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The group has confirmed the extension of its $55 million debt facility until July 2025.
N1 Holdings Limited (N1H) has also confirmed that it has completed the realty business divestment, which was disclosed on 24 November 2022. The divestment strategy aims to streamline the group’s business model and provide additional funding to grow its SME lending business.
The group utilises its debt facility as one of the sources to fund its SME lending business.
Currently, the group has access to over $110 million in funding that includes balance sheet capital, its wholesale lending fund, and the debt facility.
It also currently holds over $90 million of direct lending loan receivables, a $36.5 million mortgage management book, and over $200 million broking trail book.
N1H reports decline in SME lending 1H23
The group’s half-year results (ended 31 December 2022), revealed a $5 million drop in new commercial lending when compared to the prior half-year results.
Its commercial lending totalled $54 million, which fell from the $59.5 million reported in the second half of 2022.
N1H’s commercial lending business accounted for 81.4 per cent of the group’s total revenue, making it N1H’s “major revenue generator”.
Executive chairman and chief executive Ren Hor Wong stated the Reserve Bank of Australia’s (RBA) persistent rate hikes “disrupted the market for property transactions”.
“The management of the company in the last six months has prioritised pricing and valuation reset of our loan receivables book, made possible by our unique short-term lending product,” Mr Wong said.
Profits down after ASIC review
N1H restated its 2022 revenue in its financial report after the Australian Securities and Investment Commission (ASIC) raised concerns about the group’s treatment of loan establishment fees and the appropriateness of its accounting policy under accounting standards.
As a result, N1H’s profit has reduced by 37 per cent from $1.1 million to $697,000.
ASIC was concerned that N1H was recognising the total loan establishment fee upfront instead of treating it as part of the loan’s effective interest rate, as is required by AASB 9 Financial Instruments (AASB 9).
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“ASIC reminds preparers of financial information that AASB 9 requires loan origination fees to be treated as part of the loan’s effective interest rate. The effective interest method results in revenue that is recognised over the period of the loan, which can impact materially on reported profits,” the regulator said.
[RELATED: Listed broker restates revenue following ASIC review]
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