Trading update

Lendinvest PLC

05 September 2023

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

LEI: 213800NWMK3O4UWP9N91  

5 September 2023

LendInvest plc

Trading update

LendInvest plc (LSE: LINV) ("LendInvest" or the "Company"), the UK's leading platform for mortgages, today announces a trading update for the four month period to 31 July 2023, and updated guidance for the financial year ending 31 March 2024.

LendInvest continues to make good progress on several fronts. Completions in respect of our Flow Bridging product remain strong. Our recent launch into the large Specialist Residential segment is on track and is building good momentum. Following the completion of a new forward-flow funding arrangement, the prospects for our Buy-to-Let ('BTL') proposition are strong. We also continue to develop our market-leading proprietary technology to make the lending process even better and more competitive.

However, the market backdrop continues to remain challenging with the prospect of further base rate increases required to bring down persistently high inflation and with house prices starting to fall and lower levels of mortgage approvals.

Against this backdrop, recent trading in the first four months of FY24 has fallen short of internal budgets, with a shortfall against budget in the Company's profit before tax of £4.5m (unaudited) over this four month period.

This primarily relates to the LendInvest Capital division (our fund management and syndication business which specialises in larger, more complex loans (i.e. over £5m), including Development Finance and Structured Bridging). The shortfall in this division is driven by two factors:

1.     Performance fees earned from third-party funds were below expectations, reflecting the fact that lending margins have been squeezed by rising interest rates and that development projects are being impacted by rising costs and are taking longer to complete; and

2.     A shortfall in the volume of loan originations, where the business earns arrangement fees on new lending. This partly reflects the macroeconomic backdrop, with demand for development finance reduced as a result of some property developers deferring new projects out of caution, and also the limited capacity for new lending in existing managed funds.

There was also some shortfall in the LendInvest Mortgages division (which includes BTL and Specialist Residential homeowner mortgages and smaller Bridging loans). Although the underlying performance and competitive positioning of our BTL proposition remains encouraging, the operationalisation of the new forward flow facility for BTL lending has taken longer than anticipated. This temporarily impacted the volume of origination in July and August but has now been resolved.

Administrative expenses were also slightly higher due to the timing of certain one-off items.  Impairment costs were in line with expectations.

Whilst disappointed with current financial performance, management is confident that the core business fundamentals remain strong. As a result of the factors noted above and with uncertainty at this stage as to the quantum and timing of the Company's capital market transactions, the Board currently expects full year profit before tax for financial year 2024 to be materially below market expectations.

However, in response, the business will continue to reduce its balance sheet exposures as part of its strategy to increase the proportion of the Company's Platform AuM that is managed for third parties.

The Company is also currently seeking to increase lending capacity for its LendInvest Capital division by raising new funds to deploy around the end of the 2024 financial year.

Strategies to materially reduce the cost base are also being implemented. Some benefit of these cost reductions is expected to be realised in the second half of this financial year, with a full year benefit in the 2025 financial year.

The Board is confident that the proactive strategies noted above will improve performance in the coming months.

Enquiries:

LendInvest via Teneo                                                                                                           [phone]
Rod Lockhart, Chief Executive Officer                                          
David Broadbent, Chief Financial Officer
Leigh Rimmer, Head of External Communications                                                                                    
[e-mail]                       

Panmure Gordon (NOMAD and Joint Broker)                                                               [phone]
Atholl Tweedie
David Watkins

finnCap Limited (Joint Broker)                                                                                          [phone]
Jonny Franklin-Adams
Tim Redfern
Alice Lane

Teneo (Financial PR)                                                                                                             [phone]
Tom Murray
Ed Cropley
Olivia Lucas         

Important Notices

The information contained within this announcement is deemed by LendInvest to constitute inside information as stipulated under the UK Market Abuse Regulation. By the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of LendInvest is Rod Lockhart.

Forward-looking statements

Certain statements in this announcement are forward-looking statements. In some cases, these forward looking statements can be identified by the use of forward looking terminology including the terms "anticipate", "believe", "intend", "estimate", "expect", "may", "will", "seek", "continue", "aim", "target", "projected", "plan", "goal", "achieve" and words of similar meaning or in each case, their negative, or other variations or comparable terminology. Forward-looking statements are based on current expectations and assumptions and are subject to a number of known and unknown risks, uncertainties and other important factors that could cause results or events to differ materially from what is expressed or implied by those statements. Many factors may cause actual results, performance or achievements of LendInvest to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results, performance or achievements of LendInvest to differ materially from the expectations of LendInvest, include, among other things, general business and economic conditions globally, industry trends, competition, changes in government and changes in regulation and policy, changes in its business strategy, political and economic uncertainty and other factors. As such, undue reliance should not be placed on forward-looking statements. Any forward-looking statement is based on information available to LendInvest as of the date of the statement. All written or oral forward-looking statements attributable to LendInvest are qualified by this caution. Other than in accordance with legal and regulatory obligations, LendInvest undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Nothing in this announcement should be regarded as a profit forecast.

 

END