REG - Lendinvest PLC LendInvest - LIV2 LendInvest - LIV3 LendInvest PLC-LINV - Trading update

LendinvestAnnouncement

05/09/2023 10:30

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RNS Number : 4390L  Lendinvest PLC  05 September 2023

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INDIRECTLY, IN OR INTO OR FROM ANY OTHER JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

LEI: 213800NWMK3O4UWP9N91

5 September 2023

 

LendInvest plc

Trading update

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

 

Enquiries:

LendInvest via Teneo
 
                +44 (0)20 7353 4200

Rod Lockhart, Chief Executive Officer
 

David Broadbent, Chief Financial Officer

Leigh Rimmer, Head of External Communications
 
 

investorrelations@lendinvest.com

 

Panmure Gordon (NOMAD and Joint Broker)
                                      +44
(0)20 7886 2500

Atholl Tweedie

David Watkins

 

finnCap Limited (Joint Broker)
 
                  +44 (0)20 7220 0500

Jonny Franklin-Adams

Tim Redfern

Alice Lane

 

Teneo (Financial PR)
 
                   +44 (0)20 7353 4200

Tom Murray

Ed Cropley

Olivia Lucas

Important Notices

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

Forward-looking statements

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

 

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