UK-based financial services company Funding Circle has reported a pre-tax loss of £33.2m for the year 2023, compared with a pre-tax loss of £12.9m the previous year.
This downturn was attributed primarily to the company’s investments in its US division and the expansion of FlexiPay, its credit service.
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Funding Circle’s total income increased by 7% to £162.2m from £151m in the previous year.
This growth was supported by a profitable performance in the UK Loans division, which achieved an adjusted earnings before interest, taxes, depreciation, and amortisation of £21.3m.
The UK loan division also swung to a pre-tax profit of £6.5m, recovering from a £1.8m loss in 2022.
Loan originations exhibited a growth of 2% amounting to £1.5bn, up from £1.4bn in 2022, reflecting the company’s cautious approach to lending amid a challenging economic environment.
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By GlobalDataCommercial lending, in particular, experienced robust growth during the period.
However, the volume of loans under management saw a decrease, falling to £3.3bn from £3.7bn.
Meanwhile, FlexiPay’s transaction volume surged, nearly quadrupling to £234m from £59m.
The company’s net assets also declined to £246.8m from £284m in 2022.
With an eye towards the future, Funding Circle has set its sights on achieving profitability in its UK operations, citing promising growth prospects.
The company said it has noted some expressions of interest in its US business, which still requires more capital to operate.
For the year 2024, Funding Circle has set a target profit margin of 8%-12% for its UK loans business.
The company is optimistic that both UK Loans and FlexiPay will start generating profits in the second half of 2024.
Funding Circle has announced its intention to initiate a share buyback programme.
The programme will involve the purchase of ordinary shares at £0.001 each, with a maximum expenditure of £25m.
Funding Circle CEO Lisa Jacobs said: “We delivered a solid set of results in FY 2023, in line with our expectations, and made good progress against our multi-product strategy. Looking ahead, we will be focused on our UK business – comprising UK Loans and FlexiPay – to drive improved group cash and profits and deliver greater shareholder value.
“Whilst the US business offers attractive long-term growth, it also requires a significant amount of cash and capital to grow the SBA proposition and we do not believe that this is the best course of action for the group. We have received indications of interest for the US business and will update further in due course.”
