15 March 2022

Sancus Lending Group Limited

("Sancus", the "Company" or "Group")

Trading Update

Sancus today announces an update on trading in the financial year to 31 December 2021.

Based on its unaudited financial results for the year, Sancus is expected to generate revenue of approximately £9.0m for FY21 (FY20: £10.9m), slightly below prior expectations.  The Group expects to record a net operating loss for FY21 of approximately £10.3m (FY20: loss £14.5m).

The reduction in revenue is, in part, due to a decrease in the loan book, falling 17% to £141m in FY21 (FY20: £171m) and from the knock-on impact of Covid on new loans written, delayed loan closures, and therefore reduction in associated transactional fees.  The reduction in the loan book has largely been seen in the offshore jurisdictions of Jersey, Guernsey and Gibraltar that were impacted by a significant restructuring of their management teams.

Following Rory Mepham's appointment as CEO in June 2021, a detailed evaluation of the Group's loan book was completed.  Particular focus was given to reviewing historic loans that were either delinquent or defaulted. As a result of this exercise, the Group expects to report an increase in credit loss provisions of £6.5m for the FY21 (FY20: £4.7m). Virtually all of the provisions made relate to legacy loans written in 2018, or prior to 2018. For all of the impacted legacy loan positions, the new senior management team have put together deliverable workout strategies and these are now underway. The seasoned property professionals within the new Sancus team will continue working hard to recover value for all participants in these positions. 

Since his appointment as CEO in June 2021, Rory Mepham has also prioritised planning the turnaround of the Group's financial performance. The future plans to make the Group profitable rely on significant growth in loans under management. In order to achieve this, the Board is expanding the Group's presence in the UK and Ireland, together with rebuilding its loans under management in the Offshore markets of Jersey, Guernsey and Gibraltar. A number of key hires in the sales and credit teams during the year have been made in all markets, taking Group headcount from 25 at the end of 2020 to 35 at the end of 2021. This in turn has increased operating expenditure in FY21 to £6.2m (FY20: £5.6m).  The investment in new talent is expected to drive and support growth in the loan book over the coming years.

Other priorities of the new management include streamlining organisational structure, delivery of a robust credit process, effective management systems and becoming increasingly tech enabled, in order to deliver against the Company's growth aspirations. Substantial progress has been made and further details will be provided when the Company releases its results for the year ended 31 December 2021 expected to be around 31 March 2022.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.

For further information, please contact:

LEI: 213800S2XOO3YSEGCA26