TIDMFCH
RNS Number : 1211E
Funding Circle Holdings PLC
02 July 2019
02 July 2019
Funding Circle Holdings plc
Update to H1 & FY 2019 Outlook
Funding Circle Holdings plc ("Funding Circle" or the "Company"),
the leading small and medium enterprise ("SME") loans platform in
the UK, US, Germany and the Netherlands, is today providing an
update to its Outlook for 2019, as well as H1 2019 financial
results and updates to its statistics pages for the three months
ending 30 June 2019 (the "Quarter").
H1 2019 financial results
In advance of interim results to be published on 8 August,
headline half year performance compared to H1 2018 was:
-- Revenue growth of c.30%
-- Segment adjusted EBITDA breakeven with the UK improving
-- Adjusted EBITDA loss margin to be c.25%
-- Loans under management of GBP3.5 billion, up 37%
-- New loan originations of GBP1.2 billion, up 14%
Full Year 2019 Outlook
-- Current loan performance remains in line with previous
projections. Across all geographies, investor returns on a net
basis are expected to deliver 4.4-8.4% in 2018 and 5.0-8.5% in
2019.
-- The increasing uncertain economic outlook has reduced demand
for loans and the Company has proactively further tightened lending
to higher risk band businesses. This affects overall origination
volumes, but protects net returns for investors on the
platform.
-- As a result, Funding Circle expects 2019 revenue growth to be
c. 20%, versus previous guidance of 40%.
-- The Company expects adjusted EBITDA loss margin for 2019 to be better than 2018(1) .
Samir Desai CBE, CEO and co-founder, said:
"The uncertain economic environment has reduced demand from
small businesses and led us to proactively tighten lending
criteria. As a result, revenue growth will be impacted. We
recognise that this is a change from our previous guidance, but we
are taking the prudent course of action for the long-term growth
and development of our business. We remain confident in our aim to
become the world's largest small business loans provider, helping
millions of businesses to create jobs and support economic
growth."
Operational overview
-- Funding Circle is the leading small business loans provider
in the UK and in Q1 completed more net lending to UK SMEs (GBP177
million) than the entire UK banking system combined (GBP61
million).
-- In the US, in H1 Funding Circle passed $2 billion of loans
under management and $1 billion of total originations. Funding
Circle's loans under management is one of the 50 largest SME loan
portfolios in the US.
-- In Q2, the Company published its third Economic Impact Report
which estimated that in 2018 businesses that borrowed through
Funding Circle unlocked 115,000 jobs and contributed GBP6.5 billion
to GDP across the UK, US, Germany and the Netherlands.
-- Funding Circle successfully launched four new investor
products in H1 2019 - private direct lending funds in continental
Europe and the UK, and ABS bond products in the US and UK.
-- Merseyside Pension Fund agreed to invest GBP30m in the new UK
direct lending fund and two Finnish insurance companies have
committed an initial EUR40 million in the European direct lending
fund.
-- Additionally, EUR150m was committed in H1 by Avida, a Nordic
financial institution, and the European Investment Bank, to lend to
small businesses in Germany and the Netherlands.
-- Funding Circle continues to invest in data, tech and
analytics with more than 150 engineers working on global platform
and automation target of 50% by end of 2020.
-- Funding Circle's current markets cover c.35% of global GDP.
Given the uncertain economic environment, the Company has paused
the launch of operations in Canada in 2019 to focus on operations
in its existing markets.
Group performance
Q2 2019 Q2 2018 % H1 2019 H1 2018 %
Loans under management GBPm 3,540 2,584 37% N/A N/A N/A
------ -------- -------- ---- -------- -------- ----
Originations GBPm 548 518 6% 1,192 1,043 14%
------ -------- -------- ---- -------- -------- ----
Our statistics - H1 2019
Loans under management (million)
2012 2013 2014 2015 2016 2017 2018 2019
H1
Group
(GBP) 52 145 366 860 1,362 2,107 3,148 3,540
----- ----- ----- ----- ------ ------ ------ ------
UK (GBP) 52 144 332 653 1,027 1,584 2,208 2,448
----- ----- ----- ----- ------ ------ ------ ------
US ($) N/A 54 261 354 577 939 1,081
------------ ----- ----- ------ ------ ------ ------
DE (EUR) N/A 27 30 65 131 156
------------------- ----- ------ ------ ------ ------
NL (EUR) N/A 16 40 95 115
-------------------------- ------ ------ ------ ------
Originations (million)
2012 2013 2014 2015 2016 2017 2018 2019
H1
Group
(GBP) 49 130 311 721 1,065 1,738 2,292 1,192
----- ----- ----- ----- ------ ------ ------ ------
UK (GBP) 49 129 279 531 823 1,264 1,531 798
----- ----- ----- ----- ------ ------ ------ ------
US ($) N/A 334 281 514 792 404
------------ ------------ ------ ------ ------ ------
DE (EUR) N/A 33 19 55 105 53
------------ ------------ ------ ------ ------ ------
NL (EUR) N/A 21 34 81 41
------------------- ------------- ------ ------ ------
Gross Yield
2012 2013 2014 2015 2016 2017 2018 2019
H1
UK 9.2% 8.4% 9.9% 9.6% 9.5% 9.6% 9.7% 9.9%
----- ----- ----- ----- ------ ------ ------ ------
US N/A 14.5% 13.2% 12.3% 12.8% 12.9%
------------ ------------ ------ ------ ------ ------
DE N/A 6.7% 9.5% 9.5% 10.2% 10.6%
------------ ------------ ------ ------ ------ ------
NL N/A 8.6% 10.7% 11.6% 11.9%
------------------- ------------- ------ ------ ------
Projected annualised return range (after fees and bad
debt)(2)
2012 2013 2014 2015 2016 2017 2018 2019
H1
UK 7.1-7.2% 6.0-6.2% 7.0-7.3% 6.4-7.0% 5.0-5.6% 4.0-5.0% 4.4%-5.4% 5.0-7.0%
--------- --------- --------- --------- --------- --------- ---------- ---------
US N/A 2.6-2.8% 4.1-4.9% 5.4-6.3% 5.0-6.3% 5.7-7.8%
-------------------- -------------------- --------- --------- ---------- ---------
DE N/A 0.1-1.0% 2.3-4.1% 5.0-6.9% 5.3-7.3% 5.5-7.5%
-------------------- -------------------- --------- --------- ---------- ---------
NL N/A 3.5-4.4% 5.6-7.5% 6.4-8.4% 6.5-8.5%
------------------------------- -------------------- --------- ---------- ---------
Projected bad debt rate range(3)
2012 2013 2014 2015 2016 2017 2018 2019
H1
UK 1.3-1.3% 1.5-1.6% 1.8-2.1% 1.8-2.3% 3.0-3.6% 3.7-4.6% 3.4-4.4% 2.1-4.0%
--------- --------- --------- --------- --------- --------- --------- ---------
US N/A 10.7-10.9% 7.5-8.3% 5.4-6.3% 6.1-7.3% 4.8-6.8%
-------------------- -------------------- --------- --------- --------- ---------
DE N/A 4.7-5.6% 4.4-6.2% 1.5-3.4% 1.7-3.7% 1.8-3.8%
-------------------- -------------------- --------- --------- --------- ---------
NL N/A 3.2-4.1% 2.2-4.2% 2.2-4.2% 2.2-4.2%
------------------------------- -------------------- --------- --------- ---------
S
Media Enquiries:
Funding Circle
David de Koning - Director of Investor Relations and
Communications (0203 927 3893)
Headland Consultancy
Mike Smith / Stephen Malthouse (020 3805 4822)
About Funding Circle:
Funding Circle (LSE: FCH) is a global SME loans platform,
connecting SMEs who want to borrow with investors who want to lend
in the UK, US, Germany and the Netherlands. Since launching in
2010, investors across Funding Circle's geographies - including
retail investors, banks, asset management companies, insurance
companies, government-backed entities and funds.
Forward looking statements and other important information
This document contains forward looking statements, which are
statements that are not historical facts and that reflect Funding
Circle's beliefs and expectations with respect to future events and
financial and operational performance. These forward looking
statements involve known and unknown risks, uncertainties,
assumptions, estimates and other factors, which may be beyond the
control of Funding Circle and which may cause actual results or
performance to differ materially from those expressed or implied
from such forward-looking statements. Nothing contained within this
document is or should be relied upon as a warranty, promise or
representation, express or implied, as to the future performance of
Funding Circle or its business. Any historical information
contained in this statistical information is not indicative of
future performance.
The information contained in this document is provided as of the
dates shown. Nothing in this document should be construed as legal,
tax, investment, financial, or accounting advice, or solicitation
for or an offer to invest in Funding Circle.
Definitions and notes to the editor:
1. The 2018 financial results have been restated for the impact
of IFRS 16 "Leases". The impact for full year 2018 was to improve
Segment adjusted EBITDA and Adjusted EBITDA loss by GBP5.1 million
to GBP12.1 million and (GBP23.4 million), respectively. The impact
on H1 2018 was to improve Segment adjusted EBITDA and Adjusted
EBITDA loss by GBP2.4 million to GBP3.3 million and (GBP13.9
million), respectively. Accordingly, full year 2018 adjusted EBITDA
margin has been restated to 16.5%.
2. The projected annual return shows how loans are estimated to
perform. Loans are shown by the year they were taken out, and are
after fees and bad debt. Returns equal gross yield minus net losses
minus servicing fee and is estimated, using an internally managed
model, by cohort of origination incorporating actual returns
received for each cohort and adding future expected returns which
are determined using the same aforementioned model. Net yield is
compounded to recognise re-investment. These expectations may be
revised, for example if macroeconomic conditions change, and the
projected return, projected gross yield and the projected bad debt
rate may be adjusted to reflect this.
3. The projected bad debt rate shows the projected annualised
percentage of loans, by loan amount, that will not be repaid. Loans
are shown by the year they were taken out and include recoveries.
It can take up to five years for loans to be fully repaid, so the
projected return, projected gross yield and projected bad debt rate
take into account how each year of loans are performing and how
Funding Circle expects them to perform in future. These
expectations may be revised, for example if macroeconomic
conditions change, and the projected return, projected gross yield
and the projected bad debt rate may be adjusted to reflect
this.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTCKDDNBBKBNOK
(END) Dow Jones Newswires
July 02, 2019 02:00 ET (06:00 GMT)
Funding Circle (LSE:FCH)
Historical Stock Chart
From Apr 2024 to May 2024
Funding Circle (LSE:FCH)
Historical Stock Chart
From May 2023 to May 2024