Vector Capital describes 'resilient' full-year performance

5th Feb 2024 13:15

(Sharecast News) - Commercial property development and investment lender Vector Capital said in an update on Monday that, despite challenging market conditions in the UK characterised by high interest rates and subdued residential property values, it saw a resilient full-year operational performance.

The AIM-traded firm said its strong pipeline of opportunities throughout 2023 contributed to a robust loan book performance.

Preliminary figures indicated that revenue for the year was expected to exceed market expectations, reaching at least £5.7m.

While that marked a slight decrease from the £5.9m achieved in 2022, the board said it was a commendable performance given the cautious lending approach it adopted in response to market conditions.

As of 31 December, Vector Capital's aggregate loan book stood at £48.9m, compared to £53.4m at the end of 2022.

The company said it managed 108 live loans, up from 107 in the prior year, with an average loan size of £452,000, down from £499,000 in 2022.

That strategic shift towards lower-value loans helped the company diversify its portfolio and mitigate default risk.

Throughout 2023, Vector said it had increased its wholesale bank debt facilities by £5m, bringing the total to £45m.

Additionally, the company said it had expanded its inter-company loan with its parent company, Vector Holdings, to £3.5m after a small repayment in January 2024.

Since the end of the year, Vector Capital said it had seen a gradual softening in interest rates offered by some lenders in the wholesale market, and a willingness to relax loan-to-value requirements.

However, it said it remained cautious as it monitored these early signs of a potential reduction in UK interest rates.

"We are very pleased to have returned a resilient revenue performance ahead of market expectations in 2023, notwithstanding difficult market conditions," said chief executive officer Agam Jain.

"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."

Jain said the company's business model and strong capital base "proved its worth" during the last two years, creating 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."

Vector Capital said it would announce its full-year results and recommend its final dividend for the year ended 31 December 2023 in April.

At 1241 GMT, shares in Vector Capital were up 8.45% at 31.45p.

Reporting by Josh White for Sharecast.com.