Half-year Report

9 December 2024

LendInvest plc

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024

Driving Strong Growth and Enhanced Efficiency in an Improved Market

LendInvest plc (AIM: LINV; the "Company" or the "Group"), the UK's leading platform for mortgages, announces its unaudited results for the six months ended 30 September 2024.

CEO's Statement (Rod Lockhart)

"As we pass the halfway mark of FY25, our results reflect good progress on our key strategic objectives: growing lending, reducing costs, and bringing down debt. These actions underpin our shift toward a capital-light, asset management-oriented model, which allows us to drive stable, recurring earnings.

We have made strides in lending, with volumes up by 30% to £539.1m, whilst maintaining underwriting discipline. Operating costs have been reduced through targeted efficiencies, including a shift of roles to Glasgow, which has opened up access to a broader talent pool. Additionally, our efforts to reduce the costs of our London office footprint will yield ongoing benefits in the coming periods. We remain committed to improving the Company's financial strength and debt reduced 29% year-on-year to £601.7m.

The strong performance of our Net Fee Income, which has increased by 71% from £6.6m to £11.3m, is a key indicator of our progress toward more stable and simplified earnings and is the major contribution towards returning to profitability from an EBITDA perspective over the period. This growth reflects our focus on delivering strong returns for our investors through a less volatile, fee-driven revenue model. As we continue to grow our third-party capital, we expect to increase this figure further, positioning LendInvest as a scalable and resilient asset manager.

While recent performance - including achieving profitability in September - has been encouraging, ongoing interest rate volatility, triggered by both macro-economic and geopolitical uncertainty, could present headwinds in H2. However, we are reassured by supportive UK Government measures aimed at catalysing house building, improving energy efficiency and professionalising the Buy-to-Let sector. As such, we remain cautiously optimistic about achieving run-rate profitability during the rest of the year.

Overall, I am pleased with the significant progress we've made so far this year. Our focus will remain on executing our strategy with discipline, managing our growth carefully, and building a business that delivers sustainable value for our investors."

Summary Financials

1 Definitions are consistent with the FY 2024 Annual Report

2 New lending includes all new lending originated for 3rd Party Funding and Principal Investments

Key Highlights

1.    Continuing to Attract High-Quality Capital

Building on our FY strategy to secure sustainable growth by attracting third-party capital, we have continued to strengthen our funding base:

●     Growth in Funds Under Management (FuM): Increased by 12% year-on-year to £4.67bn, driven by successful capital-raising projects.

●     Expanded Partnership with JP Morgan: The Separate Account managed on behalf of JP Morgan was upsized by £500m to £1.5bn and extended for three years, bolstering growth for our Buy-to-Let (BTL) and owner-occupied products.

●     Renewed £300 Million Financing Syndicate with BNP Paribas, Barclays, and HSBC: Extended for three years on improved terms to support growth in the Mortgages division, focusing on bridge financing and refurbishment products.

●     Assets Under Management (AuM): Grew by 9% year-on-year to £2.95bn, as our focus on third-party managed assets drove a 71% rise in Net Fee Income, reaching £11.3m.

2.    Lending Growth and Operational Efficiency

In line with our FY commitment to expand lending and improve operational efficiency, we have achieved solid growth in new lending and streamlined processes:

●     Increase in New Lending: Lending volumes rose 30% year-on-year to £539.1m, demonstrating improved demand for our lending products.

●     Strong Growth in Mortgages Division: Mortgages Division lending grew by 67% year-on-year, supported by strong enquiry volumes and an active pipeline - validating the improvements made to processing efficiency and our service proposition.

●     Technological Efficiency: Efficiency initiatives this period have improved productivity and cut mortgage application-to-offer times by 20% to an average of 11 days - 39% to 72% faster than the industry average.

3.    Fortifying the Balance Sheet and Reducing Debt

Following our FY objective to strengthen our balance sheet and manage costs, we have delivered:

●     Debt Reduction: Debt fell by 29% year-on-year to £601.7m, underscoring our commitment to delivering more stable and simplified earnings     .

●     Credit Risk Mitigation: Balance sheet assets reduced to 19% (2023: 31%) as a proportion of total AuM, contributing to a 69% decrease in impairments year-on-year, now at £2.2m.

●     Improved Liquidity: Cash and equivalents rose from FY to £71.6m (31 March 2024: £55.7m), strengthening our financial position.

●     Net Assets: Stable, marginally reducing       to £56.4m from £56.5m at 31 March 2024.

4.    Path to Profitability

Reflecting the FY goal of returning to profitability, we have made substantial progress:

●     Reduced Loss Before Tax: First-half loss before tax narrowed to £1.7m, an 89% improvement year-on-year.

●     Increased Net Operating Income: Net operating income rose by 39% year-on-year to £17.4m, supported by record lending volumes for our mortgages division and increased fee generation.

●     Administrative Expense Reduction: Administrative expenses fell 20% year-on-year to £16.9m, with a 22% reduction in staff costs following a 16% decrease in headcount.

●     Positive Adjusted EBITDA: Adjusted EBITDA improved by 103% year-on-year to a gain of £0.3m, further demonstrating strong progress toward a return to profitability.

●     Run-Rate Profitability achieved in September from a PAT, PBT, and EBITDA perspective. Anticipated savings contributing to a run-rate expense target in line with FY23 levels by FY25.

Analysts and investors presentation: 9.00am on 9th December 2024

A webcast for analysts and investors will be hosted by Rod Lockhart, Chief Executive Officer; Hugo Davies, Chief Capital Officer and MD Mortgages Division; and Stephen Shipley, Chief Financial Officer at 9.00am today, 9th December 2024. A playback facility will also be available in due course.

To access the webcast, please register here: https://sparklive.lseg.com/LENDINVEST/events/e4d7fe8f-dbb0-4225-9bb2-469861130263/lendinvest-plc-interim-results

Enquiries:

LendInvest

Rod Lockhart, Chief Executive Officer  

Hugo Davies, Chief Capital Officer & MD of LendInvest Mortgages

Stephen Shipley, Chief Financial Officer

Chris Semple, Corporate Communications                                                                                  

[email protected]

+44 (0)7575582855

Panmure Liberum (NOMAD and Broker) 

Atholl Tweedie / David Watkins

+44 (0)20 7886 2500

Forward-looking statements

Certain statements in this announcement 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", "aim", "target", "projected", "plan", "goal", "achieve" and words of similar meaning or in each case, their negative, or other variations or comparable terminology. Forward-looking statements are based on current expectations and assumptions and are subject to a number of known and unknown risks, uncertainties and other important factors that could cause results or events to differ material from what is expressed or implied by those statements. Many factors may cause actual results, performance or achievements of LendInvest to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results, performance or achievements of LendInvest to differ materially from the expectations of LendInvest, include, among other things, general business and economic conditions globally, industry trends, competition, changes in government and changes in regulation and policy, changes in its business strategy, political and economic uncertainty and other factors. As such, undue reliance should not be placed on forward-looking statements. Any forward-looking statement is based on information available to LendInvest as of the date of the statement. All written or oral forward-looking statements attributable to LendInvest are qualified by this caution. Other than in accordance with legal and regulatory obligations, LendInvest undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Nothing in this announcement should be regarded as a profit forecast.

Market Backdrop

The housing market continues to face challenges and opportunities, but its performance supports our view that the "green shoots" mentioned in our FY24 results are starting to flourish. Much of this optimism is driven by shifting expectations around interest rates, which are helping restore confidence in our key segments. However, this optimism is tempered by caution due to recent fiscal policy changes and geopolitical uncertainty, such as potential conflicts in oil-rich regions and increased tariffs on large manufacturing hubs.

For the UK economy, 2024 has been a mixed year. Inflation cooled significantly, dropping to 1.7% in September - below the Bank of England's 2% target - offering relief to consumers and businesses after a period of rising costs and reduced spending. As domestic inflationary pressures ease, financial markets are now anticipating interest rate cuts through to 2026. Despite some market volatility, progress on inflation allowed the Bank of England to reduce the base rate from 5.25% to 5% in August, followed by a further cut to 4.75% in November, with further decreases expected.

As rates continue to fall, asset prices are stabilising, and activity is picking up across the mortgage finance landscape. Our lending products, including bridging, development, BTL and owner-occupied mortgages, are closely tied to market interest rates. In 2023/24, this dependency created challenges around balancing affordability for borrowers with margin protection. Now, in 2024/25, following improvements to our funding model and technology platform, we are better positioned to quickly adapt to market shifts and provide a stable service proposition, delivering stronger lending volumes, and improved margins.

That said, affordability remains a significant barrier, particularly in a product such as residential mortgages and it is therefore disappointing that the easing cycle through 2025 will be shallower than once thought and not unlock the pent-up supply of potential homeowners that we believe exists. 

Looking ahead, the Bank of England is expected to continue lowering the base rate by 0.25% per quarter, potentially bringing it below 4% by early 2026, which is 0.50% higher than what was priced in by the market in September.

Although this projection is slightly higher than our previous forecast, the mortgage market remains resilient. Mortgage approvals have nearly returned to pre-pandemic levels, with remortgage approvals up 52% year-on-year as of September 2024. Additionally, two-year fixed mortgage rates have decreased from 5.15% in late September 2023 to 4.9% a year later, while house prices have risen by 2.2% over the same period, supported by easing inflation and stable household budgets.

Our robust technology and service offerings, combined with our flexible funding model, ensure that we can effectively compete and grow in this market without relying solely on pricing - a key advantage over many challenger banks.

Achievements
Mortgages Division

The Mortgages Division provides innovative mortgage solutions through our proprietary technology platform, passing the benefits of finely tuned front- and back-end processes to brokers and their customers. Our offerings include a comprehensive suite of products, from Buy-to-Let and Residential to short-term financing options.

●     Rebound in BTL: New mortgage lending for the Mortgages division surged by 67% year-on-year, reaching £478m (2023: £287m). Notably, the Buy to Let segment has shown consistent growth, averaging £59m in new loan completions per month and £157m in monthly enquiries (+122% year-on-year), evidencing the strength of our mortgage offering in a highly competitive market. Our robust pipeline demonstrates our ability to capture new opportunities and respond effectively to market demand.

●     Strong Capital Raising Activity: Post period-end we      successfully securitised a £285m portfolio of prime residential and Buy-to-Let mortgages, achieving the tightest pricing in the sector in H2, again, for a 3 year securitisation of Buy-to-Let or non-conforming mortgages in the UK market. This included our first securitisation of owner-occupied loans since launching into this growing market in 2023.

●     Extended our JP Morgan Funding Partnership: In September, we upsized the Separate Account with JP Morgan by £500m to £1.5bn, to support growth in the mortgages division.

●     Extended and Improved Revolving Finance Agreement: Successfully extended financing arrangement with BNP Paribas, Barclays & HSBC on improved terms, in addition to improving the capital structure and the return profile.

●     New Products and Solutions: Launched new Product Transfer functionality, providing brokers with a seamless journey to transfer reverting      mortgages onto new offers, Bridge-to-     Let, & Expat products.

●     Enhanced Short Term Mortgage Proposition: We have enhanced Automated Valuation Models (AVM) functionality, delivered dual legal representation and iterated other operational processes, which has led to strong short-term mortgage      application levels - up 15% March '24 - September '24, compared to October '23 to March '24.

●     Customer Satisfaction & Market Reputation: Customer Experience remains central to LendInvest, with positive survey feedback from customers and intermediaries regarding our people, processes, and technology. Our progress in this area is reflected in a strong Trustpilot rating of 4.6 (as of 30th September 2024).

Capital Division

LendInvest Capital offers a range of investment products, providing diverse opportunities for exposure to the UK property finance market. Our products, tailored for both institutional and individual investors, span real estate debt funds, secured bonds, and co-investment opportunities, enabling access to various property-backed investment vehicles.

●     Launch of Secured Credit Fund III: The recent launch of Fund III expands our product offerings, catering to market demand for bridging loans and targeting returns between 7-10% per annum.

●     Third-Party Capital and Syndication: We continue to build strong relationships with institutional investors and syndication partners, increasing lending capacity while adhering to a capital-light strategy. Our co-investment and syndication models allow institutions to invest alongside others, supporting efficient capital growth and a scalable approach to the more bespoke nature of the Capital division's addressable markets.

●     Resilience in Uncertain Markets: Despite economic volatility, our Capital Division has sustained robust pipeline activity and increased enquiries. As market dynamics stabilise, we are positioned to capture growth opportunities and deliver property-backed investment solutions aligned with changing market needs. Our development loan pipeline has increased by 50% from Q1 to Q2.

Group

Technology and Platform Enhancements: We have continued to evolve and enhance our market-leading, proprietary technology platform, even while managing development costs. This platform is a cornerstone of our service offering, enabling product expansion, improving customer engagement and NPS, and driving operational efficiencies across the business. During the period, we added £1.2m to Intangible Fixed Assets (2023: £2.2m).

Operational Efficiency Improvement: We continue to streamline processes to improve loan processing speed and reduce costs. Key initiatives this period include relocating staff to our new Glasgow office, enhancing operational flexibility and supporting a scalable, resilient business model. Significant productivity gains have been achieved, with operational changes and platform enhancements delivering over 50% efficiency improvement in our BTL lending team and 25% in our short-term mortgages team. For example, our technology platform now enables a single underwriter to support more than 100 new BTL applications per month - up from 70 previously. This focus on operational leverage is critical to driving growth while lowering origination costs.

Growth in Assets under Management (AuM) While Minimising Credit Risk: Our strategic approach to managing Assets under Management (AuM) continues to deliver strong results. As of 30 September 2024, AuM stood at £2.95bn, reflecting a £161.8m (+5.5%) increase from the end of FY24. This growth is a direct result of our focus on a "capital-light" business model, which minimises the capital deployed on the balance sheet while maximising revenue through third-party managed assets. This approach ensures the business remains nimble and well-positioned to capture new opportunities while effectively managing credit risk.

Outlook

Our recent performance has been encouraging with the Company achieving profitability in September. Looking ahead, we remain cautiously optimistic about continuing to deliver profitability during the rest of the year, whilst remaining mindful that ongoing interest rate volatility, triggered by both macro-economic and geopolitical uncertainty, could present headwinds in H2. However, we are reassured by supportive UK Government measures aimed at catalysing house building, improving energy efficiency and professionalising the Buy-to-Let sector.

Strategic Priorities

LendInvest remains committed to executing its growth strategy, with a focused approach to scaling lending, securing new third party capital, and improving operational efficiency. Our key priorities for the second half of FY24 and beyond include:

Expanding Lending and Enhancing Product Reach

●     Specialist Residential and Buy-to-Let (BTL) Mortgages: We will relaunch a streamlined residential mortgage proposition in H2, made possible by our highly scalable lending infrastructure. This refined offering is designed to capture anticipated market opportunities driven by expected interest rate reductions, boosting broker engagement and growing our market share. To support this, we will strengthen partnerships with brokers and mortgage clubs, introduce roaming underwriters, raise our brand profile through industry engagement, and maintain an agile underwriting process. Following a strong H1 in Buy-to-Let, we remain committed to iterating our processes and products to respond swiftly to market changes, sustaining momentum and protecting margins through disciplined execution of our funding strategy.

●     Product Expansions: While we continue to maximise the addressable market in our core segments, we are exploring ancillary, complimentary offerings, including foreign national BTL mortgages and second-charge lending for residential mortgages, which align well with our existing product mix. Over the next 12 months, we will focus on implementing a seamless bridge-to-let solution, increasing Product Transfer (PT) conversions in BTL and owner-occupied markets, and providing targeted support to SME house builders.

Securing Capital and Funding

●     Raising Capital for Growth: To drive lending capacity, we are actively raising capital from around the world for our third fund, launched in October ("LendInvest Secured Credit Fund III"). We also have a strong pipeline of other capital raising projects, representing £1bn in notional deal value, with the majority focusing on third party funding solutions. Not only does this expand our lending capacity in a controlled way, but it will also support the growth of Net Fee Income. These capital initiatives are vital to supporting our structured approach to growth.

Driving Profitability, Managing Costs and Operational Leverage

●     Path to Profitability: We achieved run-rate profitability in September, backed by our disciplined focus on lending expansion and expense management. Improved operational efficiency, supported by targeted technology investments, will continue to drive this goal. As lending volumes grow, additional fee-based revenue and our strategic shift towards third-party asset management are expected to strengthen our income stability. This transition aligns with our capital-light model and enhances resilience against varying market conditions. While we are cautiously optimistic about sustaining this performance through the rest of the year, market volatility, interest rate fluctuations, and broader economic factors may influence our ability to maintain this trend.

●     Cost Optimisation and Structural Efficiencies: Following the recent reduction in headcount to approximately 200 employees, we will continue to drive down administrative expenses. This includes relocating roles to Glasgow, where there is a deep talent pool and costs are more favourable, and reducing our London office footprint to further reduce overhead, with anticipated savings contributing to a run-rate expense target in line with FY23 levels by FY25. These efficiency measures are expected to reduce payroll by approximately 20%, with restructuring costs of £1.2m already accounted for in H2 FY24.

●      Enhanced Technological Efficiency and AI Integration: We will leverage our proprietary platform to streamline loan origination further, allowing for 'straight-through' processing for certain loan subsets with minimal manual intervention. Further planned AI integrations in underwriting and operations will improve cost-to-originate metrics and enable underwriters to focus on complex decision-making.

Financial Statements

Condensed Consolidated Income Statement

The summary consolidated statement of profit and loss account for the 6 months' period ended 30 September 2024 is shown below. The prior year 6 months ended 30 September 2023 has been restated as described in note 1.4.

Net Interest Income: Net Interest Income has increased 5% to £6m (2023: £5.7m), reflecting the ongoing implementation of our capital-light strategy. This increase is primarily attributed to both the decrease in on-balance sheet Assets under Management (AuM), which decreased by 32% year-on-year and improved margins. Consequently, only 19% (2023: 31%) of total Platform AuM remains on the balance sheet. This strategic shift toward a more capital-efficient model is designed to reduce risk exposure and enhance scalability, aligning with our long-term goals of maximising revenue generation from third-party managed assets while minimising capital deployment.

Net Fee Income: In contrast, Net Fee Income has experienced a significant 71% increase year-on-year. This growth reflects the successful execution of our strategy to shift focus toward third-party managed assets, which has not only enhanced our fee-based revenue streams but also strengthened the overall financial performance of the business. This strategic move towards a more capital-light, fee-driven model is enabling us to generate higher margins while reducing our risk profile.

Impairment losses on financial assets: The impairment charge for the period reduced significantly to £2.2m (2023: £7.1m), returning to more normalised levels. The prior year's higher impairment charge was largely driven by a small number of larger, more complex loans within the Capital Division, specifically in the Structured Bridging and Development Finance sectors, which were disproportionately impacted by the challenging macroeconomic conditions. Expected credit losses for our Mortgage Division have remained low, reflecting the strong credit quality of our mortgage portfolio and the continued resilience of the underlying property market.

Administrative Expenses: Administrative expenses were reduced by 20%, falling to £16.9m (2023: £21.1m), reflecting our ongoing focus on operational efficiency. This reduction demonstrates our disciplined cost management approach and commitment to maintaining a lean operational structure.

●     Wages & Salaries: Employee-related costs were reduced by 23%, totalling £7.9m (2023: £10.2m). This decrease was driven by a 16% reduction in headcount year-on-year, which aligns our strategy to optimise workforce efficiency. Additionally, the prior period included £0.3m in redundancy costs.

Adjusted EBITDA

The reconciliation between Loss before taxation and Adjusted EBITDA for the 6 months' period ended 30 September 2024 is show below.

Segmental analysis

Our Mortgages Division provides mortgages to both professional BTL landlords and Residential homeowners as well as a range of Short-term Mortgages. The Capital Division provides larger, more structured finance primarily to property developers and large property companies. An analysis of the first half result based on these segments is presented below. 

Funds under Management (FuM) reconciliation to and Platform Assets under Management (AuM)

The reconciliation between Funds under Management (FuM) and Platform Assets under Management (AuM) at 30 September 2024 is presented below.

Balance Sheet

Summary of assets, liabilities, and equity for the period.

Net Assets: Stable, marginally reducing from £56.5m on 31 March 2024 to £56.4m on 30 September 2024.

Loans & Advances: Loans and Advances rose by 17% to £556.3m as of 30 September 2024, up from £477m on 31 March 2024. This growth was primarily driven by a robust 30% increase in new lending year-on-year, reflecting our strategic efforts to strengthen the loan book.

Cash Flow Statement

As at 30 September 2024, the business held cash and cash equivalents of £71.6m, a 18.6% decrease during the 12 month period.

Cash and cash equivalents increased 29% to £71.6m (31 March 2024: £55.7m). £61.9m of the balance is restricted for loan funding purposes (31 March 2024: £38.5m) with unrestricted cash decreasing to £9.2m (31 March 2024: £16.8m).

Going Concern

The Group's business activities together with the factors likely to affect its future development and position are set out in the strategic report. The Directors also considered the impact of the funding lines maturing in the next 12 months from the date of approval of the financial statements.

In line with the normal operations of the Group, there are a number of facilities which mature during this period which are at an advanced stage of negotiation.

The Directors believe that the Group will be able to refinance these facilities either with the existing funding provider or with new third parties to continue its growth trajectory. If these facilities were not to be refinanced, the Group would be able to sell individual loans or portfolio of loans to facilitate the repayment of the outstanding amounts. This strategy is in line with the existing approach of the Group to both hold assets on its balance sheet and to sell to third parties.

The Directors do not consider that this creates a material uncertainty in the going concern assessment of the Group directors have a reasonable expectation that the Group will have adequate resources to continue to operate for a period of at least 12 months from the signing of these accounts and therefore it is on this basis that the directors have continued to prepare the accounts on a going concern basis. More information on the Directors' assessment of going concern is set out in the Directors' report.

INDEPENDENT REVIEW REPORT TO LENDINVEST PLC

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2024 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the London Stock Exchange AIM Rules for Companies.

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2024  which comprises the Condensed consolidated interim statement of profit and loss, Condensed consolidated interim statement of other comprehensive income, Condensed consolidated interim statement of financial position, Condensed consolidated interim statement of changes in equity, condensed consolidated interim statements of cash flows and notes to the condensed consolidated interim financial statements.

Basis for conclusion

We conducted our review in accordance with Revised International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410 (Revised)"). 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.

As disclosed in note 1.2, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410 (Revised), however future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the London Stock Exchange AIM Rules for Companies 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.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

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 AIM Rules for Companies 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

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

CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT AND LOSS

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION                                                                                                     

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (continued)

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 6th December 2024. Signed on behalf of the Board of Directors by:

Rod Lockhart

Director

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (continued)

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (continued)

¹The 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 2024. This is due to the charge to the statement of profit and loss including a credit of £0.2m (2023: £0.0m) in respect of cash amounts recovered in the period on loans that have previously been written off.

²Cash and cash equivalents include restricted cash of £3.1m (30 September 2023 £3.5m) received from Platform Investors and these are held on account for the benefit of investors in the Self-Select Platform, prior to then either investing in loans or withdrawing their capital.  Operationally, the company does not treat the Trustees' balances as available funds and these are included within the payables balance.

Interest received was £23.9m during the six months ended 30 September 2024 (the six months ended September 2023: £ 31.0m) and interest paid was £20.7m during the six months ended 30 September 2024 (the six months ended September 2023: £28.4m).

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Basis of preparation

1.1 General information

LendInvest plc is a public company incorporated on 17 July 2012 in the United Kingdom under the Companies Act. The company listed on AIM on 14 July 2021. The address of its registered office is Two Fitzroy Place, 8 Mortimer Street, London W1T 3JJ.

These condensed consolidated interim financial statements of LendInvest plc, for the six month period ended 30 September 2024, 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 2024 and should be read in conjunction with the March 2024 annual report.

These condensed consolidated interim financial statements are not statutory accounts. The Group statutory accounts for the year ended 31 March 2024 have been reported on by its auditor and delivered to the Registrar of Companies. The report of the auditor on those statutory accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

All amounts are presented in pounds sterling, which is the functional currency of the Company and all its subsidiaries. Amounts are rounded to the nearest million, except where otherwise indicated.

1.2.1 Going Concern

The Group's business activities together with the factors likely to affect its future development and position are set out in the Strategic report. The Directors also considered the impact of the funding lines maturing in the next 12 months from the date of approval of the financial statements. In line with the normal operations of the Group, there are a number of facilities which mature during this period.

The Directors believe that the Group will be able to refinance these facilities either with the existing funding provider or with new third parties to continue its growth trajectory. If these facilities were not to be refinanced, the Group would be able to sell individual loans or portfolio of loans to facilitate the repayment of the outstanding amounts. This strategy is in line with the existing approach of the Group to both hold assets on its balance sheet and sell to the third parties.

The Directors do not consider that this creates a material uncertainty in the going concern assessment of the Group. Directors have a reasonable expectation that the Group will have adequate resources to continue to operate for a period of at least 12 months from the signing of these accounts and therefore it is on this basis that the Directors have continued to prepare the accounts on a going concern basis. More information on the Directors' assessment of going concern is set out in the Directors' report.

1.3 Accounting policies

The accounting policies and methods of computation are consistent with those set out in the Annual Report 2024.

The Group has restated its Condensed Consolidated Interim Statement of Cash Flows due to the following prior period adjustments (PPAs) which relate to errors and changes in accounting policy:

Errors

PPA 1

To reflect appropriate classifications and presentation of items within operating activities. Previous presentation of operating activities included some netting off and grossing up which have now been correctly set out to comply with IAS 7 - Statement of Cashflows:                                                                                                                                                                     

1. The profit and loss impact of derivatives and hedge accounting (which is movement in fair value of derivative instruments and hedge risk value of hedge items) were erroneously netted off in the 'Decrease/(increase) in loans and advances' and 'Derivative settlements'. This has now been presented separately as 'Derivative, hedge accounting and committed facility fair value (profits)/losses' under operating activities.                                                                                                                                                                           

2. During the period, Mortimer- 2021 Plc was deconsolidated by the Group. The deconsolidated balances in 'trade and other receivables' and 'trade and other payables' were erroneously netted off in the Decrease/(Increase) in loans and advances line.  To correctly reflect the movement in these two lines, deconsolidated balances have now been adjusted from the movement in loans and advances.                       

3. An amount of £1.1m relating to loan origination was erroneously accounted for as 'Repayment of funder liabilities'. This has now been reclassified from Financing activities to Movement in loans and advances (New originations net of redemptions) under operating activities.               

*This is the net impact of prior period adjustment relating to Reclassification of cash consideration for sold residuals described in PPA 2.

** This error was earlier identified and corrected in the March 2024 financial statements. The adjustment is now being reflected in the interim financial statements.

*** These adjustments relate to change in accounting policy which is a change in the presentation format of the statement of cashflow adopted in March 2024 financial statements as described in PPA 4.

^ This adjustment relates to an over accrual of interest income in September 2023 as described in PPA 6                     

PPA 2

To reflect the correct balance for "Proceeds received on disposal of subsidiaries".                                                                                                                                                                            

During the year, the Group noted that as per the requirements of Section 42 of IAS 7, the proceeds received from disposal of a subsidiary need to be presented net of the cash and cash equivalents disposed as part of the transaction under investing activities. Historically, this has been disclosed on a Gross basis under operating activities. The error has been corrected by netting the cash and cash equivalents in Mortimer- 2021 Plc from residual sale consideration on the date of sale. This error was earlier identified and corrected in the March 2024 financial statements. The adjustments are now being reflected in the interim financial statements. The Group has restated its September 2023 Condensed Consolidated Interim Cash Flow Statement to update the correct balance £2.3 m as an investing activity.                                                                                                                                                                      

** This error was earlier identified and corrected in the March 2024 financial statements. The adjustments are now being reflected in the interim financial statements.                                            

**** These adjustments are discussed in PPA 1 above.                                             

PPA 3

PPA 3

To reflect the funding movement in investing and financing activities on gross basis. 

1. While the funding received and paid during the 6 month period had been attempted to be presented on a gross basis, some amounts were still netting off in both lines and have now been grossed up.

2. Funding activities directly linked to investments (risk retention notes) were omitted from the cashflow statements.

** This error was earlier identified and corrected in the March 2024 financial statements. The adjustment is now being reflected in the interim financial statements.

*** These adjustments relate to change in accounting policy which is a change in the presentation format of the statement of cashflow adopted in March 2024 financial statements as described in PPA 4.

**** These adjustments are discussed in PPA 1 above.

As a result of the errors identified

(a)           Total cashflows on operating activities was overstated by £3.4 m because of PPA 1 and 2.

(b)           Total cashflows on investing activities was understated by £14.8m because of PPA 2 and 3.

(c)           Total cashflows on financing activities was overstated by £11.4 m because of PPA 1 and 3.                                               

Change in accounting policy - Presentation format of the statement of cashflows

PPA 4

During the year ended 31 March 2024, the Group updated the presentation format of the cashflow statements while correcting errors identified in historic cashflow statements. This constitutes a change in accounting policy and has thus been reflected in the interim financial statements for consistency.                                                                                                                                              

1. 'Net fee and interest income and cost deferrals' was previously netted off with the 'Decrease/(increase) in loans and advances'. This has now been presented separately to align the naming convention to the presentation format adopted by the Group for the March 2024 financial statements.                                                                                                                                                          

2. Proceeds from sale of loan portfolio was previous included in 'Decease/(increase in loans and advances'. This has now been presented separately following the change in the naming convention of the line to 'Movement in loans and advances (New originations net of redemptions)'.                                                                                                                                                     

3. Swap initial exchange cost was formerly presented as an investing activity and has now been reclassified to operating activities to reflect the purpose of the hedging relationship.       

4. Movement in accrued interest on interest bearing liabilities was formerly included within 'Repayment of funder liabilities' and has now been reclassified and presented separately under operating activities.                                                                                                                                                                 

5. Funding received and paid from external parties strictly for the purpose of holding risk retention notes have now been separated from other receipts and payments of funder liabilities.        

6. Payment of funding line costs was formerly included within 'Repayment of funder liabilities' and has now been reclassified and presented separately under financing activities.                          

7. Amortisation of funding line costs was formerly included within 'Repayment of funder liabilities' and has now been reclassified and presented separately under operating activities.         

8. 'Loss on sale of loan portfolio' was previously grossed up with 'Fair value recycled to line items (loss on sale of loan portfolio) in profit or loss'. This has now been shown separately and matches the 'Loss on sale of loan portfolio' presented in the statement of profit and loss.                                                                                                                                                                                                                                                                                                                                                                

**** These adjustments are discussed in PPA 1 above.

~ This adjustment is discussed in PPA 2 above.

~~These adjustments are discussed in PPA 3 above.                   

As a result of the change in accounting policy                                              

(a)           Total cashflows on operating activities has reduced by £0.4m.

(b)           Total cashflows on investing activities has increased by £0.8m.

(c)           Total cashflows on financing activities has reduced by £0.4m.                  

Consolidating all 4 PPAs                                     

(a)           Total cashflows on operating activities has decreased from net inflow of £116.8m to net inflows of £113m because of PPAs 1,2 and 4.

(b)           Total cashflows on investing activities has moved from net outflows of £2.9m to net inflows of £12.7 m because of PPAs 2,3 and 4.

(c)           Total cashflows on financing activities has increased from net outflows of £72.6m to net outflows of £84.4m because of PPAs 1,3 and 4.                                    

The Group has restated its Condensed Consolidated Interim Statement of Profit and Loss, Condensed Consolidated Interim Statement of Other Comprehensive Income, Condensed Consolidated Interim Statement of Financial Position, Condensed Consolidated Interim Statement of Changes in Equity and Condensed Consolidated Interim Statement of Cashflows due to the following prior period adjustments:

PPA 5

Error

To reflect a misstatement of Other payables and Net gains on derecognition of financial assets.      

As part of the securitisation and disposal of Mortimer BTL 2023 Plc in the year ended 31 March 2024, some specific proceeds of the Group were assigned to Mortimer BTL 2023 plc to augment its net assets. These proceeds were however not accrued promptly so at the time of disposal and deconsolidation of the Mortimer 2023- Plc in January 2024, the liabilities of the Group had been understated. This omission remained uncorrected in the March 2024 year-end financial statements.                                                                                                                             

Consequently, the recorded Net loss on derecognition of financial assets was understated by the value of the assigned proceeds of £2.2m.

To correct this, a prior period adjustment of £2.2m has been made to the financial results presented for 31 March 2024 in this Condensed Consolidated Interim Financial Statements                                                                                                                    

PPA 6

Error

To reflect the correction of an over accrual of interest income during the period.

The reset and sale of a development loan in September 2023 created an erroneous entry which incorrectly credited the profit and loss rather than the balance sheet. This entry resulted in the overstatement of interest income calculated using the effective interest rate and other receivables and remained uncorrected in the September 2023 half-year results and the March 2024 year-end financial statements                                                                                                                               

To correct the error, a prior period adjustment of £0.6m has been made to the financial results presented for 30 September 2023 and 31 March 2024 in this Condensed Consolidated Interim Financial Statements.                                                                                                                           

PPA5 and PPA 6 are reflected in the table which follows:                                                                                                                                                                                                                         

PPA 5 and PPA 6 adjustment table

The impact of the restatement has been reflected in the Condensed Consolidated Interim Statement of Changes In Equity.