Vector Capital plc (LON:VCAP) Chief Executive Officer Agam Jain caught up with DirectorsTalk to discuss what the business does, financial highlights, strong operational performance, being a dividend paying company and what investors can expect in 2023.
Q1: Vector Capital, it’s a commercial lending group, can you just briefly remind us what the business does and where it operates?
A1: So, we provide property-backed loans mainly to property investors and developers, mainly in England and Wales.
Q2: You have just released a positive trading update which reported revenue growth of 12%, in line with market expectations. Can you just tell us a little bit more about some of the financial highlights in that update?
A2: If I give you the two key figures first of all so the revenue went up to £5.9 million, from £5.3 million corresponding period 2021, that’s a 12% increase, and our loan book went up 46.3% to £53.4 million so that’s about a 15.4% increase in the size of our lending book.
I think why we’re happy is because after the Liz Truss scenario with all the Bank of England rates, the mortgage market went into freefall for Q4 of the year. Despite that, we’ve delivered very very good results, considering we lost any business opportunities in Q4 because everybody had to do a ‘wait and see’ approach.
Q3: Now, you mentioned that the group has delivered a strong operational performance, can you tell us more about the business has been progressing?
A3: I think we were on a good growth journey and then the Liz Truss scenario and the Bank of England rates which have been something we haven’t seen in the country for 20-odd years so they’d shaken up all of the lenders and the borrowers.
I think things are settling down now although the rate increases will affect the market quite considerably and put a lot of buy-to-let mortgages and property development loans out of the reach of several smaller type investors as the monthly repayments are going to be too high.
There’s still lots of opportunities and we being one of the smaller agile ones so I’m fairly confident we’ll continue our growth going forward on that basis.
Q4: Vector Capital is a dividend paying company, can you explain for us why this is important to the business?
A4: We’re not a NatWest or a HSBC and I suppose one of the main reasons why people invest in us is the fact that we’re profitable and we pay a very good dividend.
So, rather than yielding off our brand, we’re yielding off basically our performance and our results and so, we pay a very healthy progressive dividend year on year, and we have a very good track record of having paid dividends and we foresee that continuing in the near future.
Q5: Finally, what can investors expect from the company in 2023?
A5: We’re going through a phase of consolidation for Q1 this year, just to see how the market settles and where the interest rates finally settle. Once we have a clearer picture by the end of the quarter then I think we’ll push the button on growth again and our forecasts are that we’ll show some reasonable growth by the end of the year.
