Unaudited Interim Results Update
Summary by AI BETAClose X
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
Sancus Lending Group Limited
("Sancus" the "Company" or the "Group")
Unaudited Interim Results Update and Establishment of Liquidity Facility
Sancus Lending Group Limited (AIM: LEND) provides an update on its unaudited results for the six months ended 30 June 2026, announces plans to sharpen its strategic focus and announces it has entered into a short-term liquidity facility.
Unaudited Interim Results Update
As announced in July 2026, the geopolitical and macroeconomic backdrop has impacted activity levels across the Group's markets, and consequently profitability, in the first half of the year. The Company presently expects to report an operating loss before tax of c. £(3.4m) for the first six months of the year. This compares with an underlying operating loss before tax of £(0.9m) in the first six months of 2025 (See Note 1).
Notwithstanding this, the business has made progress in its core markets, increasing Assets Under Management ("AUM") to £339m (31 December 2025: £307m; 30 June 2025: £258.8m) and delivering Group revenue of £13.1m, a 36% increase on H1 2025. Revenue growth was supported by the Group writing total new loan facilities of £81.2m (H1 2025: £84.4m), including a 20.6% increase in UK and Irish new facilities to £72.1m (H1 2025: £59.7m). New facilities in the Channel Islands joint venture declined to £9.1m (H1 2025: £24.6m), reflecting the continued challenging conditions in that market.
Despite recorded revenue growth, the Group's H1 2026 financial performance was adversely impacted by several other factors:
· Operating Expenses: Reported operating expenses rose to £3.8m (H1 2025: £3.0m). This increase primarily reflects planned investments in expanding human capital across core UK, Ireland, and central support functions, alongside higher management costs within the Channel Islands. To enhance efficiency, the Group is optimising its operating model during H2 2026, which is projected to deliver a material reduction in the ongoing run-rate cost base.
· Credit Quality: During the period, the Group recognized an IFRS 9 impairment charge of c. £0.7m, compared to an IFRS 9 write-back of £0.2m in H1 2025. This charge relates predominantly to legacy loan positions. Crucially, the underlying credit quality of the Group's core, on-balance-sheet financed loan portfolio remained stable throughout the period.
· Funding Efficiency and Liquidity Management: Profitability was impacted by a temporary £0.8m increase in loan financing costs. This deterioration was driven by higher facility fees on on-balance-sheet financed loans, elevated liquidity costs stemming from a slower-than-anticipated rate of loan deployment, and non-utilisation fees linked to a new funding facility currently awaiting utilisation. Management expects these costs to substantially reverse over time.
Strategic Focus and Review of Channel Islands Activities
The Board retains strong confidence in Sancus' long-term opportunities within its core markets. This outlook is underpinned by robust client propositions, deep relationships, expert teams, and resilient processes, particularly across the UK and Ireland, where the business entered H2 2026 with an encouraging new business pipeline. However, the Board recognises that the Group must be appropriately structured, focused, and capitalised to navigate the current macroeconomic environment and restore operating profitability. Consequently, the Company intends to develop and execute a comprehensive strategic plan designed to
· Sharpen focus on target lending markets and products.
· Simplify the operating model, reduce costs and resolve operational drag factors.
· Deliver improved interest margins by lowering the cost of capital.
· De-risk the balance sheet and improve liquidity. The Liquidity Facility being announced today is part of these plans.
As real estate lending conditions in the Channel Islands remain challenging, the Group has determined it is optimal to concentrate capital and operational resources on its higher-growth UK and Irish activities. The Group has therefore initiated a formal review of strategic options regarding its Channel Islands lending activities.
These activities consist of the joint venture with Hawk Lending Limited (the "Hawk JV") established in December 2023, and Sancus Lending (Jersey) Limited, which was closed to new business in December 2023 and remains in run-off. The Group's share of the Hawk JV had a carrying value of £14.7m as at 30 June 2026. The Group currently anticipates recognising a non-cash accounting charge to write down its investment by c. £14.0m within its financial results for the six months ended 30 June 2026.
Establishment of a Liquidity Facility
The Company also announces that on 28 August 2026 it entered into a liquidity facility (the "Liquidity Facility") with Somerston Fintech Limited ("Somerston Fintech"), a subsidiary of Somerston. The Liquidity Facility will provide the Company with additional working capital flexibility and can be used for general corporate purposes. The maximum amount which can be drawn under the Liquidity Facility, which is unsecured, is £4 million. The Liquidity Facility has an initial term of 364 days. Interest on any amounts drawn under the Liquidity Facility will accrue and be payable monthly at the Bank of England base rate plus a margin of 450bps per annum on the daily outstanding balance on the amount outstanding less than or equal to £2 million, and the Bank of England base rate plus a margin of 725bps per annum on the amount outstanding that exceeds £2 million.
Related Party Transaction
Somerston Fintech, a member of Somerston, is a related party of the Company for the purposes of the AIM Rules for Companies ("AIM Rules"). This establishment of the Liquidity Facility constitutes a related party transaction under AIM Rule 13, in respect of which the independent directors of the Company, having consulted with the Company's nominated adviser, Shore Capital and Corporate Limited, consider the terms to be fair and reasonable insofar as shareholders of the Company are concerned.
Note 1: The underlying operating profit before tax is based on the reported profit before tax of £0.1m excluding the £1m gain on ZDP share buy-backs in that period
For further information, please contact:
|
Sancus Lending Group Limited Andrew Charnley, Chief Executive Officer Keith Lawrence, Chief Financial Officer |
+44 (0)1481 708280 |
|
Shore Capital (Nominated Adviser and Broker) Oliver Jackson George Payne Ansh Batura |
+44 (0)20 7408 4050 |
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Redwood Co Sec Limited Charlotte Sanders Gwen Norman |
|
Important information
This announcement contains inside information. The person responsible for arranging for the release of this announcement on behalf of the Company is Keith Lawrence, Chief Financial Officer.
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