GLI Finance has reported an operating loss of £5.5m for 2020, as the pandemic hit its portfolio.
By comparison, in 2019 GLI’s operating loss was approximately £900,000.
The widening losses were largely due to a material write-down on the investment trust’s FinTech Ventures portfolio and the economic pressure of the Covid-19 pandemic.
In its full-year results for 2020, the Aim-listed alternative finance group reported revenue of £10.9m, down from £13.1m the previous year. This was “partly due to the runoff of the BMS UK Fund and on balance sheet loans”, the company said, as well as lower transaction revenue from the impact of Covid-19.
“The Covid-19 pandemic negatively impacted our performance for the majority of 2020, contributing to an operating loss of £5.5m of which £4.7m related to an adjustment to our expected credit loss provision,” said Andy Whelan, chief executive of GLI Finance.
“We have taken a cautious view of our loan exposure as although we have not seen any losses materialise we are mindful of the pressures created by Covid-19. We also took a material write-down on the FinTech Ventures portfolio with a total net write down of £6m for the full year.”
In an effort to minimise its losses, the investment trust reduced its operating costs by £1.4m year-on-year, thanks to a headcount reduction and cost-saving initiatives.
In December 2020, GLI completed a fundraising and debt restructuring which included raising £4m of new equity at a price of 2.25p per share, and extending its zero dividend preference shares for another two years.
“As announced on 4 December 2020 in conjunction with Somerston Fintech Limited the company’s largest shareholder, we were delighted to report that we had completed a successful fund raise and debt restructuring of the group,” added Whelan.
“This has ensured the company is appropriately capitalised to maximise shareholder value as we come out of the pandemic and was a fantastic result amidst what has been a very turbulent time for us all.
“I would like to thank all shareholders for their continued support during this time.”
GLI also issued a new five-year bond last year, and increased its facility with Honeycomb Investment Trust from £45m to £75m with a three-year extension.
Meanwhile, GLI’s parent company Sancus BMS gradually reduced its lending to higher risk small- and medium-sized enterprises (SMEs) in 2020 and redirected resources towards asset-backed secured lending where third party funding is more accessible.
As at 31 December 2020, Sancus had loans outstanding of £171m, with co-funders providing £164m, equating to a co-funding ratio of 96 per cent, the company said.