TIDMFCH
RNS Number : 3161N
Funding Circle Holdings PLC
17 January 2019
17 January 2019
Funding Circle Holdings plc
Q4 2018 Update
Funding Circle Holdings plc ("Funding Circle" or the "Company"),
the leading small and medium enterprise ("SME") loans platform in
the UK, US, Germany and the Netherlands, today announces updates to
its statistics pages for the three months ending 31 December 2018
(the "Quarter") and selected highlights from the quarter.
The data by country included in this announcement is also
available on the Company's website at
corporate.fundingcircle.com/investors/loan-performance-statistics.
Highlights
-- Full year revenue growth of 55% (excluding property) exceeding 50% guidance stated at IPO
-- Loans under Management (excluding property) of GBP3.1 billion
as at 31 December 2018, up 55% compared to the same period last
year and also exceeding IPO guidance
-- Total originations of GBP2.3 billion in the year to 31
December 2018, up 40%; record originations (excluding property) of
GBP683 million for Q4 2018 vs GBP522 million in Q4 2017, up 31%
-- Revenue growth exceeded origination growth in H2 2018, due to
policy changes for existing borrowers in the US which reduced
overall originations, but had no impact on revenue
-- On 28 November 2018, The British Business Bank, the UK
government's economic development bank, announced a commitment of
up to GBP150 million for lending to UK small businesses through
Funding Circle
-- On 7 December 2018, Waterfall Asset Management agreed to
invest in GBP1 billion of loans originated through Funding Circle's
UK platform over a two-year period
Samir Desai CBE, CEO and co-founder, said:
"Funding Circle delivered a strong end to 2018 which resulted in
exceeding our revenue and Loans under Management guidance for the
year. We were pleased to announce a number of new institutional
investor transactions in Q4, which is further validation of the
attractive risk-adjusted returns generated on the Funding Circle
platform. We enter 2019 with continuing confidence and remain
focused on delivering our growth strategy set out at IPO."
Group performance(1)
Q4 2018 Q4 2017 % 2018 2017 %
Loans under Management (excluding
property(1) ) GBPm 3,123 2,012 55% N/A N/A N/A
------ ------- -------- ---- ------ ------ ----
Originations (excluding property(1)
) GBPm 683 522 31% 2,286 1,631 40%
------ ------- -------- ---- ------ ------ ----
Investor Returns
-- Across all geographies, investor returns on a net basis are
expected to deliver 5-8% in 2018 and 4-7% in 2016 and 2017
-- Loans originated in H2 2018 for the UK are expected to return
5.5-6.5%. The expectation of lower performance for 2016/2017
remains as a result of the weaker consumer credit environment,
which has impacted some loans in higher risk bands. In response,
the Company adjusted its risk models in H2 2018 - the total amount
of SME loans originated in H2 2018 represents almost the total
originations for the UK in 2017
-- Loans originated in H2 2018 for the US are expected to
deliver 6.0-8.0%. US loan performance has steadily improved since
2015, driven by risk model improvements and changes to pricing
strategy
-- Loans originated in H2 2018 for Germany are expected to
deliver 5.5-7.5% and loans originated in H2 2018 for the
Netherlands are expected to deliver 6.5-8.5%. Like the US, loan
performance in Germany and the Netherlands continues to improve
year-on-year
Outlook
-- The Board reconfirms guidance given at the IPO with targeted
revenue growth in excess of 40% in the medium term
-- More detailed guidance for the year ahead will be issued
alongside full year results on Thursday 7 March
Our statistics - Q4 2018
The following information is reproduced from each country's
statistics pages, which can be found at
corporate.fundingcircle.com/investors/loan-performance-statistics.
Loans under Management (million)
2012 2013 2014 2015 2016 2017 2018
Group(2)
(GBP) 52 145 366 860 1,362 2,107 3,148
----- ----- ----- ----- ------ ------ ------
UK(2)
(GBP) 52 144 332 653 1,027 1,584 2,208
----- ----- ----- ----- ------ ------ ------
US ($) N/A 54 261 354 577 939
------------ ----- ----- ------ ------ ------
DE (EUR) N/A 27 30 65 131
------------------- ----- ------ ------ ------
NL (EUR) N/A 16 40 95
-------------------------- ------ ------ ------
Originations (million)
2012 2013 2014 2015 2016 2017 2018
Group(3)
(GBP) 49 130 311 721 1,065 1,738 2,292
----- ----- ----- ----- ------ ------ ------
UK(3)
(GBP) 49 129 279 531 823 1,264 1,531
----- ----- ----- ----- ------ ------ ------
US ($) N/A 334 281 514 792
------------ ------------ ------ ------ ------
DE (EUR) N/A 33 19 55 105
------------ ------------ ------ ------ ------
NL (EUR) N/A 21 34 81
------------------- ------------- ------ ------
Gross Yield
2012 2013 2014 2015 2016 2017 2018
UK 9.2% 8.4% 9.9% 9.6% 9.6% 9.7% 9.8%
----- ----- ----- ----- ------ ------ ------
US N/A 14.2% 13.2% 12.3% 13.0%
------------ ------------ ------ ------ ------
DE N/A 7.2% 9.5% 9.5% 10.1%
------------ ------------ ------ ------ ------
NL N/A 9.3% 10.9% 12.0%
------------------- ------------- ------ ------
Projected annualised return range (after fees and bad
debt)(4)
2012 2013 2014 2015 2016 2017 2018
UK 7.1-7.2% 5.6-5.8% 7.1-7.3% 6.5-7.1% 5.2-5.8% 4.7-5.4% 5.1-6.0%
--------- --------- --------- --------- --------- --------- ---------
US N/A 2.5-2.7% 4.0-4.8% 5.3-6.9% 5.8-7.8%
-------------------- -------------------- --------- --------- ---------
DE N/A 0.1-1.0% 2.3-4.1% 4.8-6.7% 5.3-7.3%
-------------------- -------------------- --------- --------- ---------
NL N/A 3.6-4.8% 5.6-7.5% 6.4-8.4%
------------------------------- -------------------- --------- ---------
Projected bad debt rate range(5)
2012 2013 2014 2015 2016 2017 2018
UK 1.3-1.3% 1.8-2.0% 1.8-2.1% 1.8-2.3% 2.9-3.5% 3.5-4.1% 3.0-3.8%
--------- --------- --------- --------- --------- --------- ---------
US N/A 10.5-10.7% 7.5-8.3% 4.6-6.2% 4.6-6.4%
-------------------- -------------------- --------- --------- ---------
DE N/A 4.7-5.6% 4.4-6.2% 1.7-3.6% 1.7-3.7%
-------------------- -------------------- --------- --------- ---------
NL N/A 2.8-4.0% 2.2-4.2% 2.2-4.2%
------------------------------- -------------------- --------- ---------
S
Media Enquiries:
Funding Circle
David de Koning - Director of Investor Relations and
Communications (0203 927 3893)
TB Cardew
Ed Orlebar (020 79300 777)
Tom Allison (020 79300 777)
About Funding Circle:
Funding Circle (LSE: FCH) is a global SME loans platform,
connecting SMEs who want to borrow with investors who want to lend
in the UK, US, Germany and the Netherlands. Since launching in
2010, investors across Funding Circle's geographies - including
more than 85,000 retail investors, banks, asset management
companies, insurance companies, government-backed entities and
funds - have lent more than GBP6 billion to over 60,000 businesses
globally. Funding Circle is a member of the FTSE 250 Index.
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.
Definitions and notes to the editor:
1. In 2017, Funding Circle took the decision to no longer lend
to property developers in the United Kingdom, the one market in
which it had previously expanded its product set beyond amortising
SME loans. As a result, the Board excludes property lending when
measuring ongoing business performance.
2. Group and UK Loans under Management by year include property
lending. Loans under Management related solely to property were, by
year: 2012/2013: GBP0; 2014: GBP26 million; 2015: GBP115 million;
2016: GBP163 million; 2017: GBP95 million; 2018: GBP25 million.
3. Group and UK originations by year include property lending.
Group originations related solely to property lending were, by
year: 2012/2013: GBP0; 2014: GBP23 million; 2015: GBP114 million;
2016: GBP171 million; 2017: GBP107 million; 2018: GBP6 million.
4. The projected annual return shows how loans are estimated to
perform. Loans are shown by the year they were taken out, and are
after fees and bad debt. Returns equal gross yield minus net losses
minus servicing fee and is estimated, using an internally managed
model, by cohort of origination incorporating actual returns
received for each cohort and adding future expected returns which
are determined using the same aforementioned model. Net yield is
compounded to recognise re-investment. These expectations may be
revised, for example if macroeconomic conditions change, and the
projected return, projected gross yield and the projected bad debt
rate may be adjusted to reflect this.
5. The projected bad debt rate shows the projected annualised
percentage of loans, by loan amount, that will not be repaid. Loans
are shown by the year they were taken out and include recoveries.
It can take up to five years for loans to be fully repaid, so the
projected return, projected gross yield and projected bad debt rate
take into account how each year of loans are performing and how
Funding Circle expects them to perform in future. These
expectations may be revised, for example if macroeconomic
conditions change, and the projected return, projected gross yield
and the projected bad debt rate may be adjusted to reflect
this.
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 or visit www.rns.com.
END
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