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(Alliance News) - Funding Circle Holdings PLC on Thursday reported a substantially widened pretax loss for the first half of 2020 due to far higher fair value losses in the UK and US.
Shares in Funding Circle were down 5.3% at 58.71 pence per share in morning trading in London.
The London-based peer-to-peer lender posted a GBP115.1 million pretax loss for the six months ended June 30, heavily widened from a GBP30.8 million loss the year before.
Its operating loss was GBP113.5 million, having been GBP31.3 million the year before.
Funding Circle said this included an exceptional non-cash write-down of GBP12.0 million of US goodwill related to its US restructuring and GBP4.9 million related to the restructuring of its Developing Markets business, both of which were previously announced.
The company posted fair value losses of GBP96.1 million in in the first half, including GBP34.8 million in the UK and GBP61.3 million in the US, compared to just GBP300,000 in the US alone the year before. Net assets declined to GBP216.9 million from GBP319.0 million a year before.
On top of this, Funding Circle incurred depreciation, amortisation and impairment of GBP20.6 million compared to GBP7.1 million the year before.
More positively, total income increased to GBP101.2 million from GBP81.7 million thanks to a significant jump in investment income at GBP49.8 million from GBP2.2 million, more than offsetting a drop in fee income to GBP4.8 million from GBP80.4 million.
Adjusted earnings before interest, tax, depreciation, and amortisation was a loss of GBP84.1 million, widened from a GBP19.7 million loss a year before. Adjusted Ebitda excludes share-based payments, exceptional times, and foreign exchange. Funding Circle reinstated is previous guidance of being closed to adjusted Ebitda break-even in the second half of 2020.
Chief Executive Samir Desai said: "We believe that Covid-19 has led to an acceleration in the adoption of online small business lending and small businesses are increasingly drawn to the unique Funding Circle model, which provides access to finance in a fast and affordable way with excellent customer service. Our Instant Decision lending technology launched this year is already transforming the SME borrowing experience with average loan applications being completed in 6 minutes, and decisions in 9 seconds.
"Our advanced data driven credit assessment and the actions we have taken are protecting investor returns - after applying our central Covid-19 stress scenario, we expect all cohorts in the UK to deliver positive annualised returns to investors."
By Anna Farley; annafarley@alliancenews.com
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