During 2016 Wellesley Group completed a number of initiatives designed to increase focus on our key market, build capability in core lending and control functions and reduce costs.
As a direct result of this, we have seen strong and improving performance on key business targets over the course of the year. During the first half of the year, continued investment in marketing led to further increases in the number of investors using our platform, with committed balances increasing to £205m. However, the impact of investing in such rapid growth was that the business reported a loss of £1.0m for the first 6 months of the year.
In the second half of the year, marketing investment has been scaled back and the business recorded a profit of £0.6m. Going forwards we will balance the rate of growth of the business to ensure that financial resources are maintained.
On the lending side of the business, we are now completely focused on property development lending in the UK outside of central London. We aim to support mid-sized, experienced developers who are building mid-market family homes and flats. This focus has resulted in a move away from participating in the bridging loan market. This has enabled us to reduce costs and to invest in building our lending and loan management capability on the development side.
As a result, the loan book has grown by 8% over the course of 2016 and the cost to income ratio has reduced.
In parallel, our loan impairment costs to date have matured at 1.0% expressed as a percentage of the total loan facilities issued to date. We expect our improved operational capabilities to enable this figure to improve further in time.
In balance sheet terms the Equity Capital in the business is now in excess of £1m. On a related note, we chose to discontinue a recent crowdfunding campaign on the basis that it had not achieved sufficient scale to make a material difference to the growth of the company.
As we progress into 2017, key priorities include:
- Continuing to grow through building high quality, enduring relationships on both the borrower and investor sides of the business
- Ensuring that we grow at a rate that is consistent with conserving financial resources
- Continuing to work with the FCA to support positive customer outcomes, market integrity and increased competition in our key markets
- Making ongoing improvements to the information provided to investors and lenders through increasing the levels of disclosures on both our websites and our company accounts.
Please note that the audit of the Wellesley Group 2016 accounts is currently in process and that therefore the information provided in this update is unaudited.
Alasdair Lenman, CFO
This post is issued by Wellesley Group Investors Limited solely for information purposes and does not constitute an advertisement. This document is not and must not be construed as a solicitation of a financial instrument in any jurisdiction.
Wellesley is the trading name of Wellesley Group Investors Limited (Company No. 08478238). Wellesley Group Investors Limited is not authorised or regulated by the Financial Conduct Authority and your capital is at risk and is not covered by the Financial Services Compensation Scheme. Wellesley Group Investors Limited is registered in England and Wales and its registered office is at St Albans House, 57-59 Haymarket, London, SW1Y 4QX.