Vector Capital reports robust year-end financial position

Commercial lender Vector Capital reported continued growth in shareholders' equity while maintaining dividends and implementing prudent bad debt provision policies in its full-year results on Friday.

The AIM-traded firm said that, despite some fluctuations in key metrics compared to the prior financial year, its financial position remains robust.

Its loan book stood at £47.9m at year-end on 31 December, with an average loan of £453,000, showing a slight decrease compared to £53.2m and £499,000 respectively at the end of 2022.

Revenue for the period totalled £5.7m, slightly down from £5.9m a year earlier.

Profit before tax excluding bad debt provisions amounted to £2.8m, showing a marginal decrease from £3m, while profit before tax totalled £2.1m, down from £2.8m.

Additionally, unused wholesale loan facilities increased to £27.8m, up from £14.9m in 2022.

Net assets reached £25.5m, compared to £25.1m a year earlier, while the net asset value per share stood at 56p, representing a slight increase from 55p at the end of the prior year.

Vector Capital proposed a final dividend of 1.53p per share, matching the 2022 dividend.

“I am pleased to present our 2023 results; our board and operational team are experienced, efficient and focused on maintaining financial prudence and profitability,” said chief executive officer Agam Jain.

“We decided as part of our strategy to marginally reduce loan book size so as to maintain higher reserves and liquidity.

“The increased costs of borrowing from our bank providers has meant that our margins on debt finance have been squeezed as the borrowing costs overall have risen by 3% per annum during the year. and it was not always pragmatic to pass the entire increase on to our borrowers.”

However, Jain said the higher rates had enabled a better return on the group's own capital, which mitigated the squeezed margin on money from the banks.

“The demand for our loans remains high; however, we have chosen not to grow the loan book this year but maintain higher liquidity.

“We have also not sought an increase in our debt facilities which remain at £45m in 2023.”

Agam Jain said the company expected base rates to start the move downwards during mid-2024.

“At that point we will review the scenario to get back to loan book growth.

“We have a strong capital base and a talented team to perform well in our market.”

At 0802 BST, Vector Capital shares were down 0.37% at 26.9p.

Reporting by Josh White for Sharecast.com.