Vector Capital plc (LON:VCAP) Chief Executive Officer Agam Jain caught up with DirectorsTalk for an exclusive interview to discuss interim results, maintaining higher liquidity, interim dividend and what we can expect to see for the rest of the year.
Q1: Vector Capital has now released its interim results, could you start by talking us through the financial highlights?
A1: The key figures that we look at, on 30th June, our loan book was £48.8 million, we had revenues of £2.9 million and profits adjusted after provision for bad debts at £1.3 million for the six months, and we a provision of £167,000 for future bad debts, as and when they crystalise.
Q2: You mentioned your strategy this year has been to seek to maintain higher liquidity. With the corresponding lower loan book and reduced household borrowings, can you tell us how that’s worked for Vector Capital?
A2: Just a bit of a backdrop, there’s been more than 5% increase in the base rates this year and we have to accept that most borrowers are struggling to meet their monthly payments.
We’re trying to address this by giving forbearance and adding the arrears to capital wherever we can. I think it’s prudent for us this year to say, 2023 isn’t going to be the year of massive growth and it would be better to keep more reserves and liquidity rather than aim for year-on-year growth this year.
We can return to that later when circumstances are better, and that will put us in a very good position as a lender that we ourselves don’t get at risk.
Q3: In the results statement, it states the intention to recommend an interim dividend, could you elaborate on that for us?
A3: So, we’ll be paying the same dividend that we paid this time last year. Our profits before provision of the bad debts are similar to last year and, even after the provision, we have more than enough to cover so we want to reward the shareholders who are still with us.
There’s nothing we can do about the share price but at least on the dividends, we can get a good return.
Q4: Just looking forward, what else can we expect to see from Vector Capital for the rest of the year?
A4: We’ve got a very healthy pipeline, there’s a lot of demand, it’s just that we don’t want to go for growth over safety, and so for the rest of the year, I think what we’d like to do is carry on similar to what we are now and keep reviewing at the end of each quarter. Do we think the circumstances are better?
We’ve got a lot of unused wholesale banking facilities and so we’re ready to step up a gear when we feel things have settled down. I presume we’ll wait until we think we’ve had the last interest rate rise, and then review the situation after that.