DJ Funding Circle Holdings plc: Half Year 2025 Results
Funding Circle Holdings plc (FCH)
Funding Circle Holdings plc: Half Year 2025 Results
04-Sep-2025 / 07:00 GMT/BST
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Funding Circle Holdings plc
Half Year 2025 Results
STRATEGIC PROGRESS DRIVING STRONG, PROFITABLE GROWTH
ON TRACK TO DELIVER MEDIUM TERM GUIDANCE
Funding Circle Holdings plc ("Funding Circle" or the "Group") today announces results for the six months ended 30 June
2025.
Lisa Jacobs, Funding Circle CEO, commented:
"The first half of 2025 demonstrates the clear success of our strategy and execution, delivering another period of
strong, profitable growth as we extended GBP1.1 billion in credit to UK businesses across our product suite. We achieved
17% revenue growth to GBP92.3 million and a significant increase in PBT to GBP6.0 million.
Our Term Loans business delivered GBP12.7 million in PBT, driven by product innovation and continued operating leverage.
Our FlexiPay and Cashback credit card products continue to scale rapidly, as we meet more of our customers' needs with
well loved products. FlexiPay transactions were up 66% year-on-year with cumulative transactions now exceeding GBP1
billion since launch as businesses choose Funding Circle to borrow, pay later and spend.
Our performance is underpinned by our great customer experience, powered by our proprietary data, technology and AI
powered credit models. We are leveraging these strengths to deliver operating leverage in our Term Loans business
whilst continuing to grow our newer cashflow products. Today, we continue to fulfil our mission of backing small
businesses as a more meaningful part of our customers' lives, serving more of their needs, interacting with them more
frequently and capturing a larger share of their financing. This gives us a clear platform for further growth.
We remain on track to achieve our medium-term guidance of at least GBP200 million in revenue and at least GBP30 million in
PBT in FY 2026 and are continuing our share buyback programme."
H1 2025 H1 2024
GBPm GBPm
Credit extended 1,111 918
Loans/Balances under management 2,829 2,858
Revenue 92.3 79.1
Profit/(loss) before taxation (pre exceptional items) 6.0 0.5
Profit/(loss) before taxation (post exceptional items) 6.0 (2.1)
Unrestricted Cash 115.0 164.4
Financial Summary:
-- Credit extended grew 21% to GBP1,111m (H1 2024: GBP918m):
- Continued momentum in Term Loans originations, up 6% to GBP736m (H1 2024: GBP692m).
- Strong growth in FlexiPay and Cashback credit card transactions (collectively "FlexiPay"), increasing 66% to
GBP375m (H1 2024: GBP226m). -- Loans/Balances under management ("LuM") were broadly flat at GBP2,829m (FY 2024: GBP2,833m; H1 2024: GBP2,858m) and the
credit performance in both Term Loans and FlexiPay remains in line with expectations:
- Term Loans LuM of GBP2,660m ( FY 2024: GBP2,714m; H1 2024: GBP2,777m) reflects the repayment of legacy Covid
government-guaranteed loans.
- FlexiPay balances, which drive FlexiPay's revenue, increased 42% to GBP169m (FY 2024: GBP119m; H1 2024: GBP81m). -- Revenue was GBP92.3m, up 17% (H1 2024: GBP79.1m) with a healthy contribution from both Term Loans and FlexiPay. -- Strong profit growth, with profit before tax ("PBT") of GBP6.0m (H1 2024: GBP0.5m pre-exceptionals):
- Term Loans increased profitability with PBT of GBP12.7m (H1 2024: GBP9.2m pre-exceptionals) reflecting our ongoing
operating leverage.
- FlexiPay loss before tax pre-exceptionals narrowed to GBP6.7m (H1 2024: GBP8.7m loss) as the product continues to
scale. -- Unrestricted cash remained healthy at GBP115.0m (FY 2024: GBP150.5m), with the decrease due to the share buyback
programmes in the period, planned investment in FlexiPay and R&D in a new shorter term lending product, in line
with our capital allocation strategy. -- As at 30 June 2025, we have spent GBP53m purchasing and cancelling 50m shares out of the total GBP75m announced since
March 2024; GBP19m was spent in H1 2025 purchasing and cancelling 16.7m shares. The share buyback programme is
continuing.
Operational & Strategic Summary:
-- Leading UK online SME finance platform, with a simple and profitable business model.
-- Continued growth and innovation across our product suite:
Term Loans:
- Origination growth of 6% with PBT margins increasing from 13% to 17%, driven by product innovation and operating
leverage. - Grew breadth of Marketplace product set, monetising our distribution strength, and allowing us to serve more
customers' needs by extending credit to businesses via our partners. - Expansion of our shorter term lending proposition.
FlexiPay and Cashback credit card:
- Continued strong growth from both new and existing customers. The repeat nature of the product has resulted in over
80% of 2025 revenue coming from existing customers. Transactions grew 66% since H1 2024 and closing balances grew
42% to GBP169m since FY 2024. - Since the soft launch of Cashback credit card in H2 2024, continued steady uptake in users and borrower usage
exceeding expectations. - Collectively transactions from these products have surpassed GBP1bn since launch.
-- Robust and attractive returns through the cycle leading to strong ongoing investor demand:
- Annualised net returns to institutional investors on Term Loans consistently 5% above cost of capital.
- Forward lending commitments of GBP1.8bn across products with strong future pipeline.
Looking Ahead:
-- Our strategic priorities are focused on customer-led profitable growth:
- Get to yes: get the right product to the right business, through credit excellence and product improvements.
- Expand our audience: target new segments; deepen and expand our distribution channels.
- Scale our products: capitalise on the large market opportunity by focusing on refining and scaling our products
to drive growth and margin expansion.
- Build a seamless lifetime customer experience: deliver an exceptional experience throughout our customers'
lifetime journey with our expanded product set, as their trusted financial partner.
We have attractive growth opportunities and are on track to deliver our medium term guidance in 2026 of 15-20% revenue CAGR from FY23 and PBT margins of >15%, equating to:
- Revenue of at least GBP200m - Profit before tax of at least GBP30m
Board Changes:
The Company noted in the FY 2024 Annual Report and Accounts that there would be some upcoming changes in Board composition in respect of some of its long-tenured Directors.
In May 2025, Andrew Learoyd, the Chairman stepped down with Ken Stannard appointed as the new Chairman. We thank Andrew for his tireless commitment and steering of the Group since its very early days.
In June 2025, Geeta Gopalan, the Chair of the Audit & Risk Committee and Senior Independent Director stepped down and we want to thank her for her hard work and dedication to Funding Circle over a number of years. Helen Beck, the Chair of the Remuneration Committee has been appointed as Senior Independent Director.
In June 2025, Maeve Byrne was appointed as chair of the Audit Committee and, in August 2025, Richard Harvey was appointed chair of the Risk Committee. We welcome them both to the Board.
Analyst presentation:
Management will host a presentation and conference call for institutional investors and analysts at 9:30am UK time (BST) on Thursday 4 September 2025.
To watch and listen to the webcast, with the opportunity to submit written questions, please use this link to register and gain access to the event.
For conference call access, please dial +44 33 0551 0200 or +1 786 697 3501. Quote 'Funding Circle Half Year Results' when prompted by the operator.
An on-demand replay and transcript will also be available on the Funding Circle website following the presentation.
For further details:
ir@fundingcircle.com
Funding Circle Holdings plc
Lisa Jacobs, Chief Executive Officer
Tony Nicol, Chief Financial Officer
Headland Consultancy
Stephen Malthouse and Jack Gault (+44 20 3805 4822)
Forward looking statements and other important information:
This document contains forward looking statements, which are statements that are not historical facts and that reflect Funding Circle's beliefs and expectations with respect to future events and financial and operational performance. These forward looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond the control of Funding Circle and which may cause actual results or performance to differ materially from those expressed or implied from such forward looking statements. Nothing contained within this document is or should be relied upon as a warranty, promise or representation, express or implied, as to the future performance of Funding Circle or its business. Any historical information contained in this statistical information is not indicative of future performance.
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The information contained in this document is provided as of the dates shown. Nothing in this document should be construed as legal, tax, investment, financial, or accounting advice, or solicitation for or an offer to invest in Funding Circle.
About us:
Funding Circle is the UK's leading SME finance platform. We operate in a large, attractive and growing market, with over GBP84bn of outstanding debt in the UK SME market and over GBP80bn of SME card transactions each year. Established in 2010, Funding Circle has extended c.GBP16bn in credit to over 110,000 businesses in the UK.
For SME borrowers, Funding Circle provides an unrivalled customer experience, delivered through its technology and data, coupled with a human touch. Its solutions continue to help customers access the funding they need to succeed. For institutional investors, Funding Circle provides access to an alternative asset class in an underserved market and delivers robust and attractive returns.
We hosted a Capital Markets Event in June, details of which are available on Funding Circle's corporate website: https://corporate.fundingcircle.com/investors/results-reports-presentations/
Business review
Overview of the six months ended 30 June 2025
Building on our successful 2024, we are pleased to report that the Group continued to deliver strong revenue and profit growth in the first half of 2025.
The Group comprises two business units which are at different stages of maturity:
-- Term Loans - our more established business unit comprising longer-term loans used by SMEs for investment and
working capital needs; and -- FlexiPay and Cashback credit card (collectively "FlexiPay") - shorter-term cashflow products used for daily and
monthly spend meeting the shorter-term working capital needs of SMEs.
Originations and transactions (credit Balances under management
extended)
H1 2025 H2 2024 H1 2024 30 June 2025 31 December 2024 30 June 2024
GBPm GBPm GBPm GBPm GBPm GBPm
Continuing operations
Term Loans 736 715 692 2,660 2,714 2,777
FlexiPay 375 266 226 169 119 81
Total 1,111 981 918 2,829 2,833 2,858
Overall, credit extended in the half grew to GBP1.1bn, up 21% from H1 2024, with balances under management at GBP2.8bn and credit performance in line with management expectations.
30 June 2025 30 June 2024[1]
United Kingdom United Kingdom
Term Loans FlexiPay Total Term Loans FlexiPay Total
GBPm GBPm GBPm GBPm GBPm GBPm
Transaction fees 47.8 0.5 48.3 41.8 0.3 42.1
Servicing fees 18.3 - 18.3 18.6 - 18.6
Interest Income 3.1 20.0 23.1 4.3 9.8 14.1
Other fees 2.3 0.1 2.4 2.5 - 2.5
Operating income 71.5 20.6 92.1 67.2 10.1 77.3
Investment income 2.6 - 2.6 1.6 - 1.6
Total income 74.1 20.6 94.7 68.8 10.1 78.9
Fair value gains 2.0 - 2.0 2.8 - 2.8
Cost of funds (0.2) (4.2) (4.4) - (2.6) (2.6)
Net income ("revenue") 75.9 16.4 92.3 71.6 7.5 79.1
Adjusted EBITDA 20.1 (5.1) 15.0 18.3 (7.3) 11.0
Profit/(loss) before tax (pre 12.7 (6.7) 6.0 9.2 (8.7) 0.5
exceptional items)
Profit/(loss) before tax (after 12.7 (6.7) 6.0 6.9 (9.0) (2.1)
exceptional items)
Revenue increased by 17% to GBP92.3m (H1 2024: GBP79.1m). The Group made a profit before tax of GBP6.0m (H1 2024: profit before tax pre-exceptionals GBP0.5m).
In H1 2024, GBP2.6m of exceptional items were incurred relating to the restructuring undertaken in the UK, mainly comprising redundancy costs. After exceptional items, the H1 2024 loss before tax was GBP2.1m.
Term Loans
Our Term Loans business continues to grow, with originations of GBP736m (H1 2024: GBP692m). Term Loans originations are funded through forward flow agreements with institutional investors (a "platform" model). The loans are owned by these institutional investors who take the credit risk and the LuM do not form part of Funding Circle's balance sheet. As at 30 June 2025, we have c.GBP1.6bn of forward funding in place from these institutional investors for future originations.
We continue to look at ways to provide access to finance for small businesses and in Q2 2025 we expanded our shorter-term loan proposition (loans with terms of 6-24 months). In the short term, whilst we test and iterate this product, we are funding it through our balance sheet in line with our capital allocation policy. It is funded through the same leveraged warehouse as FlexiPay. We expect to onboard an institutional investor to fund the product in the near future.
LuM still includes the legacy covid scheme loans that are amortising down but now only account for 17% of the overall LuM with commercial LuM growing and now accounting for 83% (FY 2024: 27% and H1 2024: 39% of LuM were covid scheme loans). The legacy covid scheme LuM reduced by GBP300m in the first half with growth in LuM from new originations of cGBP250m leading to a LuM at June of GBP2.7bn.
We have also continued to grow originations through our Marketplace network of third party finance providers, where we refer SMEs that require finance outside our product range or credit box, earning a referral fee. This allows us to support an even greater number of SMEs to access a wide range of financing options. Marketplace originations are c.10% of overall originations, consistent with the prior year.
The Term Loans business delivered revenue of GBP75.9m, growing 6% on H1 2024. This growth came principally from the growth in originations and the corresponding transaction fees, with a yield of c.6.5% (H1 2024: 6.1%). The yield improvement is a function of the product mix with legacy loans originated under the government's growth guarantee scheme (GGS) at lower yields.
Term Loans generated profit before tax of GBP12.7m, up from GBP9.2m, pre-exceptionals, in H1 2024. After exceptional items, the comparative H1 2024 profit before tax was GBP6.9m. This profit improvement demonstrates the strong operational leverage we are achieving from this more mature business.
FlexiPay and Cashback credit card (collectively "FlexiPay")
Our line of credit product, FlexiPay, has demonstrated significant growth to date and we continue to innovate in response to customer feedback.
When the product was initially launched, customers were able to draw and repay within a 3-month period. During 2024 we expanded repayment options to include 1, 3, 6, 9 and 12 months, with fees varying depending on payback period. As a result, the average fee for each drawdown grew to 7.0% (H1 2024: 5.0%), reflecting a longer average term of 4.7 months.
In H2 2024 we launched our Cashback credit card and we continue to experience good uptake from customers. When customers transact using cards, we earn an interchange fee of 1.75% alongside interest on any revolving balances. The product offers customers a 2% cashback in the first six months followed by 1% thereafter.
Overall FlexiPay and Cashback credit card transactions increased by 66% from H1 2024, reaching GBP375m (H1 2024: GBP226m), demonstrating strong customer engagement as we added new customers and released new features. Drawn lines of credit ("balances") grew to GBP169m at 30 June 2025 (31 December 2024: GBP119m), in line with transaction growth. FlexiPay transactions have now surpassed GBP1bn since launch.
FlexiPay and the Cashback credit card are funded by Funding Circle capital and a senior debt facility. The interest payable on this facility is shown in "cost of funds" and is based on SONIA plus a margin. A GBP230m facility was renewed in April 2025 with the ability to upsize further. We fund these products through our balance sheet as this is an efficient use of capital with the capital cycling quickly.
Revenue for FlexiPay was GBP16.4m in H1 2025, increasing from GBP7.5m in H1 2024 as a result of a rise in the number of transactions and fee growth.
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Loss before tax pre-exceptionals was GBP6.7m (H1 2024: loss of GBP8.7m). Marketing costs and expected credit losses which are recognised upfront give rise to a "j-curve" to achieve profitability i.e. once a customer is onboarded and those costs are incurred, due to the repeat nature of these products, we expect to earn repeat revenues. Over 80% of the H1 2025 revenues came from customers onboarded pre-2025.
Profit and loss
30 June 2025 30 June 2024
30 June 2024 Exceptional
Before exceptional items items
GBPm GBPm GBPm GBPm
Transaction fees 48.3 42.1 - 42.1
Servicing fees 18.3 18.6 - 18.6
Interest income 23.1 14.1 - 14.1
Other fees 2.4 2.5 - 2.5
Operating income 92.1 77.3 - 77.3
Investment income 2.6 1.6 - 1.6
Total income 94.7 78.9 - 78.9
Fair value gains 2.0 2.8 - 2.8
Cost of funds (4.4) (2.6) - (2.6)
Net income ("revenue") 92.3 79.1 - 79.1
Expected credit loss charge (8.4) (3.8) - (3.8)
People costs (32.7) (36.1) (2.3) (38.4)
Marketing costs (27.6) (22.3) - (22.3)
Depreciation, amortisation and impairment (6.1) (6.5) (0.3) (6.8)
Other costs (11.5) (9.9) - (9.9)
Operating expenses (77.9) (74.8) (2.6) (77.4)
Profit before tax from continuing operations 6.0 0.5 (2.6) (2.1)
Loss for the period from discontinued - (10.2) - (10.2)
operations
Operating income includes transaction fees, servicing fees, interest income from loans held at amortised cost, interest on cash balances and other fees and was GBP92.1m (H1 2024: GBP77.3m).
-- Transaction fees, representing fees earned on originations, increased to GBP48.3m (H1 2024: GBP42.1m), driven by growth
in originations as the business continued to expand its Term Loans offering to more segments of the market, and
attract more applications from SMEs. Average transaction fee yields increased in the Term Loans business to 6.5%
(H1 2024: 6.1%) due to product mix. -- Servicing fees, representing income for servicing LuM, were GBP18.3m (H1 2024: GBP18.6m). The fees move in line with
the quantum of LuM, which decreased in the Term Loans business as growth in LuM from new lending was offset by
continued repayment on the legacy Covid-19 scheme loans. Servicing yields remain similar to H1 2024 levels at
c.1.3%. Servicing fees are not charged on FlexiPay lines of credit.
-- Interest income represents the fees earned on FlexiPay lines of credit and interest earned on cash and cash
equivalents:
i. FlexiPay interest income is the fee charged on transactions and spread over a number of months, in line with
borrower repayments. It has increased to GBP19.3m (H1 2024: GBP9.3m), driven by transaction levels and the average fees
on transactions which were 7.0% in the year (H1 2024: 5.0%). ii. Interest earned on cash and cash equivalents was GBP3.7m (H1 2024: GBP4.6m). This interest applies to the Group's
unrestricted cash as well as restricted cash drawn from the Citibank facility in anticipation of future FlexiPay
and Cashback credit card transactions.
-- Other fees arose principally from collection fees we recovered on defaulted loans or fees for the successful
facilitation of transactions on behalf of investors.
Investment income represents the investment income, less investment expense, on loans held on balance sheet at fair value. It increased to GBP2.6m (H1 2024: GBP1.6m), driven by the expansion of our shorter-term lending offering.
Revenue, defined as total income after fair value adjustments and cost of funds, was GBP92.3m (H1 2024: GBP79.1m) growth of 17%.
Expected credit losses
These principally relate to the IFRS 9 charge for FlexiPay where we account for actual and future expected credit losses from SMEs defaulting on their lines of credit. We would expect this charge to continue to increase as FlexiPay and Cashback credit card grow. Actual loss rates during the period remained consistent with the prior year.
Operating expenses
At an overall level, operating expenses increased by 4% compared with H1 2024. The primary drivers of cost growth were the variable expenses associated with marketing. Marketing costs increased by 24% to GBP27.6m.
Costs continue to be actively and tightly managed. Excluding the variable marketing costs, operating costs were down 4% compared to a 17% growth in revenue, following the 2024 cost restructuring programme which is delivering an annualised cash saving of GBP15m in 2025.
People costs (including contractors) represent the Group's largest ongoing operating cost and include salary-related costs plus share-based payments.
Total people costs reduced by 9% in the year with the savings achieved from the headcount restructuring more than offsetting inflation, new hires and the absorption of global costs previously allocated to the US business and the impact of the UK employer's national insurance increase. The number of employees at 31 December 2024 was 726, consistent with that at 30 June 2025.
The share-based payment charge for the year, included in people costs, was GBP2.6m (H1 2024: GBP4.2m). This charge is impacted by the awarding of share incentives as well as the movement in share price which impacts employers' national insurance costs. The large increase in the share price drove the higher charge seen in 2024.
30 June 30 June
Change
Continuing operations 2025 2024
%
GBPm GBPm
Salary costs 34.5 37.1 (7)
Less capitalised development spend ("CDS") (4.4) (5.2) (15)
Salary costs net of CDS 30.1 31.9 (6)
Share-based payments 2.6 4.2 (38)
Total people costs 32.7 36.1 (9)
Average headcount (incl. contractors) 725 834 (13)
Period-end headcount (incl. contractors) 727 814 (11)
Marketing costs comprise performance marketing (direct mail and online), brand spend and commission payments made to brokers. Marketing costs increased in the year to GBP27.6m (H1 2024: GBP22.3m) and remain at c.30% of revenue.
Depreciation, amortisation and impairment costs of GBP6.1m (H1 2024: GBP6.5m) largely represent the amortisation of the cost of the Group's capitalised technology development and the depreciation of right-of-use assets related to the Group's office lease.
Other costs, which consist of loan processing costs, data and technology, professional fees and staff and office-related costs, have grown as the Group continued to invest in growth in the FlexiPay business. The increase is driven by inflation, higher volumes and loan processing costs.
Balance sheet and investments
The Group's net equity was GBP198.7m at 30 June 2025 (31 December 2024: GBP216.5m). This reduction reflects the share buyback during the period.
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The majority of the Group's balance sheet is represented by cash and invested capital as shown below. The invested capital is in certain SME loans, either directly or historically through investment vehicles, and in the FlexiPay lines of credit.
30 June 31 December
Operating Investing
2025 2024
Term Loans FlexiPay Shorter term CBILS/RLS/GGS Other Total Total
business lending co-investments
GBPm GBPm GBPm GBPm
GBPm GBPm GBPm
SME loans and lines of 2.3 141.9 46.0 16.2 1.1 207.5 118.8
credit
Cash and cash
equivalents
Unrestricted 114.7 0.3 - - 115.0 150.5
Restricted - 24.8 4.6 4.2 - 33.6 37.1
Other assets/ - 9.7 (1.0) - - 8.7 6.3
(liabilities)
Borrowings - (132.3) (38.5) - - (170.8) (101.9)
Cash and net
investments
117.0 44.4 11.1 20.4 1.1 194.0 210.8
Other assets 40.1 - - - - 40.1 45.3
Other liabilities (31.2) - - (4.2) - (35.4) (39.6)
Equity 125.9 44.4 11.1 16.2 1.1 198.7 216.5
The table below provides a summation of Funding Circle's net invested capital in products and vehicles:
30 June 31 December
Investment in product/vehicles 2025 2024
GBPm GBPm
CBILS/RLS/GGS/commercial co-investments1 16 18
Shorter term lending1 11 -
Other 2 2
Net invested 29 20
FlexiPay1 44 34
Total net invested capital 73 54
1. These vehicles through which the funding and lending is generated are set up to be bankruptcy remote.
CBILS/RLS/GGS/commercial co-investments - as part of our historic participation in the CBILS and RLS government-guaranteed loan schemes and our ongoing involvement in GGS, we were required to co-invest c.1% alongside institutional investors.
Shorter term lending - this relates to our shorter term lending offering which we expanded in H1 2025 as part of our Term Loans business with terms from 6 to 24 months. Whilst the product is tested and iterated, we are funding it using our balance sheet, through the same leveraged warehouse as FlexiPay, in line with our capital allocation framework. We expect to onboard an institutional investor to fund the product and purchase the loan portfolio. The loans are treated as held for sale and therefore accounted for at fair value.
Cash flow
At 30 June 2025, the Group's cash position was GBP148.6m (31 December 2024: GBP187.6m). Of this balance GBP115.0m (31 December 2024: GBP150.5m) is unrestricted in its use with GBP33.6m (31 December 2024: GBP37.1m) being restricted.
Restricted cash relates to cash held in the funding vehicle of FlexiPay and shorter term lending together with amounts owed to the British Business Bank ("BBB") for guarantee fees collected from institutional investors under the participation of the CBILS, RLS and GGS schemes. Total cash movements have principally been driven by:
i. trading performance; ii. ongoing investment in FlexiPay lines of credit and shorter term lending product with external bank debt; iii. monetisation of on-balance sheet SME loans as they have continued to pay down; iv. purchase of shares as part of the share buyback programme and the employee benefit trust; and v. timing of working capital movements associated with UK government loan guarantee payments received from investors
still to be paid to the BBB.
Free cash flow, excluding the one-off guarantee fee payment, has significantly improved year on year driven by the prior year disposal of the loss-making US business and the move to profitability of the UK Group.
Free cash flow, which is an alternative performance measure, represents the net cash flows from operating activities less the cost of purchasing intangible assets, property, plant and equipment and lease payments. It excludes the investment vehicle financing and funding cash flows together with FlexiPay lines of credit and Cashback credit card. The Directors view this as a key liquidity measure and it is the net amount of cash used or generated to operate and develop the Group's platform each year.
The table below shows how the Group's cash has been utilised:
30 June
30 June 2025
2024
GBPm GBPm
Adjusted EBITDA from continuing operations 15.0 11.0
Adjusted EBITDA from discontinued operations - (8.7)
Adjusted EBITDA 15.0 2.3
Fair value adjustments (2.0) (5.0)
Purchase of tangible and intangible assets (4.7) (7.5)
Payment of lease liabilities (0.9) (2.4)
Working capital/other 8.0 0.7
Free cash flow (excl. restricted cash movement due to guarantee fee payment) 15.4 (11.9)
Cash movement due to guarantee fee payment (0.8) (25.2)
Free cash flow 14.6 (37.1)
Net distributions from associates 0.3 0.5
Net movement in trusts and co-investments 2.7 9.1
Net movement in lines of credit (net of borrowings) (23.9) (7.4)
Net movement in SME loans at amortised cost (net of borrowings) (0.7) 1.5
Net movement in loans at fair value through profit and loss (net of borrowings) (6.2) 12.2
Share buyback/purchase of own shares (25.9) (8.2)
Effect of foreign exchange 0.1 0.1
Movement in the year (39.0) (29.3)
Cash and cash equivalents at the beginning of the year 187.6 221.4
Cash and cash equivalents at the end of the year 148.6 192.1
Share buybacks
In May 2025, we announced our third share buyback programme, for up to GBP25m, which is currently ongoing. Since March 2024, Funding Circle has bought back 15% of its issued share capital.
Principal risks and uncertainties
The Group's principal risks and uncertainties were disclosed on pages 55 to 62 of the Funding Circle Holdings plc 2024 Annual Report and Accounts after review and approval by the Board. The Group considers that the overall principal risks and uncertainties, risk appetite, key risks and management of risks remain unchanged for the six months ended 30 June 2025.
The principal risks include:
- Strategic risk, including the economic environment and environmental, social and governance risk; - Funding and balance sheet risk; - Credit risk, including borrower acquisition and portfolio management risk; - Regulatory, reputation and conduct risk; - Operational risk, including client money risk, financial crime and process risk; and - Technology risk, including information security and data risk.
Statement of Directors' Responsibilities
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The Directors confirm that these condensed interim financial statements have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority, give a true and fair view of the assets, liabilities, financial position and profit and loss as required by DTR 4.2.4 and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
. an indication of important events that have occurred during the first six months and their impact on the condensed set of interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
. material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report and Accounts.
The maintenance and integrity of the Funding Circle Holdings plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that might have occurred to the interim financial statements since they were initially presented on the website.
The Directors of Funding Circle Holdings plc are listed in the Funding Circle Holdings plc Annual Report and Accounts for 31 December 2024 as updated with the board changes highlighted earlier in this document. A list of current directors is maintained on the Funding Circle Holdings plc website: www.corporate.fundingcircle.com.
By order of the Board
Lisa Jacobs, Chief Executive Officer
4 September 2025
Tony Nicol, Chief Financial Officer
4 September 2025
Condensed consolidated statement of comprehensive income
for the six months to 30 June 2025 (unaudited)
30 June 30 June
30 June 2024 Exceptional
items1
2025 2024
Before
exceptional
items
GBPm GBPm
Note GBPm GBPm
Transaction fees 48.3 42.1 - 42.1
Servicing fees 18.3 18.6 - 18.6
Interest income2 23.1 14.1 - 14.1
Other fees 2.4 2.5 - 2.5
Operating income 92.1 77.3 - 77.3
Investment income 2.6 1.6 - 1.6
Total income 94.7 78.9 - 78.9
Fair value gains 2.0 2.8 - 2.8
Cost of funds (4.4) (2.6) - (2.6)
Net income3 6 92.3 79.1 - 79.1
Expected credit loss charge 3, 11, 12, (8.4) (3.8) - (3.8)
15
People costs 5, 7 (32.7) (36.1) (2.3) (38.4)
Marketing costs 7 (27.6) (22.3) - (22.3)
Depreciation, amortisation and impairment 5, 6, 7 (6.1) (6.5) (0.3) (6.8)
Other costs 7 (11.5) (9.9) - (9.9)
Operating expenses 7 (77.9) (74.8) (2.6) (77.4)
Profit/(loss) before taxation 6.0 0.5 (2.6) (2.1)
Income tax (charge)/credit 8 (0.2) (0.2) - (0.2)
Profit/(loss) for the period from continuing operations 5.8 0.3 (2.6) (2.3)
Loss for the period from discontinued operations 4 - (10.2) - (10.2)
Profit/(loss) for the period 5.8 (9.9) (2.6) (12.5)
Other comprehensive expense
Items that may be reclassified subsequently to profit
and loss:
Exchange differences on translation of foreign - (0.1) - (0.1)
operations - continuing operations
Exchange differences on translation of foreign
operations - discontinued operations - (0.2) - (0.2)
4
Total comprehensive income/(expense) for the period 5.8 (10.2) (2.6) (12.8)
Total comprehensive income/(expense) attributable to:
Owners of the Parent
Income/(expense) from continuing operations 5.8 0.2 (2.6) (2.4)
Expense from discontinued operations 4 - (10.4) - (10.4)
Total comprehensive income/(expense) attributable to 5.8 (10.2) (2.6) (12.8)
the owners of the parent
Earnings per share
Basic earnings/(loss) per share from continuing 9 1.9p 0.1p (0.7)p
operations
Diluted earnings/(loss) per share from continuing 9 1.7p 0.1p (0.7)p
operations
Basic and diluted loss per share from discontinued 4, 9 - (2.9)p (2.9)p
operations
1. Exceptional items are detailed in note 5.
2. Interest income recognised on assets held at amortised cost under the effective interest rate method and GBP3.3 million (2024: GBP3.7 million) on money market funds held at fair value through profit and loss.
3. Net income is also referred to as "revenue".
The notes form part of these financial statements.
Condensed consolidated balance sheet
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DJ Funding Circle Holdings plc: Half Year 2025 Results -6-
as at 30 June 2025 (unaudited)
30 June 31 December
Note 2025 2024
GBPm GBPm
Non-current assets
Intangible assets 20.7 21.2
Property, plant and equipment 8.6 9.6
Investment in associates 0.3 0.6
Investment in trusts and co-investments 12 16.2 17.8
SME loans held at amortised cost 12 1.6 1.4
47.4 50.6
Current assets
SME loans held at amortised cost 12 0.7 0.7
SME loans held at fair value through profit and loss 12 46.8 1.2
Lines of credit 3, 12 141.9 97.1
Trade and other receivables 12 20.5 20.8
Cash and cash equivalents 13 148.6 187.6
358.5 307.4
Total assets 405.9 358.0
Current liabilities
Trade and other payables 12 27.2 27.8
Bank borrowings 10, 13 170.8 101.9
Short-term provisions and other liabilities 11 1.6 3.6
Lease liabilities 13 1.8 1.8
201.4 135.1
Non-current liabilities
Long-term provisions and other liabilities 11 0.6 0.6
Lease liabilities 13 5.2 5.8
Total liabilities 207.2 141.5
Equity
Share capital 0.3 0.3
Share premium account 0.4 0.1
Foreign exchange reserve 5.3 5.3
Share options reserve 20.0 20.6
Retained earnings 172.7 190.2
Total equity 198.7 216.5
Total equity and liabilities 405.9 358.0
The financial statements were approved by the Board and authorised for issue on 4 September 2025. They were signed on behalf of the Board by:
Tony Nicol
Director
Company registration number 07123934
The notes form part of these financial statements.
Condensed consolidated statement of changes in equity
for the six months to 30 June 2025 (unaudited)
Share Share Foreign Share Retained earnings/ Total
capital premium exchange options (accumulated losses) equity
account reserve reserve
GBPm GBPm GBPm GBPm GBPm GBPm
Balance as at
0.3 0.1 5.3 20.6 190.2 216.5
1 January 2025
Profit/(loss) for the period - - - - 5.8 5.8
Other comprehensive income
Exchange differences on
translation of foreign - - - - - -
operations
Total comprehensive income - - - - 5.8 5.8
Transactions with owners
Issue of share capital/ - 0.3 - - - 0.3
exercise of share options
Purchase of own shares held - - - - (6.9) (6.9)
in employee benefit trust
Buyback and cancellation of - - - - (19.0) (19.0)
own shares
Transfer of share option - - - (2.6) 2.6 -
costs
Employee share schemes - - - - 2.0 - 2.0
value of employee services
Balance at
0.3 0.4 5.3 20.0 172.7 198.7
30 June 2025
Balance as at
0.4 293.1 14.2 24.0 (84.9) 246.8
1 January 2024
Loss for the period - - - - (12.5) (12.5)
Other comprehensive expense
Exchange differences on
translation of foreign - - (0.3) - - (0.3)
operations
Total comprehensive expense - - (0.3) - (12.5) (12.8)
Transactions with owners
Issue of share capital/ - 0.2 - - - 0.2
exercise of share options
Purchase of own shares held - - - - - -
in employee benefit trust
Buyback and cancellation of - - - - (8.2) (8.2)
own shares
Transfer of share option - - - (3.3) 3.3 -
costs
Employee share schemes - - - - 3.0 - 3.0
value of employee services
Unaudited balance as at
0.4 293.3 13.9 23.7 (102.3) 229.0
30 June 2024
The notes form part of these financial statements.
Condensed consolidated statement of cash flows
for the six months to 30 June 2025 (unaudited)
6 months to 30 June 6 months to 30 June
Note 2025 2024
GBPm GBPm
Net cash outflow from operating activities 13 (34.4) (52.4)
Investing activities
Purchase of intangible assets (4.4) (5.3)
Purchase of property, plant and equipment (0.3) (2.2)
Originations of SME loans held at amortised cost 12 (1.2) (0.2)
Cash receipts from SME loans held at amortised cost 12 0.5 2.2
Originations from SME loans held at fair value through profit 12 (50.0) -
and loss
Cash receipts from SME loans held at fair value through profit 12 2.8 12.2
and loss
Proceeds from sale of SME loans held at fair value through 12 2.5 -
profit and loss
Investment in trusts and co-investments 12 (0.4) (1.5)
Cash receipts from investments in trusts and co-investments 12 3.1 10.6
Redemption in associates 0.3 0.5
Net cash (outflow)/inflow from investing activities (47.1) 16.3
Financing activities
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DJ Funding Circle Holdings plc: Half Year 2025 Results -7-
Proceeds from bank borrowings 10, 13 73.2 20.0 Repayment of bank borrowings 10, 13 (4.3) (2.9) Proceeds from the exercise of share options 0.3 0.2 Purchase of own shares 1 (6.9) - Share buyback 1 (19.0) (8.2) Proceeds from subleases - 0.4 Payment of lease liabilities 13 (0.9) (2.8) Net cash inflow from financing activities 42.4 6.7 Net decrease in cash and cash equivalents (39.1) (29.4) Cash and cash equivalents at the beginning of the period 187.6 221.4 Effect of foreign exchange rate changes 0.1 0.1 Cash and cash equivalents at the end of the period 13 148.6 192.1
The notes form part of these financial statements.
Notes to the condensed interim financial statements
for the six months to 30 June 2025 (unaudited)
1. Basis of preparation
General information
Funding Circle Holdings plc ('the Company') is a public limited company which is listed on the London Stock Exchange and is domiciled and incorporated in the United Kingdom under the Companies Act 2006. The Company's registered office is 71 Queen Victoria Street, London, EC4V 4AY.
These condensed interim financial statements have been prepared as at, and for the six months to, 30 June 2025. The comparative financial information presented has been prepared for the six months to 30 June 2024 and as at 31 December 2024.
The interim financial information presented as at, and for the six months to, 30 June 2025 comprise the Company and its subsidiaries (together referred to as the "Group"). The consolidated financial statements of the Group as at, and for the year to, 31 December 2024 are available on request from the Company's registered office and via the Company's website.
Going concern
The Group made a total comprehensive income of GBP5.8 million during the six months to 30 June 2025 (30 June 2024: GBP12.8 million loss). As at 30 June 2025 the Group had net assets of GBP198.7 million (31 December 2024: GBP216.5 million). This included cash and cash equivalents of GBP148.6 million (31 December 2024: GBP187.6 million) of which GBP33.6 million (31 December 2024: GBP37.1 million) is restricted. Additionally, within the net assets the Group holds GBP72.8 million (31 December 2024: GBP53.5 million) of invested capital, some of which is capable of being monetised if liquidity needs arise.
The condensed interim financial statements are prepared on a going concern basis as the Directors are satisfied that the Group has the resources to continue in business for the foreseeable future (which has been taken as at least 12 months from the date of approval of the condensed interim financial statements).
The Group has prepared detailed cash flow forecasts for the next 15 months to 31 December 2026 and has updated the going concern assessment to factor in the potential ongoing impact of inflation and related economic stress.
The base case scenario assumes:
. the economic environment remains as is with no improvement or deterioration in the macro environment forecast;
. growth in shorter term lending;
. growth in Cashback credit card alongside FlexiPay lines of credit;
. the Group continues to fund the lines of credit through its balance sheet along with the senior banking facility;
. shorter term lending assets are expected to be funded in the same way until December 2025 when we expect to sell the assets and switch to operating under a platform model;
. costs are controlled with any growth driven by marketing, expected credit losses ("ECL") and cost of funds. Remaining costs grow but predominantly through inflation. Strict control of headcount, with limited increases;
. the current share buyback programme concludes in April 2026 with no additional buyback or dividend assumed; and
. corporation tax begins to be paid alongside in 2026 utilising brought forward tax losses.
Management prepared a severe but plausible downside scenario in which:
. further macroeconomic volatility continues through the period with elevated inflation and interest rates reducing originations as borrower demand for loans at higher interest rates reduces and investor funding appetite reduces;
. a downside scenario is applied to Term Loans loans under management resulting in reduced servicing fees;
. a downside scenario applied to the on-balance sheet lines of credit results in reduced net interest margins with higher cost of funds;
. an operational event occurs, such as impacts on critical suppliers and lower corporate cash levels resulting in lost revenues and cash outlays.
The severe but plausible downside scenario results in a GBP40 million cash outflow (referred to as management's stress buffer).
Management has reviewed its limited regulatory capital requirements. In the downside scenario, the risk of capital requirement breach is considered remote. The Group does not currently rely on committed or uncommitted borrowing facilities, with the exception of a facility for the purpose of originating FlexiPay lines of credit (and initially shorter term lending) and does not have undrawn committed borrowing facilities available to the wider Group.
The Directors have made enquiries of management and considered budgets and cash flow forecasts for the Group and have, at the time of approving these financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future, specifically assessed for the 15 months to 31 December 2026.
Basis of preparation
These condensed interim financial statements, which have been reviewed and not audited, have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with UK adopted IAS 34, "Interim Financial Reporting". They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year to 31 December 2024 which have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
The financial information included in these condensed interim financial statements does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 (the 'Act'). The statutory accounts for the year ended 31 December 2024 have been reported on by the Company's auditors and were delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditor's report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 of the Act.
Significant changes in the current reporting period
The financial position and performance of the Group were affected by the following events and transactions during the six months to 30 June 2025:
i. Expansion into shorter term loans product
In April 2025, the Group expanded into a shorter term loan product offering fixed rate interest term loans between 6 and 24 month terms. Loans with terms over 12 months are subject to an origination fee in line with our other term loan products, while those with terms of 12 months or less are not subject to origination fees. The shorter term loans generally charge higher rates of interest than FC's equivalent longer term loans, but provide more flexibility with penalty-free prepayments and in some cases no origination fees.
Shorter term loans are financed through the same leveraged warehouse used to fund the FlexiPay and Cashback credit card products, Kanaloa 2 Limited ("K2"). The interest and fees related to the senior borrowing facility used to fund the loans is presented under "cost of funds" in the condensed consolidated statement of comprehensive income.
The intention of the business with the shorter term loan product is to initially build up the product on-balance sheet to an appropriate scale and to be able to iterate it, before selling the loans to a third party investor and originating new loans under a platform strategy going forward. As the loans are under a business model intending to sell them, they are measured at fair value through profit and loss and presented under "SME loans held at fair value through profit and loss" on the condensed consolidated balance sheet. Interest income and fair value gains or losses follow the existing accounting policy and presentation for SME loans held at fair value through profit and loss and within the Term Loans segment of the business in note 6.
ii. Share buyback programme extension and purchase of own shares
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DJ Funding Circle Holdings plc: Half Year 2025 Results -8-
The share buyback programme which was launched and then extended in 2024 concluded in May 2025 and was extended further to buy and cancel up to GBP25 million of shares in order to return value to shareholders. The nominal cost of the shares cancelled reduces the Group's share capital with an equal increase in the capital redemption reserve. The full cost of the buyback inclusive of stamp duty and broker fees is debited to retained earnings. In the period to 30 June 2025, 16.7 million shares were purchased for consideration of GBP19.0 million inclusive of fees and expenses under the programme.
Additionally, the Group purchased 6.4 million shares for GBP6.9 million during the period ended 30 June 2025, which were not cancelled and are held for the purpose of satisfying the exercise of employee share options.
2. Changes in material accounting policies
The accounting policies, methods of computation and presentation adopted in the preparation of the condensed interim financial statements are consistent with those followed in the preparation of the consolidated financial statements for the year ended 31 December 2024. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
A number of new or amended standards became applicable for the current reporting period, however, the Group did not have to change its accounting policies or make retrospective adjustments as a result of adoption.
3. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the condensed consolidated interim financial statements requires the Group to make estimates and judgements that affect the application of policies and reported amounts. Critical judgements represent key decisions made by management in the application of the Group accounting policies. Where a significant risk of materially different outcomes exists due to management assumptions or sources of estimation uncertainty, this will represent a key source of estimation uncertainty.
Estimates and judgements are continually evaluated and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
The significant judgements and estimates applied by the Group in the financial statements have been applied on a consistent basis with the financial statements for the comparative year to 31 December 2024, except for ECL where the model methodology has been refined (see note 12).
Critical judgements
a. Loans originated through the platform
The Group originates SME loans through its platform which have been funded primarily by banks, asset managers, other institutional investors, funds, national entities, retail investors or by usage of its own capital. Judgement is required to determine whether these loans should be recognised on the Group's balance sheet. Where the Group, its subsidiaries or SPVs which it consolidates have legal and beneficial ownership to the title of those SME loans, they are recognised on the Group's balance sheet. Where this is not the case, the loans are not recognised at the point of origination.
b. Recognition of deferred tax
Under IAS 12, a deferred tax asset should be recognised for all deductible temporary differences and tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary difference or tax losses can be utilised. While the Board-approved forecasts project the UK to be in a taxable profit position for the year ended 31 December 2025 and beyond, there are risks to achieving this forecast and as a result it is not considered highly probable. Management has used its judgement in determining whether there is sufficient certainty to recognise a deferred tax asset. The "European Securities and Markets Authority ("ESMA") has previously issued guidance relating to the recognition of deferred tax assets in response to companies recognising assets too early only to subsequently write them off. One of the key indicators suggested by ESMA for the recognition of deferred tax is whether taxable profit is being recognised from which an entity has begun to offset losses. This is not yet the case for the UK business for a sustained period and management has determined not to recognise a deferred tax asset as a result. Had management determined a different level of certainty regarding the taxable profits of the UK for the year end and beyond, then a deferred tax asset may have been recognised.
Key sources of estimation uncertainty
The following are the key sources of estimation uncertainty that the Directors have identified in the process of applying the Group's accounting policies and have the most significant effect on the amounts recognised in the financial statements.
a. Expected credit loss impairment of FlexiPay lines of credit (note 11, 12 and 15)
At 30 June 2025, the Group held GBP164.3 million of drawn FlexiPay lines of credit and GBP337.1 million of undrawn lines of credit, gross of expected credit loss impairment allowances (31 December 2024: GBP110.0 million drawn and GBP278.7 million undrawn).
While other financial assets of the Group are held at amortised cost, the FlexiPay lines of credit are the most sensitive to estimation uncertainty due to the higher balance outstanding and more limited historical data.
An expected credit loss impairment allowance is held against the lines of credit of GBP24.0 million (GBP22.4 million related to drawn lines of credit and GBP1.6 million related to undrawn) (31 December 2024: GBP15.6 million split GBP12.9 million drawn and GBP2.7 million undrawn).
The Group estimates the expected credit loss allowance following IFRS 9 through modelling the exposure at default based on observed trends related to the overall line of credit facility and the proportion drawn at the time of default. The probability of default is estimated utilising observed trends and combining these with forward-looking information including different macroeconomic scenarios which are probability weighted. The loss given default is driven by assumptions regarding the level of recoveries collected after defaults occur.
The area most sensitive to estimation uncertainty is the probability of default ("PD") related to stage 1 and 2 lines of credit which is modelled based on observed trends and adjusted using probability weighted forward-looking scenarios. Currently a baseline scenario, upside scenario and downside scenario are utilised which are probability weighted as outlined below which provide a blended stage 1 and 2 average probability of default of 9.1%.
If 100% probability weighting was to be applied to each scenario, the weighted PD related to stage 1 and 2 lines of credit and the expected credit loss impairment provision would change as follows:
ECL scenario 100% weighting ECL GBP
to scenario
Change in average PD
compared to blended scenario
%
Change in ECL compared
to blended scenario GBP
Scenario Average
weighting % PD %
Base case 70% 100% 8.9% 23.8 (0.2%) (0.2)
Upside 15% 100% 6.1% 20.2 (3.0%) (3.8)
Downside 15% 100% 12.6% 28.7 3.5% 4.7
Blended weighted 100% 100% 9.1% 24.0 - -
scenarios
The above reflects the impact of both drawn and undrawn elements of the ECL impairment allowance.
The loss given default ("LGD") of the expected credit loss impairment allowance is estimated based on observation of the blended portfolio recoveries to date on defaulted lines of credit projected out into the future using an average 84% LGD. While the LGD expectation is based on the trajectory of recoveries to date, the lifetime LGD may differ from the estimated amount. A +/- 500bps increase/decrease in the estimated lifetime LGD would increase/decrease the expected credit loss impairment allowance by GBP0.6 million/(GBP0.6 million). It is considered that the above sensitivities represent the range of reasonably possible outcomes in relation to the LGD on FlexiPay lines of credit.
4. Discontinued operations
The Group announced on 7 March 2024 its intention to divest of the US business. As of this date, the US business was considered to form a disposal group and was reclassified as a discontinued operation. An agreement was signed on 24 June 2024 to sell the business to iBusiness Funding, LLC and the transaction completed as of 1 July 2024. As a result, Group retained control of the US business until 1 July 2024, at which point it was deconsolidated.
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DJ Funding Circle Holdings plc: Half Year 2025 Results -9-
5. Exceptional items
The Group reflects its underlying financial results in the "before exceptional items" column of the condensed consolidated statement of comprehensive income in order to provide a clear and consistent view of trading performance.
In the previous year, as part of its ongoing commitment to profitability, the Group launched a redundancy and cost efficiency programme. This process resulted in a simpler, leaner and better positioned UK-focused operation. This resulted in redundancy costs of GBP2.3 million and impairment of capitalised development spend intangible assets of GBP0.3 million which were treated as exceptional items in the period ended 30 June 2024.
6. Segmental information
IFRS 8 Operating Segments requires the Group to determine its operating segments based on information which is used internally for decision making. Based on the internal reporting information and management structures within the Group, it has been determined that there are two continuing business and one discontinued US business operating segments. Reporting on this basis is reviewed by the Executive Committee ("ExCo"), which is the chief operating decision maker ("CODM"). The ExCo is made up of the Executive Directors and other senior management and is responsible for the strategic decision making of the Group.
The ExCo measures the performance of each segment primarily by reference to profit before tax. Additionally, the ExCo utilises a non-GAAP measure, Adjusted EBITDA, which is defined as profit/loss for the period before finance costs (being the discount unwind on lease liabilities), taxation, depreciation, amortisation and impairments ("AEBITDA"), and additionally excludes share-based payment charges and associated social security costs, foreign exchange and exceptional items. AEBITDA is a measure of Group performance as it allows better comparability of the underlying performance of the business. The segment reporting, including AEBITDA, excludes the impact of the Group's transfer pricing arrangements as this is not information presented to, or used by, the CODM in decision making or the allocation of resources.
30 June 2025 30 June 20241
Continuing operations Continuing operations
United Kingdom United Kingdom
Term Loans FlexiPay Total Term Loans FlexiPay Total
GBPm GBPm GBPm GBPm GBPm GBPm
Transaction fees 47.8 0.5 48.3 41.8 0.3 42.1
Servicing fees 18.3 - 18.3 18.6 - 18.6
Interest Income 3.1 20.0 23.1 4.3 9.8 14.1
Other fees 2.3 0.1 2.4 2.5 - 2.5
Operating income 71.5 20.6 92.1 67.2 10.1 77.3
Investment income 2.6 - 2.6 1.6 - 1.6
Total income 74.1 20.6 94.7 68.8 10.1 78.9
Fair value gains 2.0 - 2.0 2.8 - 2.8
Cost of funds (0.2) (4.2) (4.4) - (2.6) (2.6)
Net income (revenue) 75.9 16.4 92.3 71.6 7.5 79.1
Adjusted EBITDA 20.1 (5.1) 15.0 18.3 (7.3) 11.0
Discount unwind on lease liabilities (0.3) - (0.3) (0.3) - (0.3)
Depreciation, amortisation, impairment and (4.9) (1.2) (6.1) (5.8) (0.7) (6.5)
modification gains/(losses)
Share-based payments and social security (2.2) (0.4) (2.6) (3.5) (0.7) (4.2)
costs
Exceptional items - - - - (2.3) (0.3) (2.6)
Foreign exchange gains - - - - 0.5 - 0.5
Profit/(loss) before tax 12.7 (6.7) 6.0 6.9 (9.0) (2.1)
1. The segmental results of the US business are not presented above and are presented within discontinued operations.
7. Operating expenses
30 June 30 June
Before exceptional
items
Continuing operations 2025 Exceptional items1 2024
GBPm
GBPm GBPm GBPm
Note
Depreciation 1.2 1.7 - 1.7
Amortisation 4.8 5.2 - 5.2
Impairment of intangibles 5 0.1 - 0.3 0.3
Modification gains - (0.4) - (0.4)
Employment costs (including contractors) 5 32.7 36.1 2.3 38.4
Marketing costs - (excluding employment 27.6 22.3 - 22.3
costs)
Data and technology 4.1 3.6 - 3.6
Other expenses 7.4 6.3 - 6.3
Total operating expenses from continuing 77.9 74.8 2.6 77.4
operations
1. See note 5 for details on exceptional items.
8. Taxation
The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings. The estimated effective tax rate used for the six months to 30 June 2025 (excluding the tax charge on Research and Development Expenditure Credits (RDEC)) is (3.12%), compared to (2.09%) for the six months to 30 June 2024.
The major components of income tax expense in the condensed consolidated statement of comprehensive income are:
30 June 30 June
2025 2024
GBPm GBPm
Current tax
Corporation taxation on continuing operations 0.2 0.2
Corporation taxation on discontinued operations - 0.1
Total current tax 0.2 0.3
Deferred tax
Deferred taxation on continuing operations - -
Deferred taxation on discontinued operations - -
Total deferred tax - -
Total tax charge/(credit) on continuing operations 0.2 0.2
Total tax charge/(credit) on discontinued operations - 0.1
The above tax charge includes the amount of tax deducted from the gross RDEC credit receivable for 2025 of GBP0.2 million (2024: GBP0.2 million). There is a state tax liability of GBPnil (2024: GBP0.1 million) since the US business was disposed of in 2024.
The Group has unrelieved tax losses of GBP127.8 million (31 December 2024: GBP125.0 million) that relate to continuing operations and are available for offset against future taxable profits.
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DJ Funding Circle Holdings plc: Half Year 2025 Results -10-
9. Earnings/(loss) per share
30 June 30 June 30 June
2025 2024 2024
GBPm GBPm GBPm
Total Total Before exceptional items
Profit/(loss) for the period from continuing operations 5.8 (2.3) 0.3
Basic weighted average number of ordinary shares in issue 307.2 346.3 346.3
(million)
Basic earnings/(loss) per share from continuing operations 1.9p (0.7)p 0.1p
Profit/(loss) for the period from continuing operations 5.8 (2.3) 0.3
Diluted weighted average number of ordinary shares in issue 341.5 346.3 389.9
(million)
Diluted earnings/(loss) per share from continuing operations 1.7p (0.7)p 0.1p
30 June 30 June
2025 2024
GBPm GBPm
Total Total
Loss for the period from discontinued operations - (10.2)
Basic and diluted weighted average number of ordinary shares in issue (million) - 346.3
Basic and diluted loss per share from discontinued operations - (2.9)p
10. Borrowings
During 2025 the Group continued to operate a leveraged warehouse for the purposes of funding the FlexiPay product and the shorter term lending product with a total committed facility of up to GBP231.0 million which can be upsized further. The drawn balance on the facility at 30 June 2025 was GBP170.8 million (31 December 2024: GBP101.9 million). Interest is charged on the drawn balance at SONIA plus a margin, together with a commitment fee. The forward flow period of the facility was extended to mature in April 2026 effective April 2025.
11. Provisions and other liabilities
Dilapidation Loan Total
Restructuring (Exceptional)
1 Other liabilities2
repurchase
GBPm GBPm GBPm GBPm GBPm
At 1 January 2024 1.1 0.1 - 1.4 2.6
Additional provision/liability - - 2.3 0.7 3.0
Amount utilised (0.3) (0.1) - - (0.4)
Amount reversed (0.2) - - - (0.2)
At 30 June 2024 0.6 - 2.3 2.1 5.0
Additional provision/liability - - - 1.5 1.5
Amount utilised - - (2.3) - (2.3)
Amount reversed - - - - -
At 31 December 2024 0.6 - - 3.6 4.2
Additional provision/ - - - - -
liability
Amount utilised - - - (0.9) (0.9)
Amount reversed - - - (1.1) (1.1)
At 30 June 2025 0.6 - - 1.6 2.2
1. The restructuring provision relates to the simplification and streamlining of the Group and has been treated as an exceptional item. See note 5.
2. Other provisions includes provisions for operational buybacks of GBPnil (31 December 2024: GBP0.9 million) and GBP1.6 million (31 December 2024: GBP2.7 million) of expected credit loss impairment allowance related to undrawn FlexiPay lines of credit. See notes 12 and 15.
Current and non-current
30 June 31 December
2025 2024
GBPm GBPm
Current provisions and other liabilities 1.6 3.6
Non-current provisions and other liabilities 0.6 0.6
2.2 4.2
The dilapidation provision represents an estimated cost for dismantling the customisation of offices and restoring the leasehold premises to its original state at the end of the tenancy period. The provision is expected to be utilised by 2030.
12. Financial risk management
The Group's financial risks and risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year to 31 December 2024.
Financial risks arising from financial instruments are analysed into credit risk, liquidity risk, market risk (including currency risk, interest rate risk and other price risk) and foreign exchange risk. These condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements. Details of how these risks are managed are discussed in the Funding Circle Holdings plc's financial statements for the year ended 31 December 2024.
There has not been a significant change in the Group's financial risk management processes or policies since the year end. The assumptions used in determining the level of defaults and recoveries which determine the fair value of loans remain consistent with those used at 31 December 2024.
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
. SME loans;
. investments in trusts and co-investments;
. lines of credit;
. trade and other receivables;
. cash and cash equivalents;
. trade and other payables;
. bank borrowings; and
. lease liabilities.
Categorisation of financial assets and financial liabilities
The table shows the carrying amounts of financial assets and financial liabilities by category of financial instrument:
30 June 2025 31 December 2024
Fair value through
profit
Amortised Total Fair value through Amortised Total
cost profit and loss cost
and loss
GBPm GBPm GBPm GBPm GBPm GBPm
Assets
SME loans held at amortised cost - 2.3 2.3 - 2.1 2.1
SME loans held at fair value 46.8 - 46.8 1.2 - 1.2
through profit and loss
Lines of credit - 141.9 141.9 - 97.1 97.1
Investment in trusts and 16.2 - 16.2 17.8 - 17.8
co-investments
Trade and other receivables 0.4 13.9 14.3 0.6 10.7 11.3
Cash and cash equivalents 99.8 48.8 148.6 136.3 51.3 187.6
163.2 206.9 370.1 155.9 161.2 317.1
Liabilities
Trade and other payables - (8.1) (8.1) - (8.3) (8.3)
Bank borrowings - (170.8) (170.8) - (101.9) (101.9)
Lease liabilities - (7.0) (7.0) - (7.6) (7.6)
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- (185.9) (185.9) - (117.8) (117.8)
Financial instruments measured at amortised cost
Financial instruments measured at amortised cost, rather than fair value, include cash and cash equivalents, trade and other receivables, SME loans held at amortised cost, FlexiPay lines of credit, bank borrowings, lease liabilities and trade and other payables. Due to their nature, the carrying value of each of the above financial instruments approximates to their fair value.
Financial instruments measured at fair value
IFRS 13 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement.
Disclosure of fair value measurements by level is according to the following fair value measurement hierarchy:
. level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
. level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly or indirectly; and
. level 3 inputs are unobservable inputs for the assets or liabilities.
The fair value of financial instruments that are not traded in an active market (for example, investments in SME loans) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. An assessment that the level applied to financial instruments is appropriate and whether a transfer between levels is required is undertaken at the end of each accounting period. There were no transfers between levels during the period or prior year.
The Finance department of the Group performs the valuations of items required for financial reporting purposes, including level 3 fair values. This team reports to the Chief Financial Officer ("CFO"). Discussions of valuation processes and results are held regularly at Balance Sheet and Valuation Committee along with regular updates provided to the Audit Committee.
There were no transfers between Level 1, Level 2 and Level 3 fair value measurements (year ended 31 December 2024: none).
Fair value measurement using
30 June 2025 31 December 2024
Significant
Quoted Significant Significant observable Significant
prices observable unobservable unobservable
inputs inputs inputs
Quoted prices in
active markets Inputs
in active
markets
(level 1)
(level 1) (level 2) (level 3) (level 3)
(level 2)
GBPm GBPm GBPm GBPm GBPm GBPm
Financial assets
SME loans held at fair
value through profit and - - 46.8 - - 1.2
loss
Trade and other 0.4 - - 0.6 - -
receivables
Investment in trusts and - - 16.2 - - 17.8
co-investments
Cash and cash equivalents 99.8 - - 136.3 - -
100.2 - 63.0 136.9 - 19.0
The fair value of all SME loans held at fair value has been estimated by discounting future cash flows of the loans using discount rates that reflect the changes in market interest rates and observed market conditions at the reporting date. The estimated fair value and carrying amount of the SME loans held at fair value through profit and loss was GBP46.8 million at 30 June 2025 (31 December 2024: GBP1.2 million).
Investment in trusts and co-investments represents the Group's investment in the trusts and other vehicles used to fund CBILS, RLS, GGS and certain commercial loans and is measured at fair value through profit and loss. The government-owned British Business Bank will guarantee up to 80% of the balance of CBILS loans in the event of default (and between 70% and 80% of RLS loans and 70% for GGS loans). The estimated fair value and carrying amount of the investment in trusts and co-investments was GBP16.2 million at 30 June 2025 (31 December 2024: GBP17.8 million).
The most relevant significant unobservable inputs relate to the default rate estimate and discount rates applied to the fair value calculation. However, it was determined that the reasonably possible range of outcomes from these inputs into the estimates are not material to the accounts.
Since 31 December 2024, the forward looking assumptions related to estimating fair value have been marginally updated to incorporate forecast UK GDP and risk-free rate alongside unemployment. The base case scenario outlined later in the note under 'Macro scenarios' is utilised for projecting cash flows, however, the scenario change has not materially impacted the fair value of loans.
There has additionally been decreases in discount rates used to discount the estimated cash flows in the period, primarily driven by decreases in the risk free rate, due to central bank interest rates falling and expectations of rate cuts priced into swaps. Many of the investments in leveraged investment in trust structures have experienced a reduction in discount rates due to de-leveraging of the vehicles as senior lenders debt has been paid down. The repayment of senior debt and the passage of time has additionally led to fair value gains, as a result of the discount unwind, as projected future cash flows of the investments which tend to be backloaded in the structure become nearer in time to the balance sheet date. This, in turn, has led to a higher relative estimation of fair value in the period.
The result of the various factors outlined above is a GBP2.0 million net fair value gain during the period, primarily driven by discount unwind.
Sensitivities to unobservable assumptions in the valuation of SME loans and money market funds within cash and cash equivalents are not disclosed as reasonably possible changes in the current assumptions inclusive of default rates, discount rates and recovery rates would not be expected to result in material changes in the carrying values.
Fair value movements on SME loans held at fair value through profit and loss and investments in trusts and co-investments are recognised through the condensed consolidated statement of comprehensive income in 'fair value gains'.
The majority of additions of SME loans held at fair value through profit and loss in the period relate to the origination of loans under the shorter term lending product, which are being temporarily originated on the Group's balance sheet with the intention of selling them at a later date and originations thereafter operating under a platform model.
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A reconciliation of the movement in level 3 financial instruments is shown as follows:
SME loans held at fair value Investment in trusts and
through profit and loss co-investments
GBPm GBPm
Balance as at 1 January 2024 18.6 25.2
Additions - 1.5
Repayments (12.2) (10.6)
Net gain/(loss) on the change in fair value of financial 2.4 2.6
instruments at fair value through profit or loss
Other non-cash movements (0.7) -
Foreign exchange gain 0.1 -
Balance as at 30 June 2024 8.2 18.7
Additions - 2.6
Repayments (1.3) (4.0)
Net gain on the change in fair value of financial 0.2 1.2
instruments at fair value through profit or loss
Foreign exchange loss (0.1) -
Disposal of discontinued operations (5.8) (0.7)
Balance as at 31 December 2024 1.2 17.8
Additions 50.0 0.4
Repayments (2.8) (3.1)
Sale of loans (2.5) -
Net gain/(loss) on the change in fair value of financial 0.9 1.1
instruments at fair value through profit or loss
Balance as at 30 June 2025 46.8 16.2
Financial risk factors
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's receivables from customers and cash and cash equivalents held at banks.
The Group's maximum exposure to credit risk by class of financial asset is as follows:
30 June 31 December
2025 2024
GBPm GBPm
Non-current
SME loans held at amortised cost 1.6 1.4
Investment in trusts and co-investments 16.2 17.8
Current
SME loans held at amortised cost 0.7 0.7
SME loans held at fair value through profit and loss 46.8 1.2
Lines of credit 141.9 97.1
Trade and other receivables
- Trade receivables 0.5 0.4
- Other receivables 4.1 4.2
- Accrued income 8.8 5.8
- Rent and other deposits 0.9 0.9
Cash and cash equivalents 148.6 187.6
Total gross credit risk exposure 370.1 317.1
Less bank borrowings1 (170.8) (101.9)
Total net credit risk exposure 199.3 215.2
1. Bank borrowings are related to the FlexiPay and shorter term lending warehouse.
An expected credit loss allowance related to undrawn lines of credit on the FlexiPay product of GBP1.6 million (2024: GBP2.7 million) is held within provisions and other liabilities. The Group's maximum exposure to credit risk on the undrawn lines of credit if they were all to be fully drawn would be GBP337.1 million (2024: GBP278.7 million). The Group has the ability to freeze, reduce or withdraw lines of credit as a way of managing associated credit risk.
Credit risk associated with SME loans held at amortised cost and lines of credit
Under IFRS 9, the Group is required to provide for loans measured at amortised cost under the expected credit loss ("ECL") model. The impairment related to each loan is based on the ECLs associated with the probability of default of that loan in the next 12 months unless there has been a significant increase in credit risk of that loan since origination. The below factors are used in estimating the impairment:
Factor Description
The Group has developed PD models tailored to each Term Loan or line of credit product to assess the
Probability likelihood of default within the next 12 months and over the lifetime. The models estimate PD based on
of Default factors including the latest payment behaviour of the customers, commercial, consumer, financial and
("PD") commercial credit data sharing ("CCDS") data points and observed historical trends. The PD model also
includes an estimate of the expected future macroeconomic effect.
Exposure at The Group has developed an EAD model for line of credit products to assess the likely exposure at
Default default. The model calculates estimates of EAD based upon the latest payment behaviour of the customer,
("EAD") the credit limit utilisation, and projecting expected utilisation at default based on observed historical
trends.
Loss Given The Group has developed LGD models tailored to each Term Loan or line of credit product to assess the
Default likely financial loss given an account defaults. The models calculate estimates of LGD based on
("LGD") historical data on observed recoveries against defaulted accounts.
Discount rate The Group uses account-level effective interest rate which is calculated based on line of credit amount
or loan amount, interest and fees, expected repayments including pre-payments and term.
Model changes since 31 December 2024:
The Group has refined its ECL model methodology since 31 December 2024. The key changes are as outlined below. The overall impact of the model methodology updates on a like for like basis with the previous methodology is not material to the overall ECL figure, however, results in a larger proportion of balances in stage 2 compared to stage 1 but with a lower PD.
Model Change since 31 December 2024:
component
The PD is now calculated using a model which takes a number of input variables derived from commercial,
consumer, financial, and behavioural sources of data, which have been observed to correlate with a
PD default. These inputs are combined to determine a PD curve for each borrower, with 12-month PD utilised
for stage 1 and lifetime PD for stage 2. The marginal PDs are used to calculate an ECL in each
respective forward-looking period. Previously PD was determined using models that utilised the latest
payment behaviour of customers and observed historical trends to project defaults.
The definition of significant increase in credit risk ("SICR") used by the Group has been updated to
Significant reference the relative change in the commercial Delphi risk score between origination and the balance
increase in sheet date. Previously SICR was defined as including any account which was overdue or frozen. This
credit risk change results in a higher proportion of accounts moving to stage 2 prior to becoming late or
defaulting, relative to the previous methodology utilised. The backstop of 30 days past due remains in
place.
The EAD methodology has been refined to take account of analysis of the EAD based on more granular
EAD utilisation bands for stage 1 and stage 2. This approach has resulted in more accurate EAD prediction
when back tested against actual results across portfolios compared to the less granular credit
conversion factor approach used previously.
The assumptions behind LGD used for FlexiPay have previously been based on the extrapolation of limited
actual recovery data given the relatively small levels of defaults on the portfolio to date. The
LGD approach has been refined to supplement data limitations with substantial term loan recovery
information, in light of a shared recovery process between the products at a borrower level and as many
FlexiPay borrowers also have Term Loan products, leading to an improved basis for projecting the LGD
until more FlexiPay data becomes available in future.
The Group's macro scenarios previously incorporated just unemployment as a forecast variable to take
Macro account of forward-looking information. The Group now utilises UK unemployment, the risk-free-rate and
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scenarios GDP as the selected forecast variables, with historically observed coefficients between these variables
to predict insolvencies, instead of solely using unemployment rates previously. Further details are
provided later in this note.
Definitions:
The Group utilises the following definitions and assumptions when calculating the ECL on assets:
Component Definition/assumption
Significant The Group assumes there has been a significant increase in credit risk if the probability of default
increase in indexed to the commercial Delphi risk score of the borrower has increased over given thresholds since
credit risk origination and the balance sheet date. A backstop is applied for any outstanding amounts on the loan
investment which exceed 30 days, in line with the rebuttable presumption per IFRS 9.
We estimate PD, EAD and LGD for the duration of the lifetime of the Term Loan or line of credit. Term
Forecast period Loans utilise the contractual term of the Term Loan. For lines of credit, the duration of the lifetime
is estimated to be five years.
The Group defines a default, classified within non-performing, as a loan investment with any
outstanding amounts exceeding 90-days past their due date, which reflects the point at which the loan
is considered to be credit-impaired. In some circumstances where loans are bought back by the Group,
the financial asset associated with the purchase meets the definition of purchased or originated
credit-impaired ("POCI"); this element of the impairment is therefore based on lifetime ECLs.
Definition of
default
Lines of credit utilises the same default definition and probability of default under IFRS 9; however,
they are assessed based on 12-month probability of default at the overall available line of credit
level, estimating the expected utilisation of the line of credit at the estimated point of default. The
expected credit loss impairment associated with undrawn lines of credit is disclosed within other
liabilities in note 15.
SME loans held at amortised cost also include loans which have been brought back from investors with the intention of collecting contractual cash flows.
Lines of credit comprises GBP141.9 million (2024: GBP97.1 million) of drawn amounts through the FlexiPay product net of expected credit loss impairment.
The gross principal value of SME loans held at amortised cost is GBP12.2 million (31 December 2024: GBP11.3 million) and drawn lines of credit is GBP164.3 million (31 December 2024: GBP110.0 million), totalling GBP176.5 million (31 December 2024: GBP121.3 million), and an allowance for expected credit losses of GBP9.9 million (31 December 2024: GBP9.2 million) and GBP22.4 million (31 December 2024: GBP12.9 million) respectively, totalling GBP32.3 million (31 December 2024: GBP22.1 million), is held against these loans and drawn lines of credit as detailed below.
An impairment charge of GBP9.5 million (30 June 2024: impairment charge of GBP3.2 million of which GBP0.1 million related to discontinued operations) was recognised through the condensed consolidated statement of comprehensive income for the six months to 30 June 2025 within expected credit loss charge in the income statement related to drawn lines of credit and SME loans held at amortised cost.
Additionally, an expected credit loss impairment credit was recognised relating to undrawn FlexiPay lines of credit of GBP1.1 million (30 June 2024: charge GBP0.7 million) was recognised as detailed in notes 11 and 15.
The Group bands each loan investment at origination using an internal risk rating and assesses credit losses on a collective portfolio basis by product. Credit risk grades are not reported to management on an ongoing basis and the only borrower specific information that is produced and used is past due status. There is no significant concentration of credit risk to specific industries or geographical regions.
Stage 1 Stage 2 Stage 3
POCI
Performing: Underperforming: Non-performing:
Total
12-month Lifetime Lifetime Lifetime
ECL ECL ECL ECL
GBPm GBPm GBPm GBPm GBPm
At 1 January 2024 1.6 1.0 3.7 13.8 20.1
Impairment against new lending and purchased assets 5.9 - - - 5.9
Exchange differences - - (0.1) (0.1) (0.2)
Impairment against loans transferred between stages (0.2) 2.3 3.1 - 5.2
Loans repaid (5.2) (1.7) (0.2) (0.7) (7.8)
Impairment provision derecognised related to written - - - (0.3) (0.3)
off loans
Change in probability of default or loss given 0.1 (0.1) (0.5) 0.5 -
default assumptions
At 30 June 2024 2.2 1.5 6.0 13.2 22.9
Impairment against new lending and purchased assets 6.8 - - - 6.8
Exchange differences - - - (0.2) (0.2)
Impairment against loans transferred between stages - 1.6 4.0 - 5.6
Loans repaid (6.0) (1.6) (0.2) - (7.8)
Impairment provision derecognised related to written - - - - -
off loans
Change in probability of default or loss given (0.2) (0.1) (0.3) 0.1 (0.5)
default assumptions
Derecognition of impairment associated with assets of - - (0.1) (4.6) (4.7)
discontinued operations
At 31 December 2024 2.8 1.4 9.4 8.5 22.1
Impairment against new lending and purchased assets 10.0 - - 0.6 10.6
Exchange differences - - - 0.2 0.2
Impairment against loans transferred between stages (0.6) 7.9 3.0 - 10.3
Loans repaid (8.4) (1.3) (0.2) (0.1) (10.0)
Impairment provision derecognised related to written - - (0.3) - (0.3)
off loans
Change in probability of default or loss given 2.0 (4.4) 1.7 0.1 (0.6)
default assumptions
At 30 June 2025 5.8 3.6 13.6 9.3 32.3
Basis for
Provision
Expected Net carrying
credit recognition
of Gross lines of credit and SME loans held for expected
at amortised cost
amount
loss coverage
expected credit loss
credit GBPm
GBPm
%
GBPm
loss
impairment
As at 31 December
2024
Stage 1 - Performing 2.8 12-month ECL 99.1 (2.8) 96.3
Stage 2 - 43.8 Lifetime ECL 3.2 (1.4) 1.8
Underperforming
Stage 3 - 90.4 Lifetime ECL 10.4 (9.4) 1.0
Non-performing
POCI 98.8 Lifetime ECL 8.6 (8.5) 0.1
Total 121.3 (22.1) 99.2
As at 30 June 2025
Stage 1 -- Performing 4.3 12-month ECL 135.7 (5.8) 129.9
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Stage 2 - 20.6 Lifetime ECL 17.5 (3.6) 13.9
Underperforming
Stage 3 - 97.1 Lifetime ECL 14.0 (13.6) 0.4
Non-performing
POCI 100.0 Lifetime ECL 9.3 (9.3) -
Total 176.5 (32.3) 144.2
Basis for Provision
Expected credit Gross lines Net carrying
recognition of for expected
Of which is drawn FlexiPay lines of
credit loss coverage of credit amount
expected credit credit loss
% GBPm GBPm
loss impairment GBPm
As at 31 December 2024
Stage 1 - Performing 2.8 12-month ECL 97.0 (2.7) 94.3
Stage 2 - Underperforming 43.8 Lifetime ECL 3.2 (1.4) 1.8
Stage 3 - Non-performing 89.8 Lifetime ECL 9.8 (8.8) 1.0
POCI - Lifetime ECL - - -
Total 110.0 (12.9) 97.1
As at 30 June 2025
Stage 1 - Performing 4.3 12-month ECL 133.4 (5.7) 127.7
Stage 2 - Underperforming 20.7 Lifetime ECL 17.4 (3.6) 13.8
Stage 3 - Non-performing 97.0 Lifetime ECL 13.5 (13.1) 0.4
POCI - Lifetime ECL - - -
Total 164.3 (22.4) 141.9
The risk and finance functions of the Group monitor the performance of the FlexiPay lines of credit and SME loans held at amortised cost and calculate the ECL estimate required for financial reporting purposes. These teams report to the Chief Financial Officer ("CFO") and Chief Risk Officer ("CRO"). Discussions of estimates processes and results are held regularly at Balance Sheet and Valuation Committee meetings along with regular updates provided to the Audit Committee.
The allowance for expected credit losses requires estimation to assess individual loans or when applying statistical models for collective assessments based on the Group's past experience of historical delinquencies and loss trends, as well as forward-looking information in the form of macroeconomic scenarios governed by a Balance Sheet and Valuation Committee, which obtains macroeconomic forecasts such as changes in interest rates, GDP, risk-free rates, unemployment and inflation which are considered for incorporation into scenarios and probability weighted. These scenarios are utilised to derive an adjustment to the PD projections, to reflect the impact of forward-looking information on the underlying PD projections established from historical experience.
Key changes to macro scenarios used in 2025:
UK-specific forecast data is obtained from a third party economics provider. A number of data points were obtained and considered by Funding Circle including GDP, real estate prices, risk-free rates, unemployment rates, among others. The Group now utilises UK unemployment, the risk-free-rate and GDP as the selected forecast variables, with historically observed coefficients between these variables providing improved predictive value of insolvency under statistical modelling techniques compared to unemployment alone which was used previously. The Group previously also utilised upside, downside and baseline projections from the economics provider for each macro variable input. The Group updated its approach to use baseline projections of macro variable inputs from the economics provider, and internally generate two additional scenarios utilising a cyclicality index ("CI") approach which is a measure of where the economy sits within the credit cycle at a given point in time. The base case macro variable input forecasts from the economics provider are used to derive a forecast of CI relative to CI at the balance sheet date. The two additional scenarios are determined by selecting different confidence intervals or severities from the historical CI distribution.
Previously the 3 scenarios were weighted 30% downside, 60% baseline and 10% upside. The probability weighting attributed to the scenarios at 30 June 2025 has been updated to reflect the CI over the projected life of the product. Information related to the macroeconomic drivers utilised in creating the base case scenario and the probability weightings attributed to the scenarios is illustrated below.
H2 2025 2026 2027
Macroeconomic drivers (average for the
forecast year) ECL scenario 2028 2029 2030 H1 2031
% % %
% % % %
Unemployment rates % Base case 4.6 4.9 4.8 4.5 4.2 4.1 4.0
Risk-free rate % Base case 4.4 3.3 2.7 2.4 2.4 2.5 2.5
GDP YoY% Base case 1.1 0.9 1.3 1.8 1.7 1.6 1.6
ECL scenario
Probability weighting applied %
Base case 70
Upside 15
Downside 15
A sensitivity to the impact these assumptions have on the estimated ECL is disclosed within note 3.
Credit risk associated with other financial assets:
SME loans held at fair value through profit and loss relate to the underlying pool of SME loans from the legacy warehouses and SPVs that have since been purchased or novated into other Funding Circle entities, but remain held at FVTPL with the business model of holding the loans for sale. Additionally, loans originated by the Group with the intention of selling onwards are included in this category including the shorter term loans.
Trade receivables includes the invoiced amounts in respect of servicing fees due from institutional investors. The risk of financial loss is deemed minimal because the counterparties are well established financial institutions.
Ongoing credit evaluation is performed on the financial condition of other receivables and, where appropriate, a provision for expected credit losses is recorded in the financial statements.
Interest rate risk
a) Interest rate risk sensitivity analysis - fixed rate Interest on SME loans is fixed until the maturity of the investment and is not impacted by market rate changes.
b) Interest rate risk sensitivity analysis - floating rate Interest on cash and cash equivalent balances is subject to movements in base rates. The Directors monitor interest rate risk and note that rates have begun to decrease having previously plateaued following a period of sustained rate rises with an expectation of further base rate decreases going forward. The Directors believe that a reasonable decrease in the base rate of 100bps could reduce interest income recognised in the statement of comprehensive income. A 100bps reduction in interest rates applied to the Group's cash position is estimated to reduce annual interest income by GBP1.5 million based on the 30 June 2025 cash and cash equivalent balances.
Interest on bank borrowings related to the FlexiPay lines of credit and shorter term lending are subject to movements in SONIA. The Group has partially protected itself through the use of an interest rate cap with a strike price of 6.5% and a notional amount that increases in line with the projected draw downs on the senior borrowing facility.
If SONIA were to increase/(decrease) by 100bps, based on the drawn balance at 30 June 2025, the annualised interest expense recognised in cost of funds would increase/(decrease) by GBP1.7 million.
Some of the Group's investment in trusts are through warehouse vehicles where the Group is a minority equity investor. The senior borrowing facilities utilised in these vehicles receive interest on borrowings in priority to payments to the equity investors at SONIA plus a margin. Increases in SONIA or anticipated future increases, could result in increased borrowing costs, reducing the expected cash returns to the equity investors of the investment held at fair value through profit and loss. The impact would be recognised in fair value gains and losses in the statement of comprehensive income. The vehicles had interest rate caps or interest rate swaps within their structures which can mitigate the impact of future rate rises.
13. Notes to the condensed consolidated statement of cash flows
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DJ Funding Circle Holdings plc: Half Year 2025 Results -15-
Cash outflow from operating activities
30 June 30 June
2025 2024
GBPm GBPm
Profit/(loss) before taxation
Continuing operations 6.0 (2.1)
Discontinued operations - (10.1)
Total operations 6.0 (12.2)
Adjustments for:
Depreciation of property, plant and equipment 1.2 2.0
Amortisation of intangible assets 4.8 5.2
Modification gain - (0.4)
Impairment of property, plant and equipment, intangible assets, ROU assets and investment in 0.1 -
sublease
Impairment of intangibles (exceptional item) - 0.3
Interest payable 0.3 0.5
Non-cash employee benefits expense - share-based payments and associated social security 2.1 5.0
costs
Fair value adjustments (2.0) (5.0)
Movement in restructuring provision (exceptional item) - 2.3
Movement in loan repurchase liability - (0.1)
Movement in other provisions (2.0) 0.2
ECL impairment 8.4 3.9
Other non-cash movements 2.0 0.5
Changes in working capital
Movement in trade and other receivables (2.4) 0.9
Movement in trade and other payables (0.7) (30.4)
Tax received/(paid) 2.1 (0.1)
Originations of lines of credit (354.7) (216.6)
Cash receipts from lines of credit 300.4 191.6
Net cash outflow from operating activities (34.4) (52.4)
Cash and cash equivalents
30 June 31 December
2025 2024
GBPm GBPm
Cash and cash equivalents 148.6 187.6
The cash and cash equivalents balance is made up of cash and money market funds. The carrying amount of these assets is approximately equal to their fair value. Included within cash and cash equivalents above is a total of GBP33.6 million (31 December 2024: GBP37.1 million) in cash which is restricted in use. Of this, GBP4.2 million (31 December 2024: GBP5.0 million) of cash is held which is restricted in use to repaying investors in CBILS and RLS loans and paying CBILS and RLS-related costs to the UK government. A further GBP29.4 million (31 December 2024: GBP32.1 million) of cash is held which is restricted for use in the FlexiPay and shorter term lending warehouse.
At 30 June 2025, money market funds totalled GBP99.8 million (31 December 2024: GBP136.3 million).
Analysis of changes in liabilities from financing activities
1 January Exchange Other non-cash 30 June
Cash flow
2024 movements movements 2024
GBPm
GBPm GBPm GBPm GBPm
Bank borrowings (56.9) (17.1) - - (74.0)
Lease liabilities (12.6) 2.8 (0.1) (5.6) (15.5)
Liabilities from financing activities (69.5) (14.3) (0.1) (5.6) (89.5)
1 January Exchange Other non-cash 30 June
Cash flow
2025 movements movements 2025
GBPm
GBPm GBPm GBPm GBPm
Bank borrowings (101.9) (68.9) - - (170.8)
Lease liabilities (7.6) 0.9 - (0.3) (7.0)
Liabilities from financing activities (109.5) (68.0) - (0.3) (177.8)
14. Related party transactions
The basis of remuneration of key management personnel remains consistent with that disclosed in the 2024 Annual Report and Accounts, with the exception of the Board changes noted earlier.
15. Contingent liabilities and commitments
As part of the ongoing business, the Group has operational requirements with its investors. At any point in time, it is possible that a particular investor may expect the Group to purchase their loan in the event of a breach of representation or warranty, operational errors or control issues or where agreed eligibility criteria have not been complied with. Where a loan is purchased it is presented within SME loans held at amortised cost on the face of the condensed consolidated balance sheet and held at amortised cost under IFRS 9.
In common with other businesses, the Group is involved from time to time in disputes in the ordinary course of business. There are no active cases expected to have a material adverse financial impact on the Group.
The Group has commitments related to undrawn amounts on issued FlexiPay lines of credit. At 30 June 2025, there were undrawn commitments of GBP337.1 million (31 December 2024: GBP278.7 million). An expected credit loss impairment allowance is held within other provisions by the Group of GBP1.6 million (31 December 2024: GBP2.7 million) in relation to the estimated credit losses the Group may be exposed to on these undrawn lines of credit.
16. Subsequent events
There have been no subsequent events since the balance sheet date.
Glossary
Alternative performance measures
The Group uses a number of alternative performance measures ("APMs") within its financial reporting. These measures are not defined under the requirements of IFRS and may not be comparable with the APMs of other companies. The Group believes these APMs provide stakeholders with additional useful information in providing alternative interpretations of the underlying performance of the business and how it is managed and are used by the Directors and management for performance analysis and reporting. These APMs should be viewed as supplemental to, but not as a substitute for, measures presented in the financial statements which are prepared in accordance with IFRS.
Adjustments
APM Closest equivalent to reconcile Definition
IFRS measure to IFRS
measure
Income statement
EBITDA, while not Profit for the year before finance costs (being the discount unwind on
Adjusted defined under IFRS, Refer to lease liabilities), taxation, depreciation and amortisation and
EBITDA is a widely accepted Business impairment ("AEBITDA") and additionally excludes share-based payment
profit measure Review. charges and associated social security costs, foreign exchange and
exceptional items.
Items which the Group excludes from Adjusted EBITDA in order to present
a measure of the Group's performance. Each item is considered to be
Exceptional significant in nature or size and is treated consistently between
items None n/a periods. Excluding these items from profit metrics provides the reader
with additional performance information on the business across the
business as it is consistent with how information is reported to the
Board and ExCo. Refer to note 5.
Cash flow
Net cash flows from operating activities less the cost of purchasing
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DJ Funding Circle Holdings plc: Half Year 2025 Results -16-
Free cash Cash generated from Refer to intangible assets, property, plant and equipment, lease payments and
flow operating activities Business interest received. It excludes the warehouse and securitisation
Review. financing and funding cash flows and excludes cash flows on draw downs
and repayment of FlexiPay lines of credit.
Independent review report to Funding Circle Holdings plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Funding Circle Holdings plc's condensed consolidated interim financial statements (the "interim financial statements") in the Half Year 2025 Results of Funding Circle Holdings plc for the 6 month period ended 30 June 2025 (the "period").
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed consolidated balance sheet as at 30 June 2025; -- the Condensed consolidated statement of comprehensive income for the period then ended; -- the Condensed consolidated statement of cash flows for the period then ended; -- the Condensed consolidated statement of changes in equity for the period then ended; and -- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year 2025 Results of Funding Circle Holdings plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year 2025 Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Year 2025 Results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Half Year 2025 Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the Half Year 2025 Results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial statements in the Half Year 2025 Results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
4 September 2025
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[1] Comparative presented is for the continuing business and excludes the discontinued operations of the US business which was sold in 2024.
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Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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