Orchard Funding Group

Website: Orchard Funding Group
Index: AIM
EPIC: ORCH
Supersector: Financial Services
Sector: Financial Services
Subsector: Specialty Finance
Market Cap: £12.81M
Payout Frequency: Annual

Orchard Funding Group Dividend Analysis and Summary

Key Dividend Details

Declared dividend: 1.00p per share (interim)
Ex-dividend date: 04/12/2025
Record date: 05/12/2025
Payment date: 15/12/2025
Context: This follows the 1.00p interim and 1.00p special dividends paid in June 2025. The 12 months to 31/07/2025 show DPS of 2.00p; including the December interim takes calendar 2025 payouts to 3.00p.
Earnings cover: FY EPS 14.37p; 2.00p paid within the 12 months implies ~7.2x cover. Including the December 1.00p, total 2025 payouts of 3.00p imply ~4.8x cover.
Cash cost: c. £0.21m for the December interim (based on ~21.35m shares), versus FY profit after tax of £3.01m.

Brief Financial Backdrop

Profit growth: PBT £4.01m (+89.5%), PAT £3.01m; ROAE 14.89%.
Margins: Net interest margin up to 13.99%; gross interest margin 17.38%. Impairment charge fell sharply to £0.04m.
Balance sheet and liquidity: Net financial assets £23.55m (+17.1%); net current assets £21.66m. External unrestricted borrowing reduced to £15.55m; total borrowings down.
Cash flow: Operating cash inflow £7.00m; dividends paid in period £0.43m.

Dividend Sustainability and Growth Outlook

Sustainability: Very strong near-term cover from earnings and cash flow; modest absolute cash outlay and strengthened equity base support ongoing payouts.
Trajectory: After 0.0p in FY2024 (post-fraud clean-up), the company has resumed distributions with 2.0p for the 12 months to July and a further 1.0p interim in December, approaching the historic 3.0p run-rate of prior years. No explicit policy given, but results and balance sheet suggest scope to maintain at least a low single-digit pence DPS, with specials used opportunistically.
Support from capital allocation: Management is prioritising controlled growth while reducing reliance on external borrowings and using more internal resources. Given strong operating performance and contained impairments, dividends appear well supported without constraining growth.
Sensitivity: Falling base rates have improved margins recently, but further rate shifts and competitive pricing could affect spreads; still, lower funding costs and disciplined underwriting provide a cushion.

Structural or Policy Developments Relevant to Dividends

Change of accounting reference date to 31/01/2026; these 12-month results are interim. This may alter the timing of future dividend declarations but not necessarily the payout capacity.
Acquisitions: Two subsidiaries acquired post period-end (insurance premium finance), and Open B Gateway stake increased to 90% (at nil consideration for the latest transfers). Generally modest scale; unlikely to disrupt dividend capacity, but integration and any growth investment needs bear watching.
Funding mix: Reduced external borrowing; continued support from Toyota and NatWest. Management is exploring alternative liquidity sources, which is positive for flexibility but introduces execution considerations.

Risks and Flags to Dividend Stability

Credit risk: Prior-year fraud elevated losses; controls strengthened and impairments now minimal. Still a structural risk in lending and partner channels.
Concentration: Core exposure to insurance premium finance; Toyota-related channel has lower return and could fluctuate, though currently stable and lower risk.
Interest rate/regulatory risk: Margin sensitive to base rate and competitive dynamics; UK regulatory environment remains uncertain for consumer credit and conduct risk.
Funding and growth balance: While liquidity is adequate, growth ambitions may at times compete with distributions if external funding tightens; management’s intent to diversify liquidity is a mitigant.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
29/12/2022	06/01/2023	Final	2.00p	GBX
22/12/2022	06/01/2023	Final	2.00p	GBX
08/06/2023	23/06/2023	Interim	1.00p	GBX

Total (Annual Dividends Per Share): 5.00p

Dividend Yield = Annual Dividends Per Share (5.00p) ÷ Share Price (60.49p) = 8.27%

Ex Dividend Date	Payment Date	Type	Amount	Currency
08/06/2023	23/06/2023	Interim	1.00p	GBX
29/12/2022	06/01/2023	Final	2.00p	GBX
22/12/2022	06/01/2023	Final	2.00p	GBX
09/06/2022	24/06/2022	Interim	1.00p	GBX
09/12/2021	17/12/2021	Final	2.00p	GBX
10/06/2021	25/06/2021	Interim	1.00p	GBX
10/12/2020	18/12/2020	Final	2.00p	GBX
11/06/2020	26/06/2020	Interim	1.00p	GBX
12/12/2019	20/12/2019	Final	2.00p	GBX
13/06/2019	28/06/2019	Interim	1.00p	GBX
13/12/2018	21/12/2018	Final	2.00p	GBX
14/06/2018	29/06/2018	Interim	1.00p	GBX
07/12/2017	22/12/2017	Final	2.00p	GBX
22/06/2017	30/06/2017	Interim	1.00p	GBX
15/12/2016	23/12/2016	Final	1.40p	GBX
21/04/2016	27/04/2016	Interim	1.40p	GBX

Year	Interim	Final	Currency	Total	Change
2023	1.000		GBX	1.000	-80.000
2022	1.000	4.000	GBX	5.000	66.660
2021	1.000	2.000	GBX	3.000	0.000
2020	1.000	2.000	GBX	3.000	0.000
2019	1.000	2.000	GBX	3.000	0.000
2018	1.000	2.000	GBX	3.000	0.000
2017	1.000	2.000	GBX	3.000	7.140
2016	1.400	1.400	GBX	2.800

Number of Shares:

Payment	Paid	Amount
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