REG - Vector Capital PLC - Half Year Results for period ended 30 June 2024
02/08/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240802:nRSB8878Ya&default-theme=true
RNS Number : 8878Y Vector Capital PLC 02 August 2024
02 August 2024
Vector Capital plc
("Vector Capital", "Company" or "Group")
Half Year Results for the period ended 30 June 2024
Vector Capital Plc (AIM: VCAP), a commercial lending group that offers secured
loans primarily to businesses located in England and Wales, is pleased to
announce its interim results for the six months ended 30 June 2024.
Financial Highlights
· Revenue for the period £2.5m (H1 2023: £2.9m) reflecting a continuing
cautious approach to new lending.
· Profit before tax £707,000 (H1 2023: £1.3m) a reflection of lower revenue
and the write-off of bad debts of £364,000. An aggregate doubtful debt
reserve of £ 928,000 exists at the period ended (December 2023 £928,000).
· Loan book at 30 June 2024 of £44.8m (December 2023: £47.9m), reflecting net
redemptions during the period and selective new lending.
· No interim dividend for the period due to the planned buy-back of ordinary
shares announced today in the Tender Offer (H1 2023: 1.00p).
Other Highlights
· Wholesale banking facilities remained unchanged at £45m during the period.
· Continuing challenging conditions within the Company's SME bridge financing
sector, with borrowers often taking longer to redeem loans as they deal with
supply cost issues, persistently high interest rates and a cautious lending
environment.
· Results are presented concurrently with the issue of a Shareholders' Circular
that sets out a Tender Offer by the Company to buy back up to 11,244,385
ordinary shares from shareholders and which provides details of the planned
withdrawal of the Company from the AIM Market.
· Continuing investment and engagement in staff training and development.
· Best practice ESG policies in place to support responsible lending and
encourage sustainability across the business.
Agam Jain, CEO of Vector Capital, commented: "These results are released
alongside the Shareholders' Circular referring to a Tender Offer to buy back
up to 11,244,385 issued ordinary 0.5p shares for 33p per share which will
absorb up to £3.7 million, plus expenses, as a prelude to a withdrawal from
the AIM Market. This will reduce the Company's ability to expand its loan book
in the short to medium term, but in view of the generally challenging market
conditions and limited expectations for expansion at our previously intended
rate, we believe it is important to provide shareholders with the opportunity
to withdraw their investment and re-invest in the market as they think fit.
Vector is in a financial position that allows it to undertake the planned buy
back and we hope to return to a growth path when market conditions improve."
Enquiries
Vector Capital Plc
Robin Stevens c/o IFC Advisory
(Chairman)
Agam Jain (CEO)
Zeus Capital Limited. 020 3829 5000
Hugh Morgan, Darshan Patel
IFC Advisory 020 3934 6630
Limited
Graham Herring, Florence Chandler, Zach Cohen
Notes to Editors
Vector Capital Plc provides secured, business-to-business loans to SMEs based
principally in England and Wales. Loans are typically secured by a first
legal charge against real estate. The Group's customers typically borrow for
general working capital purposes, bridging ahead of refinancing, land
development and property acquisition. The loans provided by the Group are
typically for renewable 12-month terms with fixed interest rates.
VECTOR CAPITAL PLC
Chairman's Statement
For the six months ended 30 June 2024
I am pleased to present our 2024 interim results for the six months ended 30
June 2024, which report a consolidated operating profit of £1,630,000 (H1
2023: £2,163,000) and consolidated pre-tax profits of £707,000 (H1 2023:
£1,274,000), which reflect the challenging conditions within the Company's
SME bridge financing sector.
These results are presented concurrently with the issue of a Shareholders'
Circular that sets out a Tender Offer by the Company to buy back up to
11,244,385 of the Company's ordinary shares and which provides details of the
planned withdrawal of the Company from the AIM Market. The interim report
should therefore be read in the context of these proposals. In view of the
Tender Offer, no interim dividend will be paid in respect of the year.
While general inflation appears to be largely under control, the interim
results have been impacted by the adverse effect on some borrowers of
persistently high interest rates, the continued upward pressure of input
prices and a challenging property market, based on a lack of affordability.
Although most of the Group's borrowers have been resilient to these issues,
some borrowers have seen their equity extinguished and in such circumstances
we have been forced to appoint receivers to safeguard the Group's position. In
doing so, we have had to write off loan balances of £364,000 in the period
and, in many cases, we have not been able to re-employ our capital in new
loans as quickly as we would seek to achieve in stronger markets. This has
reduced the equity available to support new loans and has therefore depressed
income.
Our wholesale banking facilities remain unchanged at £45 million (31 December
2023: £45 million) of which £2.5 million can be applied to loans secured by
second charges. The Vector Holdings Limited loan facility reduced from £4
million to £3.5 million during the period.
Our strong capital base, our proven loan management systems and the experience
of the executive management team has provided considerable comfort during this
period. However, market conditions suggest that we are very unlikely to see a
return to significant growth in the short to medium term. The reduction in the
Group's loan book to £44.8m from £47.9m, during the period from 31 December
2023, is consistent with the longer holding periods before we have been able
to redeem loans and then re-lend our equity, as described above.
Due to capital market conditions outside our control, we were not able to
raise the equity we had intended on acceptable terms to grow the business in
line with our previously stated strategy. In addition, in the last two years,
economic pressure on the SME market sector have restricted our growth
opportunities. Despite these conditions, our underlying intention remains to
maximise the return to shareholders and to that end we believe it is in the
best interests of shareholders to have the opportunity to sell their shares
back to the Company under the Tender Offer.
We remain fully aware of our environmental, social and governance
responsibilities to shareholders and other stakeholders and we are following
what we believe to be market best practice and developing procedures to
address these important issues. Details of our ESG policies and procedures,
aimed principally at responsible lending and encouraging sustainability and
avoidance of waste in all we do, are set out on the Company's website
www.vectorcapital.co.uk.
The Group's results are based on the continued hard work and persistence of
the executive team, to whom considerable thanks is due in these challenging
business conditions. Thanks, are also due to my fellow Board members and our
business partners.
Robin Stevens
Chairman
1 August 2024
VECTOR CAPITAL PLC
Chief Executive's Statement
For the six months ended 30 June 2024
Background
Our principal market continues to be SME borrowers that take loans to
refurbish or develop land and property.
Many of these borrowers continue to be faced with high building material
costs, long lead times, cost overruns and interest rates that have failed
to fall in line with inflation. Banks and other lenders remain extremely
cautious and opportunities for borrowers to re-finance developments remain
limited.
Stressed Loans
Our approach when borrowers experience problems is to be supportive where we
believe that the circumstances justify this approach. Where we are not
satisfied with the financial viability of a borrowers' loan, we work with the
borrowers to give them time to sell or re-finance and, if necessary, appoint
an LPA Receiver to sell the property. The number of receiver appointments
again increased in this period over previous years.
Our expectation is that we will recover our capital in most cases and where
possible the fees and accrued interest in most cases, albeit with consequent
delays of 4-12 months. In accordance with our normal policy, we have made
provision for estimated doubtful debts at the end the period and the impact on
our results is within the margins we had stress tested. During the period, we
wrote off £363,681 mainly on accrued interest and costs. Our strong capital
base provides the Board with a high level of confidence that we can weather
these continued challenging market conditions for many of our borrowers.
Interim Results
As a consequence of these challenging market conditions, unaudited profit
before tax for the period was £707,000 (H1 2023: £1.3m) on a revenue of
£2.5m (H1 2023: £2.9m).
At 30 June 2024 the loan book was £44.8m (31 December 2023: £47.9m), and the
consolidated net assets were £25.4m (31 December 2023: £25.5m). The loan
balances are stated net of provisions of £928,000 at 30 June 2023 (December
2023: £928,000).
No interim dividend will be paid in respect of the six months ended 30 June
2024 (2023 1.0 pence).
Loan Book KPIs
HY 2024 % FY 2023 %
£'000 £'000
Residential 26,429 59.0% 26,623 55.5%
Commercial 7,955 17.8% 10,389 21.7%
Land & Development 5,063 11.3% 5,442 11.3%
Mixed 3,452 7.7% 3,547 7.4%
2nd charge 1,611 3.6% 1,523 3.2%
Other 268 0.6% 415 0.9%
44,778 100.0% 47,939 100.0%
The loans we have issued to the various market segments that we serve remain
broadly similar.
The average rate achieved during the period was 8.92% p.a. (June 2023: 10.18%
p.a)
The average loan size was £418,000 spread over 107 live loans. (June 2023:
£474,000)
Security held at 30 June 2024 was estimated at £75m giving an average LTV of
59.3% (June 2023: 58.1%).
VECTOR CAPITAL PLC
Chief Executive's Statement (cont.)
For the six months ended 30 June 2024
Operational review
Our strategy for the period has continued to be to seek to maintain high
liquidity, with a correspondingly lower loan book and reduced wholesale
borrowings.
Our pipeline is healthy with a steady stream of enquiries from our Broker
network allowing us to be very selective on the deals that suit us.
Our wholesale banking rates have remained historically high inevitably
increased. Our facilities are currently £45m sufficient for the foreseeable
future.
The existing operational team is extremely efficient and provides a fast
response time to brokers and borrowers alike. We remain lean and have not
needed to increase the headcount in the period.
Outlook
These results are released alongside the Shareholders' Circular referring to a
Tender Offer to buy back up to 11,244,385 issued ordinary 0.5p shares for 33p
per share which will absorb up to £3.7 million, plus expenses, as a prelude
to a withdrawal from the AIM Market. This will reduce the Company's ability to
expand its loan book in the short to medium term, but in view of the generally
challenging market conditions and limited expectations for expansion at our
previously intended rate, we believe it is important to provide shareholders
with the opportunity to withdraw their investment and re-invest in the market
as they think fit. Vector is in a financial position that allows it to
undertake the planned buy back and we hope to return to a growth path when
market conditions improve.
Agam Jain
Chief Executive Officer
1 August 2024
VECTOR CAPITAL PLC
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2024
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2024 2023 2023
Notes £'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Revenue 3 2,544 2,851 5,713
Cost of sales (175) (156) (392)
Gross profit 2,369 2,695 5,321
Administrative expenses (739) (532) (1,490)
Operating profit 1,630 2,163 3,831
Finance income 2 - 18
Finance costs (925) (889) (1,782)
Profit on ordinary activities before taxation 707 1,274 2,067
Income tax expense 4 (177) (305) (487)
Profit after taxation 530 969 1,580
Other comprehensive income - - -
Total comprehensive income attributable to the shareholders of the Company 530 969 1,580
Pro-forma basic and diluted earnings per share
attributable to the owners of the Company (pence) 9 1.17 2.14 3.49
VECTOR CAPITAL PLC
Condensed Consolidated Statement of Financial Position
For the six months ended 30 June 2024
Notes 30 June 2024 30 June 31 December 2023
2023
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Non-Current assets
Property, plant and equipment 5 - 1 -
- 1 -
Current assets
Trade and other receivables 6 45,555 49,422 48,746
Cash and bank balances 1,598 479 306
47,153 49,901 49,052
Total Assets 47,153 49,902 49,052
Current liabilities
Trade and other payables 7 18,219 20,230 22,648
Income tax payable 72 307 169
18,291 20,537 22,817
Non-Current liabilities
Trade and other payables 7 3,500 4,000 712
Total Liabilities 21,791 24,537 23,529
Equity
Share capital 8 226 226 226
Share premium 20,875 20,876 20,876
Group reorganisation reserve 188 188 188
Retained earnings 4,073 4,075 4,233
25,362 25,365 25,523
Total Equity and Liabilities 47,153 49,902 49,052
VECTOR CAPITAL PLC
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2024
Share Share premium Group reorganisation reserve Retained profits Total equity
capital
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 226 20,876 188 3,798 25,088
Profit for the six months ended 30 June 2022 - - - 969 969
Dividends paid - - - (692) (692)
Balance at 30 June 2023 226 20,876 188 4,075 25,365
Profit for the six months ended 31 December 2023 - - - 612 612
Dividends paid - - - (452) (452)
Balance at 31 December 2023 226 20,876 188 4,235 25,525
Profit for the six months ended 30 June 2024 - - - 530 530
Dividends paid - - - (692) (692)
Balance at 30 June 2024 226 20,876 188 4,073 25,363
VECTOR CAPITAL PLC
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2024
Six Months ended 30 June Six Months ended 30 June Year ended 31 December
2024 2023 2023
£'000 £'000 £'000
(Unaudited) (Unaudited) (Audited)
Cash flow from operating activities
Profit for the period before taxation 707 1,274 2,067
Adjustment for:
Finance cost 925 889 1,741
Depreciation - 1
Finance income (2) - (17)
Tax paid (273) (238) (558)
Operating cash flows before movements in working capital 1,357 1,925 3,234
Decrease in trade and other receivables 3,191 4,575 5,251
Decrease in trade and other payables (1,140) (5,131) (7,000)
Cash generated from operating activities 3,408 1,369 1,485
Interest paid (925) (889) (1,741)
Net cash generated from/(absorbed in) operating activities 2,483 480 (256)
Cash flows from investing activities
Finance income 2 - 17
Net cash generated from investing activities 2 - 17
Cash flows (for)/from financing activities
(Paid to)/Introduced by Holding company (500) - 1,000
Amounts (drawn)/introduced by directors (1) 3 2
Equity dividends paid (692) (692) (1,145)
Net cash absorbed in financing activities (1,193) (689) (143)
Net (decrease) in cash & cash equivalents 1,292 (209) (382)
Cash and equivalent at beginning of period 306 688 688
Cash and equivalent at end of period 1,598 479 306
VECTOR CAPITAL PLC
Notes to the Interim Financial Statements
For the six months ended 30 June 2024
1. Basis of Preparation
The interim consolidated financial statements of Vector Capital Plc (the
"Company") are unaudited condensed financial statements for the six months
ended 30 June 2024. These include unaudited comparatives for the six months
ended 30 June 2023 together with audited comparatives for the year ended 31
December 2023. The financial information for the six months ended 30 June
2022 does not constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006. A copy of the audited financial
statements for the year ended 31 December 2023 is available on the Company's
website. The auditor's opinion on those financial statements was unqualified
and did not draw attention to any matters by way of an emphasis of matter
paragraph. These interim condensed financial statements have been prepared on
the basis of the accounting policies expected to apply for the financial year
to 31 December 2024 based on the recognition and measurement principles of
United Kingdom adopted International Financial Reporting Standards (IFRS), in
accordance with the provisions of the Companies Act 2006, applicable to
companies reporting under IFRS.
The financial statements have been prepared under the historical cost
convention. The Group's presentation and functional currency is Sterling (£).
The interim financial statements do not include all of the information
required for full annual financial statements and do not comply with all the
disclosures in IAS 34 'Interim Financial Reporting' and should be read in
conjunction with the Group's annual financial statements to 31 December 2023.
Accordingly, whilst the interim statements have been prepared in accordance
with IFRS, they cannot be construed as being in full compliance with IFRS. The
preparation of financial statements in conformity with United Kingdom adopted
International Financial Reporting Standards (IFRS) requires the use of certain
critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group's accounting policies. The
accounting policies adopted are consistent with those followed in the
preparation of the Group's annual financial statements for the year ended 31
December 2023.
2. General information
The condensed consolidated financial information comprises the financial
information of the Company, Vector Asset Finance Ltd and Vector Business
Finance Ltd (the Group).
The principal activities of the entities in the Group are as follows: -
Name of company Country of incorporation Principal activities
Vector Capital Plc England and Wales Holding company
Vector Business Finance Ltd England and Wales Commercial lending
Vector Asset Finance Ltd England and Wales Commercial lending
There have been no significant changes in these activities during the relevant
financial periods.
3. Segmental reporting
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker (which takes the form of the Board of Directors) as
defined in IFRS 8, in order to allocate resources to the segment and to assess
its performance.
Based on management information there is one operating segment. Revenues are
reviewed based on the services provided.
No customer has accounted for more than 10% of total revenue during the
periods presented.
VECTOR CAPITAL PLC
Notes to the Interim Financial Statements
For the six months ended 30 June 2024
4. Income Tax expense
The tax charge on profits assessable has been calculated at the rates of tax
prevailing, based on existing legislation, interpretation and practices in
respect thereof.
5. Property, plant and equipment
Fixture, fittings and equipment
30 Jun 24 30 Jun 23 31 Dec 23
(Unaudited (Unaudited)£'000 (Audited`)
£'000 £'000
Cost
Brought forward 1 5 5
Disposals - - (4)
Carried forward 1 5 1
Accumulated depreciation
Brought forward 1 4 4
Depreciation - - 1
Depreciation on disposals - - (4)
Carried forward 1 4 1
NBV c/fwd - 1 -
NBV b/fwd - 1 1
6. Trade and other receivables
30 Jun 24 30 Jun 23 31 Dec 23
(Unaudited) (Unaudited) (Audited)
Current £'000 £'000 £'000
Trade receivables 43,446 48,810 45,891
Prepayments and accrued income 777 612 808
Total 44,223 52,223 46,699
Non-Current
Trade receivables 1,332 - 2,047
45,555 52,223 48,746
At 30 June 2024 37% of trade receivables were held by third party
secure funding via the block discounting facility (30 Jun 23: 48%, 31 Dec 23:
52%).
Trade receivables due after more than 1 year is not considered
material and therefore not reflected separately on the Balance Sheet.
VECTOR CAPITAL PLC
Notes to the Interim Financial Statements
For the six months ended 30 June 2024
7. Trade and other payables
30 Jun 24 30 Jun 23 31 Dec 23
(Unaudited) (Unaudited) (Audited)
Current £'000 £'000 £'000
Trade payable 11 38 9
Amounts owed to parent company - - 4,000
Other payables 17,401 20,082 18,483
Accruals and deferred income 114 110 156
Total 17,526 28,140 22,648
Non-Current
Amounts owed to parent company 3,500 4,000 -
Other payables 693 - 712
4,193 4,000 712
Other payables includes loan finance of £16,800k (30 Jun 23: £20,069k, 31
Dec 23: £19,167k) which is secured against associated loans assigned by way
of block discounting.
8. Called up share capital
Authorised Nominal value 30 Jun 24 30 Jun 23 31 Dec 23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
45,244,385 Ordinary £0.005 226 226 226
9. Basic and diluted earnings per share
The calculation of earnings per share is based on the following earnings and
number of shares.
30 Jun 24 30 Jun 23 31 Dec 23
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Total comprehensive income for the period, used in the calculation of total
basic and diluted profit per share
530 969 1,580
Weighted average number of ordinary shares for the purpose of basic and 45,244,385 45,244,385 45,244,385
diluted profit per share
Earnings per share
Basic and diluted earnings per share (pence) 1.17 2.14 3.49
VECTOR CAPITAL PLC
Notes to the Interim Financial Statements
For the six months ended 30 June 2024
10. Significant related party transactions
The Group owed £3.5 million to its parent company, Vector Holdings
Ltd (30 Jun 23 £4 million, 31 Dec 23: £4 million). During the period the
Company paid interest totalling £112k to Vector Holdings Ltd in relation to
the balance owed as per the loan agreement (30 Jun 23: £97k, 31 Dec 23:
£222k).
During the period the Company paid £520k in dividends to Vector Holdings Ltd
(30 Jun 23: £520k, 31 Dec 23: £860k).
11. Subsequent events
On 2(nd) August 2024 the Company issued a Tender Offer to acquire up
to 11,244,385 ordinary shares at a price of 33 p per share and announced the
intention to withdraw from the AIM market of the London Stock Exchange. This
is a non-adjusting post balance sheet event.
12. Half Year Report
A copy of this interim report, as well as the annual statutory accounts to 31
December 2023 are available on the Company's website at
www.vectorcapital.co.uk/investors/corporate-documents
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BLGDIUSGDGSBRecent news on Vector Capital
See all newsREG - AIM Vector Capital PLC - Cancellation - VECTOR CAPITAL PLC
AnnouncementREG - Vector Capital PLC - Result of Tender Offer, TVR & Directors' interests
AnnouncementREG - Vector Capital PLC - Result of General Meeting
AnnouncementREG - Vector Capital PLC - Proposed Tender Offer & Shares Cancellation
AnnouncementREG - Vector Capital PLC - Half Year Results for period ended 30 June 2024
Announcement