Lendinvest Plc · LSE:LINV
Lendinvest — H1 FY2024 Earnings Presentation
29 slides from Lendinvest's earnings presentation, Dec 19, 2023
Slide 1: Half year results for the six months ended 30 September 2023
Half year results for the six months ended 30 September 2023 19 December 2023
Slide 2: Agenda
Agenda 01 Strategic Review Hugo Davies, Chief Capital Officer 02 Financial Review David Broadbent, Chief Financial Officer 03 Outlook and long-term opportunity Rod Lockhart, Chief Executive Officer 04 Appendices Mortgages made simple | 2
Slide 3: Summary
Summary ● Market backdrop has been challenging but has recently shown signs of alleviating ● Progress made on key strategic objectives ● Priority has been on strengthening the balance sheet and financial position ○ Realising poor performing assets and increasing cash reserves ○ Reducing debt and ext
Slide 4: Strategic review
Strategic review
Slide 5: Market backdrop has been challenging
Market backdrop has been challenging Base rate rising to its highest point since 2008 ¹ Base rate - 9 increases in FY 2023 & H1 FY20241 Interest rate swaps - continued volatility, but BoE Base Rate recently reduced to below 4% SONIA 5 Year Swap Rate CPIH2 - 6.3% in September 2023 but reduced to 4.7%
Slide 6: Strengthening the balance sheet and de-risking the business
Strengthening the balance sheet and de-risking the business 1 ● Sold a £250m low margin BTL portfolio at a loss of £10.7m Accelerated recovery of ● Removed dilution of future net interest margin and reduced debt non-performing assets ● Accelerated recovery of non-performing assets to prioritise free
Slide 7: FuM +21% YoY to £4.2 billion, AuM +11% YoY to £2.7 billion
FuM +21% YoY to £4.2 billion AuM +11% YoY to £2.7 billion Key transactions in H1 2024 - Wells Fargo joined our £200m Buy-to-Let financing syndicate - BNP Paribas added £100m to our short-term mortgages financing syndicate - Chetwood Financial - £500m separate account mortgage partnership - £200m sep
Slide 8: Financials
Financials
Slide 9: Profit & loss
Profit & loss Half Year to 30 Half Year to 30 Group £m September September Change % 2023 £'m 2022 £'m Platform Assets under Management 2,695 2,431 11% AuM increased by 11% to £2,695m On balance sheet AuM was 32% lower than On balance sheet 822 1,213 (32%) prior year (period average 39% lower) Off ba
Slide 10: Segmental analysis of profit & loss
Segmental analysis of profit & loss Mortgages Capital £m Central £m Group £m £m Platform Assets under Management 2,076 619 - 2,695 ● New divisional structure 187 822 implemented at beginning of On balance sheet 635 - the period Off balance sheet 1,441 432 - 1,873 New Lending 283 132 - 415 ● Mortgage
Slide 11: Segmental analysis of Impairment Charge
Segmental analysis of Impairment Charge ● Conservative approach to provisioning ● Combination of statistical models and individual assessments ● Some increase in impairment expected given weaker macroeconomic outlook ● Mortgages division: very low level of impairment ● Capital division: much higher
Slide 12: LendInvest Mortgages - Losses by Vintage
LendInvest Mortgages - Losses by Vintage ● Represents the majority of loans held on balance sheet (£633m : 77%) ● Lower value, higher volume, lower risk profile ● Proprietary technology underpins the underwriting process with thousands of data points automatically analysed ● Expected credit losses r
Slide 13: LendInvest Capital - Losses by Vintage
LendInvest Capital - Losses by Vintage ● Represents the minority of assets held on the balance sheet (£185m: 23%) ● Expected credit losses of 100 - 150 bps ● Impairment charge in the period reflects the following: ○ 5 borrowers account for 70% of the charge in the period ○ £3.3m of the charge reflec
Slide 14: Cost base restructured
Cost base restructured ● Headcount peaked at 30 September 2023 at 275 ● Average headcount in first half 4% higher than prior period ● Some redundancies in first half with associated costs of £0.3m ● In November a restructuring process reduced headcount to 199, a 27% reduction since the start of the
Slide 15: Strengthening the balance sheet and reducing risk profile
Strengthening the balance sheet and reducing risk profile % of AuM on Balance Sheet Net Assets Cash & cash equivalents Free cash flow 31% £67.5m £88.0m £35.0m -14pps vs March 2023 -12% vs March 2023 +88% vs March 2023 47% vs Prior Period 2022 ● Material reduction in the proportion of the loan book he
Slide 16: Credit risk exposure substantially reduced
Credit risk exposure substantially reduced ● Since the first reporting period post IPO AuM has increased by 47% ● However, in the same period credit risk exposure has decreased by 52% (£99m) ● As a proportion of AuM, credit risk exposure has fallen from 10% to 3% as at 30 November 2023 ● The most re
Slide 17: Outlook and long-term opportunity
Outlook and long-term opportunity
Slide 18: Our technology remains a key competitive advantage
Our technology remains a key competitive advantage Key enhancements Business benefit Competitive advantage Buy-to-Let Broker Portal (Next Gen Increased origination volumes Faster than the competition BTL) Digital application process, simpler Removes our dependency on third Facilitates product switch
Slide 19: Clear market opportunity in Residential Mortgages
Clear market opportunity in Residential Mortgages ● Key focus on borrowers with complex income profile, including £100m funded by a £100m credit facility with Lloyds Bank key workers ● Initial launch to select group of brokers in December 2022 ● Whole market distribution achieved £41m size of AuM at
Slide 20: Strong foundations
Strong foundations ● Substantial headroom on diverse high quality funding lines ● Proven track record of scaling new products ● Clear market opportunity for Specialist Residential proposition ● Keen focus on product profitability ● Substantial broker network and excellent market reputation for servi
Slide 21: Outlook
Outlook ● Early signs of improvement in market backdrop ● Focused on return to profitability ● Increase Buy-to-Let originations ○ In November we had the highest level of signed applications for BTL since March 2023 ● Fundraising for Capital Division ● Realise additional cost savings post restructuri
Slide 22: Q&A
Q&A
Slide 23: Appendices
Appendices
Slide 24: Making our divisional reporting simple
Making our divisional reporting simple Realignment of the business into two divisions: - Mortgages: online platform for streamlined customer experience - Capital: complex lending with an expert, human-centric approach Current split Future split Long-term lending Mortgages Buy-to-Let mortgages Buy-to
Slide 25: Long-term growth drivers
Long-term growth drivers Est. Total Addressable Market* £bn Market Share £0.6bn 9% Given our market share, Bridging, £0.2bn 1% Development and BTL provide substantial growth opportunities £1.9bn 2% Launch of Residential Mortgages increased £0.0bn 0% our current addressable market by £100bn, currentl
Slide 26: New disclosure - components of net operating income
New disclosure - components of net operating income We have revised our disclosure to enhance transparency for the following reasons: 1. Facilitating peer group comparison 2. Distinguishing income sources: a. Income from assets held on our balance sheet - net interest income b. Income from assets ma
Slide 27: Balance sheet
Balance sheet £m 30 Sep 2023 30 Mar 2023 Cash & Cash Equivalents 88.0 46.7 Trade & Other Receivables 4.5 6.1 Loans & Other Advances 807.5 1,122.9 Derivative Financial Assets 12.0 46.0 Intangibles 11.3 10.5 Other Assets 31.2 30.6 Total Assets 954.5 1,262.8 Trade & Other Payables (33.1) (28.0) Interes
Slide 28: Disclaimer
Disclaimer Certain statements in this presentation 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
Slide 29: lendinvest.com Mortgages made simple
For more information: lendinvest.com investorrelations@lendinvest.com lendinvest.com Mortgages made simple 29