(Alliance News) - GLI Finance Ltd on Wednesday reported a narrowed interim loss as its asset backed loan book saw sharp growth but its fintech investment portfolio recorded further write-downs.
Shares in AIM-listed GLI Finance - which invests in several peer-to-peer providers - were down 28% in London in mid-morning trade at 2.41 pence each.
In the six months to June 30, GLI's pretax loss narrowed to GBP6.0 million from GBP9.1 million the year before. The company's revenue was broadly flat at GBP7.1 million.
The small business lender's operating expenses declined 18% to GBP3.6 million from GBP4.4 million the year before. GLI also recorded a GBP2.1 million impairment of goodwill last year that was not repeated this year.
"While the headline financial results for the first six months remain disappointing, they mask some crucial developments in asset efficiency and cost controls that have led to a significant improvement in return on tangible assets in our core business," the company said in a statement.
GLI cited "impressive" loan growth from its Sancus BMS business. Sancus BME offers property backed and SME lending.
Sancus' offshore loan book ended the half at GBP188 million, 25% higher than the GBP151 million reported at the same point last year. Since the end of December, Sancus has reported a 12% rise in its offshore loan book.
The total loan book for the unit slipped 8.5% to GBP225 million following the sale of its Irish loan book.
"Impressive loan growth in asset backed secured lending in our offshore jurisdictions, together with the establishment of offices in our future growth markets in the UK and Ireland are where operations have barely begun, lay the foundations for improved financial results in the years ahead," said GLI.
The company said its results were hurt by "material" write downs in its Fintech Venture portfolio, which recorded losses of GBP5.0 million in the first half.
"It is disappointing to again be reporting further write downs in the FinTech Ventures portfolio. As we have previously outlined, we are largely a passenger on this journey and due to capital constraints, we have not been able to follow our money into these platforms. Whilst FinTech as a sector continues to grow strongly, the increased competition is making it increasingly difficult for smaller players, particularly those that are loss making, to raise further equity," GLI explained.
GLI did not declare an interim dividend but expects its investments in the UK and Ireland to drive cash flow in the "coming years", when the company will look to resuming its dividend.
Chief Executive Andrew Whelan said: "The group has gone through a period of sustained change over the past three years. Our focus on growth, stringent capital allocation and profitability will drive value for shareholders. This year we are changing the shape of the group to reduce our debt costs and on-balance sheet risk exposure.
"However, I fully appreciate that we have two businesses; Sancus BMS and the FinTech Ventures portfolio, which might not ordinarily be grouped together. Therefore, I will continue to consider and explore how we can maximise their values independently in the future."
The company also stressed it is focuses on repaying its zero dividend preference shares, which is due on December 5. The total amount due is GBP16.8 million, reduced from the original GBP27.2 million following a series of buybacks.
GLI said: "Whilst we are focussed on selling down our on-balance sheet loan exposure and using cash assets to repay the ZDPs on maturity, there will likely be a near term funding gap as loans take longer to repay. We are in active discussions with the major ZDP holders and are exploring options including extending the current ZDPs for a further year with a coupon of 7% or potentially issuing further bonds under its existing bond instrument."
