Post by tjtl on Mar 12, 2020 7:46:43 GMT
Funding Circle Holdings plc
Full Year 2019 Results
Embargoed until 7.00am, 12 March 2020
THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014
Funding Circle Holdings plc ("Funding Circle"), the leading small and medium enterprise ("SME") loans platform in the UK, US, Germany and the Netherlands, today announces results for the year ended 31 December 2019 ("2019").
Samir Desai CBE, CEO and Founder, said:
"In 2019 we grew loans under management to a record £3.7bn up 19% year on year. The actions we took in 2019, in response to the uncertain economic outlook, reduced growth but improved investor returns and were the right response for the long-term benefit of the company and our customers.
We start the year in a stronger position as a business and confident in delivering an accelerated pathway to profitability targeting Adjusted EBITDA break-even for the whole business in the second half of 2020.
Our UK business was profitable in the second half of 2019 and loans under management in the US continues to follow a similar growth trajectory to the UK. We are reorganising our Developing Markets business, which represents c.8% of Group revenue but c.60% of Group Adjusted EBITDA losses in 2019, to deliver a better and more profitable model.
Our new instant decision lending platform in the UK and the US has begun to roll out and will provide a step-change in the borrowing experience for SMEs."
Financial Summary:
· Revenue of £167.4 million (2018: £141.9 million) up 18% despite a challenging economic environment.
· Adjusted EBITDA1 of negative £27.5 million (2018: negative £23.4 million) with loss margin of 16% (2018: 16%).
· UK business operating profit of £3.0 million in H2 2019 (H2 2018: negative £5.4 million). The UK business represents c.65% of Group revenue.
· Loss before taxation and exceptional costs of £49.9 million (2018: £45.0 million)2. Loss before taxation of £84.2 million (2018: £50.9 million)2 including a non-cash exceptional write-down of £34.3 million of goodwill and intangible assets related to the Developing Markets.
· Basic loss per share of 24.4 pence (2018 loss: 18.2 pence)2.
· Free cash outflow3 of £49.4 million (2018 outflow: £40.9 million).
· Net assets of £319.0 million, (2018: £401.0 million)2, including a mix of cash and short and long term investments.
Operating and Strategic Summary:
· Leading SME loans platform
o Record loans under management of £3.73 billion (2018: £3.15 billion), representing year-on-year growth of 19%.
o Originations of £2.35 billion (2018: £2.29 billion), representing year-on-year growth of 3%.
o c.80,000 small businesses have accessed funding through the Funding Circle platform as at the end of 2019.
o Net promoter score between 80-90 for borrowers in the UK and US.
· Improving returns attracting more funds to the platform
o Proactive actions taken in 2019 to reduce conversion (loans/applications) show early signs of improving net returns for investors. Investor returns are expected to deliver 5.0-7.8%4 in the UK and US for loans originated in 2019.
o New investor products launched in 2019 in line with strategy to diversify funding sources:
§ Successfully launched the Funding Circle-sponsored ABS Bond programme in 2019 with two securitisations completed and 30 institutional investors joining the Funding Circle platform.
§ Two new private funds launched in 2019 with UK Private Fund raising an initial £30 million of lending commitments from the Merseyside Pension Fund.
· Completed initial build of Instant Decision lending platform
o New instant decision lending platform drives superior customer experience and competitive advantage. The new platform includes historical data on c.1 million loan applications from the last ten years and is powered by Funding Circle's 8th generation of AI-enabled credit models.
o Initial pilots rolled out in Q4 2019 in the UK and first loans took on average 6 minutes from application to approval. On track to roll out to c.50% of borrowers by the end of 2020.
· Refining model in Developing Markets to better serve SMEs
o Reorganising German and Dutch businesses, which are developing markets for Funding Circle, and represent 8% of revenue and 60% of Adjusted EBITDA losses, to originate loans for local lenders within each market compared to originating loans to institutional and retail investors.
o New model accelerates Group path to profitability with lower overall losses in both countries.
Outlook:
· Focus on improving conversion across the platform, keeping net returns attractive and delivering profitable growth.
· Combined UK and US revenue to grow by c.15%, skewed to H2 2020 due to seasonality and lapping credit tightening actions taken in H1 2019.
· The reorganised Developing Markets5 contributing c.£7m of revenue in 2020, weighted to H1 2020 from the wind-down of the existing model with H2 2020 seeing the scaling of the new model from a low base.
· Targeting Group Adjusted EBITDA break-even in H2 2020 reflecting operational leverage as the business scales.
· Group Adjusted EBITDA losses for the year to halve benefiting from the new approach in the Developing Markets and marketing spend falling modestly as a percentage of revenue.
· Trading for the year has started well. We continue to assess the possible impact of COVID-19 on borrowers and investors. We have not seen an impact of the virus on recent trading, but we are monitoring the situation closely.
Full Year 2019 Results
Embargoed until 7.00am, 12 March 2020
THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014
Funding Circle Holdings plc ("Funding Circle"), the leading small and medium enterprise ("SME") loans platform in the UK, US, Germany and the Netherlands, today announces results for the year ended 31 December 2019 ("2019").
Samir Desai CBE, CEO and Founder, said:
"In 2019 we grew loans under management to a record £3.7bn up 19% year on year. The actions we took in 2019, in response to the uncertain economic outlook, reduced growth but improved investor returns and were the right response for the long-term benefit of the company and our customers.
We start the year in a stronger position as a business and confident in delivering an accelerated pathway to profitability targeting Adjusted EBITDA break-even for the whole business in the second half of 2020.
Our UK business was profitable in the second half of 2019 and loans under management in the US continues to follow a similar growth trajectory to the UK. We are reorganising our Developing Markets business, which represents c.8% of Group revenue but c.60% of Group Adjusted EBITDA losses in 2019, to deliver a better and more profitable model.
Our new instant decision lending platform in the UK and the US has begun to roll out and will provide a step-change in the borrowing experience for SMEs."
Financial Summary:
· Revenue of £167.4 million (2018: £141.9 million) up 18% despite a challenging economic environment.
· Adjusted EBITDA1 of negative £27.5 million (2018: negative £23.4 million) with loss margin of 16% (2018: 16%).
· UK business operating profit of £3.0 million in H2 2019 (H2 2018: negative £5.4 million). The UK business represents c.65% of Group revenue.
· Loss before taxation and exceptional costs of £49.9 million (2018: £45.0 million)2. Loss before taxation of £84.2 million (2018: £50.9 million)2 including a non-cash exceptional write-down of £34.3 million of goodwill and intangible assets related to the Developing Markets.
· Basic loss per share of 24.4 pence (2018 loss: 18.2 pence)2.
· Free cash outflow3 of £49.4 million (2018 outflow: £40.9 million).
· Net assets of £319.0 million, (2018: £401.0 million)2, including a mix of cash and short and long term investments.
Operating and Strategic Summary:
· Leading SME loans platform
o Record loans under management of £3.73 billion (2018: £3.15 billion), representing year-on-year growth of 19%.
o Originations of £2.35 billion (2018: £2.29 billion), representing year-on-year growth of 3%.
o c.80,000 small businesses have accessed funding through the Funding Circle platform as at the end of 2019.
o Net promoter score between 80-90 for borrowers in the UK and US.
· Improving returns attracting more funds to the platform
o Proactive actions taken in 2019 to reduce conversion (loans/applications) show early signs of improving net returns for investors. Investor returns are expected to deliver 5.0-7.8%4 in the UK and US for loans originated in 2019.
o New investor products launched in 2019 in line with strategy to diversify funding sources:
§ Successfully launched the Funding Circle-sponsored ABS Bond programme in 2019 with two securitisations completed and 30 institutional investors joining the Funding Circle platform.
§ Two new private funds launched in 2019 with UK Private Fund raising an initial £30 million of lending commitments from the Merseyside Pension Fund.
· Completed initial build of Instant Decision lending platform
o New instant decision lending platform drives superior customer experience and competitive advantage. The new platform includes historical data on c.1 million loan applications from the last ten years and is powered by Funding Circle's 8th generation of AI-enabled credit models.
o Initial pilots rolled out in Q4 2019 in the UK and first loans took on average 6 minutes from application to approval. On track to roll out to c.50% of borrowers by the end of 2020.
· Refining model in Developing Markets to better serve SMEs
o Reorganising German and Dutch businesses, which are developing markets for Funding Circle, and represent 8% of revenue and 60% of Adjusted EBITDA losses, to originate loans for local lenders within each market compared to originating loans to institutional and retail investors.
o New model accelerates Group path to profitability with lower overall losses in both countries.
Outlook:
· Focus on improving conversion across the platform, keeping net returns attractive and delivering profitable growth.
· Combined UK and US revenue to grow by c.15%, skewed to H2 2020 due to seasonality and lapping credit tightening actions taken in H1 2019.
· The reorganised Developing Markets5 contributing c.£7m of revenue in 2020, weighted to H1 2020 from the wind-down of the existing model with H2 2020 seeing the scaling of the new model from a low base.
· Targeting Group Adjusted EBITDA break-even in H2 2020 reflecting operational leverage as the business scales.
· Group Adjusted EBITDA losses for the year to halve benefiting from the new approach in the Developing Markets and marketing spend falling modestly as a percentage of revenue.
· Trading for the year has started well. We continue to assess the possible impact of COVID-19 on borrowers and investors. We have not seen an impact of the virus on recent trading, but we are monitoring the situation closely.