GB : Sancus Lending Group Limited - New management clearing the decks

While today’s trading update portrays a difficult 2021 financial performance for Sancus, it also highlights the priority of Rory Mepham, new CEO, of planning a turnaround to make the group profitable again through significant growth in loans under management. Following his appointment in June 2021, a detailed evaluation of the loan book revealed that a realistic view of potential troubled loans written in 2018 or before was required. Thus, higher provisions, lower revenues from the Offshore business, which suffered from the knock-on impact of Covid, and higher costs due to expansion in UK and Ireland mean that the FY21 operating loss is expected to be £10.3m (LibE: £1.0m loss). However, with the group expected to provide details on the substantial progress made in transforming the business to an operationally exciting place at the FY21 results, we maintain our current FY22 and FY23 forecasts and HOLD rating.