Good morning. For those of you that don't know me, I'm Rod Lockhart, CEO of LendInvest. I'm joined by my colleague, Michael Evans, our CFO. Thanks for your time today and the opportunity to present our half year results for H1 2023. We'll initially run through a presentation deck, which will take approximately half an hour. Then we'll have the opportunity for Q&A. I'll start by providing an overview of our H1 FY23 highlights. Michael will then take over, present our financials. I'll pick up again to provide our strategic update. I'll finish with our outlook and summary. I'm delighted to present a strong financial performance, particularly given the challenging market backdrop.
We've delivered a 20% increase in funds under management, which now stands at GBP 3.4 billion, with highlights including completing our fourth securitization, a fourth upsize of our separate account with JP Morgan, and attracting Lloyds Bank as a new financial partner. We've delivered a 33% increase in AUM, now at GBP 2.4 billion, driven by continued growth in our Buy-to-Let, but also our short-term loan portfolio. Our bridging and development loans has grown to an all-time high following a drop during COVID. Our revenue fell by 8%. This was mainly driven by the average outstanding loan balance for our short-term loans being lower in H1 2023 than in H1 2022. We also received lower performance fees from our Real Estate Opportunity fund due to higher levels of loan provisioning for that fund.
While the revenue has fallen, we've increased our profit before tax by 45% to GBP 14.8 million. This was partly driven by gain by calling our first securitization, which was recognized as a reduction in cost of sales. Michael will explain this further in his section. The strong growth in PBT has driven a 63% increase in Diluted Earnings Per Share to GBP 0.104. In line with our progressive dividend policy, we're delighted to announce an interim dividend of GBP 0.013, which is set at 30% of last year's full dividend. Despite the challenging capital markets, we've had a really busy period attracting capital and growing our funds under management. In May, we completed our fourth securitization of GBP 270 million of Buy-to-Let loans.
In August, we raised GBP 38 million of listed bonds, paying 6.5% in due in 2027. In September, we completed the fourth upsize of our separate account partnership with JP Morgan to GBP 1 billion. In September, we also secured Lloyds Bank as a new financial partner to support the continued growth of our Buy-to-Let. As well as completing these capital markets transactions, we were delighted to become carbon neutral by offsetting through our partnership with Climate Impact Partners. We produced our first Green Bond Framework in line with ICMA Green Bond Principles . The framework will support loans for refurbishing and retrofitting housing stock, which is a first for our industry. In September, we opened our second U.K. office in Glasgow, providing us with access to a fantastic pool of financial services and technology talent.
As I've already highlighted, despite the challenging capital markets, we've continued to go from strength to strength in our ability to attract deep pools of capital to our platform. Our funds under management has now grown to GBP 3.4 billion from GBP 2.5 billion when we IPO'd, a 36% increase. We have over GBP 1 billion of headroom in capital committed for new lending. As you can see on this slide, we now have just under GBP 1.5 billion in our funds and separate accounts as we continued our shift towards a larger proportion of our assets being off balance sheet. We recently signed our first loan into our new separate account with a US annuity provider, and we expect to increase our FUM and AUM by GBP 30 million imminently.
We're pleased that JP Morgan increased their commitment to GBP 1 billion, and crucially, they've extended the investment period for this capital to 3 years. We're delighted by the speed at which they've ramped up the size of their investment, and we couldn't have wished for a more powerful endorsement. Looking forward, we hope to replicate this growth with other financial partners in separate accounts. We continue our success in as an issuer of RMBS securitizations, too. We completed our fourth securitization in May for GBP 270 million. We've had a broad range of investors participating in our securitizations, including the likes of PIMCO, M&G, BlackRock, as well as a number of bank and building societies treasury, who were particularly active in our most recent securitization.
We continue to see strong demand from banks to partner with us. We were delighted to announce a new financial partnership with Lloyds. We started with a relatively modest facility of GBP 180 million for Buy-to-Let loans. We hope to scale this significantly in the months and years ahead as we've done with J.P. Morgan. We've continued to be able to access bond markets. We were delighted to have raised GBP 38 million in August for 5 years at 6.5%. Not only have we been successful in raising capital over the period, we've also lent that capital out too. Our AUM has now grown to GBP 2.4 billion, up from GBP 1.6 billion when we listed.
Over recent years, our growth has been driven by Buy-to-Let, which we launched less than five years ago, and today makes up 75% of our total platform AUM. Our short term AUM actually fell back slightly, as you can see on this slide, as we reduced our appetite for development lending during COVID. We also had loans repaid very quickly as the property market was so strong. We're delighted to see our short term AUM now grow and to now reach an all-time high. This growth has come from smaller residential bridging loans, where we're originating them through our new bridging portal for brokers. We also continue to see success with our technology too. It's our technology that gives us our competitive edge.
It helps us attract new brokers and borrowers, increase our platform AUM, but also gives us our agility to adapt and change our products, responding to changing market conditions. Our technology provides us with 3 key strengths, which we've explained on this slide. It reduces friction, provides us with agility and deeper insight. Our digital application process removes manual processes, making it simpler for brokers, borrowers, and us. Where our borrowers need to, we can complete loans really quickly. In a market backdrop where there are horror stories of lenders taking weeks just to look at mortgage applications, this quarter, we closed a loan in our portal from submission to completion in 9 days. Our technology makes us agile. We're able to adapt to market conditions and innovate our products. We, like other mortgage lenders, on the Monday immediately following the mini budget, removed our loans from sourcing systems.
We spent the day repricing based on the new market conditions, and we put new rates back into sourcing systems on Tuesday morning. Our platform provided us with the agility to do this, but also it was important for us to stay open for business and to serve brokers and borrowers as we'd done during COVID. Through APIs with a wide range of platforms, we pull and analyze over 100,000 data points for each loan application. This data and analysis allows us and our underwriters to make faster and more informed decisions. You don't need to take our word for it. We're consistently recognized in surveys and awards for technology and service. We set out on this slide some extracts from Smart Money People's Survey of Mortgage Brokers, the largest published survey of its type in the UK.
You can see that in the top table, our technology is seen as top quartile, ahead of many high street banks and building societies, many of whom are simply scorecard lending mainstream mortgages, which is much more straightforward than the specialist products that we provide. The second table shows us in comparison to other specialist lenders where we score highly across every measure. We're really proud of the service we provide. Our customer-centric approach drives high repeat broker rates and gives us a great platform to scale. I'll now pass across to Michael to run through our financials.
Thanks, Rod. Good morning, everyone. I'm really pleased to have the opportunity to discuss our strong first half results in more detail. Our profit before tax has increased by 45% to GBP 14.8 million. There are a few factors in that. Our platform AUM has increased by 33% since the last year, showing good growth across both our Buy-to-Let and short-term lending products, up 44% and 12% respectively. Our gross profit has increased by 17% to GBP 31.1 million. This has largely been driven by a GBP 9.2 million gain recognized when we exercised the call option on the Buy-to-Let loans in the Mortimer 2019 securitization and canceled the underlying interest rate swaps. This gain was recognized as a reduction in our cost of sale.
Our revenue has decreased by 8% over the same period, largely due to lower average balances in our short term loan portfolio compared to the previous comparable period, and nil performance fees from our Luxembourg-based Real Estate Opportunity fund due to higher impairment provisions taken over the six-month period. Platform AUM increased by 33%, our administrative expenses increased by only 12%. As Rod mentioned, we opened up a new Glasgow office in September, this will help to mitigate wage inflation in the second half and beyond as we take advantage of the cost-effective talent pool in Scotland.
Our impairment provisions have increased by 12% since the prior comparable period. This includes a GBP 0.6 million overlay on our expected credit loss model, reflecting the worsening in macroeconomic factors over the period, especially in the days after the U.K.'s mini-budget in September. This is expected to lead to an increase in the probability of default for some of our Buy-to-Let borrowers. We have prudently accounted for that in this set of results. Our finance income in the year of GBP 2.7 million includes a gain of GBP 3.6 million recognized on Buy-to-Let pipeline hedges. These hedges are taken out to mitigate the economic risk of interest swap rates rising between signed application and completion of the loans.
This GBP 3.6 million could reverse in the second half if swap rates reduce. These movements over the period led to an increase in the profit before tax margin from 22% to 35%. Our business operates a hybrid model, managing some of our loans on our balance sheet, as well as managing others on behalf of our third-party partners. This, combined with our broad range of products across short-term lending and Buy-to-Let, and soon to be specialist homeowner, gives us diverse revenue streams and high levels of recurring revenue. This means we are able to rely on loans originated over previous years to provide profits for the years to come. This is compounded as we grow more quickly in longer-term lending.
The strategy of the business is also to remain balance sheet light and increase the proportion of assets managed on behalf of third parties, whilst also maintaining a maximum of 5% of our own equity invested into the loans on our balance sheet. There are two core customers that we serve and we earn our revenue from. The first being investors and financial partners, and the second being brokers and borrowers. On the investor side, we generate management, servicing, and performance fees on the loans managed by us on behalf of our investors. We also generate profits when loans that we originally hold on our balance sheet are subsequently sold to third-party investors. These are generated through our separate account mandates and funds. On the broker and borrower side, we generate interest income for loans we hold on our balance sheet and fees on every loan originated.
The chart on the left shows the platform AUM growth across our Buy-to-Let and short-term products. As I've just mentioned, our Buy-to-Let platform AUM grew by 44% since March 2022. As the Bank of England base rate and the expectation of future interest rate rises continued to increase over the period, we've seen borrowers keen to complete on existing Buy-to-Let applications to secure lower rates. On short-term lending, we have continued to see the benefit of the new broker portal we introduced last December, making it easier than ever for brokers to create a new application with us and track it through to completion. The right-hand chart shows gross profit for both our Buy-to-Let and short-term lending products. Short-term lending gross profit has decreased by 37% to GBP 8.2 million.
Whilst our short-term lending increased over the past six months, the average loan balance was lower than the comparable prior period, leading to a GBP 1.6 million reduction in net interest income. Additionally, impairment provisions taken in the Real Estate Opportunity fund resulted in lower performance fees being recognized and fewer loans sold to the fund, resulting in lower gains on sale from them. Conversely, Buy-to-Let has seen a strong 70% increase in gross profit. As mentioned earlier, this was largely driven by a gain recognized when we exercised the option to call the loans in the Mortimer BTL 2019-1 plc. This led to a GBP 9.2 million reduction in cost of sales when the underlying swaps were canceled.
This gain was realized following the sharp increase in interest rate swap rates over the six-month period, and more than offsets the corresponding increases in our cost of sale line from more expensive swaps placed to hedge new Buy-to-Let lending. Additionally, we sold a residual economic interest in our fourth securitization, Mortimer BTL 2022-1, which generated GBP 3.3 million of gross profit. These factors led to a gross profit margin in Buy-to-Let of 85%, and I expect that to trend back towards the prior year's figure of 56% in future periods. One of the key focuses of the business is building technology that drives operational efficiency. As we have delivered new systems and integrations over recent years, so we are able to scale much more efficiently.
We measure our operational efficiency using a KPI metric of OpEx as a percentage of our average platform AUM. The chart on the left shows how this has improved over time as the business has grown, but our costs have grown at a much slower rate. The ratio has improved from 3.39% to 1.27% over the past three years. In the short term, I expect to see a small reversal in this trend. This is largely due to the upcoming launch of our specialist residential product as we hire underwriters and other staff to support the growth of the product. Additionally, we increased our headcount in the first half of the year in the expectation of higher growth in the second half.
As we now expect growth to be more subdued in the second half, this means we don't expect the business to grow into these costs until the first half of FY24. This historic trend will return over the medium term as we reach critical mass in the specialist homeowner product and continue to invest in technology in future periods to deliver operational efficiencies. This slide shows the difference between our profit before tax of GBP 14.3 million and Adjusted EBITDA of GBP 14.8 million. Other than depreciation and amortization of GBP 1.4 million and share-based payment of GBP 0.7 million, the other driver between these figures is the finance income of GBP 2.7 million.
As I mentioned earlier, GBP 3.6 million of this relates to pipeline hedges on our Buy-to-Let portfolio, an economic hedge to protect against interest rate swap increases between a signed application and completion of the loan. This GBP 3.6 million is partially offset by hedge inefficiency of GBP 0.9 million. As discussed in our trading statement on the 10th of October, we expect our profit before tax to be in line with the year ended 31st of March 2022. There are four reasons for that. The first, as just mentioned, is the potential for the pipeline hedge gains to reverse in the second half if swap rates reduce. The second is a lower expectation of platform AUM growth in the second half due to the sharp increase in volatility and interest rates, especially in the aftermath of the U.K.'s mini-budget.
The third, as mentioned earlier, is the increase in headcount in the anticipation of higher levels of platform AUM growth than we now expect to see, as well as costs incurred relating to the launch of our specialist homeowner product. Fourth is due to margin compression as our interest costs increased more rapidly than our lending rates in the first half. Each of these factors are expected to improve towards the end of the second half. This slide shows free cash flow and removes the complexity of our underlying statutory cash flow statement. Free cash flow is defined as our net cash flow from operating activities, net of any investment made into capital expenditure on our fixed assets and intangibles. We have additionally adjusted this figure to exclude the net movement in loans and advances.
This is due to the operating model of the business to finance any increases in loans and advances through increases in interest-bearing liabilities, that movement is also excluded from this calculation. An interim dividend of GBP 0.013 per share will be paid in January, this will result in a payment of approximately GBP 1.8 million, showing sufficient cover for the dividend from the free cash flow amount of GBP 11.4 million. I'll now hand back to Rod for an update on our strategic outlook and to wrap up.
Thanks, Michael. I'll now run through the strategic update and provide you with an outlook and summary. As I hope you've picked up from listening to our H1 highlights and financials, we're well-positioned in the current challenging market backdrop. There are four factors in particular that underpin our position. First, we've invested over GBP 55 million to date in technology, have over 90 leading engineers and product people and data scientists in our technology team, and they're focused on building out our mortgage software further. Our technology is leading, and it differentiates us. It reduces friction for brokers, borrowers, and gives us a competitive advantage. We're agile. We respond quickly to changing market dynamics. Second, our model of accessing other lenders' capital to grow means that we don't need to raise our own equity to grow. We're not constrained by our own balance sheet.
We've built an enviable stable in investors that are attracted to the assets that we originate. Despite the political and economic turmoil and challenging capital markets, we continue to grow our FUM from both new and existing investors. We've got more than GBP 1 billion of capital committed to lend as market conditions improve. Our model provides us with recurring revenue. We're not like a brokerage platform that starts every year with zero. As Michael mentioned a few minutes ago, for FY22, over 80% of our revenue was recurring. Our model of using third-party capital and securitizing loans reduces the credit risk that we hold on our balance sheet. We have credit risk exposure to GBP 139 million of our total balance sheet, of which GBP 24 million is held in investment-grade RMBS notes.
All of the loans that we write are secured against property. We have a weighted average loan-to-value across the portfolio of less than 70%, and the maximum loan-to-value we offer currently is 75%. In the short term, we'll continue to grow and optimize our funds under management. As I mentioned earlier, we recently signed our first Buy-to-Let portfolio loan into our new separate account with a US annuity provider. This first loan will close imminently, increasing both the funds under management and AUM by GBP 30 million. We've received strong interest from banks for our specialist homeowner product as well. In the coming weeks, we hope to announce the financial partner that we intend to launch that product with. We'll continue to grow our FUM. In the aftermath of the mini-budget, we launched a discount tracker Buy-to-Let mortgage.
The product targets landlords that don't expect base rate to rise as fast as fixed-rate mortgages currently imply, and that product's attracting lots of interest. We've also launched a stepped-rate bridging loan, which provides a low initial rate and incentivizes landlords that are able to complete their projects quickly and exit. We'll continue to invest in technology. For much of the last 12 months, the team's been focused on building our Specialist Homeowner mortgage product. With that product due to soft launch in the coming weeks, some of the team will move on to applying what we've built for homeowner back to Buy-to-Let to improve processing further for that product. The key short-term milestone for the business is the launch of our Specialist Homeowner product. The launch will open up a GBP 100 billion market, about the same size as the Buy-to-Let market we operate in.
We plan to disrupt this segment using our customer-centric approach, using technology to deliver a superior service. The distribution is through the same channels already established for Buy-to-Let and will focus on borrowers not well-served by high street lenders. We plan to start beta testing with preferred brokers imminently and expect the first few mortgages to complete this financial year. While it'll be a huge milestone for our business launching this specialist homeowner product proposition. We're just getting started. We continue to have significant capacity to grow in our bridging and development products. It's great to see our short-term AUM growing again. We have huge capacity to grow in Buy-to-Let. Our specialist homeowner launch opens up a similar size market where we'll compete with lenders using legacy systems and continuing with manual processes.
We continue to see the opportunity to apply our technology to the mainstream mortgage market through a mortgage as a service offering. With specialist homeowner launched, we'll focus on making the changes required to open up our software to third-party banks and building societies. In the not-too-distant future, we hope to see banks and building societies offering mortgages to their customers on a white label basis, powered by LendInvest Genesis technology. Our unique business model, superior technology, large addressable market gives us the confidence in our short, medium, and long-term outlook. We expect PBT for the full year to FY23 to be in line with last year. The profit for the year is front-loaded, as Michael Evans described, as we expect the pipeline hedging gain of GBP 3.6 million, which we recognized in our interims, to reverse.
We also completed the sale of our residual interest in our fourth securitization, which brought forward some profit from H2 into H1. Following the mini-budget, we lowered our expectation for AUM growth in H2. Given our head count was based on higher expected AUM, we've hired for the launch into specialist residential mortgages, we expect our operating margin to be lower in H2. We expect to return to growth in PBT in FY24, benefiting from the specialist homeowner launch and a more stable interest environment supporting our Buy-to-Let products. In our IPO, we set out a medium-term ambition to increase our platform AUM by 3x, to grow revenue by 2x, grow adjusted EBITDA by 3x-5x, double our adjusted EBITDA margin, and double the loans processed per operational head.
We're well on the way to delivering on this ambition, and we're confident of achieving it. Longer term, we see huge opportunity with our mortgage as a service white label offering, and we're turning our attention to that now. To summarize, we're pleased with our strong performance in H1, particularly given the challenging macro backdrop. We've made good progress on our strategic priorities, and we're reiterating our full year guidance. We've been able to demonstrate, first, the benefits of our proprietary technology platform, which have been endorsed by leading customer surveys. Second, our diverse sources of capital reinforce our strong position. Clearly, JP Morgan has confidence in us, increasing their commitment to GBP 1 billion. We believe that we can replicate JP Morgan's satisfaction with other new financial partners, such as Lloyds, who recently started with an initial GBP 180 million.
Third, we've been able to respond quickly with innovative product solutions. That's not just down to our technology but the culture we have at LendInvest. We're focused on our talent and our superior customer-centric approach. Finally, said it before, and you'll be hearing us talking about it again, in addition to the significant opportunity for further growth in our existing markets, we're now weeks away from launching into the GBP 100 billion specialist homeowner market. Thanks for listening to the presentation. We're now happy to take questions. If you could open the line for questions, that would be great. Thanks.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. A reminder, participants can also submit questions through the webcast page using the Ask Question button. We will pause for a moment to assemble the queue. We don't have any questions on the conference line. I will now hand over to Alex Dunning, Head of Investor Relations, to address the written questions submitted via the webcasting page. Please go ahead.
Morning. Thank you. We have a question. You've been a public company for almost 18 months. Can you point to some of the tangible benefits?
Hi, Alex. I'll pick that one up. Thanks for the question. Yes, yeah, I certainly can. First of all, we were delighted to raise primary capital through the IPO, which we're now investing into the business, particularly into the launch of the Specialist Homeowner product. As I said in the presentation, that product will launch imminently, and we'll start to see the benefit of that investment soon as we go into next financial year. Additionally to that, we said when we listed, that being a listed company would help us attract new capital to our platform and also attract capital to our platform at a better price. Immediately post-IPO, we were able to do that.
We were able to renegotiate, partnerships with, some of our major banks, and, engineer better terms. It's also helped us attract new capital to our platform as well.
We have a second question. What are the major risks with the new launch into the new specialist segment, and how are you mitigating them?
As we did with our Buy-to-Let product, we intend to launch on a relatively slow basis, so we've got a slow build-up plan. We hope to start beta testing with some preferred brokers in the coming weeks. That will give us the opportunity to iron out any issues, and improve the product for brokers, make the process more seamless. Once we've tested the product, we'll open it up more widely to other brokers, but equally keeping the product fairly constrained until we're comfortable with all the processes all the way through to loan completion and beyond. At that point, we'll look to ramp up originations for the product.
It'll be a relatively slow build up of the product, but that gives us the opportunity to make improvements, finesse it, and identify any issues that may arise.
Also from a credit risk perspective, when we came out in the trading statement at the start of October, we said that we'd lowered the maximum LTV on all of our existing products by 5%, and that's also gonna be reflected within the Specialist Homeowner product launch as well. We've also taken a look at the credit quality of the customers that we'd be looking to lend to, and we've also restricted that, just taking stock of the market environment that we're gonna be launching this product in as well.
There's one further question. Given the housing market, and if prices start to come down and effectivity reduces, are there any cost reduction measures that you'll put in place to protect profitability in the business?
Thanks, Alex, for that question. The starting point is that our expectation now is for the property market to slow down and values to fall slightly through next year. That's built into the forecasting model that we're currently using. It's built into our credit model too. Michael's just described how we've reduced loan-to-values on some of our products, and that's to protect us as we expect some prices to come down. We've also, as Michael described, reduced our AUM growth as we come into this, the second part of the financial year. In reducing our AUM growth, we're also slowing our hiring of new people.
All of that, all of those changes has been in response to our expectation that the property market will slow. It's already built into our forecasting model.
Just had a fourth question from Michael Hill at finnCap. He's asking, "Could I check how you've seen the securitization markets change over the past few months and how you see it changing into FY24? Is there any pressing need to securitize any loans?
Yeah. Thanks, Alex, for that question. The first point is we're not, there is no pressing need to securitize loans. We have significant capacity in other areas, so we're not forced into accessing the securitization market in the sort of immediate future. We'll look to access the market at the optimum time for us. The securitization market as of other capital markets has been, I suppose, up and down over the last few months. We were delighted back in May to securitize. We securitized relatively recently in the context of the market.
During the summer, clearly, as sort of the broader macro and political issues, that market became much more challenging, and pricing on securitization spreads moved out significantly. Over recent weeks, as we've seen more stability from political and I suppose a clearer macro outlook, we've seen spreads, securitization spreads come in, and we saw Nationwide do a securitization just a couple of weeks ago, or actually I think just last week, at some particularly strong pricing, 56 basis points on their AAA bonds. I think the market we expect to improve over the coming months and into the next calendar year.
One way that the securitization market has been affecting the business as well is in the way that we fair value our Buy-to-Let portfolio. If you're looking at our results at the half year, you'll see that we've seen a reduction in on the assets from GBP 97.5 million to just over GBP 60 million. Whilst we've recognized a profit in the half, the reason for that drop is because of this, the way that we fair value those assets. Because under accounting standards, we hold some of those assets on our balance sheet, but we also sell them, that means we have to fair value the assets through our equity. We do that by looking at the cash flows across those Buy-to-Let loans and discounting them using securitization rates.
As Rod pointed out, there's been a real widening in securitization rates over the past year. The AAA bond, Buy-to-Let bond has moved from 68 basis points last September to 100 basis points in March. It was 150 basis points just right before the UK's mini-budget, and then spiked to 200 basis points just after and just before our half year results at the 3rd of September. As Rod's mentioned, securitization markets have started to improve since the 13th of September, so the UK Buy-to-Let AAA bonds have gone from 200 basis points to 165 basis points, which would have improved our fair value of the portfolio by an additional GBP 7 million.
As we come towards the full year at the end of March, and we hopefully continue to see securitizations market improve, so we'd see that fair value of the portfolio increase and our net assets increase back up as well.
The next question. Given you have more than GBP 1 billion of headroom available capital for lending, how will this impact plans for signing up further funding agreements in H2?
We've got ambitious plans to continue to add new funding and add more FUM. As it's sort of previously advised, we tend to run the business, keeping capital committed for lending to around 9 to 12 months of pipeline. We're currently sort of in line with that ambition. As we lend more, we're gonna need to add more capital so that we're sort of always on a treadmill of adding more capital as we continue to lend that capital out. We do expect to add new partners and expand with existing partners over, you know, coming periods.
Whilst that FUM of GBP 1 billion for future lending is a big number, sounds like a big number, it's across the 3 products that we're currently lending on, so Buy-to-Let, bridging and development. That's for some of the lending that sits on our balance sheet, but also some lending that is done on behalf of our third parties where we're then managing the products. When you actually start breaking it down, it reduces quite quickly to that kind of 9-12 months roadmap that Rod talked about. When we look at specialist homeowner, that's gonna increase our FUM even more when we sign that financial partner because we'll be getting funding specifically to launch.
Also one of the things that I think is gonna be really interesting for us in the second half and beyond is looking for those opportunities in the market where there is volatility and dislocation. It creates opportunity for certain niche products. We've shown over the past year that we are able to pivot quite quickly and launch new products. We launched a 7-year fix last year, followed by a 10-year fix and a green product last year as well. These are products that we can bring to market really quickly. Part of the work that our capital markets team does is speaking to existing and potential new investors, looking for opportunities which might suit the risk reward profile that they have, and then quickly being able to launch those products, which would increase our FUM, but increase our AUM profitability as well.
Could you provide more detail on why impairment is higher in the Luxembourg Real Estate Opportunity business? Could there be more to come?
I'll pick that up to start with and Michael can pick in. The Luxembourg Real Estate Opportunity fund, it's clearly a third party fund that we manage. The fund focuses on development loans and larger more complex commercial bridging loans. It's doing, I suppose, some of the more higher risk, higher return activity that we do as a group is done through that fund. We do find it can go through periods where provisioning is significantly higher or lower. Because the loan sizes are larger, it can have a bigger impact too. One or two loans can have an impact on provisioning overall or significant impact on the provisioning overall for the fund.
There are a few older, development and commercial loans in that fund that have been dragging the performance. We've actually seen, in the most recent, fund performance that, the performance pick up again. You know, hopefully as we move forward to next year, performance will pick up, and, as those legacy positions work through.
That fund we're managing is a third party fund. The credit risk doesn't sit on our balance sheet. Impairment provisions are taken by the fund, albeit we're managing them and there's reputational risk and we obviously want to do the best for our partners. The way that impacts us, as we've seen in the first half, is because we've not been getting the performance fees. There's about GBP 1.3 million that we took in the prior comparable period. We've not received anything in the current half.
The next question. Have you been tightening underwriting recently in terms of new originations, and are fund providers encouraging you to do this?
We have been tightening criteria and the big changes really in the aftermath of the mini-budget and our expectations for property market and beyond. As I pointed out, Michael's pointed out as well, you know, the key change we've made is reducing the loan-to-values in which we lend against across the products. It's us preempting or us making these changes as opposed to being led by any partner or investor. It's us making the changes, believing it's the best way of managing the risk return of the lending that we're doing.
That was the last question. Back to you, Rod.
Well, thanks a lot. Thanks Alex, and thanks everyone for your time and the continued support. If I'm not seeing you on the roadshow, I hope you and your families have a fantastic holiday season.