Peer-to-peer lender Funding Circle saw full-year losses widen after booking substantial losses in its German and Dutch markets.
The FTSE 250 firm posted an £84.2m loss up from £50.9m a year ago, after the struggling business said it would centralise operations in Germany and the Netherlands at its London headquarters, at a cost of £34.3m.
The move will see the business, which lends to small firms, lay off 125 workers. The group employs around 1,000 staff.
Shares in Funding Circle, founded a decade ago, slumped 20 per cent. The stock languishes almost 90 per cent lower than its stock market debut in 2018.
Brexit uncertainty hit demand for loans
The business, founded in 2010, operates in the US, Germany, the Netherlands and its core UK market. In the UK it competes against rivals such as Ratesetter and Zopa, while in the US it competes with Lending Club.
These firms were set up in the wake of the 2008 financial crisis to provide credit to small firms after banks withdrew from this market, fearing defaults. They base their lending on algorithms and run lean staff, allowing them to offer competitive rates to borrowers and higher returns to lenders.
However, the business said in the UK, which accounts for 65 per cent of sales, made a £3m profit in the second half of last year, compared to £5.4m loss in the same period 12 months before.
Overall, the group said loans under management lifted 19 per cent to £3.7bn.
The group cut its growth forecasts in half to 20 per cent in July, due to a sharp drop in demand for loans due in part to Brexit uncertainty.
Plans earnings break-even later this year
Co-founder and chief executive Samir Desai (pictured) said: “The actions we took in 2019, in response to the uncertain economic outlook, reduced growth but improved investor returns and were the right response for the long-term benefit of the company and our customers.”
He added the group was on target to hit an adjusted earnings break-even “in the second half of 2020”.
Funding Circle floated on the London Stock Exchange in October 2018 at 440p per share, valuing the platform at £1.5bn.
However, analysts say an overpriced launch and a slowing economy have taken their toll on the stock, which lags almost 90 per cent below its market debut. The firm was demoted from the FTSE 100 to the FTSE 250 last September.
Funding Circle fell more than 20 per cent in late afternoon trading to 48p.