Vector Capital plc (LON:VCAP), the commercial lending group that offers secured loans primarily to businesses located in the United Kingdom, has provided the following update on the Board’s expectations for trading for the year ending 31 December 2022.
The Group’s has continued its positive operational performance, as outlined in its interim results, and the Board expects revenue, profit before tax for the full year and the aggregate loan book at the year-end to be in line with market expectations. Whilst external borrowing costs have begun to rise on new loans, the Company has been able to pass on the majority of these increases to customers and in some cases reduce gearing to maintain margins.
Despite the Group’s own resilience in these challenging economic and financial conditions, certain borrowers have been adversely affected by delays in completions, supply chain and cost issues and a general softening of values in the residential property market. Accordingly, the Board has undertaken a review of our lending book and believe it would be prudent to make a provision of approximately £200,000 for doubtful debts for the current year which may or may not be required. Recovery of all debts will continue to be actively progressed.
The demand for new loans remains strong and, as already announced, the Board is pleased that a £5 million increase in debt facilities provided by our wholesale lenders in the second half of the year to an aggregate of £40 million, will help Vector continue to grow its loan book.
The Company expects to announce its results and recommend a final dividend for the year ended 31 December 2022 in early April 2023.
Agam Jain, CEO of Vector Capital Plc commented: “We are pleased that our business model has remained resilient despite the uncertain conditions that have developed during the year and that demand for our loans remains strong from within our proven introducer base. We have taken what we believe to be a prudent step to recognise the potential impact of current interest rates and cost pressures on borrowers within the provision and we will, as always, endeavour to maximise collections.”