A Cornwall-based peer-to-peer lending platform has become one of the few in the world to have made a profit 鈥 but on the back of slashing costs.
Folk2Folk has reported a 拢198,000 profit for the 2019/20 financial year, compared to a 拢535,000 loss in the previous year.
The company鈥檚 annual report and financial statement said the turnaround was mostly the result of 鈥渟tringent cost-cutting exercises鈥 introduced by managing director Roy Warren.
But it warned that a projected increase in profits for the 2020/21 financial year would be unlikely due to the coronavirus upheaval.
In its financial statement filed with Companies House, the business said: 鈥淲e expect the economic landscape in 2020 to be extremely challenging in the Covid-19 environment.
鈥淲hilst the number of failure-to-pay cases in the Folk2Folk loan book has risen from a year ago, we are still well below the industry average.鈥
It added: 鈥淲e believe Folk2Folk is in a good position to weather the current turbluence and has a bright future within the maturing P2P sector industry.鈥
It said that before the pandemic struck, the firm had planned on generating a 拢1.1million profit in the next financial year and start paying dividends by the close of 2022.
But now it says: 鈥淭his will be extremely challenging in the current economic climate as we continue to reduce cost to maintain a positive cashflow.鈥
However, in leaping into the black, the Launceston-based company joins the ranks of the few peer-to-peer (P2P) platforms worldwide to have attained profitability
The achievement comes a year after new managing director Mr Warren took over the reins and brought in greater fiscal discipline to the business. He took over from Giles Cross who had only been in the role for 16 months.
Mr Warren, who had been the platform鈥檚 head of risk and loan portfolio, said: 鈥淧latform profitability has become increasingly important, not just for the FCA (Financial Conduct Authority), but for retail and institutional investor decision-making. Many view it as an indicator of whether a peer to peer platform is viable and has a sustainable future.
How to contact William Telford and Business Live
Business Live's South West Business Reporter is William Telford. William has more than a decade's experience reporting on the business scene in Plymouth and the South West. He is based in Plymouth but covers the entire region.
To contact William: Email: william.telford@reachplc.com - Phone: 01752 293116 - Mob: 07584 594052 - Twitter: - LinkedIn: - Facebook:
Stay in touch: BusinessLive newsletters have been re-designed to make them even better. We send morning bulletins straight to your inbox on the latest news, views and opinion in the South West. Get our breaking news alerts and weekly sector reviews too. Sign up now - it's free and it only takes a minute. To sign up for Business Live's daily newsletters click .
And visit the Business Live South West LinkedIn page
鈥淚鈥檓 proud that Folk2Folk has made a big step forward in building its financial strength, including strong positive cashflow. Achieving profitability despite the market-impacting forces of Brexit, the election and now coronavirus is a significant breakthrough for the company and testament to our team鈥檚 commitment and our customers鈥 loyalty.鈥
Since the start of the coronavirus crisis, Folk2Folk has seen a continuing trend in business levels, facilitating 拢8million of loans and investments, bringing the company鈥檚 cumulative lending volume to in excess of 拢350million.
Mr Warren added: 鈥淪tability of peer to peer platforms is important right now. Creditworthy businesses in Cornwall and the wider south west, who can鈥檛 access finance from their bank, need alternative finance providers. Our profitability status puts Folk2Folk in a strong position to be able to continue to do that.鈥
The lender also revealed it has applied to the British Business Bank to become an accredited CBILS lender and is currently waiting to hear the outcome.
