Vector Capital plc (LON:VCAP), the commercial lending group that offers secured loans to property developers and investors in England & Wales, has provided an update on trading for the year ended 31 December 2023.
The Group has delivered a resilient operational performance, despite the ongoing uncertain market conditions in the UK, where certain borrowers continue to be impacted by high interest rates, and where residential property values generally remain depressed. A strong pipeline of good quality opportunities during the year has resulted in a buoyant loan book performance described below. Subject to completion of the 2023 audit, revenue for the year is expected to be above market expectation at not less than £5.7 million. Although this represents a small decrease on the revenue of £5.9 million achieved in 2022, this is a very pleasing performance given the Board’s necessarily cautious approach to lending during the year.
As previously announced, the Group’s aggregate loan book was £48.9 million at 31 December 2023, compared with £53.4 million at 31 December 2022. At 31 December 2023, the Group had 108 live loans (2022: 107), with an average loan size of approximately £452,000 (2022: £499,000).
The Group continues to benefit from its strategic decision to mitigate against default risk by diversifying its portfolio and moving its weighting towards lower-value loans, reflected in the average year end loan figures referred to above.
During 2023, the Group also increased its wholesale bank debt facilities by £5 million to £45 million and increased its £3 million inter-company loan with its parent company Vector Holdings Limited, which, following a small repayment in January 2024, now stands at £3.5 million.
Since the year end, the Group has begun to see a softening in the interest rates offered by some lenders in the wholesale market, and a willingness in some cases to loosen loan to value requirements. Whilst this is encouraging, these are early days in the hoped for reduction in UK interest rates.
The Company expects to announce its results and recommend its final dividend for the year ended 31 December 2023 in April 2024.
Agam Jain, CEO of Vector Capital, commented: “We are very pleased to have returned a resilient revenue performance ahead of market expectations in 2023, notwithstanding difficult market conditions. The outturn for the year is expected to be in line with market expectations and reflects the continuing quality of our pipeline, the proven strength of our operating systems and the long established and supportive relationships with our wholesale debt providers. Our business model and strong capital base has proved its worth during the last two years and has created both net asset growth and attractive dividends. The Company is cautiously optimistic of the outlook for the business in 2024 and beyond as, hopefully, interest rates fall and the UK economy begins to grow.”
