Harmoney generates $8.6m of revenue in first year
Harmoney Corp, New Zealand's first and biggest peer-to-peer lender, generated $8.6 million of revenue in its first full year of operation, widening its annual loss as it poured more money into building the financial services platform.
Auckland-based Harmoney reported a loss of $14.2 million in the 12 months ended March 31, compared to a loss of $6.3 million in seven months through March 31, 2015, its financial statements show. Since the P2P platform was launched two years ago, it has generated $10.5 million of revenue for brokering $275 million of lending to 15,000 borrowers through its portal.
The company's operations burned through $13 million of cash in the year, and it raised almost as much through share issues, which left it with $8 million in cash and equivalents at March 31.
"Developing our lending platform requires a significant amount of upfront investment in both technology and people," chief financial officer Simon Ward said in a statement. "In the past year our business has grown to more than 80 staff and we are investing heavily in marketing and compliance to ensure Kiwis know about Harmoney and understand what it offers."
Harmoney got a head-start as the first mover in the market but is facing increased competition from the arrival of other licensed P2P lenders Squirrel Money, LendMe, Lending Crowd and PledgeMe, which also operates a crowdfunding platform.
The bulk of Harmoney's revenue came from fees charged to arrange a loan between a borrower and lender, with $6.3 million derived from broking fees in the year. Elsewhere, fees charged to the lender for managing repayments and administration amounted to $900,000, while performance fees when a lender's portfolio beat an agreed return were $798,000. Fees charged to institutional lenders using the platform were $491,000, and payment protect fees - essentially a form of insurance - were $184,000.
Ward said Harmoney had facilitated $26.3 million of interest payments to lenders since inception. All lenders received a realised annual return of 11.9 percent, while retail lenders made 13.1 percent. The average interest rate across all loans was 18.3 percent, with debt consolidation accounting for 47 percent of the value of all loans.
Harmoney's biggest expense was $8.1 million on marketing, followed by $6.3 million on employee costs and $2.1 million on information technology expenses. It arranged a $50 million liquidity facility with a wholesale funder in 2015 for a $1 million fee, of which the remaining $438,000 was amortised in the 2016 financial year and a further $42,000 of fees incurred.
It also paid $318,000 to cornerstone shareholder Trade Me for marketing services in the form of shares.
The peer-to-peer lender said it faced potential legal proceedings over a $196,000 outstanding invoice to a supplier, which it disputed as payment was "dependent on the supplier meeting agreed performance conditions". The claim was included as a contingent liability and Harmoney said it "believes these conditions were not met and as such the likelihood of an outflow of economic benefit and litigation is not likely."
Get full access to the NBR Rich List 2016, released July 28, by claiming your free 30-day trial to NBR ONLINE premium content at NBR.co.nz/free