disclosure requirement	Disclosure
		NSF The NSF Group operates through three divisions: its unsecured branch-based lending business (Everyday Loans); the home credit business (Loans At Home); and its guarantor loans business (George Banco and TrustTwo). All of the NSF Group's operations are within the UK.
		Provident Financial The Provident Financial Group operates through three divisions: (i) Vanquis Bank, which primarily offers credit cards; (ii) CCD, encompassing Provident Home Credit, which provides home credit products, and Satsuma, which provides on-line unsecured loans; and (iii) Moneybarn, which provides vehicle finance. The majority of the Provident Financial Group's operations are within the UK, with some limited home credit operations in the Republic of Ireland.
B.4a	Significant recent trends affecting NSF and the industries in which it operates	Following the financial crisis of 2007 the number of individuals seeking non-standard loans/credit products has increased significantly. In 2013, there were two million, or 20%, more users of non-standard consumer finance than there were in 2007, and less credit is being extended to this enlarged pool of consumers than before the financial crisis. The regulatory reforms initiated since the financial crisis, in particular CRD IV and the initiatives introduced by the PRA and the FCA in the UK, have significantly increased capital requirements and conduct-related obligations for financial institutions and in particular for large, systemically important banks. The Directors believe that the large banks' reduction of lending to the non-standard sector is therefore a secular, rather than a cyclical, phenomenon.
		As non-standard lending volumes by previous market leaders have declined, new specialist entrants have entered the market. Many firms in the sector are relatively immature or have reached a stage of development where more professional management expertise and additional investment is required to maintain historical growth rates.
		By 2015, outstanding balances in the non-standard credit sector were on a trajectory towards pre-crisis levels, despite the ongoing regulatory reforms. These reforms, and the heightened level of supervisory scrutiny on lending practices in the sector, do not appear to have dampened growth in the market as might have been expected. On the contrary, boosted by innovations in product design and distribution, outstanding balances of lenders in the period 2014-2016 grew in the region of c. 9% per annum, reaching a record high by the turn of 2017. The industry today is more mature and regulated (with a significant majority of the sector now having achieved full regulatory authorisation), but shows continued growth potential and untapped consumer demand.
		The current economic climate has seen record rates of employment, with real weekly incomes (including bonuses) increasing by 1.2% in 2018. By contrast, inflation (on the basis of the consumer price index including owner occupiers' housing costs) has reduced from its 2011 peak of 4.5% per annum to 1.8%, each of which is favourable for consumer credit lending.

Element	Disclosure requirement	Disclosure
		The prospect of the planned exit by the UK from the European Union has created uncertainty, though the impact of that uncertainty on the non-standard finance sector is difficult to quantify. As well as any direct impact on customers, withdrawal from the EU could also result in a divergence between relevant UK and EU law and regulation. This could have a significant effect on the industry, though whether the net effect would be to raise or lower compliance and operating costs within the industry is not clear, and there is unlikely to be further clarity on the effect of withdrawal for so long as the nature of the arrangements (or lack thereof) to be put into place between the UK and the EU are not certain.
		The UK Parliament has taken an active interest in the dynamics of certain segments of the non-standard finance market, for example instructing the FCA to impose a cap on the total level of fees that could be charged by the providers of payday lending loans to consumers. The FCA has run two recent thematic reviews into debt management and the role of staff remuneration and incentives in driving the way consumer credit firms treat their customers. The thematic review on the role of staff remuneration and incentives was completed with rules coming into force on 1 October 2018 alongside guidance aimed at assisting firms to identify features of their incentive or performance management arrangements which have the potential to cause customers harm. The FCA expects to complete the review with respect to debt management in Q1 2019.
B.5	Group description	NSF is the ultimate holding company of the NSF Group. Following Completion, NSF will be the ultimate holding company of the Enlarged Group.
B.6	Major shareholders	As at the Latest Practicable Date, in so far as it is known to the Company by virtue of the notifications made pursuant to the Companies Act 2006 and/or Chapter 5 of the Disclosure Guidance and Transparency Rules, the name of each person, other than a Director, who, directly or indirectly, is interested in voting rights representing 3% or more of the total voting rights in respect of the

Element	Disclosure requirement	Disclosure
		Company's issued share capital, and the amount of such person's holding, was as follows:
					Immediately following Admission(1)
		Shareholders	Number of Ordinary Shares	Approximate percentage of issued share capital	Number of Ordinary Shares	Approximate percentage of issued share capital
		Invesco Asset Management Limited	. 89,318,263	28.6	571,050,049	22.3%
		Woodford Investment Management Abeforth	. 80,273,553	25.7	635,771,824	24.8%
		Partners LLP Marathon Asset Management	. 39,882,129	12.8	39,882,129	1.6%
		LLP	. 40,076,322	12.8	164,738,444	6.4%
		Notes:
		(1) Assuming NSF acquires the entire issued and to be issued share capital of Provident Financial (excluding up to 2,495,158 shares which could be issued under the Provident Financial Savings-related Share Option Schemes) and 2,248,782,185 New Ordinary Shares are issued and that to the extent any of the shareholders set out above are also Provident Financial Shareholders, that they take up the Offer in full.
		Save as disclosed above, the Company is not aware of any holdings of voting rights (within the meaning of Chapter 5 of the Disclosure Guidance and Transparency Rules) by persons which will represent 3% or more of the total voting rights in respect of the issued ordinary share capital of the Company as at the Latest Practicable Date.
		Insofar as is known to the Company, the Company is not, as at the Latest Practicable Date, directly or indirectly owned or controlled by another corporate, any foreign government or any other natural or legal person, severally or jointly. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company.
		All Ordinary Shares voting rights.	(other	than treasury	shares) have	the same

Element	Disclosure requirement	Disclosure
B.7	Historical key financial information	The selected financial information set out below has been extracted without material adjustment from the financial statements contained in the 2015 Financial Statements, the 2016 Financial Statements, the 2017 Financial Statements and the 2018 Preliminary Results, which have been prepared in accordance with IFRS.
	Consolidated income statement
			Year ended 31 December 2018(1)	Year ended 31 December 2017	Year ended 31 December 2016	Year ended 31 December 2015
			£'000	£'000	£'000	£'000
	Revenue		158,824	107,771	72,757	9,201
	Other operating income	.	1,626	1,926	450	—
	Impairment		(42,688)	(28,795)	(23,651)	(3,858)
	Modification loss	.	(482)	—	—	—
	Administrative expenses		(97,763)	(77,100)	(54,788)	(15,370)
	Operating profit/(loss)	.	19,517	3,802	(5,232)	(10,027)
	Exceptional items .		—	(6,342)	(626)	(6,135)
	Profit/(loss) on ordinary activities
	before interest and tax	.	19,517	(2,540)	(5,858)	(16,162)
	Finance cost	.	(21,107)	(10,481)	(3,484)	70
	Profit/(loss) on ordinary activities
	before tax	.	(1,590)	(13,021)	(9,342)	(16,092)
	Tax on profit/(loss) on ordinary
		activities	(89)	2,686	1,344	3,022
	Profit/(loss) for the year		(1,679)	(10,335)	(7,998)	(13,070)
	Total comprehensive profit/(loss) for the year
			(1,679)	(10,335)	(7,998)	(13,070)
	Profit/(loss) attributable to:	.
	•	Owners of the parent	(1,679)	(10,335)	(7,998)	(13,070)
	• Non-controlling interests	.	—	—	—	—
	Notes:
	(1)	Unaudited preliminary financials for the 2018 financial year.

Element	Disclosure requirement	Disclosure
---------	------------------------	------------

Consolidated balance sheet

		31 Dec 2018(1) £'000	31 Dec 2017 £'000	31 Dec 2016 £'000	31 Dec 2015 £'000
ASSETS
	Non-current assets
	Goodwill Intangible assets	140,668 13,431	140,668 17,205	132,070 17,412	40,176 14,119
	Other assets	241	—	—	—
	Property, plant and equipment	7,723	9,434	5,459	1,718
		162,063	167,307	154,941	56,013
Current assets
Amounts receivable from customers	Inventories .	— 314,614	— 268,096	— 180,413	3 28,412
Trade and other receivables	.	3,967	1,551	9,709	10,275
	Cash and cash equivalents	13,894	10,954	5,215	7,320
		332,475	280,601	195,337	46,010
	Total assets	494,538	447,908	350,278	102,023
LIABILITIES AND EQUITY
	Current liabilities
	Trade and other payables and provisions	17,242	10,353	8,005	13,803
Total current liabilities	. Non-current liabilities	17,242	10,353	8,005	13,803
	Deferred tax liability	252	4,996	5,890	3,057
	Bank loans	266,322	199,316	87,300	—
	Total non-current liabilities	266,574	204,312	93,190	3,057
	Equity
Share capital	.	15,852	15,852	15,852	5,264
	Share premium	254,995	254,995	254,995	92,714
Other reserves Retained loss	. .	(2,011) (58,368)	(1,066) (36,793)	— (22,019)	— (13,070)
		210,468	232,988	248,828	84,908
Non-controlling interests	.	255	255	255	255
		210,723	233,243	249,083	85,163
	Total equity
Notes:	Total equity and liabilities (1) Unaudited preliminary financials for the 2018 financial year. There has been no significant change to the NSF Group's financial position and operating results during or after the period covered by the key financial information on the NSF	494,538	447,908	350,278	102,023
Group set out in this section.
	Although the Provident Financial Group also prepares its audited
	consolidated financial statements in accordance with IFRS, NSF has
	not had access to the	Provident	Financial	Group's	non-public
	information, nor has NSF	been permitted	to	engage	in any
	discussions with the senior management of Provident Financial.
	As such, NSF has not been able to determine whether there are
	significant differences between the NSF Group's accounting policies
	and those adopted by the Provident Financial Group that might be
	material to the Provident Financial Group's financial information, and
	furthermore NSF is unable to identify or quantify the adjustments
	necessary to present the NSF Group's financial information on a
	basis consistent with the	NSF Group's accounting		policies.	As a
	result, it is not possible at this time for NSF to prepare an unaudited
	pro forma income statement or an unaudited pro forma statement of
	net assets of the Enlarged Group in accordance with item 20.2 of Annex I to the Prospectus Directive Regulation.
	NSF has included in this Document a narrative description of the
	likely effect of the Transaction on NSF's assets and liabilities.
	The selected financial	information has	been	extracted	without
	material adjustment from the Provident Financial Group's unaudited
Key pro forma financial information	interim results for the six months ended 30 June 2018:

Element	Disclosure requirement	Disclosure
		• Current assets—£2,389.1 million • Non-current liabilities—£2,326.8 million • Current liabilities—£581.2 million • Net assets—£677.9 million
		The likely effect of the Acquisition on NSF's assets and liabilities is as follows: The illustrative effect on the NSF Group's balance sheet as at
		31 December 2018, on the basis of the above financial information, excluding the impact of acquisition financing, costs and other acquisition adjustments, is estimated as follows:
		• an increase to non-current assets of £615.6 million and an increase to current assets of £2,389.1 million;
		• an increase to current liabilities of £581.9 million and an increase to non-current liabilities of £2,326.8 million; and
		• an increase to net assets of £677.9 million.
		This narrative does not reflect the anticipated synergies and efficiencies associated with the Acquisition.
B.9	Profit forecast or estimate	Not applicable. There is no profit forecast or estimate.
B.10	Qualifications in the audit reports on the historical financial information	Not applicable. There are no qualifications in the auditor's reports on the historical financial information of the NSF Group incorporated by reference at Part XIV (Historical Financial Information Relating to the NSF Group), and no qualifications in the auditor's reports on the historical financial information of the Provident Financial Group incorporated by reference at Part XV (Historical Financial Information Relating to the Provident Financial Group) of this Document.
B.11	Working capital qualification	Not applicable. The Company is of the opinion that the working capital available to the NSF Group is sufficient for its present requirements, that is, for at least the next 12 months from the date of publication of this Document (on the basis of an unenlarged NSF Group, i.e., not taking into account the effect of the Transaction).
		NSF is currently unable to undertake appropriate procedures to support a statement on the sufficiency of its working capital when taking into account the Acquisition because the Company does not have access to non-public financial or other information on Provident Financial that would allow those procedures to be undertaken. The Company's opinion of the sufficiency of the working capital of the Enlarged Group (including the Provident Financial Group) is to be made as soon as possible following Completion. If the Company is granted access by Provident Financial before the Effective Date and access is sufficient for the purpose of making an Enlarged Group working capital statement on the basis of the Enlarged Group, NSF will produce an updated Enlarged Group working capital statement to be published via the Regulatory News Service of the LSE and as may otherwise be required by law.

Section C—Securities

Element	Disclosure requirement	Disclosure
C.1	Type and class of securities	The Company intends to offer up to 2,270,935,376 New Ordinary Shares. When admitted to trading, the New Ordinary Shares will be registered with ISIN number GB00BRJ6JV17 and SEDOL number BRJ6JV1.
C.2	Currency of the securities	The Existing Ordinary Shares are quoted and traded in pounds sterling, and the New Ordinary Shares will also be quoted and traded in pounds sterling.
C.3	Number of shares issued and value per share	As at the Latest Practicable Date the Company had in issue 317,049,682 fully paid Ordinary Shares of £0.05 each (including 5,000,000 Ordinary Shares held in treasury).
C.4	Rights attached to the securities	The New Ordinary Shares, when issued and fully paid, will be identical to, and rank pari passu with, the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Existing Ordinary Shares by reference to a record date on or after Admission (save for any final dividend declared by NSF in respect of the year ended 31 December 2018).
C.5	Restrictions on the free transferability of the securities	Not applicable. There are no restrictions on the free transferability of the Ordinary Shares.
C.6	Admission to trading of the securities	Applications have been made to the FCA for all of the New Ordinary Shares to be admitted to listing on the standard listing segment of the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on the Main Market. It is expected that Admission will become effective on the Closing Date and that dealings for normal settlement in the New Ordinary Shares will commence at 8.00 a.m. on the same day.
C.7	Dividend Policy	The Board considers dividends to be an important component of the Enlarged Group Shareholders' returns. The Board will review its dividend policy following Completion taking into account the New Ordinary Shares issued pursuant to the Offer and the performance of the Enlarged Group, however the NSF Board intends that future dividend payments to Shareholders of the Enlarged Group will, over time, reflect its stated policy of paying out at least 50% of normalised post-tax earnings. This is subject to discussions with the PRA in respect of the restrictions currently imposed on the payment of dividends from the Vanquis Bank business. NSF also intends to distribute to Shareholders of the Enlarged Group any excess capital arising from the expected improvement of Provident Financial's capital efficiency and the proceeds of any sale of Moneybarn and/ or Satsuma, subject to any required consents from the creditors of the Enlarged Group being obtained. Within the Provident Financial Trading Update, the Provident Financial Board expressed its expectation that a nominal dividend in respect of the 2018 Financial Year would be declared. The NSF Board gives no commitment that this expectation will be met.

Section D—Risks

Element	Disclosure requirement		Disclosure
D.1	Key information on the risks relating to the Enlarged Group's business	•	The Enlarged Group's business strategy contemplates significant growth, which it may not be able to fund from its existing level of cash generation. Any additional growth beyond organic growth depends on the Enlarged Group's ability to obtain adequate funding from a variety of sources, such as the capital markets and borrowing facilities. These sources of financing may not be available in the future in the amounts, at the pricing and/or on the terms the Enlarged Group may require or want.
		•	The Enlarged Group is dependent on its ability to raise debt and refinance existing borrowings, and this ability depends on the credit-worthiness of the Enlarged Group and market conditions outside its control.
		•	The Enlarged Group operates in a sector with a history of poor publicity and public perception, and reputational damage (even where arising in relation to a third party's actions) could damage its ability to do business, or lead to more aggressive regulatory oversight.
		•	The Enlarged Group will be subject to PRA regulation, and required to meet certain prudential regulatory capital and liquidity requirements. Such requirements limit the Enlarged Group's financial and operational freedom and may increase further in future.
		•	The consumer lender regulatory rules affecting the Enlarged Group may be subject to change in the future, and the cost of complying with such changes may be significant.
		•	Unless prescriptive rules as to the content and execution of regulated consumer agreements are followed, those agreements may be unenforceable.
		•	The extensive experience of the Enlarged Group's directors is a key pillar of its ability to effectively run the business, and maintain the support of investors. If the expertise of directors or senior management in the Enlarged Group is lost it could threaten the wider effectiveness of the Enlarged Group.
		•	Risk management policies of the Enlarged Group could be ineffective, or fail to avoid or highlight certain risks, or could be deficient by virtue of their reliance on historical data.
		•	The potential exit of the UK from the EU could create significant uncertainty in UK and global markets, restricting the Enlarged Group's future activities, and its financing.
		•	The Enlarged Group holds within it certain legacy regulatory and reputational concerns relating to, in particular, the FCA's investigation of Vanquis Bank's Repayment Option Plan ("ROP"); and the FCA's investigation into the compliance of Moneybarn with its consumer credit regulatory obligations.
	Key information on the risks associated with the Acquisition	•	The Company and its advisers have not had access to Provident Financial's non-public information or documentation and have been unable to perform due diligence on such information. As a result, it is possible that NSF could assume unexpected liabilities, or fail to be aware of all material facts, prior to the Acquisition.

Element	Disclosure requirement	Disclosure
		• Completion is subject to certain conditions (including regulatory and competition conditions) which may not be capable of being satisfied or waived in a timely manner or at all, delaying, or preventing Completion.
		• The Directors may not be able to effectively execute their post Acquisition strategy to realise operational improvements from the Acquisition, or to run the Enlarged Group's business in the way anticipated, which could in turn impact customer and key personnel numbers. Even if the strategy can be effected there is no guarantee it will be effective.
		• In the event that the Company reduces its threshold as to acceptances below 90%, NSF could complete the Offer without being able to compulsorily acquire the remaining Provident Financial Shares it does not own. In those circumstances, NSF might not control sufficient voting rights to be able to procure the delisting of Provident Financial.
D.3	Key information on the risks relating to the Ordinary Shares	• The market price for the Ordinary Shares has fluctuated and may continue to fluctuate due to a change in market appraisal of the Enlarged Group's results of operations or prospects and/or sales by major Shareholders with material holdings.
		• The Company may be unable to transfer to a Premium Listing following Admission, in which case it would not be obliged to comply with the higher standards of corporate governance required of a company with a Premium Listing or with certain provisions of the Listing Rules which only apply to companies with a Premium Listing, or to become a member of a FTSE UK Index.
		• Most Shareholders will experience a dilution in their ownership of NSF as a result of the Offer except where they are also an Eligible Provident Financial Shareholder.
		• The level of any dividend paid in respect of the Ordinary Shares is subject to a number of factors, and in particular the performance of the Enlarged Group and discussions with its regulators.

Section E Offer

Element	Disclosure requirement	Disclosure
E.1	Net proceeds and costs of the offer	The Company is not receiving any cash proceeds as a result of the Acquisition or the Admission.
		The aggregate costs, charges and expenses that are expected to be directly associated with the issuance of the New Ordinary Shares (including the listing fees of the FCA, professional fees and expenses and the costs of printing and distribution of this Document) payable by the Company (but, for the avoidance of doubt, exclusive of any costs in relation to the Acquisition) are estimated to be £21.6 million (excluding any amounts in respect of VAT).
E.2	Reasons for offer and use of proceeds	The New Ordinary Shares are being issued pursuant to the terms of the Offer. There are no proceeds receivable by NSF as a result of the issue of the New Ordinary Shares.

Element	Disclosure requirement	Disclosure
E.3	Terms and conditions of the offer	On 22 February 2019 the NSF Board announced the terms of a firm offer to acquire the entire issued and to be issued share capital of Provident Financial. Under the terms of the Offer, for each Provident Financial Share held, Provident Financial Shareholders will be entitled to receive 8.88 New Ordinary Shares.
		It is intended that the Acquisition will be implemented by way of a takeover offer within the meaning of the Companies Act. However, NSF reserves the right to elect, with the consent of the Takeover Panel (where necessary), to implement the Acquisition by way of a Court-sanctioned scheme of arrangement in accordance with Part 26 of the Companies Act.
		The Acquisition will be conditional on Shareholders granting authority at the General Meeting to the Board to allot and issue the New Ordinary Shares to Provident Financial Shareholders. The Offer is subject to other conditions, including in respect of various antitrust and regulatory clearances, details of which are set out in full in the Offer Document.
		The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with each other and with each Existing Ordinary Share, including the right to receive all dividends or other distributions declared with a record date falling after the Closing Date (save for any final dividend declared by NSF in respect of the year ended 31 December 2018). Applications will be made to the UKLA and to the London Stock Exchange for the New Ordinary Shares to be admitted to the Official List with a Standard Listing and to trading on the London Stock Exchange's Main Market for listed securities, respectively.
		Fractions of New Ordinary Shares will not be allotted to Provident Financial Shareholders but will be aggregated and sold in the market. The net proceeds of such sale will then be paid in cash to the relevant Provident Financial Shareholder in accordance with their fractional entitlements. Individual entitlements, however, of less than £5.00 will not be paid but will be retained for the benefit of the Enlarged Group.
		The offer of New Ordinary Shares to persons resident in, or who are citizens of, or who have a registered address in countries other than, the United Kingdom may be affected by the laws of the relevant jurisdiction. Those persons should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to accept the Offer.
E.4	Material interests	Not applicable. There are no interests (including conflicts of interest) known to the Company which are material to the issuance of the New Ordinary Shares or the Transaction.
E.5	Name of person selling securities/ lock-up agreements	No Shareholders are selling Ordinary Shares pursuant to an offer to the public.

Element	Disclosure requirement	Disclosure
E.6	Dilution	Assuming the issue of 2,248,782,185 New Ordinary Shares pursuant to the Offer (not including the 2,495,158 outstanding options granted under the Provident Financial Savings-related Share Option Schemes), and no other issues of Ordinary Shares between the Latest Practicable Date and Admission and no buybacks of Ordinary Shares between the Latest Practicable Date and Admission, the Existing Ordinary Shares (excluding the 5,000,000 Ordinary Shares held in treasury) will represent 12.2% (on a fully diluted basis) of the Enlarged Share Capital immediately following Admission.
E.7	Expenses charged to the investor	Not applicable. Investors will not be charged commissions, fees or expenses by the Company in connection with Admission.

PART II RISK FACTORS

Any investment in the Ordinary Shares carries a significant degree of risk. If any or a combination of the following risks actually materialise, the business, reputation, financial condition, operating results or prospects of the Company, the NSF Group and the Enlarged Group could be materially and adversely affected. In such cases, the market price of the Ordinary Shares may decline and investors may lose all or part of their investment.

The risks below are all those of which the Directors are aware as at the date of this Document and which they currently believe may materially affect the Company or the NSF Group or which may, if Completion occurs, affect the Enlarged Group. However, further risks and uncertainties which are not presently known to the Directors, or that the Directors currently deem immaterial, may also have a material effect on the Company, the NSF Group, the Enlarged Group or the Shareholders should they materialise.

References in this Part II (Risk Factors) to: (i) the acquisition of a company or a business, or an acquired company or business, shall include references to the acquisition of an interest in such business or company; (ii) the Provident Financial Group shall be construed as relevant to the Enlarged Group subject to Completion; and (iii) the Enlarged Group shall be construed as the NSF Group and the Provident Financial Group together if the Acquisition is completed or the NSF Group if the Acquisition is not completed, as applicable.

The NSF Group and its advisers have not had access to Provident Financial's information or documentation and have been unable to perform any due diligence on such information or documentation. The information in relation to the Provident Financial Group has been sourced from publicly available information and has not been subject to comment or verification by Provident Financial or the relevant member of the Provident Financial Group or the NSF Group or their respective directors. Nothing in these risk factors limits or qualifies the issuer or the Directors' responsibility under Prospectus Rule 5.5 or Part 6 FSMA.

1. RISKS RELATING TO THE ENLARGED GROUP AND ITS INDUSTRY

1.1 The expansion of the Enlarged Group's loan portfolio at a rate beyond the organic growth rate that it is able to generate from its existing loan portfolio depends in large part upon its ability to obtain adequate funding

The Enlarged Group's business strategy contemplates significant growth, which it may not be able to fund from its existing level of cash generation. Any additional growth beyond organic growth depends, to a great extent, on the Enlarged Group's ability to obtain adequate funding from a variety of sources, such as the capital markets and borrowing facilities. These sources of financing may not be available in the future in the amounts, at the pricing and/or on the terms the Enlarged Group may require or want. The credit markets have experienced, and may continue to experience, high volatility and severe liquidity disruptions. Were the levels of volatility and constraints on liquidity last seen following the global financial crisis which began in 2008 to return, the Enlarged Group may be unable to extend and/or diversify its funding sources. Were that to be the case, the Enlarged Group may be unable to finance the expansion of its lending operations, which could mean the Enlarged Group would be unable to achieve its maximum growth potential, and have a material adverse effect on its business, financial condition, results of operations and/or prospects.

1.2 The Enlarged Group's ability to raise debt or to refinance existing borrowings is dependent on market conditions and on the continued credit-worthiness of the Enlarged Group

The ability to raise future debt or to refinance future borrowings in the bank or capital markets is dependent on market conditions and the proper functioning of financial markets. In addition, the Enlarged Group may be unable to refinance its debt when it falls due, or able only to refinance existing borrowings at a price, or on terms which are not in the best interests of the Enlarged Group. The NSF Group's and the Provident Financial Group's borrowings are diversified across a number of instruments and/or facilities with different maturity profiles, the majority of which in each case are due in over a year's time. However an extended period over which the Enlarged Group was unable to refinance existing borrowings on favourable terms could have a material adverse effect on its business, financial condition, results of operations and/or prospects.

1.3 Damage to the Enlarged Group's reputation could have a material adverse effect on the Enlarged Group

The Enlarged Group could suffer damage to its reputation and brands as a result of adverse publicity in connection with, for example, the perception of high charges in personal consumer loan products, poor protection of customer data or poor conduct. Adverse publicity could stem from the actions of legislators and pressure groups, as well as social media postings and/or reporting by the media.

The Provident Financial Group is subject to enhanced supervision by the FCA, and the FCA's investigations into: (i) the sale of Repayment Option Plans by Vanquis Bank; and (ii) breaches of certain principles of the FCA's Principles for Business and the Consumer Credit Sourcebook will following the Acquisition be managed by and associated with the Enlarged Group. These issues could damage the reputation and perception of the Enlarged Group, regardless of the fact that such issues arose under Provident Financial's management team. Furthermore, the NSF Group operates in an industry in which there are many competitors. The NSF Group does not operate in conjunction or collaboration with any of its competitors, but their actions and operations may nevertheless have an adverse effect on its reputation and business. In particular, should any of the Enlarged Group's competitors suffer from financial losses, incur regulatory fines or other public censure, be found to be operating in violation of any laws or regulations, or fail as a business, this may cause customers, suppliers and providers of capital to be wary of engaging with other providers of non-standard finance, such as the Enlarged Group. Negative publicity resulting from any actions of the Enlarged Group's competitors could also have a detrimental effect on the Enlarged Group's reputation or business, through association.

The Directors believe that the Company has through active engagement with key stakeholders (including regulators, government, investors and the media) demonstrated that it acts as a responsible lender. In particular, the Company's support of Loan Smart, a charity focused on helping consumers recognise the dangers of illegal lending has been a commitment to that stance. However consumers and/or print, online and television media may conflate the non-standard finance sector in which the Enlarged Group operates with other similar finance areas, in particular the 'payday loans' sector, the dedicated debt collection sector and the debt management sector. These sectors have suffered from significant and protracted negative attention and media coverage in the UK in recent years. To the extent some consumers still confuse and conflate the different financing products, any negative attention those sectors attract may also have a negative impact on the Enlarged Group's businesses.

Unfavourable publicity could also lead to increased pressure in the UK for further changes to regulation of the non-standard consumer finance sector generally, and the unsecured consumer loans sector in particular. In the UK, short-term and high-cost lending in which the Enlarged Group is (or may in the future be) engaged is under scrutiny by the government, regulators and certain consumer advocacy groups, and the FCA has been pro-active in reviewing and placing restrictions on the activities of short-term consumer lenders since it took responsibility for regulating this sector in April 2014. Unfavourable publicity could also lead to increased pressure in the UK for further changes to regulation of the non-standard consumer finance sector generally, and the unsecured consumer loans sector in particular, which could have material adverse consequences for the Enlarged Group. The occurrence of any or a combination of these factors could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations and/or prospects.

1.4 Following Completion, the Enlarged Group will be subject to PRA regulation, and will be required to meet certain prudential regulatory capital and liquidity requirements

Following Completion, the Enlarged Group will contain within it Vanquis Bank, a bank regulated by the PRA which accepts deposits from UK retail customers. As a result, the Enlarged Group will be subject to PRA-imposed prudential regulatory capital and liquidity requirements on a consolidated basis. Vanquis Bank is also subject to prudential regulatory capital and liquidity requirements imposed by the PRA on a solo entity basis. This will mark a change for the Enlarged Group, as NSF has not previously been subject to significant regulatory capital or liquidity requirements in the past.

The prudential regulatory capital and liquidity requirements applicable to banks and regulated firms have increased significantly over the last decade. This increase has been largely in response to the financial crisis, but is also a result of continuing work undertaken by regulatory bodies in the financial sector subject to certain national and international mandates. Prudential requirements could increase further in the short term, not least in connection with ongoing implementation issues as noted in Part XVIII (Supervision and Regulation) below, and it is possible that further regulatory changes may be implemented in this area in any event.

The prudential regulatory capital and liquidity requirements to which Vanquis Bank is subject are primarily set out in the Capital Requirements Directive IV 2013/36/EU (as implemented in the UK through applicable regulatory rules which, in relation to Vanquis Bank, are set out in the PRA Rulebook and other PRA publications) and the Capital Requirements Regulation ("CRR" and together "CRD IV"). These regulatory capital and liquidity requirements include, on top of the base level requirements: (i) the capital conservation buffer which is currently set at 2.5% of total risk weighted assets ("RWAs"); and (ii) the countercyclical capital buffer which is currently 1% of total RWAs. In addition Vanquis Bank is subject to additional requirements imposed by the PRA to the extent not inconsistent with CRD IV (see Part XVIII (Supervision and Regulation) below for further details).

In addition, CRD IV requirements adopted in the United Kingdom or the way those requirements are interpreted or applied may change, including as a result of binding regulatory or implementing technical standards or guidance developed by the European Banking Authority, changes to the way in which the PRA interprets and applies these requirements to UK banks and/or further changes to CRD IV agreed to by EU legislators. Similarly there may be changes to national prudential requirements which apply to banks or financial institutions. These changes, either individually or in aggregate, may lead to further unexpected enhanced prudential requirements in relation to the Enlarged Group or Vanquis Bank's capital, leverage, liquidity and funding ratios and requirements, as applicable. There are a number of initiatives underway which could also affect prudential capital and liquidity requirements in the future. For example, the Basel Committee on Banking Supervision recently revised the market risk framework (which is expected to take effect on 1 January 2022).

The Enlarged Group and Vanquis Bank will be required to conduct an Internal Capital Adequacy Assessment Process ("ICAAP") on an annual basis. The key output of the ICAAP is a document which considers the risks faced by the Enlarged Group and the adequacy of internal controls in place, ascertains the level of regulatory capital that should be held to cover these risks and performs stress testing on both regulatory capital and liquidity under severe downside scenarios. The ICAAP must be approved by the Boards of the Enlarged Group and Vanquis Bank and will be considered by the PRA in setting the Enlarged Group's and Vanquis Bank's respective Total Capital Requirements.

The capital adequacy assessment is required to comply with CRD IV. In addition, the PRA issues various policy statements and guidance to which the Enlarged Group and Vanquis Bank will have to adhere. In December 2017 the Basel Committee agreed to further Basel III reforms, including reforms relating to the standardised and internal ratings-based approaches for credit risk, and a revised output floor. The Basel Committee expects member countries to implement these 2017 reforms—sometimes referred to as "Basel IV"—by 1 January 2022 (with the exception of those relating to the output floor, which will be phased in from 1 January 2022).

Proposals and initiatives by the Basel Committee may result in the Enlarged Group being required to hold additional operational risk Pillar 1 capital which, in turn, could materially adversely affect the Enlarged Group's access to liquidity, increase its funding costs, increase its compliance costs, delay, limit or restrict the execution of its strategy, and/or have a material adverse effect on the Enlarged Group's business, financial condition, operational results and/or prospects.

In December 2017, the Basel Committee issued its finalised revisions to the standardised approach for measuring operational risk capital which will be used by the Enlarged Group. The revised approach, which factors in historical operational risk losses as well as business indicator measures, is due to take effect from 1 January 2022. In March 2016, the Basel Committee issued standards for interest rate risk in the banking book ("IRRBB") which include (i) more extensive guidance on the expectations for a bank's IRRBB management process in areas such as the development of interest rate shock scenarios, as well as key behavioural and modelling assumptions to be considered by banks in their measurement of IRRBB; (ii) enhanced disclosure requirements (including quantitative disclosure requirements based on common interest rate shock scenarios); (iii) an updated standardised framework; and (iv) a stricter threshold for identifying outlier banks. Banks were expected to implement the standards by 31 December 2018. Moreover, in March 2018 the Basel Committee published a further consultative document proposing various revisions to its January 2016 "minimum capital requirements for market risk" standard, including proposals for a simplified alternative to the standardised approach.

There are still some areas of the PRA's intended approach to the implementation of CRD IV and the other measures mentioned above that have yet to be finalised and the prudential regulatory requirements continue to evolve. For example, in December 2018 the European Banking Authority ("EBA") published its final report on the EBA Guidelines on institutions' stress testing which, as of 2019, apply to all firms and aims to assist them identify, assess, measure, and manage tail risks. As such, the Enlarged Group and Vanquis Bank may be unable to meet their respective applicable regulatory requirements in the future without taking further action. Prior to the Acquisition, the Provident Financial Group made provisions in its audited consolidated financial statements for the year ended 31 December 2017 in connection with: (i) resolving the FCA's investigation in relation to Vanquis Bank's ROP and (ii) Moneybarn's estimated liability in connection with the FCA's ongoing investigation into Moneybarn. These depleted the Provident Financial Group's regulatory capital, with the CET1 capital ratio of the Provident Financial Group reducing to 14.5% as at 31 December 2017 before rising to 22.4% as at 30 June 2018 following the raising of £300 million (post-fees and costs) of additional equity capital by way of a rights issue completing in April 2018. This is as against a Total Capital Requirement of 25.5% of total RWA, fully loaded CRD IV buffers of 3.5% of total RWA, the minimum Pillar 1 prescribed requirement of 8.0% of RWA, and Pillar 2a regulatory capital requirements of 14.0% of total RWA currently imposed on the Provident Financial Group (on the basis of Provident Financial's position disclosed within the Provident Financial 2017 Annual Report and Accounts).

If market expectations as to capital levels increase, driven by, for example, the capital levels or targets among peer banks or regulated firms, or if new regulatory requirements are introduced, the Enlarged Group and/or Vanquis Bank, as applicable, may experience pressure to increase its capital ratios. An analogous risk applies to each of the Enlarged Group and Vanquis Bank in relation to liquidity. Even without such market-wide changes, the PRA may determine that the current Total Capital Requirements for the Enlarged Group and/or for Vanquis Bank, may need to be increased (from their already high levels) to reflect additional perceived risk or for some other reason, requiring the Enlarged Group and/or Vanquis Bank to raise additional capital and/or imposing restrictions on their ability to pay their respective liabilities as they fall due, pay future dividends and make distributions, and could affect the implementation of their respective business strategies, impacting future growth potential. Equally, it is possible that, notwithstanding efforts to resolve the issues which have led to the PRA imposing the current level of capital requirements, the PRA does not lower those requirements, as might otherwise have been hoped.

The ability of the Enlarged Group and Vanquis Bank to do business will be constrained to the extent that they do not maintain sufficient levels of capital. Moreover, if the Enlarged Group were to maintain excess liquidity, or if the levels of liquidity it is required to maintain were to increase significantly because of regulatory changes, this could reduce its overall profitability. Further, if the Enlarged Group or Vanquis Bank were to fail to meet its respective minimum regulatory capital or liquidity requirements, this may result in administrative actions or sanctions. In addition, a shortage of capital or liquidity could affect the Enlarged Group's and Vanquis Bank's ability to pay their respective liabilities as they fall due, pay future dividends and distributions, and could affect the implementation of their respective business strategies, impacting future growth potential.

Any inability of the Enlarged Group or Vanquis Bank to meet their respective regulatory capital or liquidity requirements or any legislative changes that limit their respective abilities to manage their balance sheets and capital resources effectively (including, for example, reductions in profits and retained earnings as a result of credit losses or write-downs, increases in risk-weighted assets or the inability to raise finance through wholesale markets) could have a material adverse impact on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.5 The Enlarged Group will be subject to rules relating to regulatory action in the event of a bank failure

The Bank Recovery and Resolution Directive ("BRRD") contains requirements relating to recovery and resolution plans, early supervisory interventions and the resolution of firms (including the introduction of a bail-in tool). It also provides for preferential ranking on insolvency for certain deposits that are eligible for protection by deposit guarantee schemes (including the uninsured element of such deposits and, in certain circumstances, deposits made in non-EEA branches of EEA credit institutions) in priority to deposits that are not similarly eligible, and introduces a bank funded resolution fund.

The BRRD (including the bail-in tool), together with the majority of associated FCA and PRA rules, was implemented in the UK in January 2015.

The BRRD provides write-down and conversion powers to resolution authorities to ensure that relevant capital instruments absorb losses upon, amongst other events, the occurrence of the nonviability of the relevant institution or its parent company or group, as well as a bail-in tool comprising a more general power for resolution authorities to write down (including to zero) the claims of unsecured creditors of a failing institution and to convert unsecured debt claims to equity. If the Bank of England, as resolution authority, were to consider relevant conditions for the exercise such powers to be available in respect of the Enlarged Group, then existing Shareholders may experience dilution of, or losses on, their holdings and may not receive any compensation for their losses.

In addition, in a resolution scenario, financial public support will only be available to the Enlarged Group as a last resort after the resolution authorities have assessed and exploited (if available), to the maximum extent practicable, the resolution tools, including the bail-in tool. Given that the purpose of the resolution tools is to minimise any reliance on financial public support, there can be no assurance that any such financial public support will be forthcoming.

With the implementation of the BRRD, European banks are required to have bail in-able resources in order to fulfil the minimum requirement for own funds and eligible liabilities ("MREL"). There is no minimum level of MREL—each resolution authority is required to make a separate determination of the appropriate level for each resolution group within its jurisdiction, depending on the resolvability, risk profile, systemic importance and other characteristics of each institution. Currently Vanquis Bank falls outside the lower limit for the application of the specific UK regime set by the Bank of England (£15-25 billion in RWA). As a smaller institution, Vanquis Bank will satisfy MREL requirements if it meets its minimum regulatory capital requirements as a going concern. If the Bank of England were to change the relevant thresholds, or Vanquis Bank's assets were to increase materially, Vanquis Bank may be required to increase its own funds or issue 'eligible liabilities'. Doing so may increase compliance costs, delay, limit or restrict the Enlarged Group's strategy and may have a material adverse effect on the Enlarged Group's capital structure, business, financial condition, results of operations, cash flows and/or prospects.

1.6 The regulatory rules on consumer lending affecting the Enlarged Group may be subject to change

Since 1 April 2014, consumer credit firms doing business in the UK (including the businesses within the Enlarged Group) have been regulated by the FCA, which took over responsibility for the regulation of consumer credit in the UK from the OFT (see Part XVIII ("Supervision and Regulation") below for further details).

The FCA's current priorities include the regulation of providers of high-cost short-term credit, such as payday lenders, and it has introduced rules to protect customers from certain lending practices. More recently, the FCA has turned its attention to other providers of high-cost credit, including home credit providers such as CCD and other non-standard lenders such as Everyday Loans. Accordingly, there is a risk that the FCA may introduce new, stricter, rules designed to address particular concerns in relation to lending practices in this sector.

Following a consultation, the FCA has published proposed rules and guidance on high cost credit for consultation. These proposed rules cover, amongst other things: (i) the ways in which banks and building societies charge for overdrafts; and (ii) changes aimed at tackling harm to consumers in the home-collected credit sector. Whether the FCA's work in this area has any effect on the Enlarged Group, and the rules to which the regulated entities in the Enlarged Group will be subject, will be unclear until the consultations conclude and final rules are published. The final rules are expected to be published in June 2019. The FCA is also working to encourage increased availability of alternatives to high-cost credit.

In 2015 the FCA made rules on the operation of the guarantor loan market which include requirements for firms to: (i) provide adequate pre-contract explanations to guarantors; (ii) assess the guarantor's creditworthiness; and (iii) treat guarantors fairly and with forbearance if they are in financial difficulty, in each case where both the guarantor and the borrower in question are individuals. In January 2017 the FCA published its finalised guidance on guarantor loans and default notices. The guidance sets out what the FCA considers the "enforcement of a security" means for the purposes of the Consumer Credit Act 1974 ("CCA"). The guidance also considers the consequences of failing to serve a valid default notice where required, timings relating to the issue of default notices and timings for reporting defaults to credit reference agencies. The FCA intends to keep the guarantor lending market under review, and may propose changes to its rules or guidance in the future.

More broadly, as a significant proportion of the current and anticipated regulatory regime applicable to the Enlarged Group in the UK is derived from EU directives and regulations, the UK exiting the EU could materially change the legal and regulatory framework applicable to the Enlarged Group (although no such material change is expected in the immediate short term).

Any change in the regulatory framework for consumer lending, any introduction of new rules or revised interpretation of existing rules, and the costs associated with complying with such changes and/or additions could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations and/or prospects.

1.7 Unless prescriptive rules as to the content and execution of regulated consumer agreements are followed, those agreements may be unenforceable

Certain consumer credit and consumer hire agreements are regulated under FSMA, such that entering into such agreements is a regulated activity, the conducting of which requires a person to be authorised by the FCA. The content, execution and ongoing notice requirements for such regulated agreements are set out in CCA, the Consumer Rights Act 2015 (and, in certain cases its predecessor, the Unfair Terms in Consumer Contracts Regulations 1999), FSMA and related legislation, rules, regulations and guidance.

If an agreement within the scope of this regime has not been drafted or executed in accordance with the provisions of the relevant rules, laws and regulations, that agreement may, in certain cases, not be enforceable or otherwise will only be enforceable once a court order has been obtained. This may also be the case if certain requirements relating to the way in which a firm communicates with its customers (pre- and post-contract) are not followed precisely. For example, if a notice sent to a customer under a regulated consumer agreement is not drafted in compliance with the relevant form and content requirements, the agreement itself is likely to be unenforceable until a compliant notice is sent to the customer, and interest and charges otherwise due before a compliant notice is sent out may be refundable to the customer since the customer may be absolved of liability to pay interest and charges during a "period of non-compliance". In addition, non-standard consumer finance firms are subject to various other requirements under other consumer protection legislation; for example, the general duty to act honestly and fairly towards customers under the Consumer Protection from Unfair Trading Regulations 2008.

Consumer credit legislation can be difficult to interpret and implement with absolute certainty, which means that inadvertent non-compliance with statutory provisions can occur. If a non-standard consumer finance firm's regulated agreements or notices do not comply with the CCA and related rules and regulations, even inadvertently, this can result in (i) debt being irrecoverable; (ii) a consumer's obligation to pay interest and other fees and charges being removed; and/or (iii) the firm being required to refund interest and other fees and charges that have already been collected.

Further, courts have wide-ranging powers which allow them to modify (including by reducing the amounts due) or even repudiate agreements between consumers and credit providers if the court determines that there is an unfair relationship between the credit provider and the customer.

In addition to restrictions on the ability to collect from the borrower pursuant to the agreement, failure to comply with applicable laws, regulations, rules and guidance could result in investigations or regulatory enforcement action by a firm's regulators, which could lead to fines or the variation, suspension or withdrawal of authorisation for the Enlarged Group or any firm in which the Enlarged Group may in future acquire an interest.

In addition, any failure to comply with regulatory requirements, any variation, suspension or withdrawal of authorisation, or any other actions taken by any Enlarged Group entities or any firm in which the Enlarged Group may in future acquire an interest, may damage the reputation or increase the ongoing compliance risk of that firm and any of its business partners. The latter could potentially (depending on the contractual relationship between the firm and such business partner) entitle that business partner to stop doing business with the firm and seek available remedies. The control framework for entities within the Enlarged Group, or any firm in which the Enlarged Group may in future acquire an interest, may need to be enhanced to enable full compliance with all applicable rules and avoid these adverse consequences, which would increase the Enlarged Group's costs and could reduce the Enlarged Group's income from operations.

Any of the foregoing could have a material adverse effect on the Enlarged Group's business, financial condition and/or results of operations.

1.8 The Enlarged Group will be subject to substantial and changing regulation and associated regulatory risk

In addition to the areas of regulation described in Risk Factors 1.4 to 1.7 above, the Enlarged Group will be subject to a wide range of financial laws and regulations (see Part XVIII ("Supervision and Regulation") below for further details). This results in associated regulatory risks, including those which may arise as a result of the introduction of, or amendments to, laws, regulations, rules, policies, industry-wide codes of practice, guidance and/or initiatives at both the UK and EU level.

As a result of previous compliance failings detailed elsewhere in this Prospectus (see further paragraph 2 of Part VII (Letter from the Chairman) for details), the Provident Financial Group has been placed under enhanced supervision by the FCA. As a result, following Completion, the Enlarged Group is likely to remain subject to additional regulatory scrutiny until the issues identified in the Provident Financial Group have been resolved to the satisfaction of the FCA.

These regulatory risks have the potential to significantly affect the way that the Enlarged Group conducts its business and, in particular, may restrict the scope of its existing businesses, limit its ability to expand product offerings, or cause its products and/or services to become more expensive. Future regulatory developments may also materially adversely affect the Enlarged Group's access to liquidity, increase its funding costs, increase its compliance costs and/or delay, limit or restrict its strategic development.

Failure to comply with the wide range of laws and regulations which will apply to the Enlarged Group may result in a number of adverse consequences, including (i) substantial fines, penalties, injunctive relief and/or monetary damages (which may be difficult to quantity in advance) being imposed on one or more members of the Enlarged Group; (ii) regulatory investigations, reviews, proceedings and enforcement actions being taken against one or more members of the Enlarged Group; (iii) the Enlarged Group being required to amend sales processes, product and service terms and disclosures, withdraw products and/or provide redress or compensation to affected customers; (iv) the Enlarged Group not being able to enforce contractual terms (either at all or as it had intended) or having contractual terms enforced against it in an adverse way; (v) civil or private litigation (brought by individuals or collectively) being brought against any member of the Enlarged Group in the UK or another jurisdiction; (vi) criminal enforcement proceedings being taken against any member of the Enlarged Group; and/or (vii) regulatory restrictions on the Enlarged Group's business, any of which (alone or in tandem) may cause the Enlarged Group to incur significant costs and/or record provisions in its financial statements. Additional regulatory restrictions may also be placed on the Enlarged Group, the Enlarged Group may be required to hold additional capital and/or liquidity, and—in extreme cases—the FCA or the PRA may cancel or restrict the Enlarged Group's regulatory authorisations altogether (thereby preventing or impeding it from carrying on certain of its businesses). There may also be harm to the Enlarged Group's reputation.

1.9 The Provident Financial Group is in discussions with the FCA in relation to its investigation into certain of Moneybarn's systems, controls and practices and the outcome of the investigation remains uncertain

In the period prior to and following Moneybarn obtaining full FCA authorisation on 3 June 2016, the Provident Financial Group has been in discussions with the FCA regarding certain of Moneybarn's systems, controls and practices including: (i) affordability assessments; (ii) termination of arrangements with customers; (iii) fees and charges; and (iv) forbearance. In July 2016, the FCA carried out a site visit at Moneybarn's registered office to gather more information in relation to the business following Moneybarn's authorisation and following such visit, in September 2016, the FCA set out in a letter that it had certain concerns relating to, among other things, the items described in (i) to (iv) above. On 4 December 2017, the FCA commenced an investigation into Moneybarn. The FCA investigation relates to the period commencing 1 April 2014 and involves an investigation into whether Moneybarn, including its senior managers, contravened Principle 3 (Management and control), Principle 6 (Customers' interests), and/or Principle 7 (Communications with clients) of the FCA's Principles for Businesses and the Consumer Credit Sourcebook rules, in particular the FCA is investigating: (a) whether Moneybarn's creditworthiness and customer affordability assessments were adequate and compliant with regulatory requirements; (b) whether Moneybarn failed to treat customers in default or in arrears with due forbearance and consideration appropriate to their circumstances; and (c) whether Moneybarn provided information about its termination processes which was clear, fair and not misleading in order to allow customers to make informed decisions about the different options open to them in respect of the termination process and its financial implications.

The Directors understand that Moneybarn is in continuing discussions with the FCA with respect to its ongoing investigation into affordability, forbearance and termination options. The estimated cost of £20.0 million, representing management's estimate of the expected outcome in respect of the investigation, has been reflected as an exceptional cost in the Provident Financial Group's audited consolidated financial statements for the year ended 31 December 2017. As at 30 June 2018, the Provident Financial Directors stated that they believed this exceptional cost continued to represent Provident Financial's best estimate of the expected outcome of the investigation, with an expected final resolution to the investigation within 18 months.

Provident Financial indicated on 6 March 2019 that it was working towards concluding its discussions with the FCA in relation to the investigation in the coming weeks, however no assurance can be given that in the event that were the FCA to find that Moneybarn has contravened any of the rules that are the subject of the FCA's investigation or any other rules, the level of provision that the Provident Financial Group has already taken in its audited consolidated financial statements for the year ended 31 December 2017 will be sufficient to cover any penalty, redress or other liability that Moneybarn may incur. Any requirement to make further provision could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.10 Provident Financial is in discussions with the Financial Reporting Council in relation to certain matters

Provident Financial has disclosed that since October 2017, it has been cooperating with the Financial Reporting Council with its enquiries in relation to, amongst other things, the adequacy of the disclosures in its annual report and the strategic report for the year ended 31 December 2016 regarding the FCA's investigation into, and the suspension of, the sale of the ROP to new customers. The Conduct Committee of the Financial Reporting Council is authorised for the purposes of section 456 of the Companies Act 2006 to make an application to the court for a declaration that a company's annual accounts, a strategic report or a directors' report do not comply with the requirements of the Companies Act and for an order requiring the directors of the company to prepare revised accounts or a revised report. However, as set out in paragraph 42 of the Conduct Committee's Operating Procedures, alternative corrective or clarification action proposed by the directors may be accepted instead of an application to the court. If Provident Financial were required to prepare revised accounts or a revised report, this might give rise to civil claims being brought against Provident Financial in connection with any failure to comply with the requirements in the Companies Act. The Financial Reporting Council also has the power under section 14 of the Companies (Audit, Investigations and Community Enterprise) Act 2004 to refer matters to the FCA who could review and investigate Provident Financial's compliance with its financial reporting obligations, including under the Market Abuse Regulation (2014/596/EU), the Financial Services Act 2012, the Listing Principles and other aspects of the Listing Rules. The sanctions which could be imposed on Provident Financial were the Financial Reporting Council to find that it had not complied with its obligations could result in reputational damage to the Enlarged Group and could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.11 Due to seasonality, revenues and working capital levels of home credit businesses may vary quarter to quarter

The level of sales and working capital requirements of both Provident Home Credit's business and Loans At Home's business have historically been affected by seasonal factors. For example, home credit loan volumes for Provident Home Credit and Loans At Home traditionally tend to be higher in the run-up to the Christmas holidays; approximately 25% of Loans At Home's loan origination (by value) occurred during the two-month period leading up to Christmas for the year ended 31 December 2018. Collections performance is also affected by seasonality. Within the Provident Financial Group, Provident Home Credit and Moneybarn are similarly affected by seasonal variance: in the case of Provident Home Credit with higher loan volumes in the run-up to Christmas; and for Moneybarn with greater loan volumes around April and October, being a month after the release of new vehicle registrations, reflecting increased sales initiatives by vehicle dealers. As a result of the planned Demerger the impact of seasonality may reduce, however there will remain significant parts of the Enlarged Group's business that will continue to be affected.

If seasonal fluctuations are greater than anticipated, or if there is an adverse development or general deterioration in economic conditions during peak periods, then the Enlarged Group's performance could be affected for the entire year. In addition, to the extent cash generated from lending operations represent (as they do currently) the Enlarged Group's principal source of funds, adverse collections could in turn have an adverse impact on the Enlarged Group's ability to maintain or expand loan volumes (unless it seeks third party funding from banks or the capital markets) and could also impact the level of new loans it can issue. Any of the foregoing could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations and/or prospects.

1.12 The Enlarged Group will operate in markets that are intensely competitive and may be unable to compete with businesses that offer alternative and potentially more attractive non-standard finance products, and competitors may have or develop competitive strengths that the Enlarged Group cannot match

The Enlarged Group is expected to face competition from new and existing players in the credit card, home credit, unsecured personal loan and guarantor loan segments of the UK non-standard finance market. The Enlarged Group's current competitors as well as any new competitors may have greater financial, technical, personnel or other resources. Competition may also come from other sources such as other non-standard financing companies and car lenders. In addition, large and established mainstream banks, among others, may at some point choose to enter or re-enter the non-standard finance sector, either directly or through investments in new or existing non-standard finance companies.

The consumer credit market in the UK is intensely competitive. Vanquis Bank, which following Completion will form part of the Enlarged Group, competes with other credit card and store card issuers, including most notably non-standard finance credit cards issued by NewDay, Capital One and Barclays, and other consumer credit providers on the basis of a number of factors, including pricing, breadth and quality of products and services, brand, network and reputation. This competition affects Vanquis Bank's ability to attract applicants for its products, encourage customers to use its products, maximize the revenue generated by product usage and generate customer loyalty and satisfaction so as to minimise the number of customers switching to other credit card or store card brands or other methods of obtaining credit or making payments. Competition may also reduce the yield on Vanquis Bank's credit products, if new entrants or existing competitors choose to attract new customers by lowering interest rates or providing significant incentives to new customers.

Everyday Loans is the leading branch-based provider of unsecured loans to credit impaired individuals in the UK. While there is no other branch-based provider of unsecured term loans to this segment of the UK market, there is intense competition, particularly for higher-quality credit customers, from a number of lenders including 118118 Money and Likely Loans. Whilst such firms and their peers operate remote-only lending models and have no physical branches, they remain a significant threat to Everyday Loans' strong market position. Increased competition from such firms and others may result in a reduction in Everyday Loans' active customer base, financial condition, results of operations, cash flows and/or prospects.

The home credit market in the UK is intensely competitive. If existing competitors of scale, as well as any new market entrants of scale, are successful in reducing the Enlarged Group's market share in a specific sector of the non-standard finance market or the market as a whole, and/or are otherwise successful in displacing the Enlarged Group from being the lender to a significant number of existing customers, it could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

The guarantor loans segment of the UK's non-standard finance market is dominated by a single provider, Amigo Loans, which has an estimated 88% share of the market segment. While the Enlarged Group's guarantor loans business has enjoyed strong growth in recent years and would be the clear number two in the market, Amigo Loans' significant scale and resources may make it difficult for the Enlarged Group to compete effectively in the future and may result in a reduction in the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

Disruptions to the effective operation of the Enlarged Group's business could also give rise to opportunities for competitors to take customers, loan volume and market share from the Enlarged Group.

The vehicle finance market in the UK is intensively competitive and is defined by segments of customer credit risk. A range of lenders operate across the risk segments but no one lender operates across all risk segments as customer behaviours and operating models are different. In addition, there is intense competition amongst market participants for access to customers through intermediaries. There are more than ten direct competitors to Moneybarn in the UK vehicle finance market, of which two: (i) Moneyway (a trading name of Secure Trust Bank PLC); and (ii) Advantage Finance Ltd, are of comparable size to Moneybarn in terms of gross advances to customers. Other competitors in the market include First Response, Billing Finance Ltd and The Funding Corporation Ltd. Competition may reduce the yield on Moneybarn's product offering, if new entrants or existing competitors choose to attract new customers by lowering interest rates or providing significant incentives to new customers.

There can be no assurance that the Enlarged Group will be able to offer competitive terms to customers for its non-standard finance products. If the Enlarged Group is unable to develop and expand its business or adapt to changing market needs as well as its current or future competitors are able to do, or at all, or if its competitors are able to operate at a lower cost of capital or make advances in their business methods that the Enlarged Group is not able to make, the Enlarged Group may be unable to offer products on terms it deems appropriate in order to operate profitably. Furthermore, the NSF Group's operating and technology models and approaches are not protected by registered patents or copyright and there can be no assurance that the Enlarged Group's approach and methodologies will not be replicated by competitors. Any inability to compete effectively could have a material adverse effect on the Enlarged Group's business, results of operations and/or financial condition.

1.13 An inability to make effective use of full-time employed home credit agents might adversely affect the Enlarged Group's customer and agent retention rates

Following Completion and Demerger, Provident Home Credit will be the Enlarged Group's only home credit business. In 2017 the Provident Financial Group moved Provident Home Credit away from the self-employed agent model the NSF Group successfully uses within the Loans At Home business, instead using full-time employed "Customer Experience Managers" ("CEMs") to serve customers. Following that transition, and as part of the Provident Financial Group's wider changes to Provident Home Credit's operating model in the UK, Provident Home Credit witnessed significant operational disruption. In particular, the business saw higher than anticipated agent attrition and reduced agent effectiveness, resulting in weaker than expected collections performance and adverse sales penetration and customer retention rates, which led to a deterioration in the arrears profile and an increase in impairments of receivables from customers, as well as unsatisfactory outcomes for some customers resulting from non-collections where those customers were previously served by agents leaving Provident Home Credit.

The NSF Directors believe that the difficulties experienced by the Provident Financial Group as part of the pivot towards a CEM model in 2017 had a significant detrimental impact on the results of the Provident Home Credit business. The use of employed CEMs instead of self-employed agents may result in a higher fixed cost base. However a reversion to the self-employed agent model used by Loans At Home could itself lead to further operational disruption. In addition, the NSF Directors note that despite certain advantages the self-employed model offers to agents, this model has increasingly been viewed warily by policy makers and certain segments of the public. For example, the Taylor Review of Modern Working Practices (commonly known as the "Taylor Review"), an inquiry into the issues affecting flexible workers, was published in July 2017, with the UK Government introducing in December 2018 a package of workplace reforms responding to and acting upon the recommendations of the Taylor Review. These reforms will come into force across the next two years, and it is not certain what the full impact of the reforms would have on self-employed home credit agency workers within the Enlarged Group.

The NSF Directors currently believe there would be significant risks in reversing the transition of selfemployed agents to the employed CEM model, and that the relationship model which is critical to the success of the Provident Home Credit business is possible within a CEM model. However, it is necessary that agents are appropriately incentivised to ensure that the CEM model operates effectively, and that an element of variable compensation is available to CEMs. Variable compensation can help ensure strong agent retention and good customer outcomes, and the absence of any incentive-based element of remuneration may result in an employed CEM being less motivated than a self-employed agent. Provident Financial has reported that the FCA has agreed to the introduction of an element of variable related pay for CEMs, however further details are not known. Any failure of the Enlarged Group to properly incentivise its home credit agents appropriately could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.14 A challenge to the employment status of home credit agents might adversely affect the level of the Enlarged Group's expenses

The Provident Financial Group has been, and may continue to be, subject to claims challenging the self-employed status of home credit agents in the UK. There is also a risk that the tax authorities will challenge the self-employed status of agents in the UK and (in the context of the Provident Financial Group) the Republic of Ireland, particularly given recent employment status cases reported in the press. Whilst the Provident Financial Group has previously agreed the self-employed status of agents with the tax authorities in the United Kingdom and the Republic of Ireland, no assurance can be given that the tax authorities will reach the same conclusion following any subsequent challenge. Were the Enlarged Group to be unsuccessful in defending any such claims, class actions or tax authority challenge, it may be required to make payments to former agents as well as being liable to pay additional taxes, including PAYE and National Insurance contributions to the relevant authorities, which could, in aggregate, be material. Furthermore, were a class action or tax authority challenge to be made against the Enlarged Group, whether or not such action is successful, the Enlarged Group could suffer harm to its reputation by virtue of any press or media attention. Any of the foregoing could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.15 Possible risks of personal injury to Customer Experience Managers in home credit could affect the operations of the Enlarged Group

Possible risks of personal injury to CEMs could affect the ability of the Enlarged Group to retain and engage CEMs to perform home credit services, or the ability or willingness of home credit managers to visit customers, which could give rise to an increase in personal injury claims against the Enlarged Group and may damage the reputation, brands and profitability of the Enlarged Group. While CEMrelated incidents are rare, the personal safety of employees will continue to be a priority of the Enlarged Group, and to that end, the Enlarged Group has implemented and will continue to implement appropriate formal health and safety policies and procedures.

1.16 Current and future success depends on retaining key management across the Enlarged Group

The Directors have extensive experience in the non-standard consumer finance sector, and have built a significant network of experts and business contacts in this sector. The Enlarged Group's success depends on its know-how, experience and network. If one or more of the Directors were to leave or was otherwise unable to continue to perform their duties (for example as a result of poor health, accident, or any other reason), the Enlarged Group's network of business contacts would be diminished and its reputation and ability to effectively manage itself may be materially adversely affected. In particular, the Directors believe that the shareholder support already received for the Acquisition in the form of Irrevocable Undertakings and the Letters of Intent is partly driven by investors' confidence in NSF's management team, and the loss of a Director could impact investors' confidence in the future success of the Enlarged Group.

The success of the Enlarged Group also depends, in part, on the ability to retain, motivate, and attract suitable senior managers to manage and operate the businesses which currently sit within the NSF Group and the Provident Financial Group. Competition for senior managers in the unsecured consumer loans sectors is considerable, in particular for risk and compliance roles. The Enlarged Group's staff recruitment, training and incentive programmes may not be sufficient to allow it to recruit, train and retain sufficient numbers of suitable senior managers. A failure to recruit, train and/or retain senior managers could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.17 The Enlarged Group is subject to risks relating to the credit quality, conduct and operations of its third party service providers

The Company has outsourced its email and website infrastructure functions to third party service providers and, as a result, it relies on those third parties for the provision of certain IT functions. In addition, the Company has outsourced its internal accounting and management reporting functions to a third party service provider. This outsourcing applies only to the Company in its capacity as a holding company and not to Everyday Loans, George Banco, Loans At Home or the NSF Group's accounting and management reporting. Following Completion the Company intends to bring these functions in-house using the equivalent internal systems that currently provide this infrastructure to Provident Financial.

Everyday Loans' IT, HR and payroll infrastructure relies on key software and/or services provided by third party service providers. In addition, Everyday Loans makes extensive use of Pancredit, a loan application, administration and collections system owned by Equiniti. Each of these third-party services is managed through a contract/service level agreement and is overseen by a designated member of Everyday Loans' senior management team. While primary account debt collection is delivered internally, third parties are used for specific debt collection activities.

As George Banco is a wholly owned subsidiary of Everyday Loans, the majority of its IT, HR and payroll infrastructure is shared with, and managed by, Everyday Loans. It uses the same management system as Everyday Loans for all loans written since November 2018, with loans before this date held on Nostrum, a loan management platform owned by Equiniti.

The Provident Financial Group's platforms for issuing and managing its products rely, in some cases, on a small number of key relationships with corporate partners and suppliers, including with First Data, which hosts customer credit card accounts to support Vanquis Bank's credit cards business, Newcastle Strategic Solutions Ltd (part of Newcastle Building Society), which provides the deposittaking platform for Vanquis Bank, and Pancredit, which provides certain IT systems which collate data for all customer accounts for Satsuma. While measures are taken in mitigation, these arrangements expose the Provident Financial Group to the risk of poor performance or non-performance by its corporate partners and suppliers, and to the risk of deterioration of the commercial, financial or operational soundness of those organisations. Following the Acquisition there may be dependencies on third parties which increase within the Enlarged Group, for example with respect to Pancredit, which currently provides services for both Everyday Loans in the NSF Group and Satsuma in the Provident Financial Group.

Both the NSF Group and the Provident Financial Group rely upon credit reference agencies to provide credit reference services, and were the Enlarged Group to become unable to access data from such credit reference agencies, or if the data they provided proved to be inaccurate or unreliable, the Enlarged Group may be unable to assess risk properly when considering issuing loans to new or existing customers, which could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

Should the third party corporate partners and service providers engaged by the Enlarged Group fail to perform the outsourced services as contractually required on a timely basis or at all, or terminate these arrangements unexpectedly, the Enlarged Group would need to replace the service providers. This could have adverse cost implications, lead to a disruption in services, processing inefficiencies or security breaches pending replacement, as well as potentially giving rise to breaches by the Enlarged Group of legal or regulatory requirements, and, depending on the functions involved, have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

Furthermore, there is a risk that the Enlarged Group will be unable to find new outsourcing partners in a timely fashion, on acceptable terms or at all, if any existing partners terminate their relationship with the Enlarged Group. Any failure to find new outsourcing partners in such circumstances could, depending on the service provided, give rise to the risk of the Enlarged Group breaching legal or regulatory requirements absent the introduction of alternative arrangements. Similarly, any misconduct of the Enlarged Group's third party service providers (including any breach by such third party service providers of their legal or regulatory obligations) could have a reputational impact on the Enlarged Group which could affect customer willingness to do business with the Enlarged Group and have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.18 Any disruptions to the IT systems of the Enlarged Group or those of its significant vendors could harm its business and reduce its profitability, and any loss of or unauthorised access to its data may result in liability and reputational harm

The NSF Group and its suppliers are exposed to operational risks, such as the breakdown or failure of equipment, interruption of power supply or processes, fire, flood or other natural disasters, acts of sabotage, cyber-attacks or security breaches, vandalism and workplace accidents. The NSF Group relies on its IT systems for communication among its suppliers, employees, agents, headquarters and customers. The NSF Group's performance depends on the availability of accurate and timely data and other information from key software applications to aid day-to-day business and decision-making processes, as well as to comply with regulatory requirements. The Enlarged Group may be adversely affected if its controls designed to manage operational risks fail to contain such risks. For example, Everyday Loans' business is reliant on Pancredit, a loan application, administration and collections system, and may be materially adversely affected by any disruption in or failure of the Pancredit application.

Additionally, the Provident Financial Group has previously highlighted historic underinvestment in certain aspects of its IT systems and platforms, which has resulted in certain legacy IT platforms being combined and running on an aging infrastructure. This has resulted in an overly complex IT estate. A significant portion of the telecommunications and IT systems and technology used by the Provident Financial Group remain on extended support arrangements or are nearing end-of-life (meaning that there is limited or no support provided by the vendor or specialist third-party supplier) and require upgrade. In addition, certain of these systems and technologies are provided by the Provident Home Credit business and used by Satsuma. Given the fully remote online nature of Satsuma's lending business, any disruption to these systems and technologies could have more adverse consequences for the operation of the Satsuma business than for the operation of the Provident Home Credit business.

Any disruption caused by failings in the Enlarged Group's IT infrastructure equipment or of communication networks could delay or otherwise impact the Enlarged Group's day-to-day business and decision-making processes and negatively impact the Enlarged Group's performance.

1.19 The Enlarged Group is exposed to the credit risk of its customers

Both the NSF Group and the Provident Financial Group make unsecured personal loans to a segment of the population that is either unwilling to borrow, or has difficulty obtaining credit from mainstream financial institutions. In doing so, each of the NSF Group and the Provident Financial Group assumes the risk that its customers will be unable or unwilling to pay amounts in full when due. Despite its credit review process, the Enlarged Group may be unable to fully and properly evaluate the financial condition of each prospective customer and his or her creditworthiness. Moreover, a customer's personal situation may change and render him or her unable to repay amounts borrowed, for example, due to changes in personal circumstances or due to the impact of macroeconomic trends, political events or other adverse developments or events.

The NSF Group uses internal and external data, internally developed models and other data analytics tools in order to value its portfolio and establish appropriate impairment provisions. However, the Enlarged Group is likely to have imperfect information about the ability of customers to pay, the time at which customers will pay and the cost required to service and collect on customer debts, all of which factors will affect the Enlarged Group's decisions regarding impairments. In addition, the Enlarged Group's impairment provisions may not be adequate to cover an increase in the amount of nonperforming loans or any future deterioration in the overall credit quality of its total loan portfolio. If the quality of its total loan portfolio deteriorates, or if the Enlarged Group has inaccurately valued its loan portfolio, the Enlarged Group may be required to increase its impairment provisions. Any failure to correctly assess the credit risk of potential customers, and/or make appropriate impairment provisions for the resulting losses, may have a material adverse effect on the Enlarged Group's business, financial condition, results of operations or prospects or cash flows.

1.20 The Enlarged Group is subject to risks of customer fraud

The Enlarged Group's selection and screening processes with respect to customers, as well as its internal relationship management processes, may fail to identify fraud on the part of customers. Examples of customer fraud may include the provision of false or incomplete information, including documentation in respect of identity, personal income, expenses and other liabilities, as part of the loan application process. Failure to properly identify customer fraud could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations or prospects. This risk is exacerbated by the reliance of the Enlarged Group, as part of its efforts to assess creditworthiness, on information it receives from credit reference agencies, which could be incomplete or incorrect, and could contribute to an overly positive, and unwarranted, credit assessment, even if the customer information is accurate.

1.21 The Enlarged Group is exposed to the conduct risk of its staff and third party contractors

Inappropriate or sub-standard behaviour by the Enlarged Group's representatives may expose the Enlarged Group to legal claims by customers, fines by regulators, or may prompt the need for additional investment in processes and systems to help mitigate such risks or to meet any regulatory requirements. Such behaviour may also damage the Enlarged Group's reputation (further details on the risks arising in relation to the Enlarged Group's reputation are more fully set out at Risk Factor 1.3 (Damage to the Enlarged Group's reputation could have a material adverse effect on the Enlarged Group).

1.22 The Enlarged Group may incur losses that are not adequately covered by insurance, which may harm the Enlarged Group's financial results

Although the NSF Group maintains insurance that is customary to its type of business, each of its insurance policies is subject to certain exclusions. Any lack of insurance, or the absence of coverage under existing insurance policies, for certain types or levels of risk could expose the Enlarged Group to significant losses. Any losses that the Enlarged Group incurs that are not adequately covered by insurance may decrease the Enlarged Group's future operating income. In addition, certain types of risks may be, or may become, either uninsurable or not economically insurable, or may not be currently or in the future covered by the Enlarged Groups' insurance policies, and there can be no guarantee that the Enlarged Group will be able to obtain the desired levels of insurance coverage on acceptable terms or at all in the future. Any of the foregoing could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.23 The Enlarged Group is subject to cyber security risks and security breaches and may incur increasing costs in an effort to minimise those risks and to respond to cyber incidents

The NSF Group manages and stores significant volumes of personal data relating to its customers and applicants as part of the origination and management of customer loans. This data is vulnerable to technology risks from a variety of sources, including telecommunications and network failures, natural disasters and human acts by individuals external to the NSF Group, as well as the NSF Group's employees, including fraud, identity theft and other misuse of personal data. The NSF Group routinely transmits and receives personal, confidential and proprietary information by email and other electronic means. The NSF Group relies on secure processing, storage and transmission of confidential and other information on its computer and networks. An interception, misuse or mishandling of personal, confidential or proprietary information being sent to or received from a customer, counterparty or other third party could result in legal liability, customer dissatisfaction, regulatory action and/or reputational harm. The NSF Group is exposed to the risk that data could be wrongfully appropriated, lost or disclosed, stolen or processed in breach of data protection regulations. If the Enlarged Group or any third party service provider on which it relies fails to store or transmit customer information in a secure manner, or if any loss of personal customer data were otherwise to occur, the Enlarged Group could also face legal liability (including under data protection laws), customer dissatisfaction, regulatory action and/or reputational harm.

Companies across all industries are increasingly reporting successful or attempted cyber-attacks and security breaches, some of which have involved intentional attacks. Attacks may be targeted at the Enlarged Group, its customers, its suppliers or each of the above. The Enlarged Group and its businesses are dependent on the secure operation of their systems, websites, and operation of its internet generally. Despite the Enlarged Group's efforts to ensure the integrity of these systems, it is possible that the Enlarged Group may not be able to anticipate or to implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently or are not recognised until launched, and because cyber-attacks can originate from a wide variety of sources, including third parties outside the Enlarged Group, such as persons who are involved with organised crime or associated with external service providers or who may be linked to terrorist organisations or hostile foreign governments. These risks may increase in the future as the Enlarged Group continues to increase its mobile and other internet-based product offerings and expand its internal usage of web-based products and applications or expand into new countries.

Most recently, the coming into force of the General Data Protection Regulation ("GDPR") has significantly increased the compliance requirements and scope of data protection legislation and regulation. Any cyber-attack, security breach, or loss or wrongful transfer by any other means suffered by the Enlarged Group could result in a breach of the GDPR, the Payment Card Industry Data Security Standards, or any further data protection legislation, regulation or guidelines yet to be introduced.

If an actual or perceived breach of security occurs, customer, supplier, governmental and regulatory perceptions of the effectiveness of the Enlarged Group's security measures could be harmed and could result in the loss of customers, suppliers or both, or the loss of confidence of governmental authorities or regulators. Actual or anticipated attacks and risks may cause the Enlarged Group to incur increased costs, including costs to deploy additional personnel and protection technologies, train employees, and engage third party experts and consultants. In addition, many of the third parties who provide products, services or support to the Enlarged Group could also experience any of the above cyber risks or security breaches, which could impact the Enlarged Group's customers and business and could result in a loss of customers, suppliers or revenue. Furthermore, any security or privacy breach could expose the Enlarged Group to other forms of liability, including regulatory fines or penalties, which could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.24 The Enlarged Group's risk management policies and procedures may prove inadequate

The Enlarged Group's policies and procedures for managing credit risk, liquidity risk, regulatory risk, operational risk and other risks may prove ineffective and fail to avoid or mitigate the risks they were designed for. In addition, some of the Enlarged Group's methods for managing risk may be based upon observations of historical market behaviour and statistical techniques are applied to these observations to arrive at quantifications of its potential risk exposures. However, these methods may not accurately quantify the Enlarged Group's risk exposures, especially in situations that cannot be identified based on its historical data. In particular, if the Enlarged Group enters new lines of business, historical data may be incomplete. As additional information becomes available, additional provisions may need to be made. If circumstances were to arise in which the Enlarged Group did not identify, anticipate or correctly evaluate certain risks in developing its statistical models, losses could be greater than the maximum losses envisaged under its risk management system. In addition, certain risks may not be accurately quantified by risk management systems. Material deficiencies in risk management or other internal control policies or procedures (including in respect of information technology systems) may result in significant credit, liquidity, regulatory or operational risk, which may in turn have a material adverse effect on the Enlarged Group's business, financial condition, results of operations and/or prospects.

Within the Provident Financial Group currently, each of CCD, Moneybarn and Vanquis Bank has separate risk management policies and procedures in place which are required to be aligned to the Provident Financial Group's risk management policy. Development and implementation of each risk management policy rests with each individual business with the Provident Financial Group undertaking an oversight role. Each of CCD, Moneybarn and Vanquis Bank has their own specialist credit teams, deploying conventional credit scoring strategies. The Provident Financial Group has historically had no central oversight over the individual credit teams, carrying out its oversight role at a very high level and the alignment of the risk management policies at the business level with the risk management policy of the Provident Financial Group has not been as effective as required. Following Completion, the Provident Financial Group's risk management approach will need to be reconciled with those of the NSF Group, and while this process is ongoing there is a risk that the Enlarged Group will fail to mitigate relevant risks appropriately. By comparison, the NSF Group operates a different risk management model, having implemented in 2018 a NSF Group-wide risk management system into each business division, designed to allow risks to be considered and reported on a thematic basis at the NSF Group level whilst continuing to ensure a clear audit trail through to the operational detail.

If the Enlarged Group's risk management policies and procedures are wholly or partially ineffective or fail to mitigate the risks they are designed to mitigate, or if the Enlarged Group is unable to reconcile the existing risk management policies and procedures currently used within the NSF Group and the Provident Financial Group effectively, the Enlarged Group's business, financial condition, results of operations and/or prospects may be materially and adversely affected.

1.25 The NSF Group focuses on unsecured consumer lending and is therefore reliant on demand for such financial products

The NSF Group generates its revenue principally from, and therefore is heavily reliant on demand for, unsecured consumer lending, as is the case for the Provident Financial Group. A variety of factors could influence demand for the Enlarged Group's unsecured consumer loans, such as regulatory restrictions that inhibit customer access to particular financial services, increased availability or attractiveness of competing financial products, changes in consumer sentiment and spending or borrowing patterns, or changes in the personal financial circumstances of potential customers that might cause them to seek, and obtain, loans of larger size from other lending institutions or, alternatively, to exit the consumer loan market entirely. Should these patterns emerge, and should the Enlarged Group fail to adapt to resulting significant decreases in customer demand for, or access to, its products, its revenues could decrease significantly and on-going business operations could be adversely affected. Even if the Enlarged Group were to adapt its products and services to meet changing customer demand (or its perceptions of existing or future customer demand), customers nonetheless may choose to opt for alternative products and services or otherwise cease to borrow from the Enlarged Group. In any event, the effect of any product diversification or change on the results of the Enlarged Group's business may not become clear until the change has been in effect for some time.

To the extent the Enlarged Group offers new products and services, it may face difficulty in adequately pricing, and therefore in achieving profitability, from offering these new products and services. In addition, the introduction of additional products and services could subject the Enlarged Group to additional regulation or regulatory oversight and consequently to higher internal compliance expenses.

To the extent that any of the foregoing adversely decrease revenue or increase costs, or both, it could have a material adverse effect on the Enlarged Group's business, reputation, financial condition, results of operations or prospects.

1.26 The Enlarged Group faces risks from concentrated exposure to the consumer lending industry and the macroeconomic environment in the UK and to a lesser extent in the Republic of Ireland

The NSF Group's operations are concentrated entirely in one industry and in one country: unsecured consumer lending based entirely in the UK, with revenue derived entirely from UK-based customers. Following the Acquisition the Enlarged Group will derive some revenue from Provident Home Credit operations in the Republic of Ireland, however this is less significant, and the risk of investing in the Enlarged Group could be greater than investing in an entity which owns or operates a range of businesses in a range of sectors and geographies.

In the event of a disruption to the UK or Republic of Ireland credit markets or general economic conditions in the UK or the Republic of Ireland, or macroeconomic conditions generally (including increased interest rates and/or unemployment in regions where the Enlarged Group has significant presence), this concentration risk could cause the Enlarged Group to experience a deterioration in earnings and reduced business activity, which in turn could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations and/or prospects. In particular, a possible exit by the UK from the European Union could have a negative impact on employment rates in the UK, amongst other consequences, which could lead to an increase in loan impairments (risks relating to the U.K's possible exit from the European Union are more fully set out at Risk Factor 1.28 (Legal, political and economic uncertainty surrounding the planned exit of the UK from the European Union may affect the Enlarged Group's customers, and the disruption following any such exit could have a significant ongoing effect on the Enlarged Group's business)).

In addition, adverse economic conditions in the UK or the Republic of Ireland could have a negative impact on the financial circumstances of borrowers to whom the consumer lending business provides loans, such as through increased unemployment or under-employment, which may affect the borrowers' ability to repay their loans, increasing the likelihood that they could default, which could in turn lead to an increase in non-payment, arrears and forbearance as well as an increase in the Enlarged Group's impairment charges. Higher impairment charges could reduce the Enlarged Group's profitability, capital and ability to engage in lending activities. Moreover, prospective customers may be less likely to borrow to fund discretionary purchases such as gifts or holidays during periods of economic decline, reducing the consumer lending businesses new lending opportunities. As a result, any of the foregoing results could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations and/or prospects.

An improvement in the economic conditions in the UK and/or the Republic of Ireland (as the case may be) could have both positive and negative impacts on the Enlarged Group's business. Although improved economic conditions may lead to more reliable and consistent payments on loans due to the improved financial position of customers, the Enlarged Group could experience reduced demand for its products in the non-standard finance sector as a result, as a consequence of a customer's improved credit score or otherwise, which could lead to more competitive rates offered by the Enlarged Group's competitors for their products or otherwise result in existing or new customers no longer requiring access to non-standard finance products.

The recent rise in interest rates, and further rises in interest rates, in the UK or the Republic of Ireland (as the case may be), due to a change in the economic environment or other factors beyond the Enlarged Group's control, may also increase the Enlarged Group's financing costs, which could materially and adversely affect the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects. Furthermore, rising interest rates in the UK or the Republic of Ireland, as the case may be, could result in increased levels of consumer saving and higher borrowing costs for consumers, either of which could result in lower demand from customers for the Enlarged Group's products, which could materially and adversely affect the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.27 Changes in government spending and welfare policy (including in relation to universal credit) could have a material adverse effect on the Enlarged Group's business, results of operations or financial condition

Since a proportion of the NSF Group's customers and the Provident Financial Group's customers are wholly or partially dependent on state benefits (including tax credits), the Enlarged Group's business is exposed to changes in government spending and welfare policy. In recent years, the government has made numerous announcements on welfare spending and enacted the Welfare Reform Act 2012 which proposes the replacement of certain welfare benefits and tax credits with a single 'universal credit'. In addition, the growth of many of the working age state benefits is now limited to 1% year-onyear, which is below current levels of consumer price inflation and therefore may place pressure on the income levels of the Enlarged Group's customers who receive state benefits. The government has also recently reassessed disability and job seeker benefits. The impact of these measures and future welfare policy changes, and the timing of any such impact, on the spending patterns and income levels of the Enlarged Group's customers which receive state benefits may result in the shrinking of the income levels of such customers. This, in turn, may reduce their levels of demand for the Enlarged Group's products, which would have a material adverse effect on the Enlarged Group's business, results of operations or financial condition.

1.28 Legal, political and economic uncertainty surrounding the planned exit of the UK from the European Union may affect the Enlarged Group's customers, and the disruption following any such exit could have a significant ongoing effect on the Enlarged Group's business

On 23 June 2016 the UK held a referendum to determine whether it should leave the European Union ("EU") or remain as a Member State. A vote was given in favour of the UK leaving the EU ("Brexit"). The UK Parliament has subsequently passed the European Union (Notification of Withdrawal) Act 2017, giving the UK Government power to begin the formal process for Brexit. The process of negotiation was formally begun on 29 March 2017 when the UK submitted its notice of intention to withdraw from the EU under Article 50 of the 2009 Lisbon Treaty, and will determine the terms of the UK's exit from the EU and any possible future framework agreement. The UK will cease to be a Member State when a withdrawal agreement is entered into (requiring parliamentary approval, both in the UK and the EU) or, failing that, two years following the notification of its intention to leave under Article 50 (being 11pm on 29 March 2019), unless the European Council (together with the UK) unanimously decides to extend this period or the UK revokes its Article 50 notice.

The extent of the impact of Brexit on the Enlarged Group will depend in part on the nature of the arrangements (or lack thereof) that are put in place between the UK and EU. The Enlarged Group may be subject to a significant period of uncertainty in the period leading up to (and following) Brexit, including uncertainty in relation to any potential regulatory, tax, economic, fiscal, or legal change. It is possible that arrangements between the UK and the EU will lead to greater restrictions on the free movement of goods, services, people and capital between the UK and the EU, and increased regulatory complexities. Any such restrictions could potentially disrupt and adversely impact the Enlarged Group's business, even where the majority of the Enlarged Group's operations are situated within the UK.

A significant proportion of UK law and regulation currently derives from, or operates in tandem with, EU law. This is especially true in relation to financial markets, financial services, prudential and conduct regulation of financial institutions, bank recovery and resolution, payment services and systems, settlement finality, market infrastructure and mortgage and consumer credit regulation. Depending on the timing and terms of the UK's exit from the EU, there could be significant changes to UK law in areas relevant to the Enlarged Group. Brexit may also result in a divergence between EU and UK law and regulation, which may, directly or indirectly, increase compliance and operating costs for the Enlarged Group and may have a material adverse effect on the Enlarged Group's tax position, financial condition, business, prospects and/or results of operations.

In addition, the macroeconomic effect of Brexit on the Enlarged Group is unknown. Brexit could create significant UK (and potentially global) stock market uncertainty, which may have a material adverse impact on the value of the Ordinary Shares. Brexit may also make it more difficult for the Enlarged Group to raise capital and/or increase the regulatory compliance burden on the Enlarged Group. This in turn could restrict the Enlarged Group's future activities, negatively affecting returns.

1.29 Global economies and financial markets are volatile, which could have a material adverse effect on the Enlarged Group

The financial condition and performance of companies operating in the consumer credit sector such as the Enlarged Group can be significantly affected by regional and global economic conditions. As a result, any worsening of general economic conditions or deterioration of the commercial soundness of financial institutions may have a material adverse effect on the Enlarged Group. An economic downturn or continued lack of credit could adversely affect the credit quality of the Enlarged Group's assets by increasing the risk that a greater number of its customers would be unable to meet their obligations, for instance, if they were affected by high unemployment levels. This is particularly true of the non-standard consumer finance sector, where customer loan default rates are higher than mainstream finance.

The Enlarged Group's financial condition and operating results could also be affected by fluctuations in interest rates that are beyond its control. Interest rates are sensitive to many factors, including the policies of central banks, local and international economic conditions and political factors. For example, an increase in interest rates may reduce overall demand for new loans by the Enlarged Group's customers and increase the risk of customer default. At the same time, general volatility in interest rates may result in a gap between interest-earning assets and interest-bearing liabilities, and, following Completion, at which point Provident Home Credit's Republic of Ireland operations will become part of the Enlarged Group, foreign exchange rate movements could similarly affect the Enlarged Group.

The Enlarged Group might not be able to adequately protect itself from the adverse effects of future interest rate or foreign exchange rate fluctuations. Any fluctuations in market interest or foreign exchange rates, and the Enlarged Group's inability to monitor such fluctuations so as to respond in a timely and cost effective manner, could lead to a reduction in net interest income and adversely affect the Enlarged Group's business, results of operations and/or financial condition.

1.30 Changes to accounting standards, or to the Enlarged Group's accounting policies may have a material adverse effect on the financial assets reported by the Enlarged Group

From time to time, the International Accounting Standards Board and the European Union change the accounting standards that govern the preparation of the Enlarged Group's financial statements. These changes can be difficult to predict and could materially affect how the Enlarged Group records and reports its financial condition, results of operations and cash flows. In some cases, the Enlarged Group could be required to apply a new or revised standard retrospectively, resulting in the restatement of prior period financial statements.

1.31 The Enlarged Group may be exposed to liabilities arising from historic mis-selling of insurance products

Everyday Loans used to offer certain insurance products to customers on an advised basis (including certain payment protection insurance ("PPI") products which were ancillary to the provision of credit to consumers), and ceased offering such products in May 2015. The PPI products were charged on a monthly basis as a percentage of the remaining outstanding loan balance. Customers who took the PPI products on their loans from Everyday Loans would pay a greater amount in interest on the loans than customers who did not opt for the PPI products. The relevant regulatory framework required (among other things) that, as part of the sales process, Everyday Loans established each relevant customer's demands and needs, carried out an assessment of the suitability of the insurance product for the customer in question, and took reasonable care to ensure the suitability of its advice for that customer. If Everyday Loans failed to comply with these requirements, or if it otherwise misrepresented the features of its insurance products, it may be liable to customers for mis-selling of those products.

If Everyday Loans' internal policies and procedures governing the sale of these insurance products, including the provision of advice, were found to be deficient, or a widespread failure by sales staff to comply with those policies and procedures was identified, Everyday Loans could be exposed to significant liabilities as a result of customer claims and/or regulatory action.

In response to the emergence of the systemic mis-selling of PPI, in 2010 the FSA (now the FCA) introduced new rules which altered the basis on which regulated firms must consider and deal with complaints in relation to the sale of PPI and potentially increased the amount of compensation payable to customers whose complaints are upheld.

Notwithstanding the recent trend of decreasing complaints, the ultimate financial impact on Everyday Loans of complaints concerning PPI complaints is uncertain, depending as it does on a number of factors, including the rate at which new complaints arise, the content and quality of the complaints (including the availability of supporting evidence), the role of claims management companies and the average uphold rates and redress costs.

On 26 November 2015 the FCA issued a consultation paper proposing (among other things) the introduction of a deadline by which customers would need to submit their PPI complaints or else lose their right to have them assessed by firms or by the Financial Ombudsman Service. On 2 March 2017 the FCA published its final rules and guidance on PPI complaints and confirmed that it was setting a deadline of 29 August 2019 for individuals to refer complaints to PPI providers, following which the right to have a complaint assessed by the firm or the Financial Ombudsman Service will fall away. The FCA is also running a two-year consumer communications campaign, which began in August 2017, to encourage consumers to raise claims in relation to mis-sold PPI before the deadline. The final rules and guidance include rules about how firms should handle complaints in light of Plevin v Paragon Personal Finance Ltd [2017] UKSC 23 ("Plevin"). The decision in Plevin has resulted in consumers being granted the right to complain in relation to PPI as a result of the amount of commission that providers received and because failure to disclose the commission to a borrower made the relationship unfair. The FCA sets out a 50% commission "tipping point" at which the presumption is made that the failure to disclose commission gave rise to an unfair relationship. The FCA has said that fair redress would generally be the percentage of commission over and above the tipping point plus historic interest paid on that by the customer, plus simple interest. The 29 August 2019 deadline relates only to the bringing of complaints, which means that it will still be possible for claims to be brought in the courts after that date. The courts have taken various approaches to the amount of redress awarded in commission-related PPI claims which have come before them, some of which have led to awards in excess of the level set out as fair by the FCA (as, for example, in the case of Doran v Paragon Personal Finance (unreported)).

On 7 November 2018, the FCA published final guidance clarifying its expectations pertaining to the handling of certain regular premium PPI complaints and in January 2019 issued a policy statement setting out final rules and guidance requiring firms to write to certain previously rejected PPI complainants to inform them of their ability to make new complaints about undisclosed commissions.

The NSF Group has not witnessed any material increase in claims since the announcement of the August 2019 deadline. Everyday Loans maintains a small provision for claims relating to its PPI products which the Directors believe to be sufficient for the purposes of meeting any claims before the deadline. As the FCA's communications campaign continues and the time bar nears, it is possible that the volume of PPI-related complaints received by Everyday Loans could increase in the short term, as a result of which the provision established by the NSF Group for claims relating to PPI products may prove to be insufficient. The NSF Group may therefore need to increase resources to handle any such increase and an increase in claims may affect the ability of the Enlarged Group to handle complaints within prescribed regulatory timescales. Everyday Loans has reviewed its potential exposure under potential PPI-related claims and is satisfied that its current provision is sufficient to meet any and all such claims. However Everyday Loans could still be required to pay substantial sums in remediation with respect to customer PPI complaints if the number of valid complaints increases as described above. Should such provision prove to be insufficient, then Everyday Loans could incur significant additional costs which could have a material adverse effect on the Enlarged Group's results of operations.

1.32 The operations of Vanquis Bank will continue to be impacted by the FCA's findings related to its ROP, and the Enlarged Group may incur additional material costs directly or indirectly arising from that investigation

On 27 February 2018 the Provident Financial Group announced settlement with the FCA in relation to its investigation into the sale of Vanquis Bank's ROP, with Vanquis Bank accepting that it had breached Principle 6 (Customers' interests) and Principle 7 (Communications with clients) of the FCA's Principles for Businesses between 1 April 2014 and 19 April 2016 in relation to its telephone sales of Vanquis Bank's ROP. In connection with the settlement, the Provident Financial Group took a provision of £172.1 million in its audited consolidated financial statements for the year ended 31 December 2017.

There is a risk that there may be an increase in the number of claims and/or complaints made by customers against Vanquis Bank in respect of the ROP, despite the assertion by Provident Financial that over 99% of its redress programme has been implemented within the relevant financial provisions. The extent of Vanquis Bank's potential liability and the costs it may incur in connection with any such claims and/or complaints is uncertain and will depend, amongst other things, on whether the bases for any such claims are upheld, the refund amount, claimant rates and claim uphold rates and the associated claim handling costs. Whilst the £172.1 million provision taken in the Provident Financial Group's audited consolidated financial statements for the year ended 31 December 2017 reflects a contingency of £30.7 million in respect of the forward flow of complaints which may arise in connection with the ROP, there remains a risk that the assumptions made in respect of the extent to which further payments may be required to be made, claimant rates, claim uphold rates and the associated claim-handling costs may be exceeded. As such, there is a risk that Vanquis Bank will incur greater costs than anticipated in connection with the ROP and the existing or any revised provision may not cover all potential liabilities and associated costs, meaning that further provision may be required to be made in the future. The occurrence of any of these could have a material adverse effect on Vanquis Bank's and, in turn, the Enlarged Group's businesses, financial condition, results of operations, cash flows and/or prospects.

1.33 No assurances can be given as to whether or when the ROP will be sold in the future, or that the historic revenues from sales of, or the revenue yield from, the ROP will continue at the same level in the future

The income from the ROP has been a material contributor to the revenues of Vanquis Bank historically. In the year ended 31 December 2017, the ROP contributed £75 million to Vanquis Bank UK's revenues as compared to £84 million in the year ended 31 December 2016 and £80 million in the year ended 31 December 2015. However, in the three years to 31 December 2017 the revenue from the ROP has not increased in line with the growth in Vanquis Bank's UK's Average Receivables of 14.6% in 2017, 12.9% in 2016 and 19.6% in 2015. This reflects principally a reduction in the penetration of the ROP feature within the existing customer base and, more recently, the suspension of all sales of the ROP to new customers following the voluntary requirement agreed with the FCA in April 2016 in connection with the FCA's investigation into the ROP. NSF has had initial discussion with the PRA in relation to the proposed Transaction, including its plan to resume sales by Vanquis Bank of a ROP to new customers, and these discussions are ongoing. Provident Financial has also announced that Vanquis Bank is commencing discussions with the FCA regarding an enhancement to the ROP and a return to sales. However there can be no assurance can be given that such sales will resume and, if they do, when, or whether such sales would be on the same basis as the ROP was sold to customers in the past.

Consequently, there is a risk that Vanquis Bank's revenues and revenue yield from ROP will continue to decline, which could have a material adverse effect on Vanquis Bank's and, in turn, the Enlarged Group's businesses, financial condition, results of operations, cash flows and/or prospects.

1.34 A number of businesses within the NSF Group and the Provident Financial Group source new customers from third-party brokers or utilise third-party introducers and may as a result be negatively affected by the loss of one or more major brokers, including as a result of increased regulation, and this could negatively impact the Enlarged Group

Brokers that have arrangements with banks, prime lenders and price comparison sites offer potential borrowers, who do not qualify for a prime loan due to their higher risk profile, alternative lending products such as those provided by each of the NSF Group and the Provident Financial Group. In particular, Everyday Loans, George Banco, Moneybarn, Vanquis Bank, Provident Home Credit and Satsuma all use third-party brokers to source new customers. These businesses pay commission to brokers for referrals of customers who choose to take a loan from them. Brokers may choose to refer such potential customers to other credit providers who offer lower interest rates to customers, higher commissions to brokers and/or have had longer term relationships with the brokers. This may adversely impact the Enlarged Group's ability to attract and retain brokers to steer potential customers to the Enlarged Group.

Since 1 April 2014 credit brokers, in common with other consumer credit firms, have been subject to regulation by the FCA. In some cases, intermediaries that were not previously required to be licensed under the CCA are now subject to the FCA authorisation regime in respect of their credit broking activities.

To date, the FCA has taken a more rigorous approach to regulation of consumer credit firms, including credit brokers, than was the case under the previous OFT regime. In relation to credit brokers in particular, in December 2014 the FCA published a policy statement explaining that it was exercising specific statutory powers to introduce new rules without prior consultation, on the basis that there was sufficient evidence that certain credit-broking practices were causing substantial harm to consumers. The practices in question included, among other things, a lack of informed consent from customers to the taking of fees or the disclosure of their details to third parties, lack of transparency regarding the broker's identity and the fact that such firm is not the lender, and customers being misled as to the purpose of providing their payment details. The FCA stated that these practices were principally observed in the high-cost short-term credit and other sub-prime markets. The new rules, which came into force on 2 January 2015, include a ban on credit brokers charging fees, and from requesting payment details from customers for that purpose, unless they have provided the customer with certain prescribed information concerning the identity of the firm and the fees payable. The new rules also impose additional transparency and record-keeping obligations.

It is possible that further rules may be introduced in the future to address other failings observed by the FCA in the credit broking sector. Such rules may have a significant adverse effect on brokers' business models and could, in some cases, result in their exit from the market. A reduction in the number of reputable credit brokers in the market could have a negative impact on the Enlarged Group's ability to generate new business and, consequently, on its financial condition, operations and/ or prospects.

The Provident Financial Group also utilises third-party introducers to generate customer leads and consequently source customers within Vanquis Bank and Satsuma, and any adverse changes in these relationships could similarly materially adversely affect its business, financial condition, results of operations, cash flows and/or prospects. Third-party introducers are not contractually obligated to do business with the Provident Financial Group and the Provident Financial Group's competitors also have relationships with such third-party introducers and actively compete with the Provident Financial Group for business provided by such introducers. Accordingly, the Enlarged Group may not be successful in distributing its products through third-party introduction channels or maintaining its existing relationships with third-party introducers. If the third-party introducers through whom the Provident Financial Group currently distributes its products choose not to distribute them, the number of customers the Enlarged Group originates may decline and ultimately the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects could be materially adversely affected. Moreover, the Enlarged Group does not have control over whether the third-party introducers, and other sources through whom it distributes its products, comply with FSMA and applicable FCA rules and guidance.

Whilst the Enlarged Group is required to perform certain checks relating to a broker's practices and such broker's compliance with applicable law and/or regulation, the carrying out of which has led to instances in the past of the NSF Group ceasing to use certain introducing brokers, in the event that an introducing broker or a third-party introducer breaches or has breached applicable law or regulation, the Enlarged Group could become subject to the imposition of fines, penalties, other censure and/or sanctions from regulators or under applicable law, as the Enlarged Group remains responsible for the actions and conduct of any introducing broker or third-party introducer that it uses. In addition, breaches by any introducer could lead to agreements entered into as a consequence of introductions made by that introducer being unenforceable (without a Court order). Furthermore, the Enlarged Group could also suffer reputational harm as a consequence of the relationship between the Enlarged Group and the broker or third-party introducer, as applicable. The occurrence of either of the foregoing could have a material adverse effect on the Enlarged Group's business, financial condition, results of operations, cash flows and/or prospects.

1.35 If internet search engine providers change their methodologies for organic rankings or paid search results, or the Enlarged Group's organic rankings or paid search results decline for other reasons, the Enlarged Group's new customer growth or volume from returning customers could decline

Both the NSF Group's and the Provident Financial Group's acquisition marketing for new customers and its returning customer relationship management are partly dependent on search engines such as Google, Yahoo! and others to direct a significant amount of traffic to its desktop and mobile websites via organic ranking and paid search advertising. Competitors' paid search activities may result in their sites receiving higher paid search results than the Enlarged Group's and significantly increasing the cost of such advertising for the Enlarged Group.

The Enlarged Group's paid search activities may not produce (and in the past the NSF Group's activities have not always produced) the desired results. Internet search engines often revise their methodologies, which could adversely affect the Enlarged Group's organic rankings or paid search results, leading to a decline in the Enlarged Group's new customer growth or existing customer retention; difficulty for its customers in using its web and mobile sites; more successful organic rankings, paid search results or tactical execution efforts for competitors; a slowdown in overall growth in the Enlarged Group's customer base and the loss of existing customers; and higher costs for acquiring returning customers, which could adversely impact the Enlarged Group's business. In addition, search engines could implement policies that restrict the ability of consumer finance companies to advertise their services and products. Any reduction in the number of consumers directed to the Enlarged Group's web and mobile sites may have a material adverse effect on its business, financial condition, results of operations, prospects and/or cash flows.

2. RISKS RELATING TO THE ACQUISITION

2.1 The Company has been unable to perform due diligence on Provident Financial's nonpublic information or documentation

The Company and its advisers have not had access to Provident Financial's non-public information or documentation and accordingly have been unable to perform any due diligence on such information or documentation. All information relating to Provident Financial and the Provident Financial Group has been sourced from publicly available information and has not been subject to comment or verification by Provident Financial or NSF or their respective directors.

The due diligence process has therefore been limited and NSF's assessments are subject to a number of assumptions. Accordingly, there can be no assurance that the assessments or due diligence conducted regarding Provident Financial and its businesses will prove to be correct or reveal or highlight all relevant facts that may be necessary or helpful in evaluating the potential acquisition, and actual developments may differ significantly from the NSF Group's expectations. As a result, NSF may pay too high a price to acquire Provident Financial, assume unexpected liabilities, or lose shortterm and/or long-term customers or employees following the Acquisition. In particular, NSF may assume responsibility for regulatory liabilities in relation to mis-selling or other investigations of its regulators and any related exposure and penalties relating to historical non-compliance of acquired businesses and liabilities in relation to Provident Financial's defined benefits pensions scheme. If any or all of these risks were to materialise, the result could have a material adverse impact on the Enlarged Group's business, financial condition, prospects and/or results of operations.

Nothing in this risk factor limits or qualifies the responsibility statement in paragraph 1 of Part XX (Additional Information) of this Document or under Prospectus Rule 5.5 or Part 6 of FSMA.

2.2 Completion of the Acquisition is subject to certain conditions

The Acquisition is conditional upon the satisfaction (or, where applicable, the waiver) of a number of conditions, including:

• (i) valid acceptances of the Offer being received in respect of not less than 90% of the Provident Financial Shares to which the Offer relates;
• (ii) Shareholder approval of the Resolution at the General Meeting;
• (iii) Admission of the New Ordinary Shares;
• (iv) the Antitrust Approval; and
• (v) the Regulatory Approval.

Although the Directors believe the above conditions are capable of being satisfied, it is possible that not all conditions may be satisfied or waived in a timely manner or at all, and Completion may not be achieved.

The Demerger is intended to help assist with the receipt of the Antitrust Approval. However if the Demerger was to be delayed, or failed to be executed, other options may be available to allow the Antitrust Approval to be satisfied, subject to the CMA's review and approval. If satisfaction of the Antitrust Approval required an alternative, or additional, commitment from the NSF Group, such alternative solutions could delay, or increase the costs associated with, the Acquisition.

If Completion does not occur, the NSF Group will experience a delay in the achievement of its strategic objectives and would nonetheless be obliged to pay certain costs (primarily advisory fees) incurred in connection with the Acquisition and the Demerger.

2.3 NSF is exposed to any deterioration in trading in Provident Financial between the announcement of the Offer and the Effective Date

On 22 February 2019 the NSF Board announced the terms of its Offer to acquire the entire issued and to be issued share capital of Provident Financial. Due to the required governmental or antitrust law approvals and the authorisations which must be obtained, or applicable waiting periods which must have elapsed, prior to the Effective Date, there will be a period during which NSF will be exposed to any adverse change in the financial position and future prospects of Provident Financial, including, but not limited to, any adverse developments in sales volumes. Any such changes could have a material adverse effect on the Company's business, financial condition, results of operations and/or prospects.

2.4 The NSF Group may not be able to effectively execute its post-Acquisition strategy or to realise the operational improvements from the Acquisition

NSF and Provident Financial currently operate and, until after Completion, will continue to operate, as two separate and independent businesses. Following Completion, the two businesses will be integrated, and the success of the Enlarged Group will depend, in part, on the effectiveness of the NSF Board to manage this integration process and the ability of the Enlarged Group to realise the anticipated benefits and cost savings from combining the respective businesses. The NSF Directors intend to continue to operate the core businesses of NSF and Provident Financial independently of each other, as they are currently operated. Although the Directors believe they have a sound strategy in place for successfully managing the Enlarged Group following Completion, there is no guarantee that this strategy will be effective, and some of the potential challenges in combining the businesses may not become known until after Completion, in particular due to the substantial increase in the scale of the combined operations of the Enlarged Group.

The process of integrating the businesses could potentially lead to the interruption of operations of the businesses, or a loss of customers or key personnel, which could have an adverse effect on the business, results of operations or financial condition of the Enlarged Group. There is a risk that operational improvements from the Acquisition may fail to materialise, or they may be materially lower than have been estimated. In addition, the cost of funding these operational improvements may exceed expectations. Any delays or difficulties encountered in connection with the integration of the businesses could also lead to reputational damage to the Enlarged Group.

2.5 Provident Financial may have liabilities that are not known to the NSF Group that become known after the Acquisition

As at the date of this Document, the Company has not benefitted from the co-operation of the Provident Financial Board in the context of the Acquisition, and this has made it extremely difficult to facilitate due diligence on the Provident Financial Group in the context of the Acquisition. Given this lack of co-operation, and NSF's inability to conduct detailed due diligence on the Provident Financial Group, the acquisition of Provident Financial may expose the Company to significant unanticipated liabilities relating to the operations of the Provident Financial Group. These liabilities could include employment, retirement or severance-related obligations under applicable law or other benefits arrangements and legal claims. Separately, NSF may also incur liabilities or claims associated with Provident Financial's defined benefit pension scheme. The Company's decision to proceed with the Acquisition could also expose it to unforeseen tax liabilities and other amounts owed by Provident Financial. Any unforeseen or unanticipated liabilities could have a knock-on impact on the Enlarged Group's liquidity and capital management, and should such liabilities be incurred and should they be significant, they could have a material adverse effect on the Enlarged Group's business, financial condition and results of operations.

2.6 Management attention may be diverted from NSF's existing business by the Acquisition

The Acquisition will require substantial amounts of both time and focus from NSF's and Provident Financial's senior management teams, which could divert the attention of those teams from maintaining standards of operation in their respective businesses. There is a risk that the challenges associated with managing the Acquisition will result in the management teams of each of NSF and Provident Financial being distracted and that consequently the underlying businesses of each party will not perform in line with expectations, which could have a material adverse effect on the business, results of operations, financial condition and/or prospects of the Enlarged Group.

3. RISKS RELATING TO THE DEMERGER

3.1 Some or all of the anticipated benefits of the Demerger may not be realised

NSF believes a demerger of Loans At Home will deliver additional long-term value to NSF and Loans At Home shareholders by creating two distinct entities which will have enhanced growth opportunities. This notwithstanding, the Demerger entails execution risks and significant costs, and there can be no guarantee that the Enlarged Group will realise any or all of the anticipated benefits of the Demerger in a timely manner or at all.

Furthermore, the Demerger will require considerable management time and effort and may divert management's attention from day to day operations and if the Demerger does not complete and deliver the anticipated benefits, the Enlarged Group may be unable to realise the returns to Shareholders from its businesses that the Board believes should result from the Demerger.

4. RISKS RELATING TO THE ORDINARY SHARES

4.1 The price of the Ordinary Shares has fluctuated and may continue to fluctuate

Prospective investors should be aware that the value of an investment in the Ordinary Shares may go down as well as up. The price of the Ordinary Shares may fall in response to market appraisal of the NSF Group's current strategy or if the NSF Group's results of operations or prospects, from time to time, are below the prior expectations of market analysts and investors. NSF has a number of major Shareholders with material holdings, and the holdings of some of these Shareholders may further increase as a result of the Offer; if any of these Shareholders were to choose to sell their Ordinary Shares, this could cause significant fluctuations in the value of the Ordinary Shares. In addition, stock markets have, from time to time (including recently), experienced significant price and volume fluctuations that affect the market price of the Ordinary Shares. A number of factors outside the control of the NSF Group may affect the price of the Ordinary Shares. The factors that may affect NSF's share price include (but are not limited to):

• (i) the NSF Group's targeted and actual results of operations and the performance of other companies in the markets in which the NSF Group operates;
• (ii) speculation about the NSF Group's prospects, business, business partners, mergers or acquisitions involving the NSF Group or major divestments by the NSF Group in the press, media or investment community;
• (iii) changes in markets conditions or legislative and regulatory developments which are relevant to the NSF Group's business;
• (iv) the publication of credit ratings by rating agencies or of research reports by analysts; and
• (v) the NSF Group's financial condition and ability to comply with its debt covenants.

In particular, it is planned that the Demerger will occur following Completion. It is not certain what value the market will attribute to the newly-demerged Loans At Home business, but the ongoing price discovery that will occur once Loans At Home is listed will have an impact on the price of the Enlarged Group's shares. The Directors' current intention is that the shares in the demerged Loans At Home will be initially held by the Shareholders of the Enlarged Group, such that if Loans At Home is believed to be a more valuable element of the current NSF Group's business, then the increase in value of Loans At Home shares should offset a reduction in the value of the shares in the Enlarged Group (and viceversa). However there is no guarantee that going forward the value of the shares in the Enlarged Group and of Loans At Home will equalise each other in this way, and to the extent they do, there may still be an aggregate loss of value for holders of the two sets of shares.

NSF has no current plans for a subsequent offering of Ordinary Shares within 12 months from the date of this Document. However, it is possible that NSF may decide to offer additional Ordinary Shares in the future. An additional offering or a significant sale of Ordinary Shares by any of NSF's major Shareholders may adversely affect the market price of the Ordinary Shares.

4.2 The Company may be unable to transfer to a Premium Listing following Admission

Following Admission, it is the NSF Directors' intention to apply for the Company's Ordinary Shares to be transferred to a Premium Listing as soon as possible following Completion. There can be no guarantee that the Company will meet such eligibility criteria or that a transfer to a Premium Listing will be achieved. For example, there may be a delay, which could be significant, between Completion and the date upon which the Company is able to seek or achieve a Premium Listing.

If the Company does not achieve a Premium Listing, the Company will not be obliged to comply with the higher standards of corporate governance or other requirements which it would be subject to upon achieving a Premium Listing. While the Company intends to voluntarily comply with the Listing Principles at Listing Rule 7.2.1A as it currently does with the Existing Ordinary Shares, for as long as the Company continues to have a Standard Listing, it will only be required to comply with the lesser standards applicable to a company with a Standard Listing. This includes a period of time after the Acquisition where the Company will be operating a substantial business but will not need to comply with the higher standards applicable to companies with a Premium Listing.

A Premium Listing is a prerequisite for inclusion in a FTSE UK index. Although Provident Financial is currently a member of the FTSE 250 Index, it is expected to be delisted following Completion. The Enlarged Group would, therefore, not be eligible for index inclusion until NSF's proposed transfer to a Premium Listing takes effect (if approved). Inclusion within a FTSE index would be expected to lead to increased liquidity and greater access to a global investor base, as well as resulting in a likely reduction in cost of capital for the Enlarged Group. Failure to be eligible for inclusion within a FTSE UK Index as a result of an inability to transfer to a Premium Listing could therefore have a material adverse effect on the Enlarged Group's business, financial condition, results of operations and/or prospects.

4.3 The Admission of the New Ordinary Shares to listing on the Official List and to trading on the London Stock Exchange may not occur when expected

Until the New Ordinary Shares are admitted to listing on the Official List and to trading on the London Stock Exchange, they will not be fungible with Existing Ordinary Shares currently traded on the London Stock Exchange. There is no assurance that the admission to listing on the Official List and to trading on the London Stock Exchange will take place when anticipated.

4.4 The level of any dividend paid in respect of the Ordinary Shares is subject to a number of factors

The level of any dividend paid in respect of the Ordinary Shares is within the discretion of the NSF Directors and is subject to a number of factors, including the business and financial condition, earnings and cash flow of, and other factors affecting, the NSF Group (and, following Completion of the Acquisition, the Enlarged Group), as well as the availability of funds from which dividends can be legally paid. In particular, following the Acquisition, the dividend paid in respect of the Ordinary Shares (if any), will depend upon the performance of the Enlarged Group and discussions with its regulator. The level of any dividend in respect of the Ordinary Shares is also subject to the extent to which NSF receives funds, directly or indirectly, from its operating subsidiaries and divisions in a manner which creates funds from which dividends can be legally paid. Any reduction in dividends paid on Ordinary Shares from those historically paid, or the failure to pay dividends in any financial year, could adversely affect the market price of the Ordinary Shares, and the NSF Directors make no commitment to meet the expectation of the Provident Financial Board previously communicated within the Provident Financial Trading Update.

4.5 Transfer restrictions for Shareholders in the United States may make it difficult to resell Ordinary Shares or may have an adverse impact on the market price of the Ordinary Shares

The Ordinary Shares have not been registered in the United States under the U.S. Securities Act or under any other applicable securities laws and are subject to restrictions on transfer. There are additional restrictions on the resale of Ordinary Shares by Shareholders who are in the United States and on the resale of Ordinary Shares by any Shareholders to any person who is in the United States. These restrictions will make it more difficult to resell Ordinary Shares in many instances and this could have an adverse effect on the market value of Ordinary Shares. There can be no assurance that Shareholders in the United States will be able to locate acceptable purchasers or obtain the required certifications to effect a sale.

In addition, although Ordinary Shares are freely transferrable in the UK, there are certain circumstances in which the Board may, under the Articles and subject to certain conditions, compulsorily require the transfer of Ordinary Shares.

4.6 Most Shareholders will experience dilution in their ownership of NSF as a result of the Offer

Holders of Existing Ordinary Shares will suffer an immediate dilution in their proportionate ownership and voting interests in the NSF Group which will be reduced following Admission. Assuming that NSF acquires the entire issued and to be issued share capital of Provident Financial (excluding up to 2,495,158 shares which could be issued under the Provident Financial Savings-related Share Option Schemes), holders of Existing Ordinary Shares will suffer dilution of approximately 87.8% to their shareholdings in the Company as a result of the Acquisition (except where such holder of Existing Ordinary Shares is also an Eligible Provident Financial Shareholder who accepts the Offer with regard to the entirety of their holding of Provident Financial Shares). However, this dilution is balanced against the acquisition of the Provident Financial Group and its assets.

4.7 NSF may be unable to acquire the entire issued and to be issued share capital of Provident Financial, which would lead to minority shareholders in Provident Financial

To effect a compulsory acquisition of any remaining Provident Financial Shares, NSF must have acquired (or unconditionally contracted to acquire), not less than 90% in value of the Provident Financial Shares to which the Offer relates and not less than 90% of the voting rights carried by the Provident Financial Shares to which the Offer relates. The Acquisition is conditional upon valid acceptances being received (and not withdrawn) in respect of not less than 90% of the Provident Financial Shares, but this percentage may be reduced by NSF to any percentage above 50%. Were this threshold to be reduced, NSF could Complete the Offer without being able to compulsorily acquire the remaining Provident Financial Shares it does not own. In those circumstances, although NSF would 'control' Provident Financial and be entitled to affect the composition of the Provident Financial Board, depending on the level of acceptances received, NSF might not control sufficient voting rights to be able to, in particular, procure that Provident Financial makes applications to cancel the listing of the Provident Financial Shares on the Official List, to cancel the trading in Provident Financial Shares on the LSE's Main Market for listed securities and to re-register Provident Financial as a private limited company. In such circumstances, minority shareholders would retain a stake in Provident Financial and would benefit from certain legal protections afforded to them under English law in respect of their minority shareholdings.

4.8 Overseas Shareholders may have only limited ability to bring actions or enforce judgments against NSF or the Directors

The ability of an Overseas Shareholder to bring an action against NSF may be limited under law. NSF is a public limited company incorporated in England and Wales. The rights of holders of Ordinary Shares are governed by English law and by the Articles of Association. These rights differ from the rights of shareholders in typical US corporations and some other non-UK corporations. In particular, the circumstances under which shareholders may bring derivative actions under English law are subject to significant limitations; and, in general terms, only a company may be the claimant in proceedings in respect of wrongful acts committed against it. In addition, it may be difficult for an Overseas Shareholder to effect service of process outside the United Kingdom or to prevail in a claim against NSF under, or to enforce liabilities predicated upon, non-UK securities laws, including US appraisal rights afforded to dissenting Overseas Shareholders, US disclosure liability laws and other US federal securities laws.

An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors and executive officers of NSF. All of the Directors are residents of the United Kingdom. Consequently, it may not be possible for an Overseas Shareholder to effect service of process upon the Directors and executive officers within the Overseas Shareholder's country of residence or to enforce against the Directors or executive officers of NSF judgments of courts of the Overseas Shareholder's country of residence based on civil liabilities under that country's securities laws. An Overseas Shareholder may not be able to enforce any judgments in civil and commercial matters or any judgments under the securities laws of countries other than the United Kingdom against the Directors or executive officers of NSF who are residents of the United Kingdom or countries other than those in which judgment is made. In addition, English or other courts may not impose civil liability on the Directors or executive officers in any original action based solely on non-UK securities laws brought against NSF or its Directors or executive officers in a court of competent jurisdiction in England or other jurisdictions.

4.9 Overseas Shareholders may not be able to exercise pre-emptive rights in the future

As part of the Offer, the share capital of NSF will be increased and New Ordinary Shares will be issued. In addition, further share capital increases and share issues may be proposed in the future. Shareholders are entitled to pre-emptive rights in respect of new issues of shares for cash unless those rights are waived by a Shareholders' resolution.

Overseas Shareholders may not be able to exercise their pre-emptive rights as part of a future issue of shares for cash (even if pre-emption rights were not waived), unless NSF decides to comply with applicable local laws and regulations. This is because securities laws of certain jurisdictions may restrict NSF's ability to allow participation by certain Shareholders in any future issue of shares. In particular, Overseas Shareholders who are located in the United States may not be able to exercise their rights on a future issue of shares, unless a registration statement under the US Securities Act is effective with respect to such rights or an exemption from the registration requirements is available thereunder. The New Ordinary Shares will not be registered under the US Securities Act and NSF is unlikely to file registration statements for future share issues.

4.10 Investors with a reference currency other than pounds sterling are subject to certain exchange risks when they invest in New Ordinary Shares

The NSF Group's Ordinary Shares are denominated in pounds sterling, and any dividends on the Ordinary Shares will be paid in pounds sterling. Investors in the New Ordinary Shares whose reference currency is a currency other than pounds sterling may be adversely affected by any reduction in the value of the pound relative to the respective investor's reference currency. Any depreciation of the pound in relation to such foreign currency will reduce the value of the investment in the New Ordinary Shares or any dividends in foreign currency terms, and any appreciation of the pound will increase the foreign currency terms of any such investment or dividends. In addition, such investors could incur additional transaction costs if they convert pounds sterling into another currency.

PART III CONSEQUENCES OF A STANDARD LISTING

Whilst it is the Director's intention to apply for the Company's Ordinary Shares to be transferred to a Premium Listing as soon as possible following Completion (the "Listing Transfer"), application will be made for the New Ordinary Shares to be admitted to listing on the Official List pursuant to Chapters 2 and 14 of the Listing Rules, which sets out the requirements for Standard Listings. In addition, the Company also intends to voluntarily comply with the Listing Principles at Listing Rule 7.2.1A as it currently does with the Existing Ordinary Shares, notwithstanding that they only apply to companies which obtain a Premium Listing on the Official List. Compliance with the provisions of Listing Rule 7.2.1A is being undertaken on a voluntary basis and the FCA will not have the authority to monitor the Company's voluntary compliance with the Principles listed there or to impose sanctions in respect of any breaches.

In addition, while the Company has a Standard Listing, it is not required to comply with the provisions of, among other things:

• i. Chapter 8 of the Listing Rules regarding the appointment of a sponsor to guide the Company in understanding and meeting its responsibilities under the Listing Rules in connection with certain matters.
• ii. Chapter 10 of the Listing Rules relating to significant transactions. It should be noted therefore that the Acquisition and potentially any subsequent acquisitions will not require Shareholder consent under the Listing Rules, even if Ordinary Shares are being issued as consideration for such acquisition (though Shareholder consent may still be required in relation to an issuance of shares under applicable company law requirements);
• iii. Chapter 11 of the Listing Rules regarding related party transactions. Nevertheless, the Company will not enter into any transaction which would constitute a "related party transaction" as defined in Chapter 11 of the Listing Rules without the specific prior approval of a majority of the nonexecutive Directors;
• iv. Chapter 12 of the Listing Rules regarding purchases by the Company of its Ordinary Shares. In particular, the Company has not adopted a policy consistent with the provisions of Listing Rules 12.4.1 and 12.4.2; and
• v. Chapter 13 of the Listing Rules regarding the form and content of circulars to be sent to Shareholders.

The Directors intend to apply to transfer from a Standard Listing to a Premium Listing as soon as possible following Completion, subject to fulfilling the relevant eligibility criteria at the relevant time. If a transfer to a Premium Listing is possible (and there can be no guarantee that it will be) and the Company decides to transfer to a Premium Listing, the various Listing Rules highlighted above as rules with which the Company is not required to comply will become mandatory and the Company will comply with the continuing obligations contained within the Listing Rules (and the Disclosure and Transparency Rules) in the same manner as any other company with a Premium Listing.

It should be noted that the UKLA will not have the authority to (and will not) monitor the Company's compliance with any of the Listing Rules which the Company has indicated herein that it intends to comply with on a voluntary basis, nor to impose sanctions in respect of any failure by the Company so to comply. However, the FCA would be able to impose sanctions for non-compliance where the statements regarding compliance in this Document are themselves misleading, false or deceptive.

PART IV IMPORTANT INFORMATION

1. General

The contents of this Document are not to be construed as legal, business or tax advice. Each prospective investor should consult his or her own lawyer, financial adviser or tax adviser for legal, financial or tax advice.

Any information that is incorporated by reference into documents, which in turn are incorporated into this Document, is not incorporated by reference into and does not form part of this Document.

2. Forward-looking statements

This Document contains certain forward-looking statements with respect to the financial condition, results of operations and business of Provident Financial and certain plans and objectives of NSF with respect thereto. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", or, in each case, their negative or other words of similar meaning. They appear in a number of places throughout the Document and include statements regarding the intentions, beliefs or current expectations of NSF and the NSF Board. These statements are based on assumptions and assessments made by NSF in light of its experience and its perception of historical trends, current conditions, future developments and other factors it believes appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this Document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and investors are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Document. NSF does not assume any obligation to update or correct the information contained in this Document (whether as a result of new information, future events or otherwise), except as required by applicable law.

There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. No statement in this Document is intended as a profit forecast or profit estimate and no statement in this Document should be interpreted as such.

The forward-looking statements contained in this Document speak only as at the date of this Document. Except as required by the FCA, the LSE or applicable law (including as may be required by the Listing Rules, the Disclosure and Transparency Rules and the Prospectus Rules), NSF and its directors, Deutsche Bank, Ondra, and any of Deutsche Bank's and Ondra's respective affiliates expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Document, whether as a result of any change in events, conditions or circumstances or otherwise on which any such statement is based.

For the avoidance of doubt, nothing in this paragraph 2 of this Part IV (Important Information) is intended to qualify the working capital statements set out in paragraph 14 (Working Capital) of Part XX (Additional Information).

3. Currency and exchange rate information

Unless otherwise indicated, references to pounds sterling, sterling, pounds, GBP, pence, p or £ are to the lawful currency of the United Kingdom, references to US dollars, dollars, USD, \$ or US\$ are to the lawful currency of the United States and references to Euro, EUR or € are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community, as amended.

Unless otherwise specified, the financial information contained in this Document has been expressed in sterling.

The basis of translation of foreign currency transactions and amounts in the financial information set out in the Historical Financial Information relating to the Provident Financial Group incorporated by reference into Part XV (Historical Financial Information Relating to the Provident Financial Group) is described in the Statement of accounting policies within the Financial Statements of the Provident Financial 2017 Annual Report and Accounts, the Provident Financial 2016 Annual Report and Accounts and the Provident Financial 2015 Annual Report and Accounts. Unless otherwise stated, information derived from this financial information set out elsewhere in this Document has been translated on the same basis.

4. Market, economic and industry data

This Document contains information regarding the NSF Group's, the Provident Financial Group's and the Enlarged Group's business and the market in which they operate and compete, which NSF has obtained from various third party sources. Where information has been sourced from a third party it has been accurately reproduced and, so far as NSF is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. Such information has not been audited or independently verified. Where third party information has been used in this Document, the source of such information has been identified.

5. Rounding

Certain data in this Document, including financial, statistical and operating information, has been rounded. As a result of rounding, the totals of data presented in this Document may vary slightly from the actual arithmetic totals of such data. Percentages have also been rounded and accordingly may not add to 100%.

6. Presentation of financial information

Unless otherwise stated:

• (A) financial information relating to the NSF Group has been extracted without material adjustment from the Audited Financial Statements and the 2018 Preliminary Results incorporated by reference into Part XIV (Historical Financial Information Relating to the NSF Group) of this Document;
• (B) financial information relating to the Provident Financial Group has been extracted without material adjustment from the combined historical financial information relating to the Provident Financial Group incorporated by reference into Part XV (Historical Financial Information Relating to the Provident Financial Group) of this Document;
• (C) all prices quoted for the Ordinary Shares are the Closing Prices in pounds sterling.

Unless otherwise indicated, financial information in this Document relating to NSF and Provident Financial has been prepared in accordance with IFRS and in accordance with the accounting policies adopted by NSF and Provident Financial in preparing their respective financial statements for the 2017 Financial Year.

7. Non-IFRS financial information

7.1 NSF Group

Introduction

In the reporting of financial information, the NSF Group has adopted various non-IFRS measures of historical or future financial performance, position or cash flows other than those defined or specified under IFRS.

These measures are not defined by IFRS and therefore may not be directly comparable with other companies' non-IFRS measures, including those in the NSF Group's industry.

Non-IFRS measures should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.

Purpose

The NSF Group presents reported and adjusted financial information in order to help Shareholders better understand the NSF Group's operational performance and financial position.

Total reported financial information represents the NSF Group's overall performance and financial position, but can contain significant unusual or non-operational items or involve calculations that may obscure understanding of the key trends and position.

Certain non-IFRS performance measures can be, and are, reconciled to information presented in the financial statements. Other financial key performance measures are calculated using information which is not presented in the financial statements and is based on, for example, average twelve month balances or average exchange rates.

The non-IFRS performance measures of the NSF Group used in this Document and their calculation methods are as follows:

• net loan book;
• normalised revenue;
• normalised operating profit
• normalised profit before tax; and
• normalised earnings per share.

Definitions of these measures appear in the "Alternative performance measures glossary" within the 2018 Preliminary Results, which is incorporated by reference into this Document in accordance with Part XXI (Information Incorporated by Reference) of this Document.

8. Presentation of Provident Financial's information

NSF confirms that the information relating to the Provident Financial Group, which has been sourced from information included in public documents filed by the Provident Financial Group, has been accurately reproduced from those sources and, as far as NSF is aware and is able to ascertain from information included in public documents filed by the Provident Financial Group, no facts have been omitted which would render the produced information inaccurate or misleading.

9. Pro forma financial information

In this Document, any reference to 'pro forma' financial information is to the pro forma narrative in Part XVI (Unaudited pro forma financial information relating to the Enlarged Group) of this Document.

Although the Provident Financial Group also prepares its audited consolidated financial statements in accordance with IFRS, NSF has not had access to the Provident Financial Group's non-public information, nor has NSF been permitted to engage in any discussions with the senior management of Provident Financial.

As such, NSF has not been able to determine whether there are significant differences between the NSF Group's accounting policies and those adopted by the Provident Financial Group that might be material to the Provident Financial Group's financial information, and furthermore NSF is unable to identify or quantify the adjustments necessary to present the NSF Group's financial information on a basis consistent with the NSF Group's accounting policies. As a result, it is not possible at this time for NSF to prepare an unaudited pro forma income statement or an unaudited pro forma statement of net assets of the Enlarged Group in accordance with item 20.2 of Annex I to the Prospectus Directive Regulation.

NSF has included in this Document a narrative description of the likely effect of the Transaction on the assets and liabilities of NSF.

10. No profit forecast

No statement in this Document is intended as a profit forecast or profit estimate and no statement in this Document should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share.

NSF is incorporating by reference into this Document its unaudited preliminary financials with respect to the 2018 Financial Year (the "2018 Preliminary Results"), in respect of which the following statements are made:

• the NSF Directors approve the information contained within the 2018 Preliminary Results;
• Deloitte LLP, the Company's independent auditor, has agreed that the financial information contained within 2018 Preliminary Results (as incorporated by reference into this Document) is substantially consistent with the final figures to be published in the next annual audited financial statements; and
• the 2018 Preliminary Results have not been audited.

11. No incorporation of website information

Without prejudice to the information incorporated by reference into this Document, which will be made available on NSF's website (www.nsfgroupplc.com), neither the contents of NSF's website nor of any website accessible via hyperlinks from NSF's website are incorporated into, or form part of, this Document and Shareholders and prospective investors should not rely on them.

12. Defined terms

Defined terms, including all capitalised terms, are defined and explained in Part XXII (Definitions and Glossary) of this Document.

13. Times

All references to time in this Document are, unless otherwise stated, references to time in London, United Kingdom.

PART V EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND ADMISSION STATISTICS

Expected timetable of principal events

Each of the times and dates in the table below is indicative only and may be subject to change. Please read the notes for this timetable set out below.

Announcement of the Offer and the Demerger .	22 February 2019
Publication and posting of this Document, the Offer Document,
the Notice of General Meeting and Forms of Proxy .	9 March 2019
General Meeting .	11.30 a.m. 26 March 2019
Results of General Meeting announced through a Regulatory
Information Service	26 March 2019
First Closing Date (and last date and time on which the Offer
may be declared or become unconditional as to acceptances)	8 May 2019
Last date on which the Offer may be declared or become wholly
unconditional (unless extended) .	29 May 2019
Admission of, and dealings (for normal settlement) commence in,
New Ordinary Shares on the London Stock Exchange .	8.00 a.m. on the Effective Date
New Ordinary Shares issued and credited to CREST accounts . .
	As soon as possible after
	8.00 a.m. on the Effective Date
Despatch of share certificates in respect of New Ordinary Shares and cheques in respect of fractional entitlements to New Ordinary Shares (where applicable) pursuant to the terms of
the Offer	No later than 14 days following the Effective Date

All references to time in this Document are to London time unless otherwise stated.

Notes:

⁽i) The times and dates set out in the expected timetable of principal events above and mentioned in this Document and in any other document issued in connection with the Offer are subject to change by the Company, in which event details of the new times and dates will be notified to the UKLA, the LSE and, where appropriate, to Shareholders.

Offer statistics

Number of Ordinary Shares in issue as at 7 March 2019 (being the Latest
Practicable Date)(1) .	312,049,682
(2) . Number of New Ordinary Shares to be issued pursuant to the Offer .	2,248,782,185
Number of Ordinary Shares in issue immediately following Admission(3) . .	2,560,831,867
New Ordinary Shares as a percentage of the Enlarged Share Capital immediately
following Admission(3) . .	87.8

Notes:

⁽¹⁾ Excluding 5,000,000 Ordinary Shares held in treasury.

⁽²⁾ (Excluding up to 2,495,158 shares which could be issued under the Provident Financial Savings-related Share Option Schemes).

⁽³⁾ Assuming 2,248,782,185 New Ordinary Shares are issued, but that otherwise no other Ordinary Shares are issued between 7 March (being the Latest Practicable Date) and Admission.

PART VI DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

Directors	Charles Gregson John van Kuffeler Nick Teunon Miles Cresswell-Turner Niall Booker Heather McGregor	(Non-Executive Chairman) (Group Chief Executive) (Chief Financial Officer) (Executive Director and CEO of Everyday Loans) (Independent Non-Executive Director) (Independent Non-Executive Director)
Company Secretary	Sarah Day
Registered Office	Non-Standard Finance Plc 7 Turnberry Park Road Gildersome Morley Leeds LS27 7LE
Joint Financial Advisers	Deutsche Bank AG, London Branch Winchester House 1 Great Winchester Street London EC2N 2DB
	Ondra LLP 23rd Floor 125 Old Broad Street London EC2N 1AR
Legal Adviser to the Company as to English law	Slaughter and May One Bunhill Row London EC1Y 8YY
Auditors and Reporting Accountants to NSF	Deloitte LLP 1 New Street Square London EC4A 3PA
Receiving Agent	Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol, BS99 6ZZ
Registrar	Computershare Investor Services PLC The Pavilions, Bridgwater Road Bristol, BS99 6ZZ

PART VII LETTER FROM THE CHAIRMAN

NON-STANDARD FINANCE PLC

(incorporated and registered in England and Wales with registered number 09122252)

7 Turnberry Park Road Gildersome Morley Leeds LS27 7LE

To the holders of Ordinary Shares

8 March 2019

Dear Shareholder,

PROPOSED ACQUISITION AND DEMERGER

1. Introduction to the Acquisition and the Demerger

On 22 February 2019 the Company announced the proposed Acquisition of Provident Financial by way of a reverse takeover with each Provident Financial Shareholder entitled to receive 8.88 New Ordinary Shares for each Provident Financial Share under the terms of the Offer, as well as the proposed Demerger of the Loans At Home Business.

Provident Financial is one of the leading providers of personal credit products to the non-standard credit market in the UK and Republic of Ireland and served approximately 2.5 million customers as at 30 June 2018. Like the NSF Group, the Provident Financial Group operates in the non-standard credit market, which the Directors estimate consisted of approximately 10 to 12 million customers in the UK, equivalent to approximately 25% of the UK adult population as at 31 December 2018.

NSF has quickly become a leader in each of the segments of the UK non-standard finance market it operates in since its establishment five years ago. This growth has been achieved by leveraging the NSF Board's deep experience in the non-standard finance market and investing heavily in its businesses in order to unlock their latent potential. The Board believes that its management team can replicate this success with the Enlarged Group by implementing similar initiatives within the Provident Financial business to further enhance shareholder value.

I am writing to give you further details of the Acquisition and the Demerger, including the background to and reasons for each. This letter also explains why the Board considers that the Acquisition, the Demerger and the Resolution to be proposed at the General Meeting are in the best interests of the Company and Shareholders as a whole and why the Board recommends that Shareholders vote in favour of the Resolution.

Shareholders should note that the Resolution relates solely to the issuance of the New Ordinary Shares, and that they are not being asked to vote in connection with the Acquisition or the Demerger.

2. Background to the Transaction and NSF's Plans for the Enlarged Group

The Transaction represents, in the view of the NSF Board, a compelling strategic and financial opportunity to create shareholder value and improve customer outcomes. Provident Financial is a company which has faced a number of challenges in the recent past but continues to have significant potential that, under the right leadership and pursuing a revised business strategy, can be unlocked for the benefit of Provident Financial Shareholders, employees and customers.

The NSF Board believes the Transaction will:

• establish the Enlarged Group as a leading non-standard finance provider that can meet the evolving needs of customers across a range of different product categories in a growing sector;

• bring the combined business under the leadership of the highly-experienced NSF management team that has a history of creating shareholder value in the UK non-standard finance sector;

• deliver more attractive and sustainable shareholder returns, including distributions to Shareholders, than each of Provident Financial and NSF might achieve on their own;

• deliver growth and improve profitability prospects through the execution of NSF's transformation plan that will revitalise Provident Financial's performance, realise substantial operational and funding synergies and create the opportunity for capital returns over time;
• simplify the business portfolio through the sale of Moneybarn, the Demerger of Loans At Home and the sale or closure of Satsuma;
• offer a broad product range to NSF and Provident Financial customers and the wider nonstandard finance sector to take full advantage of cross-selling opportunities;
• restore Provident Financial's culture, enhancing the focus on delivering positive customer outcomes; and
• bring best-in-class regulatory practices and relationships to each of Provident Financial's businesses as part of the Enlarged Group, restoring the confidence of regulators in both Provident Financial and Vanquis Bank as part of the Enlarged Group.

NSF's plans for the Enlarged Group

Following Completion, the NSF Board intends to:

• Retain the NSF Board to oversee the Enlarged Group—the Board expects that the Enlarged Group Board will remain unchanged following Completion with John van Kuffeler, Charles Gregson, Nick Teunon and Miles Cresswell-Turner remaining, respectively, as CEO, Chairman, CFO and CEO of Everyday Loans to oversee the Enlarged Group and existing NSF Non-Executive Directors remaining in post. With 68 years of combined experience in non-standard consumer finance (including over 33 years of experience at Provident Financial) and over 175 years in financial services, the NSF Board will continue to draw on its expertise and experience in its oversight of the Enlarged Group.
• Focus the Enlarged Group on four core divisions—credit cards, home credit, branch-based lending and guarantor loans—each of which is a market-leading business with exposure to profitable segments of the non-standard finance sector and capable of delivering highly attractive returns.
• Implement a transformation plan to revitalise the performance of Provident Financial's core businesses—the NSF Directors intend to achieve this by implementing the following initiatives across Provident Financial's businesses within the Enlarged Group. These initiatives include:
• the appointment of strengthened management teams;
• the execution of revised business strategies including an optimised product offering and the improvement of operational cost control;
• a review of the product offering to ensure a complementary product range will be offered and taking advantage of cross-selling opportunities across the enlarged customer base; and
• the restoration of Provident Financial's culture, enhancing the focus on the delivery of good customer outcomes.
• Realise synergies—the NSF Board expects the Transaction to generate operational cost savings, reduced funding costs and revenue synergies for the Enlarged Group:
• Operational cost synergies: NSF believes that there is potential scope for cost savings by removing duplicated functions across the Enlarged Group and achieving greater operational efficiencies, in particular, reducing the size of Provident Financial's central costs and the cost base of Provident Home Credit. The NSF Board believes the costs in home credit are too high, as evidenced by its cost to income ratio of 69% for H1 2018 (H1 2017: 47%) compared to, despite its smaller size, the considerably lower ratio of Loans At Home for the same period (H1 2018: 59%). NSF will seek to reverse Provident Financial's central cost base inflation which, based on Provident Financial's management guidance (as communicated at the Provident Financial 2018 Interim Results), is expected to grow by £10 million in 2018 (from a central cost base of £12.8 million in 2017). NSF expects, subject to a post-

Completion review of functional requirements and any consultation obligations, to be able to reduce costs from the rationalisation of overlapping head office functions and central costs as well as the simplification of management structures and certain corporate and support functions related to Provident Financial's status as a listed company, which will no longer be required.

• Reduced funding costs: The NSF Board expects to leverage the enhanced scale of the Enlarged Group to secure funding at similar levels to those currently available to Provident Financial. NSF, which is presently unrated, has funding of £231 million at an average cost of 8.7% (on an annualised basis as of H1 2018), whereas Provident Financial, which is BBBrated, secures blended funding at a cost of 4.3%. The NSF Board believes that there will be further scope to reduce the Enlarged Group's funding costs through the successful implementation of its transformation plan to restore profitability and growth.
• Revenue synergies: Given the complementary product offering of Vanquis Bank, Everyday Loans and George Banco, NSF believes there are cross-selling opportunities from introducing Everyday Loans and George Banco's products to Vanquis Bank base of 1.7 million customers, 65% of which have previously expressed interest in a personal loan.
• Simplify the structure of the Enlarged Group to unlock shareholder value—the NSF Board intends to simplify the structure of the Enlarged Group in order to create value for its Shareholders.
• The Demerger of NSF's home credit business, Loans At Home—although the timing of the Demerger remains subject to further consideration, including by the CMA, it is currently expected that the Demerger would take place following Completion and that Loans At Home would be admitted to trading either on the Main Market (with a Standard Listing) or on AIM. It is therefore expected that, as a result of the Demerger, in addition to holding New Ordinary Shares, Provident Financial Shareholders who participate in the Transaction will benefit from holding shares in the newly listed Loans At Home. The Demerger is intended to help assist with the competition approval process with the CMA to receive the Antitrust Approval. The NSF Board considers that Loans At Home is, and will continue to be, a viable, well-managed, independent, standalone business. As the Demerger remains subject to review by the CMA, NSF reserves the right to amend its plans with respect to the Demerger (including by proceeding with a different strategic solution for Loans At Home and/or amended plans for the management team of Loans At Home as stated elsewhere in this Document).
• The sale of Moneybarn and the sale or closure of Satsuma—NSF views both businesses as non-core to the future strategy of the Enlarged Group.
  • Moneybarn is Provident Financial's vehicle finance business and a leader in the provision of vehicle finance for the non-standard credit market. The NSF Board intends to sell Moneybarn in a competitive auction process, to be launched following Completion.
  • Satsuma is Provident Financial's short-term unsecured loans business. Satsuma has been loss-making since its inception and despite statements by the Provident Financial Board dating back to 2015 conveying its expectation and aim that Satsuma would move into profitability, this has failed to materialise to-date. The NSF Board intends to sell Satsuma or to close it, running-off its loan book following Completion.

• Dividend policy and potential for shareholder distributions—given Provident Financial's recent financial performance and operational shortcomings, the NSF Board will need to review its dividend policy shortly following Completion. However, the NSF Board intends that future dividend payments to Shareholders of the Enlarged Group will, over time, reflect its stated policy of paying out at least 50% of normalised post-tax earnings. This is subject to discussions with the PRA in respect of the restrictions currently imposed on the payment of dividends from the Vanquis Bank business. NSF also intends to distribute to Shareholders of the Enlarged Group any excess capital arising from the expected improvement of Provident Financial's capital efficiency and the proceeds of any sale of Moneybarn and/or Satsuma, subject to any required consents from the creditors of the Enlarged Group being obtained. NSF's final year dividend for the financial year ended 31 December 2018 is currently expected to be in line with its stated policy and to be paid to existing Shareholders with a record date prior to Completion.

• Restore the confidence of regulators—the NSF Board will seek to work closely with the regulators of both Provident Financial and Vanquis Bank to restore their confidence in the management of those entities, as expected to be amended by NSF in the wake of the Transaction. To the extent that such confidence can be restored, and certain conditions set by the regulator can be met, the NSF Board believes that it should be possible to facilitate the release of certain amounts of excess capital from the Provident Financial Group.

• Transfer NSF to a premium listing—the NSF Board will apply to the FCA to transfer NSF's current Standard Listing to a Premium Listing on the Official List under the Listing Rules, to take effect as soon as possible following Completion. A separate announcement will be made regarding the transfer in due course.

In taking forward any of its transformational plans for the Provident Financial Group, NSF will need to have regard to relevant regulatory frameworks, and on 6 March 2019, the Company received a letter from the FCA underlining the regulatory position on standards in the market, as well as the considerations the FCA would apply to any post-Completion transformational plans. In particular the letter noted that:

• in the context of the Enlarged Group's home credit business, any relaxation of changes introduced within Provident Home Credit which reduce the risk of harm to consumers (such as the CEM model) would require the FCA's consideration;
• any proposal to reintroduce ROP would require close engagement with the FCA; and
• any movement towards a culture driven by profits and incentives at the cost of good customer outcomes, resulting in unaffordable lending, would be acted on immediately by the FCA.

NSF as a growth driver

NSF was founded in 2014 by a highly experienced management team led by John van Kuffeler with the objective of acquiring and then growing businesses in the UK's non-standard consumer finance sector. Regulated by the FCA, the sector is increasingly fragmented, with few large, well-capitalised groups, creating an opportunity for NSF.

NSF's strategy is to become a leader in each of its chosen segments, by acquiring attractive businesses with high risk adjusted margins and the potential to deliver annual loan book growth and a return on assets of 20% or more. Once acquired, NSF seeks to realise that potential through careful investment in each business's core assets including distribution networks, people, technology and brands. At the same time, NSF is focused on ensuring the delivery of good customer outcomes through a positive business culture whilst maintaining tight controls on risk and impairment.

Since its creation, NSF has experienced dramatic growth, leading to a total net loan book value of over £300 million (reflecting year-on-year growth of 28.5%) and a combined customer base of over 180,000 from its network of 130 locations across the UK. This growth has been driven both by acquisitions, in accordance with the company's founding objective, and organically by the diligent execution of NSF's strategy by its highly experienced management team, creating a leading player in NSF's chosen segments of the non-standard finance sector.

Year-on-year, each of the NSF business divisions has experienced strong growth on a standalone basis. Everyday Loans remains the largest NSF business, whose branch network has almost doubled in size in the three years of NSF ownership. As at 31 December 2018, Everyday Loans' net loan book, before fair value adjustments, had increased by 24.6% to £186.2 million (2017: £149.4 million) driven by a combination of new branches and a high level of productivity. NSF's guarantor loans business also grew strongly, benefitting from high market demand which gave rise to a record number of leads into the two guarantor loan brands and an increased conversion of those leads into loans. As at 31 December 2018, NSF's guarantor loans business net loan book before fair value adjustment had reached £83.1 million (2017: £51.6 million), representing an increase of 61.0% compared to the previous year. Following a period of structural transformation, NSF's home credit business, Loans At Home, also performed well after a particularly strong rate of growth in 2017 and increased its loan book before fair value adjustment by 2.0% to £41.0 million as at 31 December 2018 (2017: £40.2 million). Against this backdrop, the NSF Board believes that NSF's share price does not reflect the underlying value or progress of the business and has been hindered by NSF's concentrated shareholder register and low levels of liquidity.

NSF intends to capitalise on the NSF Group's commercial and operational success, by acquiring and transforming Provident Financial in order to unlock substantial value for all shareholders of, and stakeholders in, both Provident Financial and NSF. The Transaction is expected to create a well-balanced group with leading positions in some of the most attractive segments of the non-standard finance sector.

NSF has a highly experienced management team

The NSF Board believes that, under NSF's stewardship, the Enlarged Group will be particularly well-placed to take full advantage of the continued strong demand for non-standard finance in the UK in a way which Provident Financial has not managed to do in recent years.

NSF has a strong pool of managerial talent which it intends to deploy across the business divisions of the Enlarged Group. In particular, the NSF Board includes the former Chairman and CEO and Deputy Chairman of Provident Financial with combined experience of over 33 years at Provident Financial. NSF's CEO, John van Kuffeler, was Chief Executive, and then Chairman, of Provident Financial for a combined total of 22 years. Under his leadership, Provident Financial delivered an exceptional performance, with a cumulative total shareholder return over the period of more than 4,000%.

Since John van Kuffeler stepped down from the Provident Financial Board, Provident Financial has been under significant pressure both strategically and operationally with the result that Provident Financial's performance has deteriorated dramatically. Provident Financial has issued three profit warnings in just over 18 months (January 2019, August 2017 and June 2017) with profits falling from £343.9 million in 2016 to a loss of £123.0 million in 2017 and the suspension of Provident Financial's dividend in 2017. Since Provident Financial's first profit warning in June 2017, Provident Financial's share price has declined by more than 70%.

Drawing upon its experience, the NSF Board believes that through the application of a revised strategy, executed by its highly experienced management team, NSF can both revitalise Provident Financial's performance and unlock substantial value from both Provident Financial and NSF for the benefit of all Shareholders of the Enlarged Group.

Provident Financial's recent performance and operational shortcomings

A number of shortcomings at Provident Financial have had a significant and adverse impact on its performance in recent years, which are described in more detail below:

• The Provident Financial Board's limited operational experience: In contrast to NSF, the Provident Financial Board, which has seen a high turnover in its composition over the past 18 months, has limited experience of the non-standard consumer credit sector and limited operational experience of its three business divisions.
• The project to transform Provident Financial's home credit business: In the Provident Financial 2017 Annual Report and Accounts, the Chairman acknowledged that Provident Financial's migration to a new operating model in its home credit business was "poorly executed". The result was an unprecedented and substantial increase in agent attrition and vacancies, a change that was unanticipated by the Provident Financial Board, causing discontinuity and disruption to Provident Financial's service to customers. NSF believes that it was both the failure to appreciate the fundamental importance of the customer relationship as well as the absence of any rigorous challenge to a highly risky implementation plan that led to this substantial deterioration in the trading performance of Provident Home Credit. The result was a substantial deterioration in the trading performance of Provident Home Credit business resulting in preexceptional loss of £118.8 million during 2017 (compared with a pre-exceptional profit of £115.2 million during 2016), a sharp reduction in active customers from 782,000 (2016) to 527,000 (2017) and a £207.8 million reduction in the receivables book from £560.0 million to £352.2 million. Following the transition to a new operating model, Provident Financial has failed to effectively address the size of the division's cost base which, despite Provident Financial's significant scale, remains high as a percentage of its revenue and the business remains lossmaking with collections (on older balances) not improving.
• Failure of Provident Financial's recovery plan: In the prospectus issued in connection with Provident Financial's rights issue in February 2018, Provident Financial stated that it expected its recovery plan to be substantially implemented by the end of the first half of 2018. However, a

delay in obtaining FCA clearance to enable the implementation of variable pay for field staff and continued poor collections performance from its back book, falling short of internal plans, may force Provident Financial to abandon its stated aim of returning the Provident Home Credit business to profitability in 2019.

• A series of regulatory failures: The Provident Financial Board has overseen significant regulatory failings in all three of its business divisions.
• In light of Vanquis Bank being ordered to pay compensation to customers by the FCA, Vanquis Bank negotiated a settlement with the FCA in 2017 at a total cost of £172.1 million following failures by its sales teams to disclose to customers the treatment of charges for Vanquis Bank's repayment option plan product as a purchase transaction which could attract interest.
• Moneybarn, Provident Financial's car finance division, is subject to ongoing investigation by the FCA in relation to affordability, forbearance and termination options. This resulted in Provident Financial reflecting a provision of £20.0 million in its 2017 accounts.
• Despite having been subject to a period of intense regulatory scrutiny by the FCA following the poorly executed transition to a new business model and other regulatory failings outlined above, and despite assurances provided in the company's rights issue prospectus that the Provident Financial Board was addressing 'governance and culture issues more widely across the Provident Financial Group, refocusing on the customer first', Provident Home Credit was sanctioned in January 2019 by the ASA, which found that one of Provident Financial's marketing initiatives was irresponsible. The Provident Financial Group has also received fines from the ICO for sending nuisance communications in the form of spam text messages and emails.
• Enhanced supervision and increased capital requirements: As a consequence of the disruption to Provident Home Credit and the FCA's investigations into Vanquis Bank and Moneybarn, Provident Financial has been under enhanced supervision by the FCA since 2017. The FCA has also required Provident Financial to undertake certain formal commitments, including the successful execution of its home credit recovery plan. Separately, the PRA has substantially increased the Provident Financial Group's regulatory capital requirements. These increased requirements include a block on dividends from Vanquis Bank to the rest of the Provident Financial Group (though dividends may still be paid on an ad-hoc basis with the consent of the PRA). Combined with Provident Financial's deteriorating financial performance in 2017, this resulted in Provident Financial launching a deeply-discounted rights issue in February 2018.
• Failure to enter high growth segments of the non-standard finance sector: Despite significant financial resources, a broad customer base and a long history of offering non-standard finance products to the British public, Provident Financial has failed to capitalise on these opportunities and enter and exploit new and fast-growing segments of the UK's non-standard finance sector.
• Provident Financial has twice tried and failed to launch a guarantor loan product within its consumer credit division (first using the 'Tandem' brand and then subsequently using the 'Glo' brand), resulting in the run-off of the business in 2016 and the write-off of its IT investment. In sharp contrast, NSF's guarantor loans business has continued to perform strongly with a more than six-fold increase in revenue, and 36-fold increase in normalised operating profit during the six months to 30 June 2018. In its latest trading update, NSF confirmed that in the 12 months to 31 December 2018, its guarantor loans business grew its net loan book by 61.0%.
• Vanquis Bank has struggled to materially grow its customer base and operating profit at the rates achieved prior to the ROP settlement, with new account bookings for 2018 of 366,000, 71,000 lower than in 2017.

• Significant increase in costs: Central operating costs at Provident Financial have increased significantly due to the recruitment of additional individuals to central functions. The NSF Board believes that this has duplicated equivalent divisional roles. NSF believes that certain areas of the Provident Financial Group have grown out of proportion to their operational needs, in particular the Provident Financial Group head office and the central management of Provident Home Credit.

• Continuing cultural challenges: Despite the launch of a series of initiatives in 2018, there is little evidence to suggest that the Provident Financial Board has been successful in addressing Provident Financial's cultural failings which included poor communication between the operational teams and the Provident Financial Board as well as a lack of focus on the delivery of positive customer outcomes. Separately, the recent ASA sanction and associated public criticism suggests that the business is not sufficiently focused on delivering positive customer outcomes.

• Disappointing financial performance: Despite having confirmed on 19 October 2018 that: '[t]he [Provident Financial] [G]roup has continued to make sound progress during the third quarter on delivering its operational objectives for 2018', Provident Financial's latest trading update issued on 15 January 2019 included a further profit warning, in addition to those issued in June 2017 and August 2017. This detrimental outlook prompted a 19% reduction in Provident Financial's share price on the day of its trading update.

In the NSF Directors' view, each of these factors has contributed to Provident Financial's poor operating and financial performance that have in turn reduced shareholder value by more than 70% over the past three years. NSF views the Transaction as an opportunity to reposition and revitalise Provident Financial's businesses and their respective product offerings within the non-standard finance sector, to restore Provident Financial's culture by enhancing the focus on good customer outcomes and, under the leadership of NSF's management, over time, restore the confidence of regulators in the management of the Provident Financial businesses and extract significant value from the Enlarged Group.

3. Summary information on NSF and the NSF Group

NSF was incorporated on 8 July 2014 to acquire and grow businesses in the UK's non-standard consumer finance sector. Under the direction of the Board, who have significant experience within the sector, the NSF Group has made a number of significant acquisitions, namely:

• the acquisition of Loans At Home on 4 August 2015 from S&U PLC;
• the acquisition of Everyday Loans (including TrustTwo) from Secure Trust Bank on 13 April 2016; and
• the acquisition of George Banco from its existing shareholders on 17 August 2017.

Each of the three acquired businesses now forms one of the NSF Group's three business divisions: branch-based lending, guarantor loans and home credit. Together these divisions make up a sustainable group of businesses offering credit to the approximately 10 – 12 million UK adults who are not served by, or who choose not to use, mainstream financial institutions, and the NSF Group is now a leading provider of unsecured credit, serving over 180,000 customers through a network of over 130 locations across the UK.

For the past two and a half years, the NSF Group has invested heavily in each of its business divisions, including: increasing the scale and breadth of its branch network; acquiring George Banco to become the clear number two guarantor loans business in the UK; and the organic expansion of its home credit business through a significant investment in self-employed agents, staff and technology. At the same time, NSF has ensured that it has sufficient long-term debt funding in place to fund this investment and drive loan book growth across all three divisions, underpinning its long-term growth plans.

Key milestone investments within the 2018 Financial Year included:

• the opening of 12 new branches in the branch-based lending business and the addition of 99 staff across Everyday Loans' branch-based lending business;
• the integration of both George Banco and TrustTwo onto a single loan management platform; and
• the continued evolution of Loans At Home's technology infrastructure.

For the 2018 Financial Year, the Company saw:

• a 29% increase in the total net loan book;
• a 1.6% decline in the total rate of impairment as a percentage of normalised revenue;

• normalised revenue up 39% to £166.5 million;

• normalised operating profit up 51% to £35.9 million;

• normalised earnings per share up 8% to 3.70 pence;
• total dividend per share up 18% to 2.60 pence ;
• operating profit of £19.5 million; and
• loss before tax of £(1.6) million.

4. Summary information on Provident Financial and the Provident Financial Group

The origins of the Provident Financial Group date back to 1880 when the business was founded in Bradford, West Yorkshire. In 1962, Provident Financial was admitted to trading on the London Stock Exchange. In 2003, the Provident Financial Group founded Vanquis Bank and in 2013, CCD expanded its home credit offering and launched its on-line lending product through Satsuma. In 2014, the Provident Financial Group further broadened its offering to the non-standard credit market through the acquisition of the Moneybarn vehicle financing business.

The Provident Financial Group is one of the leading providers of personal credit products to the non-standard credit market in the UK and Republic of Ireland and served approximately 2.5 million customers as at 30 June 2018.

The Provident Financial Group is headquartered in Bradford and, as at 31 December 2017, had approximately 5,947 employees.

For the 2017 Financial Year, the Provident Financial Group reported revenue of £1,196 million and a loss before taxation of £123 million. In the six months to 30 June 2018, the Provident Financial Group reported revenue of £572.5 million, profit before tax, amortisation of acquisition intangibles and exceptional items of £74.9 million, and net profit of £22 million.

5. Summary of the key terms of the Offer

Pursuant to the Offer, which will be subject to the Conditions and the other terms contained in the Offer Document (details of which are set out in Part VIII (Information on the Offer and the Demerger)), the Eligible Provident Financial Shareholders will receive:

8.88 New Ordinary Shares for each Provident Financial Share

Based on the Closing Prices of the Ordinary Shares and the Provident Financial Shares as at 21 February 2019 (being the last business day prior to NSF's announcement of the Offer on 22 February 2019), the Offer values each Provident Financial Share at 511 pence and the entire issued and to be issued ordinary share capital of Provident Financial at approximately £1.3 billion.

The purpose of the proposed Acquisition, and of the Offer of the New Ordinary Shares, is for NSF to acquire control of the entire equity interest in, Provident Financial. Following Completion and assuming that 2,248,782,185 New Ordinary Shares are issued pursuant to the Offer, the Acquisition will result in Provident Financial Shareholders together owning approximately 87.8% of the ordinary share capital of the Enlarged Group (excluding Ordinary Shares held in treasury).

Irrevocable Undertakings and Letters of Intent

Irrevocable Undertakings

On 22 February 2019, NSF and certain Provident Financial Shareholders entered into irrevocable undertakings to accept the Offer (the "Irrevocable Undertakings"). Details of those Irrevocable Undertakings are set out in the below table:

Provident Financial Shareholder	Number of Provident Financial Shares over which undertaking is given	Percentage of Provident Financial Shares subject to the undertaking(1)
Woodford Investment Management Limited .	37,368,184	14.7534
Invesco Asset Management Limited .	30,570,924	12.0698
Marathon Asset Management LLP .	8,046,083	3.1767
Total .	75,985,191	29.9999

Notes

(1) On the basis of the Provident Financial Shares in issue as at the Latest Practicable Date.

Letters of Intent

On 22 February 2019, certain Provident Financial Shareholders provided to the Company non-binding letters of intent. On 27 February, the letters of intent were revised to clarify that, under the terms of those letters, each of the relevant Provident Financial Shareholders intends to promptly accept (or procure acceptance of), the Offer (the "Letters of Intent"). Details of the Letters of Intent are set out in the below table:

Provident Financial Shareholder	Number of Provident Financial Shares subject to the Letter of Intent	Percentage of Provident Financial Shares subject to the Letter of Intent(1)
Woodford Investment Management Limited .	26,698,692	10.5410
Invesco Asset Management Limited	22,066,763	8.7122
Marathon Asset Management LLP .	1,907,207	0.7530
Total	50,672,662	20.0062

Notes

(1) On the basis of the Provident Financial Shares in issue as at the Latest Practicable Date.

On 28 February 2019, Woodford Investment Management Limited informed NSF that it had sold 1,500,000 Provident Financial Shares that were subject to its Letter of Intent, and confirmed that its intention to accept (or procure the acceptance of) the Offer remained unchanged with respect to all other Provident Financial Shares that were subject to the Letter of Intent.

On 6 March 2019, Invesco Asset Management Limited informed NSF that it had sold 6,994 Provident Financial Shares that were subject to its Letter of Intent, and confirmed that its intention to accept (or procure the acceptance of) the Offer remained unchanged with respect to all other Provident Financial Shares that were subject to the Letter of Intent.

On 7 March 2019, Invesco Asset Management Limited informed NSF that it had sold 53,018 Provident Financial Shares that were subject to its Letter of Intent, and confirmed that its intention to accept (or procure the acceptance of) the Offer remained unchanged with respect to all other Provident Financial Shares that were subject to the Letter of Intent.

Conditions to the Offer

The Offer is subject to a number of conditions, details of which are set out in full in the Offer Document. A summary of the most significant conditions is set out below:

Approval of the Resolution by the Shareholders at the General Meeting

The Offer is conditional on the approval of the Resolution by the Shareholders at the General Meeting.

Minimum number of acceptances

The Offer is conditional on valid acceptances being received in respect of not less than 90% (i) in nominal value of the Provident Financial Shares to which the Offer relates, and (ii) of the voting rights attached to those shares, representing greater than 50% of Provident Financial's entire issued share capital.

Admission to Listing

The Offer is conditional on: (i) the admission to the Official List of the New Ordinary Shares becoming effective in accordance with the Listing Rules and the admission of the New Ordinary Shares to trading becoming effective in accordance with the Admission and Disclosure Standards of the London Stock Exchange; or (ii) if NSF so determines (and subject to the consent of the Takeover Panel), (a) the UKLA having acknowledged to NSF that the application for the admission of the New Ordinary Shares to the Official List with a Standard Listing has been approved and (after satisfaction of any conditions to which such approval is expressed to be subject ("listing conditions")) will become effective as soon as a dealing notice has been issued by the UKLA and any listing conditions having been satisfied, and (b) the London Stock Exchange having acknowledged to NSF that the New Ordinary Shares will be admitted to trading on the main market for listed securities of the London Stock Exchange.

Regulatory Approval

The Offer is conditional on:

• i. the FCA: (i) giving notice for the purpose of section 189(4)(a) of FSMA that it has determined to approve; or (ii) being treated, by virtue of section 189(6) of FSMA, as having approved; the acquisition of control (as defined in section 181 of FSMA read in conjunction with the Financial Services and Markets Act 2000 (controllers) (Exemption) Order 2009) over Vanquis Bank Limited, Provident Financial Management Services Limited, Provident Personal Credit Limited, Moneybarn Limited, Moneybarn No. 1 Limited and Moneybarn No.4 Limited by NSF which will arise from the successful Completion of the Offer.
• ii. the PRA: (i) giving notice for the purpose of section 189(4)(a) of FSMA that it has determined to approve; or (ii) being treated, by virtue of section 189(6) of FSMA, as having approved; the acquisition of control (as defined in section 181 of FSMA) over Vanquis Bank by NSF which will arise from the successful Completion of the Offer.
• iii. the CBI giving approval for the acquisition of a qualifying shareholding in Provident Financial, Provident Personal Credit Limited and Provident Financial Group Limited.

Antitrust Approval

The Offer is conditional on either:

• i. the CMA confirming, in terms satisfactory to NSF, that the proposed acquisition of Provident Financial by NSF or any matter arising therefrom or related thereto or any part of it will not be subject to a reference under sections 22 or 33 of the Enterprise Act 2002 (a "CMA Phase 2 Reference"); or
• ii. the CMA having accepted under section 73(2) of the Enterprise Act 2002 undertakings that are reasonably satisfactory to NSF in lieu of making CMA Phase 2 Reference.

Compulsory acquisition, delisting and re-registration

If NSF receives acceptances under the Offer in respect of, or otherwise acquires, 90% or more of the Provident Financial Shares to which the Offer relates and 90% or more of the voting rights carried by the Provident Financial Shares to which the Offer relates, and assuming that all of the other Conditions have been satisfied or waived (if capable of being waived), NSF intends to exercise its rights pursuant to the provisions of Part 28 of the Companies Act 2006 to acquire compulsorily the remaining Provident Financial Shares in respect of which the Offer has not been accepted, on the same terms as the Offer.

Following the Offer becoming or being declared unconditional in all respects, if NSF receives acceptances in respect of the Offer in respect of, or otherwise acquires, 75% or more of the total number of Provident Financial Shares or the appropriate special resolutions are otherwise passed, and subject to any applicable requirements of the UKLA, it is intended that NSF will procure that Provident Financial makes applications to cancel the listing of Provident Financial Shares on the UKLA's Official List and to cancel trading in Provident Financial Shares on the London Stock Exchange's Main Market for listed securities.

Following such cancellation, it is intended that Provident Financial will be re-registered as a private limited company. Such cancellation and re-registration would significantly reduce the liquidity and marketability of any Provident Financial Shares not assented to the Offer.

Demerger and strategic review of assets

Although the timing of the Demerger remains subject to further consideration, including by the CMA, it is currently expected that the Demerger of Loans At Home from NSF would take place following Completion and that Loans At Home would be admitted to trading either on the Main Market (with a Standard Listing) or on AIM. It is therefore expected that, as a result of the Demerger, in addition to holding New Ordinary Shares. Provident Financial Shareholders who participate in the Transaction will benefit from holding shares in the newly listed Loans At Home. The Demerger is intended to help assist with the competition approval process with the CMA to receive the Antitrust Approval. The NSF Board considers that Loans At Home is, and will continue to be, a viable, well-managed, independent, standalone business. As the Demerger remains subject to review by the CMA, NSF reserves the right to amend its plans with respect to the Demerger (including by proceeding with a different strategic solution for Loans At Home and/or amended plans for the management team of Loans At Home as stated elsewhere in this Document).

Following Completion, the Enlarged Group will include a number of different businesses of the historic Provident Financial Group. Some of these businesses have clear counterparts within the NSF Group, however others like Moneybarn and Satsuma do not; NSF views both Moneybarn and Satsuma as non-core to the future strategy of the Enlarged Group.

Moneybarn is Provident Financial's vehicle finance business and a leader in the provision of vehicle finance for the non-standard credit market. The NSF Board intends to sell Moneybarn in a competitive auction process, to be launched following Completion.

Satsuma is Provident Financial's short-term unsecured loans business. Satsuma has been lossmaking since its inception and despite statements by the Provident Financial Board dating back to 2015 conveying its expectation and aim that Satsuma would move into profitability, this has failed to materialise to-date. The NSF Board intends to sell Satsuma or to close it, running-off its loan book following Completion.

The NSF Directors currently intend for any distributable proceeds of any sale of Moneybarn and/or Satsuma to be returned to Shareholders, subject to any required consents from the creditors of the Enlarged Group being obtained.

6. Current Trading, Prospects and Trend Information

The 2019 Financial Year has started well with continued strong loan book growth in both branchbased lending and guarantor loans with impairment tightly controlled and in-line with expectations. In home credit, having streamlined our management infrastructure there has been no noticeable impact on lending volumes and collections that have both remained in-line with our expectations.

The NSF Directors expect to continue in line with their previously-stated strategy for each of the three business divisions. In particular:

• Branch-based lending: the ongoing growth of Everyday Loans' branch network and lead volumes;
• Guarantor loans: the increase of capacity within the guarantor loan business and the exploration of more flexible, risk-based pricing to broaden the business' product offering; and
• Home credit: rebalancing of the loan book with a return to shorter-term loans and increasing the percentage of quality customers.

For further details of the performance of the current trading of the NSF Group, its prospects and relevant trends, please see Part X (Information on the NSF Group) and Part XII (Operating and Financial Review of the NSF Group).

7. Taxation

Certain information about UK taxation in relation to the Offer is set out in Part XIX (Taxation) of this Document. If you are in any doubt as to your tax position, or you are subject to tax in a jurisdiction other than the UK, you should consult your own independent tax adviser without delay.

8. General meeting

A notice convening a General Meeting to be held at the offices of Maitland/AMO, 3 Pancras Square, London, N1C 4AG at 11.30 a.m. on 26 March 2019 at which the Resolution will be proposed is set out at the end of this document. The purpose of the General Meeting is to consider and, if thought fit, pass the Resolution, as set out in full in the Notice of General Meeting.

Your attention is drawn again to the fact that the Resolution relates to the issuance of the New Ordinary Shares, and that Shareholders are not being asked to vote in connection with the Acquisition.

The Resolution is summarised below:

the Directors be authorised to allot shares in the Company in accordance with section 551 of the Companies Act 2006 and to grant rights to subscribe for or to convert any security into shares up to an aggregate nominal amount of £113,546,769 pursuant to the Offer.

The Resolution will be proposed as an ordinary resolution requiring a simple majority of votes in favour. This Resolution must be approved by Shareholders who together represent a simple majority of the Ordinary Shares being voted (whether in person or by proxy) at the General Meeting.

For further information in relation to the Resolution to be proposed at the General Meeting, see the Notice of General Meeting at the end of this Document.

9. Action to be taken

General Meeting

If you are a Shareholder, you will find enclosed with this Document a Form of Proxy for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are asked to complete the Form of Proxy in accordance with the instructions printed on it and to return it to the Registrar, Computershare, as soon as possible and, in any event, so as to arrive not later than 11.30 a.m. on 22 March 2019.

The completion and return of the Form of Proxy will not preclude you from attending the General Meeting and voting in person if you wish to do so. You may also submit your proxies electronically—see your Form of Proxy for details of how to register your vote electronically. If you hold shares in CREST, you may appoint a proxy by completing and transmitting a CREST Proxy Instruction to the issuer's agent, ID 3RA50, so that it is received no later than 11.30 a.m. on 22 March 2019.

10. Further Information

Your attention is drawn to Part II (Risk Factors) and to Part XX (Additional Information) of this Document. You should read all of the information contained in this Document before deciding the action to take in respect of the General Meeting and/or the Offer.

The results of the votes cast at the General Meeting will be announced as soon as possible once known through a Regulatory Information Service and on the NSF website (www.nsfgroupplc.com). It is expected that this will be on 26 March 2019.

11. Recommendation

The Board considers the Acquisition, the Demerger and the Resolution to be in the best interests of the Company and its Shareholders taken as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolution, as all NSF Directors intend to do in respect of the Ordinary Shares which they are interested, or in relation to which they are otherwise able to control the exercise of the voting rights, held at the time of the General Meeting, amounting to 3,852,618 Ordinary Shares in aggregate as at the Latest Practicable Date (representing approximately 1.22% of NSF's existing issued Ordinary Share capital).

Yours sincerely,

Charles Gregson Chairman

PART VIII INFORMATION ON THE OFFER AND THE DEMERGER

1. Overview

The Offer is to acquire the entire issued and to be issued share capital of Provident Financial for 8.88 New Ordinary Shares per Provident Financial Share.

As at the Latest Practicable Date 2019, NSF had an issued share capital of 312,049,682 Ordinary Shares (excluding 5,000,000 treasury shares) of £0.05 each, being 100% of the entire issued share capital of NSF. These Ordinary Shares have a Standard Listing on the Main Market of the London Stock Exchange.

It is intended that the Acquisition will be implemented by way of a takeover offer within the meaning of the Companies Act. However, NSF reserves the right to elect, with the consent of the Takeover Panel (where necessary), to implement the Acquisition by way of a Court-sanctioned scheme of arrangement in accordance with Part 26 of the Companies Act.

2. Terms of the Offer

Pursuant to the Offer, which will be subject to the Conditions and the other terms contained in the Offer Document (details of which are set out in this Part VIII (Information on the Offer and the Demerger)), the Eligible Provident Financial Shareholders will receive:

8.88 New Ordinary Shares for each Provident Financial Share

Based on the Closing Prices of the Ordinary Shares and the Provident Financial Shares as at 21 February 2019 (being the last business day prior to NSF's announcement of the Offer on 22 February 2019), the Offer values each Provident Financial Share at 511 pence and the entire issued and to be issued ordinary share capital of Provident Financial at approximately £1.3 billion.

The purpose of the proposed Acquisition, and of the Offer of the New Ordinary Shares, is for NSF to acquire control of the entire equity interest in, Provident Financial. Following Completion and assuming that 2,248,782,185 New Ordinary Shares are issued pursuant to the Offer, the Acquisition will result in Provident Financial Shareholders together owning approximately 87.8% of the ordinary share capital of the Enlarged Group (excluding Ordinary Shares held in treasury).

3. Irrevocable Undertakings and Letters of Intent

Irrevocable Undertakings

On 22 February 2019, NSF and certain Provident Financial Shareholders entered into the Irrevocable Undertakings to accept the Offer. Details of those Irrevocable Undertakings are set out in the below table:

Provident Financial Shareholder	Number of Provident Financial Shares over which undertaking is given	Percentage of Provident Financial Shares subject to the undertaking(1)
Woodford Investment Management Limited .	37,368,184	14.7534
Invesco Asset Management Limited .	30,570,924	12.0698
Marathon Asset Management LLP .	8,046,083	3.1767
Total .	75,985,191	29.9999

Notes:

(1) On the basis of the Provident Financial Shares in issue as at the Latest Practicable Date.

The Irrevocable Undertakings cease to be binding only on and from the earlier of the following occurrences:

(a) if the Offer Document or Scheme document (as the case may be) has not been posted within 28 days of 22 February 2019 (being the date of the announcement of the Offer); or: (a) within such longer period as NSF, with the consent of the Takeover Panel, determines; or (b) if NSF elects to exercise its right to switch to implement the Transaction by way of a Scheme rather than an Offer (or vice versa), within 28 days of the issue of the press announcement announcing any such switch);

• (b) the date on which the Offer or Scheme (as the case may be) lapses or is withdrawn;
• (c) by 31 July 2019, or such date as is agreed in writing between NSF and Provident Financial, the Transaction has not been completed (whether implemented by the Offer or by Scheme);
• (d) NSF announces before the Offer Document or Scheme document (as applicable) is published that it does not intend to proceed with the Acquisition and no new, revised or replacement Offer or Scheme (as applicable) is announced by NSF; or
• (e) an announcement is made of a competing offer for Provident Financial and the consideration payable to Provident Financial Shareholders per Provident Financial Share under such competing offer is at least 10% higher (in the reasonable opinion of the provider of the Irrevocable Undertaking) than that payable pursuant to the Acquisition.

Letters of Intent

On 22 February 2019, certain Provident Financial Shareholders provided to the Company non-binding letters of intent. On 27 February, the letters of intent were revised to clarify that, under the terms of those letters, each of the relevant Provident Financial Shareholders intends to promptly accept (or procure acceptance of), the Offer (the "Letters of Intent"). Details of the Letters of Intent are set out in the below table:

Provident Financial Shareholder	Number of Provident Financial Shares subject to the Letter of Intent	Percentage of Provident Financial Shares subject to the Letter of Intent(1)
Woodford Investment Management Limited .	26,698,692	10.5410
Invesco Asset Management Limited	22,066,763	8.7122
Marathon Asset Management LLP .	1,907,207	0.7530
Total	50,672,662	20.0062

Notes:

(1) On the basis of the Provident Financial Shares in issue as at the Latest Practicable Date.

On 28 February 2019, Woodford Investment Management Limited informed NSF that it had sold 1,500,00 Provident Financial Shares that were subject to its Letter of Intent, and confirmed that its intention to accept (or procure the acceptance of) the Offer remained unchanged with respect to all other Provident Financial Shares that were subject to the Letter of Intent.

On 6 March 2019, Invesco Asset Management Limited informed NSF that it had sold 6,994 Provident Financial Shares that were subject to its Letter of Intent, and confirmed that its intention to accept (or procure the acceptance of) the Offer remained unchanged with respect to all other Provident Financial Shares that were subject to the Letter of Intent.

On 7 March 2019, Invesco Asset Management Limited informed NSF that it had sold 53,018 Provident Financial Shares that were subject to its Letter of Intent, and confirmed that its intention to accept (or procure the acceptance of) the Offer remained unchanged with respect to all other Provident Financial Shares that were subject to the Letter of Intent.

4. Conditions to the Offer

The Offer is subject to a number of conditions, details of which are set out in full in the Offer Document. A summary of the most significant conditions is set out below:

Approval of the Resolution by the Shareholders at the NSF General Meeting

The Offer is conditional on the approval of the Resolution by the Shareholders at the General Meeting.

Minimum number of acceptances

The Offer is conditional on valid acceptances being received in respect of not less than 90% (i) in nominal value of the Provident Financial Shares to which the Offer relates, and (ii) of the voting rights attached to those shares, representing greater than 50% of Provident Financial's entire issued share capital.

Admission to Listing

The Offer is conditional on: (i) the admission to the Official List of the New Ordinary Shares becoming effective in accordance with the Listing Rules and the admission of the New Ordinary Shares to trading becoming effective in accordance with the Admission and Disclosure Standards of the London Stock Exchange; or (ii) if NSF so determines (and subject to the consent of the Takeover Panel), (a) the UKLA having acknowledged to NSF that the application for the admission of the New Ordinary Shares to the Official List with a Standard Listing has been approved and (after satisfaction of any conditions to which such approval is expressed to be subject ("listing conditions")) will become effective as soon as a dealing notice has been issued by the UKLA and any listing conditions having been satisfied, and (b) the London Stock Exchange having acknowledged to NSF that the New Ordinary Shares will be admitted to trading on the Main Market for listed securities of the London Stock Exchange;

Regulatory clearances

The Offer is conditional on:

• i. the FCA: (i) giving notice for the purpose of section 189(4)(a) of FSMA that it has determined to approve; or (ii) being treated, by virtue of section 189(6) of FSMA, as having approved; the acquisition of control (as defined in section 181 of FSMA read in conjunction with the Financial Services and Markets Act 2000 (controllers) (Exemption) Order 2009) over Vanquis Bank Limited, Provident Financial Management Services Limited, Provident Personal Credit Limited, Moneybarn Limited, Moneybarn No. 1 Limited and Moneybarn No.4 Limited by NSF which will arise from the successful Completion of the Offer;
• ii. the PRA: (i) giving notice for the purpose of section 189(4)(a) of FSMA that it has determined to approve; or (ii) being treated, by virtue of section 189(6) of FSMA, as having approved; the acquisition of control (as defined in section 181 of FSMA) over Vanquis Bank by NSF which will arise from the successful Completion of the Offer;
• iii. the CBI giving approval for the acquisition of a qualifying shareholding in Provident Financial, Provident Personal Credit Limited and Provident Financial Group Limited,

together the ("Regulatory Approval").

Antitrust approvals and clearances

The Offer is conditional on either:

• i. the CMA confirming, in terms satisfactory to NSF, that the proposed acquisition of Provident Financial by NSF or any matter arising therefrom or related thereto or any part of it will not be subject to a reference under sections 22 or 33 of the Enterprise Act 2002 (a "CMA Phase 2 Reference"); or
• ii. the CMA having accepted under section 73(2) of the Enterprise Act 2002 undertakings that are reasonably satisfactory to NSF in lieu of making CMA Phase 2 Reference,

the ("Antitrust Approval").

Satisfaction of Conditions

Under Rule 31.7 of the Takeover Code, except with the consent of the Takeover Panel, all the Conditions must be satisfied or the Offer will lapse within 21 days of the first closing date or the date the Offer becomes or is declared unconditional to acceptances, whichever is the later. Rule 31.7 also provides that the Takeover Panel's consent to an extension will normally only be granted, broadly, if the outstanding condition involves a material official authorisation or regulatory clearance relating to the Transaction.

The timetable for obtaining each of the Regulatory Approvals is controlled, respectively, by the FCA, the PRA and the CBI and the timetable for obtaining the Antitrust Approval is controlled by the CMA. These timetables differ from, and can be longer than, the conventional timetable for an offer under the Takeover Code.

The NSF Board expects that individuals to be appointed to the boards of the Enlarged Group's home credit business, Provident Personal Credit Limited, Vanquis Bank and Moneybarn will need to be approved by: (i) the FCA to perform one or more controlled functions; (ii) the PRA and/or the FCA to perform one or more senior management functions; and/or (iii) the CBI, under its fitness and probity regime, depending on precisely which functions the individuals perform for the relevant businesses.

The timetable for obtaining approvals in respect of the individuals to be appointed to the boards of the Enlarged Group's home credit business and Vanquis Bank will be controlled by the FCA, PRA and/or the CBI, as applicable. Although such applications are technically made by the firms for which an individual is to perform a function, in the context of the Acquisition NSF has requested that these processes run alongside the process to approve NSF as a controller of Vanquis Bank Limited, Provident Management Services Limited, Provident Personal Credit Limited, Moneybarn Limited, Moneybarn No. 1 Limited and Moneybarn No.4 Limited respectively, and/or that those individuals can perform relevant functions without formal approval for a short period of time after Completion, by relying on transitional provisions.

Provident Financial Shareholders who have accepted the Offer will not be able to withdraw their acceptances from the date on which the Offer becomes or is declared unconditional as to acceptances until the date on which the Offer becomes or is declared unconditional in all respects or lapses. Accordingly, if the 21 day period in Rule 31.7 is extended by the Takeover Panel in the manner described above, Provident Financial Shareholders will not be able to withdraw acceptances for the duration of this extended period.

If the Offer becomes or is declared unconditional as to acceptances and, subsequently, becomes or is declared unconditional in all respects, NSF has agreed to keep the Offer open for acceptances for at least seven days following the date on which the Offer becomes or is declared unconditional in all respects.

Provident Financial Share Schemes

The Offer will extend to any Provident Financial Shares unconditionally allotted or issued before the Offer closes (or such earlier time as NSF may, subject to the rules of the Takeover Code, decide) as a result of the exercise of options or vesting of awards granted under any of the Provident Financial Share Schemes.

Participants in the Provident Financial Share Schemes will be contacted regarding the effect of the Transaction on their rights under the Provident Financial Share Schemes and provided with further details concerning the proposals which will be made to them in due course. Details of the proposals will be set out in separate letters to be sent to participants in the Provident Financial Share Schemes.

Settlement

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with each other and with each Existing Ordinary Share, including the right to receive all dividends or other distributions declared with a record date falling after the Closing Date (save for any final dividend declared by NSF in respect of the year ended 31 December 2018). Applications will be made to the UKLA and to the London Stock Exchange for the New Ordinary Shares to be admitted to the Official List with a Standard Listing and to trading on the London Stock Exchange's Main Market for listed securities, respectively.

Fractions

Fractions of New Ordinary Shares will not be allotted to Provident Financial Shareholders but will be aggregated and sold in the market. The net proceeds of such sale will then be paid in cash to the relevant Provident Financial Shareholder in accordance with their fractional entitlements. Individual entitlements, however, of less than £5.00 will not be paid but will be retained for the benefit of the Enlarged Group.

The offer of New Ordinary Shares to persons resident in, or who are citizens of, or who have a registered address in countries other than, the United Kingdom may be affected by the laws of the relevant jurisdiction. Those persons should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to accept the Offer.

5. Compulsory acquisition, delisting and re-registration

If NSF receives acceptances under the Offer in respect of, or otherwise acquires, 90% or more of the Provident Financial Shares to which the Offer relates and 90% or more of the voting rights carried by the Provident Financial Shares to which the Offer relates, and assuming that all of the other Conditions have been satisfied or waived (if capable of being waived), NSF intends to exercise its rights pursuant to the provisions of Part 28 of the Companies Act 2006 to acquire compulsorily the remaining Provident Financial Shares in respect of which the Offer has not been accepted, on the same terms as the Offer.

Following the Offer becoming or being declared unconditional in all respects, if NSF receives acceptances in respect of the Offer in respect of, or otherwise acquires, 75% or more of the total number of Provident Financial Shares or the appropriate special resolutions are otherwise passed, and subject to any applicable requirements of the UKLA, it is intended that NSF will procure that Provident Financial makes applications to cancel the listing of Provident Financial Shares on the UKLA's Official List and to cancel trading in Provident Financial Shares on the London Stock Exchange's Main Market for listed securities.

Following such cancellation, it is intended that Provident Financial will be re-registered as a private limited company. Such cancellation and re-registration would significantly reduce the liquidity and marketability of any Provident Financial Shares not assented to the Offer.

6. Demerger and strategic review of assets

Although the timing of the Demerger remains subject to further consideration, including by the CMA, it is currently expected that the Demerger of Loans at Home from NSF would take place very shortly after Completion and that Loans At Home would be admitted to trading either on the Main Market (with a Standard Listing) or on AIM. It is therefore expected that, as a result of the Demerger, in addition to holding New Ordinary Shares, Provident Financial Shareholders who participate in the Transaction will benefit from holding shares in the newly listed Loans At Home. The Demerger is intended to help assist with the competition approval process with the CMA to receive the Antitrust Approval. The NSF Board considers that Loans At Home is, and will continue to be, a viable, wellmanaged, independent, standalone business. As the Demerger remains subject to review by the CMA, NSF reserves the right to amend its plans with respect to the Demerger (including by proceeding with a different strategic solution for Loans At Home and/or amended plans for the management team of Loans At Home as stated elsewhere in this Document).

The NSF Board intends to grant every individual who is a Loans at Home employee on the date of the Demerger (and not under notice) an option over shares in the newly-listed Loans at Home equal in value to £2,000 (by reference to the offer price of Loans at Home shares on initial public offering), subject to the individual remaining an employee of Loans at Home for a period of three years (at which point the shares in Loans at Home may be sold).

Following Completion, the Enlarged Group will include a number of different businesses of the historic Provident Financial Group. Some of these businesses have clear counterparts within the NSF Group, however others like Moneybarn and Satsuma do not. NSF views both Moneybarn and Satsuma as non-core to the future strategy of the Enlarged Group.

Moneybarn is Provident Financial's vehicle finance business and a leader in the provision of vehicle finance for the non-standard credit market. The NSF Board intends to sell Moneybarn in a competitive auction process, to be launched following Completion.

Satsuma is Provident Financial's short-term unsecured loans business. Satsuma has been lossmaking since its inception and despite statements by the Provident Financial Board dating back to 2015 conveying its expectation and aim that Satsuma would move into profitability, this has failed to materialise to-date. The NSF Board intends to sell Satsuma or to close it, running-off its loan book following Completion.

The NSF Directors currently intend for any distributable proceeds of any sale of Moneybarn and/or Satsuma to be returned to Shareholders, subject to any required consents from the creditors of the Enlarged Group being obtained.

7. Future intentions for Provident Financial

The proposals outlined in this section 7 remain subject to detailed implementation planning following Completion. Employees or their representatives will be consulted regarding proposals in accordance with any applicable consultation requirements.

Future intentions in relation to employees

NSF attaches great importance to the skills and experience of the employees of the Provident Financial Group and expects existing Provident Financial Group personnel to play an important role in driving the future success of the combined business following Completion. However, the NSF Board believes that, in light of Provident Financial's recent financial performance and as part of a comprehensive review of Provident Financial following Completion, Provident Financial's high cost base needs to be evaluated and reduced. Subject to an evaluation of the outcome of this review, a reduction in headcount may be appropriate. Any such reduction, if appropriate following the review, is expected to predominantly involve Provident Financial's London office, as the NSF Board intends to implement a de-centralised divisional strategy across the businesses of the Enlarged Group alongside a lean London-based head office. This approach, which is consistent with the proven NSF model, is expected to simplify management structures enabling fast economic-based decision-making within each core division and the creation of an efficient, non-bureaucratic organisation with reduced central costs. Each of the four core businesses will have a strong management team supported by members of the NSF Board and senior management in non-executive positions to provide coordination and oversight over non-business specific areas such as IT, risk, HR and regulation.

The headquarters of the Enlarged Group will be in London. While the NSF Board has no intention to make changes to Provident Financial's divisional head office locations, subject to the outcome of the review mentioned above, the NSF Board does expect to implement a rationalisation plan to simplify the central functions of and, where relevant, remove duplication from, the head office functions and locations of the Enlarged Group.

The Provident Financial Group occupied 201 properties in the UK and the Republic of Ireland (as at 31 December 2017) (including home credit branches nationwide, a home credit contact centre in Bradford and a Vanquis Bank contact centre in Chatham) and the NSF Group occupies 130 properties (as at 31 December 2018). NSF may choose to leverage its geographic footprint to consolidate some of these non-head office locations within the Enlarged Group where appropriate. The NSF Board does not expect any such consolidation to result in a material rationalisation of the non-head office locations and it is expected that Provident Home Credit will remain operationally based and headquartered in Bradford and the Vanquis Bank contact centre will remain in Chatham.

Notwithstanding the plans described above, NSF intends to safeguard the existing contractual and statutory employment rights of Provident Financial employees, subject to the introduction of flexible working and a variable pay structure (to be agreed with the FCA (and the CBI, to the extent required)) to the contractual terms of employees of the Enlarged Group's home credit business.

Dividend Policy

The Board considers dividends to be an important component of the Enlarged Group Shareholders' returns. The Board will review its dividend policy following Completion taking into account the New Ordinary Shares issued pursuant to the Offer and the performance of the Enlarged Group, however the NSF Board intends that future dividend payments to Shareholders of the Enlarged Group will, over time, reflect its stated policy of paying out at least 50% of normalised post-tax earnings. This is subject to discussions with the PRA in respect of the restrictions currently imposed on the payment of dividends from the Vanquis Bank business. NSF also intends to distribute to Shareholders of the Enlarged Group any excess capital arising from the expected improvement of Provident Financial's capital efficiency and the proceeds of any sale of Moneybarn and/or Satsuma, subject to any required consents from the creditors of the Enlarged Group being obtained. Within the Provident Financial Trading Update, the Provident Financial Board expressed its expectation that a nominal dividend in respect of the 2018 Financial Year would be declared. The NSF Board gives no commitment that this expectation will be met.

Provident Financial's Articles of Association

NSF has no current intention to amend Provident Financial's Articles of Association following Completion other than to amend the accounting reference date of Provident Financial to bring the financial year in line with the other companies in the NSF Group.

Provident Financial's management bodies

NSF believes that the management expertise existing within the NSF Group is one of the NSF Group's greatest strengths, and that the Acquisition would represent an opportunity to apply that expertise within the businesses that currently form the Provident Financial Group. In particular, the Board expects that the Enlarged Group Board will remain unchanged following Completion with John van Kuffeler, Charles Gregson, Nick Teunon and Miles Cresswell-Turner remaining, respectively, as CEO, Chairman, CFO and CEO of Everyday Loans to oversee the Enlarged Group.

Vanquis Bank has not had a permanent CEO since the departure of Chris Sweeney on 1 November 2018 (though Provident Financial has recently announced an agreement to appoint a managing director, and the expectation of a new Chairman, of Vanquis Bank (in each case, subject to receipt of relevant regulatory approval)). At Completion, NSF intends to appoint a new Chairman and CEO of Vanquis Bank. Subject to receipt of relevant regulatory approval, Niall Booker, a Non-Executive Director of NSF, has agreed to join Vanquis Bank as Chairman with effect from Completion. NSF has also identified a number of highly experienced candidates for the role of CEO of Vanquis Bank and expects to be in a position to announce an appointment, subject to receipt of relevant regulatory approval, prior to Completion.

It is expected that Loans At Home's current CEO and CFO will operate the home credit business of the Enlarged Group while John van Kuffeler will become Chairman of the division.

The NSF Board expects that individuals to be appointed to the boards of the Enlarged Group's home credit business, Provident Personal Credit Limited, Vanquis Bank and Moneybarn will need to be approved by: (i) the FCA to perform one or more controlled functions; (ii) the PRA and/or the FCA to perform one or more senior management functions, and/or (iii) the CBI, under its fitness and probity regime, depending on precisely which functions the individuals perform for the relevant businesses.

The timetable for obtaining approvals in respect of the individuals to be appointed to the boards of the Enlarged Group's home credit business and Vanquis Bank will be controlled by the FCA, PRA and/or the CBI, as applicable.

Attaining full ownership of Provident Financial

It is NSF's current intention to make use of any and all legal procedures available to itself or to Provident Financial (whether immediately following Completion or in the future) in order to seek to attain full ownership of Provident Financial.

Regulatory Compliance of transformational plans

In taking forward its transformational plans for the Provident Financial Group, NSF will need to have regard to relevant regulatory frameworks, and on 6 March 2019, the Company received a letter from the FCA underlining the regulatory position on standards in the market, as well as the considerations the FCA would apply to any post-Completion transformational plans. In particular the letter noted that:

• in the context of the Enlarged Group's home credit business, any relaxation of changes introduced within Provident Home Credit which reduce the risk of harm to consumers (such as the CEM model) would require the FCA's consideration;
• any proposal to reintroduce ROP would require close engagement with the FCA; and
• any movement towards a culture driven by profits and incentives at the cost of good customer outcomes, resulting in unaffordable lending, would be acted on immediately by the FCA.

PART IX

INFORMATION ON THE NEW ORDINARY SHARES

1. Description of the type and class of the New Ordinary Shares being offered

The New Ordinary Shares to be issued by NSF will be ordinary shares with a nominal value of 5 pence each, with ISIN GB00BRJ6JV17, being the same ISIN as that of the Existing Ordinary Shares. Following Admission, which is expected to occur on the Closing Date, NSF will have one class of Ordinary Shares, the rights of which are set out in the Articles. The New Ordinary Shares will be credited as fully paid and will be free from all liens, equities, charges, encumbrances and other interests.

2. Legislation under which the New Ordinary Shares will be created

The New Ordinary Shares will be created under the Companies Act 2006.

3. Listing

The Existing Ordinary Shares are listed on the Official List and are admitted to trading on the Main Market. Applications have been made to the FCA for all of the New Ordinary Shares to be admitted to listing on the standard listing segment of the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on the Main Market. Subject to certain conditions being satisfied, it is expected that Admission will become effective on the Closing Date and that dealings for normal settlement in the New Ordinary Shares will commence at 8.00 a.m. on the same day. It is the Directors' intention that following Admission the Company's Ordinary Shares are transferred to a Premium Listing.

4. Form and currency of the New Ordinary Shares

The New Ordinary Shares will be issued in registered form and will be capable of being held in certificated and uncertificated form.

Title to the certificated New Ordinary Shares will be evidenced by entry in the register of members of the Company and title to uncertificated New Ordinary Shares will, in respect of Shareholders, be evidenced by entry in the operator register maintained by Euroclear (which forms part of the register of members of the Company). The registrar of the Company is Computershare.

If any New Ordinary Shares are to be held in certificated form, share certificates will be issued in respect of those shares in accordance with the Articles and applicable legislation.

The New Ordinary Shares will be denominated in pounds sterling.

5. Rights attached to the New Ordinary Shares

Each New Ordinary Share will rank pari passu in all respects with each Existing Ordinary Share, and rank in full for all other dividends and other distributions declared in respect of the ordinary share capital of the Company (save for any final dividend declared by NSF in respect of the year ended 31 December 2018). Each New Ordinary Share will have the same voting rights, rights on a return of capital and restrictions as the other Ordinary Shares, as set out in the Articles. Further details of the rights attaching to the Existing Ordinary Shares and the New Ordinary Shares are set out in paragraph 7 (Articles) of Part XX (Additional Information) of this Document.

6. Dilution

Assuming the issue of 2,248,782,185 New Ordinary Shares pursuant to the terms of the Offer and no other issues of Ordinary Shares between the Latest Practicable Date and Admission (and excluding for that purpose shares which could be issued under the Provident Financial Savings-related Share Options Scheme), the Existing Ordinary Shares (excluding the 5,000,000 Ordinary Shares held in treasury) will represent 12.2% (on a fully diluted basis) of the Enlarged Share Capital (excluding the 5,000,000 Ordinary Shares held in treasury) immediately following Admission. As a result, the voting rights of Shareholders holdings of Existing Ordinary Shares (excluding the 5,000,000 Ordinary Shares held in treasury) would be diluted, such that they would, immediately following Admission, hold voting rights of approximately 12.2% of the total voting rights that they had held immediately prior to Admission.

7. Resolution, authorisations and approvals relating to the New Ordinary Shares

The New Ordinary Shares will be created, allotted and issued pursuant to the authority to be granted under the resolution proposed at the General Meeting.

8. Dates of issue and settlement

The New Ordinary Shares are expected to be issued and allotted on the Closing Date.

9. Description of restrictions on free transferability

Subject to the terms of the Articles, any Shareholder may transfer all or any of his certificated Ordinary Shares by an instrument of transfer in any usual form or in any other form which the Directors may approve. No transfer of Ordinary Shares will be registered if, in the reasonable determination of the Directors, the transferee is or may be a Prohibited Person, or is or may be holding such Ordinary Shares on behalf of a beneficial owner who is or may be a Prohibited Person. In addition, if the Board becomes aware that any Ordinary Shares are owned directly or beneficially by a Prohibited Person, the Board may give notice to such person requiring such person either: (i) to provide the Board within 30 days of receipt of such notice with sufficient documentary evidence to satisfy the Board that such person is not a Prohibited Person; or (ii) to sell or transfer his Ordinary Shares to a person who is not a Prohibited Person within 30 days and within such 30 days to provide the Board with satisfactory evidence of such sale or transfer. Where condition (i) or (ii) is not satisfied within 30 days after the serving of the notice, the Board is entitled to arrange for the sale of the relevant Ordinary Shares on behalf of the registered holder. If the Company cannot effect a sale of the relevant Ordinary Shares within five business days of its first attempt to do so, the registered holder will be deemed to have forfeited his Ordinary Shares.

The Directors shall have power to implement and/or approve any arrangements they may, in their absolute discretion, think fit in relation to the evidencing of title to and transfer of interests in Ordinary Shares in the Company in uncertificated form.

The Company may, under the Companies Act, send out statutory notices to those it knows or has reasonable cause to believe have an interest in its shares, asking for details of those who have an interest and the extent of their interest in a particular holding of shares. When a person receives a statutory notice he has 14 days to comply with it. If he does not do so or if he makes a statement in response to the notice which is false or inadequate in some way, the Company can decide to restrict the rights relating to the identified shares and send out a further notice to the holder, known as a restriction notice. The restriction notice will take effect when it is delivered and will state, amongst other things, that the identified shares no longer give the Shareholder any right to attend or vote either personally or by proxy at a Shareholders' meeting or to exercise any other right in relation to Shareholders' meetings.

The Directors may also refuse to register the transfer of any Ordinary Shares which are not fully paid.

10. Mandatory takeover bids, squeeze-out and sell-out rules

Please see Part XX (Additional Information) of this Document for information relating to mandatory takeover bids, squeeze-out and sell-out rules.

PART X INFORMATION ON THE NSF GROUP

Unless otherwise stated, the financial information relating to the Company and the NSF Group set out in this Part X (Information on the NSF Group) has been extracted without material amendment from the consolidated financial information incorporated by reference in this Document (see Part XXI (Information Incorporated by Reference) of this Document).

1. Introduction

The Company was incorporated on 8 July 2014 to acquire and grow businesses in the UK's non-standard consumer finance sector. Under the direction of the Board, who have significant experience within the sector, the NSF Group has made a number of significant acquisitions, namely:

• the acquisition of Loans At Home on 4 August 2015 from S&U PLC;
• the acquisition of Everyday Loans (including TrustTwo) from Secure Trust Bank on 13 April 2016; and
• the acquisition of George Banco from its existing shareholders on 17 August 2017.

Each of the three acquired businesses now forms one of the NSF Group's three business divisions: branch-based lending, guarantor loans and home credit. Together these divisions make up a sustainable group of businesses offering credit to the approximately 10 – 12 million UK adults who are not served by, or who choose not to use, mainstream financial institutions, and the NSF Group is now a leading provider of unsecured credit, serving over 180,000 customers through a network of over 130 locations across the UK.

For the past two and a half years, the NSF Group has invested heavily in each of its business divisions, including: increasing the scale and breadth of its branch network; acquiring George Banco to become the clear number two guarantor loans business in the UK; and the organic expansion of its home credit business through a significant investment in self-employed agents, staff and technology. At the same time, NSF has ensured that it has sufficient long-term debt funding in place to fund this investment and drive loan book growth across all three divisions, underpinning its long-term growth plans.

For the 2018 Financial Year, the Company saw:

• a 29% increase in the total net loan book;
• a 1.6% decline in the total rate of impairment as a percentage of normalised revenue;
• normalised revenue up 39% to £166.5 million;
• normalised operating profit up 51% to £35.9 million;
• normalised earnings per share up 8% to 3.70 pence; and
• total dividend per share up 18% to 2.60 pence.

For the 2018 Financial Year, the Company saw revenue of £158.8 million, normalised operating profit of £35.9 million, reported operating profit of £19.5 million and a loss before tax of £(1.6) million. The below table sets out summary information relating to the NSF Group for the financial years ended 31 December 2016, 2017 and 2018:

	For the year ended 31 December
	2018(1)	2017	2016
		£'000
Normalised revenue .	166,502	119,756	81,099
Reported revenue .	158,824	107,771	72,757
Normalised operating profit .	35,876	23,684	13,824
Reported operating profit .	19,517	3,802	(5,232)
Normalised profit before tax .	14,769	13,203	10,340
Reported (loss) before tax .	(1,590)	(13,021)	(9,342)
Normalised profit after tax .	11,572	10,890	8,062
Reported (loss) after tax	(1,679)	(10,335)	(7,998)
Normalised earnings per share .	3.70p	3.44p	3.37p
Reported (loss) per share	(0.54)p	(3.26)p	(2.60)p

Notes:

(1) Unaudited preliminary financials for the 2018 financial year.

2. Industry overview

Non-standard consumer finance in the UK

Sums borrowed on an unsecured basis tend to be relatively small by mainstream banking standards and are often borrowed for relatively short periods. In the UK, it is estimated that there are currently approximately 10 – 12 million people who either do not wish to borrow from, or who do not meet the credit criteria of mainstream financial institutions, for example because their incomes are too low (approximately 18% of the total work-force are engaged in jobs that are deemed to be low-paid), they are self-employed with variable incomes (approximately 15% of the total work-force), they are credit impaired (there were over one million County Court judgments in the year to 31 December 2018), or they do not otherwise meet the requirements of mainstream financial institutions (for example, over 3% of the total work-force comprises recently arrived migrants). The demand from such borrowers is significant (approximately 14 million people use unarranged overdrafts each year), and these potential customers can be creditworthy, but often need a different type of credit facility provided by specialist finance companies.

Non-standard consumer finance providers endeavour to address these needs through a broad variety of differing products, each seeking to address a particular need and/or segment of the market. To date, the NSF Group has been focused on three of these:

• (A) Unsecured personal loans—lending amounts of between £1,000 to £15,000, with a fixed monthly repayment period typically of between 18 months and five years. Customers are typically salaried or with a regular pre-tax income of c.£30,000 per annum and loans are most commonly provided face-to-face in a branch, but can also be provided remotely. Having achieved an estimated compound annual growth rate of 18% between 2014 and 2017, the Directors believe that this segment continues to have strong growth prospects.
• (B) Guaranteed consumer loans—the average loan is under £4,000 with fixed monthly repayments, typically between 12 months and five years. Customers are normally salaried or earning regular pre-tax income of c.£27,000 per annum with the loan guaranteed by a family member or friend who is generally also a home owner. All loans are completed remotely, usually by phone or using the internet. The segment achieved an estimated compound annual growth rate of 37.5% between 2014 and 2017, and although compound annual growth rate has reduced from the 43.5% attributable to the 2008-2014 period, the Directors believe that this segment continues to have excellent growth prospects.
• (C) Home credit—lending amounts are typically between £250 and £750 and for a term of less than 12 months. Customers tend to be on low incomes of less than £15,500 per annum, they may not be working but most tend to receive a significant proportion of their income as benefits. Loans are issued in the customer's home and are repaid to collectors who visit the house in person, normally weekly to make the collection. Having achieved an estimated compound annual growth

rate of 4.1% between 2014 and 2017, the Directors believe that although this segment is mature, it remains a profitable market.

Annual percentage rates ("APRs") for loans in the non-standard consumer finance sector tend to be higher than more traditional bank lending—this reflects the acceptance by lenders of higher credit risk but also provides an opportunity for well-capitalised and strongly managed groups giving the potential to generate attractive, strong long-term returns. Within the non-standard consumer finance sectors that the NSF Group operates in, APRs tend to be lower in guaranteed loans and unsecured consumer loans and higher in unsecured loans and home credit.

Significant trends

1. The supply of non-standard finance

The financial crisis of 2007 resulted in mainstream financial institutions reducing their exposure to, or exiting entirely, certain sectors. In the prime market, lending to SMEs reduced as banks sought to limit exposure to higher risk lending, reacting to decreased market liquidity and reputational concerns around risk. In the non-standard consumer finance sector, new lending volumes declined significantly as financial institutions sought to exit any sector which might be described as sub-prime. This left a large gap in the market and a growing section of the population without appropriate credit facilities.

The result of the credit crisis and the mainstream banks' exodus from non-standard consumer finance has been significant. Since 2006, overall consumer lending from mainstream financial institutions (including non-standard lending) has steadily declined, while other consumer credit providers saw lending volumes increase dramatically then fall equally dramatically after the financial crisis, before beginning to rise again from 2012. Meanwhile, the number of individuals seeking non-standard loans/ credit products has increased significantly since 2007. In 2013, there were two million, or 20%, more users of non-standard consumer finance than there were in 2007. In addition, even though there are more users of non-standard consumer finance, less credit is being extended to this enlarged pool of consumers than before the financial crisis. The regulatory reforms initiated since the financial crisis, in particular CRD IV (being the collective name for an EU legislative package covering prudential rules for banks, building societies and investment firms which came into force on 1 January 2014) and the initiatives introduced by the PRA and the FCA in the UK, have significantly increased capital requirements and conduct-related obligations for financial institutions and in particular for large, systemically important banks. The Directors believe that the large banks' reduction of lending to the non-standard sector is therefore a secular, rather than a cyclical, phenomenon.

By 2015, outstanding balances in the non-standard credit sector were on a trajectory towards pre-crisis levels, despite the ongoing regulatory reforms. These reforms, and the heightened level of supervisory scrutiny on lending practices in the sector, do not appear to have dampened growth in the market as might have been expected. On the contrary, boosted by innovations in product design and distribution, outstanding balances of lenders in the period 2014-2016 grew in the region of c. 9% per annum, reaching a record high by the turn of 2017. The industry today is more mature and regulated (with a significant majority of the sector now having achieved full regulatory authorisation), but shows continued growth potential and untapped consumer demand.

The current economic climate has seen record rates of employment, with real weekly incomes (including bonuses) increasing by 1.2% in 2018. By contrast, inflation (on the basis of the consumer price index including owner occupiers' housing costs) has reduced from its 2011 peak of 4.5% per annum to 1.8%, each of which is favourable for consumer credit lending.

The prospect of the planned exit by the UK from the European Union has created uncertainty, though the impact of that uncertainty on the non-standard finance sector is difficult to quantify. As well as any direct impact on customers, withdrawal from the EU could also result in a divergence between relevant UK and EU law and regulation. This could have a significant effect on the industry, though whether the net effect would be to raise or lower compliance and operating costs within the industry is not clear, and there is unlikely to be further clarity on the effect of withdrawal for so long as the nature of the arrangements (or lack thereof) to be put into place between the UK and the EU are not certain.

2. The demand for non-standard finance

As non-standard lending volumes by previous market leaders have declined, a significant portion of the UK population has found itself with limited credit-raising options, an issue which is being addressed by new specialist entrants into the market, with some of the fastest growing segments in recent years including guarantor loans and unsecured consumer credit. Many firms in the nonstandard consumer finance sector are relatively immature or have reached a stage of development where more professional management expertise and additional investment is required to maintain historical growth rates, for instance to access more or better funding, implement stronger management controls, utilise more rigorous credit standards, improve product pricing, roll out new compliance protocols and improve IT systems. The Company intends to enable its businesses to realise their growth potential and generate savings through scaling of their IT, capital, compliance and finance platforms.

3. Regulation

Having existed in the UK for well over 100 years, the non-standard consumer finance sector has from time to time recently been subject to increasing regulatory focus and enhanced public scrutiny.

Since assuming responsibility for the regulation of consumer credit in the UK in 2014, the FCA has been driven by its objectives to protect consumers and to ensure sufficient levels of competition, and that markets work effectively. To that end, the FCA has conducted a series of thematic reviews as well as sector specific reviews that have, amongst other things, resulted in the introduction and enforcement of an intricate network of new rules and policies with which regulated firms are required to comply.

In addition, the UK Parliament has also taken an active interest in the dynamics of certain segments of the non-standard finance market. One such example was the payday lending segment, where after having identified a series of business practices that were potentially harming consumers, it instructed the FCA to impose, amongst other things, a cap on the total level of fees that could be charged by the providers of such loans to consumers. In its Business Plan for 2015 to 2016, the FCA announced it would launch two thematic reviews into debt management and the role of staff remuneration and incentives in driving the way consumer credit firms treat their customers. The thematic review on the role of staff remuneration and incentives was completed with rules coming into force on 1 October 2018 alongside guidance aimed at assisting firms to identify features of their incentive or performance management arrangements which have the potential to cause customers harm. The FCA expects to complete the review with respect to debt management in Q1 2019.

3. Business strategy

The NSF Group has three key strategic elements which together make up its business strategy:

• to act responsibly;
• to be a leader in each of its chosen segments; and
• to invest in its core assets (networks, people, technology and brands).

Acting responsibly

Changing customer behaviour and preferences continue to support growth in the non-standard finance sector. Internet-enabled customer acquisition, engagement and retention initiatives play an increasingly important role in the non-standard finance market, permitting firms with superior technology and marketing skills to achieve stronger market positions.

With changing engagement, the FCA has also taken a greater interest in the UK non-standard finance sector, for example, introducing new rules in response to the lending practices of certain market participants to protect customers from excessive charges under high-cost short-term credit agreements (including a cap on interest rates and fees). These rules came into force on 2 January 2015.

A significant downturn in some types of lending (for example, in the high-cost short-term credit sector) has been the natural outcome of the FCA ensuring that an adequate assessment of affordability is a paramount aspect of the lending decision and stressing the importance that credit can be repaid by borrowers in a sustainable manner. However, the Directors believe that the FCA's actions recognise that the continuing provision of credit in the non-standard consumer finance sector is only possible if commercial returns are in line with risk. In the opinion of the Directors, this regulatory approach creates an opportunity for the Company, in light of the Directors' experience in the sector, to deliver "best in class" compliance with regulation in the subsector(s) in which it makes acquisitions.

After an extensive investigation into the high-cost credit market (within which the NSF Group's home credit business falls), the regulator published their final rules and guidance in December 2018. The operational changes required will not have a material impact on our home credit business and the NSF Group expects all changes to be fully embedded before the end of March 2019.

Whilst the regulator can be expected to continue to review key segments of the market from time-totime, in addition to periodic thematic reviews, we may see a period of relative stability following the completion of what has been a period of significant review and regulatory change. The Directors believe that the NSF Group established a good working relationship with the regulator at both an operational as well as a strategic level throughout this period. The Directors believe that there is no contradiction between the increasing regulation of the UK non-standard finance sector and the ability to grow the NSF Group's business. Rather, the Directors believe that by treating customers fairly, delivering excellent service and lending responsibly, the NSF Group can ensure its continuing success. The NSF Group's preference for face-to-face lending is a working model of how lending practices can be both operationally effective (by forming part of the underwriting process) and responsible (by ensuring visible customer engagement).

Leadership in each of the NSF Group's chosen segments

The Company operates three business divisions:

• (A) Unsecured branch-based lending: Everyday Loans has 68 branches and 63,000 customers, confirming NSF's position as the UK's largest branch-based provider of unsecured loans in the non-standard finance market. NSF has a wide geographic coverage and therefore has strong access to a large and expanding customer base.
• (B) Guarantor loans: The acquisition of George Banco in August 2017 transformed NSF's position in the exciting and fast growing UK guarantor loans segment. George Banco has experienced particularly strong performance across a range of key performance indicators including loan book growth and number of customers whilst maintaining a tight control on impairment.
• (C) Home credit: Loans At Home, comprising 897 self-employed agencies operating out of 65 offices and serving more than 93,800 active customers, has enjoyed strong year-on-year loan book growth.

Each division has a top three position in its own segment of the non-standard finance market, and each has high risk-adjusted margins and an ability to deliver sustained and long-term returns for Shareholders. This goal is underpinned by our objective to build strong, long-term relationships with our customers, something that lies at the heart of our business model. Our preferred path to achieving this when lending direct is to meet our customers face-to-face, although we are also happy to do so through remote channels, when and if a guarantor is present.

In the digital age such an approach is seen by some as being 'old-fashioned' and/or 'inefficient'. Certainly the infrastructure required in the form of national networks and large numbers of well-trained people means that our model is more expensive to operate than pure online providers. However, personal contact with our customers is an essential part of our underwriting process, one that has proven its ability to succeed whilst many digital models continue to be plagued by unsustainable rates online fraud. The Directors also believe that this customer-facing model is also in a large part responsible for the NSF Group's low levels of impairment, with levels of impairment across each of its three business divisions either remaining flat or reducing.

Investing in its core assets (networks, people, technology and brands)

The NSF Group has invested heavily in each of its three divisions, believing that such investment is crucial to unlocking the full potential of each division.

Nowhere is this investment more visible than in the NSF Group's branch-based lending division, which opened a further 12 branches in the 2018 Financial Year, resulting in a total of 65 branches at the end of the 2018 Financial Year. Since acquiring the Everyday Loans business in April 2016, this represents an almost doubling of the branch network size. The Directors believe that there is market demand for significant additional branch openings, and sees scope for a further 100-120 branches to be opened at a rate of approximately five to 10 branches per annum per year for the foreseeable future.

Following the acquisition of George Banco in August 2017, the guarantor loans division became the NSF Group's second largest, and fastest growing, business. The NSF Group has invested heavily in the business, substantially increasing staff numbers in the 2018 Financial Year, as well as making continued investments in the integration of the division's systems and processes. In particular all new loans within the division are now being written on a common loan management platform, allowing increased efficiency and allowing better control on the division's already strong impairment results.

Within the NSF Group's home credit division, investment in systems and technology over the last three years has ensured that the significant expansion of the business that took place in the 2017 Financial Year was managed effectively. Despite the scale of this growth, these investments contributed to a reduction in impairment of normalised revenue from 37.5% in the 2017 Financial Year to 32.6% in the 2018 Financial Year.

4. Business divisions

4.1 Branch-based lending

Established over 12 years ago, Everyday Loans is now the only significant branch-based provider of unsecured loans in the UK's non-standard finance sector. Since becoming part of the NSF Group in 2016, the business has undergone significant investment and structural change, including the rapid expansion of its branch network and investment in the requisite infrastructure to support a much larger and faster growing business. The branch network has almost doubled under NSF's ownership with 68 branches now open across the UK. This increased capacity has helped to grow the active customer base that rose by 30% in the 2018 Financial Year to 61,200 (2017: 47,000) as well as the net loan book, up 24% to £186.0 in the 2018 Financial Year (2017: £150.6m). Key drivers for the business include network capacity, lead volume and quality, network productivity and tight management of impairment.

In May 2017, Miles Cresswell-Turner was appointed as CEO of Everyday Loans, together with a number of other operational management appointments, significantly strengthening the senior management team. These management changes have been crucial in increasing the pace and ambition of the business' development, with branch opening significantly accelerated under the new leadership team.

Network capacity

For a new branch to succeed, areas with populations of at least 70,000 adults matching the Everyday Loans business' desired customer type are required. In areas with sufficient lead volumes, an additional branch or headcount means the ability to convert more leads into loans. Up-front investment and associated infrastructure costs mean that new branches typically take 11 – 12 months to breakeven, however within three to five years of opening a mature branch would normally be expected to generate an annual operating profit of between £0.8m and £1.0m (before central costs). Everyday Loans' most successful branch is already generating profits above this range. As well as increasing overall capacity, additional branches can also help to increase conversion by reducing the distance that customers have to travel to a branch and by reducing the time taken by the network to respond to an application.

Lead volumes and quality

As well as increasing capacity with more branches, the continual flow of high quality leads is crucial within the branch-based lending business. Once leads have passed through initial screening criteria they are passed on to the branch network. The business processed over 1.6 million leads in the 2018 Financial Year, up 59% from 1 million leads in the 2017 Financial Year. The majority of this increase came from a concerted effort to deepen relationships with a discrete number of financial brokers. While the scale of this increase meant that there was a reduction in quality with 24.1% of the leads passing through our internal scorecard (2017: 32.6%), the number of applications sent to branch increased by 18% to 401,000 (2017: 340,000).

Productivity

Opening branches often reduces average productivity in the short-term as a new branch tends to be sub-scale in terms of numbers of customers and size of loan book and also because new staff take time to match the performance of their more experienced colleagues. The branch-based lending business mitigates this risk by recruiting new managers from within the network, as well as through a rigorous recruitment process for more junior staff followed by an intensive induction and training programme. The objective of these processes is that, when a new staff member arrives in the branch, they are able to write and process a new loan application and can contribute from day one. During the 2018 Financial Year, Everyday Loans wrote 37% more loans than in the 2017 Financial Year reaching 44,841 in total (2017: 32,668), and achieved an improved conversion rate on new borrower applications to branch of 9.0% (2017: 7.3%).

Delinquency management

With 12 years' of customer data, across a broad range of customer types, Everyday Loans has developed a highly robust underwriting process, evidenced by an impressive track record of managing impairment within a tight range since the financial crisis. Having augmented collections tools and improved overall contact strategy during the 2018 Financial Year, impairment as a percentage of average net receivables remained stable at 10.1% (2017: 9.5%) while normalised revenue remained stable at 21.5% (2017: 21.5%). Whilst the business continually seeks further improvements in impairment, this is only done where it is possible to ensure that any reductions are not at the expense of business volume, overall profitability or the delivery of good customer outcomes.

Financial performance

Normalised revenue in branch-based lending increased in the 2018 Financial Year by 31% to £79.6m (2017: £60.9m), driven by the increased capacity and lead volumes outlined above as well as by an improved performance from branches opened in 2016 and 2017. Fair value adjustments to revenue in the 2018 Financial Year reduced to £4.0m (2017: £11.9m) resulting in reported revenue of £75.6m (2017: £49.1m). Other normalised operating income of £1.4m (2017: £1.9m) arose in the 2018 Financial Year from the sale of a small, non-performing loan portfolio. While increased business volumes meant that the absolute level of impairments increased under IFRS 9 to £17.1m (2017: £11.7m), on a like-for-like basis, the rate of impairment as a percentage of normalised revenue declined versus the prior year and remains well within the NSF Group's previous guidance of 20 – 22%.

The opening of 12 new branches represented a significant investment for the business with respect to premises and associated infrastructure, as well as in the recruitment and training of new staff. This rate of expansion was a drag on profit growth in 2018, something that is less likely in the context of current plans to build only seven new branches in 2019. The total number of full-time employees at the year-end was 406 (2017: 307), an increase of 32%. As a result, administrative expenses increased to £36.5m (2017: £28.6m) equivalent to 46% of normalised revenue (2017: 47%). The net impact of all of these movements was that normalised operating profit increased by 19% to £27.0m (2017: £22.7m) while reduced amortisation charges meant that reported operating profit increased by 112% to £22.9m (2017: £10.8m). There were no exceptional costs incurred in 2018 (2017: £5.3m) while the prior year total related to the refinancing of the Everyday Loans bank facilities and restructuring costs.

Higher finance costs of £12.8m (2017: £7.1m) were driven by strong loan book growth and a full year's impact of the increased average cost of the NSF Group's new debt arrangements with the net result that normalised profit before tax decreased by 10% to £14.1m (2017: £15.6m).

4.2 Guarantor loans

The NSF Group's guarantor loans business comprises two separate brands. TrustTwo, which launched in 2014, was acquired on 13 April 2016 as part of Everyday Loans. Following that acquisition, TrustTwo was established as a stand-alone business, with its own management team being brought in, and it received full FCA authorisations in June 2016. On 17 August 2017 the guarantor loans business was transformed by the acquisition of George Banco, a transaction which confirmed the NSF Group as being the clear number two in the UK guarantor loans market.

The guarantor loans business retains both the TrustTwo and the George Banco brands, which address complementary segments of the market, offering different customer journeys through different channels, but with a common underwriting approach. TrustTwo is predominantly focused on price comparison websites and the direct channel, while George Banco specialises in capturing leads from the financial broker community.

NSF's guarantor loans division made excellent progress in 2018, driven by strong demand and an improved operational performance. The size of the UK guarantor loans market is continuing to grow rapidly and L.E.K. Consulting estimate that the value of outstanding net receivables at the end of 2017 had reached £658m, a compound annual growth rate of 37.5% since 2014. Whilst estimates for the size of the market are not yet available for the 2018 Financial Year or later, taking the size of NSF's own net loan book and that of the market leader at 31 December 2018 would imply it is now likely to be closer to £1 billion.

The guarantor loan process

Most customers apply online, often via a broker, or by phone. However, unlike the branch-based lending and home credit divisions, the presence of a guarantor means that lending to a customer without first meeting them face-to-face is considered to be appropriate. After having passed an initial credit check, both borrower and guarantor are contacted by phone and each is assessed for their creditworthiness and ability to afford the loan. In addition, the guarantor's role and responsibilities are clearly explained and recorded. This is to ensure that while the borrower is primarily responsible for making the repayments, both the borrower and the guarantor (in the event of default) are clear as to their obligations, and are capable of repaying the loan. The presence of a suitable guarantor means that, in most circumstances, an applicant with a thin or impaired credit file is able to borrow at a much lower rate of interest than if they had taken out the loan without guarantor support.

Operational improvements

The financial results of the guarantor loans business in the 2018 Financial Year were achieved whilst at the same time delivering on a number of operational milestones:

Move to a single loan management platform—all new loans for both George Banco and TrustTwo are now being written onto one platform, a complex but important step that has improved the quality of management information and over time will result in cost savings.

Development of a more tailored customer journey—the introduction of the single loan management system is the precursor to the final step towards the business' target operating model: a seamless lending and collecting process across both brands using a common lending approach but catering for different customer journeys depending upon a variety of factors such as: channel; risk profile of the applicant and guarantor; and the size of the loan. It is expected that this target operating model will be materially in place during 2019.

Maintain a well-balanced channel mix—the guarantor loans business has continued to build on the NSF Group's existing relationships to help maintain a strong presence in the important broker market whilst also ensuring a healthy balance of leads and loans written through other channels.

New premises in Trowbridge—George Banco moved to a new premises in Trowbridge in October 2018. The new office, which was secured at a reduced cost from the previous location, has provided additional capacity for further expansion.

Harmonised collections—centralising collections expertise in Trowbridge during the final quarter of 2018 will allow the business to maintain a consistent approach across both brands, which may allow for marginal improvements in delinquency performance in 2019.

Financial performance

Loan volumes increased by 73% to £65m (2017: £38m) whilst the quality of leads improved with an increasing proportion of leads passing through the division's internal scorecard (32% were approved in principle versus 27% in 2017). This helped to improve the business' conversion rate of applications into loans. Continuing investment in training and systems were key factors in this effort, and conversion increased as a result with a record number of 17,393 loans written for a total value of £65m during the year (2017: 10,766 loans and £38m respectively). The guarantor loans business continues to maintain a healthy balance of new and existing customers of approximately 64:36 (2017: 62:38) with the result that customer numbers grew by 44% to 25,100 in 2018 (2017: 17,400).

The net loan book increased by 61.9% to reach £83.1m at 31 December 2018 (2017: £51.6m). This was well ahead of NSF's internal target of 20% annual loan book growth and represents a total increase of over 90% since George Banco was acquired in August 2017.

The results for the 2018 Financial Year and the 2017 Financial Year are not strictly comparable as 2018 includes a full period of George Banco while the 2017 results include four and a half months' of George Banco that was acquired on 17 August 2017. In addition, the 2017 results have not been restated for the introduction of IFRS 9 that was adopted from 1 January 2018.

Significant loan book growth, together with a full period's contribution from George Banco meant that normalised revenue increased to £21.7m (2017: £8.1m). Reported revenue was impacted by a marked increase in the fair value adjustment to revenue reflecting a full period of the fair value unwind that totalled £3.7m (2017: £0.1m).

A full period of George Banco expenses, including an accounting change for deferred consideration payable to vendors who remained as employees of George Banco of £1.4m (2017: £nil), the addition of 31 new staff and increased lending volumes together meant that administration costs increased to £10.0m (2017: £4.0m) with the result that normalised operating profit increased to £7.7m (2017: £2.7m).

Higher finance costs of £5.8m (2017: £2.0m) were driven by strong loan book growth and the impact for a full period of the terms of the new debt arrangements that were put in place at the time of the George Banco acquisition. The net result was that normalised profit before tax reached £1.8m (2017: £0.7m). The absence of any exceptional items (2017: £0.2m) meant that reported loss before tax was £1.9m (2017: profit of £0.4m) as a result of the £3.7m fair value unwind that reduced reported revenue (2017: £0.1m).

4.3 Home credit

Over the course of 2017 and 2018 the home credit industry has seen an unprecedented period of structural change, following a major restructuring at the market leader, Provident Financial, in 2017 which in particular led to substantial agent attrition from Provident Financial and prompted the departure of a large number of management staff. Many of the agents that left Provident Financial subsequently found roles within competitor businesses (including Loans At Home, the NSF Group's home credit business). At the same time, Loans At Home has made significant investments in technology to improve its lending and collections process as well as enhancing the reliability and security of its IT infrastructure.

Agent migration

The financial impact of having recruited a large number of highly experienced self-employed agents and management staff in 2017 continued in 2018, and as at 31 December 2018 the business had 897 agencies, a decrease from the 1,005 of the previous year, reflecting a return to the natural rate of agent attrition and a focus on removing sub-scale agencies. However, as newly recruited agents sought to increase the size of their individual loan portfolios, the size of the net loan book (before fair value adjustments) at 31 December 2018 increased 2.0% year-on year to £41.0m from £40.2m.

Productivity

Over the course of 2018, the business continued its transition from what on acquisition had been a purely paper-based lending and collections-based process to one that can now be done entirely using an agent's mobile device. 98% of all loans are now processed using the business' lending app. During 2018 the suite of applications that help improve productivity and enhance management control and oversight were also enhanced, including the automation of a series of previously manual processes, allowing managers to spend more time with agents and focus on customer-related issues. The Journey Management Performance Report ('JMPR') was also introduced, providing a range of realtime performance metrics on every individual customer and for every agent, by location and region. This new tool is an invaluable aid for managers, enabling them to identify any customer issues at a granular level and then address those much more quickly.

As well as improving its operational procedures and performance, Loans At Home's technology infrastructure was significantly de-risked following the migration of the business' data centre to Microsoft Azure. This cloud-based solution has unlocked a series of new capabilities for future technologies, reduced costs and provided much greater protection for the business' data.

Financial performance

Normalised revenue increased in 2018 to £65.2m (2017: £50.7m) and there was no adjustment for reported revenue following the completion of the unwind of the fair value adjustment made to the carrying value of the loan book at acquisition in 2015.

Higher impairment in 2018 of £21.2m (2017: £15.8m) reflected the move to IFRS 9 as well as the growth in the net loan book but was 32.6% of normalised revenue, below NSF's guided range of 33 – 37%. Increased administration costs reflected the full year impact of the expansion undertaken in 2017 and the average number of staff in 2018 was up 18% at 361 (2017: 305), although at 31 December 2018 there were a total of 331 staff (compared to 350 at 31 December 2017). Normalised operating profit increased by 116% in 2018 to £6.7m (2017: £3.1m), benefiting from the significant reduction in temporary additional commission that had been paid to newly recruited agents during 2017 and incorporating the impact of IFRS 9.

There were no exceptional costs in the 2018 Financial Year, the figure for the prior year arose from the refinancing of the Loans At Home bank facility. The net result was that profit before tax increased by 133% to £4.3m (2017: £1.8m). Increased finance costs of £2.5m (2017: £1.3m), reflected the growth in the loan book and a full year impact of the increased cost of the NSF Group's long-term debt arrangements that were put in place in August 2017.

5. Borrowings and funding

As part of the NSF Group's financing arrangements, it has in place three term loan facilities provided by a group of institutional investors led by funds managed by Alcentra Limited (the "Term Facilities"). The Term Facilities comprise a fully drawn £175 million term loan facility, a fully drawn £50 million term loan facility and a committed term loan facility of £60 million, of which £20 million has been drawn and £40 million remains undrawn. This undrawn amount of the third facility may be utilised to fund certain permitted acquisitions, to refinance certain indebtedness and pay related costs and expenses and/or to meet the funding needs of the consumer finance business and capital expenditure of NSF Finco Limited and its subsidiaries. Each of the Term Facilities matures on 3 August 2023 and bears interest at a rate of LIBOR plus 7.25% per annum.

The NSF Group also has available a revolving credit facility of £45 million (the "RCF"), provided by National Westminster Bank plc for general corporate and working capital purposes. The RCF matures on 3 August 2022 and bears interest at a rate of LIBOR plus 3.5% per annum.

The Term Facilities and the RCF have the benefit of: (i) guarantees from, and fixed and floating security granted by, the following entities: NSF Finco Limited, Non-Standard Finance Subsidiary II Limited, Non-Standard Finance Subsidiary III Limited, S.D. Taylor Limited, Everyday Loans Holdings Limited, Everyday Loans Limited, Everyday Lending Limited, George Banco Limited, George Banco.com Limited; and (ii) a charge over the shares in, and intercompany loans made to, NSF Finco Limited granted by Non-Standard Finance Subsidiary Limited.

6. Dividend policy

Since declaring its maiden dividend in 2016, NSF has delivered strong annual dividend growth. If the recommendation for a final dividend for the 2018 Financial Year, of 2.00 pence per Ordinary Share is approved by Shareholders, it will make a total dividend for the 2018 Financial Year of 2.60 pence per Ordinary Share, up from 2.20 pence per Ordinary Share in the 2017 Financial Year and representing a dividend growth of 18% The Board believes that following the Acquisition the Enlarged Group will continue to have a strong dividend paying capacity (subject to the block on dividends from Vanquis Bank (though dividends may still be paid on an ad-hoc basis with the consent of the PRA)).

The table below shows the dividend per Ordinary Share paid in respect of the 2018 Financial Year, the 2017 Financial Year and the 2016 Financial Year to date:

	Year ended 31 December
	2018	2017	2016
	pence	pence	pence
Final dividend .	2.00(1)	1.70	0.90
Interim dividend .	0.60	0.50	0.30
Total dividend for the Financial Year .	2.60(2)	2.20	1.20

Notes:

(1) Final dividend recommendation.

(2) On the basis of the 2018 Financial Year interim dividend plus the final dividend recommendation for the 2018 Financial Year.

The Board considers dividends to be an important component of the Enlarged Group's Shareholders' returns. The Board will review its dividend policy following Completion, taking into account the New Ordinary Shares issued pursuant to the Offer and the performance of the Enlarged Group, however the NSF Board intends that future dividend payments to Shareholders of the Enlarged Group will, over time, reflect its stated policy of paying out at least 50% of normalised post-tax earnings. This is subject to discussions with the PRA in respect of the restrictions currently imposed on the payment of dividends from the Vanquis Bank business. NSF also intends to distribute to Shareholders of the Enlarged Group any excess capital arising from the expected improvement of Provident Financial's capital efficiency and the proceeds of any sale of Moneybarn and/or Satsuma, subject to any required consents from the creditors of the Enlarged Group being obtained. Within the Provident Financial Trading Update, the Provident Financial Board expressed its expectation that a nominal dividend in respect of the 2018 Financial Year would be declared. The NSF Board gives no commitment that this expectation will be met.

7. Property

As at 31 December 2018, the NSF Group occupied 130 properties in the UK. The NSF Group's registered office is situated at 7 Turnberry Park Road, Gildersome, Morley, Leeds, England, LS27 7LE, United Kingdom. Other key properties leased by the NSF Group are situated in Bourne End, Trowbridge (the divisional home of NSF's guarantor loan business) and St. James's Street (the NSF Group's London-based office).

8. Regulation

The NSF Group closely monitors all regulatory developments and, where appropriate, will participate fully in any related consultations or debate. For a more detailed explanation of regulation which governs the NSF Group, please see Part XVIII (Supervision and Regulation) of this Document.

9. Corporate governance

NSF is committed to maintaining high standards of corporate governance. Although the Company does not have a Premium Listing on the Main Market of the London Stock Exchange, following Admission it is the Board's intention to seek a transfer of the Ordinary Shares to the Premium Segment. The Board seeks to comply with the Corporate Governance Code where practical. Any divergence from the Corporate Governance Code is as set out in Part XVII (The Directors, the Board, Senior Managers and Corporate Governance) of this Document.

PART XI INFORMATION ON THE PROVIDENT FINANCIAL GROUP

Unless otherwise stated, the financial information relating to Provident Financial and the Provident Financial Group set out in this Part XI (Information on the Provident Financial Group) has been extracted without material amendment from the combined financial information incorporated by reference in this Document (see Part XXI (Information Incorporated by Reference) of this Document). Any other information relating to Provident Financial and the Provident Financial Group set out in this Part XI (Information on the Provident Financial Group) has been extracted without material amendment from the Provident Financial 2017 Annual Report, which is incorporated into this Document by reference, and accordingly has not been subject to comment or verification by NSF or its Directors.

1. Group overview

The origins of the Provident Financial Group date back to 1880 when the business was founded in Bradford, West Yorkshire. In 1962, Provident Financial was admitted to trading on the London Stock Exchange. In 2003, the Provident Financial Group founded Vanquis Bank and in 2013, CCD expanded its home credit offering and launched its on-line lending product through Satsuma. In 2014, the Provident Financial Group further broadened its offering to the non-standard credit market through the acquisition of the Moneybarn vehicle financing business.

The Provident Financial Group is one of the leading providers of personal credit products to the non-standard credit market in the UK and Republic of Ireland and served approximately 2.5 million customers as at 30 June 2018.

The Provident Financial Group is headquartered in Bradford and, as at 31 December 2017, had approximately 5,947 employees.

For the 2017 Financial Year, the Provident Financial Group reported revenue of £1,196 million and a loss before taxation of £123 million. In the six months to 30 June 2018, the Provident Financial Group reported revenue of £572.5 million, profit before tax, amortisation of acquisition intangibles and exceptional items of £74.9 million, and net profit of £22 million.

2. Business overview

The Provident Financial Group operates through three divisions which focus on different products to service the non-standard credit market: (i) Vanquis Bank; (ii) CCD (comprising Provident Home Credit trading as "Provident" and Satsuma); and (iii) Moneybarn.

Vanquis Bank

Vanquis Bank is a leading issuer of credit cards in the non-standard credit market in the UK. Vanquis Bank offers the following products:

• a range of own-brand credit cards, each of which is designed to appeal to the different profiles and credit needs of Vanquis Bank's customers. Vanquis Bank also offers cards to customers introduced by third-parties. The credit limit for these cards ranges between £150 – £4,000; with representative APRs of between 19.5% and 69.9%;
• unsecured personal loan primarily distributed through the online channel of between £1,000 and £3,000 with a term of one to three years with a representative APR of 29.9% to 39.9% as at 31 December 2017; and
• fixed rate bond deposit products to UK depositors with fixed terms of one to five years with internet only applications. The product is not targeted at the non-standard finance market and is used primarily to fund the issue of Vanquis Bank's credit cards. The minimum opening deposit for a bond is £1,000 and the maximum is £250,000. Once the account is opened, no further amounts can be added and no withdrawals can be made during the term of the bond, except in the event of hardship or other mandated legal reason.

CCD

CCD specialises in providing small sum, short-term unsecured loans in the non-standard credit market. CCD comprises two divisions: (i) Provident Home Credit, the home-collected credit business, which satisfies the demand of customers requiring a face-to-face service; and (ii) Satsuma, the online weekly and monthly instalment loans business, which commenced lending in 2013 and brings the benefit of serving customers remotely.

Home Credit

Cash loans are the core focus of the Provident Home Credit product range. Provident Home Credit offers a range of weekly instalment loans to meet its customers' needs. Key features of Provident Home Credit's loans include:

• weekly repayments (although some customers agree fortnightly, four-weekly or monthly repayments);
• fixed repayment amounts: the total amount repayable by the customer, which consists of the amount borrowed plus a service charge, is fixed at the outset, meaning that there are no other charges, even for missed or late payments, and interest does not compound irrespective of how long the customer takes to repay the loan;
• repayment collections by CEMs (although alternative payment mechanisms do exist should a customer's circumstances change); and
• the total cost of credit is the same for both new and existing customers (although access to longer loan terms and larger loan amounts at lower APRs is restricted to existing customers).

In the UK, customers have a choice of five different loan terms, ranging from 13 to 104 weeks, and can borrow between £50 and £2,500 (in increments of £10), depending on their requirements, repayment history and affordability assessment. Loan terms are set in order to provide customers with short-term (13 weeks), medium-term (26 weeks), annual (52 weeks) and long term (78 weeks and 104 weeks) lending options.

Provident Home Credit also offers cash loans in the Republic of Ireland which work in the same way as those offered in the UK, although the total cost of credit varies and the loan terms offered are for 26 weeks and 52 weeks only.

Satsuma

Satsuma provides online short-term unsecured instalment loans to meet the needs of customers in the non-standard lending market. Loans are offered with either monthly or weekly repayment terms to align to customers' income patterns (e.g. weekly paid customers tend to pay weekly whereas monthly paid customers tend to pay monthly).

Loan amounts range from £100 to £1,000 (in £10 increments) for new customers, whereas existing customers are able to borrow up to £2,000, subject to affordability. Customers have the option of borrowing over three to 12 months with the weekly term options being equivalent to the corresponding number of months.

Moneybarn

Moneybarn was acquired by the Provident Financial Group on 20 August 2014 and is the leading provider of non-standard vehicle finance in the UK; with over 57,000 customers and reported period-end receivables of £360.6 million in the six months ended 30 June 2018.

The Moneybarn business was established in 1992, originally lending in the non-standard market on higher value cars using a contract hire model. Between 2000 and 2010 the business gradually changed its business model from providing contract hire lending to hire purchase loans (in the form of conditional sale contracts). Moneybarn changed its business model to focusing on lower-value, more mainstream, vehicle purchases, and ceased providing large loans on high value cars. During this period the non-standard vehicle finance market shrank considerably as mainstream and specialist participants reduced their lending, collapsed or exited the market. From 2010, Moneybarn provided loans through an automated system, allowing a growth in scale, and materially increased its funding capacity in late 2010. The Provident Financial Group acquired the business in August 2014 for £120 million and since acquisition has sought to grow the business.

3. Borrowings and funding

The Provident Financial Group's funding strategy is to maintain at all times committed facilities to meet contractual maturities and fund growth for at least the following 12 months and maintain access to three main sources of funding comprising: (i) a syndicated revolving bank facility; (ii) market funding, including retail bonds, institutional bonds and private placements; and (iii) retail deposits.

During the first half of 2018, the Provident Financial Group completed a refinancing of its senior bonds. On 23 May 2018, the Provident Financial Group launched and priced £250m of 5-year fixed rate bonds carrying a semi-annual coupon of 7%. The proceeds of the bond issue were used to finance the tender offer for the £250m existing senior bonds which carry a coupon of 8% and mature in October 2019. 89% of the existing bonds were tendered and redeemed at an 8% premium on 30 May 2018 resulting in an exceptional cost of £18.5m. The remaining existing senior bonds of £27.5m will mature on their original maturity date in October 2019.

At 30 June 2018, Vanquis Bank had retail deposit funding of £1,478.5m, up from £1,291.8m at 31 December 2017.

Headroom on the Provident Financial Group's committed debt facilities was approximately £331m at 30 June 2018.

The Provident Financial Group's funding rate during the first half of 2018 was 4.3%, down from 4.7% in the first half of 2017. This reflects a lower average blended rate on retail deposits and a lower average rate on the group's syndicated bank facilities.

4. Real estate

As at 31 December 2017, the Provident Financial Group occupied 201 properties in the UK and the Republic of Ireland. Of these, 42 were held as freeholds, 6 as long-term leaseholds, 132 as short-term leaseholds and 36 were held under licences or service agreements. In addition, there are 18 properties which are either sub-let or vacant. The Provident Financial Group's head office is situated at No. 1 Godwin Street, Bradford, West Yorkshire BD1 2SU, United Kingdom.

5. Dividend policy

The table below shows the dividend per Ordinary Share paid in respect of the 2018 Financial Year, the 2017 Financial Year and the 2016 Financial Year to date:

	Year ended 31 December
	2018	2017(1)	2016
	pence	pence	pence
Final dividend		0.0—	91.40
Interim dividend .	—	—	43.20
Total dividend for the Financial Year	—(1)	—	134.60

Notes:

(1) Final dividend in respect of the 2018 Financial Year not yet declared.

(2) No dividend declared in the 2017 Financial Year.

PART XII OPERATING AND FINANCIAL REVIEW OF THE NSF GROUP

The following is a discussion of the NSF Group's results of operations and financial condition as of and for the years ended 31 December 2018, 2017, 2016 and 2015. Except with regard to financial information relating to the unaudited 2018 Financial Year, which is included by way of the incorporation by reference to the 2018 Preliminary Results, or as otherwise specified or as the context otherwise requires, the financial information set forth and discussed herein is based on the Audited Financial Statements. Prospective investors should read this discussion in conjunction with Part IV (Important Information), Part XIV (Historical Financial Information Relating to the NSF Group), Part XIII (Capitalisation and Indebtedness) the 2018 Preliminary Results and the related notes thereto and the Audited Financial Statements and the related notes thereto, which are incorporated by reference into this Document and are available for inspection in accordance with paragraph 21 of Part XX (Additional Information) of this Document.

Where applicable, the references below set out the sections of these documents which are incorporated by reference into, and form part of, this Part XII (Operating and Financial Review of the NSF Group), and only the parts of the documents identified in below are incorporated into, and form part of, this Part XII (Operating and Financial Review of the NSF Group). The parts of these documents which are not incorporated by reference either are not relevant for this Part XII (Operating and Financial Review of the NSF Group) or are covered elsewhere in this Document. To the extent that any part of any information referred to below itself contains information which is incorporated by reference, such information shall not form part of this Document.

2018 Preliminary Results	Group Chief Executive's Report	4 – 5
	Strategy	6 – 8
	2018 Financial Review	8 – 10
	Divisional overview: Branch-based lending	11 – 13
	Divisional overview: Guarantor loans	13 – 16
	Divisional overview: Home credit	16 – 20
	Financial Statements	21 – 25
	Notes to the Financial Statements	26 – 36
2017 Annual Report and
Accounts .	Chairman's Statement	4 – 5
	Market Review	20 – 21
	Business Model	22 – 23
	Group Chief Executive's Report	24 – 28
	Strategy	29 – 35
	2017 Financial Review	39 – 41
	Divisional overview: Branch-based lending	42 – 43
	Divisional overview: Home credit	44 – 46
	Divisional overview: Guarantor loans	47 – 49
	Independent Auditor's Report	86 – 92
	Financial Statements	93 – 97
	Notes to Financial Statements	98 – 123
2016 Annual Report and
Accounts .	Chairman's Statement	4 – 5
	Market Opportunity	6 – 7
	Business Model	8 – 11
	Group Chief Executive's Report	12 – 14
	Strategy & key performance indicators	15 – 23
	2016 Financial Review	26 – 35
	Independent Auditor's Report	70 – 76
	Financial Statements	77 – 82
	Notes to Financial Statements	83 – 102
2015 Annual Report and
Accounts .	Chairman's Statement	4 – 5
	Market Overview	6 – 7
	Divisional Overview	8 – 13

14 – 17
22 – 25
50 – 53
54 – 58
59 – 76

PART XIII CAPITALISATION AND INDEBTEDNESS

The following tables show the capitalisation and indebtedness of the NSF Group as at 31 December 2018, which have been sourced from the unaudited 2018 Preliminary Results of the NSF Group. These should be read in conjunction with Part XII (Operating and Financial Review of the NSF Group) and Part XIV (Historical Financial Information Relating to the NSF Group).

1. CAPITALISATION

The table below sets out the NSF Group's capitalisation and indebtedness as at 31 December 2018. The capitalisation and indebtedness figures have been extracted without material adjustment from the unaudited 2018 Preliminary Results of the NSF Group incorporated by reference in Part XIV (Historical Financial Information Relating to the NSF Group).

	As at 31 December 2018(1)
	(£'000)
Current debt
Guaranteed .	0.0—
Secured(2) .	5,306
Unguaranteed/unsecured(3) .	17,242
Total current debt .	22,548
Non-current debt .
Guaranteed .	—
Secured(2) .	266,322
Unguaranteed/unsecured(4) .	252
Total non-current debt .	266,574
Shareholder's equity(5) .
Share capital .	15,852
Legal reserve .	—
Other reserves(6) .	252,984
Total shareholders' equity	268,836
Total .	557,958

Notes:

(1) Unaudited preliminary financials for the 2018 Financial Year.

• (2) Total secured debt comprises a term loan provided by institutional investors and a revolving bank facility provided by The Royal Bank of Scotland totalling £271,628,000, including a current portion of £5,306,000 and a non-current portion of £266,322,000.
• (3) Unguaranteed/unsecured current debt comprises trade and other payables.
• (4) Unguaranteed/unsecured non-current debt comprises the deferred tax liability that was recognised on acquisition of Loans at Home, Everyday Loans (including TrustTwo) and George Banco in relation to intangible assets on which no tax deduction will be claimed in future periods for amortisation.
• (5) Total shareholders' equity does not include retained earnings and non-controlling interests. Therefore, issuers are not expected to calculate retained earnings for the purpose of the capitalisation statement.
• (6) Other reserves comprises (i) share premium of £254,995,000 and (ii) other reserves of (£2,011,000).

There has been no material change in the total capitalisation or indebtedness of the NSF Group since 31 December 2018, being the date of each of the statements above, except for as disclosed in Part XII (Operating and Financial Review of the NSF Group).

2. NET INDEBTEDNESS

The table below sets out the NSF Group's net indebtedness as at 31 December 2018. The indebtedness figures have been extracted without material adjustment from the unaudited 2018 Preliminary Results of the NSF Group incorporated by reference in Part XIV (Historical Financial Information Relating to the NSF Group).

	As at 31 December 2018(1)
	(£'000)
Cash and cash equivalents .	13,894
Trading securities .	—
Liquidity .	13,894
Current financial receivable	314,614
Current bank debt .	—
Current portion of non-current debt	5,306
Other current financial debt .	17,242
Current financial debt	22,548
Net current financial indebtedness .	(305,960) 0.0
Non-current bank loans	266,322
Bonds issued .	—
Other non-current loans .	—
Non-current financial indebtedness .	266,322
Net financial indebtedness .	(39,638)

Notes:

(1) Unaudited preliminary financials for the 2018 Financial Year.

(2) Current financial receivable comprises amounts receivable from customers of £354,794,000 net of loan loss provision of (£40,180,000).

(3) The term loan provided by institutional investors and a revolving bank facility provided by The Royal Bank of Scotland equals a total amount of £271,628,000, which includes a current portion of non-current debt of £5,306,000 thousand and a non-current bank loan portion of £266,322,000.

(4) Other current financial debt comprises trade and another payables.

As at 31 December 2018, the NSF Group has no direct or contingent indebtedness.

PART XIV

HISTORICAL FINANCIAL INFORMATION RELATING TO THE NSF GROUP

The: (i) unaudited preliminary financials relating to the NSF Group for the financial year ended 31 December 2018 (as published on 8 March 2019); and (ii) audited consolidated historical financial information relating to the NSF Group for the financial years ended 31 December 2017, 31 December 2016 and 31 December 2015 and the audit reports on such consolidated historical financial information, are incorporated by reference into this Document (see Part XXI (Information Incorporated by Reference)).

Deloitte has issued unqualified audit opinions on the audited consolidated historical financial information relating to the NSF Group referenced above.

The historical financial information for the NSF Group was prepared in accordance with IFRS and the historical financial information for NSF was prepared in accordance with UK Generally Accepted Accounting Practice.

The historical financial information of the NSF Group should also be read in conjunction with XII (Operating and Financial Review of the NSF Group) and Part IV (Important Information) of this Document.

PART XV

HISTORICAL FINANCIAL INFORMATION RELATING TO THE PROVIDENT FINANCIAL GROUP

The: (i) unaudited interim results of the Provident Financial Group for the six months ended 30 June 2018; (ii) unaudited interim results of the Provident Financial Group for the six months ended 30 June 2017; and (iii) combined audited historical financial information relating to the Provident Financial Group for the financial years ended 31 December 2017, 31 December 2016 and 31 December 2015 as set out within the Provident Financial Group's consolidated financial statements of those financial years is incorporated by reference into this Document (see Part XXI (Information Incorporated by Reference)). Provident Financial's auditors have issued unqualified audit opinions on the consolidated historical financial information relating to the combined audited historical information of the Provident Financial Group referenced above.

The historical financial information of the Provident Financial Group should also be read in conjunction with Part IV (Important Information) of this Document.

At this stage, and given the lack of access that NSF has had to the Provident Financial business, NSF is unable to confirm that no material adjustments need to be made to the financial statements of the Provident Financial Group to achieve consistency with the accounting policies of NSF. The Directors have reviewed the accounting policies of the Provident Financial Group disclosed within its most recent audited financial statements and have not identified any accounting policy differences that, in their view, would in themselves give rise to material adjustments needing to be made to the financial statements of Provident Financial to achieve consistency with the accounting policies of NSF. However, there may be differences in the application of these accounting policies and NSF cannot confirm that any such differences, if identified, may not be material.

PART XVI

UNAUDITED PRO FORMA FINANCIAL INFORMATION RELATING TO THE ENLARGED GROUP

Although the Provident Financial Group also prepares its audited consolidated financial statements in accordance with IFRS, NSF has not had access to the Provident Financial Group's non-public information, nor has NSF been permitted to engage in any discussions with the senior management of Provident Financial.

As such, NSF has not been able to determine whether there are significant differences between the NSF Group's accounting policies and those adopted by the Provident Financial Group that might be material to the Provident Financial Group's financial information, and furthermore NSF is unable to identify or quantify the adjustments necessary to present the NSF Group's financial information on a basis consistent with the NSF Group's accounting policies. As a result, it is not possible at this time for NSF to prepare an unaudited pro forma income statement or an unaudited pro forma statement of net assets of the Enlarged Group in accordance with item 20.2 of Annex I to the Prospectus Directive Regulation.

NSF has included in this Document a narrative description of the likely effect of the Transaction on the assets and liabilities of NSF.

The selected financial information has been extracted without material adjustment from the Provident Financial Group's unaudited interim results for the six months ended 30 June 2018:

• Non-current assets—£615.6 million
• Current assets—£2,389.1 million
• Non-current liabilities—£2,326.8 million
• Current liabilities—£581.2 million
• Net assets—£677.9 million

The likely effect of the Acquisition on NSF's assets and liabilities is as follows:

The illustrative effect on the NSF Group's balance sheet as at 31 December 2018, on the basis of the above financial information, excluding the impact of acquisition financing, costs and other acquisition adjustments, is estimated as follows:

• an increase to non-current assets of £615.6 million and an increase to current assets of £2,389.1 million;
• an increase to current liabilities of £581.9 million and an increase to non-current liabilities of £2,326.8 million; and
• an increase to net assets of £677.9 million.

This narrative does not reflect the anticipated synergies and efficiencies associated with the Acquisition.

PART XVII

THE DIRECTORS, THE BOARD, SENIOR MANAGERS AND CORPORATE GOVERNANCE

1. Directors and Senior Managers

1.1 Current Directors and Senior Managers

The current Directors of NSF and their functions are as follows:

Name	Position	Date appointed to the Board or Senior Manager role
	John de Blocq van Kuffeler (Group Chief Executive and Chairman of Loans at Home)	8 July 2014
	Nick Teunon (Chief Finance Officer, Chairman of Everyday Loans and Loans at Home Executive Director)	8 August 2014
Miles Cresswell-Turner (Executive Director and CEO of	Everyday Loans)	10 December 2014
	Niall Booker (Independent Non-Executive Director)	9 May 2017
Charles Gregson (Non-Executive Chairman)		10 December 2014
Heather McGregor	. (Independent Non-Executive Director)	10 December 2014
Davie Thompson (CEO of Loans At Home)		17 January 2017
Sarah Day (Company Secretary)		27 November 2017
	Peter Reynolds (IR and Communications Director)	2 May 2016

The business address of each of the Directors (in such capacity) is 7 Turnberry Park Road, Gildersome, Morley, Leeds, England LS27 7LE.

1.2 Profiles of the Directors and Senior Managers

The business experience and principal business activities (both for and outside of NSF) of each of the Directors are as follows:

(a) John de Blocq van Kuffeler, Group Chief Executive

John was Chief Executive and then Chairman of Provident Financial plc for a combined total of 22 years until December 2013. He was Chairman of Marlin Financial Group Limited, the consumer debt purchasing company, for four years until its sale in February 2014 and was also Chairman of Hyperion Insurance Group Limited for five years until December 2013. John was previously Chief Executive of Brown Shipley Holdings PLC which included Medens Trust Limited, a consumer car finance company, and was Chairman of the credit committee of Brown Shipley Holdings PLC's main banking subsidiary, Brown, Shipley & Co. Limited. He is also a former Chairman of the J.P. Morgan Fleming Technology Trust PLC and the Finsbury Smaller Quoted Companies Trust PLC.

(b) Nick Teunon, Group Finance Director

Nick was Chief Financial Officer of Marlin Financial Group Limited, the consumer debt purchasing company, from August 2013 until June 2014. Prior to that, Nick spent five years as Chief Financial Officer of FTSE International, joining from the Press Association, where he was Group Finance & Strategy Director for seven years. At both FTSE International and the Press Association, Nick was responsible for all mergers and acquisitions activity and related debt funding, in addition to leading the finance function.

(c) Miles Cresswell-Turner, Executive Director and CEO of Everyday Loans

Before joining NSF, Miles was a partner in Duke Street LLP where he specialised in the finance sector and led on the acquisitions by Duke Street LLP of Marlin Financial Group Limited and UKWM Limited. Before becoming a partner at Duke Street LLP, Miles was a partner at Palamon Capital Partners LLP from 1998 to 2008, where he led the investment in Towry Law plc. Prior to Palamon Capital Partners LLP, Miles spent seven years as a Director in the Leveraged Finance Department of HSBC Investment Bank. Miles was appointed Executive Chairman of Everyday Loans in May 2017 and became Chief Executive of Everyday Loans in September 2017.

(d) Niall Booker, Independent Non-Executive Director

Niall has spent 35 years in banking providing him with a wide range of experience in both consumer and wholesale products. His previous roles include being Group Managing Director and CEO of HSBC North America where he worked through the issues in HSBC Finance Corporation and in doing so worked closely with US regulators on these and other matters. Most recently he was CEO of the Cooperative Bank from 2013 to December 2016 having been tasked with rebuilding the capital base, stabilising the operational infrastructure and maintaining the franchise after the problems the bank faced in 2013. Niall has been a member of the College Council at Glenalmond College since 2012 and became Chairman of the Council in August 2017.

(e) Charles Gregson, Non-Executive Chairman

Charles is a highly experienced executive having previously held a number of senior positions in finance. He has been Non-Executive Chairman of NEX Group plc, formerly ICAP plc since 1988 to 2 November 2018 when NEX was acquired by the CME Group. Charles was former Non-Executive Chairman of Wagon Finance Group Limited, from 1996 to 2006; Non-Executive Director and Deputy Chairman of Provident Financial plc for 12 years until 2007; Non-Executive Director of International Personal Finance plc from 2007 to 2010;, Chairman of CPP Group plc; and Chairman of St James's Place plc. Charles was Executive Director of United Business Media plc (formerly MAI plc) from 1985 to 2003 and Global CEO and Chairman of PR Newswire from 2003 to 2009.

(f) Heather McGregor, Independent Non-Executive Director

Heather is the Executive Dean of Edinburgh Business School, the Graduate School of Business of Heriot-Watt University. She is also Chairwoman of the executive search firm Taylor Bennett. She began her early career in financial communications and investor relations before joining ABN Amro as a sell-side analyst. She then spent eight years with the bank, working in London, Hong Kong, Singapore and Tokyo, before joining Taylor Bennett, an executive search firm in 2000. She has an MBA from the London Business School and a PhD from the University of Hong Kong. Heather was the founder of the Taylor Bennett Foundation, which works to promote diversity in the communications industry, and is a founding member of the steering committee of the 30% Club, which is working to raise the representation of women at senior levels within the UK's publicly quoted companies. She is also an experienced writer and broadcaster in the national media. In 2017 she was appointed to the Honours Committee for the Economy.

A list of the companies and partnerships (other than NSF and its subsidiaries) of which the NSF Directors are or have been a director or partner within the past five years is set out in paragraph 5.1 of this Part XVII (The Directors, the Board, Senior Managers and Corporate Governance).

The business experience and principal business activities (both for and outside of NSF) of each of the Senior Managers are as follows:

(a) Davie Thompson, CEO of Loans At Home

Davie has 37 years' experience in home credit specialising in Field Operations, Operational Risk and Business Change. He joined Provident Financial in 1981 and worked at all levels in Field Operations from Development Manager to Head of Field Performance. He also had a 3 year spell as Head of Operational Risk focused mainly on Fraud Prevention and Detection as well as reviewing processes to ensure the business was focused on providing Good Customer Outcomes at all times. He moved to International Personal Finance plc at the beginning of 2011 where he served as Field Operations Director facilitating major change programmes. From October 2012 until September 2015 he worked as a Divisional Director with Buy As You View, with responsibility for the field operational performance of the North Division of the company. Davie joined Loans At Home in January 2016 as Head of Central Operations before becoming National Operations Manager in September 2016 bringing his wealth of operational experience to the role. In January 2017 he took over as acting CEO, a position made permanent in April 2017.

(b) Sarah Day, Company Secretary

Sarah qualified as a Chartered Accountant in 1999 having trained with PwC and initially gained experience of the home credit industry through involvement in external audit. Prior to joining SD Taylor, Sarah worked at Provident Financial for 17 years, with varied roles initially working in the International Division (now International Personal Finance plc) with responsibility for the smooth establishment of Finance within overseas operations before moving to Provident Financial plc's UK division in 2002. Following roles within Provident Financial plc covered all aspects of Finance on both the performance and Financial Accounting sides of the function. More recently Sarah was responsible for UK Tax Compliance for Provident Financial plc's Consumer Credit Business and more latterly established the UK Consumer Credit Division Governance and Company Secretarial function. Having initially joined the NSF Group as Company Secretary and Financial Controller of the NSF Group's home credit division, Loans at Home, Sarah was appointed Company Secretary of NSF in November 2017.

(c) Peter Reynolds, IR and Communications Director

Peter Reynolds became Director of IR and Communications at NSF in May 2016, is a member of the Company's executive committee and is also a non-executive director of SD Taylor Limited (trading as Loans At Home), Everyday Loans Limited and Everyday Lending Limited. Before joining NSF he was Communications Director for bwin.party digital entertainment plc where he was responsible for all investor relations, corporate and internal communications as well as consumer PR. Prior to its merger with bwin Interactive Entertainment AG in 2011, Peter was the Corporate Affairs Director for PartyGaming Plc. Prior to joining PartyGaming Plc in 2005, Peter was Director of Investor Relations with The Rank Group Plc and previously Director of Corporate Planning and Investor Relations at Thomson Travel Group Plc. An economics graduate from University College London, Peter's other relevant experience includes over 11 years in investment banking, where he was a Director in Corporate Finance at Dresdner Kleinwort Wasserstein, as well as a period in equity research with UBS.

2. Corporate governance

NSF is committed to maintaining high standards of corporate governance. Although the Company does not have a Premium Listing on the Main Market of the London Stock Exchange, it is the Board's intention to seek a transfer of the Ordinary Shares to the Premium Segment as soon as possible following Completion. The Board seeks to comply with the Corporate Governance Code where practical. Any non-compliance with the Corporate Governance Code is as set out in this Part XVII (The Directors, the Board, Senior Managers and Corporate Governance).

The Board comprises six individuals, being the Non-Executive Chairman, three Executive Directors and two Non-Executive Directors.

The Board has overall responsibility for the strategy, effective control and management of the Company. The Board reviews the performance of the NSF Group and undertakes a strategic review on an annual basis. There is a formal schedule of matters reserved for consideration and approval by the Board. These include the annual budget, substantial acquisitions and disposals, the approval of the full-year and half-year results and a review of the overall system of internal control and risk management. In addition to formal Board meetings, the Chairman and Chief Executive maintain regular contact with all Directors and hold informal meetings with Non-Executive Directors to discuss issues affecting the Company. Individual Directors are encouraged to make site visits during the year.

The Company has a programme of regular meetings, site visits and results briefings with its major institutional Shareholders, which provides opportunities to discuss the progress of the business. Presentations are conducted in accordance with the Disclosure Guidance and Transparency Rules on the dissemination of inside information and the Market Abuse Regulation to ensure the protection of such information that has not already been made available generally to Shareholders.

The annual general meeting is used as an opportunity to communicate with private Shareholders, including a short presentation on the business and current trading position as well as an opportunity for questions from investors to the Chairman of the Board and the chairmen of the Audit and Remuneration Committees. All Directors who attend the annual general meeting make themselves available to meet Shareholders after the formal business of the meeting. To ensure compliance with the Corporate Governance Code, separate resolutions are proposed on each discrete subject.

Regular communication with Shareholders also takes place through the full-year and half-year reports and via the Company's website, www.nsfgroupplc.com. In addition, the Company provides trading updates.

Each of the Senior Managers interacts with the Board and its processes to ensure a robust governance framework. In the case of the Loans At Home CEO, involvement in corporate governance processes is primarily by way of their overall responsibility for the implementation of Loans At Home's governance framework, which is then reported to the Board. The IR and Communications Director is a member of the NSF Executive Committee, as well as a non-executive director on each of the boards of NSF's material subsidiaries and an observer at NSF Board, Risk Committee and Audit Committee meetings. This broad oversight is intended to enable a consistent, strong culture to be maintained within the NSF Group. The NSF Company Secretary is responsible for the effective running of the Board and Committees at NSF, and advises the Board on good governance practice, having played an instrumental part in the development of a NSF Group-wide Governance Framework, which each subsidiary within the NSF Group is expected to implement and comply with. The Company Secretary also coordinates Risk Management across the NSF Group, including the proposal and assessment of the NSF Group's risk appetite.

2.1 Board of Directors

The Board is collectively responsible for promoting the success of the Company by directing and supervising the Company's affairs. The Board's role is to provide leadership of the Company within a framework of prudent and effective controls which enable risk to be assessed and managed.

The Board sets the Company's strategic aims, ensures that the necessary financial and human resources are in place for the Company to meet its objectives, and reviews management performance.

In addition, the Board sets the Company's values and standards and ensures that its obligations to its Shareholders and others are understood and met.

The Board currently comprises the Non-Executive Chairman, the NSF Group Chief Executive, the Chief Financial Officer, an Executive Director and two Non-Executive Directors. The offices of Non-Executive Chairman and Group Chief Executive are held separately. During the year, each Non-Executive Director has at all times acted independently of management and has no relationships which would materially interfere with the exercise of their independent judgement and decision making.

All Board members attend all Board and relevant Committee meetings unless exceptional circumstances prevent them from attending. The Board does not have a set number of meetings each financial year, but is scheduled to meet 11 times per financial year, with ad-hoc meetings in addition to this held as necessary. In the 2018 Financial Year, the Board met 12 times.

2.2 Board Committees

As envisaged by the Corporate Governance Code, the Board has established Audit, Remuneration, Nomination and Risk Committees. All Committees have written terms of reference agreed by the Board. These are available on the Company's website at www.nsfgroupplc.com or are available on request to the Company Secretary.

(a) Audit Committee

The Audit Committee is made up of Niall Booker (Committee Chairman), Heather McGregor, and Charles Gregson.

The Audit Committee met nine times during the 2018 Financial Year.

The terms of reference of the Audit Committee include all the matters indicated by DTR 7.1 of the Disclosure Guidance and Transparency Rules and the Corporate Governance Code. The primary objective of the Audit Committee is to assist the Board in fulfilling its responsibilities relating to:

• (i) the accounting principles, policies and practices adopted in the NSF Group's accounts;
• (ii) external financial reporting and associated announcements;
• (iii) the appointment, independence, effectiveness and remuneration of the NSF Group's Auditors;
• (iv) the resourcing, plans and effectiveness of the internal audit performed on behalf of the Company by a major accountancy firm, independent from the NSF Group's Auditors;

(v) the adequacy and effectiveness of the financial control environment; and

(vi) the NSF Group's compliance with the Corporate Governance Code.

The Audit Committee receives and reviews regular reports from the external auditors, internal audit and the Chief Financial Officer.

(b) Remuneration Committee

The Remuneration Committee is made up of Charles Gregson (Committee Chairman), Niall Booker and Heather McGregor.

The Remuneration Committee met five times during the 2018 Financial Year.

The Remuneration Committee reviews and recommends to the Board the framework and policy for the remuneration of the Chairman and the Executive Directors. The remuneration of the Non-Executive Directors is determined by the Chairman and the Executive Directors. The Committee takes into account the business strategy of the NSF Group and how the remuneration policy reflects and supports that strategy.

(c) Nomination Committee

The Nomination Committee comprises: Charles Gregson (Committee Chairman), Heather McGregor, and Niall Booker.

The Nomination Committee met two times during the 2018 Financial Year.

The Nomination Committee regularly reviews the structure, size and composition of the Board and its Committees. It identifies and nominates suitable candidates to be appointed to the Board (subject to Board approval) and considers talent and succession generally.

(d) Risk Committee

The Risk Committee comprises: Heather McGregor (Committee Chairman), Charles Gregson and Niall Booker.

The Risk Committee met three times during the 2018 Financial Year.

The Risk Committee assists the Board in its oversight of risk within the Company, with particular focus on risk appetite, risk profile and the effectiveness of the Company's internal controls and risk management systems.

3. Takeover Regulation

The Takeover Code is issued and administered by the Takeover Panel. The Company is subject to the Takeover Code and therefore its Shareholders are entitled to the protections afforded by the Takeover Code.

Under Rule 9 of the Takeover Code when (a) a person acquires an interest in shares which (taken together with shares he and persons acting in concert with him are interested) carry 30% or more of the voting rights of a company subject to the Takeover Code or (b) any person who, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30% of the voting rights of a company, but does not hold shares carrying more than 50% of the voting rights of the company subject to the Takeover Code, and such person, or any persons acting in concert with him, acquires an interest in any other shares which increases the percentage of the shares carrying voting rights in which he is interested, then, in either case, that person, together with the person acting in concert with him, is normally required to extend offers in cash, at the highest price paid by him (or any persons acting in concert with him) for shares in the company within the preceding 12 months, to the holders of any class of equity share capital whether voting or non-voting and also to the holders of any other class of transferable securities carrying voting rights, unless the Company has obtained the approval of over 50% of its independent Shareholders.

4. Other Directorships

In addition to their directorships of NSF (in the case of the NSF Directors), the NSF Directors and Senior Managers hold or have held the following directorships (other than directorships of subsidiaries of NSF), and are or were members of the following partnerships, within the past five years.

Name	Current directorship/partnership	Previous directorship/partnership
John de Blocq van Kuffeler Nick Teunon .	Paratus AMC Limited —	— —
Miles Cresswell-Turner .	Levana Education Ltd	Rochberie Consulting Limited Towry Services Limited Towry Nominees No.2 Limited DS Aslan Midco Limited Duke Street V Limited Duke Street General Partner Limited DS Opportunities GP LLP Duke Street LLP
Niall Booker Charles Gregson .	Glenalmond College Council Caledonia Investments Plc Woodcote Grove Estate Limited University of Chichester (Multi) Academy Trust UBM Trustees Limited United Trustees Limited Outdoor Installations Limited The Public Catalogue Foundation Arabian Racing Organisation Limited	— Nex Group Limited Nex International Limited Zen Exchange Ltd
Heather McGregor .	Edinburgh Business School Taylor Bennett Limited Taylor Bennett Holdings Limited International Game Technology PLC Graduatejobsnetwork Limited Russetsand Ideas Limited Lachlan Films Development Limited	Osborne McGregor Limited
Peter Reynolds .		bwin.party services (UK) Limited

5. Directors' and Senior Managers' Confirmations

As at the Latest Practicable Date, none of the Directors or Senior Managers have, during the five years before the date of this Document:

• (a) save as disclosed in paragraph 5 (Other Directorships) of this Part XVII (The Directors, the Board, Senior Managers and Corporate Governance), been a director or partner of any company or partnership;
• (b) been convicted in relation to a fraudulent offence;
• (c) been adjudged bankrupt or entered into an individual voluntary arrangement;
• (d) been a director or member of the administrative, management or supervisory bodies or a senior manager (who is relevant in establishing that a company has the appropriate expertise and experience for management of that company) of any company at the time of, or within 12 months preceding, any receivership, compulsory liquidation, creditors voluntary liquidation, administration, company voluntary arrangement or any composition or arrangement with that company's creditors generally or with any class of its creditors;
• (e) been a partner in a partnership or at the time of, or within 12 months preceding, any compulsory liquidation, administration or voluntary arrangement of such partnership;
• (f) had his assets form the subject of any receivership or has been a partner of a partnership at the time of, or within 12 months preceding, any assets thereof being the subject of a receivership;
• (g) been subject to any official public incrimination and/or sanctions by any statutory or regulatory authorities (including any designated professional bodies); or

(h) been disqualified by a court from acting as a director of a company or from acting as a member of the administrative, management or supervisory bodies of any company or from acting in the management or conduct of the affairs of any company.

The Board does not presently consider there are to be any potential conflicts of interests between any of the Directors' or Senior Managers' duties to NSF or the NSF Group and their private interests and/ or other duties.

There are no outstanding loans granted by NSF or any member of the NSF Group to any of the Directors or Senior Managers, nor has any guarantee been provided by NSF or any member of the NSF Group for their benefit.

6. Divergence from the Corporate Governance Code

As previously noted, the Company has a Standard Listing, and as such is not required to meet the requirements of the Corporate Governance Code. That said, where practical the Board will look to do so.

The Company does not comply with provision A.4.1 of the Corporate Governance Code. The Board assessed the risk of not appointing a Non-Executive Director to the role of Senior Independent Director and resolved that the formal role was not required due to the relatively small size of the Board. The Company does not believe absence of the role detracts from its ability to comply with principle A.4. 1. The activity normally carried out by a Senior Independent Director is shared between the independent Non-Executive Directors and the Company Secretary.

The Company does not meet provision D.2.1 of the Corporate Governance Code, due to the Chairman of the Board also being the Chair of the Remuneration Committee. As explained below, it is recognised that, in accordance with the Corporate Governance Code, Charles Gregson was not independent on appointment. However, due to his professionalism, independence in character and judgement, together with his experience, and taking into account the size and nature of the Company, it is deemed appropriate at this point in time for him to remain Chairman of the Remuneration Committee. The Directors do not consider the appointment detrimental to compliance with principle D.2.

Following Admission the Directors intend to move the Company to a Premium Listing, at which time the Company will be required to either with, or explain any non-compliance with, the Corporate Governance Code.

PART XVIII SUPERVISION AND REGULATION

1. Regulation of the NSF Group

The Enlarged Group's operations are subject to various UK, Irish and EU regulatory regimes. The following paragraphs set out a summary of the key areas of regulation applicable to those operations. Unless otherwise noted, the information presented below applies to one or more of the regulated businesses in the Enlarged Group.

Entities in the Enlarged Group which are subject to regulation include Everyday Loans Limited, Everyday Lending Limited, George Banco Limited, George Banco.com Limited, S.D. Taylor Limited, Moneybarn Limited, Moneybarn No.1 Limited, Moneybarn No.4 Limited, Provident Financial Management Services Limited, each of which is authorised and regulated by the Financial Conduct Authority ("FCA").

Vanquis Bank provides credit cards to the non-standard UK consumer credit market and accepts retail deposits. Vanquis Bank is authorised by the Prudential Regulation Authority ("PRA") and regulated by the PRA and FCA.

1. UK REGULATION

1.1 Financial Services and Markets Act 2000 and the UK regulatory regime

The most important piece of financial services legislation in the UK is FSMA. FSMA prohibits any person from carrying on a "regulated activity" by way of business in the UK unless that person is authorised or exempt under FSMA. Regulated activities include deposit-taking, effecting and carrying out contracts of insurance as well as insurance mediation and consumer credit activities. FSMA also prohibits a person from making financial promotions in the UK unless the financial promotion is issued or approved by an authorised firm or is exempt from the prohibition.

The two key UK financial services regulatory bodies are the PRA and the FCA.

The Prudential Regulation Authority

The PRA is responsible for the prudential regulation and supervision of approximately 1,700 banks (including Vanquis Bank), building societies, credit unions, insurers and major investment firms. The PRA has three statutory objectives:

• (i) a general objective to promote the safety and soundness of the firms it regulates;
• (ii) an objective specific to insurance firms, to contribute to ensuring that policyholders are appropriately protected; and
• (iii) a secondary objective to facilitate effective competition.

In discharging its functions, the PRA's general objective is promoting the safety and soundness of PRA-authorised firms. The PRA is required to advance this objective primarily by seeking to: (i) ensure that the business of PRA-authorised firms is carried on in a way which avoids any adverse effect on the stability of the UK financial system; and (ii) minimise the adverse effect that the failure of a PRA-authorised firm could be expected to have on the stability of the UK financial system.

The Financial Conduct Authority

The FCA has responsibility for the conduct of business and market regulation in relation to all authorised firms and for the prudential regulation of firms not regulated by the PRA. The FCA's supervisory approach is outcomes-based, pre-emptive and focused on delivering the following statutory objectives:

• (i) securing an appropriate degree of protection for consumers (the "consumer protection objective");
• (ii) protecting and enhancing the integrity of the UK financial system (the "integrity objective"); and
• (iii) promoting effective competition in the interests of consumers in financial markets (the "competition objective").

So far as is compatible with its consumer protection and integrity objectives, the FCA must discharge its general functions in a way which promotes effective competition in the interests of consumers.

The FCA's approach to regulation, and the standards it requires firms to maintain, are set out in the FCA's Handbook of rules and guidance (the "FCA Handbook"). The FCA's standards apply to all firms which conduct regulated consumer credit activities in the UK.

The FCA regards lending and collections of loans as a "high risk" activity and therefore dedicates special resources to intensive monitoring of businesses operating in this market.

The Financial Policy Committee

The Financial Policy Committee ("FPC") is a part of the Bank of England and has the primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. The FPC has a secondary objective to support the economic policy of the UK Government, including its objectives for growth and employment. The FPC's activities may be relevant to Vanquis Bank.

FCA Handbook, PRA Rulebook and other guidance

The detailed rules and prudential standards set by the relevant regulators, and the standards which each requires firms to maintain, are contained in the FCA and the PRA's rule making instruments, which are set out in accessible form online in various parts of the FCA Handbook and the set of rules made by the PRA under FSMA (the "PRA Rulebook") respectively.

Firms are obliged to comply with the FCA's Principles for Businesses and, for dual-regulated firms, the PRA's Fundamental Rules which each include requirements to (i) conduct their business with due skill, care and diligence; (ii) treat customers fairly; and (iii) communicate with customers in a manner that is clear, fair and not misleading. The FCA's 11 Principles for Businesses and the PRA's eight Fundamental Rules are set out in the FCA Handbook and PRA Rulebook respectively.

The FCA rules and guidance for firms providing consumer credit are contained in a specialist sectorspecific sourcebook in the FCA Handbook, which is known as the Consumer Credit Sourcebook ("CONC"). Serious or systematic failure to adhere to the standards specified in CONC would likely result in enforcement action being taken by the FCA.

Threshold conditions

Authorised firms must at all times meet certain "threshold conditions" specified in Schedule 6 of FSMA, and further elaborated upon in the FCA Handbook and PRA Rulebook. These are different depending whether a firm is regulated solely by the FCA or is a dual-regulated firm (i.e. is regulated by both the PRA and FCA). Dual-regulated firms, including banks such as Vanquis Bank, must meet both the PRA and FCA threshold conditions. The FCA threshold conditions are, in summary, that:

• (i) the firm is capable of being effectively supervised by the FCA;
• (ii) the firm maintains appropriate non-financial resources;
• (iii) the firm itself is a fit and proper person, having regard to the FCA's objectives; and
• (iv) the firm's strategy for doing business is suitable for a person carrying on regulated activities that it carries on or seeks to carry on, having regard to the FCA's operational objectives.

The PRA threshold conditions require that:

• (i) a firm is either a body corporate or partnership;
• (ii) if the firm is incorporated in the UK, its head office is in the UK and if it has a registered office, that office is in the UK;
• (iii) the business of the firm must be conducted in a prudent manner and, in particular, have appropriate financial and non-financial resources;
• (iv) the firm itself is a fit and proper person, having regard to the PRA's objectives; and
• (v) the firm is capable of being effectively supervised by the PRA.

Change of control

Any firm which is authorised by the FCA or the PRA, including authorised consumer finance firms and credit institutions, will be subject to the change in control regime contained in Part XII of FSMA. Under this regime, any person who proposes to acquire control over a regulated entity (or the parent of a regulated entity), or increase control over such an entity through specified thresholds, must first receive approval from the 'appropriate authority' of that regulated entity (the PRA if the firm is dualregulated (such as a bank), or the FCA in all other cases) before it can do so.

The FCA or the PRA has up to 60 working days, extendable by up to 20 working days (up to 30 working days if the acquirer is not an EEA entity or is not itself subject to regulation), to determine whether to approve an acquisition of, or increase of control over, an authorised person. These time limits start to run from the date the appropriate regulator acknowledges it has all the information it requires to process the application. This can have a significant influence on the timing of any corporate M&A transaction involving a target that is authorised under FSMA.

The PRA or the FCA (as the case may be) will not approve a person to acquire or increase control without being satisfied that the relevant controller is financially sound and suitable to become a controller of, or acquire increased control over, the UK authorised person.

Acquiring control over a UK bank, investment firm, UCITS manager, insurance or reinsurance undertaking for the purposes of FSMA means a situation whereby a person first acquires 10% or more of the shares or voting power in that firm or its parent undertaking. A person will be treated as increasing his or her control over such a person, and will therefore require further approval from the PRA or FCA, if the level of his or her shareholding or entitlement to voting power increases from a holding below certain thresholds to a holding above them. The thresholds are 10%, 20%, 30% and 50% of outstanding shares or voting power. The tests are different for firms other than those listed above. For example, acquiring control of a consumer credit firm means a situation whereby a person first acquires 20% or more of the shares or voting power in that firm or its parent undertaking and there is no additional requirement to obtain approval when increasing control of such a firm above 20% (assuming the relevant acquirer has already received regulatory approval as a controller)

When determining a person's level of control, that person's holding of shares or entitlement to voting power will be aggregated with the holdings or entitlements of any person with whom he or she is "acting in concert".

An acquisition or increase of control without prior PRA or FCA approval (as applicable) is a criminal offence.

Enforcement

The PRA and the FCA have the power to take a range of enforcement actions, including the ability to sanction firms and individuals carrying out functions within those firms. Sanctions may include restrictions on undertaking new business, public censure, restitution, fines and, ultimately, revocation or variation of a firm's permission to carry on regulated activities or of an individual's approval to perform particular roles within a firm. The PRA or FCA can also vary or revoke the permissions of an authorised firm that has not engaged in regulated activities for 12 months or that fails to meet the relevant threshold conditions.

If a financial services firm wishes to challenge any decision of the PRA or the FCA, it would usually make formal representations and/or bring its case before the Upper Tribunal.

1.2 Consumer credit regulation

Responsibility for consumer credit transferred from the OFT to the FCA on 1 April 2014. The framework for consumer credit regulation comprises FSMA and its secondary legislation, retained provisions in the Consumer Credit Act 1974 ("CCA") and its retained secondary legislation, and rules and guidance in the FCA Handbook generally, and CONC in particular (which sets out general conduct standards, rules on financial promotions, further rules on pre- and post- contractual requirements, responsible lending rules and debt advice rules).

The CCA outlines pre-contractual credit information requirements, the form and content of regulated credit agreements, and the right to cancel and withdraw from unfair relationships.

The requirement to obtain a licence from the OFT to carry on consumer credit business has been replaced by the need for authorisation under FSMA to carry on a consumer credit regulated activity. For example, entering into a "regulated credit agreement" as lender is now a regulated activity for the purposes of FSMA. A "regulated credit agreement" is any "credit agreement" that is not an "exempt agreement". A "credit agreement" is any agreement between an individual or relevant recipient of credit ("A") and any other person ("B"), under which B provides A with "credit" of any amount. As such, a credit agreement does not include any agreement under which credit is provided to a corporation or partnership with four or more members.

"Credit" is widely defined and includes cash loans and any other form of financial accommodation. Provisions relating to exempt credit agreements are set out in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. Categories of exempt credit agreements include agreements whereby credit is extended predominantly for the purposes of a business, agreements secured over land or otherwise by mortgage, and agreements where the lender is a local authority or other specified type of organisation.

Consumer credit advertisements are covered by the FSMA financial promotions regime. The FCA has set out specific financial promotion rules within CONC 3 which relate to the promotion of consumer credit products, including rules for high cost short-term credit (i.e. "payday lending"—see paragraph 1.5 below), cold calling and debt management companies.

Every firm which is authorised by the FCA must comply with high-level standards set by the FCA. This means that, in addition to the rules set out in CONC, a regulated consumer credit firm will have to comply with the following standards and rules (amongst others):

• (i) the FCA's Principles for Businesses, which are general statements of the fundamental obligations that firms regulated by the FCA must comply with under the regulatory system. They are regarded by the FCA as the basis for most of its other more detailed rules and guidance and include, for example, requirements for a firm to treat its customers fairly, conduct its business with integrity and deal with its regulators in an open and cooperative way;
• (ii) the rules in the FCA's Senior Management Arrangements, Systems and Controls Sourcebook ("SYSC"), which require firms to organise and control their affairs responsibly and effectively, and which impose, among other things, general organisational requirements relating to governance, the skills, knowledge and expertise of staff, outsourcing responsibilities relating to outsourcing, record-keeping and rules relating to conflicts of interests; and
• (iii) the general provisions as set out in the FCA's General Provisions Sourcebook, which mostly comprise administrative requirements and guidance for interpreting the FCA Handbook.

The FCA undertakes monitoring of authorised firms and may ask to perform on-site visits to ensure that the business of such firms is compliant with all the requirements to them. The FCA is likely to take a targeted and risk-based approach to supervision, focusing on those firms which it considers to be most at risk of harming customers. The FCA is also likely to be proactive in pursuing possible regulatory failures and poor practices (for example, by initiating its own investigations where consumer experience suggests that such an investigation is merited). Where consumer detriment is found, the FCA will use its powers of intervention, which might include enforcement action and/or securing redress for consumers.

Serious or systematic failure to adhere to the standards set by the FCA would likely result in it taking enforcement action. The FCA has a broad range of enforcement powers, including the ability to: bring criminal, civil and disciplinary proceedings; withdraw or amend authorisations; suspend authorised firms for 12 months; suspend individuals from performing certain roles for two years; and issue fines of unlimited amount. It is also able to use its product intervention powers in the consumer credit market, which include the ability to place restrictions on product features and impose selling practices or product bans.

In 2016 the FCA carried out a review of the rules it had imposed on high-cost short-term credit in 2015, feedback from which was published in Feedback Statement FS17/2. A further update was published in January 2018. Thereafter, the FCA launched two consultations relevant to the high-cost credit market: CP 18/12 (consultation on rent-to-own, home collected credit, catalogue credit and store cards, and alternatives to high-cost credit) and CP 18/13 (high-cost credit review: overdrafts).

Both consultations are now closed, and in December 2018 the FCA by way of update on its work relating to high-cost credit published:

(a) a consultation on proposals to reform the ways in which banks and building societies charge for overdrafts and final rules and guidance aimed at addressing low awareness and engagement in this market (CP18/42);

• (b) feedback on CP18/12 with final rules and guidance, and a consultation on "buy now pay later" offers (CP18/43); and
• (c) finalised guidance on helping tenants find alternatives to high-cost credit and what this means for social housing landlords (FG18/6).

Whether the FCA's work in this area has any effect on the Enlarged Group and the rules to which the regulated entities in the Enlarged Group are subject will be unclear until the consultations conclude and final rules are published. The final rules are expected to be published in June 2019.

1.3 Regulation of insurance intermediaries

Certain providers of consumer finance may also be authorised by the FCA to sell insurance together with their loan products (commonly known as "add-on insurance").

In the UK arranging an insurance contract on behalf of another person, making arrangements with a view to the conclusion of an insurance contract, dealing in (i.e. entering into) an insurance contract as agent for another person, and assisting in the administration and performance of a contract of insurance are each regulated activities in the UK. Firms which carry on one or more of these "insurance distribution" activities will require authorisation from the FCA unless they are able to benefit from an exemption. Certain firms may also advise customers on the purchase of insurance products, in which case they must have specific permission to do so.

At an EU level, insurance distribution is regulated under the Insurance Distribution Directive 2016/97/EU ("IDD"), which requires EU member states to establish a framework to:

• (i) ensure that insurance and reinsurance distributors have been registered on the basis of a minimum set of professional and financial requirements;
• (ii) ensure that registered distributors will be able to operate in other member states by availing themselves of the freedom to provide services or by establishing a branch; and
• (iii) impose requirements on insurance distributors to provide specified minimum information to potential customers.

The IDD is implemented in the UK principally through FSMA, and the FCA's Conduct of Business Sourcebook ("COBS") and Insurance Conduct of Business Sourcebook ("ICOBS"), both in the FCA Handbook. In addition to meeting the Threshold Conditions and Principles for Businesses referred to above, and complying with the relevant COBS and ICOBS rules and SYSC requirements, UK authorised insurance intermediaries must also comply with the FCA's prudential sourcebook for Mortgage and Home Finance Firms and Insurance Intermediaries ("MIPRU"). The rules in MIPRU include requirements relating to the maintenance of capital resources by such insurance intermediaries and the responsibilities and suitability of management and persons involved in insurance distribution activities.

1.4 Regulated Mortgages

FCA Regulation of Regulated Mortgages

The FCA regulates the provision of regulated mortgages. Everyday Loans Limited is authorised to administer regulated mortgage contracts and is therefore subject to FCA regulation in relation to this activity.

The Mortgages and Home Finance: Conduct of Business Sourcebook in the FCA Handbook sets out rules for regulated mortgage activities which cover, among other things, post-contract notifications, contract changes, arrears and repossessions, and charges. MIPRU also includes requirements relating to the maintenance of capital resources by mortgage intermediaries and the allocation of responsibility for a firm's insurance distribution and/or MCD credit intermediation activities to a specific director or senior manager.

Mortgage Credit Directive

EU Member States are subject to the Mortgage Credit Directive (2014/17/EU), which applies to various categories of secured and unsecured credit agreements which relate to immovable property for consumers. The Mortgage Credit Directive Order 2015, as amended by the Mortgage Credit Directive (Amendment) Order 2015, implements the Mortgage Credit Directive into UK law (in part by making changes to FSMA).

Home Owner and Tenant Protection

Part 1 of the Home Owner and Debtor Protection (Scotland) Act 2010 ("Home Owner and Debtor Protection Act") came into force on 30 September 2010 and contains provisions imposing additional requirements on heritable creditors (the Scottish equivalent to mortgagees) in relation to the enforcement of standard securities over property in Scotland used to any extent for residential purposes. The Home Owner and Debtor Protection Act amends the provisions of the Conveyancing and Feudal Reform (Scotland) Act 1970 and the Heritable Securities (Scotland) Act 1894 which permitted a heritable creditor to proceed to eject occupants and sell the secured property where the notice period specified in a calling up notice served in respect of the relevant standard security had expired without challenge (or where a challenge had been made but not upheld). Under the Home Owner and Debtor Protection Act, the heritable creditor is required to obtain a court order to exercise its power of sale, unless the borrower and any other occupier have surrendered the property voluntarily. In addition, the Home Owner and Debtor Protection Act requires the heritable creditor in applying for a court order to demonstrate that it has taken various preliminary steps to resolve the borrower's position, as well as imposing further procedural requirements.

Repossessions Policy

A pre-action protocol relating to mortgage or home plan arrears where the relevant loan relates to residential property in England and Wales came into force on 19 November 2008 (the "Pre-Action Protocol"). In particular, the Pre-Action Protocol sets out the steps that judges will expect any lender to take before commencing a claim for possession. A number of mortgage lenders confirmed that they would delay the initiation of repossession action for at least three months after arrears start to accrue and where the property in question is occupied by the borrower.

The Mortgage Repossession (Protection of Tenants etc) Act 2010 came into force on 1 October 2010 and gives courts in England and Wales the same power to postpone and suspend repossession for up to two months on application by an unauthorised tenant (i.e. a tenant in possession without the lender's consent). It also requires the lender to serve notice at the property before enforcing a possession order.

A further Pre-Action Protocol for Debt Claims came into force on 1 October 2017 and applies to any business when claiming payment of a debt from an individual. It encourages early and reasonable engagement between parties and aims to allow parties to resolve the matter without the need to institute court proceedings. Such "out of court proceedings" may include discussing a reasonable payment plan or considering the use of alternative dispute resolution.

1.5 High-cost short-term finance (payday lending)

Tackling risks in the high-cost short-term credit ("HCSTC") market (also referred to as payday lending) is considered by the FCA to be a priority. CONC sets out rules and guidance for firms carrying on HCSTC activities. These rules include the imposition by the FCA of:

• (a) a limit of two unsuccessful attempts on the use of a continuous payment authority to pay off a loan, and a ban on part payments using a continuous payment authority;
• (b) a limit of two on the number of times a loan can be refinanced;
• (c) a requirement for HCSTC providers to provide an information sheet to their customers, including information on free debt advice, before a loan is refinanced; and
• (d) a requirement that risk warnings be included on all HCSTC advertisements.

The FCA has also made rules to protect customers from excessive charges under HCSTC agreements. The rules impose a cap on interest and fees payable under a HCSTC agreement of 0.8% of the amount borrowed per day, a £15 cap on default charges and a total cost cap of 100% of the amount borrowed.

In July 2017, the FCA published a feedback statement (FS17/2) to assess whether the HCSTC caps required changing. Ultimately, the FCA decided to maintain the caps at their current levels, but will review them by 2020 to ensure they remain effective.

1.6 Guarantor loans

In 2015 the FCA made rules on the operation of the guarantor loan marker which include requirements for firms to: provide adequate pre-contract explanations to guarantors; assess the guarantor's creditworthiness, and to treat guarantors fairly and with forbearance if they are in financial difficulty, in each case where both the guarantor and the borrower in question are individuals.

In January 2017 the FCA published its finalised guidance on guarantor loans and default notices. The guidance sets out what the FCA considers the "enforcement of a security" means for the purposes of the CCA. The guidance also considers what pre-contractual information lenders ought to provide guarantors, the consequences of failing to serve a valid default notice where required, timings relating to the issue of default notices and for the notification of defaults to credit reference agencies.

The FCA intends to keep the guarantor lending market under review and may propose changes to its rules or guidance if considered appropriate in the future.

1.7 FCA review of the add-on insurance market

As a result of a market study conducted in 2014, in July 2016 the FCA introduced rules regarding the sale of general insurance "add-ons". These rules include a ban on opt-out selling (unless the add-on is free of charge both at inception and at renewal) and a requirement to provide customers with product information concerning insurance add-ons.

1.8 Financial Services Compensation Scheme

FSMA established the Financial Services Compensation Scheme ("FSCS") which pays compensation to eligible customers of certain types of authorised financial services firms which are unable, or are likely to be unable, to pay claims against them. Broadly speaking, the aims of compensation payments are to provide redress for customers who are least able to sustain financial loss and therefore to assist in promoting consumer confidence in the financial system.

The actual level of compensation paid by the FSCS depends on the basis of claim. The FSCS only pays compensation for financial loss. Compensation limits apply on a "per person per firm" and "per claim category" (listed below) basis.

Slightly different limits and rules apply if the claim is made against an insurer, a bank that became insolvent before the FSCS became operational (1 December 2001) or against an investment firm that was declared to be in default before the FSCS became operational.

The maximum levels of compensation in respect of the different types of claim which can be made are as follows:

• (i) Deposits: £85,000 per person per firm (for claims against firms declared in default from 30 January 2017). There is also a £1 million protection limit for temporary high balances held with a bank, building society or credit union in certain situations (i.e. where this represents proceeds from the sale of a primary residence).
• (ii) Investments: £50,000 per person per firm (for claims against firms declared in default from 1 January 2010). This limit will increase to £85,000 from 1 April 2019.
• (iii) Home Finance (e.g. mortgage advice and arranging): £50,000 per person per firm (for claims against firms declared in default from 1 January 2010). This limit will increase to £85,000 from 1 April 2019.
• (iv) Insurance Business: Long-term insurance benefits are 100% protected. Claims under compulsory insurance, professional insurance and certain claims for injury, sickness or infirmity of the policyholder are 100% protected. Other types of claim are also 90% protected with no upper limit.
• (v) General insurance advice and arranging: Protects 90 per cent of claims with no upper limit. Compulsory insurance is 100% protected (for business conducted on or after 14 January 2005).

The FSCS is funded by levies raised on authorised firms.

1.9 Financial Ombudsman Service

FSMA established the Financial Ombudsman Service ("FOS") which provides customers with a free and independent service designed to resolve disputes where the customer is not satisfied with the response received from a regulated firm. The jurisdiction of the FOS extends to banks and consumer finance firms. The FOS resolves disputes for eligible persons that cover most financial products and services provided in (or from) the UK. The FOS may also make directions (which direct the business to take such steps as the FOS considers just and appropriate).

At present, the maximum monetary award which may be awarded by the FOS is £150,000 (excluding any interest and costs) for complaints received by the FOS on or after 1 January 2012. However, the FCA is currently consulting on proposals to increase the award limit:

• (i) to £350,000 for complaints about acts or omissions by firms on or after 1 April 2019; and
• (ii) to £160,000 for complaints about acts or omissions by firms before 1 April 2019, and which are referred to the FOS after that date.

The FCA also proposes that, from 1 April 2020 onwards, both award limits should be automatically adjusted on 1 April each year to ensure they keep pace with inflation. For any complaints referred to the FOS before 1 April 2019 the limit will remain at £150,000.

Although the FOS takes account of relevant regulation and legislation, its guiding principle is to resolve cases on the basis of what is fair and reasonable. In this regard, the FOS is not bound by law or even its own precedent. The decisions made by the FOS are binding on regulated firms.

1.10 Senior managers and certification regime

The senior managers and certification regime ("SM&CR"), has applied to banks since 7 March 2016, and specifically applies to, and imposes requirements regarding, senior individuals employed by banks. The senior managers element of the regime focuses on the most senior individuals employed by firms (i.e. individuals who hold key roles or have overall responsibility for business areas of the firm in question) and requires those managers to take personal responsibility for the areas of business for which they are assigned responsibility. Firms must:

• (i) ensure that each senior manager has a statement of responsibilities setting out the areas for which they are personally accountable;
• (ii) produce a firm "responsibilities map" that knits these together; and
• (iii) ensure that all senior managers are pre-approved by the regulators before carrying out their roles.

The certification regime applies to employees of relevant firms who, while not senior managers, could pose a risk of significant harm to the firm or its customers. Such individuals must be certified by their firm to be fit and proper to carry out their roles both when taking up that role and on a continuing basis thereafter.

Conduct rules

The FCA conduct rules now apply to most employees employed by firms within the scope of the SMCR. The PRA Conduct Rules apply, in summary, to individuals approved as senior managers or performing certification functions for the purposes of the SMCR, as well as to non-executives of PRAauthorised firms.

1.11 Approved persons regime

FSMA provides that individuals performing certain "controlled functions" at an FCA-authorised firm, including a consumer credit firm, must be approved by the FCA before performing such functions. The firm itself must take reasonable care to ensure that such approval is procured where necessary.

Some of the controlled functions which are likely to be relevant for a consumer credit firm working within the non-standard consumer credit sector are:

• (i) CF1—the director function;
• (ii) CF2—the non-executive director function;
• (iii) CF3—the chief executive function;
• (iv) CF11—the money laundering reporting officer function; and
• (v) CF28—the systems and controls function.

The FCA may approve an individual to carry out a controlled function only if it is satisfied that he or she is a "fit and proper" person to perform that function. FSMA provides that, in making that determination, the FCA may have regard to an individual's training, competence and qualifications.

If a firm fails to take reasonable care to ensure that it does not employ unapproved persons to carry out functions for which they require approval, the FCA may carry out an investigation and take enforcement action against the firm concerned. Enforcement action could result in a fine or, for serious breaches, the suspension of a firm permission to carry on regulated activities.

If an unapproved individual performs a function for which he or she required approval (and he or she knew that approval was required), the FCA may impose a financial penalty on that individual of such amount as it considers appropriate.

An approved person must also comply with the FCA's Statements of Principle and Code of Practice for approved persons ("APER"). APER sets out a number of high level statements of principle for approved persons including, for example, that approved persons act with integrity, due skill, care and diligence.

If an approved person fails to comply with APER, or is knowingly concerned in a contravention by an authorised firm of any requirement imposed on it by or under FSMA, the FCA may: (i) fine the approved person; (ii) suspend or impose limitations or restrictions on the approval of that person for such period as the FCA considers appropriate; and/or (iii) issue a public statement concerning the misconduct of that person.

Extension of the senior managers and certification regime

The SM&CR will soon be extended to all FCA solo-regulated firms (including insurance intermediaries, mortgage lenders and brokers, and consumer credit firms) and will replace the approved persons regime currently applicable to those firms (set out immediately above). The extended SM&CR is anticipated to come into force for these firms in December 2019. Although certain features of the two regimes are similar, there are key differences, most notably in terms of: the (i) scope of individuals that will be captured by the new approval (for senior managers only) and certification regimes; and (ii) additional ongoing compliance burden the certification aspect of the regime may place on firms.

In summary, the key features of the extended SM&CR will be:

• (i) an approval regime focused on senior management, with requirements on firms to submit robust documentation on the scope of these individuals' responsibilities;
• (ii) a statutory requirement for senior managers to take reasonable steps to prevent regulatory breaches in their areas of responsibility;
• (iii) a requirement on firms to certify as "fit and proper" any individual who performs a function that could cause significant harm to the firm or its customers, both on appointment and annually thereafter; and
• (iv) powers for the relevant regulators to apply enforceable rules of conduct on any individual who may impact their respective statutory objectives.

1.12 Other relevant legislation and regulation

Payment Services Regulations

Under the Payment Services Regulations 2017 ("PSR"), the FCA is responsible for regulating payment services in the UK. The PSR establish an authorisation regime, which requires payment service providers either to be authorised or registered with the FCA. The PSR also contain certain rules about the provision of payment services with which payment service providers must comply, including rules concerning obtaining consent for payment transactions, unauthorised or incorrectly executed transactions, liability for unauthorised payment transactions, refunds, execution of payment transactions, execution time, information to be provided to payment service users, and liability of payment services providers where things go wrong. The PSR apply to Vanquis Bank when it is providing payment services to its customers.

The UK Money Laundering Regulations

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ("Money Laundering Regulations"), which came into force on 26 June 2017, require the Enlarged Group to verify the identity and address of customers during the on-boarding process and to keep records to help prevent money laundering and fraud. Guidance in respect of firms' anti-money laundering and counter-terrorist financing obligations is produced by the Joint Money Laundering Steering Group.

The Bribery Act

The Bribery Act 2010 ("Bribery Act") contains offences relating to bribing another person, accepting bribes and bribing foreign public officials. It also contains an offence concerned with failures by commercial organisations to prevent bribery. The Ministry of Justice has published guidance about procedures which commercial organisations may put into place to help prevent associated persons from engaging in such activity.

Criminal Finances Act

With effect from 30 September 2017, the Criminal Finances Act 2017 introduced a new criminal offence for businesses that fail to take adequate steps to prevent their associates (employees, agents or other persons who perform services for or on behalf of the business concerned) from facilitating tax evasion. Only where the business has put in place reasonable prevention procedures to prevent facilitation of tax evasion by their associates will it have a defence. HMRC has published guidance on the types of processes and procedures that may be put in place, as well as on the risk assessment and implementation plan that firms should have put in place before 30 September 2017.

Data Protection Act

The Data Protection Act 2018 ("DPA") supplements the GDPR, see further below) and came into force on 25 May 2018 (superseding the Data Protection Act 1998). It also implements the EU Data Protection Directive (EU 2016/680) into UK law. Those responsible for processing and controlling personal data must ensure that their data policies and processes reflect requirements contained in the DPA. The DPA appoints the Information Commissioner as the independent data protection regulator and contains requirements for data controllers to notify the Information Commissioner of breaches of the DPA.

Modern Slavery Act

The Modern Slavery Act 2015 requires companies with a total global annual turnover of £36 million or more that is carrying out a business, or part of a business, in the UK to publish a slavery and human trafficking statement each financial year.

Consumer Rights

The Consumer Rights Act 2015 ("CRA") came into force in 2015. It gives effect in the UK to the Unfair Contract Terms Directive and revokes the Unfair Terms in Consumer Contracts Regulations 1999. It deals with unfair contract terms and consumer notices. The main effect of this legislation is to consolidate the rules dealing with the fairness of contractual terms when dealing with a consumer as well as clarify the remedies that consumers have.

In the United Kingdom, the Unfair Terms in Consumer Contracts Regulations 1994 applied to all mortgage loans that were entered into between 1 July 1995 and 30 September 1999. These regulations were revoked and replaced by the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCR") on 1 October 1999, which apply to all mortgage loans as of that date. The UTCCR generally provide that:

• (i) a borrower may challenge a term in an agreement on the basis that it is an "unfair" term within the regulations and therefore not binding on the borrower (although the agreement itself continues to bind the parties if it is capable of continuing in existence without the unfair term); and
• (ii) the CMA and any "qualifying body" (as defined in the regulations, such as the FCA) may seek to prevent a business from relying on unfair terms.

The CRA significantly reforms and consolidates consumer law in the UK. The CRA involves the creation of a single regime out of the Unfair Contract Terms Act 1977 (which essentially deals with attempts to limit liability for breach of contract) and the UTCCR. When the unfair contract terms regime of the CRA came into force it revoked the UTCCR and introduced a new regime for dealing with unfair contractual terms as follows:

• (i) Under Part 2 of the CRA an unfair term of a consumer contract (a contract between a trader and a consumer) is not binding on a consumer (an individual acting for purposes that are wholly or mainly outside that individual's trade, business, craft or profession). Additionally, an unfair notice is not binding on a consumer, although a consumer may rely on the term or notice if the consumer chooses to do so. A term will be unfair where, contrary to the requirement of good faith, it causes significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer.
• (ii) A term in a consumer contract may not be assessed for fairness to the extent that (a) it specifies the main subject matter of the contract; or (b) the assessment is of the appropriateness of the price payable under the contract by comparison with the goods, digital content or services supplied under it, to the extent that such term is transparent and prominent.
• (iii) A trader must ensure that a written term of a consumer contract, or a consumer notice in writing, is transparent i.e. that it is expressed in plain and intelligible language and is legible. Where a term in a consumer contract is susceptible to multiple different meanings, the meaning most favourable to the consumer will prevail.

Unfair Consumer Practices

Unfair business-to-consumer commercial practices are regulated under Directive 2005/29/EC (the "Unfair Practices Directive"). The Unfair Practices Directive has been implemented in the UK through the Consumer Protection from Unfair Trading Regulations 2008 ("CPUTR"),

The Unfair Practices Directive provides that enforcement bodies may take administrative action or legal proceedings in connection with unfair business-to-consumer commercial practices. The Unfair Practices Directive is intended to protect only collective interests of consumers, and is therefore not intended to give any claim, defence or right to set-off to an individual consumer.

Under the CPUTR a commercial practice is to be regarded as unfair, and is therefore prohibited, if it is:

• (i) contrary to the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, commensurate with honest market practice and/or general principles of good faith in the trader's field of activity; and
• (ii) materially distorts or is likely to materially distort the economic behaviour of the average consumer (who is reasonably well-informed and reasonably observant and circumspect, and taking into account social, cultural and linguistic factors) who the practice reaches or to whom it is addressed (or where a practice is directed at or is of a type which may affect a particular group of consumers, the average consumer within that group).

In addition to the general prohibition on unfair commercial practices, the CPUTR contain provisions aimed at aggressive and misleading practices and customers now have a direct civil right of redress against businesses for such practices by virtue of the Consumer Protection from Unfair Trading (Amendment) Regulations 2014.

Financial Services (Distance Marketing) Regulations

The Financial Services (Distance Marketing) Regulations 2004 ("FSDMR") give effect to the Consumer Credit Directive (see paragraph 2.2 below) and govern the conditions on the sale of retail financial services products (such as credit cards) where the products are sold over the internet, by telephone or by SMS within the United Kingdom or elsewhere in the EEA. The FSDMR (i) restrict the use of "cold calling" and unsolicited commercial e-mails for the promotion of financial services; (ii) impose an obligation to provide certain information before concluding a contract; and (iii) require a "cooling off" period of 14 calendar days during which consumers may withdraw from a contract without incurring penalties and without providing a reason. There are also additional pre-contract information requirements prescribed by the FSDMR.

Foreign Account Tax Compliance Act

The United States has enacted rules that in general impose a reporting and withholding regime with respect to certain U.S. source payments made by, and financial accounts held with, entities that are classified as "financial institutions" under the Foreign Account Tax Compliance Act ("FATCA"). The United States has entered into an intergovernmental agreement regarding the implementation of FATCA with the United Kingdom. The FATCA provisions impose substantial burdens on UK businesses in identifying U.S. taxpayers, and registering and reporting information. Further, significant aspects of how FATCA will apply in the future remain unclear and, as a result, the scope of compliance may change.

Financial Reporting Council

The Financial Reporting Council ("FRC") is an independent UK regulatory body responsible for promoting high quality corporate governance and reporting. Among other things, the FRC sets UK codes and standards for governance, accounting, auditing and actuarial work. It also monitors disclosure compliance by public companies within the applicable financial reporting framework and investigates misconduct by professional accountants and actuaries.

International Financial Reporting Standards ("IFRS"), previously known as International Accounting Standards ("IAS")

Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of International Accounting Standards (the "IAS Regulation") represented a significant step taken by the EU to assist with the overall convergence of accounting standards on an international scale.

The main aim of the IAS Regulation is to ensure that publicly traded companies in the EU apply a single set of high quality international accounting standards for the preparation of their consolidated financial statements (known as "group accounts" under the Companies Act 2006). Under the Companies Act 2006, "international accounting standards" is used to refer to the international accounting standards within the meaning of the IAS Regulation.

In 2001 the International Accounting Standards Committee was replaced by the International Accounting Standards Board, since when all new published standards have been issued as IFRS instead of IAS.

IFRS 9: (Financial Instruments)

The new accounting standard governing the impairment of financial assets is effective for annual reporting periods beginning on or after 1 January 2018. The standard fundamentally changes the calculation and recognition of credit losses by introducing the requirement to base impairment provisions on expected credit losses over the life of the financial asset. It also requires credit losses to be recognised for all loans, in contrast with the previous standard (IAS 39) which requires recognition of losses only when there is evidence of impairment. In addition, the models used to calculate expected credit losses must now include forward looking factors including macro-economic variables.

1.13 Regulatory and other changes resulting from the UK exit from the European Union

As a significant proportion of the current and anticipated regulatory regime applicable to the Enlarged Group in the UK is derived from EU directives and regulations, the UK exiting the EU could materially change the legal and regulatory framework applicable to the Enlarged Group, although no such material change is expected in the immediate short term.

1.14 Other

In addition to those laws and regulations described above, the Enlarged Group is also subject to, and complies with, a number of legal and regulatory requirements that relate to, amongst other areas, employment, health and safety, and data protection.

2. EUROPEAN UNION LEGISLATION

The regulatory framework for financial services within the UK is currently shaped to a large degree by EU legislation. EU regulations apply directly in EU Member States (including the UK) while directives are required to be implemented into national law by Member States.

As a significant proportion of the Enlarged Group's regime is derived from EU regulations and directives, the UK exiting the EU may change the legal and regulatory framework applicable to the Enlarged Group's operations. For more information see "Legal, political and economic uncertainty surrounding the planned exit of the UK from the European Union may affect the Enlarged Group's customers, and the disruption following any such exit could have a significant ongoing effect on the Enlarged Group's business" in Part II (Risk Factors) of this Document.

The items of EU legislation listed below have particular relevance to the Enlarged Group.

1.1 Capital Requirement Regulation and Directive

The Basel Committee on Banking Supervision (the "Basel Committee") introduced significant changes to its existing capital requirements framework for banks between 2011 and 2013, with the final reform package issued in December 2017. The intention of these new capital and liquidity requirements is to reinforce capital standards (with heightened requirements for global systemically important banks), and to establish minimum liquidity standards, for credit institutions. The changes (referred to as the "Basel III reforms") include new requirements regarding a bank's capital base, measures to strengthen the capital requirements for counterparty credit exposures arising from certain transactions, and the introduction of a leverage ratio as well as short-term and longer- term standards for liquidity and funding (the "Liquidity Coverage Ratio" and the "Net Stable Funding Ratio" respectively).

The Basel III reforms have been implemented in the EU by the Capital Requirements Regulation ("CRR") and the associated Capital Requirements Directive ("CRD IV Directive", together with the CRR known as "CRD IV") which were adopted by the European Parliament and European Council on 26 June 2013.

In December 2017 the Basel Committee agreed to further Basel III reforms, including reforms relating to the standardised and internal ratings-based approaches for credit risk, and a revised output floor. The Basel Committee expects member countries to implement these 2017 reforms—sometimes referred to as "Basel IV"—by 1 January 2022 (with the exception of those relating to the output floor, which will be phased in from 1 January 2022).

Capital

A bank's ability to absorb losses is determined by the amount of capital it holds. Consequently, a bank's total assets and risk-weighted assets ("RWAs") determine the minimum capital that a bank is required to hold, with that capital calculated as a percentage of its RWAs. A bank's capital requirements need to be met with a combination of the three types of regulatory capital set out in the CRR which are:

• (i) CET1 Capital, comprising common equity and retained earnings;
• (ii) Additional Tier 1 Capital, comprising deeply subordinated perpetual instruments issued in accordance with the requirements of the CRR; and
• (iii) Tier 2 Capital, comprising dated or perpetual subordinated instruments issued in accordance with the requirements of the CRR as well as (a) any share premium account generated by the issuance of such instruments; and (b) certain other risk-weighted exposure amounts.

The principal metrics used to assess capital strength are the CET1 ratio (CET 1 capital:RWAs), Total Capital Ratio and the Leverage Ratio. The CRR sets out the minimum requirements for institutions' own funds which are as follows:

• (i) a CET1 capital ratio of 4.5%;
• (ii) a Tier 1 capital ratio of 6%; and
• (iii) a total capital ratio of 8%.

The CRR places a requirement on EU parent institutions of in-scope firms (including EU-authorised banks) to comply with own funds and leverage requirements on the basis of their consolidated situation. The effect of this is that the Enlarged Group will be subject to consolidated supervision by the PRA as a result of NSF being the ultimate parent company of Vanquis Bank. Therefore, in addition to Vanquis Bank being subject to capital and liquidity requirements at a solo level, NSF will also be subject to capital requirements calculated by reference to the RWAs of all entities within the Enlarged Group.

Liquidity

A bank's ability to manage shocks to the financial system is assessed by the extent to which its assets are covered by funding with equal or longer maturity. The principal metrics to assess bank funding and liquidity are the Net Stable Funding Ratio and Liquidity Coverage Ratio:

• (i) The Net Stable Funding Ratio is a key component of the Basel III reforms (discussed above). The ratio seeks to calculate the proportion of long-term assets which are funded by long term, stable funding. The Basel III regulations state that a bank's Net Stable Funding Ratio must be at least 100%.
• (ii) The Liquidity Coverage Ratio is designed to ensure that financial institutions have the necessary assets available to withstand short-term liquidity disruptions. Banks are required to hold an amount of highly liquid assets equal to or greater than their net cash outflow over a 30-day period. The Liquidity Coverage Ratio was introduced in October 2015 and, following a phased implementation period, the full 100% minimum came into force on 1 January 2018.

1.2 Consumer Credit Directive

Directive 2008/48/EC on consumer credit (the "Consumer Credit Directive") regulates the provision of credit at EU level and was implemented in the UK through a series of implementing regulations, including by way of amendments to the CCA, FSMA and CONC.

In essence, the Consumer Credit Directive requires EU Member States to ensure that suppliers of consumer credit provide a comprehensible set of information to consumers in good time before a consumer credit agreement is entered into, with the aim of permitting consumers to compare consumer credit agreements more easily and better understand the features and obligations of such agreements. The pre-contractual information provided by creditors must follow a standardised format. In addition, EU Member States must implement two essential rights for consumers: (i) the right to withdraw from a credit agreement without giving any reason within a period of 14 days after the conclusion of the contract; and (ii) the right to repay his or her credit early at any time. In respect of the latter, the creditor is entitled to ask the customer for fair and objectively justified compensation.

1.3 Bank Recovery and Resolution Directive

The Bank Recovery and Resolution Directive ("BRRD") has been implemented in the UK through a mixture of legislative provisions, new rules in the FCA Handbook and the PRA Rulebook, and amendments to HM Treasury's SRR Code of Practice.

The BRRD requires EU Member States to introduce legislation aimed at avoiding the problem of banks being effectively too big to fail. It is designed to provide relevant authorities with the means to intervene quickly and early in an unsound or failing institution so as to ensure the continuity of that institution's critical financial or economic functions, without material disruption to the financial system or the real economy and without imposing significant costs on taxpayers.

Under the BRRD, resolution authorities are given resolution powers to seek to ensure these results. These include the powers to transfer the shares or assets of a failing bank to a third party, a bridge institution established for the purpose or an asset management vehicle and to bail-in the bank's liabilities (either to write them down or to convert them into equity),

Additionally, the BRRD requires banking groups, and their regulators, to plan for how they might be rescued or resolved in a crisis scenario, including by making so-called 'living wills', and to take into account the competent authority's resolution powers when they issue capital and other debt instruments and enter into agreements creating liabilities.

The powers extended to regulators designed to aid early intervention in failing banks include the ability to remove and replace members of the board, implement measures identified in an institution's recovery plan, appoint special managers, and require changes to the operational and/or legal structure of the institution.

1.4 Deposit Guarantee Schemes Directive

The recast Deposit Guarantee Schemes Directive 2014/49/EU ("DGSD") requires each EU Member State to implement at least one deposit guarantee scheme, covering those deposits, in those situations and those amounts, set out in the DGSD. The DGSD also imposes requirements on the operation of these deposit guarantee schemes, including in relation to mandatory part pre-funding of deposit guarantee schemes, a requirement that deposit guarantee schemes repay customers within a week, and a requirement for banks to be able to provide pertinent information at any time. The Financial Services Compensation Scheme ("FSCS") is the UK's deposit guarantee scheme. The DGSD and the FSCS apply to Vanquis Bank.

1.5 Payment Services Directive

Directive (EU) 2015/2366 ("PSD2") is a further step towards the harmonisation of the regulatory regime for payment services across the EU following on from the original Payment Services Directive adopted by the EU in 2007.

The original Payment Services Directive aimed to bring cross-border payments within the EU in line with the level of security and efficiency of payments made within a member state. PSD2 builds on this by, requiring businesses which provide payment services to, amongst other things:

• (i) open up third-party access to account information;
• (ii) improve consumer rights including in relation to complaints handling and by introducing new rules on surcharging and interchange fees; and
• (iii) enhance security through the introduction of strong customer authentication.

Whilst most PSD2 requirements came into force in 2018, certain others, such as those relating to strong customer authentication are due to come into force in September 2019. The Regulation on Interchange Fees for Card-based Payment Transactions ((EU) 2015/751) ("IFR") came into force on 8 June 2015, with the exception of rules relating to the capping of interchange fees for consumer debit and credit card transactions (which came into force on 9 December 2015). The combined effect of PSD2 and the IFR is to introduce maximum levels of interchange fees for transactions based on consumer debit and credit cards and ban surcharges on these types of cards. PSD2 and the IFR apply to Vanquis Bank.

1.6 General Data Protection Regulation

The GDPR is directly applicable in the UK and came into force on 25 May 2018. The GDPR brought about material changes to the way data processors are regulated and affects marketing processes, particularly with respect to requirements relating to the procurement of a customer's consent to the use of his or her personal data.

The GDPR expands the territorial reach of data protection legislation beyond the borders of the EU and requires data controllers to map their data processes, ensuring demonstrable compliance with the provisions of the regulation. The GDPR also imposes more onerous breach reporting obligations and tougher penalties for compliance failures, with the maximum fine for compliance failures increasing to €20 million or up to 4% of the annual worldwide group turnover.

1.7 Anti Money Laundering

The Fourth Anti Money Laundering Directive 2015/849 ("4MLD") came into force in June 2017 and has been transposed into UK law by virtue of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. 4MLD made changes to the requirements around customer due diligence and the central register of beneficial ownership, introduced enhanced measures for local politically-exposed persons, removed the automatic exemption from enhanced customer due diligence, and extended to companies with majority-owned subsidiaries located in countries outside of the EU. 4MLD also introduced a risk based approach to customer due diligence. The Fifth Anti Money Laundering Directive 2018/843 ("5MLD") was published in June 2018 and EU Member States must transpose 5MLD into national law by the end of 2019. Although the changes introduced by 5MLD are not as extensive as those introduced by 4MLD, 5MLD contains some notable introductions including extension to virtual currencies and pre-paid cards, improved safeguards for financial transactions to/from high risk third countries, and provisions aimed at ensuring that centralised national bank and payment account registers or central data retrieval systems are accessible in all EU Member States.

3. REPUBLIC OF IRELAND REGULATION

The Enlarged Group's operations in Ireland are subject to the money-lending licensing regime set out in the Consumer Credit Act 1995 (as amended) (the "CCA 1995") and the provision of consumer credit is subject to the conduct of business rules set out in the CCA 1995 and the European Communities (Consumer Credit Agreements) Regulations 2010 (as applicable). Money-lenders must also comply with the Consumer Protection Code for Licensed Moneylenders (the "CP Code"). The CP Code includes provisions on knowing your customer, suitability, complaint handling and consumer records.

The Enlarged Group's business in Ireland is also subject to a range of other regulatory requirements including the fitness and probity standards issued by the CBI and the enforcement and sanctions provisions contained in the Central Bank Reform Act 2010 and the Central Bank (Supervisions and Enforcement) Act 2013.

The Credit Reporting Act 2013 (the "CRA 2013") provided for the establishment of the Central Credit Register ("CCR") in Ireland and was developed to collect and centralise information on credit/loans. The CCR contributes to financial stability and consumer protection by:

• providing lenders with a better analysis of borrowers' creditworthiness;
• giving information to borrowers on their financial profile;
• giving the CBI better insight into financial markets; and
• supporting the CBI's role of supervising the financial sector and ensuring financial stability.

The Enlarged Group's business in Ireland is required under the CRA 2013 to conduct credit checks on the CCR when a borrower has made an application for credit and to report any credit granted to the CCR on an ongoing basis.

PART XIX TAXATION

1. General

The following statements do not constitute legal or tax advice and are intended to apply only as a general guide to the position under current UK tax law and the current published practice of HMRC (which may not be binding), either of which is subject to change at any time (possibly with retroactive effect). They are not intended to be exhaustive and in particular do not include a consideration of the potential UK inheritance tax consequences of holding shares. Except where otherwise expressly stated, they apply only to Shareholders who are resident and (in the case of individuals) domiciled for tax purposes in (and only in) the UK to whom split-year treatment does not apply, who hold their Ordinary Shares as an investment, other than under an individual savings account or pension arrangement (and not as securities to be realised in the course of a trade or which constitute interest), hold less than 10% of the Ordinary Shares and who are the absolute beneficial owners of their Ordinary Shares and any dividends paid on them. They may not apply to certain Shareholders, such as dealers in securities, insurance companies, collective investment schemes, Shareholders who are exempt from tax and Shareholders who have (or are deemed to have) acquired their Ordinary Shares by virtue of an office or employment. Such persons may be subject to special rules.

Any person who is in any doubt as to his or her tax position or who may be subject to tax in any jurisdiction other than the United Kingdom is strongly advised to consult an appropriate professional tax adviser without delay.

2. Taxation of chargeable gains

If a Shareholder sells or otherwise disposes of all or some of the New Ordinary Shares allotted to him, he may, depending on his circumstances, incur a liability to UK taxation on any chargeable gain realised.

(i) Individual Shareholders

The current headline rates of capital gains tax for the 2018/19 tax year are 10% (for basic rate tax payers) and 20% (for high and additional rate tax payers) for individuals for gains other than those made which relate to disposals of residential property and/or carried interest receipts relating to investment management services provided. Certain reliefs or allowances may be available depending on the individual circumstances of the Shareholder, including the availability of an annual exempt amount which allows an individual to make a certain amount of total gain each year before such gain become subject to tax in the UK. For 2018/19 this annual exempt amount is £11,700.

(ii) Individual non-resident Shareholders

Individuals who are temporarily non-resident may, in certain circumstances, be subject to tax in respect of gains realised while they are not resident in the UK. Temporary non-residence for these purposes refers to the situation in which the individual Shareholder ceases to be tax resident in the UK (or is treated as having ceased to be tax resident in the UK for the purposes of the double tax treaty) for a period of five years or fewer and who disposes of his New Ordinary Shares during that period of temporary non-residence. Such an individual may be liable to capital gains tax on a chargeable gain accruing on the disposal on his return to the UK under certain anti-avoidance rules.

Subject to the paragraph above, a Shareholder who is not resident in the UK for tax purposes and who realises a gain will not normally be liable to UK taxation on chargeable gains. However, such a Shareholder who is an individual may be liable to UK tax on chargeable gains if, at the relevant time that Shareholder carries on a trade, profession or vocation in the UK through a branch or agency and the New Ordinary Shares, as the case may be are, or have been, used, held or acquired for the purposes of such trade, profession or vocation or for the purposes of such branch or agency. Shareholders who are not UK resident for tax purposes may be subject to non-UK tax on any gains under local law.

(iii) Corporate Shareholders

Corporate Shareholders within the charge to UK corporation tax which realise a gain will, subject to the availability of any exemptions, reliefs and/or allowable losses, be subject to corporation tax (at a rate of 19% for the year 2018/19 decreasing to 17% from 1 April 2020).

(iv) Corporate non-resident Shareholders

A corporate Shareholder which is not resident in the UK for tax purposes and which realises a gain will not normally be liable to UK taxation on chargeable gains. However, a corporate Shareholder which is not UK resident but carries on a trade in the UK through a permanent establishment may be liable to UK tax on chargeable gains if it disposes of New Ordinary Shares, as the case may be which are, at or before the time the gain accrues, used in or for the purposes of that trade or for the purposes of the permanent establishment.

(v) Indexation

In the case of individuals, trustees and personal representatives, indexation allowance is not available. Corporate Shareholders will be entitled to an indexation allowance in computing the amount of a chargeable gain accruing on a disposal of the New Ordinary Shares, which will provide relief for the effects of inflation by reference to movements in the UK retail price index up to December 2017 (but not from January 2018 onwards).

3. Stamp duty and SDRT

The comments below relating to stamp duty and SDRT apply whether or not a Shareholder is resident in the UK, but it should be noted that certain categories of person, including market makers, brokers, dealers and other specified market intermediaries, are entitled to exemption from stamp duty and SDRT in respect of purchases of securities in specified circumstances.

There should be no liability to stamp duty or SDRT arising on the allotment of New Ordinary Shares by the Company. The registration of and the issue of definitive share certificates to Shareholders in the name of a member of CREST should not give rise to any liability to stamp duty or SDRT.

Any unconditional agreement (whether written or verbal) to sell Ordinary Shares will normally give rise to a liability on the purchaser to SDRT, at the rate of 0.5% of the actual consideration paid. If an instrument of transfer (usually a stock transfer form) is subsequently produced it will generally be subject to stamp duty at the rate of 0.5% of the actual consideration paid (rounded up to the nearest £5 if necessary).

If within six years of the date of the agreement becoming unconditional an instrument of transfer is executed pursuant to the agreement, when stamp duty is duly paid on that instrument, or it is certified as exempt, the SDRT charge will be cancelled and any SDRT already paid will be refunded provided that a claim for repayment is made. Stamp duty and SDRT are generally the liability of the purchaser.

However, an exemption from stamp duty is available where the amount or value of the consideration is £1,000 or less, and it is certificated on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions for which the aggregate amount or value of the consideration exceeds £1,000.

Where Ordinary Shares are held in uncertificated form within CREST, a transfer of shares through CREST will generally be subject to SDRT (rather than stamp duty) at the rate of 0.5% of the value of the consideration given. CREST is obliged to collect SDRT on relevant transactions settled within the system. Deposits of Ordinary Shares into CREST will generally not be subject to SDRT or stamp duty, unless the transfer into CREST is itself for consideration. Special rules apply in connection with depositary arrangements and clearance services.

From 29 October 2018, transfers of listed securities to connected companies are subject to stamp duty or SDRT on no less than the market value of such securities.

4. Taxation of dividends

Under current UK tax law, the Company will not be required to withhold tax at source from dividend payments it makes. Liability to tax on dividends will depend upon the individual circumstances of the Shareholder.

A Shareholder resident outside the UK may be subject to non-UK taxation on dividend income under local law. A Shareholder who is resident outside the UK for tax purposes should consult their own tax adviser concerning their tax position on dividends received from the Company.

Individual Shareholders

Different rates of tax apply to different bands of a UK tax resident individual Shareholder's dividend income, which for these purposes includes UK and non-UK source dividends and certain other distributions in respect of shares.

With effect from 6 April 2018, the first £2,000 of dividend income received by an individual Shareholder in a tax year (the "Nil Rate Amount") is exempt from UK income tax, regardless of what tax rate would otherwise apply to that dividend income. If an individual Shareholder receives dividends in excess of the Nil Rate Amount in a tax year, the excess is taxed at the following dividend rates for the year 2018/19: 7.5% (for individuals not liable to tax at a rate above the basic rate), 32.5% (for individuals subject to the higher rate of income tax) and 38.1% (for individuals subject to the additional rate of income tax).

Dividend income that is within the dividend Nil Rate Amount counts towards an individual's basic or higher rate limits—and will therefore affect the level of savings allowance to which they are entitled, and the rate of tax that is due on any dividend income in excess of the Nil Rate Amount. In calculating into which tax band any dividend income over the Nil Rate Amount falls, savings and dividend income are treated as the highest part of an individual's income. Where an individual has both savings and dividend income, the dividend income is treated as the top slice.

Corporate Shareholders

It is likely that most dividends paid on the New Ordinary Shares to UK resident corporate Shareholders would fall within one or more of the classes of dividend qualifying for exemption from corporation tax. However, it should be noted that the exemptions are not comprehensive and are also subject to anti-avoidance rules. If a dividend paid on the Ordinary Shares to a UK resident corporate Shareholder does not fall within one of the exempt classes, the Shareholder will be subject to corporation tax on the gross amount of the dividend at a rate of 19%, falling to 17% from 1 April 2020.

A corporate Shareholder that is not resident in the UK will not be subject to corporation tax on dividends received from the Company in the UK, unless such Shareholder carries on a trade in the UK through a permanent establishment and the shares are used by, for or held by or for, the permanent establishment. In these circumstances, the non-UK resident corporate Shareholder may, depending on its individual circumstances and if the exemption discussed above is not available, be chargeable to corporation tax on dividends received from the Company.

PART XX ADDITIONAL INFORMATION

1. Responsibility

1.1 NSF and the NSF Directors, whose names appear in paragraph 1 (Directors and Senior Managers) of Part XVII (The Directors, the Board, Senior Managers and Corporate Governance), accept responsibility for the information contained in this Document. To the best of the knowledge and belief of NSF and the NSF Directors (who have each taken all reasonable care to ensure that such is the case) the information contained in this Document is in accordance with the facts and does not omit anything likely to affect the import of such information.

2. Incorporation and Registered Office

• 2.1 The Company was incorporated on 8 July 2014 as a private company limited by shares under the laws of England and Wales, with the name Non Standard Finance Limited and company number 09122252. On 20 August 2014, the Company changed its name to Non-Standard Finance Limited. On 4 December 2014 Non-Standard Finance Limited re-registered as a public company and changed its name to Non-Standard Finance Plc.
• 2.2 The Company's Ordinary Shares were admitted to the Official List by way of a Standard Listing in accordance with Chapter 14 of the Listing Rules and to trading on the London Stock Exchange's Main Market for listed securities on 19 February 2015, simultaneously with which the Company raised £102,283,168 before expenses through the 2015 Placing. The Company subsequently issued 40,750 ordinary shares of £0.05 each in August 2015. In September 2015 the Company was readmitted to the Official List with an ordinary share capital of 105,284,445 ordinary shares. The Company issued 188,235,825 ordinary shares in January 2016 in connection with the acquisition of Everyday Loans. In April 2016, following completion of the acquisition of Everyday Loans, the Company cancelled all its listed ordinary shares. The Company's ordinary shares and consideration shares, totalling 317,049,682 were subsequently readmitted on 14 April 2016.
• 2.3 The registered office of NSF is at 7 Turnberry Park Road, Gildersome, Morley, Leeds, England, LS27 7LE. Its telephone number is +44 (020) 7832 8921 and its fax number is +44 (020) 7832 4901.
• 2.4 The principal legislation under which NSF operates is the Companies Act 2006 and the regulations made under the Companies Act 2006.

3. NSF's Share Capital

3.1 Issued share capital

The number of Ordinary Shares outstanding as at 1 January 2018, being the first day of the Company's last complete financial year, and as at 31 December 2018, being the last day of the Company's last complete financial year, is as follows:

Date	Nominal value of Ordinary Shares	Number of Ordinary Shares issued, allotted, called up and fully paid
1 January 2018 . 31 December 2018	Ordinary Shares of £0.05 Ordinary Shares of £0.05	317,049,682(1) 317,049,682(2)

Notes:

(1) Includes 1.9 million Ordinary Shares held as treasury shares.

(2) Includes 5,000,000 Ordinary Shares are held as treasury shares (representing 1.6% of the total ordinary share capital in issue). Treasury shares retain no voting rights.

The issued and fully paid share capital of the Company as at the Latest Practicable Date was as follows:

Number of Ordinary Shares	Nominal value of	Amount of
issued, allotted, called up and fully paid	Ordinary Shares	share capital (£)
317,049,682 .	£0.05	£15,852,484

Notes:

(1) 5,000,000 Ordinary Shares are held as treasury shares (representing 1.6% of the total ordinary share capital in issue). Treasury shares retain no voting rights.

The issued and fully paid share capital of the Company immediately following Admission is expected to be as follows:

Nominal value of Ordinary Shares	Number of Ordinary Shares issued, allotted, called up and fully paid(1)	Amount of share capital (£)
£0.05	2,587,985,058	129,399,253

Notes:

(1) Assumes that no further Ordinary Shares are issued between 7 March 2019 (being the Latest Practicable Date) and Admission (excluding up to 2,495,158 shares which could be issued under the Provident Financial Savings-related Share Option Schemes).

The Ordinary Shares are admitted to the standard segment of the Official List and traded on the Main Market. The ISIN of the Ordinary Shares is GB00BRJ6JV17 and the SEDOL number is BRJ6JV1. The Ordinary Shares are in registered form and are capable of being held in either certificated or uncertificated form, and title to such shares may be transferred by means of a relevant system (as defined in the CREST Regulations).

The Ordinary Shares to be issued as New Ordinary Shares will be Ordinary Shares in registered form and may be held in certificated form or in uncertificated form, and title to such Ordinary Shares may be transferred by means of a relevant system (as defined in the CREST Regulations). Where Ordinary Shares are held in certificated form, share certificates will be sent to the registered members by first class post. Where Ordinary Shares are held in paperless form, the Company's registrar, Computershare, will transfer the Ordinary Shares through the CREST system. Where the registered member is resident overseas the Ordinary Shares are transferred through the CREST system to the beneficial owner's CREST appointed partner and from there they can be transferred to the beneficial owner's preferred holding vehicle.

3.2 Share capital history

On 8 July 2014, the Company issued one ordinary share of £1 to John van Kuffeler. On 5 November 2014, the share capital was sub-divided into 20 Ordinary Shares of 5 pence each. On 2 December 2014, the share capital was increased by the issuance of 999,980 Ordinary Shares of 5 pence each at par to John van Kuffeler. On 4 February 2015, the share capital was further increased by the issuance of 1,960,527 Ordinary Shares of 5 pence each at a premium of 33 pence each to John van Kuffeler, Nicholas Teunon, Miles Cresswell-Turner, Robin Ashton and Charles Gregson. On 19 February 2015, the share capital was further increased by: (i) the issuance of 102,283,168 Ordinary Shares of 5 pence each at a premium of 95 pence each to the investors in the 2015 Placing; (ii) the issuance of 27,500 Ordinary Shares of 5 pence each at a premium of 95 pence each to Charles Gregson; (iii) and the issuance of 13,250 Ordinary Shares of 5 pence each to Heather McGregor at a premium of 95 pence each in lieu of their first year's fees in accordance with the terms of their letters of appointment.

On 3 September 2015, the UKLA cancelled the listing of the Ordinary Shares on the Official List, and the Ordinary Shares were cancelled from admission to trading on the Main Market of the London Stock Exchange, in connection with the Loans at Home Acquisition (such acquisition being classified as a reverse takeover under the Listing Rules). The Ordinary Shares were immediately readmitted to the Official List (by way of a standard listing) and to trading on the Main Market London Stock Exchange on the same date. On 7 January 2016 the share capital of the Company was increased by the issuance of 188,235,825 Ordinary Shares of 5 pence each at a premium of 80 pence in relation to the Everyday Loans Acquisition and on 13 April 2016, the share capital of the Company was increased by a further issuance of 25,529,412 Ordinary Shares of 5 pence each at a premium of 80 pence in relation to the Everyday Loans Acquisition.

As announced on 8 November 2017, and from that date until 1 May 2018, the Company repurchased 5,000,000 shares to be held in treasury under a share buyback scheme. At the Latest Practicable Date, NSF held 5,000,000 Ordinary Shares in treasury.

To date, no Ordinary Shares have been issued in connection with the Employee Share Plans.

4. Interests of the Directors

4.1 Interests of the Directors and Senior Managers in Ordinary Shares

As at the Latest Practicable Date, except as disclosed in the table below, neither the Directors, the Senior Managers, nor any of their respective immediate families, will have any interests in the share capital of NSF which:

• (a) are required to be notified to NSF pursuant to the Market Abuse Regulation and Chapter 3 of the Disclosure Guidance and Transparency Rules; or
• (b) are interests of a connected person (within the meaning of Schedule 11B of FSMA) which would be required to be disclosed under paragraph (a) above and the existence of which is known to or could with reasonable diligence be ascertained by that Director, as at the Latest Practicable Date.

The following table sets out the interests of the Directors and the Senior Managers as at the Latest Practicable Date and immediately following Admission:

	As at the Latest Practicable Date		Immediately following Admission
Director	Number of Ordinary Shares(1)	Approximate percentage of issued share capital	Number of Ordinary Shares(1)	Approximate percentage of issued share capital(2)
Niall Booker	426,700	0.14%	426,700	0.017%
Miles Cresswell-Turner	833,780	0.27%	833,780	0.033%
John Van Kuffeler .	2,114,474	0.68%	2,114,474	0.083%
Charles Gregson .	310,984	0.10%	310,984	0.012%
Heather McGregor .	78,700	0.03%	78,700	0.003%
Nicholas Teunon	87,980	0.03%	87,980	0.003%
Davie Thompson .	0	0.00%	0	0.000%
Sarah Day	0	0.00%	0	0.000%
Peter Reynolds	100,000	0.03%	100,000	0.004%

Notes:

• (1) Includes total shares under individual's control, but which may be held by another (for example, a spouse).
• (2) Assumes that no further Ordinary Shares are issued between 7 March (being the Latest Practicable Date) and Admission apart from the New Ordinary Shares, and excluding the 5,000,000 Ordinary Shares held in treasury for the purpose of this calculation and excluding up to 2,495,158 shares which could be issued under the Provident Financial Savings-related Share Option Schemes.

Taken together, the combined percentage interest of the Directors and the Senior Managers in the issued share capital expected to subsist immediately following Admission is approximately 0.15%.

Details of other rights over Ordinary Shares held by the Directors or the Senior Managers as at the Latest Practicable Date are set out below. Those rights are not included in the interests shown in the table above.

4.2 Interests of the Directors and the Senior Managers in Ordinary Shares pursuant to the Employee Share Plans

The following tables set out details of the options and awards held by the Directors and the Senior Managers under the Employee Share Plans as at the Latest Practicable Date. Further details of the Employee Share Plans are set out in paragraph 8 (Employee Share Plans) of this Part XX (Additional Information).

(a) NSF LTI

As at the Latest Practicable Date, participation by Directors and Senior Managers in the NSF LTI was as follows:

Director / SM	Award date	Vesting Date	Percentage of pool or C Shares allocation
John van Kuffeler .	19 September 2017	31 December 2020	37.5%
Nick Teunon	19 September 2017	31 December 2020	25%
Miles Cresswell-Turner .	15 September 2017	31 December 2020	250 C-Shares of Non-Standard Finance Subsidiary Limited
Peter Reynolds	15 September 2017	31 December 2020	125 C-Shares of Non- Standard Subsidiary Limited

Notes:

(1) NSF LTI awards have been granted subject to performance conditions. The NSF LTI awards held by Directors and Senior Managers are either in the form of nil-cost options or C Shares in Non-Standard Finance Subsidiary Limited which may be exchanged for Ordinary Shares in the Company in certain circumstances. For further information on the NSF LTI, see the fuller description at section 8 of this Part XX (Additional Information).

(b) ELG LTI

As at the Latest Practicable Date, participation by Directors and Senior Managers in the ELG LTI was as follows:

Director / SM	Award date	Vesting Date	Maximum value of Ordinary Shares under award
Miles Cresswell-Turner	14 May 2018	31 December 2019	£894,000

Notes:

(1) ELG LTI awards have been granted in the form of nil-cost options, subject to performance conditions. They will be exercisable (subject to the rules of the LAH LTI) from the vesting date until the tenth anniversary of the award date.

(2) Dividend equivalents arising over the period between the grant date and the vesting date will be paid in Ordinary Shares following exercise.

(c) LAH LTI

As at the Latest Practicable Date, participation by Directors and Senior Managers in the LAH LTI was as follows:

Director / SM	Award date	Vesting Date	Maximum value of Ordinary Shares under award
Davie Thompson .	20 December 2017	31 December 2019	£750,000

Notes:

(1) LAH LTI awards have been granted in the form of nil-cost options, subject to performance conditions. They will be exercisable (subject to the rules of the LAH LTI) from the vesting date until the tenth anniversary of the award date.

(2) Dividend equivalents arising over the period between the grant date and the vesting date will be paid in Ordinary Shares following exercise.

(d) SAYE

As at the Latest Practicable Date, participation by Directors and Senior Managers in the SAYE was as follows:

Director / SM	Award date	Vesting Date	Exercise Price (£)	Maximum Number of Ordinary Shares under award
Nick Teunon .	14 May 2018	1 July 2021	0.4952	36,348
Miles Cresswell-Turner .	14 May 2018	1 July 2021	0.4952	36,348
Davie Thompson .	6 October 2017	1 December 2020	0.6060	29,702
Peter Reynolds .	14 May 2018	1 July 2021	0.4952	36,348

Notes:

(1) The SAYE options will be exercisable (subject to the rules of the SAYE) for a six-month period commencing on the vesting date.

(e) Founder Shares

As at the Latest Practicable Date, holdings by Directors and Senior Managers of the Founder Shares was as follows:

Director	Subject to conditions	Vested but unexercised	Total at Latest Practicable Date
John van Kuffeler	30	0	30
Nick Teunon .	25	0	25
Miles Cresswell-Turner .	25	0	25
Charles Gregson .	10	0	10
Peter Reynolds .	6	0	6

Further details on the Founder Shares are set out in paragraph 8.6 (Founder Shares) of this Part XX (Additional Information).

5. Remuneration and benefits of Directors and Senior Managers

Under the terms of their service agreements, letters of appointment and applicable incentive plans, the remuneration and benefits to the Directors (and to the Senior Managers in aggregate) who served during the 2018 Financial in respect of the 2018 Financial Year, were as follows:

	Base Salary	Benefits	Bonus	Long-Term Incentives	Pension	Other	Total
	£000	£000	£000	£000	£000	£000	£000
John van Kuffeler	325	38	245	—	30	—	644
Nick Teunon .	280	17	211	6	26	—	548
Miles Cresswell-Turner .	280	19	238	6	25	—	568
Charles Gregson .	125	—	—	—	—	—	125
Heather McGregor .	75	—	—	—	—	—	75
Niall Booker	75	0.0—	—	0.0—	—	0.0—	75
Senior Managers .	535	24	136	—	48	—	743
Total .	1,695	98	830	12	129	0	2765

Notes:

(1) Benefits include life, private medical and income protection insurance benefits, and provision of a company car to the NSF Group Chief Executive

6. Directors' Service Contracts and Letters of Appointment

6.1 Executive Directors

(a) General terms

The Executive Directors have service agreements with NSF as follows:

Director	Position	Date of contract
John van Kuffeler .	Group Chief Executive	19 February 2015
Nick Teunon .	Group Finance Officer	19 February 2015
Miles Cresswell-Turner	Chief Executive of Everyday Loans	1 January 2016

Salary

The NSF Group Chief Executive is paid a salary of £333,100 per annum, the Chief Financial Officer is paid a salary of £287,000 per annum and the Chief Executive of Everyday Loans is paid a salary of £287,000, in each case as from 1 January 2019.

Benefits

Each Executive Director is entitled to life, private medical and income protection insurance benefits. In addition, the Executive Directors are entitled to be reimbursed by the Company for travel, hotel and other expenses incurred by them in the course of their directors' duties relating to the Company. The NSF Group Chief Executive is also entitled to a company car.

Bonus

Each Executive Director is eligible for an annual discretionary cash bonus (with a maximum bonus opportunity of 100% of annual base salary, an on-target bonus of 75% of annual base salary, and a threshold bonus of 25% annual base salary). There is no minimum bonus award. Bonus awards are granted annually following the signing of the Annual Report and Accounts, usually in March of the year following the reporting period in question.

The performance period applicable to bonuses is one financial year, with payout determined by the Remuneration Committee following the year end, based on achievement against a range of financial and non-financial targets.

Malus and clawback provisions apply at the discretion of the Remuneration Committee where the Remuneration Committee considers such action is reasonable and appropriate, such as a participant's material underperformance, material brand or reputational damage, material misstatement of the accounts, gross misconduct and fraud, regulatory and similar failures or other reason as determined by the Remuneration Committee.

Pension

Executive Directors' are entitled either to contributions to a personal pension scheme or a cash allowance in lieu of pension benefits up to a maximum amount equal to 10% of base salary.

Share awards

Details of the share options and awards held by the Executive Directors as at the Latest Practicable Date are set out in paragraph 4.2 (Interests of the Directors and Senior Managers in Ordinary Shares pursuant to the Employee Share Plans) of this Part XX (Additional Information). Details of the Employee Share Plans are at paragraph 8 (Employee Share Plans) of this Part XX (Additional Information).

(b) Termination provisions

Each Executive Director's service agreement is terminable on 12 months' written notice given by either party. The Company, as the employer under the service agreements, is entitled to terminate the Executive Director's employment by payment of a cash sum in lieu of notice, equal to the salary which the Executive Director would have been entitled to receive during the notice period. The payment in lieu of notice can be paid, at the Company's discretion, as a lump sum or in monthly instalments over the notice period. There is a mechanism in each Executive Director's service agreement to reduce the payment in lieu of notice where he commences alternative employment while the monthly instalments remain payable.

Each of the Executive Directors is subject to a confidentiality undertaking without limitation in time and to non-competition, non-solicitation, and non-hiring restrictive covenants for periods of six to 12 months after the termination of their respective service agreements.

6.2 Non-Executive Directors

(a) General terms

The dates of appointment or subsequent re-appointment and unexpired term of the Non-Executive Directors as at the Latest Practicable Date are as follows:

Director	Position	Date of (re)appointment	Date of expiration of current term in office
Charles Gregson	Non-executive Chairman	30 April 2018	30 April 2021
Heather McGregor	Independent Non-Executive Director	30 April 2018	30 April 2021
Niall Booker .	Independent Non-Executive Director	9 May 2017	9 May 2020

Each of the Non-Executive Directors has been appointed by the Company pursuant to a letter of appointment. Charles Gregson receives a fee in respect of his Chairmanship of £125,000 per annum, and each of Heather McGregor and Niall Booker receive a £75,000 per annum fee in their capacity as Independent Non-Executive Directors. Fees are payable quarterly in arrears. Charles Gregson received 50% of his fee relating to his Chairmanship (post-tax) in the form of Ordinary Shares.

In addition, the Non-Executive Directors are entitled to be reimbursed by the Company for travel, hotel and other expenses incurred by them in the course of their directors' duties relating to the Company. Any tax that arises on these reimbursed expenses is paid by the Company.

(b) Termination provisions

Each of the Chairman and the Non-Executive Directors has a letter of appointment. The appointment of a Non-Executive Director or Chairman is for a period of three years with each such appointment being terminable by either the relevant non-executive Director or the Company on 12 months' written notice. No compensation is payable in the event of early termination apart from the notice period. The Non-Executive Directors and the Chairman are required to seek re-election at the annual general meeting of NSF and any subsequent annual general meeting as required by the Articles or as the Board resolves.

The Non-Executive Directors are subject to confidentiality undertakings without limit in time and to non-compete restrictive covenants for six months after the termination of their appointments.

Save as disclosed in this Part XX (Additional Information), there are no existing letters of appointment or other contracts between any Non-Executive Director and any of NSF, its subsidiaries and subsidiary undertakings which provide for benefits upon termination of employment.

7. Articles

This section has been incorporated by reference as detailed in the section of this Document entitled Part XXI (Information incorporated by reference).

8. Employee Share Plans

The Company operates six employee share plans, namely the NSF LTI, the GLD LTI, the EDL LTI, the LAH LTI, the SAYE and the Founder Shares (together, the "Employee Share Plans").

A description of the principal terms of each of the Employee Share Plans is set out below.

8.1 The Company's Long Term Incentive Plan ("NSF LTI")

(a) Status

The NSF LTI is a discretionary executive share plan. Under the NSF LTI, eligible employees may be granted awards ("NSF LTI Awards") in the form of:

• options over Ordinary Shares; and/or
• C shares in a subsidiary of the Company which may be exchanged in certain circumstances for Ordinary Shares or cash.

(b) Eligibility

All employees (including Executive Directors) of the NSF Group are eligible for selection to participate in the NSF LTI. In practice, awards have been granted to Executive Directors and senior management.

(c) Limits

The NSF LTI may operate over new issue Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market.

In any 10-year period, not more than 5% of the Company's issued ordinary share capital will be issued under the NSF LTI and under any other discretionary employees' share scheme adopted by the NSF Group.

In addition, the maximum dilution possible in connection with the NSF LTI and all other share incentive plans offered by the Company will not be greater than 10% of the Company's issued share capital in any 10-year period.

Any awards earned in excess of either cap will be satisfied using Ordinary Shares purchased in the market.

Awards which lapse shall cease to count towards this limit. This limit shall not include Ordinary Shares bought in the market but shall include Ordinary Shares provided out of treasury.

(d) Structure of award

NSF LTI Awards are subject to a four-year performance period which commenced on 1 January 2017 (the "Performance Period").

NSF LTI Awards give participants the opportunity to share in a proportion of the total value created for Shareholders above set hurdles measured at the end of the Performance Period (the "Measurement Date").

The final value will be delivered to participants in the form of Ordinary Shares equal in value to the value attributable to the award as determined by the performance measurement of the NSF LTI Award at the end of the Performance Period.

Shares will need to be held for a further 12 months from vesting (the "Deferral Period") before they can be sold.

(e) Performance conditions

NSF LTI Awards held by participants will share in the growth in value of the Company measured at the Measurement Date.

If the average middle market price of the Ordinary Shares for the 30 business days prior to the Measurement Date is greater than £1.10, then the total value attributable to the awards will be equal to 15% of the growth in value of the Company at 1 January 2017 versus the value of the Company at a share price of £1.10.

If the share price of the Company is less than £1.10 at the end of the Performance Period, then the total value attributable to the NSF LTI Awards will be nil and they will lapse.

(f) Delivery of Shares in the Company

At the end of the Performance Period and following determination of the total value attributable to the awards, and depending on the structure of the awards, NSF LTI Awards will vest and, in the case of options, become exercisable (the number of options that can be exercised being determined by value attributable to the awards held by the individual participants). If an award, or any part of it, was over shares in a subsidiary, participants can, shortly after the end of the Performance Period, exchange their awards for a number of Ordinary Shares equal in value to the value attributable to the awards held by the individual participants.

Regardless of the form of award, the Ordinary Shares that participants receive must be retained by them during the Deferral Period.

(g) Cessation of employment

If a participant resigns or is dismissed for gross misconduct, or is otherwise not deemed to be a "good leaver" during the four year Performance Period, then the award will lapse and the total value attributable to the remaining awards at the end of the Performance Period will be reduced in proportion to the award held by the leaving participant.

If a participant's cessation of employment is the result of specified "good leaver" events (for example, injury, disability, ill health, death) or such other reason as the Remuneration Committee may determine, then that participant will retain the award. However, the value attributable to that award at the end of the Performance Period will be reduced in proportion to the period during the Performance Period when the participant was employed.

(h) Change of Control

In the event of a change of control of the Company, there will be a special 'Measurement Date' on the change of control and the total value attributable to the awards will be calculated as at that date. The share price of the Company used to calculate the total value attributable to the awards will be the offer price for the Company.

Restrictions during the Deferral Period will not apply.

Similar provisions to those on a change of control apply to certain other corporate events including a scheme of arrangement or voluntary winding up.

(i) Dividends

Participants will not be entitled to dividends in respect of their award during the Performance Period. Participants will be entitled to dividends in respect of their shares during the Deferral Period.

(j) Taxation

Participants will be responsible for paying any taxes due on the receipt of the award or reimbursing the Company for any taxes paid on behalf of the participants.

(k) Allotment of shares

Application will be made for the admission of new shares to be issued at the end of the Performance Period to the Official List of the UKLA and to trading on the London Stock Exchange plc's Main Market for listed securities.

(l) Variation in share capital (adjustments and amendments)

On a variation of the share capital of the Company or any Group company, NSF LTI Awards may be adjusted in such manner as the Remuneration Committee determines and the advisors of the Company confirm to be fair and reasonable.

(m) Malus and clawback

Malus and clawback provisions will apply to the NSF LTI.

Trigger events will be:

• the adverse restatement of the published accounts of any NSF Group company in respect of a period which overlaps in whole or in part with the Performance Period; and/or
• the Remuneration Committee determining that the results of any NSF Group company have otherwise been achieved in an inappropriate manner; and/or

• the discovery that any information used to determine the payment was based on error, or inaccurate or misleading information; and/or

• action or conduct of the participant which, in the reasonable opinion of the Remuneration Committee, amounts to employee misbehaviour, material underperformance, fraud or gross misconduct; and/or

• events or behaviour of the participant that have led to the censure of a NSF Group company by a regulatory authority or have had a significant detrimental impact on the reputation of any NSF Group company provided that the Remuneration Committee is satisfied that the participant was responsible for the censure or reputational damage and that the censure or reputational damage is attributable to him.

Malus will operate throughout the Performance Period. Clawback will apply during the Deferral Period.

(n) Benefits not pensionable

NSF LTI Awards, Ordinary Shares acquired and any other rights granted pursuant to the NSF LTI are non-pensionable.

(o) Non-transferability

NSF LTI Awards are not transferable, except in limited circumstances such as to the trustee for the participant, in which case the trustee will be able to transfer the benefit to the participant or by will or by the laws of descent and distribution.

(p) Amendments

Amendments to the NSF LTI may be made at the discretion of the Remuneration Committee. However, the provisions governing eligibility requirements, equity dilution, share utilisation and the adjustments that may be made following a rights issue or any other variation of capital, together with the limitations on the number of shares that may be issued, cannot be altered to the advantage of participants without prior shareholder approval, except for minor amendments to benefit the administration of the NSF LTI, to take account of a change in legislation, or to obtain or maintain favourable tax, exchange of control or regulatory treatment for participants or for the NSF Group.

8.2 The Guarantor Loans Division Long Term Incentive Plan ("GLD LTI")

(a) Status

The GLD LTI is a discretionary executive share plan. Under the GLD LTI, eligible employees may be granted awards ("GLD LTI Awards") in the form of:

• options over Ordinary Shares; and/or
• conditional awards over Ordinary Shares; and/or
• restricted Ordinary Shares in the Company.

(b) Eligibility

Individuals who are employed by an Everyday Loans Holdings Limited ("EDL") group member and who work for or on behalf of the Guarantor Loans Division of the EDL group, but who are not a member of the Board, are eligible for selection to participate in the GLD LTI.

(c) Limits

The GLD LTI may operate over new issue Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market.

The rules of the GLD LTI provide that, in any 10-year period, not more than 10% of the Company's issued ordinary share capital may be issued under the GLD LTI and under any other employees' share scheme adopted by the Group.

In addition, the rules of the GLD LTI provide that, in any 10-year period, not more than 5% of the Company's issued ordinary share capital may be issued under the GLD LTI and under any other discretionary employees' share scheme adopted by the Group.

Ordinary Shares issued out of treasury under the GLD LTI will count towards these limits for so long as this is required under the Investment Association guidelines.

(d) Performance conditions

GLD LTI awards may be granted subject to performance conditions and any other conditions set on or before the award date.

If an event occurs which causes the grantor to consider that any performance condition and/or other condition subject to which a GLD LTI award has been granted is no longer appropriate, it may substitute, vary or waive that condition in such manner as is reasonable in the circumstances and, except in the case of waiver, produces a fairer measure of performance and is not materially less difficult to satisfy that if the event had not occurred.

Awards granted under the GLD LTI have been granted subject to performance conditions measured over a period of just over three years. Performance conditions have typically been based on financial performance targets linked to the performance of the guarantor loans division.

(e) Vesting and exercise

Options will normally become exercisable, conditional awards will normally vest and restricted shares will normally be released on a vesting date which is no earlier than three years after the award date, to the extent that any applicable performance conditions have been satisfied and to the extent permitted under any operation of malus or clawback. Options will normally remain exercisable until the tenth anniversary of the award date (or a shorter period specified at grant).

(f) Holding period

GLD LTI Awards may be granted subject to a holding period, during which the participants will not be permitted to sell their shares, irrespective of their employment status (save in the case of death, where the holding period is deemed to have ended immediately).

(g) Cessation of employment

As a general rule, an award shall vest and an option shall be exercisable only while the participant remains employed by any member of the NSF Group, and awards will lapse on cessation of employment.

However, if a participant so ceases because of his injury, ill-health or disability, redundancy, retirement by agreement with the employer, or his employing company or the business for which he works being transferred out of the NSF Group, the company by which he is employed requiring that he is no longer employed by that company or any other NSF Group company, or in other circumstances at the discretion of the Board (each a "Good Leaver Reason"), his GLD LTI Award will ordinarily vest on the date that it would have vested if he had not so ceased employment, subject to performance conditions and (unless the Board decides otherwise) time pro-rating. Alternatively, the Board can decide that vesting will occur immediately, in which case the award will vest to the extent determined by the Board in its discretion, taking into account such factors as it may consider relevant including satisfaction of any performance and other conditions, and (unless the Board determines otherwise) subject to time pro-rating.

To the extent that an option vests in accordance with the above provisions, it may be exercised for a period of six months following vesting (or such longer period as the Board determines).

If a participant dies, a proportion of each unvested GLD LTI Award held by him will vest immediately. The proportion which vests will be determined by the Board in its discretion taking into account such factors as it may consider relevant including satisfaction of any performance and other conditions. Alternatively, the Board may decide that an unvested GLD LTI Award will vest on the normal vesting date, in which case any performance and other conditions will be considered at the time of vesting. In each case, vesting will be subject to time pro-rating (unless the Board determines otherwise).

A participant may not exercise options and no award will vest while the participant is under notice, unless the Board determines otherwise. If the award would otherwise have vested during the notice period and the notice is withdrawn, the award will vest on that withdrawal, subject to any dealing restriction.

(h) Corporate events

In the event of a takeover (by way of general offer or a Court sanctioned scheme of arrangement) or winding-up of the Company, the Board shall determine what proportion of an award shall vest early, taking into account such factors as it considers relevant including the time the award has been held by the participant and having regard to any performance and other conditions. Any proportion of an option which vests may be exercised during the six month period (or such longer period as the Board determines) following the change of control (or, in the case of a scheme of arrangement, following Court sanction) or winding-up, after which it will lapse.

If the Board becomes aware that the Company will be affected by a demerger, distribution (other than an ordinary dividend) or other transaction not otherwise covered by the rules of the GLD LTI, it may determine that awards will vest. In these circumstances, the Board will determine the proportion of the award which will vest in its discretion subject to such conditions as it may require and taking into account such factors as it may consider relevant including the time the award has been held by the participant and having regard to any performance and other conditions.

Where the Board is aware of a corporate event which is likely to cause early vesting under the rules and either (i) on vesting, the conditions for relief under Part 12 of the Corporation Tax Act 2009 may not be satisfied or (ii) the Board in its discretion so determines, the Board may declare that all awards that are expected to vest as a result of the relevant event will vest during such period prior to the relevant event as it determines.

In the event of an internal corporate reorganisation or a merger, GLD LTI Awards may alternatively be exchanged for new awards over shares in another company where either the participant accepts such an offer or the Board decides that awards are to be exchanged for new awards.

(i) Dividend equivalents

An award may entitle participants to receive an amount either in Ordinary Shares or in cash equal in value to any dividends that would have been paid on the Ordinary Shares which vest under their GLD LTI Awards by reference to dividend record dates falling between the award date and the date of vesting. This amount may assume the re-investment of dividends and may exclude or include special dividends or dividends in specie, at the grantor's discretion.

(j) Allotment of Shares

Provided that Ordinary Shares are listed on the Official List and traded on the London Stock Exchange, the Company will apply for the listing and admission to trading of any Ordinary Shares issued under the GLD LTI as soon as reasonably practicable.

(k) Variation in share capital (adjustments and amendments)

On any variation of the share capital of the Company, the number of shares subject to a GLD LTI Award in the form of an option or conditional award, the description of the shares subject to such option or award and/or the award price may be adjusted in such manner as the grantor (and, where relevant, the Board) determines.

The holder of any restricted shares under the GLD LTI will have the same rights as any other shareholder of restricted shares in the event of any variation of share capital.

(l) Malus and clawback

Malus and clawback provisions will apply to the GLD LTI.

Trigger events for both provisions will be:

• a material misstatement resulting in adjustment in the audited consolidated accounts of the Company or any member of the NSF Group;
• discovery that the assessment of any performance or other condition applying to an award was based on a material error or materially inaccurate or misleading information;

• discovery that any information used to determine the number of Ordinary Shares subject to an award was based on a material error or materially inaccurate or misleading information;

• action or conduct by a participant which, in the Board's reasonable opinion, amounts to material employee misbehaviour, fraud or gross misconduct; and/or

• events or behaviour of a participant which leads to the censure of a member of the NSF Group by a regulatory authority or otherwise has a significant detrimental impact on a member of the NSF Group's reputation, provided that the Board is satisfied that the relevant participant was responsible and the censure or reputational damage is attributable to him.

The Board may apply clawback during the period of one year following vesting.

(q) Benefits not pensionable

The benefits received under the GLD LTI are not pensionable.

(r) Non-transferability

GLD LTI Awards are not transferable, except in the case of death of the participant.

(m) Amendments

The Board may, at any time, amend the provisions of the GLD LTI in any respect, except that:

• (i) the prior approval of the Company in general meeting must be obtained in the case of any amendment to the advantage of existing or future participants which relates to the basis for determining an eligible employee's entitlement to an award and/or to Ordinary Shares in the Company, the persons to whom a GLD LTI Award can be granted, the limit on the aggregate number of shares over which awards may be granted, the limit on the number of shares over which awards may be granted to any one eligible employee, the adjustment of awards on a variation of the Company's share capital and/or the rule relating to such prior approval, save that there are exceptions for minor amendments which (a) benefit the administration of the GLD LTI or (b) are necessary or desirable to take account of a change in legislation or obtain favourable tax, exchange control or regulatory treatment for participants, the Company and/or NSF Group companies; and
• (ii) amendments which would materially adversely affect the rights of existing participants may only be made if such participants are notified of such amendments and the majority of participants approve such amendment, or where the amendment is required by a legal or regulatory requirement.

8.3 The Everyday Loans Limited Long Term Incentive Plan ("EDL LTI")

(a) Status

The EDL LTI is a discretionary executive share plan for senior management. Under the EDL LTI, eligible employees may be granted awards ("EDL LTI Awards") in the form of:

• options over Ordinary Shares; and/or
• conditional awards over Ordinary Shares; and/or
• restricted Ordinary Shares.

(b) Eligibility

Employees of the EDL group who are not members of the Board are eligible for selection to participate in the EDL LTI.

(c) Limits

The EDL LTI may operate over new issue Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market.

The rules of the EDL LTI provide that, in any 10-year period, not more than 10% of the Company's issued ordinary share capital may be issued under the EDL LTI and under any other employees' share scheme adopted by the Group.

In addition, the rules of the EDL LTI provide that, in any 10-year period, not more than 5% of the Company's issued ordinary share capital may be issued under the ELD LTI and under any other discretionary employees' share scheme adopted by the Group.

Ordinary Shares issued out of treasury under the EDL LTI will count towards these limits for so long as this is required under the Investment Association guidelines.

(d) Performance conditions

EDL LTI awards may be granted subject to performance conditions and any other conditions set on or before the award date.

If an event occurs which causes the grantor to consider that any performance condition and/or other condition subject to which a EDL LTI award has been granted is no longer appropriate, it may substitute, vary or waive that condition in such manner as is reasonable in the circumstances and, except in the case of waiver, produces a fairer measure of performance and is not materially less difficult to satisfy that if the event had not occurred.

Awards granted under the EDL LTI have been granted subject to performance conditions measured over a period of three years. Performance conditions have typically been based on financial performance targets linked to the performance of EDL.

(e) Vesting and exercise

Options will normally become exercisable, conditional awards will normally vest and restricted shares will normally be released on a vesting date which is no earlier than three years after the award date, to the extent that any applicable performance conditions have been satisfied and to the extent permitted under any operation of malus or clawback. Options will normally remain exercisable until the tenth anniversary of the award date (or a shorter period specified at grant).

(f) Holding period

EDL LTI Awards may be granted subject to a holding period, during which the participants will not be permitted to sell their shares, irrespective of their employment status (save in the case of death, where the holding period is deemed to have ended immediately).

(g) Cessation of employment

As a general rule, an award shall vest and an option shall be exercisable only while the participant remains employed by any member of the NSF Group, and awards will lapse on cessation of employment.

However, if a participant so ceases because of a Good Leaver Reason, his EDL LTI Award will ordinarily vest on the date that it would have vested if he had not so ceased employment, subject to performance conditions and (unless the Board decides otherwise) time pro-rating. Alternatively, the Board can decide that vesting will occur immediately, in which case the award will vest to the extent determined by the Board in its discretion, taking into account such factors as it may consider relevant including satisfaction of any performance and other conditions, and (unless the Board determines otherwise) subject to time pro-rating.

To the extent that an option vests in accordance with the above provisions, it may be exercised for a period of six months following vesting (or such longer period as the Board determines).

If a participant dies, a proportion of each unvested EDL LTI Award held by him will vest immediately. The proportion which vests will be determined by the Board in its discretion taking into account such factors as it may consider relevant including satisfaction of any performance and other conditions. Alternatively, the Board may decide that an unvested EDL LTI Award will vest on the normal vesting date, in which case any performance and other conditions will be considered at the time of vesting. In each case, vesting will be subject to time pro-rating (unless the Board determines otherwise).

A participant may not exercise options and no award will vest while the participant is under notice, unless the Board determines otherwise. If the award would otherwise have vested during the notice period and the notice is withdrawn, the award will vest on that withdrawal, subject to any dealing restriction.

(h) Corporate events

In the event of a takeover (by way of general offer or a Court sanctioned scheme of arrangement) or winding-up of the Company, the Board shall determine what proportion of an award shall vest early, taking into account such factors as it considers relevant including the time the award has been held by the participant and having regard to any performance and other conditions. Any proportion of an option which vests may be exercised during the six month period (or such longer period the Board determines) following the change of control (or, in the case of a scheme of arrangement, following Court sanction) or winding-up, after which it will lapse.

If the Board becomes aware that the Company will be affected by a demerger, distribution (other than an ordinary dividend) or other transaction not otherwise covered by the rules of the EDL LTI, it may determine that awards will vest. In these circumstances, the Board will determine the proportion of the award which will vest in its discretion subject to such conditions as it may require and taking into account such factors as it may consider relevant including the time the award has been held by the participant and having regard to any performance and other conditions.

Where the Board is aware of a corporate event which is likely to cause early vesting under the rules and either (i) on vesting, the conditions for relief under Part 12 of the Corporation Tax Act 2009 may not be satisfied or (ii) the Board in its discretion so determines, the Board may declare that all awards that are expected to vest as a result of the relevant event will vest during such period prior to the relevant event as it determines.

In the event of an internal corporate reorganisation or a merger, EDL LTI Awards may alternatively be exchanged for new awards over shares in another company where either the participant accepts such an offer or the Board decides that awards are to be exchanged for new awards.

(i) Dividend equivalents

An award may entitle participants to receive an amount either in Ordinary Shares or in cash equal in value to any dividends that would have been paid on the Ordinary Shares which vest under their EDL LTI Awards by reference to dividend record dates falling between the award date and the date of vesting. This amount may assume the re-investment of dividends and may exclude or include special dividends or dividends in specie, at the grantor's discretion.

(j) Allotment of Shares

Provided that ordinary shares in the Company are listed on the Official List and traded on the London Stock Exchange, the Company will apply for the listing and admission to trading of any Ordinary Shares issued under the EDL LTI as soon as reasonably practicable.

(k) Variation in share capital (adjustments and amendments)

On any variation of the share capital of the Company, the number of shares subject to an EDL LTI Award in the form of an option or conditional award, the description of the shares subject to such option or award and/or the award price may be adjusted in such manner as the grantor (and, where relevant, the Board) determines.

The holder of any restricted shares under the EDL LTI will have the same rights as any other shareholder of restricted shares in the event of any variation of share capital.

(l) Malus and clawback

Malus and clawback provisions will apply to the EDL LTI.

Trigger events for both provisions will be:

• a material misstatement resulting in adjustment in the audited consolidated accounts of the Company or any member of the NSF Group;
• discovery that the assessment of any performance or other condition applying to an award was based on a material error or materially inaccurate or misleading information;

• discovery that any information used to determine the number of Ordinary Shares subject to an award was based on a material error or materially inaccurate or misleading information;

• action or conduct by a participant which, in the Board's reasonable opinion, amounts to material employee misbehaviour, fraud or gross misconduct; and/or

• events or behaviour of a participant which leads to the censure of a member of the NSF Group by a regulatory authority or otherwise has a significant detrimental impact on a member of the NSF Group's reputation, provided that the Board is satisfied that the relevant participant was responsible and the censure or reputational damage is attributable to him.

The Board may apply clawback during the period of one year following vesting.

(m) Benefits not pensionable

The benefits received under the EDL LTI are not pensionable.

(n) Non-transferability

EDL LTI Awards are not transferable, except in the case of death of the participant.

(o) Amendments

The Board may, at any time, amend the provisions of the EDL LTI in any respect, except that:

• (i) the prior approval of the Company in general meeting must be obtained in the case of any amendment to the advantage of existing or future participants which relates to the basis for determining an eligible employee's entitlement to an award and/or to Ordinary Shares in the Company, the persons to whom a EDL LTI Award can be granted, the limit on the aggregate number of shares over which awards may be granted, the limit on the number of shares over which awards may be granted to any one eligible employee, the adjustment of awards on a variation of the Company's share capital and/or the rule relating to such prior approval, save that there are exceptions for minor amendments which (a) benefit the administration of the EDL LTI or (b) are necessary or desirable to take account of a change in legislation or obtain favourable tax, exchange control or regulatory treatment for participants, the Company and/or NSF Group companies; and
• (ii) amendments which would materially adversely affect the rights of existing participants may only be made if such participants are notified of such amendments and the majority of participants approve such amendment, or where the amendment is required by a legal or regulatory requirement.

8.4 The Loans at Home Long Term Incentive Plan ("LAH LTI")

(a) Status

The LAH LTI is a discretionary executive share plan for senior management. Under the LAH LTI, eligible employees may be granted awards ("LAH LTI Awards") in the form of:

• options over Ordinary Shares; and/or
• conditional awards over Ordinary Shares; and/or
• restricted Ordinary Shares.

(b) Eligibility

Employees of S.D. Taylor Limited or any of its subsidiaries, who are not members of the Board, are eligible to participate in the LAH LTI.

(c) Limits

The LAH LTI may operate over new issue Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market.

The rules of the LAH LTI provide that, in any 10-year period, not more than 10% of the Company's issued ordinary share capital may be issued under the LAH LTI and under any other employees' share scheme adopted by the Group.

In addition, the rules of the LAH LTI provide that, in any 10-year period, not more than 5% of the Company's issued ordinary share capital may be issued under the LAH LTI and under any other discretionary employees' share scheme adopted by the Group.

Ordinary Shares issued out of treasury under the LAH LTI will count towards these limits for so long as this is required under the Investment Association guidelines.

(d) Performance conditions

LAH LTI awards may be granted subject to performance conditions and any other conditions set on or before the award date.

If an event occurs which causes the grantor to consider that any performance condition and/or other condition subject to which an LAH LTI award has been granted is no longer appropriate, it may substitute, vary or waive that condition in such manner as is reasonable in the circumstances and, except in the case of waiver, produces a fairer measure of performance and is not materially less difficult to satisfy than if the event had not occurred.

Awards granted under the LAH LTI have been granted subject to performance conditions measured over a period of four years. Performance conditions have typically been based on financial performance targets linked to the performance of Loans at Home.

(e) Vesting and exercise

Options will normally become exercisable, conditional awards will normally vest and restricted shares will normally be released on a vesting date which is no earlier than four years after the award date, to the extent that any applicable performance conditions have been satisfied and to the extent permitted under any operation of malus or clawback. Options will normally remain exercisable until the tenth anniversary of the award date (or a shorter period specified at grant).

(f) Holding period

LAH LTI Awards may be granted subject to a holding period, during which the participants will not be permitted to sell their shares, irrespective of their employment status (save in the case of death, where the holding period is deemed to have ended immediately).

(g) Cessation of employment

As a general rule, an award shall vest and an option shall be exercisable only while the participant remains employed by any member of the NSF Group, and awards will lapse on cessation of employment.

However, if a participant so ceases because of a Good Leaver Reason, his LAH LTI Award will ordinarily vest on the date that it would have vested if he had not so ceased employment, subject to performance conditions and (unless the Board decides otherwise) time pro-rating. Alternatively, the Board can decide that vesting will occur immediately, in which case the award will vest to the extent determined by the Board in its discretion, taking into account such factors as it may consider relevant including satisfaction of any performance and other conditions, and (unless the Board determines otherwise) subject to time pro-rating.

To the extent that an option vests in accordance with the above provisions, it may be exercised for a period of six months following vesting (or such longer period as the Board determines).

If a participant dies, a proportion of each unvested LAH LTI Award held by him will vest immediately. The proportion which vests will be determined by the Board in its discretion taking into account such factors as it may consider relevant including satisfaction of any performance and other conditions. Alternatively, the Board may decide that an unvested LAH LTI Award will vest on the normal vesting date, in which case any performance and other conditions will be considered at the time of vesting. In each case, vesting will be subject to time pro-rating (unless the Board determines otherwise).

A participant may not exercise options and no award will vest while the participant is under notice, unless the Board determines otherwise. If the award would otherwise have vested during the notice period and the notice is withdrawn, the award will vest on that withdrawal, subject to any dealing restriction.

(h) Corporate events

In the event of a takeover (by way of general offer or a Court sanctioned scheme of arrangement) or winding-up of the Company, the Board shall determine what proportion of an award shall vest early, taking into account such factors as it considers relevant including the time the award has been held by the participant and having regard to any performance and other conditions. Any proportion of an option which vests may be exercised during the six month period (or such longer period the Board determines) following the change of control (or, in the case of a scheme of arrangement, following Court sanction) or winding-up, after which it will lapse.

If the Board becomes aware that the Company will be affected by a demerger, distribution (other than an ordinary dividend) or other transaction not otherwise covered by the rules of the LAH LTI, it may determine that awards will vest. In these circumstances, the Board will determine the proportion of the award which will vest in its discretion subject to such conditions as it may require and taking into account such factors as it may consider relevant including the time the award has been held by the participant and having regard to any performance and other conditions.

Where the Board is aware of a corporate event which is likely to cause early vesting under the rules and either (i) on vesting, the conditions for relief under Part 12 of the Corporation Tax Act 2009 may not be satisfied or (ii) the Board in its discretion so determines, the Board may declare that all awards that are expected to vest as a result of the relevant event will vest during such period prior to the relevant event as it determines.

In the event of an internal corporate reorganisation or a merger, LAH LTI Awards may alternatively be exchanged for new awards over shares in another company where either the participant accepts such an offer or the Board decides that awards are to be exchanged for new awards.

(i) Dividend equivalents

An award may entitle participants to receive an amount either in Ordinary Shares or in cash equal in value to any dividends that would have been paid on the Ordinary Shares which vest under their LAH LTI Awards by reference to dividend record dates falling between the award date and the date of vesting. This amount may assume the re-investment of dividends and may exclude or include special dividends or dividends in specie, at the grantor's discretion.

(j) Allotment of shares

Provided that ordinary shares in the Company are listed on the Official List and traded on the London Stock Exchange, the Company will apply for the listing and admission to trading of any Ordinary Shares issued under the LAH LTI as soon as reasonably practicable.

(k) Variation in share capital (adjustments and amendments)

On any variation of the share capital of the Company, the number of shares subject to an LAH LTI Award in the form of an option or conditional award, the description of ordinary shares to such option or award and/or the award price may be adjusted in such manner as the grantor (and, where relevant, the Board) determines.

The holder of any restricted shares under the LAH LTI will have the same rights as any other shareholder of restricted shares in the event of any variation of share capital.

(l) Malus and clawback

Malus and clawback provisions will apply to the LAH LTI.

Trigger events for both provisions will be:

• a material misstatement resulting in adjustment in the audited consolidated accounts of the Company or any member of the NSF Group;
• discovery that the assessment of any performance or other condition applying to an award was based on a material error or materially inaccurate or misleading information;

• discovery that any information used to determine the number of Ordinary Shares subject to an award was based on a material error or materially inaccurate or misleading information;

• action or conduct by a participant which, in the Board's reasonable opinion, amounts to material employee misbehaviour, fraud or gross misconduct; and/or

• events or behaviour of a participant which leads to the censure of a member of the NSF Group by a regulatory authority or otherwise has a significant detrimental impact on a member of the NSF Group's reputation, provided that the Board is satisfied that the relevant participant was responsible and the censure or reputational damage is attributable to him.

The Board may apply clawback during the period of one year following vesting.

(m) Benefits not pensionable

The benefits received under the LAH LTI are not pensionable.

(n) Non-transferability

LAH LTI Awards are not transferable, except in the case of death of the participant.

(o) Amendments

The Board may, at any time, amend the provisions of the LAH LTI in any respect, except that:

• (i) the prior approval of the Company at general meeting must be obtained in the case of any amendment to the advantage of existing or future participants which relates to the basis for determining an eligible employee's entitlement to an award and/or to Ordinary Shares in the Company, the persons to whom a LAH LTI Award can be granted, the limit on the aggregate number of shares over which awards may be granted, the limit on the number of shares over which awards may be granted to any one eligible employee, the adjustment of awards on a variation of the Company's share capital and/or the rule relating to such prior approval, save that there are exceptions for minor amendments which (a) benefit the administration of the LAH LTI or (b) are necessary or desirable to take account of a change in legislation or obtain favourable tax, exchange control or regulatory treatment for participants, the Company and/or NSF Group companies; and
• (ii) amendments which would materially adversely affect the rights of existing participants may only be made if such participants are notified of such amendments and the majority of participants approve such amendment, or where the amendment is required by a legal or regulatory requirement.

8.5 The Company's Save As You Earn Scheme ("SAYE")

(a) Status

The SAYE is an all-employee savings-related share option plan which has been designed to meet the requirements of Schedule 3 of the Income Tax (Earnings and Pensions) Act 2003 so that Ordinary Shares can be acquired by UK employees in a tax-efficient manner.

(b) Eligibility

Each time that the Board decides to operate the SAYE, all UK-resident employees and full-time directors of the Company and its subsidiaries participating in the SAYE must be offered the opportunity to participate. Other employees may be permitted to participate. Participants invited to participate may be required to have completed a minimum qualifying period of employment (which may be up to 5 years) before they can participate, as determined by the Board in relation to any award of an option under the SAYE.

(c) Savings contract and grant of option

In order to participate in the SAYE, participants must enter into a linked savings contract with a bank or building society to make contributions from salary on a monthly basis over a three or five year period. A participant who enters into a savings agreement is granted an option to acquire Ordinary Shares in the Company at the end of the three or five year period.

The number of Ordinary Shares over which the SAYE option is granted is limited to the number of Ordinary Shares that may be acquired at the option exercise price out of the proceeds of the linked savings contract. The exercise price per Ordinary Share is an amount determined by the Board which shall not be less than 80% (or such percentage as is permitted by the applicable legislation) of the market value of an Ordinary Share at the date of invitation (or such other date as the Board may determine).

Contributions may be made between £10 a month and the maximum permitted under the applicable legislation (currently £500 a month) or up to such lesser sum as the Board may determine. At the end of the three or five year savings contract, employees may either withdraw their savings on a tax free basis or utilise such sum and any bonus or interest due under the savings contract to acquire Ordinary Shares under the linked option granted to the participant under the SAYE.

Invitations may be issued during the 42 days beginning on: (i) the day after the announcement of the Company's results for any period; (ii) any day on which the Board determines that circumstances are sufficiently exceptional to justify the grant of an option at that time; or (iii) the day after the lifting of any dealing restrictions which prevent making the invitation at any of the times listed above.

However, no SAYE options may be granted more than 10 years from the date when the SAYE was adopted.

SAYE options are not transferable and may only be exercised by the relevant employee or in the event of death their personal representatives.

(d) Limits on the number of shares

The SAYE operates over newly issued Ordinary Shares, Ordinary Shares held in treasury or Ordinary Shares purchased in the market.

The rules of the SAYE provide that, in any period of 10 calendar years, not more than 10% of the Company's issued ordinary share capital may be issued under the scheme and under any other employees' share scheme operated by the Company. Ordinary Shares issued out of treasury under the scheme will count towards these limits for so long as this is required under institutional shareholder guidelines. In addition, awards which are renounced or lapse shall be disregarded for the purposes of these limits, as will any shares purchased by a trustee for the purposes of satisfying awards under any employees' share scheme, or any partnership or dividend shares purchased in respect of a Share Incentive Plan (or broadly equivalent plan).

(e) Exercise of SAYE options

SAYE options may generally only be exercised for a period of six months following the maturity of the related savings contract. If not exercised by the end of this period, the relevant SAYE options shall lapse.

SAYE options may be exercised earlier with the proceeds of savings made under the linked savings contract and any interest due in certain specified circumstances including death, retirement, cessation of employment due to injury, disability or redundancy, by reason of a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 or if the relevant employment is no longer treated as relevant employment due to a change of control of the employing company or other circumstances ending that company's status as an associated company or on death. In such circumstances the participant is entitled to exercise his options at any time during the period of 6 months after the date he ceases to be in relevant employment.

(f) Change of control

In the event of a takeover, scheme of arrangement, or winding-up of the Company, SAYE options may normally be exercised early with the proceeds of savings made under the linked savings contract and any interest due.

If there is a corporate event resulting in a new person or company acquiring control of the Company, SAYE options may in certain circumstances be replaced by equivalent new options over shares in the acquiring company.

(g) Variation of share capital (adjustments and amendments)

If there is a variation of share capital of the Company, the Board may make such adjustments to SAYE options, including the number of Ordinary Shares subject to SAYE options and the SAYE option exercise price, as it considers to be fair and reasonable.

(h) Rights attaching to Ordinary Shares

Ordinary Shares issued and/or transferred under the SAYE will not confer any rights on any participant until the relevant SAYE option has been exercised and the participant in question has received the underlying Ordinary Shares. Any Ordinary Shares allotted when a SAYE option is exercised will rank equally with Ordinary Shares then in issue (except for rights arising by reference to a record date prior to their issue).

(i) Benefits not pensionable

The benefits received under the SAYE are not pensionable.

(j) Amendments

The Board may, at any time, amend the provisions of the SAYE plan in any respect, except that:

• (i) the prior approval of the Company in general meeting must be obtained in the case of any amendment to the advantage of participants which is made to the provisions relating to eligibility, individual or overall limits, the persons to whom a SAYE option can be granted, the price at which Ordinary Shares can be acquired on exercise of a SAYE option, the adjustments that may be made in the event of any variation to the share capital of the Company and/or the rule relating to such prior approval, save that there are exceptions for any minor amendment to benefit the administration of the SAYE plan, to take account of the provisions of any proposed or existing legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants, the Company and/or NSF Group companies; and
• (ii) amendments which would adversely affect the rights of participants may only be made if such participants are notified of such amendments and the majority of participants approve such amendment.

8.6 Founder Shares

(a) Status

The "Founder Shares" are B ordinary shares in Non-Standard Finance Subsidiary Limited, a subsidiary of the Company ("NSF Subsidiary") which were granted prior to the initial public offering of the Company. The Founder Shares grant each holder the option in certain circumstances to require the Company to purchase all or some of their Founder Shares. The purchase price for the exercise of this option may be paid by the Company in Ordinary Shares or as a cash equivalent at the Company's option.

(b) Eligibility

Founder Shares are held by John van Kuffeler, Nicolas Teunon, Miles Cresswell-Turner, Charles Gregson and Peter Reynolds.

(c) Limits

The number of newly issued Ordinary Shares delivered in respect of the Founder Shares, together with any newly issued Ordinary Shares that can be delivered under any other discretionary employees' share scheme adopted by the Group will not exceed a dilution limit of 5% of the Company's issued capital in any period of 10 calendar years.

Any awards earned in excess of this cap will be satisfied using shares purchased in the market.

(d) Structure of award

Holders of Founder Shares have a put option to exchange their Founder Shares for Ordinary Shares or cash (at the Company's option), subject to:

• completion of acquisition(s) by the Company and/or any of its subsidiaries with an aggregate value of at least £50 million (a "Significant Acquisition"); and
• the satisfaction of the Performance Condition.

(e) Performance Condition

The "Performance Condition" shall be satisfied on the first occurrence of either of the following:

• (i) the price of Ordinary Shares reaching or exceeding, for 20 business days within a period of 30 consecutive business days, a closing price (the "Threshold Price") equal to the higher of (A) an equivalent of a compound rate of return from completion of an acquisition by the Company or any of its subsidiaries of an interest in an operating company or business on a reference price equal to 8.5% per annum accrued daily and compounded quarterly or (B) an amount equal to a 25% increase in the reference price; or
• (ii) a change of control of the Company (which can be satisfied, in certain cases, if one of the holders of Founder Shares is removed from the Board), provided that the offer made to the Shareholders exceeds the Threshold Price.

If the Performance Condition has not been satisfied by the fifth anniversary of the date of a Significant Acquisition, the Company may purchase all (but not some) of the Founder Shares for nil consideration by giving 10 business days' notice to all of the holders of the Founder Shares.

(f) Exercising rights

Holders of Founder Shares shall be entitled to exercise their rights by giving notice to the NSF Subsidiary and the Company.

A holder of Founder Shares may exercise its rights independently of the other holders of Founder Shares and may exercise its rights in one or more instalments (and in such circumstances the holder will receive the applicable proportion(s) of the Ordinary Shares).

A holder of Founder Shares who has exercised his rights shall deliver to the Company the certificate for those shares being purchased.

(g) Delivery of Shares in the Company

On receipt of the certificate for the Founder Shares being purchased, the Company will pay cash, or deliver Ordinary Shares to the relevant individual.

The consideration payable by the Company in respect of each of the shares purchased shall be either of the following, at the option of the Company:

• (i) such number of Ordinary Shares as is equal to 1/19 of the total number of Ordinary Shares in issue on (or immediately following) the first admission of the Ordinary Shares multiplied by the proportion of all Founder Shares held by the relevant individual, rounded down to the nearest whole number of shares; or
• (ii) cash of equivalent value (calculated on exercise of the put option as the estimated total price of the Ordinary Shares that would have been issued if the option had been settled in Ordinary Shares rather than cash, based on the mean of the closing middle market quotations for an Ordinary Share on the London Stock Exchange over the 30 business days prior to exercise).

(h) Voting

Holders of Founder Shares have no right to receive notice of or attend or vote at any general meeting or any written resolution of the NSF Subsidiary unless a resolution is to be proposed which varies, modifies, alters or abrogates the rights attaching to the Founder Shares.

(i) Dividends

Participants will not be entitled to any dividends or distributions in respect of the Founder Shares.

(j) Corporate events

As described above, the holders of Founder Shares have a put option in respect of their Founder Shares which will become exercisable in the event of a Significant Acquisition if the Performance Condition has been satisfied.

If, at any time at which any of the Founder Shares remain in issue, the Company (or any subsidiary of the Company) effects (or proposed to effect) any form of demerger (or similar transaction or step), it must procure that the holders of Founder Shares are in no worse position in their capacity as holders of such shares by reason of such demerger (or similar transaction or step).

Subject to applicable law, on a winding up of the Company and the NSF Subsidiary, the assets of the NSF Subsidiary available for distribution shall be distributed, provided there are sufficient assets available, so that the holders of Founder Shares shall, once that A ordinary shareholders in the NSF Subsidiary have received (in aggregate) the priority return sum, be entitled to receive an amount equal to the amounts paid up respectively on their Founder Shares, and any remaining balance shall be distributed between the A ordinary shareholders.

(k) Non-transferability

Founder Shares are not transferable, except in limited circumstances such as for estate planning purposes, to trusts for the benefit of the holders of Founder Shares or their families and to other holders of Founder Shares.

9. Pensions

Save for the pension contributions referred to in paragraph 4 of "Part XVII (The Directors, the Board, Senior Managers and Corporate Governance) and this paragraph 9 of this Part XX (Additional Information), there are no pensions or other similar arrangements in place with the Directors and Senior Managers nor are any such arrangements proposed.

Davie Thompson and Sarah Day each participate in relation to a Scottish Widows pension arrangement which is available to Senior Managers employed by the Loans At Home business. Under that arrangement, Davie Thompson and Sarah Day are each entitled to employer contributions up to a maximum amount equal to 10% of basic pay.

10. Major Shareholders and Other Interests

As at the Latest Practicable Date, in so far as it is known to the Company by virtue of the notifications made pursuant to the Companies Act 2006 and/or Chapter 5 of the Disclosure Guidance and Transparency Rules, the name of each person, other than a Director, who, directly or indirectly, is interested in voting rights representing 3% or more of the total voting rights in respect of the Company's issued share capital, and the amount of such person's holding, was as follows:

	As at the Latest Practicable Date
Shareholders	Number of Ordinary Shares	Approximate percentage of issued share capital
Invesco Asset Management Limited	89,318,263	28.6%
Woodford Investment Management (UK)	80,273,553	25.7%
Aberforth Partners LP .	39,882,129	12.8%
Marathon Asset Management LLP	40,076,322	12.8%

Notes:

(1) On the basis that the total number of voting rights as at the Latest Practicable Date was 312,049,682 (excluding 5,000,000 Ordinary Shares held in treasury).

Save as disclosed in this paragraph 10 (Major Shareholders and Other Interests) of this Part XX (Additional Information), the Company is not aware of any holdings of voting rights (within the meaning of Chapter 5 of the Disclosure Guidance and Transparency Rules) by persons which will represent 3% or more of the total voting rights in respect of the issued ordinary share capital of the Company as at the Latest Practicable Date.

Insofar as is known to the Company, the Company is not, as at the Latest Practicable Date, directly or indirectly owned or controlled by another corporate, any foreign government or any other natural or legal person, severally or jointly. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company.

All Ordinary Shares (other than treasury shares) have the same voting rights.

11. Material Contracts

11.1NSF

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Company of any other member of the NSF Group during the two years prior to the date of this Document which: (i) are, or may be, material to the Company; or (ii) contain obligations or entitlements which are, or may be, material to the Company or any member of the NSF Group as at the date of this Document.

1. Facilities Agreement

NSF Finco Limited ("Finco") is party to a facilities agreement dated 3 August 2017 (as amended on 6 October 2017 and as amended and restated on 31 August 2018) between, among others, Finco as original borrower, the subsidiaries of Finco named therein as guarantors, the financial institutions named therein as lenders, Global Loan Agency Services Limited as agent and Glas Trust Corporation Limited as security agent (the "Facilities Agreement"). The Facilities Agreement consists of a £175 million term loan facility ("Facility A"), a £50 million term loan facility ("Facility B"), a £60 million term loan facility ("Facility C" and, together with Facility A and Facility B, the "Term Facilities") and a £45 million revolving credit facility (the "RCF").

As at the Latest Practicable Date, both Facility A and Facility B were fully utilised, £20 million is drawn under Facility C and £40 million of Facility C remained undrawn. Undrawn amounts under Facility C remain available to be drawn for a period of three years from 31 August 2018. The undrawn £40 million of committed funding available under Facility C may be utilised by Finco to fund the consideration for an acquisition permitted by the Facilities Agreement, to refinance any indebtedness of Finco and its subsidiaries (the "Banking Group"), to pay fees, costs and expenses in connection with any such acquisition or refinancing and/or to meet the funding needs of the Banking Group's consumer finance business and any capital expenditure by the Banking Group. The final maturity date of the Term Facilities falls on the sixth anniversary of the Facilities Agreement, 3 August 2023.

The RCF is a committed facility and may be used for the general corporate and working capital purposes of the Banking Group. The final maturity date of the RCF is the fifth anniversary of the Facilities Agreement, 3 August 2022, and the RCF remains available to be drawn until the date falling one month prior to its scheduled final maturity date. As at the Latest Practicable Date, £35.8 million was drawn under the RCF.

Each of the Term Facilities bears interest at a rate of LIBOR plus 7.25% per annum and the RCF bears interest at a rate of LIBOR plus 3.5% per annum. Each loan under the RCF, and accrued interest on each loan under the Term Facilities and the RCF, is required to be repaid or paid, as applicable, on the last day of the relevant interest period. Finco has entered into an interest rate cap with NatWest Markets Plc, in respect of amounts drawn under Facility A and Facility B, to provide hedging in circumstances where LIBOR exceeds 4.0% per annum.

The Facilities Agreement includes certain customary mandatory prepayment and cancellation events, including mandatory prepayments:

• (A) on a change of control of Finco (if a lender so requests after a certain period of negotiations);
• (B) following the sale of all or substantially all of the assets of the Banking Group (if a lender so requests); and
• (C) using proceeds received in connection with certain (i) claims brought by members of the Banking Group in respect of specified acquisitions, (ii) disposals made by members of the Banking Group

and (iii) insurance proceeds received by members of the Banking Group, in each case subject to an aggregate de minimis threshold of £5 million and customary exceptions.

Finco may also voluntarily prepay any of the loans made under the Term Facilities or the RCF in whole or in part provided that it gives five business days' (or such shorter period as may be agreed by the majority lenders) prior notice and the prepayment is of a minimum amount of £100,000 for each loan. Amounts that are prepaid under any of the Term Facilities may not be reborrowed. Amounts repaid or prepaid under the RCF may generally be reborrowed until the date falling one month prior to the final maturity date of the RCF.

The Facilities Agreement also includes customary representations, covenants (including financial covenants) and events of default, including:

• (A) financial covenants which require that on each quarter-end date (i) the amount (stated as a percentage) of the consolidated secured net leverage of the Banking Group when divided by the aggregate value of the eligible loan assets of the Banking Group does not exceed 90% (the "Consolidated Gearing Ratio Covenant") and (ii) the amount (stated as a percentage) of the super senior consolidated net leverage of the Banking Group when divided by the aggregate value of the eligible loan assets of the Banking Group does not exceed 22.5%;
• (B) restrictions on the ability of members of the Banking Group to enter into mergers, acquisitions or disposals, to grant guarantees, indemnities or security, to incur financial indebtedness, to make loans or to make a substantial change to the nature of the business of the Banking Group as a whole (in each case subject to exceptions);
• (C) restrictions on the ability of members of the Banking Group to make distributions, including distributions to companies outside the Banking Group, unless such distribution falls within certain exceptions or baskets, including (i) a £10 million aggregate basket and (ii) a builder basket based on 50% of consolidated net income plus 100% of specified equity contributions and subordinated shareholder funding, which can only be used if (x) no default has occurred and is continuing or would occur as a consequence of the distribution, (y) after giving pro forma effect to the distribution, the fixed charge coverage ratio is either at least 2.00 to 1.00 or is no lower than it was immediately prior to such distribution and (z) Finco confirms that, for the six-month period following the distribution, and after giving pro forma effect thereto, the Consolidated Gearing Ratio Covenant will not be breached; and
• (D) events of default, including non-payment, non-compliance with financial covenants and information covenants, breach of other obligations, cross default (in relation to certain other financial indebtedness of members of the Banking Group and subject to a £5 million de minimis threshold), insolvency and related events, unlawfulness and invalidity, audit qualification and material adverse change.

The Term Facilities and the RCF have the benefit of: (i) guarantees from, and fixed and floating security granted by, the following entities: Finco, Non-Standard Finance Subsidiary II Limited, Non-Standard Finance Subsidiary III Limited, S.D. Taylor Limited, Everyday Loans Holdings Limited, Everyday Loans Limited, Everyday Lending Limited, George Banco Limited, George Banco.com Limited; and (ii) a charge over the shares in, and intercompany loans made to, Finco granted by Non-Standard Finance Subsidiary Limited. The Facilities Agreement contains a mechanism for other members of the Banking Group (present and future) to accede as guarantors, and to grant security, in order to satisfy customary guarantor coverage covenants contained in the Facilities Agreement.

Amounts owed by members of the Banking Group to each other, and to other members of the NSF Group, are subordinated to amounts owed in respect of the Term Facilities and the RCF pursuant to an intercreditor agreement between, among others, the members of the Banking Group and the lenders under the Facilities Agreement (the "Intercreditor Agreement").

The Facilities Agreement and the Intercreditor Agreement and any non-contractual obligations arising out of or in connection with them are governed by English law. Security granted in connection with the Facilities Agreement is governed by English law, Scots law and Northern Irish law, as applicable, based on the location or governing law of the underlying assets being secured.

2. Irrevocable Undertakings and Letters of Intent

Details of the Irrevocable Undertakings and of the Letters of Intent are set out at in Part VIII (Information on the Offer and the Demerger) of this Document.

11.2Provident Financial

Save as set out below and so far as NSF is aware having regard to publicly available information, NSF is not aware of any material contracts which may have been entered into (other than contracts entered into in the ordinary course of business) by Provident Financial and/or any member of the Provident Financial Group either: (i) within the period of two years immediately preceding the date of this Document which are or may be material to Provident Financial and/or any member of the Provident Financial Group; or (ii) which, regardless of when entered into, contain any provisions under which Provident Financial and/or any member of the Provident Financial Group has any obligation or entitlement which is, or may be, material to Provident Financial and/or the Provident Financial Group as at the date of this Document.

The material contracts of Provident Financial are set out on pages 299 to 209 of the Provident Financial RI Prospectus, as described in Part XXI (Information Incorporated by Reference) of this Document.

12. Related Party Transactions

Save as disclosed in the financial information relating to related party transactions as set out:

• (a) in note 27 in the notes to the 2017 Financial Statements on page 122 of the 2017 Annual Report and Accounts; and
• (b) in note 27 in the notes to the 2016 Financial Statements on page 100 of the 2016 Annual Report and Accounts; and
• (c) in note 26 in the notes to the 2015 Financial Statements on page 74 of the 2015 Annual Report and Accounts,

each of which are incorporated by reference into this Document, the NSF Group entered into no transactions with related parties.

13. UK Withholding Tax

Under current UK tax legislation, payments of dividends on the Ordinary Shares may be made without withholding or deduction for or on account of UK tax. Any liability to tax of the Shareholder in respect of dividends received from the Company on the Ordinary Shares will depend on the Shareholder's individual circumstances.

14. Working Capital

The Company is of the opinion that the working capital available to the NSF Group is sufficient for its present requirements, that is, for at least the next 12 months from the date of publication of this Document (on the basis of an un-enlarged NSF Group, i.e., not taking into account the effect of the Transaction).

NSF is currently unable to undertake appropriate procedures to support a statement on the sufficiency of its working capital when taking into account the Acquisition because the Company does not have access to non-public financial or other information on Provident Financial that would allow those procedures to be undertaken.

The Company's opinion of the sufficiency of the working capital of the Enlarged Group (including the Provident Financial Group) is to be made available as soon as possible following Completion. If the Company is granted access by Provident Financial before the Effective Date and access is sufficient for the purpose of making an Enlarged Group working capital statement on the basis of the Enlarged Group, NSF will produce an updated Enlarged Group working capital statement to be published via the Regulatory News Service of the LSE and as may otherwise be required by law.

15. Undertakings

NSF is the principal operating and holding company of the NSF Group. The subsidiary undertakings of NSF are set out in Note 16 of the 2017 Financial Statements, as described in Part XXI (Information Incorporated by Reference) of this Document. During the period from 31 December 2017 to the Latest Practicable Date, there were no new significant subsidiaries or subsidiary undertakings.

16. Litigation

16.1 NSF Group

There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which NSF is aware) during a period covering at least the previous 12 months preceding the date of this Document which may have, or have had, a significant effect on NSF's and/or the NSF Group's financial position or profitability.

16.2 Provident Financial Group

Save as set out below and so far as NSF is aware having regard to publicly available information, there are no, nor have there been any, governmental, legal or arbitration proceedings (nor is the Company aware of any such proceedings which are pending or threatened) during the last 12 months which may have, or have had in the recent past, a significant effect on Provident Financial's and/or the Provident Financial Group's financial position or profitability.

17. Significant Change

17.1 NSF Group

There has been no significant change in the trading or financial position of the NSF Group since 31 December 2018, being the date to which the latest unaudited preliminary financials, published on 8 March 2019, of the NSF Group were prepared.

17.2 Provident Financial Group

The Company and its advisers have not had access to Provident Financial's non-public information or documentation and accordingly have been unable to perform any due diligence on such information or documentation. Save as set out below and so far as NSF is aware having regard to publicly available information, there has been no significant change in the financial or trading position of the Provident Financial Group since 30 June 2018, the date to which Provident Financial's last published unaudited consolidated financial interim statements were prepared.

On 15 January 2019, Provident Financial released the Provident Financial Trading Update, which contained the following disclosure:

Group

The group has made further good progress during the final quarter against its operational objectives for 2018:

• The Consumer Credit Division (CCD) achieved full authorisation from the Financial Conduct Authority (FCA) on 9 November 2018. Management continue to progress discussions with the FCA regarding the implementation of enhanced performance management of our Customer Experience Managers (CEMs), including some element of variable related pay, which is important in returning the business to run-rate profitability in due course;
• Vanquis Bank has made significant progress in delivering the Repayment Option Plan (ROP) refund programme, with over 1 million customers now refunded, and adapting to the measures in the Credit Card Market Study (CCMS). The refund programme is on-track to be substantially completed in early 2019;
• Moneybarn continues to assist the FCA in its investigation into affordability, forbearance and termination options and is working towards concluding the matter in the first half of 2019;
• Further strengthening of the Board and governance framework; and
• The group's funding and capital positions remain strong.

Moneybarn has continued to perform well and CCD has performed in line with internal plans during the last quarter of the year. Vanquis Bank has delivered further customer and receivables growth although impairment has been modestly higher than expected. This reflects the continued increase in the use of payment arrangements from enhanced forbearance measures as reported in the October trading statement. The group therefore expects to report profits for 2018 towards the lower end of the range of market expectations of £151m to £166m.*

Commenting on the final quarter of the year, Malcolm Le May, Chief Executive Officer, said:

"I am very pleased with the progress we have made in 2018 on delivering against the operational objectives we set ourselves at the start of the year. The FCA authorisation of CCD and the substantial completion of the ROP refund programme in Vanquis Bank have been major milestones for the group. In addition, we have made good progress on the FCA investigation at Moneybarn and are working towards concluding this matter in the first half of 2019.

We have been progressively tightening our underwriting standards throughout the group in anticipation of the current uncertain UK economic environment we are facing. We will continue to monitor underwriting standards in light of any changes in customer behaviour.

The group has strong funding and capital positions and the actions we have taken over the last 18 months have established a solid foundation for continuing to deliver on our strategic aim of being the leading provider of credit products to the 10 to 12 million consumers who are not well served by mainstream lenders."

Vanquis Bank

Vanquis Bank delivered fourth quarter new account bookings of 76,000, 17,000 lower than the last quarter of 2017. Total new account bookings for 2018 were 366,000, 71,000 lower than 2017 which reflects the impact of tighter underwriting, the cessation of the Argos contract in early 2018 and a temporary reduction in the marketing programme in the fourth quarter as the business focused on implementation of a new underwriting platform which went live in November.

Customer numbers ended the year at 1,773,000, representing year-on-year growth of 3.1%. The growth in customer numbers and credit line increases to established customers combined to produce receivables growth for the year of approximately 5%. In response to the CCMS measures on persistent debt, the business increased the required minimum payments due from customers in the fourth quarter of the year and expects to roll-out the use of recommended payments in the near future. The timing of implementation of these measures has not resulted in a material impact on receivables growth in 2018 as was anticipated at the start of the year. However, the measures are expected to moderate receivables growth in 2019 as they fully flow through into customer repayment behaviour.

There has been some pressure on delinquency and arrears metrics in the second half of the year. This primarily reflects the continued increase in the use of payment arrangements, as first reported in October 2018, relating to enhanced forbearance procedures. Underwriting standards have been progressively tightened over the last 18 months which, together with the historic resilience of the business model, means that Vanquis Bank is well-positioned if there is any deterioration in the UK economic environment.

The annualised risk-adjusted margin has shown a further reduction in the last quarter. This reflects two factors. Firstly, the anticipated moderation in the revenue yield, primarily due to the continuing reduction in the penetration of the ROP product within the customer base following the cessation of sales to new customers in April 2016 together with the continued expansion of the product offering into the near prime segment of the market through the Chrome branded card. Secondly, the modest increase in impairment.

The refund programme to current and past ROP customers is on-track to be substantially completed in early 2019. Following the step up in the volume of refunds being processed in the final quarter, over 1 million customers have now been refunded, representing approximately £160m of cash refunds and balance reductions. The level of ROP-related complaints has remained lower than expected following the announcement of the settlement on 27 February 2018.

^* Market expectations in this announcement represent a mean consensus 2018 group profit before tax, amortisation of acquisition intangibles and exceptional items of £159m with a range of £151m to £166m based on the forecasts published by 12 equity research analysts.

CCD

CCD was fully authorised by the FCA on 9 November 2018. This followed the successful implementation of the home credit recovery plan over the previous 12 months, including the roll-out of a new operating model which provides improved oversight and control over field activity and customer outcomes.

The recruitment of new customers in home credit was marginally above plan during the peak fourth quarter trading period. In addition, Satsuma continued to deliver strong growth with fourth quarter new business and further lending volumes showing a year-on-year increase of approximately 38%. As a result, CCD active customer numbers and receivables ended the year at 560,000 and approximately £290m respectively, marginally ahead of internal expectations and stable with June 2018.

The collections performance of credit originated since the fourth quarter of 2017 continues to remain broadly in line with the levels achieved prior to the change of operating model from self-employed agents to employed CEMs in July 2017, where the CEM has issued the credit and the ownership of the customer relationship is strong. However, the collections performance on credit originated prior to the fourth quarter of 2017, where the CEM typically did not originate the credit following the change in operating model, remains significantly lower than historic levels and has not shown any improvement, consistent with the experience reported in the second and third quarters of the year. Importantly, however, these balances now represent less than 10% of the carrying value of receivables.

As previously indicated, performance management of the field force continues to be focused on managing activity and customer outcomes without the use of performance-related pay or financial objectives. The business is continuing to progress discussions with the FCA regarding the implementation of enhanced performance management of CEMs based upon a balanced scorecard approach and some element of variable related pay. The implementation of enhanced performance management is essential to improving the efficiency and effectiveness of the field organisation, both in terms of delivering consistently good customer outcomes and returning the business to run-rate profitability in due course through growing the customer base and improving collections performance.

Action continues to be taken to align the cost base with the reduced size of the business. Whilst the business has invested in field management to improve oversight and control, the number of CEMs has shown a further reduction from around 2,300 at the end of September to around 2,100 at the end of December. In addition, the central cost base and resources within central support functions continues to be carefully managed.

Moneybarn

Moneybarn has continued to deliver strong growth with demand and used car prices remaining robust. As a result, fourth quarter new business volumes showed year-on-year growth of 21%. Customer numbers ended the year at 62,000, representing year-on-year growth of approximately 24%, with receivables showing a similar level of growth.

Default rates and arrears levels in Moneybarn have remained stable over the last six months following the initial tightening of underwriting in the second quarter of 2017 on higher risk categories of business and the removal of a tier of lower value business in the second quarter of 2018. As a result, the annualised risk-adjusted margin has shown further improvement during the final quarter of the year.

Moneybarn continues to assist the FCA in respect of its ongoing investigation into affordability, forbearance and termination options and is working towards concluding the matter in the first half of 2019.

Exceptional costs

The group expects to report exceptional costs of approximately £55m in 2018, of which £37m were incurred in the first half, representing: (i) costs associated with the implementation of the home credit recovery plan of approximately £30m, comprising intangible and tangible asset write offs, redundancy and consultancy costs (June 2018: £18.1m); (ii) the 8% premium and fees paid on redemption of 89% of the £250m senior bonds maturing in October 2019 amounting to £18.5m (June 2018: £18.5m); and (iii) approximately £7m of non-cash pension charges in respect of the equalisation of Guaranteed Minimum Pensions following the High Court judgement against Lloyds Bank PLC and others in October 2018 (June 2018: £nil).

Regulation

The FCA's final rules and guidance from PS18/19 'Assessing creditworthiness in consumer credit' came into effect on 1 November 2018. All of the group's businesses have taken the necessary measures to meet the affordability principles arising from this review.

On 18 December 2018, the FCA published CP18/43 in respect of its review of high-cost credit, including final rules and guidance in respect of home-collected credit. The changes made by CCD to the home credit operating model over the last 18 months, in particular the recording of all sales interactions with customers, means that the business will be able to evidence compliance with the revised requirements by the deadline of 19 March 2019.

Dividends

As previously communicated, the Board expects to declare a nominal dividend in respect of the 2018 financial year.

18. Mandatory bids and compulsory acquisition

The Takeover Code applies to the Company. Under Sections 974 to 991 of the Companies Act 2006, if an offeror acquires or contracts to acquire (pursuant to a takeover offer) not less than 90% of the shares in the Company (in value and by voting rights) to which such offer relates, it may then compulsorily acquire the outstanding shares not assented to the offer. The offeror would do so by sending a notice to outstanding holders of shares telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the outstanding shares in its favour and pay the consideration to the Company, which would hold the consideration on trust for the outstanding holders of shares. The consideration offered to the holders whose shares are compulsorily acquired under the Companies Act 2006 must, in general, be the same as the consideration that was available under the takeover offer.

In addition, pursuant to Section 983 of the Companies Act 2006, if an offeror acquires or agrees to acquire not less than 90% of the shares in the Company (in value and by voting rights) to which the offer relates, any holder of shares to which the offer relates who has not accepted the offer may require the offeror to acquire his/her shares on the same terms as the takeover offer. The offeror would be required to give any holder of shares notice of his/her right to be bought out within one month of that right arising. These sell-out rights cannot be exercised after the end of the period of three months from the last date on which the offer can be accepted or, if later, three months from the date on which the notice is served on the holder of shares notifying him/her of their sell-out rights. If a holder of shares exercises his/her rights, the offeror is bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.

19. Employees

The table below sets out the average number of people (full time equivalents) employed by the NSF Group in each of the previous three financial years (including Executive Directors but excluding Loans At Home's network of self-employed agencies):

		Financial Year
Region	2018	2017	2016
United Kingdom .	762	678	497

20. Consents

Each of Deutsche Bank and Ondra has given and has not withdrawn its written consent to the inclusion in this Document of the references to its name in the form and context in which they are included.

21. Documents Available for Inspection

Copies of the following documents will be available for inspection during normal business hours on any business day, free of charge, at the offices of Slaughter and May, One Bunhill Row, London, EC1Y 8YY and at the Company's registered office, from the date of this Document up to and including the date of Admission:

• (a) the Memorandum of Association and Articles of the Company;
• (b) the information incorporated by reference into this Document as described in Part XXI (Information Incorporated by Reference) of this Document;
• (c) the consent letters referred to in section 20 of Part XX (Additional Information); and
• (d) a copy of this Document.

Dated: 8 March 2019

PART XXI INFORMATION INCORPORATED BY REFERENCE

The documents set out in the table below, which have been approved, filed with or notified to the FCA, and which are available for inspection in accordance with paragraph 21 (Documents Available for Inspection) of Part XX (Additional Information) of this Document, contain information about the NSF Group and the Provident Financial Group which is relevant to this Document:

The table below sets out the sections of these documents which are incorporated by reference in, and form part of, this Document, and only the parts of the documents identified in the table below are incorporated by reference in, and form part of, this Document. The parts of these documents which are not incorporated by reference are either not relevant for investors or are covered elsewhere in this Document. To the extent that any part of any information referred to below itself contains information which is incorporated by reference, either expressly or impliedly, such information shall not form part of this Document.

Any statement contained in a document which is deemed to be incorporated by reference in this Document shall be deemed to be modified or superseded for the purpose of this Document to the extent that a statement contained in this Document (or in a later document which is incorporated by reference in this Document) modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to form part of this Document.

Except as indicated below, information contained on the Company's website or the contents of any website accessible from hyperlinks on the Company's website are not incorporated into and do not form part of this Document.

Reference document	Information incorporated by reference into this Document	Page number(s) in reference document
2018 Preliminary Results .	Group Chief Executive's Report	4 – 5
	Strategy	6 – 8
	2018 Financial Review	9 – 10
	Divisional Overview: Branch-based lending	11 – 13
	Divisional overview: Guarantor Loans	13 – 16
	Divisional Overview: Home Credit	16 – 20
	Financial Statements	21 – 25
	Notes to the Financial Statements	26 – 36
	Appendix	37
2017 Annual Report and Accounts	Chairman's Statement	4 – 5
	Market Review	20 – 21
	Business Model	22 – 23
	Group Chief Executive Report	24 – 28
	Strategy	29 – 35
	2017 Financial Review	39 – 41
	Divisional Overview: Branch-based Lending	42 – 43
	Divisional overview: Home credit	44 – 46
	Divisional Overview: Guarantor Loans	47 – 49
	Independent Auditor's Report	86 – 92
	Financial Statements	93 – 97
	Notes to Financial Statements	98 – 123

Reference document	Information incorporated by reference into this Document	Page number(s) in reference document
2016 Annual Report and Accounts	Chairman's Statement	4 – 5
	Market Opportunity	6 – 7
	Business Model	8 – 11
	Group Chief Executive's Report	12 – 14
	Strategy & key performance indicators	15 – 23
	2016 Financial Review	26 – 35
	Independent Auditor's Report	70 – 76
	Financial Statements	77 – 82
	Notes to Financial Statements	83 – 102
2015 Annual Report and Accounts	Chairman's Statement	4 – 5
	Market Overview	6 – 7
	Divisional Overview	8 – 13
	Financial Review	14 – 17
	Directors' Report	22 – 25
	Independent Auditor's Report	50 – 53
	Financial Statements	54 – 58
	Notes to Financial Statements	59 – 76
Placing Prospectus .	"Part VIII—Additional Information—Articles of Association"	99 – 106
Provident Financial 2018 Interim
Results .	Chief Executive's Review	4 – 6
	Financial Review	7 – 18
	Regulation	18 – 20
	Unaudited consolidated income statement	21
	Unaudited consolidated balance sheet Unaudited consolidated statement of	22 23
	changes in shareholders' equity Unaudited consolidated statement of cash flows	24
	Notes to the unaudited condensed interim financial statements	25 – 39
	Independent review report to Provident Financial Plc	41
Provident Financial 2017 Annual Report and Accounts .	Chairman's Statement	4 – 8
	Chief Executive Officer's Review	15 – 18
	Consolidated income statement	128
	Consolidated statement of comprehensive income	128
	(Loss)/earnings per share	128

Reference document	Information incorporated by reference into this Document	Page number(s) in reference document
	Dividends per share	128
	Balance sheets	129
	Statements of changes in shareholders' equity	130 – 131
	Statements of cash flows	132
	Statement of accounting policies	133 – 139
	Financial and capital risk management	140 – 145
	Notes to the financial statements	146 – 186
	Independent auditor's report	187 – 196
Provident Financial 2016 Annual
Report and Accounts .	Chairman's Review	8 – 9
	Chief Executive's Review	12 – 15
	Consolidated income statement	120
	Consolidated statement of comprehensive income	120
	Earnings per share	120
	Dividends per share	120
	Balance sheets	121
	Statements of changes in shareholders' equity	122 – 123
	Statements of cash flows	124
	Statement of accounting policies	125 – 130
	Financial and capital risk management	131 – 135
	Notes to the financial statements	136 – 171
	Independent auditor's report	172 – 178
Provident Financial 2015 Annual
Report and Accounts .	Chief Executive's Review	8 – 11
	Consolidated income statement	134
	Consolidated statement of comprehensive income	134
	Earnings per share	134
	Dividends per share	134
	Balance sheets	135
	Statements of changes in shareholders' equity	136 – 137
	Statements of cash flows	138
	Statement of accounting policies	139 – 144
	Financial and capital risk management	145 – 149
	Notes to the financial statements	150 – 187
	Independent auditor's report	188 – 194

Reference document	Information incorporated by reference into this Document	Page number(s) in reference document
Provident Financial RI Prospectus	"Part XIV—Additional Information—Material Contracts"	299 – 309
Provident Financial Trading Update	Paragraph "Dividends"	3

PART XXII DEFINITIONS AND GLOSSARY

The following definitions apply throughout this Document unless the context requires otherwise:

2015 Annual Report and Accounts .	NSF's annual report and accounts in respect of the 2015 Financial Year;
2015 Financial Statements .	NSF's audited financial statements for the 2015 Financial Year;
2015 Placing .	the placing of 102,283,168 ordinary shares of the Company on 19 February 2015;
2016 Annual Report and Accounts .	NSF's annual report and accounts in respect of the 2016 Financial Year;
2016 Financial Statements .	NSF's audited financial statements for the 2016 Financial Year;
2016 Financial Year .	the financial year ended 31 December 2016;
2017 Annual Report and Accounts .	NSF's annual report and accounts in respect of the 2017 Financial Year;
2017 Financial Statements .	NSF's audited financial statements for the 2017 Financial Year;
2017 Financial Year .	the financial year ended 31 December 2017;
2018 Financial Year .	the financial year ended 31 December 2018;
2018 Preliminary Results .	NSF's unaudited preliminary financials for the 2018 Financial Year, as published on 8 March 2019;
2019 Financial Year .	NSF's financial year ending 31 December 2019;
Acquisition .	the reverse takeover of Provident Financial by NSF for newly issued ordinary shares in NSF;
Admission .	the admission of the New Ordinary Shares to the standard listing segment of the Official List becoming effective in accordance with the Listing Rules and the admission of the New Ordinary Shares to trading on the London Stock Exchange's Main Market becoming effective in accordance with the Admission and Disclosure Standards;
Antitrust Approval .	has the meaning set out at paragraph 4 (Conditions to the Offer) at Part VIII (Information on the Offer and the Demerger);
APR .	Annual Percentage Rate;
Articles of Association or Articles	the articles of association of NSF in force from time to time and reference to a specific article of the articles of association of NSF shall be to an Article;
Audited Financial Statements .	the 2015 Financial Statements, 2016 Financial Statements, and 2017 Financial Statements;
business day .	a day (excluding Saturdays, Sundays and public holidays in England and Wales) on which banks are generally open for business in London;
CBI .	the Central Bank of Ireland;
CCA	the Consumer Credit Act 1974;

CCD	the consumer credit division of the Provident Financial Group, encompassing Provident Home Credit and Satsuma;
certificated .	in relation to a share or other security, a share or other security, title to which is recorded in the relevant register of the share or other security concerned as being held in certificated form (that is, not in CREST);
Closing Date	the date on which Completion occurs;
Closing Price .	the closing middle market price of a relevant share as derived from SEDOL on any particular day;
Committee or Committees .	one or all of the Audit Committee, the Nomination Committee, the Remuneration Committee and any other committees established from time to time by the Company;
Companies Act 2006 or the Companies Act	the Companies Act 2006, as amended;
Completion .	completion of the Acquisition, being the time of satisfaction or waiver (as applicable) of all conditions to the Offer;
Computershare .	Computershare Investor Services PLC;
CONC	the FCA's Consumer Credit Sourcebook rules;
Corporate Governance Code .	the corporate governance code issued by the Financial Reporting Council in the United Kingdom from time to time;
CREST or CREST system .	the relevant system, as defined in the CREST Regulations (in respect of which Euroclear is the operator as defined in the CREST Regulations);
CREST Manual .	means the compendium of documents entitled "CREST Manual" issued by Euroclear from time to time and comprising the CREST Reference Manual, the CREST Central Counterparty Service Manual, the CREST International Manual, the CREST Rules, the CSS Operations Manual and the CREST Glossary of Terms;
CREST Regulations .	the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended;
CRD IV	the Capital Requirements Directive IV 2013/36/EU;
CRR	the Capital Requirements Regulation (EU) No. 575/2013;
Deloitte	Deloitte LLP;
Demerger .	the proposed disposal of the Loans at Home Business by way of a direct dividend demerger;
Deutsche Bank .	Deutsche Bank AG, London Branch;
Disclosure Guidance and Transparency
Rules .	the rules made by the FCA under Part VI of FSMA relating to the disclosure of information (as amended from time to time);
Document	this prospectus;
EBA .	the European Banking Authority;

Effective Date .	the date on which:
	(i) the Offer becomes or is declared wholly unconditional in all respects; or
	(ii) if NSF elects to implement the Acquisition by way of a scheme of arrangement, the date such scheme of arrangement becomes effective in accordance with its terms;
ELG LTI .	the Everyday Loans Group Long-Term Incentive Plan;
Eligible Provident Financial
Shareholders .	Provident Financial Shareholders, other than Restricted Provident Financial Shareholders;
Employee Share Plans	the NSF LTI, the ELG LTI, the LAH LTI, the SAYE and the Founder Shares;
Enlarged Group	the NSF Group and the Provident Financial Group together following Completion;
Enlarged Share Capital .	the expected issued ordinary share capital of NSF immediately following the issue of the New Ordinary Shares;
EU .	the European Union;
Euroclear .	Euroclear UK and Ireland Limited;
Everyday Loans and the Everyday
Loans Group .	Everyday Loans Holdings Limited, Everyday Loans Limited and Everyday Lending Limited;
Everyday Loans Acquisition .	the acquisition of the entire issued share capital of Everyday Loans Holdings Limited from Secure Trust Bank PLC by the Company's wholly-owned subsidiary, Non-Standard Finance Subsidiary IIII Limited;
Executive Directors .	John van Kuffeler, Nick Teunon and Miles Creswell Turner;
Existing Ordinary Shares .	the Ordinary Shares in issue immediately before Admission;
FCA .	the Financial Conduct Authority of the UK;
Finco .	NSF Finco Limited;
Form of Proxy	the form of proxy for use by Shareholders in connection with the General Meeting;
Founder Shares	the class of shares in Non-Standard Finance Subsidiary Limited, details of which are set out in Part XVII (The Directors, the Board, Senior Managers and Corporate Governance);
FSMA	the Financial Services and Markets Act 2000, as amended from time to time;
GDPR	the General Data Protection Regulation (EU) 2016/679 of the European Parliament;
General Meeting .	the general meeting of NSF to be convened pursuant to the Notice in order to approve the issuance of the New Ordinary Shares;
George Banco and the George Banco
Group .	George Banco Limited, George Banco.com Limited and Georgefinance.com Limited;

GLD LTI .	the Guarantor Loans Division Long Term Incentive Scheme;
HMRC	HM Revenue & Customs, the UK tax authority;
IFRS	the International Financial Reporting Standards, as adopted by the European Union;
Irrevocable Undertakings .	the irrevocable undertakings which have been entered into by certain Provident Financial Shareholders as further detailed at page 59 of this Document;
ISIN .	international securities identification number;
Joint Financial Advisors	Deutsche Bank and Ondra;
LAH LTI .	the Loans at Home Long Term Incentive Scheme;
Latest Practicable Date .	7 March 2019 (being the latest practicable date before publication of this Prospectus);
Letters of Intent .	non-binding letters of intent which have been entered into by certain Provident Financial Shareholders as further detailed at page 60 of this Document;
Listing Rules .	the listing rules made by the FCA under Part VI of FSMA (as amended from time to time);
Listing Transfer	the intended transfer of the NSF Shares to a Premium Listing following Admission;
Loans at Home or the Loans at Home Business .	the Loans at Home business operated by NSF;
Loans at Home Acquisition .	the acquisition of Loans at Home on 4 August 2015;
London Stock Exchange or LSE .	London Stock Exchange plc;
Main Market .	the London Stock Exchange's main market for listed securities;
MAR or Market Abuse Regulation .	Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse;
Member State .	a member state of the European Economic Area;
Moneybarn .	a division of Provident Financial, which provides vehicle finance;
New Ordinary Shares	the new Ordinary Shares to be issued by the Company pursuant to the Offer;
Non-Executive Directors	the Directors who hold the position of Chairman of the NSF Board or non-executive director, and each a Non Executive Director;
Notice .	means the notice convening the General Meeting, included at the Appendix to this Document;
NSF or the Company .	Non-Standard Finance Plc, a company incorporated in England and Wales with registered number 09122252 and having its registered office at 7 Turnberry Park Road, Gildersome, Morley, Leeds, England, LS27 7LE;
NSF Board or Board .	the board of Directors of the Company;
NSF Directors or Directors	the directors of the Company, whose names appear in paragraph 1 (Directors) of Part XVII (The Directors, the Board, Senior Managers and Corporate Governance) of this Document, or, as the context requires, the directors

	from time to time of the Company, and Director shall be construed accordingly;
NSF Group .	NSF and each of its direct and indirect subsidiary undertakings from time to time (where "subsidiary undertaking" shall have the meaning ascribed to it in the Companies Act 2006);
NSF LTI .	the NSF Long-Term Incentive Plan;
NSF Subsidiary .	Non-Standard Finance Subsidiary Limited, a private company limited by shares incorporated in England under the Companies Act 2006, with number 09281088, being a wholly-owned subsidiary of the Company;
Offer .	the takeover offer, as defined in Chapter 3 of Part 28 of the Companies Act 2006, to be made by or on behalf of NSF to acquire the entire issued share capital of Provident Financial on the terms and subject to the conditions set out in the Offer Dcoument and this Document and, where the context admits, any subsequent revision, variation, extension or renewal of such offer;
Offer Document	the document despatched to Eligible Provident Financial Shareholders on or around the date hereof containing, among other things, the terms and conditions of the Offer;
Official List	the official list of the FCA;
Ondra	Ondra LLP (trading as Ondra Partners);
Ordinary Shares .	the ordinary shares of 5 pence each in the capital of NSF;
Overseas Shareholder .	Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom;
Placing Prospectus .	the prospectus published by the Company on 16 February 2015 in connection with the 2015 Placing;
PRA .	the Prudential Regulation Authority;
Premium Listing .	a premium listing under Chapter 6 of the Listing Rules;
Prohibited Person .	any person whose legal or beneficial ownership of Ordinary Shares, in the opinion of the Directors, would or would reasonably be likely to: (i) require the Company to register as an "investment company" under the U.S. Investment Company Act; (ii) require the Company to register under the U.S. Exchange Act or result in the Company not being considered a "foreign private issuer" as such term is defined in Rule 3b-4(c) under the U.S. Exchange Act; or (iii) subject the Company to regulation in the United States as a bank, bank holding company or other financial institution;
Prospectus Directive Regulation .	the Commission Regulation (EC) No 809/2004;
Prospectus Rules .	the prospectus rules of the FCA made pursuant to section 73A of the FSMA;
Provident Financial .	Provident Financial Group plc, a company incorporated in England and Wales with registered number 00668987

	and having its registered office at No. 1 Godwin Street, Bradford, West Yorkshire, BD1 2SU;
Provident Financial 2015 Annual Report and Accounts	Provident Financial's annual report and accounts in respect of the 2015 Financial Year;
Provident Financial 2016 Annual Report and Accounts	Provident Financial's annual report and accounts in respect of the 2016 Financial Year;
Provident Financial 2017 Annual Report and Accounts	Provident Financial's annual report and accounts in respect of the 2017 Financial Year;
Provident Financial 2017 Interim Results .	Provident Financial's financial statements for the six months ended 30 June 2017;
Provident Financial 2018 Interim Results .	Provident Financial's financial statements for the six months ended 30 June 2018;
Provident Financial Group .	Provident Financial and each of its direct and indirect subsidiaries from time to time (where "subsidiary undertaking" shall have the meaning ascribed to it in the Companies Act 2006);
Provident Financial RI Prospectus .	the prospectus published by Provident Financial on 27 February 2018;
Provident Financial Savings-related Share Option Schemes .	the Provident Financial plc Employee Savings-related Share Options Scheme (2003), the Provident Employee Savings-related Share Options Scheme (2013) and the Provident Irish Employee Savings-related Options Scheme 2014;
Provident Financial Share Schemes . .	the employee share schemes of Provident Financial as described and defined in the Provident Financial 2017 Annual Report and Accounts, including but not limited to the Provident Financial Employee Savings-Related Share Option Scheme (2003), the Provident Financial Savings-Related Share Option Scheme 2013; the Provident Financial Share Incentive Plan (SIP); and the Provident Financial Irish Savings-Related Share Option Scheme 2014; the Provident Financial Performance Share Plan, the Provident Financial Long Term Incentive Scheme 2015 and the Provident Financial Equity Plan;
Provident Financial Shareholder .	a holder of Provident Financial Shares from time to time;
Provident Financial Shares	the ordinary shares of 0.207272 pence each in Provident Financial;
Provident Financial Trading Update	the trading update released by Provident Financial on 15 January 2019;
Provident Home Credit	the home credit business of the Provident Financial Group;
Receiving Agent .	Computershare Investor Services PLC;
Registrar .	Computershare, or any other registrar appointed by the Company from time to time;

Regulatory Approval .	has the meaning set out at paragraph 4 (Conditions to the Offer) at Part VIII (Information on the Offer and the Demerger);
regulatory authority .	any central bank, ministry, governmental, quasi governmental (including the European Union), supranational, statutory, regulatory or investigative body or authority (including any national or supranational antitrust or merger control authority), national, state, municipal or local government (including any subdivision, court, administrative agency or commission or other authority thereof), private body exercising any regulatory, taxing, importing or other authority, trade agency, association, institution or professional or environmental body or any other person or body whatsoever in any relevant jurisdiction, including for the avoidance of doubt, the Takeover Panel, the FCA, the UKLA and the London Stock Exchange;
Regulatory Information Service	one of the regulatory information services authorised by the UKLA to receive, process and disseminate regulatory information from listed companies;
Remuneration Committee .	the remuneration committee of the Board;
Resolution .	the resolution set out in the Notice of the General Meeting annexed to this Document;
Restricted Provident Financial
Shareholders .	those Provident Financial Shareholders who are located in an Restricted Territory;
Restricted Territories .	any jurisdiction where the extension and availability of this Document would breach any applicable law, and each a Restricted Territory;
reverse takeover .	a transaction defined as a reverse takeover under Chapter 10 of the Listing Rules;
ROP	Vanquis Bank's Repayment Option Plan;
RWA .	risk weighted assets;
Satsuma	Satsuma Loans, a division of Provident Financial, which provides on-line unsecured loans;
Scheme .	should the Acquisition be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006, such scheme of arrangement between Provident Financial and Provident Financial Shareholders to implement the Acquisition with or subject to any modification, addition or condition approved or imposed by the court;
SEC .	the Securities and Exchange Commission of the United States;
Securities Act .	the United States Securities Act of 1933, as amended;
SEDOL .	the London Stock Exchange Daily Official List of share identifiers;
Senior Manager	a senior manager who for the purposes of paragraph 14.1(d) of Annex 1 to Appendix 3.1.1 of the Prospectus Rules is relevant to establishing that the

	NSF Group has the appropriate expertise and experience for the management of its business;
Shareholder .	a holder of Ordinary Shares from time to time;
Takeover Code .	the City Code on Takeovers and Mergers;
Takeover Panel .	the UK Panel on Takeovers and Mergers;
Term Loan .	the £175 million term loan facility provided by a group of institutional investors led by Alcentra Limited;
Transaction	the Acquisition and the Demerger;
TrustTwo .	the guarantor loans business operated by Everyday Lending Limited;
UKLA .	the FCA in its capacity as the competent authority for listing in the UK pursuant to Part V of FSMA;
uncertificated or in uncertificated form	in relation to a share or other security, a share or other security, title to which is recorded in the relevant register of the share or other security concerned as being held in uncertificated form (that is, in CREST) and title to which may be transferred by using CREST;
United Kingdom or UK	the United Kingdom of Great Britain and Northern Ireland;
United States, US or U.S. .	the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia;
U.S. Exchange Act	the U.S. Securities Exchange Act of 1934, as amended;
U.S. Investment Company Act .	the U.S. Investment Company Act of 1940, as amended, and related rules;
Vanquis Bank .	Vanquis Bank Limited; and
VAT .	(i) within the EU, any tax imposed by any member state in accordance with the directive of the council of the European Union on the common system of value added tax (2006/112/EC), and (ii) any tax corresponding to, or substantially similar to, the common system of value added tax referred to in paragraph (i) of this definition, whether imposed in a member state of the EU in substitution for, or in addition to, such tax imposed pursuant to directive 2006/112/EC, or imposed

elsewhere.

NOTICE OF GENERAL MEETING

NON-STANDARD FINANCE PLC

(incorporated in England and Wales with registered number 09122252)

Notice is hereby given that a General Meeting of Non-Standard Finance plc (the "Company") will be held at the offices of Maitland/AMO, 3 Pancras Square, London, N1C 4AG on 26 March 2019 at 11.30 a.m. for the purpose of considering and, if thought fit, passing the following resolution (the "Resolution"), the Resolution to be passed as an ordinary resolution.

Authority to allot

That the Directors of the Company be and are hereby generally and unconditionally authorised to exercise all powers of the Company in accordance with section 551 of the Companies Act 2006 ("Companies Act") to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares (all of which transactions are hereinafter referred to as an allotment of 'relevant securities') up to an aggregate nominal amount of £113,546,769 pursuant to the Offer. The authority conferred by this resolution shall expire at the Company's next annual general meeting (unless previously revoked or varied by the Company in a general meeting), save that the Company may, before such expiry, revocation or variation, make an offer or agreement which would or might require relevant securities to be allotted after such expiry, revocation or variation and the Directors may allot relevant securities in pursuance of such offer or agreement as if the authority hereby conferred has not expired or been revoked or varied.

By order of the Board

9 March 2019

NOTES TO THE NOTICE OF GENERAL MEETING

• 1. The business to be conducted at the meeting is set out on the previous page of this notice of meeting (the "Notice").
• 1. Only those shareholders on the register of members of the Company as at 6.30 p.m. on 24 March 2019 (or, in the event of any adjournment, at 6.30 p.m. on the day, two days before the reconvened meeting) will be entitled to attend or vote at the general meeting and they may only vote in respect of the number of shares registered in their name at the relevant time. Changes to entries on the register of members after the relevant deadline will be disregarded in determining the rights of any person to attend or vote at the meeting.
• 1. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation of the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
• 1. A member is entitled to appoint another person as his proxy to exercise all or any of his rights to attend, to speak and to vote at the meeting. A member may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him. A proxy need not be a member of the Company. A form for appointing a proxy accompanies this Notice. To be effective, the Form of Proxy must be completed and reach the Company's registrars, Computershare Investor Services PLC, not later than 11.30 a.m. on 22 March 2019. You may also submit your Form of Proxy electronically; see your Form of Proxy for details of how to register your vote. Completion of a Form of Proxy, other such instrument or any CREST Proxy Instruction will not preclude a member from attending and voting in person at the meeting. If you require additional Forms of Proxy, please contact the Registrars of the Company on 0370 707 1147. Lines are open 8:30 a.m. to 5:30 p.m., Monday to Friday (excluding bank holidays in England and Wales).
• 1. In the case of a shareholder which is a company, the Form of Proxy must be executed under its common seal or signed on its behalf by an officer of the company.
• 1. Any power of attorney or any other authority under which the Form of Proxy is signed (or a duly certified copy of such power or authority) must be included with the Form of Proxy.
• 1. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding (the first-named being the most senior).
• 1. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of the same powers as the corporation could exercise if it were an individual member provided they do not do so in relation to the same shares.
• 1. CREST members holding their shares in uncertificated form who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s) who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a 'CREST Proxy Instruction') must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or relates to an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer's agent (CREST ID 3RA50) no later than 11.30 a.m. on 22 March 2019. For these purposes, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. No messages received through the CREST network after this time will be

accepted. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

• 1. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular message. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s)) take(s) such actions as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning limitation of the CREST system and timings.
• 1. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. The CREST Manual can be reviewed at www.euroclear.com.
• 1. The Company cannot accept responsibility for loss or damage arising from the opening or use of any emails or attachments from the Company and recommends that shareholders subject all messages to virus checking procedures prior to opening or use. Any electronic communication received by the Company and/or Computershare, including the lodgement of an electronic Form of Proxy that is found to contain a computer virus will not be accepted.
• 1. A person who is not a shareholder of the Company, but has been nominated by a shareholder to enjoy information rights in accordance with section 146 of the Companies Act (a "nominated person") does not have a right to appoint any proxy. Nominated persons may have a right under an agreement with the shareholder to be appointed (or to have someone appointed) as a proxy for the meeting. Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under an agreement with the relevant shareholder to give instructions as to the exercise of voting rights. The statement of the rights of shareholders in relation to the appointment of proxies in paragraph 4 above does not apply to nominated persons. The rights described in paragraph 4 can only be exercised by shareholders of the Company. If you have been nominated to receive general shareholder communications directly from the Company, it is important to remember that your main contact in terms of your investment remains the registered shareholder or custodian or broker who administers the investment on your behalf. Therefore, any changes or queries relating to your personal details and holding (including any administration) must continue to be directed to your existing contact at your investment manager or custodian. The Company cannot guarantee to deal with matters that are directed to them in error. The only exception to this is where the Company, in exercising one of its powers under the Companies Act, writes to you directly for a response.
• 1. As at 7 March 2019 (being the last practicable business day prior to the publication of this Notice) the Company's issued share capital consisted of 317,049,682 ordinary shares of 5 pence each, carrying one vote each. Therefore the total voting rights in the Company as at that date were 317,049,682.
• 1. A copy of this Notice and other information required by section 311A of the Companies Act can be found at www.nsfgroupplc.com.
• 1. Except as provided above, members who have general queries about the meeting should use the following means of communication (no other methods of communication will be accepted):
• a. calling the shareholder helpline on +44 0370 707 1147 if calling from outside the UK or if within the UK on 0370 707 1147. Lines are open 8.30 a.m. to 5.30 p.m. (excluding bank holidays in England and Wales);
• b. by writing to Computershare Investor Services PLC, at The Pavilions, Bridgwater Road, Bristol BS99 6ZY; or
• c. by sending an email to webqueries@computershare.co.uk.
• 1. You may not use any electronic address provided either in this Notice or any related documents to communicate with the Company for any purposes other than those expressly stated.