Our Purpose Is to Help People Be Better with Credit
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Helping people 2019 Annual Report be better with credit and Financial Statements Our purpose is to help people be better with credit Contents Strategic Report Governance Financial Statements At a glance 01 Our end-to-end digital Chairman’s introduction Independent Our Customer Manifesto 02 product solutions 22 to corporate governance 57 auditor’s report 78 NewDay in numbers 04 Acquiring new customers that Board of Directors 60 Income statements Who we work with 06 create long-term relationships 24 Management Committee 63 and statements of comprehensive income 80 Our business model 10 Delivering strong growth 26 The Board 64 Balance sheets 81 Chairman’s statement 12 Key Performance Indicators 28 Board Committee reports 66 Statements of Chief Executive Officer’s Financial review 30 Directors’ report 76 changes in equity 82 review 14 Operating responsibly 38 Statements of cash flows 83 Market overview 18 Promoting success and Notes to the Leveraging a leading digital stakeholder engagement 46 Financial Statements 84 platform 20 Risk management 48 Mapping our risks 52 Our owners 123 Cautionary statement Please see page 123 of this report for a description of: (i) the basis of preparation of the financial information contained in this report; (ii) the governance and risk frameworks described in this report; (iii) the use of certain non-IFRS financial measures and forward-looking statements; and (iv) certain other important information. You should review this in full prior to reading this report. Strategic Report At a glance Who we are We are a leading consumer credit company By understanding the varying needs of our serving five million customers in the UK through customers, building long-term relationships and our diverse and growing business. rewarding customers for appropriately managing their credit we continue to be one of the most We want to be the UK’s leading digitally enabled inclusive lenders in the UK and are able to fulfil our consumer finance provider, responsibly saying purpose to help people be better with credit. “yes” to more people and developing innovative tools to help people stay in control of their finances and access credit seamlessly. What we do We have proven specialist capabilities in Our access to and understanding of data allows underwriting credit cards and providing us to generate in-depth customer insights. This unsecured credit across a range of products enables us to provide valued support to our retail including our digital revolving credit product partners and evolve our products to meet our NewPay. Through our Own-brand business, we customers’ rapidly changing needs. offer near-prime revolving credit and unsecured loans to customers who may not have easy access Our business is underpinned by an advanced to mainstream lenders. In our Co-brand business digital platform that allows us to innovate and we partner with retailers and online e-tailers to respond rapidly to changing needs, whilst offer credit to their customers together with creating value for our customers, colleagues and loyalty and other reward programmes. shareholders. An established UK-focused A digital business that invests in business with a heritage in innovation to create best-in- credit and partnerships class customer journeys Trusted partner with some of the Our Customer Manifesto largest brands in the UK underpins our purpose to help people be better with credit NewDay Annual Report and Financial Statements 2019 01 Strategic Report Our Customer Manifesto Our purpose is to help people be better with credit, guided by four clear principles. These principles bring the Customer Manifesto to life for our customers, colleagues and retail partners Welcoming We aim to responsibly say “yes” to as Understanding We aim to build lifelong relationships many people who apply for credit as with customers and recognise that possible. Customers are assessed to customers may want to change ensure affordability criteria are met products as their circumstances and that they are provided with the change. We offer a range of right product at an appropriate rate. understandable solutions. If things are not going quite to plan, we We strive to provide customers with a offer customer support, agreeing great experience by offering products appropriate actions for moving and services that are simple, intuitive forward. and useful. Knowing We know our customers have varying Rewarding We reward customers for managing needs and we provide a range of their credit well. This can mean products and services to suit these providing benefits, such as lowering different needs. These aim to help all APRs, as a result of paying on time and customers be better with credit. We sticking to commitments made or utilise our analytical expertise, providing rewards for customers’ combined with partner insight, to the loyalty. Ultimately, our success is benefit of customers and provide based on helping customers be better tools that help people manage credit with credit and charging appropriately more easily and allow them to access for the risks we take. the benefits it provides. 02 NewDay Annual Report and Financial Statements 2019 Strategic Report Our Customer Manifesto in action in 2019 2.0m 1.2m £27m customers helped to improve new customers we responsibly given back to customers their credit score said “yes” to through rewards We’ve helped customers with their credit questions in ways that work for them: 111m 2.8m self-service transactions conversations Continued support of our community partners to promote financial inclusion and provide 5 financial support to those who need it: new products • entered a new partnership with Demos, meeting different credit needs: a leading UK think tank, to fund the launch • AO Finance – spread the cost of the Good Credit Index with the aim to of online purchases improve access to affordable, sustainable • Argos Classic credit card – access and transparent ‘good credit’ to credit for purchases • continued support of our charity partner • Miss Selfridge, Topman and Family Action to fund the launch of FamilyLine, Topshop credit cards – learning a seven-day-a-week helpline providing to manage credit through rewards practical, emotional and financial support NewDay Annual Report and Financial Statements 2019 03 Strategic Report NewDay in numbers Our business is more digital and growing In 2019, our receivables grew by 15% to £3.0bn and we were delighted to welcome 1.2m new customer accounts to the NewDay family, our 1.2m 77% fifth successive year with over one million new new customer accounts new accounts customer account originations. We continue to (2018: 1.2m) digitally originated ask our customers for feedback to understand (2018: 63%) how we can improve the way they want to interact with us. In 2019, we radically redesigned many of the features in our apps and we saw this investment yield great results in stable app store £5.8bn £2.0bn ratings of 4.7 stars. customer spend through customer spend through our products digital channels By improving the customer experience and (2018: £5.0bn) (2018: £1.7bn) remaining focused on helping customers be better with credit, we have continued to grow our business. Read more on page 40. Own-brand receivables Co-brand £3,026m receivables £113m Unsecured Personal Loans receivables £2,623m £1,160m £66m £2,164m £992m £17m £3,026m £821m Group closing receivables (2018: £2,623m) £1,753m £1,566m £1,326m 2017 2018 2019 04 NewDay Annual Report and Financial Statements 2019 Strategic Report 5.2m 2.0m customer accounts customers with improved credit score (2018: 4.7m) (2018: 1.7m1) 4.7 +66 average app store rating transactional Net Promoter Score (NPS) (average customer feedback score when rating their experience on an interaction with us) (2018: +64) 2.3m 125m app downloads to date transactions processed (2018: 1.4m) (2018: 107m) 1. In 2019, we refined our definition of customers with an improved credit score so that it is assessed only on customers who have had an account with NewDay for at least twelve months. In 2018, the definition only included accounts that were active as at both the beginning and end of the year. Accordingly, the 2018 comparative has been restated throughout this report. NewDay Annual Report and Financial Statements 2019 05 Strategic Report Who we work with We are committed to building long-term relationships with our customers, suppliers and partners. We partner with companies that share our vision and help us to deliver seamless customer journeys Broad spectrum of customers Innovative retail partners Powered by our in-house and state-of-the-art technology, our We partner with some of the UK’s most loved brands, both Customer Manifesto and credit capabilities allow us to responsibly traditional and online-only retailers. Our partners share our say “yes” to more customers. passion for delivering a best-in-class customer experience. We work together to build brand loyalty and deliver value for both our Our Own-brand business serves customers who typically are partners and customers. employed but exhibit one or more additional characteristics such as a limited credit history or a history of adverse credit events that Our partners value the seamless integration and insight that prevents them from easily accessing credit from mainstream our data and technology offers. They also value our collaborative credit providers. and open approach in delivering for them and their customers. Our Co-brand retail partners value our ability to serve a broad range of prime and near-prime customers. We do this by offering a spectrum of credit products including NewPay, our digital revolving credit product. They also value our modern customer offering and the power that our offering brings to their online platforms in building customer loyalty and profitability. Leading technology partners Diversified funding partners Our in-house digital capability is built on infrastructure provided Our broad base of international funding partners includes many of by leading technology organisations, including Microsoft and the world’s leading financial institutions and we adopt a very Amazon Web Services.