REG-Funding Circle Holdings plc Funding Circle Holdings plc: Half Year 2025 Results
04/09/2025 07:00
============
Funding Circle Holdings plc (FCH)
Funding Circle Holdings plc: Half Year 2025 Results
04-Sep-2025 / 07:00 GMT/BST
════════════════════════════════════════════════════════════════════════════════════
Funding Circle Holdings plc
Half Year 2025 Results
STRATEGIC PROGRESS DRIVING STRONG, PROFITABLE GROWTH
ON TRACK TO DELIVER MEDIUM TERM GUIDANCE
Funding Circle Holdings plc (“Funding Circle” or the “Group”) today announces
results for the six months ended 30 June 2025.
Lisa Jacobs, Funding Circle CEO, commented:
“The first half of 2025 demonstrates the clear success of our strategy and
execution, delivering another period of strong, profitable growth as we extended
£1.1 billion in credit to UK businesses across our product suite. We achieved 17%
revenue growth to £92.3 million and a significant increase in PBT to £6.0 million.
Our Term Loans business delivered £12.7 million in PBT, driven by product innovation
and continued operating leverage. Our FlexiPay and Cashback credit card products
continue to scale rapidly, as we meet more of our customers’ needs with well loved
products. FlexiPay transactions were up 66% year-on-year with cumulative
transactions now exceeding £1 billion since launch as businesses choose Funding
Circle to borrow, pay later and spend.
Our performance is underpinned by our great customer experience, powered by our
proprietary data, technology and AI powered credit models. We are leveraging these
strengths to deliver operating leverage in our Term Loans business whilst continuing
to grow our newer cashflow products. Today, we continue to fulfil our mission of
backing small businesses as a more meaningful part of our customers’ lives, serving
more of their needs, interacting with them more frequently and capturing a larger
share of their financing. This gives us a clear platform for further growth.
We remain on track to achieve our medium-term guidance of at least £200 million in
revenue and at least £30 million in PBT in FY 2026 and are continuing our share
buyback programme.”
H1 2025 H1 2024
£m £m
Credit extended 1,111 918
Loans/Balances under management 2,829 2,858
Revenue 92.3 79.1
Profit/(loss) before taxation (pre exceptional items) 6.0 0.5
Profit/(loss) before taxation (post exceptional items) 6.0 (2.1)
Unrestricted Cash 115.0 164.4
Financial Summary:
• Credit extended grew 21% to £1,111m (H1 2024: £918m):
◦ Continued momentum in Term Loans originations, up 6% to £736m (H1 2024:
£692m).
◦ Strong growth in FlexiPay and Cashback credit card transactions
(collectively “FlexiPay”), increasing 66% to £375m (H1 2024: £226m).
• Loans/Balances under management (“LuM”) were broadly flat at £2,829m (FY 2024:
£2,833m; H1 2024: £2,858m) and the credit performance in both Term Loans and
FlexiPay remains in line with expectations:
◦ Term Loans LuM of £2,660m ( FY 2024: £2,714m; H1 2024: £2,777m) reflects
the repayment of legacy Covid government-guaranteed loans.
◦ FlexiPay balances, which drive FlexiPay’s revenue, increased 42% to £169m
(FY 2024: £119m; H1 2024: £81m).
• Revenue was £92.3m, up 17% (H1 2024: £79.1m) with a healthy contribution from
both Term Loans and FlexiPay.
• Strong profit growth, with profit before tax (“PBT”) of £6.0m (H1 2024: £0.5m
pre-exceptionals):
◦ Term Loans increased profitability with PBT of £12.7m (H1 2024: £9.2m
pre-exceptionals) reflecting our ongoing operating leverage.
◦ FlexiPay loss before tax pre-exceptionals narrowed to £6.7m (H1 2024: £8.7m
loss) as the product continues to scale.
• Unrestricted cash remained healthy at £115.0m (FY 2024: £150.5m), with the
decrease due to the share buyback programmes in the period, planned investment
in FlexiPay and R&D in a new shorter term lending product, in line with our
capital allocation strategy.
• As at 30 June 2025, we have spent £53m purchasing and cancelling 50m shares out
of the total £75m announced since March 2024; £19m was spent in H1 2025
purchasing and cancelling 16.7m shares. The share buyback programme is
continuing.
Operational & Strategic Summary:
• Leading UK online SME finance platform, with a simple and profitable business
model.
• Continued growth and innovation across our product suite:
Term Loans:
◦ Origination growth of 6% with PBT margins increasing from 13% to 17%, driven by
product innovation and operating leverage.
◦ Grew breadth of Marketplace product set, monetising our distribution strength,
and allowing us to serve more customers’ needs by extending credit to businesses
via our partners.
◦ Expansion of our shorter term lending proposition.
FlexiPay and Cashback credit card:
◦ Continued strong growth from both new and existing customers. The repeat nature
of the product has resulted in over 80% of 2025 revenue coming from existing
customers. Transactions grew 66% since H1 2024 and closing balances grew 42% to
£169m since FY 2024.
◦ Since the soft launch of Cashback credit card in H2 2024, continued steady
uptake in users and borrower usage exceeding expectations.
◦ Collectively transactions from these products have surpassed £1bn since launch.
• Robust and attractive returns through the cycle leading to strong ongoing
investor demand:
◦ Annualised net returns to institutional investors on Term Loans
consistently ~5% above cost of capital.
◦ Forward lending commitments of £1.8bn across products with strong future
pipeline.
Looking Ahead:
• Our strategic priorities are focused on customer-led profitable growth:
◦ Get to yes: get the right product to the right business, through credit
excellence and product improvements.
◦ Expand our audience: target new segments; deepen and expand our
distribution channels.
◦ Scale our products: capitalise on the large market opportunity by focusing
on refining and scaling our products to drive growth and margin expansion.
◦ Build a seamless lifetime customer experience: deliver an exceptional
experience throughout our customers’ lifetime journey with our expanded
product set, as their trusted financial partner.
We have attractive growth opportunities and are on track to deliver our medium term
guidance in 2026 of 15-20% revenue CAGR from FY23 and PBT margins of >15%, equating
to:
◦ Revenue of at least £200m
◦ Profit before tax of at least £30m
Board Changes:
The Company noted in the FY 2024 Annual Report and Accounts that there would be some
upcoming changes in Board composition in respect of some of its long-tenured
Directors.
In May 2025, Andrew Learoyd, the Chairman stepped down with Ken Stannard appointed
as the new Chairman. We thank Andrew for his tireless commitment and steering of the
Group since its very early days.
In June 2025, Geeta Gopalan, the Chair of the Audit & Risk Committee and Senior
Independent Director stepped down and we want to thank her for her hard work and
dedication to Funding Circle over a number of years. Helen Beck, the Chair of the
Remuneration Committee has been appointed as Senior Independent Director.
In June 2025, Maeve Byrne was appointed as chair of the Audit Committee and, in
August 2025, Richard Harvey was appointed chair of the Risk Committee. We welcome
them both to the Board.
Analyst presentation:
Management will host a presentation and conference call for institutional investors
and analysts at 9:30am UK time (BST) on Thursday 4 September 2025.
To watch and listen to the webcast, with the opportunity to submit written
questions, please use 1 this link to register and gain access to the event.
For conference call access, please dial +44 33 0551 0200 or +1 786 697 3501. Quote
‘Funding Circle Half Year Results’ when prompted by the operator.
An on-demand replay and transcript will also be available on the Funding Circle
website following the presentation.
For further details:
2 ir@fundingcircle.com
Funding Circle Holdings plc
Lisa Jacobs, Chief Executive Officer
Tony Nicol, Chief Financial Officer
Headland Consultancy
Stephen Malthouse and Jack Gault (+44 20 3805 4822)
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.
About us:
Funding Circle is the UK’s leading SME finance platform. We operate in a large,
attractive and growing market, with over £84bn of outstanding debt in the UK SME
market and over £80bn of SME card transactions each year. Established in 2010,
Funding Circle has extended c.£16bn in credit to over 110,000 businesses in the UK.
For SME borrowers, Funding Circle provides an unrivalled customer experience,
delivered through its technology and data, coupled with a human touch. Its solutions
continue to help customers access the funding they need to succeed. For
institutional investors, Funding Circle provides access to an alternative asset
class in an underserved market and delivers robust and attractive returns.
We hosted a Capital Markets Event in June, details of which are available on Funding
Circle’s corporate website:
3 https://corporate.fundingcircle.com/investors/results-reports-presentations/
Business review
Overview of the six months ended 30 June 2025
Building on our successful 2024, we are pleased to report that the Group continued
to deliver strong revenue and profit growth in the first half of 2025.
The Group comprises two business units which are at different stages of maturity:
• Term Loans - our more established business unit comprising longer-term loans
used by SMEs for investment and working capital needs; and
• FlexiPay and Cashback credit card (collectively “FlexiPay”) - shorter-term
cashflow products used for daily and monthly spend meeting the shorter-term
working capital needs of SMEs.
Originations and transactions Balances under management
(credit extended)
H1 2025 H2 2024 H1 2024 30 June 31 December 30 June
2025 2024 2024
£m £m £m £m £m £m
Continuing
operations
Term Loans 736 715 692 2,660 2,714 2,777
FlexiPay 375 266 226 169 119 81
Total 1,111 981 918 2,829 2,833 2,858
Overall, credit extended in the half grew to £1.1bn, up 21% from H1 2024, with
balances under management at £2.8bn and credit performance in line with management
expectations.
30 June 2025 30 June 2024 4 1
United Kingdom United Kingdom
Term Loans FlexiPay Total Term Loans FlexiPay Total
£m £m £m £m £m £m
Transaction fees 47.8 0.5 48.3 41.8 0.3 42.1
Servicing fees 18.3 — 18.3 18.6 — 18.6
Interest Income 3.1 20.0 23.1 4.3 9.8 14.1
Other fees 2.3 0.1 2.4 2.5 — 2.5
Operating income 71.5 20.6 92.1 67.2 10.1 77.3
Investment income 2.6 — 2.6 1.6 — 1.6
Total income 74.1 20.6 94.7 68.8 10.1 78.9
Fair value gains 2.0 — 2.0 2.8 — 2.8
Cost of funds (0.2) (4.2) (4.4) — (2.6) (2.6)
Net income (“revenue”) 75.9 16.4 92.3 71.6 7.5 79.1
Adjusted EBITDA 20.1 (5.1) 15.0 18.3 (7.3) 11.0
Profit/(loss) before tax 12.7 (6.7) 6.0 9.2 (8.7) 0.5
(pre exceptional items)
Profit/(loss) before tax 12.7 (6.7) 6.0 6.9 (9.0) (2.1)
(after exceptional items)
Revenue increased by 17% to £92.3m (H1 2024: £79.1m). The Group made a profit before
tax of £6.0m (H1 2024: profit before tax pre-exceptionals £0.5m).
In H1 2024, £2.6m of exceptional items were incurred relating to the restructuring
undertaken in the UK, mainly comprising redundancy costs. After exceptional items,
the H1 2024 loss before tax was £2.1m.
Term Loans
Our Term Loans business continues to grow, with originations of £736m (H1
2024: £692m). Term Loans originations are funded through forward flow agreements
with institutional investors (a “platform” model). The loans are owned by these
institutional investors who take the credit risk and the LuM do not form part of
Funding Circle’s balance sheet. As at 30 June 2025, we have c.£1.6bn of forward
funding in place from these institutional investors for future originations.
We continue to look at ways to provide access to finance for small businesses and in
Q2 2025 we expanded our shorter-term loan proposition (loans with terms of 6-24
months). In the short term, whilst we test and iterate this product, we are funding
it through our balance sheet in line with our capital allocation policy. It is
funded through the same leveraged warehouse as FlexiPay. We expect to onboard an
institutional investor to fund the product in the near future.
LuM still includes the legacy covid scheme loans that are amortising down but now
only account for 17% of the overall LuM with commercial LuM growing and now
accounting for 83% (FY 2024: 27% and H1 2024: 39% of LuM were covid scheme loans).
The legacy covid scheme LuM reduced by £300m in the first half with growth in LuM
from new originations of c£250m leading to a LuM at June of £2.7bn.
We have also continued to grow originations through our Marketplace network of third
party finance providers, where we refer SMEs that require finance outside our
product range or credit box, earning a referral fee. This allows us to support an
even greater number of SMEs to access a wide range of financing options. Marketplace
originations are c.10% of overall originations, consistent with the prior year.
The Term Loans business delivered revenue of £75.9m, growing 6% on H1 2024. This
growth came principally from the growth in originations and the corresponding
transaction fees, with a yield of c.6.5% (H1 2024: 6.1%). The yield improvement is a
function of the product mix with legacy loans originated under the government’s
growth guarantee scheme (GGS) at lower yields.
Term Loans generated profit before tax of £12.7m, up from £9.2m, pre-exceptionals,
in H1 2024. After exceptional items, the comparative H1 2024 profit before tax was
£6.9m. This profit improvement demonstrates the strong operational leverage we are
achieving from this more mature business.
FlexiPay and Cashback credit card (collectively “FlexiPay”)
Our line of credit product, FlexiPay, has demonstrated significant growth to date
and we continue to innovate in response to customer feedback.
When the product was initially launched, customers were able to draw and repay
within a 3-month period. During 2024 we expanded repayment options to include 1, 3,
6, 9 and 12 months, with fees varying depending on payback period. As a result, the
average fee for each drawdown grew to 7.0% (H1 2024: 5.0%), reflecting a longer
average term of 4.7 months.
In H2 2024 we launched our Cashback credit card and we continue to experience good
uptake from customers. When customers transact using cards, we earn an interchange
fee of 1.75% alongside interest on any revolving balances. The product offers
customers a 2% cashback in the first six months followed by 1% thereafter.
Overall FlexiPay and Cashback credit card transactions increased by 66% from H1
2024, reaching £375m (H1 2024: £226m), demonstrating strong customer engagement as
we added new customers and released new features. Drawn lines of credit (“balances”)
grew to £169m at 30 June 2025 (31 December 2024: £119m), in line with transaction
growth. FlexiPay transactions have now surpassed £1bn since launch.
FlexiPay and the Cashback credit card are funded by Funding Circle capital and a
senior debt facility. The interest payable on this facility is shown in “cost of
funds” and is based on SONIA plus a margin. A £230m facility was renewed in April
2025 with the ability to upsize further. We fund these products through our balance
sheet as this is an efficient use of capital with the capital cycling quickly.
Revenue for FlexiPay was £16.4m in H1 2025, increasing from £7.5m in H1 2024 as a
result of a rise in the number of transactions and fee growth.
Loss before tax pre-exceptionals was £6.7m (H1 2024: loss of £8.7m). Marketing costs
and expected credit losses which are recognised upfront give rise to a “j-curve” to
achieve profitability i.e. once a customer is onboarded and those costs are
incurred, due to the repeat nature of these products, we expect to earn repeat
revenues. Over 80% of the H1 2025 revenues came from customers onboarded pre-2025.
Profit and loss
30 June 2025 30 June
30 June 2024 Exceptional 2024
Before exceptional items
items
£m £m £m £m
Transaction fees 48.3 42.1 — 42.1
Servicing fees 18.3 18.6 — 18.6
Interest income 23.1 14.1 — 14.1
Other fees 2.4 2.5 — 2.5
Operating income 92.1 77.3 — 77.3
Investment income 2.6 1.6 — 1.6
Total income 94.7 78.9 — 78.9
Fair value gains 2.0 2.8 — 2.8
Cost of funds (4.4) (2.6) — (2.6)
Net income (“revenue”) 92.3 79.1 — 79.1
Expected credit loss charge (8.4) (3.8) — (3.8)
People costs (32.7) (36.1) (2.3) (38.4)
Marketing costs (27.6) (22.3) — (22.3)
Depreciation, amortisation and (6.1) (6.5) (0.3) (6.8)
impairment
Other costs (11.5) (9.9) — (9.9)
Operating expenses (77.9) (74.8) (2.6) (77.4)
Profit before tax from 6.0 0.5 (2.6) (2.1)
continuing operations
Loss for the period from — (10.2) — (10.2)
discontinued operations
Operating income includes transaction fees, servicing fees, interest income from
loans held at amortised cost, interest on cash balances and other fees and was
£92.1m (H1 2024: £77.3m).
• Transaction fees, representing fees earned on originations, increased to £48.3m
(H1 2024: £42.1m), driven by growth in originations as the business continued to
expand its Term Loans offering to more segments of the market, and attract more
applications from SMEs. Average transaction fee yields increased in the Term
Loans business to 6.5% (H1 2024: 6.1%) due to product mix.
• Servicing fees, representing income for servicing LuM, were £18.3m (H1 2024:
£18.6m). The fees move in line with the quantum of LuM, which decreased in the
Term Loans business as growth in LuM from new lending was offset by continued
repayment on the legacy Covid-19 scheme loans. Servicing yields remain similar
to H1 2024 levels at c.1.3%. Servicing fees are not charged on FlexiPay lines of
credit.
• Interest income represents the fees earned on FlexiPay lines of credit and
interest earned on cash and cash equivalents:
i. FlexiPay interest income is the fee charged on transactions and spread over a
number of months, in line with borrower repayments. It has increased to £19.3m
(H1 2024: £9.3m), driven by transaction levels and the average fees on
transactions which were 7.0% in the year (H1 2024: 5.0%).
ii. Interest earned on cash and cash equivalents was £3.7m (H1 2024: £4.6m). This
interest applies to the Group’s unrestricted cash as well as restricted cash
drawn from the Citibank facility in anticipation of future FlexiPay and Cashback
credit card transactions.
• Other fees arose principally from collection fees we recovered on defaulted
loans or fees for the successful facilitation of transactions on behalf of
investors.
Investment income represents the investment income, less investment expense, on
loans held on balance sheet at fair value. It increased to £2.6m (H1 2024: £1.6m),
driven by the expansion of our shorter-term lending offering.
Revenue, defined as total income after fair value adjustments and cost of funds, was
£92.3m (H1 2024: £79.1m) growth of 17%.
Expected credit losses
These principally relate to the IFRS 9 charge for FlexiPay where we account for
actual and future expected credit losses from SMEs defaulting on their lines of
credit. We would expect this charge to continue to increase as FlexiPay and Cashback
credit card grow. Actual loss rates during the period remained consistent with the
prior year.
Operating expenses
At an overall level, operating expenses increased by 4% compared with H1 2024. The
primary drivers of cost growth were the variable expenses associated with marketing.
Marketing costs increased by 24% to £27.6m.
Costs continue to be actively and tightly managed. Excluding the variable marketing
costs, operating costs were down 4% compared to a 17% growth in revenue, following
the 2024 cost restructuring programme which is delivering an annualised cash saving
of £15m in 2025.
People costs (including contractors) represent the Group’s largest ongoing operating
cost and include salary-related costs plus share-based payments.
Total people costs reduced by 9% in the year with the savings achieved from the
headcount restructuring more than offsetting inflation, new hires and the absorption
of global costs previously allocated to the US business and the impact of the UK
employer’s national insurance increase. The number of employees at 31 December 2024
was 726, consistent with that at 30 June 2025.
The share-based payment charge for the year, included in people costs, was £2.6m (H1
2024: £4.2m). This charge is impacted by the awarding of share incentives as well as
the movement in share price which impacts employers’ national insurance costs. The
large increase in the share price drove the higher charge seen in 2024.
30 June 30 June
Change
Continuing operations 2025 2024
%
£m £m
Salary costs 34.5 37.1 (7)
Less capitalised development spend (“CDS”) (4.4) (5.2) (15)
Salary costs net of CDS 30.1 31.9 (6)
Share-based payments 2.6 4.2 (38)
Total people costs 32.7 36.1 (9)
Average headcount (incl. contractors) 725 834 (13)
Period-end headcount (incl. contractors) 727 814 (11)
Marketing costs comprise performance marketing (direct mail and online), brand spend
and commission payments made to brokers. Marketing costs increased in the year to
£27.6m (H1 2024: £22.3m) and remain at c.30% of revenue.
Depreciation, amortisation and impairment costs of £6.1m (H1 2024: £6.5m) largely
represent the amortisation of the cost of the Group’s capitalised technology
development and the depreciation of right-of-use assets related to the Group’s
office lease.
Other costs, which consist of loan processing costs, data and technology,
professional fees and staff and office-related costs, have grown as the Group
continued to invest in growth in the FlexiPay business. The increase is driven by
inflation, higher volumes and loan processing costs.
Balance sheet and investments
The Group’s net equity was £198.7m at 30 June 2025 (31 December 2024: £216.5m). This
reduction reflects the share buyback during the period.
The majority of the Group’s balance sheet is represented by cash and invested
capital as shown below. The invested capital is in certain SME loans, either
directly or historically through investment vehicles, and in the FlexiPay lines of
credit.
30 June 31
Operating Investing December
2025
2024
Term Shorter CBILS/RLS/GGS
Loans FlexiPay term co-investments Other Total Total
business lending
£m £m £m £m £m
£m £m
SME loans and lines 2.3 141.9 46.0 16.2 1.1 207.5 118.8
of credit
Cash and cash
equivalents
Unrestricted 114.7 0.3 — — 115.0 150.5
Restricted — 24.8 4.6 4.2 — 33.6 37.1
Other — 9.7 (1.0) — — 8.7 6.3
assets/(liabilities)
Borrowings — (132.3) (38.5) — — (170.8) (101.9)
Cash and net
investments
117.0 44.4 11.1 20.4 1.1 194.0 210.8
Other assets 40.1 — — — — 40.1 45.3
Other liabilities (31.2) — — (4.2) — (35.4) (39.6)
Equity 125.9 44.4 11.1 16.2 1.1 198.7 216.5
The table below provides a summation of Funding Circle’s net invested capital in
products and vehicles:
30 June 31 December
Investment in product/vehicles 2025 2024
£m £m
CBILS/RLS/GGS/commercial co-investments1 16 18
Shorter term lending1 11 —
Other 2 2
Net invested 29 20
FlexiPay1 44 34
Total net invested capital 73 54
1. These vehicles through which the funding and lending is generated are set up to
be bankruptcy remote.
CBILS/RLS/GGS/commercial co-investments – as part of our historic participation in
the CBILS and RLS government-guaranteed loan schemes and our ongoing involvement in
GGS, we were required to co-invest c.1% alongside institutional investors.
Shorter term lending – this relates to our shorter term lending offering which we
expanded in H1 2025 as part of our Term Loans business with terms from 6 to 24
months. Whilst the product is tested and iterated, we are funding it using our
balance sheet, through the same leveraged warehouse as FlexiPay, in line with our
capital allocation framework. We expect to onboard an institutional investor to fund
the product and purchase the loan portfolio. The loans are treated as held for sale
and therefore accounted for at fair value.
Cash flow
At 30 June 2025, the Group’s cash position was £148.6m (31 December 2024: £187.6m).
Of this balance £115.0m (31 December 2024: £150.5m) is unrestricted in its use with
£33.6m (31 December 2024: £37.1m) being restricted.
Restricted cash relates to cash held in the funding vehicle of FlexiPay and shorter
term lending together with amounts owed to the British Business Bank (“BBB”) for
guarantee fees collected from institutional investors under the participation of the
CBILS, RLS and GGS schemes. Total cash movements have principally been driven by:
i. trading performance;
ii. ongoing investment in FlexiPay lines of credit and shorter term lending product
with external bank debt;
iii. monetisation of on-balance sheet SME loans as they have continued to pay down;
iv. purchase of shares as part of the share buyback programme and the employee
benefit trust; and
v. timing of working capital movements associated with UK government loan guarantee
payments received from investors still to be paid to the BBB.
Free cash flow, excluding the one-off guarantee fee payment, has significantly
improved year on year driven by the prior year disposal of the loss-making US
business and the move to profitability of the UK Group.
Free cash flow, which is an alternative performance measure, represents the net cash
flows from operating activities less the cost of purchasing intangible assets,
property, plant and equipment and lease payments. It excludes the investment vehicle
financing and funding cash flows together with FlexiPay lines of credit and Cashback
credit card. The Directors view this as a key liquidity measure and it is the net
amount of cash used or generated to operate and develop the Group’s platform each
year.
The table below shows how the Group’s cash has been utilised:
30 June
30 June 2025
2024
£m £m
Adjusted EBITDA from continuing operations 15.0 11.0
Adjusted EBITDA from discontinued operations — (8.7)
Adjusted EBITDA 15.0 2.3
Fair value adjustments (2.0) (5.0)
Purchase of tangible and intangible assets (4.7) (7.5)
Payment of lease liabilities (0.9) (2.4)
Working capital/other 8.0 0.7
Free cash flow (excl. restricted cash movement due to 15.4 (11.9)
guarantee fee payment)
Cash movement due to guarantee fee payment (0.8) (25.2)
Free cash flow 14.6 (37.1)
Net distributions from associates 0.3 0.5
Net movement in trusts and co-investments 2.7 9.1
Net movement in lines of credit (net of borrowings) (23.9) (7.4)
Net movement in SME loans at amortised cost (net of (0.7) 1.5
borrowings)
Net movement in loans at fair value through profit and loss (6.2) 12.2
(net of borrowings)
Share buyback/purchase of own shares (25.9) (8.2)
Effect of foreign exchange 0.1 0.1
Movement in the year (39.0) (29.3)
Cash and cash equivalents at the beginning of the year 187.6 221.4
Cash and cash equivalents at the end of the year 148.6 192.1
Share buybacks
In May 2025, we announced our third share buyback programme, for up to £25m, which
is currently ongoing. Since March 2024, Funding Circle has bought back 15% of its
issued share capital.
Principal risks and uncertainties
The Group’s principal risks and uncertainties were disclosed on pages 55 to 62 of
the Funding Circle Holdings plc 2024 Annual Report and Accounts after review and
approval by the Board. The Group considers that the overall principal risks and
uncertainties, risk appetite, key risks and management of risks remain unchanged for
the six months ended 30 June 2025.
The principal risks include:
◦ Strategic risk, including the economic environment and environmental, social and
governance risk;
◦ Funding and balance sheet risk;
◦ Credit risk, including borrower acquisition and portfolio management risk;
◦ Regulatory, reputation and conduct risk;
◦ Operational risk, including client money risk, financial crime and process risk;
and
◦ Technology risk, including information security and data risk.
Statement of Directors’ Responsibilities
The Directors confirm that these condensed interim financial statements have been
prepared in accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom’s Financial Conduct Authority, give a true and fair
view of the assets, liabilities, financial position and profit and loss as required
by DTR 4.2.4 and that the interim management report includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8, namely:
• an indication of important events that have occurred during the first six months
and their impact on the condensed set of interim financial statements, and a
description of the principal risks and uncertainties for the remaining six months of
the financial year; and
• material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last Annual Report and
Accounts.
The maintenance and integrity of the Funding Circle Holdings plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that might have occurred to the interim financial
statements since they were initially presented on the website.
The Directors of Funding Circle Holdings plc are listed in the Funding Circle
Holdings plc Annual Report and Accounts for 31 December 2024 as updated with the
board changes highlighted earlier in this document. A list of current directors is
maintained on the Funding Circle Holdings plc website:
www.corporate.fundingcircle.com.
By order of the Board
Lisa Jacobs, Chief Executive Officer
4 September 2025
Tony Nicol, Chief Financial Officer
4 September 2025
Condensed consolidated statement of comprehensive income
for the six months to 30 June 2025 (unaudited)
30 June 30 June 2024 Exceptional 30 June
items1
2025 Before 2024
exceptional
items
£m £m
Note £m £m
Transaction fees 48.3 42.1 — 42.1
Servicing fees 18.3 18.6 — 18.6
Interest income2 23.1 14.1 — 14.1
Other fees 2.4 2.5 — 2.5
Operating income 92.1 77.3 — 77.3
Investment income 2.6 1.6 — 1.6
Total income 94.7 78.9 — 78.9
Fair value gains 2.0 2.8 — 2.8
Cost of funds (4.4) (2.6) — (2.6)
Net income3 6 92.3 79.1 — 79.1
Expected credit loss charge 3, 11, (8.4) (3.8) — (3.8)
12, 15
People costs 5, 7 (32.7) (36.1) (2.3) (38.4)
Marketing costs 7 (27.6) (22.3) — (22.3)
Depreciation, amortisation and 5, 6, 7 (6.1) (6.5) (0.3) (6.8)
impairment
Other costs 7 (11.5) (9.9) — (9.9)
Operating expenses 7 (77.9) (74.8) (2.6) (77.4)
Profit/(loss) before taxation 6.0 0.5 (2.6) (2.1)
Income tax (charge)/credit 8 (0.2) (0.2) — (0.2)
Profit/(loss) for the period from 5.8 0.3 (2.6) (2.3)
continuing operations
Loss for the period from 4 — (10.2) — (10.2)
discontinued operations
Profit/(loss) for the period 5.8 (9.9) (2.6) (12.5)
Other comprehensive expense
Items that may be reclassified
subsequently to profit and loss:
Exchange differences on translation
of foreign operations – continuing — (0.1) — (0.1)
operations
Exchange differences on translation
of foreign operations – — (0.2) — (0.2)
discontinued operations 4
Total comprehensive 5.8 (10.2) (2.6) (12.8)
income/(expense) for the period
Total comprehensive
income/(expense) attributable to:
Owners of the Parent
Income/(expense) from continuing 5.8 0.2 (2.6) (2.4)
operations
Expense from discontinued 4 — (10.4) — (10.4)
operations
Total comprehensive
income/(expense) attributable to 5.8 (10.2) (2.6) (12.8)
the owners of the parent
Earnings per share
Basic earnings/(loss) per share 9 1.9p 0.1p (0.7)p
from continuing operations
Diluted earnings/(loss) per share 9 1.7p 0.1p (0.7)p
from continuing operations
Basic and diluted loss per share 4, 9 — (2.9)p (2.9)p
from discontinued operations
1. Exceptional items are detailed in note 5.
2. Interest income recognised on assets held at amortised cost under the effective
interest rate method and £3.3 million (2024: £3.7 million) on money market funds
held at fair value through profit and loss.
3. Net income is also referred to as “revenue”.
The notes form part of these financial statements.
Condensed consolidated balance sheet
as at 30 June 2025 (unaudited)
30 June 31 December
Note 2025 2024
£m £m
Non-current assets
Intangible assets 20.7 21.2
Property, plant and equipment 8.6 9.6
Investment in associates 0.3 0.6
Investment in trusts and co-investments 12 16.2 17.8
SME loans held at amortised cost 12 1.6 1.4
47.4 50.6
Current assets
SME loans held at amortised cost 12 0.7 0.7
SME loans held at fair value through profit and loss 12 46.8 1.2
Lines of credit 3, 12 141.9 97.1
Trade and other receivables 12 20.5 20.8
Cash and cash equivalents 13 148.6 187.6
358.5 307.4
Total assets 405.9 358.0
Current liabilities
Trade and other payables 12 27.2 27.8
Bank borrowings 10, 13 170.8 101.9
Short-term provisions and other liabilities 11 1.6 3.6
Lease liabilities 13 1.8 1.8
201.4 135.1
Non-current liabilities
Long-term provisions and other liabilities 11 0.6 0.6
Lease liabilities 13 5.2 5.8
Total liabilities 207.2 141.5
Equity
Share capital 0.3 0.3
Share premium account 0.4 0.1
Foreign exchange reserve 5.3 5.3
Share options reserve 20.0 20.6
Retained earnings 172.7 190.2
Total equity 198.7 216.5
Total equity and liabilities 405.9 358.0
The financial statements were approved by the Board and authorised for issue on 4
September 2025. They were signed on behalf of the Board by:
Tony Nicol
Director
Company registration number 07123934
The notes form part of these financial statements.
Condensed consolidated statement of changes in equity
for the six months to 30 June 2025 (unaudited)
Share Foreign Share Retained
Share premium exchange options earnings/ Total
capital account reserve reserve (accumulated equity
losses)
£m £m £m £m £m £m
Balance as at
0.3 0.1 5.3 20.6 190.2 216.5
1 January 2025
Profit/(loss) for the period — — — — 5.8 5.8
Other comprehensive income
Exchange differences on
translation of foreign — — — — — —
operations
Total comprehensive income — — — — 5.8 5.8
Transactions with owners
Issue of share
capital/exercise of share — 0.3 — — — 0.3
options
Purchase of own shares held — — — — (6.9) (6.9)
in employee benefit trust
Buyback and cancellation of — — — — (19.0) (19.0)
own shares
Transfer of share option — — — (2.6) 2.6 —
costs
Employee share schemes – — — — 2.0 — 2.0
value of employee services
Balance at
0.3 0.4 5.3 20.0 172.7 198.7
30 June 2025
Balance as at
0.4 293.1 14.2 24.0 (84.9) 246.8
1 January 2024
Loss for the period — — — — (12.5) (12.5)
Other comprehensive expense
Exchange differences on
translation of foreign — — (0.3) — — (0.3)
operations
Total comprehensive expense — — (0.3) — (12.5) (12.8)
Transactions with owners
Issue of share
capital/exercise of share — 0.2 — — — 0.2
options
Purchase of own shares held — — — — — —
in employee benefit trust
Buyback and cancellation of — — — — (8.2) (8.2)
own shares
Transfer of share option — — — (3.3) 3.3 —
costs
Employee share schemes – — — — 3.0 — 3.0
value of employee services
Unaudited balance as at
0.4 293.3 13.9 23.7 (102.3) 229.0
30 June 2024
The notes form part of these financial statements.
Condensed consolidated statement of cash flows
for the six months to 30 June 2025 (unaudited)
6 months to 30 6 months to 30
June June
Note
2025 2024
£m £m
Net cash outflow from operating activities 13 (34.4) (52.4)
Investing activities
Purchase of intangible assets (4.4) (5.3)
Purchase of property, plant and equipment (0.3) (2.2)
Originations of SME loans held at amortised 12 (1.2) (0.2)
cost
Cash receipts from SME loans held at amortised 12 0.5 2.2
cost
Originations from SME loans held at fair value 12 (50.0) —
through profit and loss
Cash receipts from SME loans held at fair value 12 2.8 12.2
through profit and loss
Proceeds from sale of SME loans held at fair 12 2.5 —
value through profit and loss
Investment in trusts and co-investments 12 (0.4) (1.5)
Cash receipts from investments in trusts and 12 3.1 10.6
co-investments
Redemption in associates 0.3 0.5
Net cash (outflow)/inflow from investing (47.1) 16.3
activities
Financing activities
Proceeds from bank borrowings 10, 13 73.2 20.0
Repayment of bank borrowings 10, 13 (4.3) (2.9)
Proceeds from the exercise of share options 0.3 0.2
Purchase of own shares 1 (6.9) —
Share buyback 1 (19.0) (8.2)
Proceeds from subleases — 0.4
Payment of lease liabilities 13 (0.9) (2.8)
Net cash inflow from financing activities 42.4 6.7
Net decrease in cash and cash equivalents (39.1) (29.4)
Cash and cash equivalents at the beginning of 187.6 221.4
the period
Effect of foreign exchange rate changes 0.1 0.1
Cash and cash equivalents at the end of the 13 148.6 192.1
period
The notes form part of these financial statements.
Notes to the condensed interim financial statements
for the six months to 30 June 2025 (unaudited)
1. Basis of preparation
General information
Funding Circle Holdings plc (‘the Company’) is a public limited company which is
listed on the London Stock Exchange and is domiciled and incorporated in the United
Kingdom under the Companies Act 2006. The Company’s registered office is 71 Queen
Victoria Street, London, EC4V 4AY.
These condensed interim financial statements have been prepared as at, and for the
six months to, 30 June 2025. The comparative financial information presented has
been prepared for the six months to 30 June 2024 and as at 31 December 2024.
The interim financial information presented as at, and for the six months to, 30
June 2025 comprise the Company and its subsidiaries (together referred to as the
“Group”). The consolidated financial statements of the Group as at, and for the year
to, 31 December 2024 are available on request from the Company’s registered office
and via the Company’s website.
Going concern
The Group made a total comprehensive income of £5.8 million during the six months to
30 June 2025 (30 June 2024: £12.8 million loss). As at 30 June 2025 the Group had
net assets of £198.7 million (31 December 2024: £216.5 million). This included cash
and cash equivalents of £148.6 million (31 December 2024: £187.6 million) of which
£33.6 million (31 December 2024: £37.1 million) is restricted. Additionally, within
the net assets the Group holds £72.8 million (31 December 2024: £53.5 million) of
invested capital, some of which is capable of being monetised if liquidity needs
arise.
The condensed interim financial statements are prepared on a going concern basis as
the Directors are satisfied that the Group has the resources to continue in business
for the foreseeable future (which has been taken as at least 12 months from the date
of approval of the condensed interim financial statements).
The Group has prepared detailed cash flow forecasts for the next 15 months to 31
December 2026 and has updated the going concern assessment to factor in the
potential ongoing impact of inflation and related economic stress.
The base case scenario assumes:
• the economic environment remains as is with no improvement or deterioration in the
macro environment forecast;
• growth in shorter term lending;
• growth in Cashback credit card alongside FlexiPay lines of credit;
• the Group continues to fund the lines of credit through its balance sheet along
with the senior banking facility;
• shorter term lending assets are expected to be funded in the same way until
December 2025 when we expect to sell the assets and switch to operating under a
platform model;
• costs are controlled with any growth driven by marketing, expected credit losses
(“ECL”) and cost of funds. Remaining costs grow but predominantly through inflation.
Strict control of headcount, with limited increases;
• the current share buyback programme concludes in April 2026 with no additional
buyback or dividend assumed; and
• corporation tax begins to be paid alongside in 2026 utilising brought forward tax
losses.
Management prepared a severe but plausible downside scenario in which:
• further macroeconomic volatility continues through the period with elevated
inflation and interest rates reducing originations as borrower demand for loans at
higher interest rates reduces and investor funding appetite reduces;
• a downside scenario is applied to Term Loans loans under management resulting in
reduced servicing fees;
• a downside scenario applied to the on-balance sheet lines of credit results in
reduced net interest margins with higher cost of funds;
• an operational event occurs, such as impacts on critical suppliers and lower
corporate cash levels resulting in lost revenues and cash outlays.
The severe but plausible downside scenario results in a £40 million cash outflow
(referred to as management’s stress buffer).
Management has reviewed its limited regulatory capital requirements. In the downside
scenario, the risk of capital requirement breach is considered remote. The Group
does not currently rely on committed or uncommitted borrowing facilities, with the
exception of a facility for the purpose of originating FlexiPay lines of credit (and
initially shorter term lending) and does not have undrawn committed borrowing
facilities available to the wider Group.
The Directors have made enquiries of management and considered budgets and cash flow
forecasts for the Group and have, at the time of approving these financial
statements, a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future,
specifically assessed for the 15 months to 31 December 2026.
Basis of preparation
These condensed interim financial statements, which have been reviewed and not
audited, have been prepared in accordance with the Disclosure and Transparency Rules
of the Financial Conduct Authority and with UK adopted IAS 34, “Interim Financial
Reporting”. They do not include all of the information required for full annual
financial statements, and should be read in conjunction with the consolidated
financial statements of the Group as at and for the year to 31 December 2024 which
have been prepared in accordance with UK-adopted International Accounting Standards
and with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The financial information included in these condensed interim financial statements
does not constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006 (the ‘Act’). The statutory accounts for the year ended 31
December 2024 have been reported on by the Company’s auditors and were delivered to
the Registrar of Companies following the Company’s Annual General Meeting. The
auditor’s report was (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under section 498 of the Act.
Significant changes in the current reporting period
The financial position and performance of the Group were affected by the following
events and transactions during the six months to 30 June 2025:
i. Expansion into shorter term loans product
In April 2025, the Group expanded into a shorter term loan product offering fixed
rate interest term loans between 6 and 24 month terms. Loans with terms over 12
months are subject to an origination fee in line with our other term loan products,
while those with terms of 12 months or less are not subject to origination fees.
The shorter term loans generally charge higher rates of interest than FC’s
equivalent longer term loans, but provide more flexibility with penalty-free
prepayments and in some cases no origination fees.
Shorter term loans are financed through the same leveraged warehouse used to fund
the FlexiPay and Cashback credit card products, Kanaloa 2 Limited (“K2”). The
interest and fees related to the senior borrowing facility used to fund the loans is
presented under “cost of funds” in the condensed consolidated statement of
comprehensive income.
The intention of the business with the shorter term loan product is to initially
build up the product on-balance sheet to an appropriate scale and to be able to
iterate it, before selling the loans to a third party investor and originating new
loans under a platform strategy going forward. As the loans are under a business
model intending to sell them, they are measured at fair value through profit and
loss and presented under “SME loans held at fair value through profit and loss” on
the condensed consolidated balance sheet. Interest income and fair value gains or
losses follow the existing accounting policy and presentation for SME loans held at
fair value through profit and loss and within the Term Loans segment of the business
in note 6.
ii. Share buyback programme extension and purchase of own shares
The share buyback programme which was launched and then extended in 2024 concluded
in May 2025 and was extended further to buy and cancel up to £25 million of shares
in order to return value to shareholders. The nominal cost of the shares cancelled
reduces the Group’s share capital with an equal increase in the capital redemption
reserve. The full cost of the buyback inclusive of stamp duty and broker fees is
debited to retained earnings. In the period to 30 June 2025, 16.7 million shares
were purchased for consideration of £19.0 million inclusive of fees and expenses
under the programme.
Additionally, the Group purchased 6.4 million shares for £6.9 million during the
period ended 30 June 2025, which were not cancelled and are held for the purpose of
satisfying the exercise of employee share options.
2. Changes in material accounting policies
The accounting policies, methods of computation and presentation adopted in the
preparation of the condensed interim financial statements are consistent with those
followed in the preparation of the consolidated financial statements for the year
ended 31 December 2024. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective.
A number of new or amended standards became applicable for the current reporting
period, however, the Group did not have to change its accounting policies or make
retrospective adjustments as a result of adoption.
3. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the condensed consolidated interim financial statements requires
the Group to make estimates and judgements that affect the application of policies
and reported amounts. Critical judgements represent key decisions made by management
in the application of the Group accounting policies. Where a significant risk of
materially different outcomes exists due to management assumptions or sources of
estimation uncertainty, this will represent a key source of estimation uncertainty.
Estimates and judgements are continually evaluated and are based on experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Although these estimates are based on
management’s best knowledge of the amount, event or actions, actual results
ultimately may differ from those estimates.
The significant judgements and estimates applied by the Group in the financial
statements have been applied on a consistent basis with the financial statements for
the comparative year to 31 December 2024, except for ECL where the model methodology
has been refined (see note 12).
Critical judgements
a. Loans originated through the platform
The Group originates SME loans through its platform which have been funded primarily
by banks, asset managers, other institutional investors, funds, national entities,
retail investors or by usage of its own capital. Judgement is required to determine
whether these loans should be recognised on the Group’s balance sheet. Where the
Group, its subsidiaries or SPVs which it consolidates have legal and beneficial
ownership to the title of those SME loans, they are recognised on the Group’s
balance sheet. Where this is not the case, the loans are not recognised at the point
of origination.
b. Recognition of deferred tax
Under IAS 12, a deferred tax asset should be recognised for all deductible temporary
differences and tax losses to the extent that it is probable that taxable profit
will be available against which the deductible temporary difference or tax losses
can be utilised. While the Board-approved forecasts project the UK to be in a
taxable profit position for the year ended 31 December 2025 and beyond, there are
risks to achieving this forecast and as a result it is not considered highly
probable. Management has used its judgement in determining whether there is
sufficient certainty to recognise a deferred tax asset. The “European Securities and
Markets Authority (“ESMA”) has previously issued guidance relating to the
recognition of deferred tax assets in response to companies recognising assets too
early only to subsequently write them off. One of the key indicators suggested by
ESMA for the recognition of deferred tax is whether taxable profit is being
recognised from which an entity has begun to offset losses. This is not yet the
case for the UK business for a sustained period and management has determined not to
recognise a deferred tax asset as a result. Had management determined a different
level of certainty regarding the taxable profits of the UK for the year end and
beyond, then a deferred tax asset may have been recognised.
Key sources of estimation uncertainty
The following are the key sources of estimation uncertainty that the Directors have
identified in the process of applying the Group’s accounting policies and have the
most significant effect on the amounts recognised in the financial statements.
a. Expected credit loss impairment of FlexiPay lines of credit (note 11, 12 and 15)
At 30 June 2025, the Group held £164.3 million of drawn FlexiPay lines of credit and
£337.1 million of undrawn lines of credit, gross of expected credit loss impairment
allowances (31 December 2024: £110.0 million drawn and £278.7 million undrawn).
While other financial assets of the Group are held at amortised cost, the FlexiPay
lines of credit are the most sensitive to estimation uncertainty due to the higher
balance outstanding and more limited historical data.
An expected credit loss impairment allowance is held against the lines of credit of
£24.0 million (£22.4 million related to drawn lines of credit and £1.6 million
related to undrawn) (31 December 2024: £15.6 million split £12.9 million drawn and
£2.7 million undrawn).
The Group estimates the expected credit loss allowance following IFRS 9 through
modelling the exposure at default based on observed trends related to the overall
line of credit facility and the proportion drawn at the time of default. The
probability of default is estimated utilising observed trends and combining these
with forward-looking information including different macroeconomic scenarios which
are probability weighted. The loss given default is driven by assumptions regarding
the level of recoveries collected after defaults occur.
The area most sensitive to estimation uncertainty is the probability of default
(“PD”) related to stage 1 and 2 lines of credit which is modelled based on observed
trends and adjusted using probability weighted forward-looking scenarios. Currently
a baseline scenario, upside scenario and downside scenario are utilised which are
probability weighted as outlined below which provide a blended stage 1 and 2 average
probability of default of 9.1%.
If 100% probability weighting was to be applied to each scenario, the weighted PD
related to stage 1 and 2 lines of credit and the expected credit loss impairment
provision would change as follows:
100%
ECL scenario weighting to ECL £ Change in
scenario average PD
compared to Change in
blended scenario ECL compared
% to blended
Scenario Average PD scenario £
weighting % %
Base case 70% 100% 8.9% 23.8 (0.2%) (0.2)
Upside 15% 100% 6.1% 20.2 (3.0%) (3.8)
Downside 15% 100% 12.6% 28.7 3.5% 4.7
Blended
weighted 100% 100% 9.1% 24.0 — —
scenarios
The above reflects the impact of both drawn and undrawn elements of the ECL
impairment allowance.
The loss given default (“LGD”) of the expected credit loss impairment allowance is
estimated based on observation of the blended portfolio recoveries to date on
defaulted lines of credit projected out into the future using an average 84% LGD.
While the LGD expectation is based on the trajectory of recoveries to date, the
lifetime LGD may differ from the estimated amount. A +/- 500bps increase/decrease in
the estimated lifetime LGD would increase/decrease the expected credit loss
impairment allowance by £0.6 million/(£0.6 million). It is considered that the above
sensitivities represent the range of reasonably possible outcomes in relation to the
LGD on FlexiPay lines of credit.
4. Discontinued operations
The Group announced on 7 March 2024 its intention to divest of the US business. As
of this date, the US business was considered to form a disposal group and was
reclassified as a discontinued operation. An agreement was signed on 24 June 2024 to
sell the business to iBusiness Funding, LLC and the transaction completed as of 1
July 2024. As a result, Group retained control of the US business until 1 July 2024,
at which point it was deconsolidated.
5. Exceptional items
The Group reflects its underlying financial results in the “before exceptional
items” column of the condensed consolidated statement of comprehensive income in
order to provide a clear and consistent view of trading performance.
In the previous year, as part of its ongoing commitment to profitability, the Group
launched a redundancy and cost efficiency programme. This process resulted in a
simpler, leaner and better positioned UK-focused operation. This resulted in
redundancy costs of £2.3 million and impairment of capitalised development spend
intangible assets of £0.3 million which were treated as exceptional items in the
period ended 30 June 2024.
6. Segmental information
IFRS 8 Operating Segments requires the Group to determine its operating segments
based on information which is used internally for decision making. Based on the
internal reporting information and management structures within the Group, it has
been determined that there are two continuing business and one discontinued US
business operating segments. Reporting on this basis is reviewed by the Executive
Committee (“ExCo”), which is the chief operating decision maker (“CODM”). The ExCo
is made up of the Executive Directors and other senior management and is responsible
for the strategic decision making of the Group.
The ExCo measures the performance of each segment primarily by reference to profit
before tax. Additionally, the ExCo utilises a non-GAAP measure, Adjusted EBITDA,
which is defined as profit/loss for the period before finance costs (being the
discount unwind on lease liabilities), taxation, depreciation, amortisation and
impairments (“AEBITDA”), and additionally excludes share-based payment charges and
associated social security costs, foreign exchange and exceptional items. AEBITDA is
a measure of Group performance as it allows better comparability of the underlying
performance of the business. The segment reporting, including AEBITDA, excludes the
impact of the Group’s transfer pricing arrangements as this is not information
presented to, or used by, the CODM in decision making or the allocation of
resources.
30 June 2025 30 June 20241
Continuing operations Continuing operations
United Kingdom United Kingdom
Term Loans FlexiPay Total Term Loans FlexiPay Total
£m £m £m £m £m £m
Transaction fees 47.8 0.5 48.3 41.8 0.3 42.1
Servicing fees 18.3 — 18.3 18.6 — 18.6
Interest Income 3.1 20.0 23.1 4.3 9.8 14.1
Other fees 2.3 0.1 2.4 2.5 — 2.5
Operating income 71.5 20.6 92.1 67.2 10.1 77.3
Investment income 2.6 — 2.6 1.6 — 1.6
Total income 74.1 20.6 94.7 68.8 10.1 78.9
Fair value gains 2.0 — 2.0 2.8 — 2.8
Cost of funds (0.2) (4.2) (4.4) — (2.6) (2.6)
Net income (revenue) 75.9 16.4 92.3 71.6 7.5 79.1
Adjusted EBITDA 20.1 (5.1) 15.0 18.3 (7.3) 11.0
Discount unwind on lease (0.3) — (0.3) (0.3) — (0.3)
liabilities
Depreciation, amortisation,
impairment and modification (4.9) (1.2) (6.1) (5.8) (0.7) (6.5)
gains/(losses)
Share-based payments and (2.2) (0.4) (2.6) (3.5) (0.7) (4.2)
social security costs
Exceptional items — — — — (2.3) (0.3) (2.6)
Foreign exchange gains — — — — 0.5 — 0.5
Profit/(loss) before tax 12.7 (6.7) 6.0 6.9 (9.0) (2.1)
1. The segmental results of the US business are not presented above and are
presented within discontinued operations.
7. Operating expenses
30 June Before exceptional 30 June
items Exceptional
Continuing operations 2025 items1 2024
£m
£m £m £m
Note
Depreciation 1.2 1.7 — 1.7
Amortisation 4.8 5.2 — 5.2
Impairment of intangibles 5 0.1 — 0.3 0.3
Modification gains — (0.4) — (0.4)
Employment costs (including 5 32.7 36.1 2.3 38.4
contractors)
Marketing costs - (excluding 27.6 22.3 — 22.3
employment costs)
Data and technology 4.1 3.6 — 3.6
Other expenses 7.4 6.3 — 6.3
Total operating expenses from 77.9 74.8 2.6 77.4
continuing operations
1. See note 5 for details on exceptional items.
8. Taxation
The Group calculates the period income tax expense using the tax rate that would be
applicable to the expected total annual earnings. The estimated effective tax rate
used for the six months to 30 June 2025 (excluding the tax charge on Research and
Development Expenditure Credits (RDEC)) is (3.12%), compared to (2.09%) for the six
months to 30 June 2024.
The major components of income tax expense in the condensed consolidated statement
of comprehensive income are:
30 June 30 June
2025 2024
£m £m
Current tax
Corporation taxation on continuing operations 0.2 0.2
Corporation taxation on discontinued operations — 0.1
Total current tax 0.2 0.3
Deferred tax
Deferred taxation on continuing operations — —
Deferred taxation on discontinued operations — —
Total deferred tax — —
Total tax charge/(credit) on continuing operations 0.2 0.2
Total tax charge/(credit) on discontinued operations — 0.1
The above tax charge includes the amount of tax deducted from the gross RDEC credit
receivable for 2025 of £0.2 million (2024: £0.2 million). There is a state tax
liability of £nil (2024: £0.1 million) since the US business was disposed of in
2024.
The Group has unrelieved tax losses of £127.8 million (31 December 2024: £125.0
million) that relate to continuing operations and are available for offset against
future taxable profits.
9. Earnings/(loss) per share
30 June 30 June 30 June
2025 2024 2024
£m £m £m
Total Total Before exceptional items
Profit/(loss) for the period from 5.8 (2.3) 0.3
continuing operations
Basic weighted average number of ordinary 307.2 346.3 346.3
shares in issue (million)
Basic earnings/(loss) per share from 1.9p (0.7)p 0.1p
continuing operations
Profit/(loss) for the period from 5.8 (2.3) 0.3
continuing operations
Diluted weighted average number of ordinary 341.5 346.3 389.9
shares in issue (million)
Diluted earnings/(loss) per share from 1.7p (0.7)p 0.1p
continuing operations
30 June 30 June
2025 2024
£m £m
Total Total
Loss for the period from discontinued operations — (10.2)
Basic and diluted weighted average number of ordinary shares in — 346.3
issue (million)
Basic and diluted loss per share from discontinued operations — (2.9)p
10. Borrowings
During 2025 the Group continued to operate a leveraged warehouse for the purposes of
funding the FlexiPay product and the shorter term lending product with a total
committed facility of up to £231.0 million which can be upsized further. The drawn
balance on the facility at 30 June 2025 was £170.8 million (31 December 2024: £101.9
million). Interest is charged on the drawn balance at SONIA plus a margin, together
with a commitment fee. The forward flow period of the facility was extended to
mature in April 2026 effective April 2025.
11. Provisions and other liabilities
Dilapidation Loan Restructuring Other Total
(Exceptional)1 liabilities2
repurchase
£m £m £m £m £m
At 1 January 2024 1.1 0.1 — 1.4 2.6
Additional — — 2.3 0.7 3.0
provision/liability
Amount utilised (0.3) (0.1) — — (0.4)
Amount reversed (0.2) — — — (0.2)
At 30 June 2024 0.6 — 2.3 2.1 5.0
Additional — — — 1.5 1.5
provision/liability
Amount utilised — — (2.3) — (2.3)
Amount reversed — — — — —
At 31 December 2024 0.6 — — 3.6 4.2
Additional — — — — —
provision/liability
Amount utilised — — — (0.9) (0.9)
Amount reversed — — — (1.1) (1.1)
At 30 June 2025 0.6 — — 1.6 2.2
1. The restructuring provision relates to the simplification and streamlining of the
Group and has been treated as an exceptional item. See note 5.
2. Other provisions includes provisions for operational buybacks of £nil (31
December 2024: £0.9 million) and £1.6 million (31 December 2024: £2.7 million) of
expected credit loss impairment allowance related to undrawn FlexiPay lines of
credit. See notes 12 and 15.
Current and non-current
30 June 31 December
2025 2024
£m £m
Current provisions and other liabilities 1.6 3.6
Non-current provisions and other liabilities 0.6 0.6
2.2 4.2
The dilapidation provision represents an estimated cost for dismantling the
customisation of offices and restoring the leasehold premises to its original state
at the end of the tenancy period. The provision is expected to be utilised by 2030.
12. Financial risk management
The Group’s financial risks and risk management objectives and policies are
consistent with those disclosed in the consolidated financial statements as at and
for the year to 31 December 2024.
Financial risks arising from financial instruments are analysed into credit risk,
liquidity risk, market risk (including currency risk, interest rate risk and other
price risk) and foreign exchange risk. These condensed interim financial statements
do not include all financial risk management information and disclosures required in
the annual financial statements. Details of how these risks are managed are
discussed in the Funding Circle Holdings plc’s financial statements for the year
ended 31 December 2024.
There has not been a significant change in the Group’s financial risk management
processes or policies since the year end. The assumptions used in determining the
level of defaults and recoveries which determine the fair value of loans remain
consistent with those used at 31 December 2024.
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
• SME loans;
• investments in trusts and co-investments;
• lines of credit;
• trade and other receivables;
• cash and cash equivalents;
• trade and other payables;
• bank borrowings; and
• lease liabilities.
Categorisation of financial assets and financial liabilities
The table shows the carrying amounts of financial assets and financial liabilities
by category of financial instrument:
30 June 2025 31 December 2024
Fair value Fair value
through Amortised through Amortised
profit cost Total profit and cost Total
loss
and loss
£m £m £m £m £m £m
Assets
SME loans held at — 2.3 2.3 — 2.1 2.1
amortised cost
SME loans held at fair
value through profit and 46.8 — 46.8 1.2 — 1.2
loss
Lines of credit — 141.9 141.9 — 97.1 97.1
Investment in trusts and 16.2 — 16.2 17.8 — 17.8
co-investments
Trade and other 0.4 13.9 14.3 0.6 10.7 11.3
receivables
Cash and cash equivalents 99.8 48.8 148.6 136.3 51.3 187.6
163.2 206.9 370.1 155.9 161.2 317.1
Liabilities
Trade and other payables — (8.1) (8.1) — (8.3) (8.3)
Bank borrowings — (170.8) (170.8) — (101.9) (101.9)
Lease liabilities — (7.0) (7.0) — (7.6) (7.6)
— (185.9) (185.9) — (117.8) (117.8)
Financial instruments measured at amortised cost
Financial instruments measured at amortised cost, rather than fair value, include
cash and cash equivalents, trade and other receivables, SME loans held at amortised
cost, FlexiPay lines of credit, bank borrowings, lease liabilities and trade and
other payables. Due to their nature, the carrying value of each of the above
financial instruments approximates to their fair value.
Financial instruments measured at fair value
IFRS 13 requires certain disclosures which require the classification of financial
assets and financial liabilities measured at fair value using a fair value hierarchy
that reflects the significance of the inputs used in making the fair value
measurement.
Disclosure of fair value measurements by level is according to the following fair
value measurement hierarchy:
• level 1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date;
• level 2 inputs are inputs other than quoted prices included within level 1 that
are observable for the assets or liabilities, either directly or indirectly; and
• level 3 inputs are unobservable inputs for the assets or liabilities.
The fair value of financial instruments that are not traded in an active market (for
example, investments in SME loans) is determined by using valuation techniques.
These valuation techniques maximise the use of observable market data where it is
available and rely as little as possible on entity-specific estimates. If all
significant inputs required to fair value an instrument are observable, the
instrument is included in level 2. If one or more of the significant inputs are not
based on observable market data, the instrument is included in level 3. An
assessment that the level applied to financial instruments is appropriate and
whether a transfer between levels is required is undertaken at the end of each
accounting period. There were no transfers between levels during the period or prior
year.
The Finance department of the Group performs the valuations of items required for
financial reporting purposes, including level 3 fair values. This team reports to
the Chief Financial Officer (“CFO”). Discussions of valuation processes and results
are held regularly at Balance Sheet and Valuation Committee along with regular
updates provided to the Audit Committee.
There were no transfers between Level 1, Level 2 and Level 3 fair value measurements
(year ended 31 December 2024: none).
Fair value measurement using
30 June 2025 31 December 2024
Quoted Quoted Significant
prices Significant Significant prices observable Significant
observable unobservable in unobservable
in inputs inputs active Inputs inputs
active markets
markets
(level
(level (level 2) (level 3) 1) (level 2) (level 3)
1)
£m £m £m £m £m £m
Financial assets
SME loans held
at fair value — — 46.8 — — 1.2
through profit
and loss
Trade and other 0.4 — — 0.6 — —
receivables
Investment in
trusts and — — 16.2 — — 17.8
co-investments
Cash and cash 99.8 — — 136.3 — —
equivalents
100.2 — 63.0 136.9 — 19.0
The fair value of all SME loans held at fair value has been estimated by discounting
future cash flows of the loans using discount rates that reflect the changes in
market interest rates and observed market conditions at the reporting date. The
estimated fair value and carrying amount of the SME loans held at fair value through
profit and loss was £46.8 million at 30 June 2025 (31 December 2024: £1.2 million).
Investment in trusts and co-investments represents the Group’s investment in the
trusts and other vehicles used to fund CBILS, RLS, GGS and certain commercial loans
and is measured at fair value through profit and loss. The government-owned British
Business Bank will guarantee up to 80% of the balance of CBILS loans in the event of
default (and between 70% and 80% of RLS loans and 70% for GGS loans). The estimated
fair value and carrying amount of the investment in trusts and co-investments was
£16.2 million at 30 June 2025 (31 December 2024: £17.8 million).
The most relevant significant unobservable inputs relate to the default rate
estimate and discount rates applied to the fair value calculation. However, it was
determined that the reasonably possible range of outcomes from these inputs into the
estimates are not material to the accounts.
Since 31 December 2024, the forward looking assumptions related to estimating fair
value have been marginally updated to incorporate forecast UK GDP and risk-free rate
alongside unemployment. The base case scenario outlined later in the note under
‘Macro scenarios’ is utilised for projecting cash flows, however, the scenario
change has not materially impacted the fair value of loans.
There has additionally been decreases in discount rates used to discount the
estimated cash flows in the period, primarily driven by decreases in the risk free
rate, due to central bank interest rates falling and expectations of rate cuts
priced into swaps. Many of the investments in leveraged investment in trust
structures have experienced a reduction in discount rates due to de-leveraging of
the vehicles as senior lenders debt has been paid down. The repayment of senior debt
and the passage of time has additionally led to fair value gains, as a result of the
discount unwind, as projected future cash flows of the investments which tend to be
backloaded in the structure become nearer in time to the balance sheet date. This,
in turn, has led to a higher relative estimation of fair value in the period.
The result of the various factors outlined above is a £2.0 million net fair value
gain during the period, primarily driven by discount unwind.
Sensitivities to unobservable assumptions in the valuation of SME loans and money
market funds within cash and cash equivalents are not disclosed as reasonably
possible changes in the current assumptions inclusive of default rates, discount
rates and recovery rates would not be expected to result in material changes in the
carrying values.
Fair value movements on SME loans held at fair value through profit and loss and
investments in trusts and co-investments are recognised through the condensed
consolidated statement of comprehensive income in ‘fair value gains’.
The majority of additions of SME loans held at fair value through profit and loss in
the period relate to the origination of loans under the shorter term lending
product, which are being temporarily originated on the Group’s balance sheet with
the intention of selling them at a later date and originations thereafter operating
under a platform model.
A reconciliation of the movement in level 3 financial instruments is shown as
follows:
SME loans held at Investment in trusts and
fair value through co-investments
profit and loss
£m
£m
Balance as at 1 January 2024 18.6 25.2
Additions — 1.5
Repayments (12.2) (10.6)
Net gain/(loss) on the change in fair
value of financial instruments at fair 2.4 2.6
value through profit or loss
Other non-cash movements (0.7) —
Foreign exchange gain 0.1 —
Balance as at 30 June 2024 8.2 18.7
Additions — 2.6
Repayments (1.3) (4.0)
Net gain on the change in fair value of
financial instruments at fair value 0.2 1.2
through profit or loss
Foreign exchange loss (0.1) —
Disposal of discontinued operations (5.8) (0.7)
Balance as at 31 December 2024 1.2 17.8
Additions 50.0 0.4
Repayments (2.8) (3.1)
Sale of loans (2.5) —
Net gain/(loss) on the change in fair
value of financial instruments at fair 0.9 1.1
value through profit or loss
Balance as at 30 June 2025 46.8 16.2
Financial risk factors
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty
to a financial instrument fails to meet its contractual obligations and arises
principally from the Group’s receivables from customers and cash and cash
equivalents held at banks.
The Group’s maximum exposure to credit risk by class of financial asset is as
follows:
30 June 31 December
2025 2024
£m £m
Non-current
SME loans held at amortised cost 1.6 1.4
Investment in trusts and co-investments 16.2 17.8
Current
SME loans held at amortised cost 0.7 0.7
SME loans held at fair value through profit and loss 46.8 1.2
Lines of credit 141.9 97.1
Trade and other receivables
- Trade receivables 0.5 0.4
- Other receivables 4.1 4.2
- Accrued income 8.8 5.8
- Rent and other deposits 0.9 0.9
Cash and cash equivalents 148.6 187.6
Total gross credit risk exposure 370.1 317.1
Less bank borrowings1 (170.8) (101.9)
Total net credit risk exposure 199.3 215.2
1. Bank borrowings are related to the FlexiPay and shorter term lending warehouse.
An expected credit loss allowance related to undrawn lines of credit on the FlexiPay
product of £1.6 million (2024: £2.7 million) is held within provisions and other
liabilities. The Group’s maximum exposure to credit risk on the undrawn lines of
credit if they were all to be fully drawn would be £337.1 million (2024: £278.7
million). The Group has the ability to freeze, reduce or withdraw lines of credit
as a way of managing associated credit risk.
Credit risk associated with SME loans held at amortised cost and lines of credit
Under IFRS 9, the Group is required to provide for loans measured at amortised cost
under the expected credit loss (“ECL”) model. The impairment related to each loan is
based on the ECLs associated with the probability of default of that loan in the
next 12 months unless there has been a significant increase in credit risk of that
loan since origination. The below factors are used in estimating the impairment:
Factor Description
The Group has developed PD models tailored to each Term
Loan or line of credit product to assess the likelihood
of default within the next 12 months and over the
Probability of Default lifetime. The models estimate PD based on factors
(“PD”) including the latest payment behaviour of the customers,
commercial, consumer, financial and commercial credit
data sharing (“CCDS”) data points and observed historical
trends. The PD model also includes an estimate of the
expected future macroeconomic effect.
The Group has developed an EAD model for line of credit
products to assess the likely exposure at default. The
Exposure at Default model calculates estimates of EAD based upon the latest
(“EAD”) payment behaviour of the customer, the credit limit
utilisation, and projecting expected utilisation at
default based on observed historical trends.
The Group has developed LGD models tailored to each Term
Loan or line of credit product to assess the likely
Loss Given Default (“LGD”) financial loss given an account defaults. The models
calculate estimates of LGD based on historical data on
observed recoveries against defaulted accounts.
The Group uses account-level effective interest rate
Discount rate which is calculated based on line of credit amount or
loan amount, interest and fees, expected repayments
including pre-payments and term.
Model changes since 31 December 2024:
The Group has refined its ECL model methodology since 31 December 2024. The key
changes are as outlined below. The overall impact of the model methodology updates
on a like for like basis with the previous methodology is not material to the
overall ECL figure, however, results in a larger proportion of balances in stage 2
compared to stage 1 but with a lower PD.
Model component Change since 31 December 2024:
The PD is now calculated using a model which takes a number
of input variables derived from commercial, consumer,
financial, and behavioural sources of data, which have been
observed to correlate with a default. These inputs are
combined to determine a PD curve for each borrower, with
PD 12-month PD utilised for stage 1 and lifetime PD for stage
2. The marginal PDs are used to calculate an ECL in each
respective forward-looking period. Previously PD was
determined using models that utilised the latest payment
behaviour of customers and observed historical trends to
project defaults.
The definition of significant increase in credit risk
(“SICR”) used by the Group has been updated to reference the
relative change in the commercial Delphi risk score between
Significant increase in origination and the balance sheet date. Previously SICR was
credit risk defined as including any account which was overdue or
frozen. This change results in a higher proportion of
accounts moving to stage 2 prior to becoming late or
defaulting, relative to the previous methodology utilised.
The backstop of 30 days past due remains in place.
The EAD methodology has been refined to take account of
analysis of the EAD based on more granular utilisation bands
EAD for stage 1 and stage 2. This approach has resulted in more
accurate EAD prediction when back tested against actual
results across portfolios compared to the less granular
credit conversion factor approach used previously.
The assumptions behind LGD used for FlexiPay have previously
been based on the extrapolation of limited actual recovery
data given the relatively small levels of defaults on the
portfolio to date. The approach has been refined to
LGD supplement data limitations with substantial term loan
recovery information, in light of a shared recovery process
between the products at a borrower level and as many
FlexiPay borrowers also have Term Loan products, leading to
an improved basis for projecting the LGD until more FlexiPay
data becomes available in future.
The Group’s macro scenarios previously incorporated just
unemployment as a forecast variable to take account of
forward-looking information. The Group now utilises UK
Macro scenarios unemployment, the risk-free-rate and GDP as the selected
forecast variables, with historically observed coefficients
between these variables to predict insolvencies, instead of
solely using unemployment rates previously. Further details
are provided later in this note.
Definitions:
The Group utilises the following definitions and assumptions when calculating the
ECL on assets:
Component Definition/assumption
The Group assumes there has been a significant increase in
credit risk if the probability of default indexed to the
Significant increase in commercial Delphi risk score of the borrower has increased
credit risk over given thresholds since origination and the balance
sheet date. A backstop is applied for any outstanding
amounts on the loan investment which exceed 30 days, in line
with the rebuttable presumption per IFRS 9.
We estimate PD, EAD and LGD for the duration of the lifetime
Forecast period of the Term Loan or line of credit. Term Loans utilise the
contractual term of the Term Loan. For lines of credit, the
duration of the lifetime is estimated to be five years.
The Group defines a default, classified within
non-performing, as a loan investment with any outstanding
amounts exceeding 90-days past their due date, which
reflects the point at which the loan is considered to be
credit-impaired. In some circumstances where loans are
bought back by the Group, the financial asset associated
with the purchase meets the definition of purchased or
originated credit-impaired (“POCI”); this element of the
Definition of default impairment is therefore based on lifetime ECLs.
Lines of credit utilises the same default definition and
probability of default under IFRS 9; however, they are
assessed based on 12-month probability of default at the
overall available line of credit level, estimating the
expected utilisation of the line of credit at the estimated
point of default. The expected credit loss impairment
associated with undrawn lines of credit is disclosed within
other liabilities in note 15.
SME loans held at amortised cost also include loans which have been brought back
from investors with the intention of collecting contractual cash flows.
Lines of credit comprises £141.9 million (2024: £97.1 million) of drawn amounts
through the FlexiPay product net of expected credit loss impairment.
The gross principal value of SME loans held at amortised cost is £12.2 million (31
December 2024: £11.3 million) and drawn lines of credit is £164.3 million (31
December 2024: £110.0 million), totalling £176.5 million (31 December 2024: £121.3
million), and an allowance for expected credit losses of £9.9 million (31 December
2024: £9.2 million) and £22.4 million (31 December 2024: £12.9 million)
respectively, totalling £32.3 million (31 December 2024: £22.1 million), is held
against these loans and drawn lines of credit as detailed below.
An impairment charge of £9.5 million (30 June 2024: impairment charge of £3.2
million of which £0.1 million related to discontinued operations) was recognised
through the condensed consolidated statement of comprehensive income for the six
months to 30 June 2025 within expected credit loss charge in the income statement
related to drawn lines of credit and SME loans held at amortised cost.
Additionally, an expected credit loss impairment credit was recognised relating to
undrawn FlexiPay lines of credit of £1.1 million (30 June 2024: charge £0.7 million)
was recognised as detailed in notes 11 and 15.
The Group bands each loan investment at origination using an internal risk rating
and assesses credit losses on a collective portfolio basis by product. Credit risk
grades are not reported to management on an ongoing basis and the only borrower
specific information that is produced and used is past due status. There is no
significant concentration of credit risk to specific industries or geographical
regions.
Stage 1 Stage 2 Stage 3
POCI
Performing: Underperforming: Non-performing: Total
12-month Lifetime Lifetime Lifetime
ECL ECL ECL ECL
£m £m £m £m £m
At 1 January 2024 1.6 1.0 3.7 13.8 20.1
Impairment against new
lending and purchased 5.9 — — — 5.9
assets
Exchange differences — — (0.1) (0.1) (0.2)
Impairment against
loans transferred (0.2) 2.3 3.1 — 5.2
between stages
Loans repaid (5.2) (1.7) (0.2) (0.7) (7.8)
Impairment provision
derecognised related to — — — (0.3) (0.3)
written off loans
Change in probability
of default or loss 0.1 (0.1) (0.5) 0.5 —
given default
assumptions
At 30 June 2024 2.2 1.5 6.0 13.2 22.9
Impairment against new
lending and purchased 6.8 — — — 6.8
assets
Exchange differences — — — (0.2) (0.2)
Impairment against
loans transferred — 1.6 4.0 — 5.6
between stages
Loans repaid (6.0) (1.6) (0.2) — (7.8)
Impairment provision
derecognised related to — — — — —
written off loans
Change in probability
of default or loss (0.2) (0.1) (0.3) 0.1 (0.5)
given default
assumptions
Derecognition of
impairment associated — — (0.1) (4.6) (4.7)
with assets of
discontinued operations
At 31 December 2024 2.8 1.4 9.4 8.5 22.1
Impairment against new
lending and purchased 10.0 — — 0.6 10.6
assets
Exchange differences — — — 0.2 0.2
Impairment against
loans transferred (0.6) 7.9 3.0 — 10.3
between stages
Loans repaid (8.4) (1.3) (0.2) (0.1) (10.0)
Impairment provision
derecognised related to — — (0.3) — (0.3)
written off loans
Change in probability
of default or loss 2.0 (4.4) 1.7 0.1 (0.6)
given default
assumptions
At 30 June 2025 5.8 3.6 13.6 9.3 32.3
Basis for
Expected Provision
credit recognition Gross lines of credit Net
of and SME loans held at for carrying
loss amortised cost expected
coverage expected amount
credit £m credit loss
% £m
loss £m
impairment
As at 31 December
2024
Stage 1 – 2.8 12-month ECL 99.1 (2.8) 96.3
Performing
Stage 2 – 43.8 Lifetime ECL 3.2 (1.4) 1.8
Underperforming
Stage 3 – 90.4 Lifetime ECL 10.4 (9.4) 1.0
Non-performing
POCI 98.8 Lifetime ECL 8.6 (8.5) 0.1
Total 121.3 (22.1) 99.2
As at 30 June 2025
Stage 1 –- 4.3 12-month ECL 135.7 (5.8) 129.9
Performing
Stage 2 – 20.6 Lifetime ECL 17.5 (3.6) 13.9
Underperforming
Stage 3 – 97.1 Lifetime ECL 14.0 (13.6) 0.4
Non-performing
POCI 100.0 Lifetime ECL 9.3 (9.3) —
Total 176.5 (32.3) 144.2
Expected Basis for Provision
credit Gross Net
recognition of lines for carrying
Of which is drawn FlexiPay loss expected
lines of credit coverage expected credit of credit amount
credit loss
% loss impairment £m £m
£m
As at 31 December 2024
Stage 1 – Performing 2.8 12-month ECL 97.0 (2.7) 94.3
Stage 2 – Underperforming 43.8 Lifetime ECL 3.2 (1.4) 1.8
Stage 3 – Non-performing 89.8 Lifetime ECL 9.8 (8.8) 1.0
POCI — Lifetime ECL — — —
Total 110.0 (12.9) 97.1
As at 30 June 2025
Stage 1 – Performing 4.3 12-month ECL 133.4 (5.7) 127.7
Stage 2 – Underperforming 20.7 Lifetime ECL 17.4 (3.6) 13.8
Stage 3 – Non-performing 97.0 Lifetime ECL 13.5 (13.1) 0.4
POCI — Lifetime ECL — — —
Total 164.3 (22.4) 141.9
The risk and finance functions of the Group monitor the performance of the FlexiPay
lines of credit and SME loans held at amortised cost and calculate the ECL estimate
required for financial reporting purposes. These teams report to the Chief Financial
Officer (“CFO”) and Chief Risk Officer (“CRO”). Discussions of estimates processes
and results are held regularly at Balance Sheet and Valuation Committee meetings
along with regular updates provided to the Audit Committee.
The allowance for expected credit losses requires estimation to assess individual
loans or when applying statistical models for collective assessments based on the
Group’s past experience of historical delinquencies and loss trends, as well as
forward-looking information in the form of macroeconomic scenarios governed by a
Balance Sheet and Valuation Committee, which obtains macroeconomic forecasts such as
changes in interest rates, GDP, risk-free rates, unemployment and inflation which
are considered for incorporation into scenarios and probability weighted. These
scenarios are utilised to derive an adjustment to the PD projections, to reflect the
impact of forward-looking information on the underlying PD projections established
from historical experience.
Key changes to macro scenarios used in 2025:
UK-specific forecast data is obtained from a third party economics provider. A
number of data points were obtained and considered by Funding Circle including GDP,
real estate prices, risk-free rates, unemployment rates, among others. The Group now
utilises UK unemployment, the risk-free-rate and GDP as the selected forecast
variables, with historically observed coefficients between these variables providing
improved predictive value of insolvency under statistical modelling techniques
compared to unemployment alone which was used previously. The Group previously also
utilised upside, downside and baseline projections from the economics provider for
each macro variable input. The Group updated its approach to use baseline
projections of macro variable inputs from the economics provider, and internally
generate two additional scenarios utilising a cyclicality index (“CI”) approach
which is a measure of where the economy sits within the credit cycle at a given
point in time. The base case macro variable input forecasts from the economics
provider are used to derive a forecast of CI relative to CI at the balance sheet
date. The two additional scenarios are determined by selecting different confidence
intervals or severities from the historical CI distribution.
Previously the 3 scenarios were weighted 30% downside, 60% baseline and 10% upside.
The probability weighting attributed to the scenarios at 30 June 2025 has been
updated to reflect the CI over the projected life of the product. Information
related to the macroeconomic drivers utilised in creating the base case scenario and
the probability weightings attributed to the scenarios is illustrated below.
Macroeconomic drivers H2 2025 2026 2027
(average for the forecast ECL scenario 2028 2029 2030 H1 2031
year) % % %
% % % %
Unemployment rates % Base case 4.6 4.9 4.8 4.5 4.2 4.1 4.0
Risk-free rate % Base case 4.4 3.3 2.7 2.4 2.4 2.5 2.5
GDP YoY% Base case 1.1 0.9 1.3 1.8 1.7 1.6 1.6
ECL scenario
Probability weighting applied %
Base case 70
Upside 15
Downside 15
A sensitivity to the impact these assumptions have on the estimated ECL is disclosed
within note 3.
Credit risk associated with other financial assets:
SME loans held at fair value through profit and loss relate to the underlying pool
of SME loans from the legacy warehouses and SPVs that have since been purchased or
novated into other Funding Circle entities, but remain held at FVTPL with the
business model of holding the loans for sale. Additionally, loans originated by the
Group with the intention of selling onwards are included in this category including
the shorter term loans.
Trade receivables includes the invoiced amounts in respect of servicing fees due
from institutional investors. The risk of financial loss is deemed minimal because
the counterparties are well established financial institutions.
Ongoing credit evaluation is performed on the financial condition of other
receivables and, where appropriate, a provision for expected credit losses is
recorded in the financial statements.
Interest rate risk
a) Interest rate risk sensitivity analysis – fixed rate Interest on SME loans is
fixed until the maturity of the investment and is not impacted by market rate
changes.
b) Interest rate risk sensitivity analysis – floating rate Interest on cash and cash
equivalent balances is subject to movements in base rates. The Directors monitor
interest rate risk and note that rates have begun to decrease having previously
plateaued following a period of sustained rate rises with an expectation of further
base rate decreases going forward. The Directors believe that a reasonable decrease
in the base rate of 100bps could reduce interest income recognised in the statement
of comprehensive income. A 100bps reduction in interest rates applied to the
Group’s cash position is estimated to reduce annual interest income by £1.5 million
based on the 30 June 2025 cash and cash equivalent balances.
Interest on bank borrowings related to the FlexiPay lines of credit and shorter term
lending are subject to movements in SONIA. The Group has partially protected itself
through the use of an interest rate cap with a strike price of 6.5% and a notional
amount that increases in line with the projected draw downs on the senior borrowing
facility.
If SONIA were to increase/(decrease) by 100bps, based on the drawn balance at 30
June 2025, the annualised interest expense recognised in cost of funds would
increase/(decrease) by £1.7 million.
Some of the Group’s investment in trusts are through warehouse vehicles where the
Group is a minority equity investor. The senior borrowing facilities utilised in
these vehicles receive interest on borrowings in priority to payments to the equity
investors at SONIA plus a margin. Increases in SONIA or anticipated future
increases, could result in increased borrowing costs, reducing the expected cash
returns to the equity investors of the investment held at fair value through profit
and loss. The impact would be recognised in fair value gains and losses in the
statement of comprehensive income. The vehicles had interest rate caps or interest
rate swaps within their structures which can mitigate the impact of future rate
rises.
13. Notes to the condensed consolidated statement of cash flows
Cash outflow from operating activities
30 June 30 June
2025 2024
£m £m
Profit/(loss) before taxation
Continuing operations 6.0 (2.1)
Discontinued operations — (10.1)
Total operations 6.0 (12.2)
Adjustments for:
Depreciation of property, plant and equipment 1.2 2.0
Amortisation of intangible assets 4.8 5.2
Modification gain — (0.4)
Impairment of property, plant and equipment, intangible assets, ROU 0.1 —
assets and investment in sublease
Impairment of intangibles (exceptional item) — 0.3
Interest payable 0.3 0.5
Non-cash employee benefits expense – share-based payments and 2.1 5.0
associated social security costs
Fair value adjustments (2.0) (5.0)
Movement in restructuring provision (exceptional item) — 2.3
Movement in loan repurchase liability — (0.1)
Movement in other provisions (2.0) 0.2
ECL impairment 8.4 3.9
Other non-cash movements 2.0 0.5
Changes in working capital
Movement in trade and other receivables (2.4) 0.9
Movement in trade and other payables (0.7) (30.4)
Tax received/(paid) 2.1 (0.1)
Originations of lines of credit (354.7) (216.6)
Cash receipts from lines of credit 300.4 191.6
Net cash outflow from operating activities (34.4) (52.4)
Cash and cash equivalents
30 June 31 December
2025 2024
£m £m
Cash and cash equivalents 148.6 187.6
The cash and cash equivalents balance is made up of cash and money market funds. The
carrying amount of these assets is approximately equal to their fair value. Included
within cash and cash equivalents above is a total of £33.6 million (31 December
2024: £37.1 million) in cash which is restricted in use. Of this, £4.2 million (31
December 2024: £5.0 million) of cash is held which is restricted in use to repaying
investors in CBILS and RLS loans and paying CBILS and RLS-related costs to the UK
government. A further £29.4 million (31 December 2024: £32.1 million) of cash is
held which is restricted for use in the FlexiPay and shorter term lending warehouse.
At 30 June 2025, money market funds totalled £99.8 million (31 December 2024: £136.3
million).
Analysis of changes in liabilities from financing activities
1 January Exchange Other non-cash 30 June
Cash flow
2024 movements movements 2024
£m
£m £m £m £m
Bank borrowings (56.9) (17.1) — — (74.0)
Lease liabilities (12.6) 2.8 (0.1) (5.6) (15.5)
Liabilities from financing (69.5) (14.3) (0.1) (5.6) (89.5)
activities
1 January Exchange Other non-cash 30 June
Cash flow
2025 movements movements 2025
£m
£m £m £m £m
Bank borrowings (101.9) (68.9) — — (170.8)
Lease liabilities (7.6) 0.9 — (0.3) (7.0)
Liabilities from financing (109.5) (68.0) — (0.3) (177.8)
activities
14. Related party transactions
The basis of remuneration of key management personnel remains consistent with that
disclosed in the 2024 Annual Report and Accounts, with the exception of the Board
changes noted earlier.
15. Contingent liabilities and commitments
As part of the ongoing business, the Group has operational requirements with its
investors. At any point in time, it is possible that a particular investor may
expect the Group to purchase their loan in the event of a breach of representation
or warranty, operational errors or control issues or where agreed eligibility
criteria have not been complied with. Where a loan is purchased it is presented
within SME loans held at amortised cost on the face of the condensed consolidated
balance sheet and held at amortised cost under IFRS 9.
In common with other businesses, the Group is involved from time to time in disputes
in the ordinary course of business. There are no active cases expected to have a
material adverse financial impact on the Group.
The Group has commitments related to undrawn amounts on issued FlexiPay lines of
credit. At 30 June 2025, there were undrawn commitments of £337.1 million (31
December 2024: £278.7 million). An expected credit loss impairment allowance is held
within other provisions by the Group of £1.6 million (31 December 2024: £2.7
million) in relation to the estimated credit losses the Group may be exposed to on
these undrawn lines of credit.
16. Subsequent events
There have been no subsequent events since the balance sheet date.
Glossary
Alternative performance measures
The Group uses a number of alternative performance measures (“APMs”) within its
financial reporting. These measures are not defined under the requirements of IFRS
and may not be comparable with the APMs of other companies. The Group believes these
APMs provide stakeholders with additional useful information in providing
alternative interpretations of the underlying performance of the business and how it
is managed and are used by the Directors and management for performance analysis and
reporting. These APMs should be viewed as supplemental to, but not as a substitute
for, measures presented in the financial statements which are prepared in accordance
with IFRS.
Closest Adjustments to
APM equivalent IFRS reconcile to IFRS Definition
measure measure
Income statement
Profit for the year before
finance costs (being the
discount unwind on lease
EBITDA, while not liabilities), taxation,
defined under Refer to Business depreciation and amortisation
Adjusted EBITDA IFRS, is a widely Review. and impairment (“AEBITDA”) and
accepted profit additionally excludes
measure share-based payment charges
and associated social security
costs, foreign exchange and
exceptional items.
Items which the Group excludes
from Adjusted EBITDA in order
to present a measure of the
Group’s performance. Each item
is considered to be
significant in nature or size
and is treated consistently
between periods. Excluding
Exceptional items None n/a these items from profit
metrics provides the reader
with additional performance
information on the business
across the business as it is
consistent with how
information is reported to the
Board and ExCo. Refer to note
5.
Cash flow
Net cash flows from operating
activities less the cost of
purchasing intangible assets,
property, plant and equipment,
Cash generated Refer to Business lease payments and interest
Free cash flow from operating Review. received. It excludes the
activities warehouse and securitisation
financing and funding cash
flows and excludes cash flows
on draw downs and repayment of
FlexiPay lines of credit.
Independent review report to Funding Circle Holdings plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Funding Circle Holdings plc’s condensed consolidated interim
financial statements (the “interim financial statements”) in the Half Year 2025
Results of Funding Circle Holdings plc for the 6 month period ended 30 June 2025
(the “period”).
Based on our review, nothing has come to our attention that causes us to believe
that the interim financial statements are not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom’s Financial Conduct Authority.
The interim financial statements comprise:
• the Condensed consolidated balance sheet as at 30 June 2025;
• the Condensed consolidated statement of comprehensive income for the period then
ended;
• the Condensed consolidated statement of cash flows for the period then ended;
• the Condensed consolidated statement of changes in equity for the period then
ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year 2025 Results of Funding
Circle Holdings plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, ‘Review of Interim Financial Information Performed by the
Independent Auditor of the Entity’ issued by the Financial Reporting Council for use
in the United Kingdom (“ISRE (UK) 2410”). A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and, consequently, does not enable us to
obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year 2025 Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an
audit as described in the Basis for conclusion section of this report, nothing has
come to our attention to suggest that the directors have inappropriately adopted the
going concern basis of accounting or that the directors have identified material
uncertainties relating to going concern that are not appropriately disclosed. This
conclusion is based on the review procedures performed in accordance with ISRE (UK)
2410. However, future events or conditions may cause the group to cease to continue
as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Year 2025 Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half Year 2025 Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s
Financial Conduct Authority. In preparing the Half Year 2025 Results, including the
interim financial statements, the directors are responsible for assessing the
group’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease operations, or have no
realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial statements in
the Half Year 2025 Results based on our review. Our conclusion, including our
Conclusions relating to going concern, is based on procedures that are less
extensive than audit procedures, as described in the Basis for conclusion paragraph
of this report. This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority
and for no other purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
4 September 2025
════════════════════════════════════════════════════════════════════════════════════
5 1 Comparative presented is for the continuing business and excludes the
discontinued operations of the US business which was sold in 2024.
════════════════════════════════════════════════════════════════════════════════════
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
════════════════════════════════════════════════════════════════════════════════════
ISIN: GB00BG0TPX62
Category Code: IR
TIDM: FCH
LEI Code: 2138003EK6UAINBBUS19
Sequence No.: 400746
EQS News ID: 2192786
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
References
Visible links
1. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=9b8634a10d5faeb3d7c09f221f856bed&application_id=2192786&site_id=refinitiv~~~456f380e-074c-434c-ab61-d8ca972fa0de&application_name=news
2. mailto:ir@fundingcircle.com
3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=9072c48a0be01baf13cb5fc600f41737&application_id=2192786&site_id=refinitiv~~~456f380e-074c-434c-ab61-d8ca972fa0de&application_name=news
4. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_BFHUeopz.html#_ftn1
5. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_BFHUeopz.html#_ftnref1
============Recent news on Funding Circle Holdings
See all newsREG-Funding Circle Holdings plc Funding Circle Holdings plc: POS-Transaction in Own Shares
AnnouncementREG-Funding Circle Holdings plc Funding Circle Holdings plc: DSH-Director/PDMR Shareholding
AnnouncementREG-Funding Circle Holdings plc Funding Circle Holdings plc: POS-Transaction in Own Shares
AnnouncementREG-Funding Circle Holdings plc Funding Circle Holdings plc: Half Year 2025 Results
AnnouncementREG-Funding Circle Holdings plc Funding Circle Holdings plc: POS-Transaction in Own Shares
Announcement