Lendinvest issues profit warning after accounting error on £5m securitisation deal
Property fintech Lendinvest has issued a profit warning for its 2024 financial year after an accounting error related to a £5m securitisation deal.
The firm, which operates an online marketplace for property finance, said on Monday that the market should now “reduce expectations” for its 2024 net operating income and pretax profit by disregarding a previously expected net gain of £12.1m from the deal.
As of April, Lendinvest’s company-compiled consensus forecast a net operating income of £36m and pretax loss of £15.9m for the financial year ending on 31 March 2024.
The firm had announced the expected gain in January following the £5m sale of its residual economic interest in Mortimer BTL 2023-1, which comprised £410m worth of UK buy-to-let mortgages. It completed the securitisation last year, marking its fifth and largest transaction.
However, Lendinvest said on Monday that it had identified an “isolated issue with the accounting advice concerning the sale” and revised its recognition calculation.
It added that the issue related to “swap and hedge accounting assumptions that include mark-to-market adjustments and fair value hedge accounting applied as part of the derecognition calculation”.
Lendinvest said the latest adjustments had no impact on its current cash position. The firm continues to expect to return to profitability in its 2025 financial year.
Increased competition among mortgage lenders saw the AIM-listed firm swing to a loss of £15.1m in the six months to the end of September and forced it to cut more than a quarter of its staff.
However, in April Lendinvest cited “rising confidence in the UK property market”, largely due to expectations for easing inflation, lower borrowing costs and falling swap rates, which influence mortgage pricing.