Operating Review

LendInvest is a leading UK asset management platform focussed on property finance. LendInvest originates and manages portfolios of property loans for investors by providing borrowers and brokers with transparent, convenient and competitively-priced products. The Group benefits from a diversified revenue stream, with revenue generated through annual management, performance and servicing fees on Separate Accounts and Funds, and interest charged to borrowers on assets funded through Financial Partnerships and Residential Mortgage-Backed Securities (RMBS). Arrangement fees are earned on every loan originated. The Group currently provides three types of secured property lending to borrowers in the form of bridging loans, development loans, (collectively, "short term lending"), and Professional Buy-to-Let ("BTL") loans.

One of the key objectives for LendInvest is to have a diverse and highly scalable investor base that provides it with both flexibility and resilience. The Group already benefits from a diverse pool of capital and has continued to add to its investor base in line with this objective during the period.

Technology also underpins a roadmap for growth for the Group, becoming increasingly important as the Group grows its share in longer term, higher volume products. The investment made into the technology platform will enable the Group to scale efficiently and launch new products, underpinning our future success.

The Group has made strong progress in its strategic goals over the past six months which will facilitate further growth in future periods:

1.     Technology investment

o  We hired a vice president of technology, Peter Wallis. Peter was previously Chief Technology Officer ("CTO") at Sporting Group, and before that CTO at ETX Capital. Prior to ETX he was Chief Architect at Camelot Lotteries

o  We increased our technology headcount by 26%. One of the identified uses of the £40m of primary capital raised through the IPO was to accelerate the delivery of our technology roadmap and these hires will enable us to iterate our existing technology in readiness for our planned launch of our new specialist homeowner product in the next financial year

o  We launched a new broker portal for our short term bridging product. This is targeted to loans of less than £1m and replicates much of the technology already in place on our BTL systems, enabling brokers to more easily apply for loans with us by removing friction in the process. The launch has been a success with short term lending signed applications for these types of loans in October being the highest of the year so far and nearly 50% of those applications coming through the new portal

2.     Launch of new products

o  A new range of green loans was designed in the first half and led to the launch of our EPiC range in October 2021 which supports sustainable landlords and reduces the environmental impact of the UK's ageing housing stock. This range provides borrowers with reduced rates for environmentally friendly properties with an EPC of C or above and further incentivises borrowers improving the EPC ratings of their underlying properties. BTL applications have increased by 85% since launch

o  A new 7 year fixed BTL loan was also introduced as part of the EPiC range, providing landlords with certainty of funding costs over a longer period of time. Interest in this product has been high given expected increases in interest rates over the next twelve months, with 30% of our BTL signed applications in November being for this product

o  We hired a new Managing Director of Homeowner Mortgages, Esther Morley. Esther was previously Managing Director, Mortgages at Secure Trust Bank, and before that she worked for 10 years at Kensington Group - the UK's leading specialist homeowner mortgage lender - where she was latterly responsible for all aspects of origination and portfolio performance for the specialist mortgage business. Esther will lead the development and launch of our new specialist homeowner product which we expect to launch in the next financial year

3.     Broker market penetration

o  Broker market penetration continued to improve since the previous year, with active brokers completing applications, up 41% since the previous period to over 1,800

o  Repeat business from our broker population has also increased reflecting the ease with which brokers can complete an application and the friction removed from the process through our technology platform. Business from repeat brokers has increased to 77% in the period

o  The UK property market is highly intermediated and therefore brokers are LendInvest's primary route to market and represent 100% of BTL originations. We are focused on being the partner of choice to mortgage brokers in the UK and an important part of our strategy is ensuring we are providing high quality products characterised by excellent service, evidenced by our Trustpilot rating of 4.5

 

 

¹ Refer to the Glossary for an explanation of this term and reconciliation back to relevant IFRS measures

 

4.     Board appointments 

●     We have made a number of changes to our board over the six month period. In May 2021, Michael Evans, the Group's Chief Financial Officer, was appointed to the board as executive director. In June 2021, Stephan Wilcke was appointed to the Board as Senior Independent Director, Penny Judd and Dale Murray were appointed to the board as independent non-executive directors

●     Chris Barnes resigned as non-executive director in June 2021

●     The Nominations committee is actively recruiting for a fourth independent non-executive director for the Board

5.     Increased investment in our platform

●     We completed the successful execution of our third BTL RMBS securitisation, which achieved the best market pricing on a UK BTL RMBS since July 2007 and attracted 60% more investors than the Group's previous securitisations. The transaction increased the Funds Under Management¹ ("FuM") of the Group by £280m

●     We were pleased to announce a £100m upsize of our BTL separate account with J.P. Morgan in September 2021. This was achieved by way of a sale of £100m loans which increased our full year profit before tax forecast by £1.6m

●     A new £150m partnership with HSBC and Barclays was announced in July 2021. This will enable borrowers to access short term property loans through our unique technology-driven platform with a particular focus on retrofitting and renovating existing UK property

6.     ESG

o  We continue to review our approach to ESG and sustainability and in the coming months will define how the business is measured on progress against relevant UN sustainable goals. We will disclose this in more detail in our annual report for the year ended 31 March 2022

 

Finance Review

These are the first set of results presented for the Group following a successful admission to trading on the AIM market of the London Stock Exchange which raised £40m to support the Group's growth plans. The principal activity of the Group is to provide asset management services for property finance in the United Kingdom.

	6 month period ended 30 September 2021 £m	6 month period ended 30 September 2020 £m (Restated)	Change
	(Unaudited)	(Unaudited)
Revenue	50.8	39.1	30%
Cost of sales	(24.3)	(21.5)	13%
Gross profit	26.5	17.6	51%
Non-exceptional administrative expenses	(13.7)	(11.7)	17%
Exceptional costs	(1.6)	(0.8)	100%
Impairment provisions	(1.7)	(3.1)	(45%)
Profit from operations	9.5	2.0	375%
Finance income	1.1	-	-
Finance expense	(0.4)	(2.2)	(82%)
Profit/(loss) before tax	10.2	(0.2)	5,200%
Adjusted EBITDA1	13.4	4.8	179%

¹Refer to the Glossary for an explanation of this term and reconciliation back to relevant IFRS measures

 

The reported figures for the comparative period have been restated. Details of the prior period restatement are disclosed in note 1.4 of these condensed consolidated interim financial statements.

 

Gross Profit & Revenue

	6 month period to 30 September 2021 £m	6 month period to 30 September 2020 £m	Change
	(Unaudited)	(Unaudited)
Interest on loans and advances	33.4	25.9	29%
Origination and other loan fees recognised under IFRS15	8.3	4.4	89%
Asset management, fund and servicing fees*	9.1	8.8	3%
Total Revenue	50.8	39.1	30%

 

*Asset management, performance and servicing fees from off balance sheet entities includes £2.9m (2021: £4.1m) of fees received on transfer of a portfolio of BTL mortgages to JPM, culminating in a derecognition event.

During the period under review, the Group increased gross profit by 51% to £26.5m (6 months to September 2020: £17.6m). This was achieved as revenue increased by 30% to £50.8m (6 months to September 2020: £39.1m), largely driven by a 29% increase in interest revenue to £33.4m (6 months to September 2020: £25.9m) and 89% increase in origination and other loan fees to £8.3m (6 months to September 2020: £4.4m) on higher volumes of  BTL assets. This increase was also driven through the agreement with J.P. Morgan to originate BTL loans into a separate account managed for them, recognising these fees in full at the point of origination. This agreement is new since the prior period.

Cost of Sales increased by only 13% to £24.3m (6 months to September 2020: £21.5m). This partially reflects the increase in fee revenue which does not have corresponding cost of sales, but is also driven by reduced funding costs due to the completion of the third RMBS securitisation and renegotiation of terms with Citi and National Australia Bank on the BTL portfolio and the new partnership with Barclays and HSBC to fund short term loans.

Operating Expenses

	6 month period to 30 September 2021 £m	6 month period to 30 September 2020 £m	Change
	(Unaudited)	(Unaudited)
Wages and salaries	7.1	6.0	18%
Depreciation and amortisation	1.7	1.7	-
Fees payable to the auditors for the audit of the financial statements	0.2	0.2	-
Audit related assurance services	0.1	0.1	-
Fees payable to the auditors for other assurance services	0.3	-	-
Share-based payments	0.4	0.1	300%
Lease finance expense	0.3	0.3	-

The Group incurred administrative expenses of £13.7m (6 months ended 30 September 2020: £11.7m). A key driver of this increase is from the investment in key hires, including a 26% growth in the technology headcount as well as strategic hires for long term lending. Share based payments increased by 300% to £0.4m (6 months ended 30 September 2020: £0.1m) due to new share schemes for staff introduced following the admission to AIM. The Group continues to deliver operational efficiency through its technology ensuring administrative costs increase at a slower pace than revenue and gross profit.

The Group incurred total IPO listing costs of £3.9m, £1.6m of which is expensed in the statement of profit and loss as administrative expenses but considered to be an exceptional item.

 

Impairment

The Group incurred impairment provisions of £1.7m (6 months ended 30 September 2020: £3.1m). This has reduced by 45% following a significant reversal of the adverse effects of Covid-19, improving the macroeconomic metrics that are used in our credit loss modelling, discussed in greater detail in Note 13 of these interim financial statements.  

Finance Income / Finance Expense

Finance income increased to £1.1m (6 months ended 30 September 2020: £2k). This gain was realised when portfolios of interest rates swaps were terminated at completion of the third securitisation and transfer of £100m of BTL assets to J.P. Morgan. Fair value gains on interest rate swaps, prior to being designated into a hedge relationship with BTL loans, are also recognised through finance income.

Finance expense decreased by 82% to £0.4m (6 months ended 30 September 2020: £2.2m) due to costs incurred in the prior year when interest rate swaps were terminated on the transfer of £125m of BTL loans to J.P. Morgan.

Adjusted EBITDA

 

Adjusted EBITDA has increased by 179% to £13.4m (6 months to 30 September 2020: £4.8m). This is largely due to the four factors, which are described in more detail above. The first is the increase in our Assets under Management¹ ("AuM") by 32% to £1.8bn and the related revenue growth of 30%. The second is through a smaller increase in Cost of Sales to leading to higher gross profit and gross profit margin. The third is through the operational efficiency delivered through our proprietary technology so our administrative expenses have grown at a slower rate than our gross profit. The fourth is through a reduction of our impairment charge by 45% to £1.7m (6 months to 30 September 2020: £3.1m) as the U.K. macroeconomic picture has improved since the prior interim period.

 

Cash & Cash Flow

As at 30 September 2021, the Group held cash and cash equivalents of £169.9m, a 173% increase in the 6 month period. Of this total, £100.1m of this balance is restricted for loan funding purposes. The remaining cash balance of £69.8m has increased by £52.1m in the six month period largely due to the £40m of capital raised through the Group's IPO in July 2021, as well as additional funds raised through the third securitisation in June 2021.

 

	6 month period ended 30 September 2021 £m	6 month period ended 30 September 2020 £m
	(Unaudited)	(Unaudited)
Net cash outflow from operations	(11.2)	(14.1)
Net cash outflow from investing activities	(1.7)	(1.3)
Net cash inflow/(outflow) from financing activities	120.7	(4.1)
Net increase / (decrease) in cash and cash equivalents	107.8	(19.5)
Cash and cash equivalents at beginning of the period	62.1	91.6
Cash and cash equivalents at end of the period	169.9	72.1

 

 

 

Lending Product Highlights

 

	6 month period to 30 September 2021			6 month period to 30 September 2020
	Short Term Lending £m	BTL £m	Total £m	Short Term Lending £m	BTL £m	Total £m
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Statement of Profit and Loss:
Interest revenue, fees and other income	24.1	26.7	50.8	21.1	17.9	39.0
Interest expense	(10.3)	(14.0)	(24.3)	(8.9)	(12.5)	(21.4)
Gross Profit	13.8	12.7	26.5	12.2	5.4	17.6

 

	As at 30 September 2021			As at 31 March 2021
	(Unaudited)			(Platform AuM Unaudited)
	Short Term Lending £m	BTL £m	Total £m	Short Term Lending £m	BTL £m	Total £m
Platform AuM*	608.0	1,217.9	1,825.9	677.6	895.7	1,573.3
Statement of Financial Position  - Loans & Advances	228.8	880.8	1,109.6	282.5	774.4	1,056.9

*Refer to the Glossary for an explanation of this term and reconciliation to Loans & Advances

 

 

Short Term Lending

 

During the period, the housing market remained favourable despite the wind down of the stamp duty land tax relief. Interest revenue, fees and other income improved by 14% to £24.1m (6 months to 30 September 2020: £21.1m), an increase which was mirrored in gross profit, as the business experienced an increased volume of activity compared to the prior period. The gross profit margin remained consistent with the prior year at 57% (6 months to 30 September 2020: 58%)

 

Short term assets under management reduced by 10% reflecting elevated repayments at the end of the 6 month period to September 2021 due to the strength of the underlying property market and our borrowers' ability to exit their projects.

 

Buy-to-Let Lending

 

During the period BTL lending saw continued growth with a 36% increase in AuM to £1,217.9m. The continued stamp duty land tax reliefs and strong demand from landlords for new properties aided the growth in AuM in the first half of the period.

 

BTL lending provided revenue growth of 49% to £26.7m in the period to 30 September 2021 compared with the same period in 2020. This growth is as a result of the increase in BTL AuM by 36% and additional revenue earned through the J.P. Morgan separate account.

 

BTL lending delivered gross profit growth of 135% to £12.7m in the 6 month period to 30 September 2021 compared with the same period in 2020. Gross profit increases are a result of the aforementioned increase in revenues combined with a lowering in the cost of funding following the Group's third RMBS securitisation of £280m BTL loans and renegotiated terms with Citi and National Australia Bank. These changes resulted in an improvement in the gross profit margin improving to 47.6% from 30.2% since the prior period.

 

 

Going Concern

The Group's business activities together with the factors likely to affect its future development are set out in this operating review. The directors have considered these factors alongside the Group's financial plan and any associated risks, and it is on this basis that the directors have continued to prepare the financial statements on a going concern basis.

The impact of Covid-19 has been assessed and several financial forecasts have been prepared across a range of potential scenarios. Alongside this, a comprehensive review of all material financial covenants attached to all funding sources, has been conducted to ensure ongoing compliance both under expected circumstances and potential stressed scenarios. The directors have reviewed these plans and consider the Group to have sufficient resources to continue its activities for 12 months from the date these financial statements were authorised for issue, including against the most severe but plausible outcome and do not consider there to be any material uncertainty.

Events after the period end date

There were no events to report after the period end date.

 

Responsibility statement of the directors in respect of the interim consolidated financial statements for the 6 month period ended 30 September 2021

  

We confirm that to the best of our knowledge:

 

●       the condensed set of financial statements has been prepared in accordance the UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority 

Approved on behalf of the board:

  

 

 

Michael Evans

Director

08 December 2021

 

 

               

INDEPENDENT REVIEW REPORT TO LENDINVEST PLC

 

Introduction

We have been engaged by the Company to review the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 September 2021 which comprises the condensed consolidated interim statement of profit and loss, the condensed consolidated interim statement of comprehensive income, the condensed consolidated interim statement of financial position, the condensed consolidated interim statement of changes in equity, the condensed consolidated interim statement of cash flows and the related explanatory notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of financial statements in the half-yearly financial report for the six months ended 30 September 2021 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

 

BDO LLP

Chartered Accountants

London, UK

Date:

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT AND LOSS

	Note	6 month period ended 30 September 2021 £'000	6 month period ended 30 September 2020 £'000 (Restated1)
		(Unaudited)	(Unaudited)
Interest revenue	4	33,411	25,866
Fees and other income	4	17,421	13,215
Cost of sales		(24,306)	(21,443)
Gross profit		26,526	17,638
Administrative expenses	8	(15,358)	(12,497)
Impairment provisions	13	(1,701)	(3,112)
Profit from operations		9,467	2,029
Finance income	5	1,099	2
Finance expense	6	(393)	(2,219)
Profit before tax	7	10,173	(188)
Tax (charge)/credit	10	(1,915)	62
Profit/(loss) for the period		8,258	(126)
Earnings per share for profit attributable to the ordinary equity holders of the Group:
Basic earnings per share (pence/share)	23	6.60	(0.44)
Diluted earnings/(loss) per share (pence/share)	23	6.35	(0.43)

 

¹See note 1.4

                               

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

 

	Note	6 month period ended 30 September 2021 £'000	6 month period ended 30 September 2020 £'000 (Restated1)
		(Unaudited)	(Unaudited)
Profit for the period		8,258	(126)
Other comprehensive income:
Gain on derecognition of interest bearing liabilities reclassed to profit and loss	20	-	-
Items that will or may be reclassified to profit or loss:
Cash flow hedge adjustment		6,890	(2,582)
Fair value gain on loans and advances measured at fair value through other comprehensive income	20	7,022	32,848
Deferred tax charge on fair value adjustment	20	(2,643)	(5,750)
Other comprehensive income for the period		11,269	24,516
Total comprehensive income for the period		19,527	24,390

 

¹See note 1.4(ii)

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION                                                                                                

	Note	As at 30 September 2021 £'000	As at 31 March 2021 £'000 (Restated1)
Assets		(Unaudited)	(Audited)
Cash and cash equivalents	12	169,877	62,155
Trade and other receivables	11	11,680	13,124
Loans and advances	13	1,109,554	1,056,900
Property, plant and equipment	14/15	4,144	4,619
Intangible assets	16	6,003	5,526
Derivative financial assets	21	3,998	1,926
Investment in third parties		30	30
Fair value adjustment for portfolio hedged risk asset		2,075	2,468
Deferred taxation	10	788	1,083
Total assets		1,308,149	1,147,831
Liabilities
Trade and other payables	17	(55,272)	(36,284)
Corporation tax payable		(2,961)	(575)
Interest bearing liabilities	18	(1,125,579)	(1,040,165)
Lease liabilities	15	(4,573)	(5,004)
Derivative financial liabilities	20/21	(3,494)	(8,674)
Fair value adjustment for portfolio hedged risk liability		(1,196)	(2,425)
Deferred taxation	10	(8,468)	(6,457)
Total liabilities		(1,201,543)	(1,099,584)
Net assets		106,606	48,247

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (continued)

 

Equity
Share capital	22	69	-
Share premium	22	55,929	17,540
Employee share reserve	24	1,958	1,584
Fair value reserve	24	32,823	27,135
Cash flow hedge reserve		3,151	(2,430)
Retained earnings	24	12,676	4,418
Total equity		106,606	48,247

 

¹See note 1.4(i)

 

These condensed consolidated interim financial statements of LendInvest plc, with registered number 08146929, were approved by the Board of Directors and authorised for issue on 9 December 2021. Signed on behalf of the Board of Directors by:

 

 

 

 

M Evans

Director

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

 

	Share capital   £'000	Share premium   £'000	Employee Share Reserve £'000	Fair value reserve net of deferred tax £'000	Cash flow hedge reserve net of deferred tax £'000	Retained earnings   £'000	Total     £'000
	(Unaudited)
Balance as at 1 April 2020 (Restated1)	-	17,540	915	(5,215)	(3,782)	670	10,128
Profit after taxation	-	-	-	-	-	(126)	(126)
Employee share options schemes	-	-	105	-	-	-	105
Fair value adjustments on loan & advances through OCI	-	-	-	26,607	-	-	26,607
Cash flow hedge adjustments through OCI	-	-	-	-	(2,090)	-	(2,090)
Balance as at 30 September 2020	-	17,540	1,020	21,392	(5,872)	544	34,624
Profit after taxation	-	-	-	-	-	3,874	3,874
Fair value adjustments on loan & advances through OCI	-	-	-	5,743	-	-	5,743
Cash flow hedge adjustments through OCI	-	-	-	-	3,442	-	3,442
Employee share options schemes	-	-	564	-	-	-	564
Balance as at 31 March 2021/1 April 2021	-	17,540	1,584	27,135	(2,430)	4,418	48,247
Profit after taxation	-	-	-	-	-	8,258	8,258
Recognition of employee share options schemes	-	-	374	-	-	-	374
Bonus issue of free shares funded by share premium	58	(58)	-	-	-	-	-
Issue of new shares on IPO	11	40,038	-	-	-	-	40,049
Cost incurred in issuing new shares		(2,181)					(2,181)
Issue of free shares to employees through a share incentive plan	-	590	-	-	-	-	590
Fair value adjustments on loan & advances through OCI	-	-	-	5,688	-	-	5,688
Cash flow hedge adjustments through OCI	-	-	-	-	5,581	-	5,581
Balance as at 30 September 2021	69	55,929	1,958	32,823	3,151	12,676	106,606

¹See note 1.4(ii)

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

 

	Note	6 month period ended 30 September 2021 £'000	6 month period ended 30 September 2020 £'000 (Restated1)
		(Unaudited)	(Unaudited)
Cash flows from operating activities
Profit for the period		8,258	(126)
Adjusted for:
Depreciation of property, plant and equipment	14	61	102
Amortisation of intangible fixed assets	16	1,179	1,099
Share option scheme	9	406	106
Finance income		-	(2)
Income tax expense		1,915	-
Derivative unrealised (gain)/loss and hedge accounting	5,6	(1,099)	2,237
Impairment provision2	13	1,818	3,327
Fair value movements - committed undrawn facility		193	-
Depreciation of right of use asset	15	469	464
Interest expense of right of use asset	15	261	288
Bonus share issue - Non executive directors		60	-
Non - capitalised financing cost	6	200	83
Cost of share listing expensed in income statement	8	1,581	-
Change in working capital
Increase in loans and advances		(47,643)	(20,683)
Decrease/(Increase) in trade and other receivables		2,298	(985)
Increase/(Decrease) in trade and other payables		18,694	(45)
Income tax  refund received		132	-
Net cash outflow from operations		(11,217)	(14,135)

 

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (continued)

 

Cash flow from investing activities
Purchase of property, plant and equipment	14	(56)	-
Capitalisation of internally developed software	16	(1,656)	(1,217)
Investments in third parties		-	(30)
Interest received		-	2
Net cash outflow from investing activities		(1,712)	(1,245)
Cash flow from financing activities
Increase/(Decrease) in interest bearing liabilities		85,414	(1,557)
Principal elements of finance lease payments	15	(431)	(391)
Interest expense of right of use asset	15	(261)	(288)
Proceeds from an equity share issue		40,049	-
Equity raising costs	8	(3,602)	-
Derivative settlements	21	546	(1,796)
Swap initial exchange and termination costs	6	(864)	-
Non - capitalised financing cost	6	(200)	(83)
Net cash inflow / (outflow) from financing activities		120,651	(4,115)
Net increase / (decrease) in cash and cash equivalents		107,722	(19,495)
Cash and cash equivalents at beginning of the period		62,155	91,609
Cash and cash equivalents at end of the period		169,877	72,114

 

¹See note 1.4(ii)

²The non-cash movement in the impairment provision differs from the charge to the statement of profit and loss in respect to the impairment provision for the 6 month period ended 30 September 2021. This is due to the charge to the statement of profit and loss including a credit of £117k in respect of cash amounts recovered in the period on loans that have previously been written off.

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

1. Basis of preparation

 

1.1 General information

 

LendInvest plc is a public company incorporated on 24 June 2021 in the United Kingdom under the Companies Act. The address of its registered office is given on page 3.

 

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into the UK law and became UK-adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement board. LendInvest plc transitioned to UK-adopted International Accounting Standard in its consolidated financial statements on 1 April 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework.

 

These condensed interim consolidated financial statements of LendInvest plc, for the six month period ended 30 September 2021, comprise the results of the Company and its subsidiaries (together referred to as the Group) (collectively "these financial statements").

 

1.2 Basis of accounting

 

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" and have been prepared on a historical cost basis, except as required in the valuation of certain financial instruments which are carried at fair value. These condensed consolidated interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published financial statements for the year ended 31 March 2021.

 

These condensed consolidated interim financial statements are not statutory accounts. The Group statutory accounts for the year ended 31 March 2021 have been reported on by its auditor and delivered to the Registrar of Companies. The report of the auditor on those statutory accounts (i) was unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

 

The Group maintains its books and records in pound sterling ("£").

 

1.3 Accounting policies

 

The accounting policies and methods of computation are consistent with those set out in the Annual Report 2021.

 

 

1.4 Changes in prior year figures

 

(i)            The Group has restated its March 2021 consolidated statement of financial position in accordance with IAS 1:54(n), which requires the inclusion of liabilities and assets for current tax as a separate line item in the statement of financial position. It was previously shown within the Trades and other payables line item. This has had no impact on the March 2021 consolidated statement of profit and loss or the March 2021 consolidated statement of cash flows.

 

Restated comparative consolidated statement of financial position

 

	As at 31 March 2021 £'000 (Reported)	Adjustment £'000	As at 31 March 2021 £'000 (Restated)
Assets
Cash and cash equivalents	62,155	-	62,155
Trade and other receivables	13,124	-	13,124
Loans and advances	1,056,900	-	1,056,900
Property, plant and equipment	4,619	-	4,619
Intangible assets	5,526	-	5,526
Derivative financial assets	1,926	-	1,926
Investment in third parties	30	-	30
Fair value adjustment for portfolio hedged risk asset	2,468	-	2,468
Deferred taxation	1,083	-	1,083
Total assets	1,147,831	-	1,147,831
Liabilities
Trade and other payables	(36,859)	575	(36,284)
Corporation tax payable	-	(575)	(575)
Interest bearing liabilities	(1,040,165)	-	(1,040,165)
Lease liabilities	(5,004)	-	(5,004)
Derivative financial liabilities	(8,674)	-	(8,674)
Fair value adjustment for portfolio hedged risk liability	(2,425)	-	(2,425)
Deferred taxation	(6,457)	-	(6,457)
Total liabilities	(1,099,584)	-	(1,099,584)
Net assets	48,247	-	48,247

 

 

Equity
Share capital	-	-	-
Share premium	17,540	-	17,540
Employee share reserve	1,584	-	1,584
Fair value reserve	27,135	-	27,135
Cash flow hedge reserve	(2,430)	-	(2,430)
Retained earnings	4,418	-	4,418
Total equity	48,247	-	48,247

 

(ii)           The Group has restated its 30 September 2020 consolidated statement of profit and loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows in accordance with IFRS9 which requires a financial liability to be derecognised when it is  extinguished. In March 2020, the Group purchased £7.3m of its bonds from a third party bond holder for £5.9m. A gain was recognised in the consolidated statement of other comprehensive income in the year ended 31 March 2020. These bonds were cancelled in April 2020 and the Group recognised a gain of £1.4m in the consolidated statement of profit and loss in the 6 month period to 30 September 2020.

According to IFRS9, the gain in the consolidated statement of profit and loss should have been recognised in full in the consolidated financial statements for the year ended 31 March 2020. This change does not affect the retained earnings of the Group at 31 March 2021. Retained earnings at 31 March 2020 will be £1,102k higher and the fair value reserve will be £1,102k lower. Total equity in the statement of financial position is unaffected at 31 March 2020. Recognising the gain through the P&L in the year ended 31 March 2020 will not affect the tax position of the group at 31 March 2021, as this gain will be taxed at the same rate as it was when it was recognised through the P&L in the year ended 31 March 2021.

Basic earnings per share for the period to 30 September 2020 has changed from 3.44 pence per share to a loss of (0.44) pence per share. Diluted earnings per share for the period to 30 September 2020 has changed from 3.35 pence per share to a loss of (0.43) pence per share. Please see note 23 for further details.

Restated comparative condensed consolidated interim statement of profit and loss

 

	6 month period ended 30 September 2020 £'000 (Reported)	Adjustment £'000	6 month period ended 30 September 2020 £'000 (Restated)
Interest revenue	25,866	-	25,866
Fees and other income	13,215	-	13,215
Cost of sales	(21,443)	-	(21,443)
Gross profit	17,638	-	17,638
Gain on derecognition of financial liability	1,361	(1,361)	-
Total operating income	18,999	(1,361)	17,638
Administrative expenses	(12,497)	-	(12,497)
Impairment provisions	(3,112)	-	(3,112)
Profit from operations	3,390	(1,361)	2,029
Finance income	2	-	2
Finance expense	(2,219)	-	(2,219)
Profit before tax	1,173	(1,361)	(188)
Tax (charge)	(197)	259	62
Profit for the period	976	(1,102)	(126)

 

 

Restated comparative condensed consolidated interim statement of comprehensive income

 

	6 month period ended 30 September 2020 £'000 (Reported)	Adjustment £'000	6 month period ended 30 September 2020 £'000 (Restated)
Profit for the period	976	(1,102)	(126)
Other comprehensive income:
Gain on derecognition of interest bearing liabilities reclassed to profit and loss	(1,361)	1,361	-
Items that will or may be reclassified to profit or loss:
Cash flow hedge adjustment	(2,582)	-	(2,582)
Fair value gain on loans and advances measured at fair value through other comprehensive income	32,848	-	32,848
Deferred tax charge on fair value adjustment	(5,491)	(259)	(5,750)
Other comprehensive income for the period	23,414	1,102	24,516
Total comprehensive income for the period	24,390	-	24,390

 

Restated opening balance of condensed consolidated interim statement of changes in equity

	Share capital   £'000	Share premium   £'000	Employee Share Reserve £'000	Fair value reserve net of deferred tax £'000	Cash flow hedge reserve net of deferred tax £'000	Retained earnings   £'000	Total     £'000
Balance as at 1 April 2020 (Reported)	-	17,540	915	(4,113)	(3,782)	(432)	10,128
Adjustment	-	-	-	(1,102)	-	1,102	-
Balance as at 1 April 2020 (Restated)	-	17,540	915	(5,215)	(3,782)	670	10,128

 

 

Restated comparative condensed consolidated interim statement of cash flows

	6 month period ended 30 September 2020 £'000 (Reported)	Adjustment £'000	6 month period ended 30 September 2020 £'000 (Restated)
Cash flows from operating activities
Profit for the period	976	(1,102)	(126)
Adjusted for:
Depreciation of property, plant and equipment	102	-	102
Amortisation of intangible fixed assets	1,099	-	1,099
Share option scheme	106	-	106
Finance income	(2)	-	(2)
Income tax expense	-	-	-
Derivative unrealised (gain)/loss and hedge accounting	2,237	-	2,237
Impairment provision	3,327	-	3,327
Fair value movements - committed undrawn facility	-	-	-
Depreciation of right of use asset	464	-	464
Interest expense of right of use asset	288	-	288
Bonus share issue - Non executive directors	-	-	-
Non - capitalised financing cost	83	-	83
Cost of share listing expensed in income statement	-	-	-
Cancellation of interest bearing liabilities	(7,315)	7,315	-
Redemption of interest bearing liabilities	5,954	(5,954)	-
Change in working capital
Increase in loans and advances	(20,683)	-	(20,683)
Decrease/(Increase) in trade and other receivables	(726)	(259)	(985)
Increase/(Decrease) in trade and other payables	(45)	-	(45)
Income tax refund received	-		-
Net cash outflow from operations	(14,135)	-	(14,135)

 

 

Cash flow from investing activities
Purchase of property, plant and equipment	-	-	-
Capitalisation of internally developed software	(1,217)	-	(1,217)
Investments in third parties	(30)	-	(30)
Interest received	2	-	2
Net cash outflow from investing activities	(1,245)	-	(1,245)
Cash flow from financing activities
Increase/(Decrease) in interest bearing liabilities	(1,557)	-	(1,557)
Principal elements of finance lease payments	(391)	-	(391)
Interest expense of right of use asset	(288)	-	(288)
Proceeds from an equity share issue	-	-	-
Equity raising costs	-	-	-
Derivative settlements	(1,796)	-	(1,796)
Swap initial exchange and termination costs	-	-	-
Non - capitalised financing cost	(83)	-	(83)
Net cash inflow / (outflow) from financing activities	(4,115)	-	(4,115)
Net increase / (decrease) in cash and cash equivalents	(19,495)	-	(19,495)
Cash and cash equivalents at beginning of the period	91,609	-	91,609
Cash and cash equivalents at end of the period	72,114	-	72,114

 

2. Financial risk management

 

General objectives, policies and processes 

 

The board has the overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's risk management activities and exposure to credit, liquidity and market risk are consistent with those set out in the Annual Report 2021. The tables below analyse the Group's contractual undiscounted cash flows of its financial assets and liabilities:

 

As at 30 September 2021	Carrying amount   £'000	Gross nominal inflow/ (outflow) £'000	Amount due within one year £'000	Amount due between one and five years £'000	Amount due in more than 5 years £'000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Financial assets
Cash and cash equivalents	169,877	169,877	169,877	-	-
Trade and other receivables	3,003	3,003	1,768	1,235	-
Derivative financial asset	3,998	3,998	-	3,998	-
Loans and advances	1,109,554	1,687,633	265,153	148,636	1,273,844
	1,286,432	1,864,511	436,798	153,869	1,273,844
Financial liabilities
Trade and other payables	(54,691)	(54,691)	(54,691)	-	-
Interest bearing liabilities	(1,125,579)	(1,185,370)	(286,639)	(898,731)	-
Derivative financial liability	(3,494)	(3,494)	-	(3,494)	-
Lease liability	(4,573)	(4,573)	(1,282)	(3,291)	-
	(1,188,337)	(1,248,128)	(342,612)	(905,516)	-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 March 2021	Carrying amount   £'000	Gross nominal inflow/ (outflow) £'000	Amount due within one year £'000	Amount due between one and five years £'000	Amount due in more than 5 years £'000
	(Audited)	(Audited)	(Audited)	(Audited)	(Audited)
Financial assets
Cash and cash equivalents	62,155	62,155	62,155	-	-
Trade and other receivables	4,218	4,218	2,983	1,235	-
Loans and advances	1,056,900	1,572,336	307,857	129,153	1,135,326
Derivative financial asset	1,926	1,926	(5)	1,931	-
	1,125,199	1,640,635	372,990	132,319	1,135,326
Financial liabilities
Trade and other payables	(35,720)	(35,720)	(35,720)	-	-
Interest bearing liabilities	(1,040,165)	(1,093,543)	(29,843)	(1,063,700)	-
Derivative financial liability	(8,674)	(8,674)	(5,192)	(3,482)	-
Lease liability	(5,004)	(5,004)	(861)	(4,143)	-
	(1,089,563)	(1,142,941)	(71,616)	(1,071,325)	-

 

3. Segmental analysis

 

The Group's lending operations are largely carried out solely in the UK with two main lending products: short-term lending and BTL

mortgages. The results and net assets of the Group are derived from the provision of property related loans only.

 

The following summary describes the operations of the two reportable segments:

 

Short term lending

 

Provides finance for borrowers who need to quickly secure property, generate cash flow or fund works through the Group's bridging products, and provides property developers with funding to start or exit a project through development products. The term of these loans are up to 24 months.

 

Buy-to-let lending

 

Provides finance for professional portfolio landlords looking to purchase or remortgage BTL investment properties in England, Wales and Scotland. The mortgages are available to both individual and corporate borrowers, and funds are lent against standard properties as well as houses in multiple occupation and multi-unit freehold blocks. The term of these loans are up to 30 years.

 

Please see below for a segmental analysis of the profit and loss and statement of financial position balances:

 

 

 

 

 

6 month period to 30 September 2021	Short Term Lending £'000	BTL £'000	Total £'000
Statement of Profit and Loss Information	(Unaudited)
Interest revenue, fees and other income	24,096	26,736	50,832
Interest expense	(10,248)	(14,058)	(24,306)
Gross Profit	13,848	12,678	26,526

 

6 month period to 30 September 2020	Short Term Lending £'000	BTL £'000	Total £'000
Statement of Profit and Loss Information	(Unaudited)
Revenue	21,146	17,935	39,081
Interest Expense	(8,929)	(12,514)	(21,443)
Gross Profit	12,217	5,421	17,638

 

All other cost lines in the statement of profit and loss are centrally incurred and are not allocated to either operating segments. These centrally incurred costs are not included in the measure of segment profit and loss reviewed management.

 

As at 30 September 2021	Short Term Lending £'000	BTL £'000	Total £'000
Statement of Financial Position Information	(Unaudited)
Loans & Advances	228,741	880,813	1,109,554

 

As at 31 March 2021	Short Term Lending £'000	BTL £'000	Total £'000
Statement of Financial Position Information	(Audited)
Loans & Advances	282,526	774,374	1,056,900

 

All other lines in the statement of financial position are centrally allocated and are not allocated to either operating segments.

 

 

 

4. Revenue

 

	6 month period to 30 September 2021 £'000	6 month period to 30 September 2020 £'000
	(Unaudited)	(Unaudited)
Interest on loans and advances1	33,411	25,866
Origination and other loan fees recognised under IFRS15	8,269	4,358
Asset management, fund and servicing fees2	9,152	8,857
	50,832	39,081

¹Includes origination fees recognised under the effective interest method

²Asset management, performance and servicing fees from off balance sheet entities and also includes £2.9m (2021: £4.1m) received on transfer of a portfolio of BTL mortgages to JPM, culminating in a derecognition event.

 

5. Finance Income

 

	6 month period to 30 September 2021 £'000	6 month period to 30 September 2020 £'000
	(Unaudited)	(Unaudited)
Realised derivative fair value gains	296	-
Unrealised derivative fair value gains and hedge accounting	803	-
Bank interest income	-	2
	1,099	2

 

6. Finance Expense

 

	6 month period to 30 September 2021 £'000	6 month period to 30 September 2020 £'000
	(Unaudited)	(Unaudited)
Realised derivative fair value loss	-	(1,827)
Unrealised derivative fair value loss and hedge accounting	-	(271)
FV movement on undrawn committed facility *	(193)	150
Funding line exit fee	(200)	(271)
	(393)	(2,219)

*Fair value movements through profit and loss is associated with one loan formerly within the lending portfolio being subject to a committed facility. The undrawn committed facility has been transferred and the Group no longer holds the obligation, resulting in the reversal of fair value gains recognised at 31 March 2021.

 

 

 

 

 

 

 

7. Profit before taxation

 

Profit before taxation has been stated after charging:

 

	6 month period to 30 September 2021 £'000	6 month period to 30 September 2020 £'000
	(Unaudited)	(Unaudited)
Wages and salaries	7,117	6,043
Depreciation and amortisation	1,709	1,664
Audit related assurance services	79	75
Fees payable to the auditors for other assurance services	245	-
Share-based payments	406	106
Lease finance expense	261	288

 

8.  Exceptional costs

 

Administrative expense reported for the current (£15.4m) and comparative period (£12.5m) include the cost of exceptional items. Exceptional items for the period relate to significant one-off costs associated with Group's admission onto AIM in June 2021. Of the £3.8m cost incurred in the listing process £2.2m was deemed as meeting IAS 32 definition of equity transaction costs and therefore deducted from equity, and £1.6m was determined as not directly attributable to an equity transaction and therefore expensed through the statement of profit and loss.

 

A £0.8m restructuring programme was expensed in the statement of profit and loss under exceptional costs in the 6 month period to 30 September 2020.

 

9. Share-based payments

 

Company Share Option Plans

During the period ended 30 September 2021, the Group issued a Long Term Incentive Plan (LTIP) to certain employees and issued a free share award under a share incentive plan (SIP). During prior financial years, the Group also issued a Company Share Option Plan (CSOP) to employees.

 

The grant of shares or options under these schemes may be made on an annual or on an ad hoc basis.

 

Share Option expense recognised

 

During the six month ended 30 September 2021, the Group recognised a £406,000 expense as a result of issued share options vesting.

 

	6 month period ended 30 September 2021 £'000	6 month period ended 30 September 2020 £'000
	(Unaudited)	(Unaudited)
The expense is included in administrative expenses, as part of employee expenses	406	106

 

10. Taxation on profit on ordinary activities

 

The Group is subject to all taxes applicable to a commercial company in the United Kingdom. The UK business profits of the Group are subject to UK income tax at the prevailing basic rate of 19% (2020:19%).  In March 2021, it was announced in Budget 2021 that the main rate of UK corporation tax will rise to 25% from 1 April 2023. This rise was substantively enacted in May 2021.

As of 30 September 2021, the Group had £7,680k in net deferred tax liabilities (DTLs) (31 March 2021: net deferred tax liability of £5,374k). These DTAs/DTLs include:

●      Assets of £594k (31 March 2021: Assets of £300k) related to temporary differences arising between the tax base of share based payments and the carrying amount;

●      Liabilities of £30k (31 March 2021: Liabilities of £92k) related to temporary differences arising between the tax base of property, plant and equipment and the carrying amount;

●      Liabilities of £8,438k (31 March 2021: Liabilities of £5,794k) related to the fair value reserve on loans and advances and cash flow hedge reserve;

●      Assets of £113k (31 March 2021: Assets of £122k) related to the ECL provision on transition to IFRS 9;

●      Assets of £81k (31 March 2021: Assets of £90k) related to transition to IFRS 16;

 

11. Trade and other receivables

 

	As at 30 September 2021 £'000	As at 31 March 2021 £'000
	(Unaudited)	(Audited)
Due within one year
Trade receivables	649	2,249
Other receivables:
Prepayments and accrued income	8,118	8,906
Other receivables	1,678	734
Due after one year
Rent deposit	1,235	1,235
	11,680	13,124

 

12. Cash and cash equivalents

 

	As at 30 September 2021 £'000	As at 31 March 2021 £'000
	(Unaudited)	(Audited)
Cash and cash equivalents	153,246	57,286
Trustee's account	16,631	4,869
	169,877	62,155

 

Operationally, the Company does not treat the Trustees' balances as available funds. An equal and opposite payable amount is included within the trade payables balance (see note 17).

               

 

 

13. Loans and advances

 

	As at 30 September 2021 £'000	As at 31 March 2021 £'000
	(Unaudited)	(Audited)
Gross loans and advances	1,078,259	1,031,690
ECL provision	(9,228)	(8,483)
Fair value adjustment (*)	40,523	33,693
Loans and advances	1,109,554	1,056,900

 

 (*) Fair value adjustment to gross loans and advances due to classification as FVTOCI. Fair value adjustments are a function of changes in discount rates on the Group's loan assets. The changes in the underlying variables during the period and effect on fair value is discussed in Note 20.

 

 ECL provision

 

Movement in the period	£'000
Under IFRS 9 at 1 April 2021 (Audited)	(8,483)
Additional provisions made during the period1	(2,188)
Utilised in the period2	1,443
Under IFRS 9 at 30 September 2021 (Unaudited)	(9,228)

 

Movement in the period	£'000
Under IFRS 9 at 1 April 2020 (Audited)	(5,985)
Additional provisions made during the period1	(3,450)
Utilised in the period	724
Under IFRS 9 at 30 September 2020 (Unaudited)	(8,711)

 

¹The ECL provision of £9.2m is stated including the expected credit losses incurred on the interest income recognised on stage 3 loans and advances. The net ECL impact on the income statement for the period to 30 September 2021 is £2.2m (HY2020: £3.5m). This includes the £1.7m (HY2020: £3.1m) of bad debt expense shown in the income statement and the total impact of expected credit losses on income recognised on stage 3 loans and advances using the effective interest rate is £0.5m (HY2020: £0.4m).

 

²Loans that are written off can still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due. The contractual amount outstanding on loans and advances that have previously been written off and are still subject to enforcement activity is £8.5m (2021: £12.2m).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Analysis of loans and advances by stage

 

As at 30 September 2021	Stage 1 £'000	Stage 2 £'000	Stage 3 £'000	Total £'000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Gross loans and advances	857,803	191,062	29,394	1,078,259
ECL provision	(261)	(826)	(8,141)	(9,228)
Fair value adjustment	35,208	4,862	453	40,523
Loans and advances	892,750	195,098	21,706	1,109,554

 

The maximum LTV on stage 1 loans is 82%. The maximum LTV on stage 2 loans is 103%. The maximum LTV on Stage 3 loans is 149% and the total value of collateral (capped at the gross loan value) held on stage 3 loans is £26.9m.

 

As at 31 March 2021	Stage 1 £'000	Stage 2 £'000	Stage 3 £'000	Total £'000
	(Audited)	(Audited)	(Audited)	(Audited)
Gross loans and advances	777,744	221,600	32,346	1,031,690
ECL provision	(627)	(1,719)	(6,137)	(8,483)
Fair value adjustment	27,459	5,879	355	33,693
Loans and advances	804,576	225,760	26,564	1,056,900

 

The maximum LTV on stage 1 loans is 82%. The maximum LTV on stage 2 loans is 101%. The maximum LTV on Stage 3 loans is 132% and the total value of collateral (capped at the gross loan value) held on stage 3 loans is £30.7m.

 

Impairment provisions are calculated on an expected credit loss (ECL) basis. Financial assets are classified individually into one of the categories below:

 

●      Stage 1 - assets are allocated to this stage on initial recognition and remain in this stage if there is no significant increase in credit risk since initial recognition. Impairment provisions are recognised to cover 12 month ECL, being the proportion of lifetime ECL arising from default events expected within 12 months of the reporting date;

●      Stage 2 - assets where it is determined that there has been a significant increase in credit risk since initial recognition, but where there is no objective evidence of impairment. Impairment provisions are recognised to cover lifetime;

●      Stage 3 - assets where there is objective evidence of impairment, i.e. they are considered to be in default. Impairment provisions are recognised against lifetime ECL. For assets allocated to Stage 3, interest income is recognised on the balance net of impairment provision;

●      Purchased or originated credit impaired ("POCI") - POCI assets are financial assets that are credit impaired on initial recognition. On initial recognition they are recorded at fair value. ECLs are only recognised or released to the extent that there is a subsequent change in the ECLs. Their ECL is always measured on a lifetime basis.

 

If a loss is ultimately realised, it is written off against the provision previously provided for with any excess charged to the impairment provision in the statement of profit and loss.

 

 

The impairment loss provisions under IFRS 9 is calculated using macroeconomic variables, in particular UK house price inflation and unemployment, and the probability weightings of the macroeconomic scenarios used. The Group has used three macroeconomic scenarios, which are considered to represent a range of possible outcomes over a normal economic cycle, in determining impairment loss provisions:

 

●      a central scenario aligned to the Group's business plan;

●      a downside scenario as modelled in the Group's risk management process; and

●      an upside scenario representing the impact of modest improvements to assumptions used in the central scenario.

 

The central scenario represents management's current view of the most likely economic outturn. During the period, the following weightings of the different scenarios where used:

 

●      BTL ECL model - 40% / 40% / 20% to the central, downside and upside scenarios.

●      Short Term Lending ECL models - 40% / 50% /10% to the central, downside and upside scenarios.

 

The scenario weighting for both  lending models remain unchanged from the year  ended 31 March 2021, when a greater weighting to the downside scenario was applied on the short term lending models  to reflect the impact of the Covid-19 pandemic. The greater downside scenario weighting has been maintained given continued variability in macroeconomic factors combined with uncertainty due to the removal of some government support measures for the economy. This is expected to have a much greater impact on the short-term lending book.

 

Changes to macroeconomic assumptions, as expectations change over time, are expected to lead to volatility in impairment loss provisions and may lead to pro-cyclicality in the recognition of impairment provisions.

 

The methodology on which the ECL model is based has not changed from the financial statements dated 31 March 2021. The macroeconomic data inputs have been updated as at 30 September 2021.

 

Credit risk on gross loans and advances

 

The table below provides information on the Group's loans and advances by stage and risk grade.

 

At 31 March 2021, the risk grades ranged from 1 to 18. In the period to 30 September 2021, the underlying methodology has been changed to better align loss forecasting with portfolio risk. A 10 point risk grading has been implemented that is derived from the behavioural score of the borrower.

 

Risk grades detailed in the table range from 1 to 10 with a risk grade of 1 being assigned to cases with the lowest credit risk and 10 representing cases in default. Equifax Risk Navigator (RN) scores are used to assign the initial Risk Grade score with additional SICR rules used to generate the final Risk Grade.

 

As at 30 September 2021	Stage 1 £'000	Stage 2 £'000	Stage 3 £'000	Total £'000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Risk Grades 1 - 5	857,803	152,407	-	1,010,210
Risk Grades 6 - 9	-	38,655	-	38,655
Default	-	-	29,394	29,394
Total	857,803	191,062	29,394	1,078,259

 

 

 

As at 31 March 2021	Stage 1 £'000	Stage 2 £'000	Stage 3 £'000	Total £'000
	(Audited)	(Audited)	(Audited)	(Audited)
Risk Grades 1 - 5	661,031	37,549	-	698,580
Risk Grades 6 - 10	105,354	101,874	-	207,228
Risk Grade 11 -15	11,359	70,843	-	82,202
Risk Grade 16 - 17	-	11,334	-	11,334
Default	-	-	32,346	32,346
Total	777,744	221,600	32,346	1,031,690

 

14. Property, plant and equipment

 

Acquisitions and disposals: During the six months ended 30 September 2021, the Group purchased additional assets of £56,000 (the six months ended 30 September 2020: Nil). Depreciation: During the six months ended 30 September 2021, the Group depreciated £61,000 against property, plant and equipment (the six months ended 30 September 2019: £102,000).

 

15. Lease arrangements

 

The Group is the lessee to a property lease arrangement.

 

Depreciation: In the six months ended 30 September 2021 the Group depreciated £469,000 against the right of use asset (the six months ended 30 September 2020: £464,000).

 

Amortisation: During the six months ended 30 September 2021 the Group expensed lease finance charges of £261,000 (the six months ended 30 September 2019: £288,000).

 

16. Intangible fixed assets

 

During this period, the Group also capitalised intangible assets with a cost of £1,656,000 (the six months ended 30 September 2020: £1,217,000). Amortisation: During the six months ended 30 September 2021, the Group amortised £1,179,000 against intangible fixed assets (the six months ended 30 September 2020: £1,099,000).

 

17. Trade and other payables

 

	As at 30 September 2021 £'000	As at 31 March 2021 £'000 (Restated1)
	(Unaudited)	(Audited)
Trade payables	(30,531)	(17,016)
Other payables:
Taxation and social security costs	(582)	(564)
Accruals and deferred income	(24,159)	(18,704)
	(55,272)	(36,284)

 

¹See note 1.4

 

The trade payables balance includes Trustees' balances of £16.6m in respect of uninvested cash held on the self-select platform, which may be withdrawn by investors at any time. The Company has no non-current trade and other payables. The carrying value of trade and other payables approximates fair value.

 

 

18. Interest bearing liabilities               

 

	As at 30 September 2021 £'000	As at 31 March 2021 £'000
	(Unaudited)	(Audited)
Funds from investors and partners	1,131,212	1,044,446
Funding line costs	(5,633)	(4,281)
	1,125,579	1,040,165

 

The Group's interest on funding has ranged between 2% to 8% in the 6 month period ended 30 September 2021.

Funding line costs are amortised on an effective interest rate basis. Interest bearing liabilities are secured by charges over the assets and operations of the Group.

 

Net debt represents interest bearing liabilities (as above), less cash at bank and in hand (excluding cash held for clients) and excluding unamortised debt issue costs but including accrued interest relating to the Group's third-party indebtedness. A reconciliation of net debt is:

 

	As at 30 September 2021 £'000	As at 31 March 2021 £'000
	(Unaudited)	(Audited)
Interest bearing liabilities	1,125,579	1,040,165
Deduct: cash as reported in financial statements	(169,877)	(62,155)
Net debt: borrowings less cash as reported in the financial statements	955,702	978,010
Add back: unamortised funding line costs	5,633	4,281
Add back: trustees account cash	16,631	4,869
Add: accrued interest	3,782	3,875
Deduct: retained interest	(3,303)	(5,036)
Net debt	978,445	985,999

 

 

19. Reconciliation of liabilities arising from financing activities

 

	Interest bearing liabilities £'000	Leases £'000	Derivatives £'000
31 March 2020 (Audited)	(846,164)	(5,717)	(12,993)
Cash flows	(194,001)	1,377	4,453
Fair value changes	-	-	1,793
Lease finance expense	-	(664)	-
Other	-	-	-
31 March 2021 (Audited)	(1,040,165)	(5,004)	(6,747)
Cash flows	(85,414)	692	(1,573)
Fair value changes		-	8,824
Leases finance expense	-	(261)	-
Other	-	-	-
30 September 2021 (Unaudited)	(1,125,579)	(4,573)	504

 

20. Financial instruments

 

Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are: loans and advances, trade and other receivables, cash and cash equivalents, loans and borrowings, derivatives, and trade and other payables. 

Categorisation of financial assets and financial liabilities
With the exception of loan commitments classified as fair value through profit or loss, all financial assets of the Group are carried at amortised cost or fair value through other comprehensive income as at 30 September 2021 and 31 March 2021 depending on the business model under which the Group manages the financial assets. All financial liabilities of the Group are carried at amortised cost as at 30 September 2021 and 31 March 2021 due to the nature of the liability, with the exception of derivatives that are measured at fair value.                

Financial instruments measured at amortised cost, rather than fair value, include cash and cash equivalents, trade and other receivables, trade and other payables, rent deposit and interest-bearing liabilities. Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates their fair value.

 

(a)  Carrying amount of financial instruments

A summary of the financial instruments held by category is provided below:

 

	As at 30 September 2021 £'000	As at 31 March 2021 £'000
	(Unaudited)	(Audited)
Financial assets at amortised cost
Cash and cash equivalents	169,877	62,155
Trade and other receivables	3,003	4,218
Loans and advances1	29,455	24,585
Financial assets at fair value through other comprehensive income
Loans and advances	1,080,099	1,032,122
Derivative financial asset	3,551	-
Financial assets at fair value through profit and loss
Loans and advances	-	193
Derivative financial asset	447	1,926
Total financial assets	1,286,432	1,125,199
Financial liabilities at amortised cost
Trade and other payables	(54,691)	(35,720)
Interest bearing liabilities	(1,125,579)	(1,040,165)
Lease liability	(4,573)	(5,004)
Financial liabilities at fair value through other comprehensive income
Derivative financial liability	(3,494)	(8,674)
Total financial liabilities	(1,188,337)	(1,089,563)

¹As at 30 September 2021 the group held a number of loans originated under the governments CBILs scheme. These loans are valued at amortised cost within the accounts.

 

(b)  Carrying amount versus fair value

 

The following table compares the carrying amounts and fair values of the Group's financial assets and financial liabilities as at 30 September 2021.

 

	As at 30 September 2021 £'000	As at 30 September 2021 £'000	As at 31 March 2021 £'000	As at 31 March 2021 £'000
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
	(Unaudited)	(Unaudited)	(Audited)	(Audited)
Financial assets
Cash and cash equivalents	169,877	169,877	62,155	62,155
Trade and other receivables	3,003	3,003	4,218	4,218
Loans and advances	1,109,554	1,109,554	1,056,900	1,056,900
Derivative financial asset	3,998	3,998	1,926	1,926
Fair value adjustment for portfolio hedged risk asset	2,076	2,076	2,468	2,468
Total financial assets	1,288,508	1,288,508	1,127,667	1,127,667
	As at 30 September 2021 £'000	As at 30 September 2021 £'000	As at 31 March 2021 £'000	As at 31 March 2021 £'000
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
	(Unaudited)	(Unaudited)	(Audited)	(Audited)
Financial liabilities
Trade and other payables	(54,691)	(54,691)	(35,720)	(35,720)
Interest bearing liabilities	(1,125,579)	(1,128,571)	(1,040,165)	(1,042,398)
Derivative financial liability	(3,494)	(3,494)	(8,674)	(8,674)
Fair value adjustment for portfolio hedged risk liability	(1,196)	(1,196)	(2,425)	(2,425)
Lease liability	(4,573)	(4,573)	(5,004)	(5,004)
Total financial liabilities	(1,189,533)	(1,192,525)	(1,091,988)	(1,094,221)

 

The fair value of the Retail Bond 2 interest bearing liability is calculated based on the mid-market price of £101.35 on 30 September 2021.

 

The fair value of the Retail Bond 2 interest bearing liability is calculated based on the mid-market price of £102.88 on 30 September 2021.

 

Loans and advances are classified as fair value through other comprehensive income and any changes to fair value are calculated based on a fair value model and recognised through the Statement of Other Comprehensive Income. Interest bearing liabilities are classified at amortised cost and the fair value in the table above is for disclosure purposes only.

 

 

 

 

 

 

 

 

 

(c)            Fair value hierarchy

 

The​ ​level​ ​in​ ​the​ ​fair​ ​value​ ​hierarchy​ ​within​ ​which​ ​the​ ​financial​ ​asset​ ​or​ ​financial​ ​liability​ ​is​ ​categorised​ ​is determined​ ​on​ ​the​ ​basis​ ​of​ ​the​ ​lowest​ ​level​ ​input​ ​that​ ​is​ ​significant​ ​to​ ​the​ ​fair​ ​value​ ​measurement. Financial​ ​assets​ ​and​ ​liabilities​ ​are​ ​classified​ ​in​ ​their​ ​entirety​ ​into​ ​only​ ​one​ ​of​ ​the​ ​three​ ​levels. ​ ​The​ ​fair​ ​value hierarchy​ ​has​ ​the​ ​following​ ​levels:  

 

Level​ ​1​ ​-​ ​quoted​ ​prices​ ​(unadjusted)​ ​in​ ​active​ ​markets​ ​for​ ​identical​ ​assets​ ​or​ ​liabilities;  

Level​ ​2​ ​-​ ​inputs​ ​other​ ​than​ ​quoted​ ​prices​ ​included​ ​within​ ​Level​ ​1​ ​that​ ​are​ ​observable​ ​for​ ​the​ ​asset​ ​or liability, ​ ​either​ ​directly​ ​(i.e.​ ​​prices)​ ​or​ ​indirectly​ ​(i.e.​ ​derived​ ​from​ ​prices);  

Level​ ​3​ ​-​ ​inputs​ ​for​ ​the​ ​asset​ ​or​ ​liability​ ​that​ ​are​ ​not​ ​based​ ​on​ ​observable​ ​market​ ​data​ ​(unobservable inputs).    

The​ ​objective​ ​of​ ​valuation​ ​techniques​ ​is​ ​to​ ​arrive​ ​at​ ​a​ ​fair​ ​value​ ​measurement​ ​that​ ​reflects​ ​the​ ​price​ ​that would​ ​be​ ​received​ ​to​ ​sell​ ​the​ ​asset​ ​or​ ​paid​ ​to​ ​transfer​ ​the​ ​liability​ ​in​ ​an​ ​orderly​ ​transaction​ ​between​ ​market participants​ ​at​ ​the​ ​measurement​ ​date.

 

Financial instruments	As at 30 September 2021                                           £'000	Level 1     £'000	Level 2     £'000	Level 3     £'000
Interest rate swap * (Unaudited)	505	-	505	-
Loans and advances* (Unaudited)	1,109,554	-	-	1,109,554

 *Measured at fair value

 

 For all other financial instruments, the fair value is equal to the carrying value and has not been included in the

 table above.

 

Financial instruments	As at 31 March 2021     £'000	Level 1     £'000	Level 2     £'000	Level 3     £'000
Interest rate swap* (Audited)	(6,748)	-	(6,748)	-
Loans and advances* (Audited)	1,056,900	-	-	1,056,900

 *Measured at fair value 

 

Level 2 instruments include interest rate swaps which are either 2 or 5 years in length. These lengths are aligned with the fixed interest period of the loan book. Interest rate swaps are measured against the underlying benchmark index (3M LIBOR or SONIA)

 

Level 3 instruments include loans and advances. The valuation of the asset is not based on observable market data (unobservable inputs). Valuation techniques include net present value and discounted cash flow methods. The assumptions used in such models include benchmark interest rates and borrower risk profile. The objective of the valuation techniques is to determine a fair value that reflects the price of the financial instrument that would have been used by two counterparties in an arm's length transaction.

 

 

Financial instrument	Valuation techniques used	Significant unobservable inputs	Range
Loans and advances	Discounted cash flow valuation	Prepayment Rate Probability of default Discount Rate	2% - 14% 16% - 84% 1.6% - 11.7%

 

 

 

 

(d)           Fair value reserve

 

Six months to 30 September 2021	Financial assets £'000	Deferred tax £'000	Fair value reserve £'000
Balance as at 1 April 2021 (Audited)	30,499	(5,794)	24,705
Movement in fair value of loans and advances at fair value through other comprehensive income	7,022	(1,334)	5,688
Cash flow hedge adjustment through other comprehensive income	6,890	(1,309)	5,581
Fair value reserve at 30 September 2021 (Unaudited)	44,411	(8,437)	35,974

 

Information about sensitivity to change in significant unobservable inputs

The significant unobservable inputs used in the fair value measurement of the reporting entity's loans and advances are prepayment rates, probability of default and discount rates. Significant increase / (decrease) in any of those inputs in isolation would result in a lower / (higher) fair value measurement. A change in the assumption of these inputs will not correlate to a change in the other inputs.

 

Sensitivity Analysis

 

Impact of changes in unobservable inputs	Gain or loss at 30 September 2021 £'000	+5bps £'000	-5bps £'000
Prepayment rates (Unaudited)	40,523	40,047	40,998
Discount rate (Unaudited)	40,523	39,176	41,869

 

21. Derivatives held for risk management and hedge accounting

 

	As at 30 September 2020		As at 31 March 2021
	Unaudited		Audited
Instrument type	Asset £'000	Liability £'000	Asset £'000	Liability £'000
Interest rate swap	505	-	-	(6,748)

 

All derivatives are held at fair value for the purpose of managing risk exposures associated with the BTL mortgage portfolio. The net notional principal amount of the outstanding interest rate swap contracts at 30 September 2021 was £836.6m (31 March 2021: £717.9m).

 

The Group reported a net gain of £7.2m on its derivatives positions during the period (6 months ended 30 September 2020: £4.7m loss).

 

£5.7m of fair value gains are deferred in the cash flow hedge reserve and £1.2m of fair value losses deferred in prior periods was recycled from the hedge reserve to profit and loss during the period.

 

£1.5m (6 months ended 30 September 2020: £1.8m) of the Group's accumulated derivative losses were settled during the period.

 

22. Share capital

 

	As at 30 September 2021 number	As at 31 March 2021 number
	(Unaudited)	(Audited)
Issued and fully paid up
Ordinary shares of £0.0005 each	137,698,910	-
Ordinary Shares of £0.000001 each	-	21,168,175
"A" Ordinary shares of £0.000001 each	-	687,556
"A2" Ordinary shares of £0.000001 each	-	880,000
"A3" Ordinary shares of £0.000001 each	-	600,000
Series B1 Preferred shares of £0.000001 each	-	1,615,881
Series B2 Preferred shares of £0.000001 each	-	2,308,402
Series C Preferred shares of £0.000001 each	-	1,711,181
	137,698,910	28,971,195

 

	As at 30 September 2021  £	As at 31 March 2021 £
Issued and fully paid up	(Unaudited)	(Audited)
Ordinary Shares of £0.0005 each	68,849	-
Ordinary Shares of £0.000001 each	-	21
"A" Ordinary shares of £0.000001 each	-	1
"A2" Ordinary shares of £0.000001 each	-	1
"A3" Ordinary shares of £0.000001 each	-	1
Series B1 Preferred shares of £0.000001 each	-	2
Series B2 Preferred shares of £0.000001 each	-	2
Series C Preferred shares of £0.000001	-	2
	68,849	30

 

Share premium	As at 30 September 2021 £'000	As at 31 March 2020 £'000
	(Unaudited)	(Audited)
Closing balance	55,929	17,540

 

On 14 July 2021, the Group completed a listing onto the London Stock Exchange and all existing share classes were converted to ordinary shares.

 

The balance on the share capital account represents the aggregate nominal value of all ordinary and preferred shares in issue. There is no maximum number of shares authorised by the articles of association.

 

The balance on the share premium account represents the amounts received in excess of the nominal value of the ordinary and preferred shares. All ordinary and preferred shares have a nominal value of £0.0005.

 

Reconciliation of movements during the period

 

	Ord Shares	Ord "A" Shares	Ord "A2" Shares	Ord "A3" Shares
As at 1 April 2021	21,168,175	687,556	880,000	600,000
1999:1 bonus issue, funded by share premium	42,315,181,825	1,374,424,444	1,759,120,000	1,199,400,000
Share consolidation 2000:1, nominal value of shares increased to £0.0002	(42,315,181,825)	(1,374,424,444)	(1,759,120,000)	(1,199,400,000)
A Ordinary conversion	7,803,020	(687,556)	(880,000)	(600,000)
4:1 share split, nominal value reduced to £0.0005	86,913,585	-	-	-
Issue of shares at IPO	21,531,722	-	-	-
Issue of shares in employee share scheme	282,408	-	-	-
As at 30 September 2021	137,698,910	-	-	-

 

	B1 Preferred Shares	B2 Preferred Shares	C Preferred Shares
As at 1 April 2021	1,615,881	2,308,402	1,711,181
1999:1 bonus issue, funded by share premium	3,230,146,119	4,614,495,598	3,420,650,819
Share consolidation 2000:1, nominal value of shares increased to £0.002	(3,230,146,119)	(4,614,495,598)	(3,420,650,819)
A Ordinary conversion	(1,615,881)	(2,308,402)	(1,711,181)
4:1 share split, nominal value reduced to £0.0005	-	-	-
Issue of shares at IPO	-	-	-
Issue of shares in employee share scheme	-	-	-
As at 30 September 2021	-	-	-

 

On 21 June 2021, the Group completed a bonus share issue to existing shareholders across all share classes, with 1999 bonus shares awarded for every 1 share held. The bonus issue was funded through the Group's share premium and increased the value of the Group's shares to £57,942.39. Immediately following this bonus share award, a share consolidation was completed, reducing every 2000 shares held by existing shareholders across all share classes to 1 share. This share consolidation increased the nominal value of all share classes to £0.002 from £0.000001.

 

On 14 July 2021, the Group successfully admitted to trading on the AIM market of the London Stock Exchange and converted all share classes to ordinary shares and performed a share split converting every share held into 4 shares and reducing the nominal value of the shares to £0.0005 from £0.002. An additional 21,531,722 of ordinary shares were issued to new shareholders.

 

23. Earnings per share

 

(a)

 

Basic earnings per share	As at 30 September 2021 (Unaudited)	As at 30 September 2020 (Unaudited)
	Pence/share	Pence/share
Total basic earnings per share attributable to the ordinary equity holders of the Group	6.60	(0.44)

 

(b)

 

Diluted earnings per share	As at 30 September 2021 (Unaudited)	As at 30 September 2020 (Unaudited)
	Pence/share	Pence/share
Total diluted earnings per share attributable to the ordinary equity holders of the Group	6.35	(0.43)

 

(c) Number of shares used as denominator

 

	As at 30 September 2021 (Unaudited)	As at 30 September 2020 (Unaudited)
Number of ordinary shares used as the denominator in calculating basic earnings per share	125,182,487	28,371,195
Adjustments for calculations of diluted earnings per share: Options	4,883,113	800,427
Number of ordinary shares and potential ordinary shares used as denominator in calculating diluted earnings per share	130,065,600	29,171,622

 

The profit after tax reported in the consolidated statement of profit and loss, £8.26m (30 September 2020: £(0.13)m), is the numerator (earnings) used in calculating earnings per share.

 

24. Reserves

 

Retained earnings represent all net gains and losses of the Group less prior period adjustments and the employee share reserve represents the fair value of share options issued to employees but not exercised.

 

The fair value reserve represents movements in the fair value of the financial assets classified as FVTOCI. The movements in fair value are a function of changes in credit spreads, interest rate curves and size of the loan portfolio. A significant change in any of these variables will have a consequential effect on fair value movements and therefore the Group's reported reserves.

 

The cash flow hedge reserve is the deferred portion of the change in the fair value of the hedging instrument that is deemed to be effective.

 

25. Related party transactions

 

Key management personnel compensation

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. Key management is defined as the directors of LendInvest plc.

 

	6 month period ended 30 September 2021 £'000	6 month period ended 30 September 2020 £'000
	(Unaudited)	(Unaudited)
Salary & bonus	586.2	406.2
Short-term non-monetary benefits	2.2	2.2
Defined contribution pension cost	12.4	7.3
Share based payments	32.5	-
Total	633.3	415.7

 

 

There were no other related party transactions during the period to 30 September 2021 that would materially affect the position or performance of the Group. Details of the transactions for the year ended 31 March 2021 can be found in the 2021 Annual Report.

 

26. Events after reporting date

 

There were no events to report after the period end date.

 

Glossary

 

Alternative Performance Measures

In the reporting of financial information, the Directors have adopted various alternative performance measures (APMs). APMs should be considered in addition to IFRS measurements. The Directors believe that these APMs assist in providing useful information on the underlying performance of the Group, enhance the comparability of information between reporting periods, and are used internally by the Directors to measure the Group's performance, not necessarily comparable to other entities' APMs.

Platform AuM

The Group defines Platform AuM as the sum of (i) the total amount of outstanding loans and advances (including accrued interest, and gross of impairment provisions and fair value adjustments), as reported on an IFRS basis in the notes to the accounts in the Group's Financial Statements, and (ii) off-balance sheet assets, which represents the total amount of outstanding loans and advances (including accrued interest) that the Group originates but does not hold on its balance sheet, comprising those loans that are held by its off-balance sheet entities. Off-Balance Sheet Assets are not presented net of any impairment provisions relating thereto.

The Directors view Platform AuM as a useful measure because it is used to analyse and evaluate the volume of revenue-generating assets of the platform on an aggregate basis and is therefore helpful for understanding the performance of the business.

The following table provides a reconciliation from the Group's reported gross loans and advances.

Unaudited	6 month period ended 30 September 2021 (£m)	6 month period ended 30 September 2020 (£m)
Gross Loans and advances	1,078.3	818.4
Off-Balance Sheet Assets	747.6	567.8
Platform AuM	1,825.9	1,386.2

FuM

The Group defines FuM as the aggregate sum available to the Group under each of its funding lines. The Group's FuM are used to originate revenue generating AuM. The Directors view the difference between the Group's FuM and Platform AuM as the headroom for future growth.

 

 

Platform Revenue

The Group defines Platform Revenue as revenue attributable to both on-balance sheet entities and off-balance sheet entities, calculated as the sum of (i) the Group's reported revenue, as presented on an IFRS basis on the Group's income statement, and (ii) revenue attributable to off-balance sheet entities, less (iii) gross profit attributable to off-balance sheet entities, as adjusted for other adjusting entries. The following table provides a reconciliation from the Group's reported gross loans and advances.

Unaudited	6 month period ended 30 September 2021 (£m)	6 month period ended 30 September 2020 (£m)
Revenue	50.8	39.1
Revenue attributable to off-balance sheet entities	38.4	30.1
Less: gross profit attributable to off-balance sheet entities	(16.8)	(12.8)
Platform Revenue	72.4	56.4

 

Unaudited	6 month period ended 30 September 2021 (£m)	6 month period ended 30 September 2020 (£m)
Origination and other loan fees recognised under IFRS15	8.3	4.4
Revenue from asset management, fund and servicing fees	9.2	8.9
Less: costs of sales from asset management and fund fees	(0.7)	(0.5)
Gross profit attributable to off-balance sheet entities	16.8	12.8

 

 

Adjusted EBITDA

The Group defines Adjusted EBITDA as Group profit or loss before finance income, finance expenses, income tax, depreciation and amortisation, and exceptional items. The Directors view Adjusted EBITDA as a useful measure because it is used to analyse the Group's operating profitability, and shows the results of normal core operations exclusive of non-cash changes that the Group considers to be non-recurring and not part of the Group's core day-to-day business. The following table provides a reconciliation from the Group's reported profit for the period to Adjusted EBITDA.

Unaudited	6 month period ended 30 September 2021 (£m)	6 month period ended 30 September 2020 (£m)
Profit/(loss) after taxation	8.3	(0.2)
Finance expense	0.3	2.1
Finance income	(1.1)	-
Income Tax	1.9	-
Depreciation and amortisation	1.2	1.2
Depreciation of right of use asset	0.5	0.5
Interest expense - lease liabilities	0.3	0.3
Share based payment charge	0.4	0.1
Exceptional items	1.6	0.8
Adjusted EBITDA	13.4	4.8

 

Diluted earnings per share

The Group defines diluted earnings per share as earnings per share adjusted to take into account the after income tax effect of interest and financing costs associated with dilutive potential ordinary shares and by the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.