Final Results

25 June 2026

Orchard Funding Group PLC

("Orchard Funding Group", the "company" or the "group")

Final Results for the 18 months ended 31 January 2026

Orchard Funding Group PLC, the finance company which specialises in insurance premium finance and the professions funding market, is pleased to announce its results for the 18 months ended 31 January 2026.

As previously announced, the group changed its accounting reference date from 31 July to 31 January in order to align the year end across the group. The current reporting period therefore covers the 18 months from 1 August 2024 to 31 January 2026, while the comparative figures cover the 12 months to 31 July 2024. Comparisons should be read with this difference in period length in mind; selected annualised comparisons are provided below.

Highlights

·    18-month reporting period following the change of accounting reference date from 31 July to 31 January (comparatives: 12 months to 31 July 2024)

·    Lending volumes of £182.77m (12 months to 31 July 2024: £114.70m) - an increase of approximately 6.2% on an annualised 12-month basis

·    Gross total income of £15.73m (31 July 2024: £9.64m)

·    Net total income of £12.68m (31 July 2024: £6.89m) - an increase of approximately 22.8% on an annualised 12-month basis

·    Profit before tax of £6.59m (31 July 2024: £2.12m)

·    Profit after tax of £4.91m (31 July 2024: £1.57m)

·    Basic earnings per share of 23.11p (31 July 2024: 7.39p)

·    Operating costs (excluding impairments) of £6.03m (31 July 2024: £3.60m)

·    Expected credit losses and other impairments of £0.06m (31 July 2024: £1.17m)

·    Loan book (net of ECL provision) of £66.14m at 31 January 2026 (31 July 2024: £66.98m)

·    Borrowings of £33.64m (31 July 2024: £40.22m) and cash of £1.07m (31 July 2024: £1.48m)

·    Interim and special dividends totalling 3p per share paid during the period; a final dividend of 1p per share is proposed (31 July 2024: nil), subject to shareholder approval at the annual general meeting on 23 July 2026

Further detail on the above is given throughout the strategic report below.

Ravi Takhar, Chief Executive Officer of the company, stated:

"I am pleased to report a strong set of results for an 18-month period that has reshaped our business. We have continued to grow our lending in our core market of insurance premium finance while carefully managing our costs and margins.

"We enter our 11th year as a listed company with the benefit of our accumulated experience, our loyal staff, excellent funding partners and market leading and cost-effective IT. We are therefore optimistic and excited about the prospects for the business going forward."

For further information, please contact:

For Investor Relations please go to: www.orchardfundinggroupplc.com

The information contained within this announcement is deemed by the company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Chairman's statement

The 18 months to 31 January 2026 have been very successful for the group as we continue to grow our business in our core insurance premium funding markets based on our small but highly skilled team and our in-house Lend XP platform.

I am pleased to report a very positive financial performance with increased lending volumes and improving margins driving income growth and strong profitability, with profit before tax for the 18 months of £6.59m.

This success is driven by the hard work of our people, and I thank them for their ongoing commitment. In particular, we have a small executive and senior management team who have considerable industry experience and who are invaluable to our business. We also continue to benefit from strong, mutually beneficial relationships with our introducer partners and funders, and I remain grateful to them for their ongoing support.

The global environment and market outlook has recently become more challenging and introduces a new level of unpredictability. The board is mindful of how this could affect our customers. We will keep a close watch on inflationary conditions and the potential impact on base lending rates, where forecasts now assume a slower reduction in rates than forecast earlier this year.

Overall, we remain optimistic that we can continue to deliver good outcomes for all of our stakeholders. For our customers and partners, we provide straightforward, easy to access funding; for our regulators we uphold the highest standards of governance and compliance; and for our shareholders we continue to deliver sustainable returns.

During the period we paid interim and special dividends totalling 3p per share and, following this continued good performance, I am pleased to confirm that the board is proposing a final dividend of 1p per share.

Steven Hicks

Chairman

Chief executive's review

I am pleased to report a strong set of results for an 18-month period that has reshaped our business. We have extended our financial year from 31 July to 31 January, so these statutory accounts cover the 18 months from 1 August 2024 to 31 January 2026. Over that period the group delivered profit before tax of £6.59m (12 months to 31 July 2024: £2.12m), profit after tax of £4.91m and basic earnings per share of 23.11p, on net total income of £12.68m (year to 31 July 2024: £6.89m).

Our staff have worked hard to continue to grow our lending in our core market of insurance premium finance, which remains the backbone of the business. Professions and leisure lending has remained solid, safe and stable. We have continued to exercise caution in the static caravan and property bridging market, where the economic backdrop has limited our appetite to lend.

Higher than historic base rates continued to impact our business through the first part of the period, as they have a direct and immediate impact on our cost of funds. We operate in extremely competitive markets and are not able to pass on base rate rises to our customers. The gradual easing of rates as the period progressed is welcome and is beginning to feed through to the net income of our business. Our average cost of finance for the period was 7.68%.

We continue to carefully manage operational costs and retain a loyal and hardworking team of staff. Employee numbers have been held broadly flat at 23 despite the extension of the period and the integration of two small acquisitions completed during the period.

IT remains an important focus of the business. We continue to develop our lending platform, Lend XP, and have also developed our open banking platform to enable fully automated affordability calculations for our customers. We are pleased to confirm that we have obtained ISO 27001 accreditation for our Lend XP software.

We operate in highly regulated markets. The regulatory framework is burdensome and the costs of regulatory compliance continue to increase. We continue to manage our regulatory obligations and responsibilities effectively.

As we enter our new financial year to 31 January 2027 there are, as ever, headwinds that the business will be required to navigate - the path of interest rates and the ongoing FCA review of motor finance, which affects the market in which Orchard Finance operates.

Our business has operated in its markets for over 20 years. We enter our 11th year as a listed company with the benefit of our accumulated experience, our loyal staff, excellent funding partners and market leading and cost-effective IT. We are therefore optimistic and excited about the prospects for the business going forward.

I would like to thank our staff, Toyota and NatWest, our funding partners, our shareholders, bondholders and customers for their continued support and loyalty.

Ravi Takhar

Chief Executive Officer

Group strategic report

Strategy and objectives

There has been no change to our strategy. It remains, as always, to increase our profitability in a prudent, sustainable manner, having due regard for the interests of all stakeholders, from shareholders and employees to the wider community. In so doing, the board have responsibility to ensure fair treatment for all, although the interests of some stakeholders may differ markedly from those of others.

The strategic drivers behind our principal objective remain to: differentiate our business from that of our competitors, based on service excellence, fair pricing and robust underwriting procedures; increase lending in a responsible manner using a two-pronged approach - increasing the number of partners who fit with our business values (brokers, accountants and other third-party introducers) and increasing the volume of business from each of these partners, while always keeping fair treatment of customers at the heart of our business; preserve and, where deemed necessary, increase our sources of liquidity; innovate by reviewing markets and product lines appropriate for our lending criteria of safe lending and sensible returns; continually improve our IT systems to enable efficient processing of information and to reduce the various risks attaching to our business; and support our staff by providing them with the means to find and develop lending opportunities, offering continuous training and ensuring an appropriate balance between work and home life.

Our business model

Our business is a "hold to collect" model in which financial assets are held to maturity to collect cash flows of principal and interest, rather than being held for sale. The financial assets are loans to businesses and consumers to enable them to spread the cost of their insurance premiums, professional fees or other service fees. Most of our lending remains within a one-year repayment period, although approximately 0.15% of our lending is for a period in excess of one year (31 July 2024: 1.33%) and 0.15% in excess of five years (31 July 2024: 0.85%), excluding lending by Orchard Finance which is financially risk free.

The nature of most of our lending is similar in terms of risk, reward and processes. However, we have a significant amount of lending which is no risk and offers lower returns than other types of lending - lending for Toyota products. Because of the lower risk and lower returns, this part of the business is reported as a separate segment, described as "Toyota products" and "Standard lending". In most other cases our Standard lending is covered by recourse to a guaranteeing partner. All of our lending is within the UK.

Lending limits are set by reference to financial information (credit reports, regulatory and other requirements) and to other qualitative information for both our introducing partners and the end borrowers. An annual review process, including regulatory permissions and credit checks, is conducted for each introducing partner. Most of our lending gives us recourse to the introducing partner, is through regulated introducers, and no cash is passed over until at least the first repayment is received. In the case of insurance, the customer's cover can be withdrawn for non-payment, with any refunds being paid to Orchard. For longer-term lending the procedure is more rigorous, making use of open banking technology to further mitigate the risk of default. In terms of bridging finance, our maximum loan to the value of the property ("LTV") is 75%.

The group has borrowing facilities (other than the retail bond of £3.90m) of up to £30.00m (31 July 2024: £30.00m) for general lending. In addition, Orchard Finance has a facility of up to £20.00m (31 July 2024: £20.00m) to be used exclusively for lending in respect of products from the provider of those funds. At the period end £17.31m of the general facility (31 July 2024: £7.02m) and £2.89m of the restricted facility (31 July 2024: £6.55m) were unused. The group's average cost of finance for the period was 7.68% (31 July 2024: 7.99%).

The business environment

Businesses are still in a period of instability and continuing world problems mean there is still uncertainty in the markets. Inflation was falling, as were interest rates, but this situation may not continue, especially with oil and gas price rises.

Insurance is one type of expenditure which lends itself to financing, and is also a purchase which is a necessity, either for legal reasons or for security. Orchard's core business is exactly that - providing funds for the spreading of insurance payments - and we are well placed to help our introducers and their customers in these difficult times.

Development and performance of the business

We have continued to grow our lending. To enable a like-for-like comparison, the growth figures below are based on an average for the period, calculated by dividing the amounts for the 18-month period to 31 January 2026 by 18 and multiplying by 12.

Overall lending in the period was £182.77m (12 months to 31 July 2024: £114.70m). Overall growth, including Toyota products, was on average 59.35% up on the prior period; on an adjusted 12-month basis it was 6.23% higher. Most of our premium finance growth continues to come from the direct insurance side, which was up 71.98% (excluding Toyota products), or 14.66% on an adjusted 12-month basis. Lending to broker premium funding companies ("PFCs") was 59.89% higher than in the period to 31 July 2024 (6.59% on an adjusted 12-month basis). Demand for professional fee funding grew by 7.95% over the 18-month period overall, although on an adjusted 12-month basis it was 28.03% lower than the prior year.

Product lines already introduced are reviewed regularly to evaluate their impact on the business; to date that impact has been encouraging, and we continue to apply the same disciplined approach when evaluating potential new markets. We began lending into longer-term markets, as mentioned last year, and this has slowed during the period due to the economic environment; we still intend to grow these further once economic conditions improve. Our largest partner broker for this product, Nukula Limited trading as Insure That, went into administration in July 2024 and a provision was made for these debts amounting to £479k in the year to 31 July 2024.

Our margin is an important area. Some of our borrowing is linked to bank base rate and some to the Sterling Overnight Index Average ("SONIA"); as these rates change so will our borrowing costs. Given the short-term nature of most of our lending, any likely changes would only have a short-term impact on our margins, although there remains greater risk with our longer-term products that rate increases would erode margins. Most other operating costs are relatively stable; although staffing levels have not increased, wage costs have risen as a result of pay rises and performance-related bonuses. Overall, operating costs (including ECL and other impairments) were 27.67% higher in the 18 months to 31 January 2026 than in the year to 31 July 2024. Net total income continued to grow - by 84.21% in absolute terms (comparing the 18-month period with a 12-month period) and by 22.80% on an annualised 12-month basis.

Preliminary financial information

The condensed consolidated financial statements below are presented in £000 unless otherwise stated. The current period covers the 18 months from 1 August 2024 to 31 January 2026; the comparative period covers the 12 months to 31 July 2024 and is therefore not directly comparable.

Consolidated statement of comprehensive income

For the 18 months ended 31 January 2026

Consolidated statement of financial position

As at 31 January 2026

Consolidated statement of changes in equity

Consolidated statement of cash flows

For the 18 months ended 31 January 2026

Notes to the financial information

1.  Basis of preparation

The financial information set out in this announcement does not constitute the company's statutory financial statements for the 18 months ended 31 January 2026 or the year ended 31 July 2024 within the meaning of section 434 of the Companies Act 2006, but is derived from those financial statements. The statutory financial statements for the 18 months ended 31 January 2026 will be delivered to the Registrar of Companies following the company's Annual General Meeting on 23 July 2026.

The auditor has reported on those financial statements; the auditor's report was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The financial information has been prepared in accordance with UK-adopted International Accounting Standards and on a basis consistent with the accounting policies applied in the statutory financial statements. As previously announced, the group changed its accounting reference date from 31 July to 31 January; the current period therefore covers 18 months and is not directly comparable with the 12-month comparative. While the financial information has been computed in accordance with UK-adopted International Accounting Standards, this announcement does not itself contain sufficient information to comply with those standards.

The directors have prepared the financial information on a going concern basis. In making this assessment they have prepared forecasts covering a period of at least 12 months from the date of approval of this announcement and have stress-tested the key assumptions of lending volumes, margins and expected credit losses. Based on the level of existing cash, the projected income and expenditure and the excess of the group's loan book over its external debt, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial information.

2.  Earnings per share

Basic and diluted earnings per share of 23.11p (12 months to 31 July 2024: 7.39p) are based on the profit for the period attributable to the owners of the parent of £4.91m (12 months to 31 July 2024: £1.57m) and the weighted average number of ordinary shares in issue during the period of 21.35m (31 July 2024: 21.35m). There are no dilutive instruments in issue, so basic and diluted earnings per share are the same.

3.  Dividends

A final dividend of 1p per share (12 months to 31 July 2024: nil) in respect of the 18 months ended 31 January 2026, amounting to £214,000, has been proposed and is subject to shareholder approval at the Annual General Meeting on 23 July 2026. In accordance with IAS 10 it has not been recognised as a liability at the period end.

4.  Borrowings

Total borrowings at 31 January 2026 were £33.64m (31 July 2024: £40.22m), comprising £21.70m repayable within one year (31 July 2024: £29.69m) and £11.94m repayable after more than one year (31 July 2024: £10.53m). Borrowings include amounts drawn under the group's lending facilities together with the group's retail bond.

Borrowings by Bexhill UK Limited of £10.19m (31 July 2024: £20.48m) are secured by a fixed and floating charge over the assets of Bexhill and bear interest at an average rate of 6.99% (31 July 2024: 7.75%). In March 2022 the group issued retail bonds raising £3.90m; these bear interest at 6.50% per annum, payable twice a year, and are repayable in June 2027. The group's average cost of finance for the period was 7.68% (31 July 2024: 7.99%).