TIDMTRU TIDMTRU
RNS Number : 9840M
TruFin PLC
15 May 2020
15 May 2020
TruFin plc
("TruFin" or the "Company" or together with its subsidiaries
"TruFin Group" or "the Group")
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2019
Full year results demonstrate robust growth and momentum into
2020.
TruFin today announces its financial results for the year ended
31 December 2019, which are consistent with the guidance provided
in the trading update of 24 March 2020. TruFin's complete annual
report and accounts, which set out these results in full detail
with accompanying commentary, are now available below and on
TruFin's website: www.Trufin.com/investors .
Financial Highlights
-- Gross revenues from continuing operations were GBP7.3m for
the year ended 31 December 2019, representing year-on-year growth
of 68%
-- Loss before tax from continuing operations excluding share-based payment charge was GBP9.3m
-- During 2019 the Group demerged Distribution Capital Finance
Ltd ("DFC"), sold its stake in Zopa Group Limited ("Zopa") and
acquired majority stakes in Playstack Limited ("Playstack") and
Vertus Capital Limited ("Vertus")
Operational Highlights
-- Total amount of invoices for which Oxygen Finance Group
Limited (together with its subsidiaries, Oxygen Finance Limited,
Oxygen Finance Americas, Inc. and Porge Ltd) ("Oxygen") accelerated
payment, rose by 26% to GBP550 million during the year
-- Satago Financial Solutions Limited ("Satago") launched a paid
subscription model for its core software services in October 2019,
and continued to see minimal defaults on its loan book
-- Vertus secured a debt facility of GBP15 million with a UK
high street bank, and its approved loan facilities grew to GBP16.5
million
Current Trading and Prospects
-- Group revenues for Q1 2020 were GBP2.1m (unaudited),
representing growth of 36% over the same period in 2019
-- Despite the headwind from the Covid-19 pandemic, April 2020
saw the Group experience revenue growth of not less than 45% over
April 2019 (unaudited).
-- Oxygen has maintained its 100% renewal success rate in 2020
-- Satago signed a GBP5 million revolving credit facility in March 2020
-- Playstack signed a significant exclusivity contract for one
of its games with a leading platform in February 2020
James van den Bergh, TruFin CEO, said:
"2019 was a year of meaningful change for TruFin at Group level;
we completed the demerger and listing of our largest subsidiary
(DFC), the sale of our stake in Zopa (the largest consumer lending
peer-to-peer platform in the UK), and completed investments in
Playstack and Vertus. Given these transactions, we executed a
significant restructuring of the Group's Head Office to reflect the
reduced size of the TruFin Group. Despite these changes, I am
pleased to say that each of our underlying businesses continued to
perform well over 2019.
More recently, whilst the Covid-19 pandemic has inevitably led
to changes in the way that we have had to do business, and there is
greater uncertainty in our markets, our businesses operate in
sectors that should be resilient in comparison to many others. Much
of the momentum we experienced in 2019 is continuing into 2020 and
we remain cautiously optimistic about our prospects for 2020 and
beyond. We will keep shareholders updated as the current year
progresses."
For further information, please contact:
TruFin plc
James van den Bergh, Chief Executive Officer 0203 743 1340
Macquarie Capital (Europe) Limited (NOMAD and
joint broker)
Alex Reynolds
Jonny Allison 0203 037 2000
Liberum Capital Limited (Joint broker)
Chris Clarke
Louis Davies 0203 100 2000
About TruFin plc:
TruFin plc is the holding company for an operating group of
companies that are niche lenders and early payment providers.
TruFin Group combines the benefits of both the traditional
relationship banking model and developments in the fintech sector.
The Company was admitted to AIM in February 2018 and trades under
the ticker symbol: TRU. More information is available on the
Company website www.TruFin.com
The information contained within this Announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No.596/2014. By the publication of
this Announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain. The
person responsible for arranging for the release of this
Announcement on behalf of the Company is Annie Styler.
COMPANY INFORMATION
Directors Simon Henry Kenner (Chairman)
James van den Bergh (Chief Executive Officer)
Raxita Kapashi (Chief Financial Officer) (resigned
31 July 2019)
Steve Baldwin (Senior Independent Non-Executive
Director)
Peter Whiting (Non-Executive Director) (resigned
31 July 2019)
Penny Judd (Non-Executive Director)
Paul Dentskevich (Non-Executive Director)
Stephen Greene (Non-Executive Director) (appointed
29 April 2020)
Company Secretary Ocorian Secretaries (Jersey) Limited
Registered Office 26 New Street
St Helier
Jersey
JE2 3RA
Business Address Mercury House
109-117 Waterloo Road
London
SE1 8UL
Previous Business Address (until 05 December
2019)
4 Bentinck Street
London
W1U 2EF
Registered Number 125245
Auditor Crowe U.K. LLP
St Bride's House
10 Salisbury Square
London
EC4Y 8EH
Nominated Advisor Macquarie Capital (Europe) Limited Ropemaker
and Broker Place
28 Ropemaker Street
London
EC2Y 9HD
Joint Broker Liberum Capital Limited
25 Ropemaker Street
London
EC2Y 9LY
Advisors Travers Smith LLP (Solicitors - UK law)
10 Snow Hill
London
EC1A 2AL
Ogier (Solicitors - Jersey law)
44 Esplanade
St Helier
Jersey
JE4 9WG
Equiniti (Jersey) Limited (Registrar)
26 New Street
St Helier
Jersey
JE2 3RA
CHAIRMAN'S STATEMENT
As I write this report, we are still in the midst of the
Covid-19 pandemic - a global catastrophe and one that has caused
enormous uncertainty for so many. And so, whilst expressing our
heartfelt condolences to all those suffering, I have been hugely
impressed and immensely proud at how our businesses have reacted,
adapted and coped with this unprecedented occurrence. We owe them a
large thank you for enabling the services we offer our customers to
remain open and available.
The consequences of this pandemic are still far from certain and
we are still assessing all potential impacts; it would be foolish
and inappropriate to make too many overly assertive statements at
this time.
As regards 2019 it was yet another eventful year with the
following notable strategic transactions:
-- The disposal of our stake in Zopa Limited ("Zopa") for
GBP44.5m as part of a strategic assessment
-- The demerger of Distribution Finance Capital Ltd ("DFC") and
listing of Distribution Finance Capital Holdings plc as a pragmatic
step towards its strategic goal of obtaining a bank licence
-- The acquisition of 100% of Playstack Limited ("Playstack") to
garner control and provide strategic leadership to this exciting
growth company
-- Conversion of the outstanding convertible loan in Vertus
Capital Limited ("Vertus") resulting in a holding of 51% of
Vertus
-- External funding secured by Vertus enabling it to continue
its growth
-- GBP5m return of value to shareholders in June 2019 and a
further GBP5m in December 2019
These transactions are a great tribute to all involved and belie
the intense level of activity within the Group throughout the year
as many other potential opportunities and developments were
assessed. For a small executive team this represents a great
achievement especially given that the team was restructured and
reduced during the year.
My change of role to a non-executive role has enabled me to
fulfil some lifelong ambitions in the field of ornithology for
which I am extremely grateful, whilst allowing James van den Bergh
to more than ably fill my shoes as our new Chief Executive Officer.
In this roll call we should also not forget the considerable
contribution made by Peter Whiting prior to his stepping down from
the Board and those of our former executive management team Raxita
Kapashi and Jason Rogers - thank you.
As to the businesses themselves, they continued to perform well
in 2019, as detailed in our Chief Executive Officer's report below.
Oxygen Finance's ("Oxygen") leading market position, Satago
Limited's ("Satago") strategic partnerships, Playstack's position
in the games publishing and mobile game financing sector and
Vertus's exciting pipeline mean we have good reason to be excited
for the future. The leadership and management teams within all our
businesses continue to develop, mature and deliver for you our
shareholders. The businesses are each well positioned to pursue
their paths to profitability. I see this continuing in 2020 and we
hope and expect to be able to further report positively on all of
this in the future.
Finally, it would be remiss of me not to mention that our share
price has not performed as the Board would have liked. You will be
aware that our 74 per cent shareholder, Arrowgrass Master Fund
Limited ("AMFL"), announced in September 2019 that it would be
closing and divesting of its positions over time. We believe that
this resulted in an "overhang" on the share price. We remain in
regular dialogue with AMFL and have been seeking ways to resolve
this situation. On 29 April 2020, Stephen Greene joined the Board
as a Non-Executive Director. This appointment was in accordance
with AMFL's rights under its relationship agreement with TruFin as
described at IPO. At this stage, we can provide no certainty over
the future of AMFL's holding, but we remain focused on working with
AMFL and Stephen Greene for a solution in the interests of TruFin's
stakeholders as a whole.
From the business perspective we have started 2020 in good form
with developments apace and, despite the pandemic, hope to show the
fruits of all these efforts in our future results.
Henry Kenner
Chairman
14 May 2020
CEO'S REVIEW
2019 was a year of meaningful change for TruFin. Most notably we
successfully demerged and listed our largest subsidiary (DFC) on
AIM, sold our stake in Zopa (the largest consumer lending
peer-to-peer platform in the UK), acquired a majority stake in
Playstack and converted our outstanding loan in Vertus. Alongside
these transactions, we secured a GBP15m funding facility for Vertus
and executed a significant restructuring of the TruFin Group
("Group") HQ. Finally, our largest shareholder, AMFL, announced
their closure and with it the future divestment of all its
holdings.
Our subsidiaries operate in competitive markets and the
objective of the team at Group level is to shield them from any
unnecessary distractions which could be unsettling for their
employees, cause a lack of focus, and ultimately be an edge for
their rivals. In order to do this, we arm the subsidiaries with the
capital - both human and financial - they need to compete in their
marketplaces. Alongside maintaining a stable environment for our
subsidiaries, we also implemented a number of material strategic
changes during 2019 as further described below. This will ensure
the momentum we experienced in 2019 is maintained in 2020 and
beyond.
TruFin's performance in 2019
Alongside the corporate events that occurred during 2019 at
Group level, the Group saw strong revenue growth of 68% across the
continuing operations and despite the impact of the Covid-19
pandemic this momentum has, in the main, continued in the first
quarter of 2020.
Oxygen
-- During 2019 Oxygen maintained a 100% renewal record for local
authority Early Payment Programme Services with three customers
renewing their contract for a further 5 years
-- The total amount of invoices, for which Oxygen accelerated
payment, rose by 26% to GBP550 million and further efficiencies
were made reducing EBITD losses by 36%
-- A refined commercial model has resulted in clients acquired
in the second half of 2019 contracting on a gain share model,
alongside a new fixed monthly service fee. This is now the standard
model for all new business and results in even greater income
predictability for the five-year term of every new contract
Satago
-- In a direct response to customer and partner demand, Satago
launched a paid subscription model for its core software services
in October 2019
-- The monthly subscription model growth was bolstered by the
signing of a reseller agreement with a leading software provider in
the fourth quarter of 2019
-- In addition to the many thousands of customers who currently
use Satago's software on a free basis, Satago is targeting 2,000
paid subscribers by 31 December 2020
-- Satago's key strength remains the technology platform; to
ensure they maintain their competitive position the development
team was enhanced during 2019 to allow for complimentary product
builds during 2020 and beyond
-- Minimal defaults with the loans advanced constrained only by
a lack of capital
Playstack
-- TruFin acquired a majority controlling stake in Playstack in
September 2019
-- Lending in PlayIgnite, the financing subsidiary of Playstack,
experienced zero losses and showcased the opportunity set within
the mobile-game lending space
-- The Group remains capital constrained and as such the full
lending opportunity set cannot yet be fully exploited
-- Playstack released six new titles including 'Doctor Who: Edge
of Time' VR game under licence from the BBC
-- Playstack also pioneered and tested a proprietary technology
platform to scale mobile game revenue in 2020 and beyond
Vertus
-- TruFin converted its outstanding loan to Vertus in July 2019,
resulting in a 51% holding of Vertus
-- In September 2019 Vertus concluded a secured debt facility of
GBP15 million with a UK high street bank, with the potential for it
to be increased by a further GBP10 million
-- Approved loan facilities to clients increased by 58% between
September and December of 2019
-- In 2019, approved loan facilities grew by 82% from GBP9
million to GBP16.5 million
-- The business experienced zero defaults or write downs in the
year
Current Trading and Prospects
I am pleased to report that the Group's robust growth has
remained resilient with Group revenues for the first quarter ended
31 March 2020 of GBP2.1 million (unaudited). This is an increase of
36% over the same period in 2019 and a 5% increase over the fourth
quarter of 2019.
Given the ongoing Covid-19 pandemic we felt it important to
reassure shareholders that April 2020 also saw revenue growth from
continuing operations of not less than 40% over April 2019
(unaudited).
Oxygen
-- Oxygen has maintained their 100% renewal success rate in
2020, with four renewals already secured
-- During April 2020 Oxygen was notified, following a full
Official Journal of the European Union (OJEU) process, that the
North East Procurement Organisation (NEPO) will award a contract to
Oxygen enabling their 520 NEPO member organisations to procure
Oxygen's Early Payment Programme Services. The framework contract
is available for 8 years
-- Oxygen's pipeline of opportunities remains strong overall
although we expect to see some 'pushing back' of the pipeline in
the second and third quarters of 2020
-- As a result of the Covid-19 pandemic some UK Government
bodies are delaying the tendering of certain capital projects which
we anticipate will have a knock-on financial impact for Oxygen
during the second half of 2020 and into early 2021
Satago
-- A GBP5 million revolving credit facility was signed in March
2020. This is the first step to resolving Satago's capital
constraints
-- Satago anticipates writing in excess of GBP60 million of
loans during 2020
-- All else being equal, Satago expects paying subscribers to
hit 2,000 by 31 December 2020 and this momentum to continue into
2021
-- Satago continues to have strategic dialogue with new and
existing partners and is now in discussions with a leading UK
clearing bank, which is looking at the feasibility of leveraging
Satago's best-in-class invoice financing software for its SME
customers
-- During this period of macro uncertainty Satago will continue
to manage the book cautiously
Playstack
-- During the first quarter of 2020 Playstack signed a
significant exclusivity contract with a leading games platform for
one of its upcoming launches, highlighting the pedigree of the
Playstack portfolio
-- Due to the Group's capital constraints, PlayIgnite has begun
to source capital from external debt providers which has led to
their pipeline of international funding opportunities growing
meaningfully
-- Given interest from investors in the 'Covid-19 resilient'
gaming space and the momentum of the Playstack portfolio, we are
currently exploring the feasibility of a third-party equity
investment into Playstack. Discussions are at an early stage and
may or may not lead to a transaction
Vertus
-- Vertus expects a mature pipeline to result in completed
applications as the market environment stabilises
-- The Covid-19 pandemic has had a short-term impact on new loan
applications, although Vertus believes that the IFA sector will be
robust through the crisis
-- All else being equal, Vertus is targeting a loan book of
GBP16m by 31 December 2020
Outlook
It is with considerable pride that I can write that during the
Covid-19 crisis all of our businesses have stood by their customers
and are working closely with their customers and partners to ensure
we all come through this pandemic stronger. This collaborative
approach is not only the right thing to do, but we are convinced
will, in time, yield meaningful financial benefits. This is an
ever-changing situation and, although we are cautiously optimistic
about how the Group is weathering the crisis, we will be sure to
update shareholders as and when the effects (both positive and
negative) of the pandemic are clear.
As demonstrated by the pursuit of external investors directly
into Playstack, the Board remains opportunistic. This fresh
approach of inviting new investors into our subsidiaries in order
to drive further growth without an equity injection from TruFin,
demonstrates the Board's pragmatism and ability to quickly adapt to
changing market sentiment. If successful, this could be a model we
look to replicate across the Group, and we look forward to updating
shareholders in due course.
Despite the uncertainty caused by the Covid-19 crisis we believe
each of the subsidiaries have excellent prospects. They operate in
resilient sectors such as public procurement, mobile gaming,
independent financial advice, and, in the case of Satago, provide
cashflow management software for SMEs. As a result, we believe,
there are considerable opportunities for meaningful capital
realisations over time within the Group.
James van den Bergh
Chief Executive Officer
14 May 2020
GROUP STRATEGIC REPORT
Goals and Objectives
TruFin was founded with the belief that it could generate
significant value by focusing on poorly served niches. These are
markets where the large lenders and operators cannot navigate or
are unable to make a return, due to cumbersome cost bases and
ineffective use of technology. These markets need servicing and the
customers we serve are loyal, reliable and can scale with us. This
belief has not changed. In fact, it has been solidified over the
last three months as a number of our competitors begin to rein in
their lending or have stopped operating all together.
We remain focused on these niches. We remain committed to our
markets and we remain committed to our partners. The way our
businesses are acting now, in the face of adversity, will ensure
they become more valuable in the medium term. Our strategic
objective remains the realisation of value from each of our assets,
ensuring our shareholders' commitment and support is well
rewarded.
Specifically, the Directors have the following strategic
objectives for each business:
Oxygen
-- The absolute focus of the business remains on monetising live
clients through the onboarding of their suppliers to Oxygen
programmes
-- The formation of the client led 'Advisory Boards' is leading
to far greater client engagement and best practice, which will
continue to drive improved efficiencies for both Oxygen and their
clients
-- Oxygen has signed several partnerships with organisations
that are keen to leverage Oxygen's client relationships. These
complimentary services augment the value that Oxygen can bring to
existing clients whilst strengthening relationships
-- New products will be launched in 2020 combining the deep
technical connectivity Oxygen has with its client's data and the
research and insight capabilities of its subsidiary Porge. These
new chargeable services have already been successfully tested and
deployed in 2020
Satago
-- Satago's core strategic goal is unchanged: to be the leading
comprehensive cash flow management solution for SMEs. To achieve
this goal Satago is leveraging technology to enhance credit
control, risk monitoring, customer experience and its product
suite
-- Satago's customer acquisition strategy is focused on the deep
partnerships it has formed to-date with accountants and software
providers whilst seeking new routes to market through other
financial intermediaries
-- The rapid adoption of the paid subscription model has given
management the confidence to reinforce the technology investment
already made, in order to solidify the competitive advantage Satago
has built
Playstack
-- Raise 3rd party equity capital in order to exploit the
growing pipeline of opportunities for both PlayIgnite and
Playstack
-- Market testing of proprietary technology platform to grow
additional revenues in 2020 and beyond
-- Increase reach on console and PC platforms
Vertus
-- Vertus aims to be the UK leader in providing debt capital and
support to IFAs for succession planning (acquisitions and MBOs)
-- Vertus has an established management team, a strong partner
(in IntegraFin Holdings plc) and an efficient capital structure
-- Following the focus on capital raising in 2019, Vertus is now
solely focussed on sales and origination opportunities to
capitalise on the significant consolidation that is taking place in
the UK IFA market
-- Vertus, along with their partner, anticipate that the
Covid-19 crisis will accelerate consolidation in the IFA market,
increasing their lending opportunities
Principal risks and uncertainties
The Directors of TruFin plc confirm that we have carried out a
robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future
performance, solvency or liquidity.
Principal risks are a risk or combination of risks that, given
the Group's current position, could seriously affect the
performance, future prospects or reputation of the Group. These
risks could potentially threaten the businesses, performance,
solvency or liquidity, or prevent the delivery of the strategic
objectives. The Board has overall responsibility for ensuring that
risk is appropriately managed across the Group.
As well as external reviews and audits from the Group's
statutory auditors, the Group has internal checks and policies.
Initial responsibility rests with the management team of each
business for identifying and managing risks arising in their
business areas. This is augmented by the Group's central compliance
and finance function with responsibility for reporting to the
Board.
The key risks identified and which the Board has reasonable
expectation are appropriately mitigated are:
-- Covid-19 - The overarching risk of the Covid-19 crisis is how
it impacts our customers and partners. The inevitable rescheduling
of meetings, agreements and partnerships makes this pandemic a
headwind on the Group. It is too early to say what the medium-term
financial impacts are and we will be sure to update shareholders
when the full impact is more accurately measurable
-- Strategic risk - Strategic and business risk is the risk
which can affect the Group's ability to achieve its corporate and
strategic objectives. The risk on the performance of the Group
arising from its strategic decisions, change in the business
conditions, improper implementation of decisions or lack of
responsiveness to industry changes. It is particularly important as
the Group continues its growth strategy. Mitigating factors
include: the Group will not put its core strategic and business
objectives at a level of risk which is beyond its financial
resources and operational capabilities. The Group will monitor and
continually review this risk
-- Credit risk - The risk of default, potential write-off,
financial loss arising from a borrower or counterparty failing to
meet its financial obligations. This is mitigated by the Group
adopting prescribed lending policies and adhering to strict credit
and underwriting criteria specifically tailored to each business
area. The loans issued are in most cases collateralised to a large
extent and the majority of the loans are short dated and therefore
the risk of loss is mitigated to the extent the Directors deem
appropriate in accordance with the relevant risk policies
-- Funding risk - The risk of the Group not being able to meet
its current and future financial obligations over time,
specifically that funding is not available to meet the Group's
growth targets. Both Vertus and Satago have secured external
funding in the last six months with which they can continue to grow
their loan books. Playstack has started to explore the feasibility
of third-party equity investment and PlayIgnite has begun to source
capital from external debt providers
There is ongoing uncertainty amongst potential funding partners
and delivery partners concerning the intentions of TruFin's largest
shareholder, AMFL, which announced in September 2019 that it would
be closing its fund, leading in due course to the divestment of its
investment positions. AMFL has appointed a representative director
to the board and the Board remains actively engaged with AMFL
-- Liquidity risk - The Group is due to receive repayments of
GBP5.3m from DFC in June 2020 and GBP9.1m in December 2020. There
are risks that these payments become impaired or delayed and this
would cause a considerable risk to the Group. The Group regularly
conducts liquidity stress tests, based on a range of different
scenarios to ensure it can meet all of its liabilities as they fall
due
-- Operational risk - the risk of financial loss and/or
reputational damage resulting from inadequate or failed internal
processes, people and systems or from external events. The exposure
to operational risk has increased from the previous year as the
businesses have grown. Mitigants are: the Group reviews its
operational infrastructure to ensure that it is secure and fit for
purpose, the Group maintains a strong internal control environment
and the Group has also factored in the strengthening of processes
and systems
Strict adherence to managing risk
The Group manages such risks, among other things, with robust
systems and processes, guidelines and policies which are
forward-looking, clearly articulated, documented and communicated
throughout the businesses and which enable the accurate
identification and control of potentially problematic transactions
and events.
Due to Satago and Vertus being lending businesses, they each
have their own risk committees and formal risk procedures in place
that aim to manage risk effectively. The systems and processes,
guidelines and policies are continually reviewed and updated and
effectively communicated to all personnel to ensure that resources,
governance and infrastructure are appropriate for the increasing
size and complexity of the business.
The Group manages the risks by making complex judgements,
including decisions (based on assumptions about economic factors)
about the level and types of risk that it is willing to accept in
order to achieve its business objectives, the maximum level of risk
the Group can assume before breaching constraints determined by
liquidity needs and its regulatory.
Significant events post reporting date
Since the year end, it has become clear that the spread of the
Covid-19 coronavirus will have a material impact on many economies
globally both through the effects of the virus itself and the
measures taken by governments to restrict its spread.
Given the emergence and spread of the Covid-19 virus is not
considered to provide more information about conditions that
existed as at the balance sheet date, this is considered to be a
non-adjusting post balance sheet event and so the measurement of
assets and liabilities in the accounts have not been adjusted for
its potential impact.
Since the year end Satago has implemented its Management
Incentive Plan ("Satago MIP"). Under the Satago MIP key Satago
managers were given the opportunity to acquire new created ordinary
shares in the capital of Satago Financial Solutions Limited. 20%
(750,000 ordinary shares) of the fully diluted share capital has
been made available under the Satago MIP and, to date, 590,625
ordinary shares have been issued to Satago managers. It is expected
that Satago MIP participants will receive value for their shares on
an exit event in relation to Satago.
James van den Bergh
Chief Executive Officer
14 May 2020
REPORT OF THE DIRECTORS
The Directors present their report with the financial statements
of the Company and the Group for the year ended 31 December
2019.
Principal activity
The principal activities of the Group in the year under review
were those of providing niche lending, early payment services and
video games publishing.
Dividends and return of capital
The Directors have confirmed that no dividends have been
declared for the year to 31 December 2019. The Directors' current
view is that the earnings of Group will first be reinvested in the
businesses to fund the Group's growth strategy and any surplus
cash, if not reinvested in the foreseeable future, will be returned
to shareholders. During the year GBP10m was returned to
shareholders via a share buyback of GBP5m in June 2019 and GBP5m in
December 2019.
Events since the end of the year
Since the year end, it has become clear that the spread of the
Covid-19 coronavirus will have a material impact on many economies
globally both through the effects of the virus itself and the
measures taken by governments to restrict its spread.
Given the emergence and spread of the Covid-19 virus is not
considered to provide more information about conditions that
existed as at the balance sheet date, this is considered to be a
non-adjusting post balance sheet event and so the measurement of
assets and liabilities in the accounts have not been adjusted for
its potential impact.
Directors
The Directors who held office during the year and up to the date
of the Directors' report were as follows:
Simon Henry Kenner
James van den Bergh
Raxita Kapashi (resigned 31 July 2019)
Steve Baldwin
Peter Whiting (resigned 31 July 2019)
Penny Judd
Paul Dentskevich
Stephen Greene (appointed 29 April 2020)
The Directors' interests in the shares of TruFin plc, all of
which were beneficial interests, at 31 December 2019 are as
follows:
Number of Shares 2019 2018
--------------------------------------------------------- -------------- --------------
S H Kenner 18,441 -
J van den Bergh 165,982 150,000
P Whiting 26,315 26,315
P Judd 24,723 24,723
Shares jointly held by the trustee of the Company's
employee benefit trust (the "EBT") and S H
Kenner - 1,825,658
Shares jointly held by the EBT and J van den
Bergh 1,186,678 1,582,237
During the year 1,825,658 shares that were jointly held by the
EBT and Henry Kenner vested. 1,807,217 became fully owned by the
EBT and 18,441 became fully owned by Henry Kenner. Henry Kenner
holds a nil cost option in respect of 1,807,217 shares.
During the year 395,559 shares that were jointly held by the EBT
and James van den Bergh vested. 379,577 became fully owned by the
EBT and 15,982 became fully owned by James van den Bergh. James van
den Bergh holds a nil cost option in respect of 1,186,678
shares.
Directors insurance and indemnities
Throughout the year the Company has maintained Directors and
Officers liability insurance for the benefit of the Company, the
Directors and its officers. The Directors consider the level of
cover appropriate for the business and will remain in place for the
foreseeable future.
Significant shareholders
The following parties held greater than 3% of the issued share
capital of TruFin plc as at 31 December 2019:
Number of % of issued
shares share capital
--------------------------------------- --------------- -------------------
Arrowgrass Master Fund Limited 59,470,670 73.58%
Watrium AS 5,260,588 6.51%
TruFin plc Employee Benefit Trust 3,373,472 4.17%
Liontrust Asset Management 2,938,523 3.64%
Statement of Directors' responsibility
The Directors are required by the Companies (Jersey) Law 1991,
to prepare financial statements for each financial year which give
a true and fair view of the state of affairs of the Company as at
the end of the financial year and of the profit or loss of the
company for that period. The directors have elected to prepare the
financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. In preparing these financial statements, the
Directors are required to:
-- Select suitable accounting policies and then apply them
consistently,
-- Make judgements and estimates that are reasonable and
prudent,
-- State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements, and
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping accounting records
that are sufficient to show and explain the Company's transactions.
These records must disclose with reasonable accuracy at any time
the financial position of the Company and enable the Directors to
ensure that any financial statements prepared comply with the
Companies (Jersey) Law 1991. They are also responsible for
safeguarding the assets of the Company and, hence, for taking
reasonable steps for the prevention and detection of fraud, error
and non-compliance with law and regulations.
Statement of Going Concern
The directors have completed a final assessment of the Group's
financial resources, including forecasts. Based on this review, the
directors believe that the Group is well placed to manage its
business risks successfully within the expected economic
outlook.
After making enquiries, and taking into consideration the
potential uncertainties of Covid-19, the directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the Annual Report and Financial Statements.
Corporate Governance and Internal Controls
The Directors acknowledge the importance of high standards of
corporate governance and how the Board and its committees operate.
The corporate governance framework which TruFin operates, including
Board leadership and effectiveness, board remuneration, and
internal control is based upon practices which the board believes
are proportional to the size, risks, complexity and operations of
the business and is reflective of the Group's values.
The Board has decided to adhere to the Quoted Companies
Alliance's Corporate Governance Code ("QCA Code") for small and
mid-size quoted companies (revised in April 2018 to meet the new
requirements of AIM Rule 26). The QCA Code is constructed around
ten broad principles and a set of disclosures. The QCA itself has
stated what it considers to be appropriate arrangements for growing
companies and asks companies to provide an explanation about how
they are meeting the principles through the prescribed
disclosures.
The Board has considered how it applies each principle and the
extent to which the Board judges these to be appropriate in the
circumstances. Details of how TruFin adhere to these principles can
be found on our website www.TruFin.com.
In line with the QCA Code, the Board and Committees conducted a
formal performance evaluation process during the year. The process
was carried out by way of tailored questionnaires completed by each
member of the Board and Committees.
With respect to the Board, the question covered a variety of
topics, including the composition of the Board, the quality and
timeliness of information provided to the Board, succession
planning and shareholder engagement. In general, the responses
found the Board comprises an appropriate balance of skills and
experience and that it is operating effectively.
The Board comprises one Executive Director and five
Non-Executive Directors, three of which are independent.
Brief biographies of the Directors are set out below:
Henry Kenner - Chairman (Chairman and Chief Executive Officer
until 11 September 2019)
Henry possesses over 30 years of investment banking and capital
markets experience. Henry co-founded Arrowgrass Capital Partners
LLP in 2008 and was CEO until late 2017. Prior to that, Henry
served as a Managing Director at Deutsche Bank. Henry has also
worked as a Managing Director at Swiss Re Capital Management and at
ABN Amro Hoare Govett having started his capital markets career at
NatWest Markets. Henry qualified as a Chartered Accountant.
James van den Bergh - Chief Executive Officer (Deputy Chief
Executive Officer until 11 September 2019)
James possesses over 16 years of investment banking and capital
markets experience. James led the alternative finance team at
Arrowgrass Capital Partners since its inception in 2013 to its
transfer to TruFin. James began his career at Merrill Lynch before
transitioning into investment management in 2003. James was
formerly a partner at SAC Capital Advisors, Walter Capital
Management LLP and Ivaldi Capital LLP. James is a Chartered
Financial Analyst (CFA) Charterholder.
Steve Baldwin - Senior Independent Non-Executive Director
Steve has an extensive corporate finance background and is
currently a Non-Executive Director at The Edinburgh Investment
Trust plc and Plus500 Limited. He is also a Trustee at Howard de
Walden Estate Limited. Steve was the Head of European Equity
Capital Markets and Corporate Broking at Macquarie Capital until
February 2015. Prior to this, Steve was a Director at JPMorgan
Cazenove for ten years and was a Vice President of Corporate
Finance at UBS from 1995 to 1998. Steve qualified as a Chartered
Accountant.
Penny Judd - Independent Non-Executive Director
Penny has over 30 years of experience in Compliance, Regulation,
Corporate Finance and Audit and is currently Chairman of Plus500.
Penny was until June 2016, a Managing Director and EMEA Head of
Compliance at Nomura International plc, a position she held for
three years. Prior to this, Penny worked at UBS Investment Bank for
nine years and held the position of Managing Director, EMEA Head of
Compliance. Penny qualified as a Chartered Accountant. Penny is
also currently Non-executive Director of Alpha Financial Management
Consulting Plc and Team17 plc.
Paul Dentskevich - Independent Non-Executive Director
Paul has over 30 years of financial services experience,
specialising in risk management, investment management and
corporate governance of hedge and other multi-asset funds. Paul is
currently Risk Director at Crestbridge, having previously been at
Brevan Howard, 2008 to 2015, where he was a member of the Manager's
investment committee and sat on a number of boards. Paul has a PhD
in Economics from Imperial College London.
Stephen Greene - Non-Executive Director
Stephen has investment banking, investing and capital markets
experience, previously holding positions at Keel Harbour Capital
Limited, Arrowgrass Capital Partners, RMG Wealth Management, ACPI
Investments and Deutsche Bank. Having recently transitioned into
more technology focused roles, specifically within financial
services and artificial intelligence, Stephen currently serves as a
Non-Executive Director of Distribution Finance Capital Holdings
plc, Managing Director of Orsus Ventures Limited and Coleura Labs
Limited and formerly served as Managing Director of Satalia.
Stephen is a CFA Charterholder.
Stephen was appointed to the Board as Director Representative of
Arrowgrass Master Fund Limited on 29 April 2020 pursuant to the
relationship agreement entered into with Arrowgrass Master Fund
Limited at IPO.
Our Committees
The Board has established the Audit Committee, the Remuneration
Committee and the Nomination Committee each with written terms of
reference and agreed schedules of work.
(a) Audit Committee
The Audit Committee is chaired by Penny Judd. Its other members
are Steve Baldwin and Paul Dentskevich who joined the committee on
6 August 2019. Peter Whiting was a member of this committee prior
to him leaving the Group. The Audit Committee has primary
responsibility for monitoring the quality of internal controls and
ensuring that the financial performance of the Company is properly
measured and reported on. It receives and reviews reports from the
Company's management and auditors relating to the interim and
annual accounts and the accounting and internal control systems in
use throughout the Company. The Audit Committee meets at least
twice a year and will have unrestricted access to the Company's
auditors. A copy of the Audit Committee Terms of Reference can be
found on our website.
(b) Remuneration Committee
The Remuneration Committee is chaired by Steve Baldwin. Its
other members are Penny Judd and Paul Dentskevich who both joined
the committee on 6 August 2019. Peter Whiting chaired this
committee prior to him leaving the Group. The Remuneration
Committee reviews the performance of the Company's Executive
Directors and makes recommendations to the Board on matters
relating to their remuneration and terms of employment. The
Remuneration Committee also makes recommendations to the Board on
proposals for the granting of options and other equity incentives
pursuant to any share option scheme or equity incentive scheme in
operation from time to time by the Company. The remuneration and
terms and conditions of appointment of the Non-Executive Directors
is set by the Board. The Remuneration Committee meets formally at
least once a year and otherwise as required. A copy of the
Remuneration Committee Terms of Reference can be found on our
website.
(c) Nomination Committee
The Nomination Committee is chaired by Steve Baldwin. Its other
members are Penny Judd, Henry Kenner and Paul Dentskevich. Paul
joined the committee on 6 August 2019. The Nomination Committee
assists the Board in discharging its responsibilities relating to
the composition of the Board, performance of Board members,
induction of new Directors, appointment of committee members and
succession planning for senior management of the Company. The
Nomination Committee is responsible for evaluating the balance of
skills, knowledge, diversity and experience of the Board, the size,
structure and composition of the Board, retirements and
appointments of additional and replacement directors and makes
appropriate recommendations to the Board on such matters including
succession planning. The Nomination Committee prepares a
description of the role and capabilities required for a particular
appointment. The Nomination Committee meets formally at least once
a year and otherwise as required. A copy of the Nomination
Committee Terms of Reference can be found on our website.
Board and Committee attendance record
Board Committee Membership
---------- --------------------------------------------
Meetings Nomination Remuneration
attended Committee Audit Committee Committee
--------------------- ---------- ----------- ---------------- -------------
Henry Kenner 20 / 20 3 / 3
James van den Bergh 19/ 20
Raxita Kapashi 11 / 12
Steve Baldwin 19 /20 3 / 3 3 / 3 8 / 8
Peter Whiting 10 / 12 1 / 2 4 / 4
Penny Judd 18 / 20 3 / 3 3 / 3 3 / 4
Paul Dentskevich 20 / 20 2 / 2 1 / 1 3 / 4
Statement as to disclosure of information to auditors
So far as the Directors are aware, there is no relevant audit
information of which the Company's auditors are unaware and each
Director has taken all the steps that he or she ought to have taken
as a Director in order to make himself or herself aware of any
relevant audit information and to establish that the Company's
auditors are aware of that information.
ON BEHALF OF THE BOARD
Henry Kenner
Chairman
14 May 2020
AUDIT COMMITTEE REPORT
Members of the Committee
-- Penny Judd (Chair)
-- Peter Whiting (resigned 31 July 2019)
-- Steve Baldwin (joined committee 6 August 2019)
-- Paul Dentskevich (joined committee 6 August 2019)
Role of the Committee
The Audit Committee has primary responsibility for monitoring
the quality of internal controls and ensuring that the financial
performance of the Company is properly measured and reported on. It
receives reviews reports from the Company's management and auditors
related to the interim and annual accounts and the accounting and
internal control systems in use throughout the Group. The Audit
Committee meets at least twice a year and has unrestricted access
to the Company's auditors. A copy of the Audit Committee Terms of
Reference can be found on our website.
External Audit
The Audit Committee approves the appointment and remuneration of
the Group's external auditors. They also ensure that they are
satisfied with the external auditors' independence in relation to
any other non-audit work undertaken by them.
Internal Audit
The Committee has considered the need for an internal audit
function during the year and continues to be of the view that,
given the size and nature of the Group's operations and finance
team, there is no current requirement to establish a separate
internal audit function.
Significant issues considered in relation to the financial
statements
The Audit Committee assesses whether suitable accounting
policies have been adopted and whether appropriate estimates and
judgements have been made by management. The Committee also reviews
accounting papers prepared by management, and reviews reports by
the external auditors. The specific areas reviewed by the Committee
in respect of the year were:
-- appropriateness of the calculation and valuation of Goodwill
recognised in the Group financial statements
-- appropriateness of going concern assumptions
REPORT OF THE INDEPENT AUDITOR TO THE SHAREHOLDERS OF TRUFIN
PLC
Opinion
We have audited the financial statements of TruFin plc (the
"Parent Company") and its subsidiaries (the "Group") for the year
ended 31 December 2019, which comprise:
-- the Group consolidated statement of comprehensive income for
the year ended 31 December 2019;
-- the Group consolidated and parent company statements of
financial position as at 31 December 2019;
-- the Group and parent company statements of cash flows for the
year then ended;
-- the Group and parent company statements of changes in equity
for the year then ended; and
-- the notes to the financial statements, including a summary of
significant accounting policies
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the Parent Company's affairs as at 31
December 2019 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies (Jersey) Law 1991
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which ISAs (UK) require us to report to you when:
-- The directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- The directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Group's or the Parent Company's ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the Group financial statements as a whole to be
GBP300,000 (FY18: GBP766,250), based on 0.5% of Total Assets (FY18:
0.5% of equity).
We use a different level of materiality ('performance
materiality') to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for related party transactions
and directors' remuneration.
We agreed with the Board of Directors to report to it all
identified errors in excess of GBP15,000 (2018: GBP38,312). Errors
below that threshold would also be reported to it if, in our
opinion as auditor, disclosure was required on qualitative
grounds.
Overview of the scope of our audit
The group consists of TruFin plc itself, TruFin Holdings Ltd
(the holding entity) and the subsidiaries as disclosed in note
1.
All of the trading subsidiaries, excluding the non-UK registered
entities, have been subject to a full scope audit.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our
audit.
Revenue Recognition
=======================================================================================
Key audit matter The Group derives its revenue from interest, fee and
description publishing income. During the year ended 31 December
2019, the Group recorded total revenue of GBP7,339k
(FY18: GBP4,365k).
Interest income is earned on loans and advances to
customers and accounts for 46% of total revenue. Fee
income is earned on payment services provided by Oxygen
and accounts for approximately 47% of total revenue.
Publishing income is provided by Playstack and accounts
for approximately 7% of total revenue.
The key revenue recognition risk is in respect of
ensuring revenue is recognised in the year that has
not been performed.
======================== =============================================================
How the scope -- For each company in the Group, we gained an understanding
of our audit addressed of its business model and the services and products
the key audit it delivers to its customers;
matter -- Based on that understanding we identified when
"control" passes to the customer and, consequently,
when revenue is earned;
-- We selected a sample of contracts to confirm our
understanding of the principal terms and obligations;
-- We gained an understanding of the key systems
used to capture and record that income and evaluate
any key controls;
-- Where the Group utilises third party platforms
we evaluated those platforms and the safeguards management
have in place to corroborate the output from those
platforms;
-- We performed an overall analytical review and
corroborated the reasons for any large and unusual
variances;
-- For a selection of transactions, we confirmed
that the recognition criteria in relation to the income
earned in the period has been met;
-- We reviewed and tested the basis for accrued and
deferred income;
-- We reviewed aged receivables profile and credit
notes issued post balance sheet date; and
-- Where relevant, we reviewed and tested revenue
cut off procedures
======================== =============================================================
Carrying value of goodwill and other intangible assets
==========================================================================================
Key audit matter The Group's intangible assets comprises of goodwill,
description client contracts, software licenses and project costs.
When assessing the carrying value of goodwill and
intangible assets, management make judgements regarding
the appropriate cash generating unit, strategy, future
trading and profitability and the assumptions underlying
these. We considered the risk that goodwill and/or
other intangible assets were impaired.
======================== ================================================================
How the scope -- We evaluated, in comparison to the requirements
of our audit addressed set out in IAS 36, management's assessment (using
the key audit discounted cash flow models) as to whether goodwill
matter and/or other intangible assets were impaired
-- We challenged, reviewed and considered by reference
to external evidence, management's impairment and
fair value models as appropriate and their key estimates,
including the discount rate. We reviewed the appropriateness
and consistency of the process for making such estimates
======================== ================================================================
Recognition and carrying value of deferred tax
========================================================================================
Key audit matter As at 31 December 2019, the Group is carrying a deferred
description tax asset of GBP2.50m in respect of the gross value
of the accumulated tax losses in Oxygen. The estimation
of this carrying value requires the exercise of considerable
judgement about the ability of the Group to utilise
the accumulated tax losses.
======================== ==============================================================
How the scope -- We obtained and assessed extended projections
of our audit addressed and financial analyses to support management valuation
the key audit for balances.
matter -- We challenged management's projections and forecasts
which the management used as basis for recognition
and carrying value of the deferred tax assets by holding
discussions with management, reviewing the inputs
and assumptions used such as the forecasted profit
levels and growth rate.
======================== ==============================================================
Carrying value of the loan book
===========================================================================================
Key audit matter The Group's total revenue is derived mainly from the
description loan books under Satago and Vertus. There is a risk
the loan book is not appropriately carried at the
expected recoverable amount which includes the expected
credit loss required under IFRS 9. We also considered
the ageing analysis to ensure that an appropriate
approach has been taken to dealing with any loans
which are deemed past due either in terms of capital
or interest.
======================== =================================================================
How the scope -- We selected a sample of agreements entered into
of our audit addressed to confirm our understanding of the principal terms
the key audit and obligations.
matter -- We examined the ageing analysis to ensure that
an appropriate approach has been taken to dealing
with any loans which are deemed past due either in
terms of capital or interest.
-- We challenged management in relation to the assumptions
applied in the ECL model by holding discussions with
the management and challenging the inputs applied
in the Loss Given Default assumption used in the ECL
model.
======================== =================================================================
Going concern
=====================================================================================
Key audit matter The Board is responsible for ensuring it is appropriate
description to prepare the Group's financial statements on the
basis that it is a going concern for a period of at
least 12 months from the date of approving the financial
statements.
======================== ===========================================================
How the scope -- We obtained and reviewed the Board's assessment
of our audit addressed of going concern, which included considerations arising
the key audit from the Covid19 pandemic. The directors have completed
matter a full assessment of the Group's financial resources,
including forecast projections.
-- We challenged budgets used by management in their
going concern assessment by assessing the degree of
effectivity in the management's budgeting process
by comparing the prior year budgets with actual figures
and by comparing the first quarter of the 2020 budget
to the actual Q1 2020 results.
-- We examined within the working capital forecasts
the key inputs within the model and corroborated them
through discussions with management.
======================== ===========================================================
Our audit procedures in relation to these matters were designed
in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on these matters
individually and we express no such opinion.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report to you in respect of the following
matters where the Companies (Jersey) Law 1991 requires us to report
to you if, in our opinion:
-- proper accounting records have not been kept by the company,
or proper returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- we have not received all the information and explanations we
require for our audit
Responsibilities of the directors for the financial
statements
As explained more fully in the directors' responsibilities
statement set out on page 13, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and parent company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Article 113A of the Companies (Jersey) Law 1991.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Leo Malkin (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
14 May 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes 2019 2018
GBP'000 GBP'000
============================================= ======= ======================== =========
Interest income 3 3,347 1,467
Fee income 3 3,445 2,898
Publishing income 3 547 -
Interest, fee and publishing expenses (1,115) (157)
------------------------ ---------
Net revenue 6,224 4,208
======================== =========
Staff costs 5 (12,722) (10,244)
Other operating expenses (4,406) (3,490)
Depreciation & amortisation (963) (175)
Net impairment gain/(loss) on financial
assets 8 18 (128)
------------------------ ---------
Operating loss before share of loss
from joint venture (11,849) (9,829)
------------------------ ---------
Share of profit from associates accounted
for using the equity method 15 -
------------------------ ---------
Loss before tax (11,834) (9,829)
======================== =========
Taxation 11 (3,090) 390
------------------------ ---------
Loss from continuing operations (14,924) (9,439)
======================== =========
Loss from discontinued operations 10 (3,463) (5,671)
------------------------ ---------
Loss for the year (18,387) (15,110)
======================== =========
Other comprehensive income
Items that will not be reclassified subsequently
to profit and loss
Gains on investments in equity instruments 14 - 8,000
------------------------ ---------
- 8,000
---------
Items that may be reclassified subsequently
to profit and loss
Exchange differences on translating
foreign operations 81 275
Other comprehensive income for the
year, net of tax 81 8,275
======================== =========
Total comprehensive loss for the year (18,306) (6,835)
======================== =========
Loss from continuing operations attributable
to:
Owners of TruFin plc (14,783) (9,439)
Non-controlling interests (141) -
------------------------ ---------
(14,924) (9,439)
======================== =========
Loss from discontinued operations
attributable to:
Owners of TruFin plc (3,287) (5,249)
Non-controlling interests (176) (422)
------------------------ ---------
(3,463) (5,671)
======================== =========
Total comprehensive loss for the period
attributable to the owners of TruFin
plc from
Continuing operations (14,702) (1,164)
Discontinued operations (3,287) (5,249)
(17,989) (6,413)
======================== =========
Earnings per Share
2019 2018
Notes pence pence
====================== ======= ======= =======
Basic and Diluted EPS 27 (19.2) (15.8)
Adjusted EPS 27 (13.1) (7.2)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes 2019 2018
GBP'000 GBP'000
==================================== ======= ========================= =========
Assets
Non-current assets
Intangible assets 12 20,571 6,038
Property, plant and equipment 13 237 303
Deferred tax asset 11 2,503 5,579
------------------------- ---------
Total non-current assets 23,311 11,920
========================= =========
Current assets
Cash and cash equivalents 6,971 24,888
Loans and advances 16 27,705 129,221
Other investments 14 - 49,494
Assets classified as held for sale 17 - 266
Trade receivables 18 1,075 417
Other receivables 18 2,932 3,202
------------------------- ---------
Total current assets 38,683 207,488
========================= =========
Total assets 61,994 219,408
========================= =========
Equity and liabilities
Equity
Issued share capital 19 73,548 185,000
Retained earnings (63) 15,375
Foreign exchange reserve (40) (121)
Other reserves (24,395) (50,261)
------------------------- ---------
Equity attributable to owners of
the company 49,050 149,993
------------------------- ---------
Non-controlling interest 23 1,293 3,255
------------------------- ---------
Total equity 50,343 153,248
========================= =========
Liabilities
Current liabilities
Borrowings 20 6,194 59,041
Trade and other payables 21 4,757 6,066
Provision for commitments and other
liabilities 7 700 1,053
------------------------- ---------
Total current liabilities 11,651 66,160
========================= =========
Total liabilities 11,651 66,160
========================= =========
Total equity and liabilities 61,994 219,408
========================= =========
The notes on pages 34 to 84 are an integral part of these
financial statements.
The financial statements were approved by the Board of Directors
and authorised for issue on 14 May 2020. They were signed on its
behalf by:
James van den Bergh
Chief Executive Officer
COMPANY STATEMENT OF FINANCIAL POSITION
Notes 2019 2018
GBP'000 GBP'000
=================================== ======= ========================= =========
Assets
Non-current assets
Property, plant and equipment 13 1 2
Investments in subsidiaries 15 30,189 123,966
Amounts owed by group undertakings 49,083 -
------------------------- ---------
Total non-current assets 79,273 123,968
========================= =========
Current assets
Cash and cash equivalents 184 8,448
Trade and other receivables 18 195 56,652
------------------------- ---------
Total current assets 379 65,100
========================= =========
Total assets 79,652 189,068
========================= =========
Equity and liabilities
Equity
Issued share capital 19 73,548 185,000
Retained earnings (5,006) (6,033)
Other reserves 8,966 8,966
------------------------- ---------
Total equity 77,508 187,933
========================= =========
Liabilities
Current liabilities
Trade and other payables 21 1,444 1,135
Provisions 700 -
------------------------- ---------
Total current liabilities 2,144 1,135
========================= =========
Total liabilities 2,144 1,135
========================= =========
Total equity and liabilities 79,652 189,068
========================= =========
The Company reported a loss for the year to 31 December 2019 of
GBP6,530,000 (2018: GBP4,391,000).
The notes on pages 34 to 84 are an integral part of these
financial statements.
The financial statements were approved by the Board of Directors
and authorised for issue on 14 May 2020. They were signed on its
behalf by:
James van den Bergh
Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES OF EQUITY
Foreign Non-
Share Retained exchange Other controlling Total
capital earnings reserve reserves Total interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- --------- --------- --------- -------- ------------ --------
Balance at 1 January
2019 185,000 15,375 (121) (50,261) 149,993 3,255 153,248
IFRS 16 adjustment - (18) - - (18) 1 (17)
Revised Balance
at 1 January 2019 185,000 15,357 (121) (50,261) 149,975 3,256 153,231
Loss for the year - (14,783) - - (14,783) (141) (14,924)
Other comprehensive
income for the
year - - 81 - 81 - 81
Loss from discontinued
operations - (3,287) - - (3,287) (176) (3,463)
-------- --------- --------- --------- -------- ------------ --------
Total comprehensive
loss for the year - (18,070) 81 - (17,989) (317) (18,306)
-------- --------- --------- --------- -------- ------------ --------
Acquisition of
subsidiaries - - - - - 1,435 1,435
Demerger of subsidiary (96,395) (13,916) - 34,866 (75,445) (3,081) (78,526)
Share buyback (15,057) 5,057 - - (10,000) - (10,000)
Share based payment - 2,509 - - 2,509 - 2,509
Reduction of capital - 9,000 - (9,000) - - -
-------- --------- --------- --------- -------- ------------ --------
Balance at 31
December 2019 73,548 (63) (40) (24,395) 49,050 1,293 50,343
======== ========= ========= ========= ======== ============ ========
Balance at 1 January
2018 123,966 (4,962) (396) (26,919) 91,689 (293) 91,396
Loss for the year - (14,688) - - (14,688) (422) (15,110)
Other comprehensive
income for the
year - 8,000 275 - 8,275 - 8,275
-------- --------- --------- --------- -------- ------------ --------
Total comprehensive
loss for the year - (6,688) 275 - (6,413) (422) (6,835)
--------- --------- --------- -------- ------------ --------
New issue of shares 70,000 (3,661) - - 66,339 - 66,339
Share cancellation (8,966) - - 8,966 - - -
Share based payment - 2,739 - - 2,739 - 2,739
Reduction of Capital - 28,752 - (28,752) - 1,819 1,819
NCI Share Premium - - - - - 1,482 1,482
Adjustment arising
from change in
NCI - (805) - (3,556) (4,361) 669 (3,692)
-------- --------- --------- --------- -------- ------------ --------
Balance at 31
December 2018 185,000 15,375 (121) (50,261) 149,993 3,255 153,248
======== ========= ========= ========= ======== ============ ========
The notes on pages 34 to 84 are an integral part of these
financial statements
Share capital
Share capital represents the nominal value of equity share
capital issued.
Retained earnings
The retained earnings reserve represents cumulative net gains
and losses. Retained earnings for the year include a credit of
GBP5,057,000 arising from two share buybacks that took place in
2019.
Foreign exchange reserve
The foreign exchange reserve represents exchange differences
which arise on consolidation from the translation of the financial
statements of foreign subsidiaries.
Other reserves
Other reserves consist of the merger reserve, the share
revaluation reserve and share buyback reserve.
The merger reserve arose as a result of combining businesses
that are under common control. As at 31 December 2019 it was a
debit balance of GBP33,360,000 (2018: GBP59,227,000). The merger
reserve balance related to Distribution Finance Capital Limited pre
demerger was GBP34,866,000.
The share revaluation reserve arose from the share cancellation
that took place in February 2018. As at 31 December 2019 its
balance was GBP8,966,000 (2018: GBP8,966,000).
Non-Controlling Interest
The non-controlling interest relates to the minority interest
held in Bandana Media Limited, Playstack OY, Foxglove Studios AB,
Vertus Capital Limited, Vertus SPV1 Limited and Distribution
Finance Capital Limited prior to its demerger from the Group.
COMPANY STATEMENT OF CHANGES OF EQUITY
Share capital Retained earnings Other reserves Total equity
GBP'000 GBP'000 GBP'000 GBP'000
========================= =============== =================== ================ ==============
Balance at 1 January
2019 185,000 (6,033) 8,966 187,933
IFRS 16 adjustment - (9) - (9)
Revised balance at 1
January 2019 185,000 (6,042) 8,966 187,924
Total comprehensive loss
for the year - (6,530) - (6,530)
Share buyback (15,057) 5,057 - (10,000)
Demerger of subsidiary (96,395) - - (96,395)
Share based payment - 2,509 - 2,509
--------------- ------------------- ---------------- --------------
Balance at 31 December
2019 73,548 (5,006) 8,966 77,508
=============== =================== ================ ==============
Balance at 1 January
2018 123,966 (720) - 123,246
Total comprehensive loss
for the year - (4,391) - (4,391)
New issue of shares 70,000 (3,661) - 66,339
Share cancellation (8,966) - 8,966 -
Share options issued - 2,739 - 2,739
--------------- ------------------- ---------------- --------------
Balance at 31 December
2018 185,000 (6,033) 8,966 187,933
=============== =================== ================ ==============
The notes on pages 34 to 84 are an integral part of these
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
2019 2018
GBP'000 GBP'000
=========================================== ======================== =========
Cash flows from operating activities
Loss before income tax
Continuing operations (11,849) (9,829)
Discontinued operations (3,463) (5,671)
Adjustments for
Depreciation of property, plant and
equipment 307 109
Amortisation of intangible fixed
assets 1,032 225
Share based payments 2,509 2,739
Increase in provision 506 -
Impairment of intangible assets 186 -
Fair value increase of demerged subsidiary (2,618) -
Underlying trading loss on discontinued
operations 2,963 -
Working capital adjustments (10,427) (12,427)
Movement in Loans and advances 770 (96,512)
Increase in trade and other receivables (2,637) (1,311)
Increase in trade and other payables 1,165 3,318
Net payables on acquisition of subsidiary 1,162 (325)
IFRS 16 adjustment (462) -
Additions to assets held for sale - (266)
(2) (95,096)
Tax paid (36) (36)
------------------------ ---------
Net cash used in operating activities (10,465) (107,559)
======================== =========
Cash flows from investing activities:
Additions to intangible assets (1,695) (2,855)
Additions to property, plant and
equipment (38) (275)
Net increase in debt securities - (4,993)
Acquisition of subsidiaries (1,105) (2,014)
Movement in loans in year to subsidiaries
pre acquisition (7,201) -
Cash from acquisition of subsidiaries 516 382
Disposal of equity investment 44,500 -
Net cash generated from/(used in)
investing activities 34,977 (9,755)
Cash flows from financing activities:
Issue of ordinary share capital - 70,000
Issue of ordinary share capital of
subsidiary 30 -
Share issue costs - (3,661)
New borrowings 5,011 49,926
Share buybacks (10,000) -
Net cash (used)/generated from financing
activities (4,959) 116,265
------------------------ ---------
Net increase/(decrease) in cash and
cash equivalents from continuing
operations 19,553 (1,049)
------------------------ ---------
Net cash from discontinued operations (37,556) -
------------------------ ---------
Cash and cash equivalents at beginning
of the year 24,888 26,049
Effect of foreign exchange rate changes 86 (112)
------------------------ ---------
Cash and cash equivalents at end
of the year 6,971 24,888
======================== =========
All cash and cash equivalents are cash at bank.
The notes on pages 34 to 84 are an integral part of these
financial statements
COMPANY STATEMENT OF CASH FLOWS
2019 2018
GBP'000 GBP'000
=================================================== ======================== =========
Cash flows from operating activities
Loss before income tax (6,530) (4,391)
Adjustments for:
Depreciation of property, plant and equipment 167 1
Fair value of intangible fixed assets (2,618) -
Share based payments 2,509 2,739
Increase in provision 700 -
------------------------ ---------
Working capital adjustments (5,772) (1,651)
Decrease/(increase) in trade and other receivables 190 (3,407)
Increase in trade and other payables 140 334
------------------------ ---------
330 (3,073)
------------------------ ---------
Net cash used in operating activities (5,442) (4,724)
------------------------ ---------
Cash flows from investing activities
Decrease/(increase) in intragroup loans 7,178 (53,164)
Additions to property, plant and equipment - (3)
------------------------ ---------
Net cash used in investing activities 7,178 (53,167)
Cash flows from financing activities
Issue of ordinary share capital - 70,000
Share issue costs - (3,661)
Share buyback (10,000) -
------------------------ ---------
Net cash generated from financing activities (10,000) 66,339
Net increase in cash and cash equivalents (8,264) 8,448
------------------------ ---------
Cash and cash equivalents at beginning of the
year 8,448 -
------------------------ ---------
Cash and cash equivalents at end of the year 184 8,448
======================== =========
All cash and cash equivalents are cash at bank.
The notes on pages 34 to 84 are an integral part of these
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Statutory information
TruFin plc is a Company registered in Jersey and incorporated
under Companies (Jersey) Law 1991. The Company's ordinary shares
were listed on the Alternative Investment Market of the London
Stock Exchange. The address of the registered office is 26 New
Street, St Helier, Jersey, JE2 3RA.
The Company was listed on 21 February 2018.
1. Accounting policies
General information
The TruFin Group (the "Group") is the consolidation of TruFin
plc and the companies set out in the "Basis of consolidation"
(below).
The principal activities of the Group are the provision of niche
lending, early payment services and mobile game publishing.
The financial statements are presented in Pounds Sterling, which
is the currency of the primary economic environment in which the
Group operates. Amounts are rounded to the nearest thousand.
Basis of accounting
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS").
Prior to 29 November 2017 and before the incorporation of TruFin
plc and TruFin Holdings, the entities named above were under common
control and therefore, have been accounted for as a common control
transaction - that is a business combination in which all the
combining entities or businesses are ultimately controlled by the
same company both before and after the combination. IFRS 3 provides
no specific guidance on accounting for entities under common
control and therefore other relevant standards have been
considered. These standards refer to pooling of assets and merger
accounting and this is the methodology that has been used to
consolidate the Group.
After 29 December 2017, post the reorganisation, the entities
constitute a legal group and accordingly the consolidated financial
statements have been prepared by applying relevant principles
underlying the consolidation procedures of IFRS.
Basis of preparation
The results of the Group companies have been included in the
consolidated statement of comprehensive income. Where necessary,
adjustments have been made to the underlying financial information
of the companies to bring the accounting policies used into line
with those used by the Group. All intra-group transactions,
balances, income and expenses are eliminated on consolidation.
The consolidated financial statements contained in this document
consolidates the statements of total comprehensive income,
statements of financial position, cash flow statements, statements
of changes in equity and related notes for each of the companies
listed in the "Basis of consolidation" below, which have been
prepared in accordance with IFRS.
Non-controlling interests, presented as part of equity,
represent the portion of a subsidiary's profit or loss and net
assets that is not held by the Group. The Group attributes total
comprehensive income or loss of subsidiaries between the owners of
the parent and the non-controlling interests based on their
respective ownership interests.
Basis of consolidation
The consolidated financial statements include all of the
companies controlled by the Group, which are as follows:
Country of Nature of % voting rights
Entities incorporation Registered the business and shares
address held
======================= =================== ======================= ======================== =====================
TruFin Holdings Jersey 26 New Street, Holding Company 100% of ordinary
Limited St Helier, Jersey shares
("THL") JE2 3RA
======================= =================== ======================= ======================== =====================
Satago Financial UK 48 Warwick Street, Provision 100% of ordinary
Solutions London, United of short term shares
Limited ("Satago") Kingdom, W1B 5AW finance
======================= =================== ======================= ======================== =====================
Satago SPV 1 UK 48 Warwick Street, Provision 100% of ordinary
Limited London, United of short term shares
("Satago SPV 1") - Kingdom, W1B 5AW finance
incorporated on 11
September 2019
======================= =================== ======================= ======================== =====================
Satago z.o.o Poland 32-023 Krakow ul. Provision 100% of ordinary
(Satago Sw. Krzyza 19/6 of short term shares
Poland) Poland finance
======================= =================== ======================= ======================== =====================
Oxygen Finance UK Cathedral Place, Holding Company 100% of ordinary
Group 42-44 Waterloo shares
Limited ("OFGL") Street,
(together Birmingham,
with OFL and OFAI) United Kingdom,
("Oxygen") B2 5QB
======================= =================== ======================= ======================== =====================
Oxygen Finance UK Cathedral Place, Provision 100% of ordinary
Limited 42-44 Waterloo of early payment shares
("OFL") Street, services
Birmingham,
United Kingdom,
B2 5QB
======================= =================== ======================= ======================== =====================
Oxygen Finance USA Corporation Trust Provision 99.99% of
Americas, Center, 1209 of early payment ordinary shares
Inc ("OFAI") Orange services
Street, City of
Wilmington, County
of New Castle,
Delaware 19801,
USA
======================= =================== ======================= ======================== =====================
Porge Ltd UK Cathedral Place, Provision 100% of ordinary
("Porge") 42-44 Waterloo of market shares
Street, research
Birmingham, information.
United Kingdom,
B2 5QB
======================= =================== ======================= ======================== =====================
TruFin Software UK Mercury House, Provision 100% of ordinary
Limited 109-117 Waterloo of technology shares
("TSL") Road, London, services
United
Kingdom, SE1 8UL
======================= =================== ======================= ======================== =====================
AltLending UK UK 48 Warwick Street, Provision 100% of ordinary
Limited London, United of short term shares
("AltLending") Kingdom, W1B 5AW finance
======================= =================== ======================= ======================== =====================
Vertus Capital UK Building 1 Provision 51% of ordinary
Limited Chalfont of short term shares
("Vertus Capital") Park, Gerrards finance
(together with Cross, United
Vertus Kingdom,
SPV 1 Limited) SL9 0BG
("Vertus")
- acquired on 29
July
2019
======================= =================== ======================= ======================== =====================
Vertus Capital SPV UK Building 1 Provision 51% of ordinary
1 Limited ("Vertus Chalfont of short term shares
SPV 1") - acquired Park, Gerrards finance
on 29 July 2019 Cross, United
Kingdom,
SL9 0BG
======================= =================== ======================= ======================== =====================
Playstack Limited UK 56a Poland Street, Publishing 100% of ordinary
("Playstack")* London United of computer shares
Kingdom, games
W1F 7NN
======================= =================== ======================= ======================== =====================
Bandana Media UK 56a Poland Street, Publishing 72% of ordinary
Limited London United of computer shares
("Bandana")* Kingdom, games
W1F 7NN
======================= =================== ======================= ======================== =====================
PlayIgnite Ltd UK 56a Poland Street, Business and 100% of ordinary
("PlayIgnite")* London United domestic software shares
Kingdom, developer
W1F 7NN
======================= =================== ======================= ======================== =====================
Playtest Limited UK 56a Poland Street, Publishing 100% of ordinary
("Playtest")* London United of computer shares
- dissolved on 24 Kingdom, games
March 2020 W1F 7NN
======================= =================== ======================= ======================== =====================
Playstack z.o.o Poland Kamienna 21, Publishing 100% of ordinary
("PS 31-403 activities shares
Poland") * Krakow, Poland in the field
of computer
games
======================= =================== ======================= ======================== =====================
Playstack OY ("PS Finland Mikonkatu 17 B, Publishing 75% of ordinary
Finland")* 00100 Helsinki, activities shares
Finland in the field
of computer
games
======================= =================== ======================= ======================== =====================
Foxglove Studios Sweden Solbergavägen Developing, 80% of ordinary
AB 17, 17998 publishing shares
("Foxglove")* Färentuna, and selling
Sweden electronic
games
======================= =================== ======================= ======================== =====================
Playstack Inc USA Gust Delaware, Publishing 100% of ordinary
("Playstack 16192 Coastal Hwy, of computer shares
USA")* Lewes, DE 19958 games
======================= =================== ======================= ======================== =====================
PlayIgnite Inc USA Cogency Global Business and 100% of ordinary
("PlayIgnite Inc, 850 New domestic software shares
USA")* Burton developer
Road, Suite 201,
Dover DE 19904
======================= =================== ======================= ======================== =====================
*These companies (together the "Playstack Group") were acquired
on 11 September 2019. The Group had a 40% interest in PlayIgnite
prior to this date and until then was accounted for using the
equity method. The Playstack Group acquisition also included 4
associate companies incorporated in the UK which have been
accounted for using the equity method. These are:
-- A 49% interest in PlayFinder Games Ltd
-- A 49% interest in Snackbox Games Ltd
-- A 42% interest in Military Games International Ltd
-- A 26% interest in Stormchaser Games Ltd
The consolidated financial information also includes:
-- a 50% interest in a joint venture, Clear Funding Limited
("Clear Funding"), which was struck off on 30 April 2019.
On 7 May 2019 Distribution Finance Capital Limited ("DFC")
demerged from the Group. The Group held 94% of the ordinary shares
in DFC prior to the demerger.
The Group had a minority interest in Zopa Group Limited ("Zopa")
which was sold on 7 May 2019.
All of these three investments were incorporated in the UK.
Principal accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below. These policies have
been applied consistently to all the financial periods
presented.
The consolidated financial statements have been prepared in
accordance with European Union Endorsed International Financial
Reporting Standards (IFRSs) and the IFRS Interpretations Committee
(formerly the International Financial Reporting Interpretations
Committee (IFRIC)) interpretations. These statements have been
prepared on a going concern basis and under the historical cost
convention except for the treatment of certain financial
instruments.
Going concern
The Group's forecasts and projections, taking into account
reasonable possible changes in trading performance, show that the
Group should be able to operate in the foreseeable future. As a
consequence, the Directors have a reasonable expectation that the
Group will have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the Directors
have adopted the going concern basis in preparing these financial
statements. This assessment takes into consideration the potential
uncertainties arising from Covid-19 mentioned earlier in the
report.
Revenue recognition
Net revenue
Interest income and expense
Interest income and expense for all financial instruments except
for those classified as held for trading or measured or designated
as at Fair Value Through Profit and Loss ("FVTPL") are recognised
in "Net revenue" as "Interest income" and "Interest, fee and
publishing expenses" in the profit or loss account using the
effective interest method.
The Effective Interest Rate ("EIR") is the rate that exactly
discounts estimated future cash flows of the financial instrument
through the expected life of the financial instrument or, where
appropriate, a shorter period, to the net carrying amount of the
financial asset or financial liability. The future cash flows are
estimated taking into account all the contractual terms of the
instrument.
The calculation of the EIR includes all fees and points paid or
received between parties to the contract that are incremental and
directly attributable to the specific lending arrangement,
transaction costs and all other premiums or discounts.
The interest income/expense is calculated by applying the EIR to
the gross carrying amount of non-credit impaired financial assets
(that is, to the amortised cost of the financial asset before
adjusting for any expected credit loss allowance), or to the
amortised cost of financial liabilities.
For credit-impaired financial assets, as defined in the
financial instruments accounting policy, the interest income is
calculated by applying the EIR to the amortised cost of the
credit-impaired financial assets, that is, to the gross carrying
amount less the allowance for Expected Credit Losses ("ECLs").
Fee income
Fee income for the Group is earned from payments services fees
provided by Oxygen and subscription fees from Porge and Satago.
Payment services provided by Oxygen comprises the following
elements:
Early Payment Programme Services ("EPPS") contracts
Oxygen's Early Payment Programme Services generate rebates (i.e.
discounts on invoice value) for its clients by facilitating the
early payment of supplier invoices. Oxygen's single performance
obligation is to make its intellectual property and software
platform available to its clients for the duration of their
contracts.
Oxygen bills its clients monthly for a contractually agreed
share of supplier rebates generated by their respective Early
Payment Programmes during the previous month. This revenue is
recognised in the month the rebates are generated.
Assessment fees
Assessment fees include Oxygen consultants reviewing the
client's internal processes and technology and analysing the
financial business case for setting up an Early Payment Programme.
The assessment is a self- contained consultancy project which is
not contingent on any future Early Payment Programme being entered
into by the client and accordingly Oxygen's single performance
obligation is to deliver a report that summarises the assessment
findings. Revenue from assessment fees is deferred and is accrued
over the period of the assessment.
Implementation fees
Implementation fees are charged to some clients to cover
Oxygen's costs in establishing a client's technological access to
the Early Payment Programme Services and in otherwise readying a
client to benefit from the Services. Establishing access to the
company's intellectual property and software platform does not
amount to a distinct service as the client cannot benefit from the
initial access except by the company continuing to provide access
for the contract period. Where an implementation fee is charged, it
is therefore a component of the aggregate transaction price of the
Early Payment Programme Services. Accordingly, such revenue is
initially deferred and then recognised in the statement of
comprehensive income over the life of the related Early Payment
Programme Services contract.
Consultancy fees
Oxygen provides stand-alone advisory services to clients.
Revenue is accrued as the underlying services are provided to the
client.
Subscription fees
Porge subscription fees
These are typically annual fees for access to Porge's market
insight and research database. Subscriptions are received in
advance and recognised over the length of the contract as access to
the database is provided.
Satago subscription fees
These are monthly fees for access to Satago's platform.
Subscriptions are received in advance and recognised during the
month the subscription relates to.
Fee expenses
Fee expenses are directly attributable costs, associated with
the Oxygen's Early Payment Programme Services. The expenses include
amortisation arising from capitalised contract costs incurred
directly through activities which generate fee income. Amortisation
arising from other intangible assets is recognised in depreciation
and amortisation of non-financial assets before operating
profit/loss.
Publishing income
Publishing income for the Group is earned by companies in the
Playstack Group and comprises the following elements. Publishing
income is recognised at the fair value of consideration received or
receivable for goods and services provided and is shown net of VAT
and any other sales taxes. The fair value takes into account any
trade or volume discounts and commission retained.
In App Purchases (IAP)revenue
IAP revenue is earned on the sale of mobile games and features
within those games. It is recognised when the game or feature is
sold.
Advertising revenue
Advertising revenue is earnings from featuring third party
advertising within mobile games. It is recognised when these
advertisements are featured within the games.
Console revenue
Console revenue is earned on the sale of video games for
consoles. It is recognised when the game is sold.
Brand revenue
Brand revenue is when a mobile game player signs up to an
advertised brand in a mobile game. Revenue is recognised when the
brand has confirmed acquisition of the customer.
Publishing expenses
Publishing expenses are directly attributable costs, associated
with the Playstack Group's publishing income. These costs are
included at their invoiced value and are net of VAT and any other
sales tax.
Other income from financial instruments
Dividends from equity investments measured at Fair Value Through
Other Comprehensive Income ("FVTOCI") are recognised in profit and
loss when the Group becomes entitled to them.
For financial instruments that are classified as FVTPL, any
interest or fee income is included in the profit and loss account
within the fair value gain or loss.
Debt securities are measured at fair value through other
comprehensive income. The securities are measured at their closing
bid prices at the reporting date with any unrealised gain or loss
recognised through other comprehensive income.
The Group presently holds no financial instruments for trading
or hedging purposes, nor has it designated any other items as
FVTPL.
Operating profit/loss
Operating profit/loss is net interest and fee income less staff
costs, depreciation and amortisation, impairment loss on financial
assets and other operating expenses.
Foreign currencies
The results and financial position of each group company are
expressed in Pounds Sterling, which is the functional currency of
the UK based members of the Group and the presentation currency for
the consolidated financial statements.
Transactions in foreign currencies are translated to the Group
companies' functional currency at the foreign exchange rate ruling
at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are
retranslated to the functional currency at the foreign exchange
rate ruling at that date. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Foreign exchange differences arising on translation are recognised
in the consolidated statement of comprehensive income.
Property, plant and equipment
All property, plant and equipment is stated at historical cost
(or deemed historical cost) less accumulated depreciation and less
any identified impairment. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset
to its working condition for its intended use.
Depreciation is provided on all property, plant and equipment at
rates calculated to write each asset down to its estimated residual
value on a straight line basis at the following annual rates:
Leasehold improvements - 5 years
Office equipment - 3 years
Computer equipment - 3 -5 years
Useful economic lives and estimated residual values are reviewed
annually and adjusted as appropriate.
Intangible and contract assets
Identifiable intangible assets are recognised when the Group
controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Group and the cost of the
asset can be reliably measured.
Intangible assets with finite lives are stated at acquisition or
development cost less accumulated amortisation and less any
identified impairment. The amortisation period and method is
reviewed at least annually. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits
embodied in the asset are accounted for by changing the
amortisation period or method, as appropriate and are treated as
changes in accounting estimates.
Computer software
Computer software which has been purchased by the Group from
third party vendors is measured at initial cost less accumulated
amortisation and less accumulated impairments.
Computer software also comprises internally developed platforms
and the costs directly associated with the production of these
identifiable and unique software products controlled by the Group.
They are probable of producing future economic benefits. They
primarily include employee costs and directly attributable
overheads.
Internally generated intangible assets are only recognised by
the Group when the recognition criteria have been met in accordance
with IAS 38: Intangible Assets as follows:
-- expenditure can be reliably measured;
-- the product or process is technically and commercially
feasible;
-- future economic benefits are likely to be received;
-- intention and ability to complete the development; and
-- view to either use or sell the asset in the future.
The Group will only recognise an internally-generated asset
should it meet all the above criteria. In the event of a
development not meeting the criteria it will be recognised within
the statement of profit or loss in the period incurred.
Capitalised costs include all directly attributable costs to the
development of the asset. Internally generated assets are measured
at capitalised cost less accumulated amortisation less accumulated
impairment losses. The internally generated asset is amortised at
the point the asset is available for use or sale. The asset is
amortised on a straight-line basis over the useful economic life
with the remaining useful economic life and residual value being
assessed annually.
Any subsequent expenditure on the internally generated asset is
only capitalised if the cost increases the future economic benefits
of the related asset. Otherwise all additional expenditure should
be recognised through the statement of profit or loss in the period
it occurs.
Contract assets
Contract assets comprise the directly attributable costs
incurred at the beginning of an Early Payment Scheme Service
contract to revise a client's existing payment systems and provide
access to the Group's software and other intellectual property.
These implementation (or "set up") costs are comprised primarily of
employee costs.
Amortisation is charged to the statement of comprehensive income
over the estimated useful lives of intangible assets from the date
they are available for use, on a straight-line basis. The
amortisation basis adopted for each class of intangible asset
reflects the Group's consumption of the economic benefit from that
asset.
Estimated useful lives
The estimated useful lives of finite intangible assets are as
follows:
Computer software - 3 -5 years
Contract assets - Life of underlying contract (typically
5 years)
Computer equipment - 3 -5 years
Goodwill
Goodwill arising on acquisition represents the excess cost of a
business combination over the fair values of the Group's share of
the identifiable assets and liabilities at the date of the
acquisition. When part of the consideration transferred by the
Group is deferred or contingent, this is valued at its acquisition
date fair value, and is included in the consideration transferred
in a business combination. Changes in the deferred or contingent
consideration, which occur in the measurement period, are adjusted
retrospectively, with corresponding adjustments to goodwill.
Goodwill is not amortised but is reviewed at least annually for
impairment. For the purpose of impairment testing, goodwill is
allocated to each Cash Generating Unit ("CGU"). Each CGU is
consistent with the Group's primary reporting segment. Any
impairment is recognised immediately through the income statement
and is not subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of profit or loss on disposal.
Assets classified as held for sale
Whilst assessing whether any assets should be classified as held
for sale, the management of the Group ensure that the status of the
asset satisfies all of the following criteria as set out within
IFRS 5:
-- the carrying amount of the asset will be recovered
principally through a sale transaction rather than through
continuing use;
-- the asset is available for immediate sale in its present
condition subject only to terms that are usual and customary for
sales of such assets;
-- its sale must be highly probable and within one year from the
date of classification;
-- management must be committed to a plan to sell the asset;
and
-- the asset is being actively marketed for sale at a sales
price reasonable in relation to its fair value.
In the event an asset satisfies the criteria, prior to
reclassification the asset should be valued in accordance with IFRS
accounting standards applicable to the asset in question.
At initial recognition the asset is measured at the lower of
carrying amount and fair value less costs to sell. Any unrealised
gains or losses are recognised in the profit and loss account.
Financial instruments
Initial recognition
Financial assets and financial liabilities are recognised in the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of the financial assets
and financial liabilities (other than financial assets and
financial liabilities at FVTPL) are respectively added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs that are directly attributable to the acquisition of
financial assets and financial liabilities at FVTPL are recognised
immediately in profit or loss.
Financial assets
Classification and reclassification of financial assets
Recognised financial assets within the scope of IFRS 9 are
required to be classified as subsequently measured at amortised
cost, FVTOCI or FVTPL on the basis of both the Group's business
model for managing the financial assets and the contractual cash
flow characteristics of the financial assets.
Financial assets are reclassified if and only if, the business
model under which they are held is changed. There has been no such
change in the allocation of assets to business models in the
periods under review.
Loans and advances
Other than convertible debt instruments, loans and advances are
held within a business model whose objective is to hold those
financial assets in order to collect contractual cash flows. The
contractual terms of the loan agreements give rise on specified
dates to cash flows that are solely payments of principal and
interest or fees on the principal amount outstanding.
After initial measurement, loans and advance to customers are
subsequently measured at amortised cost using the Effective
Interest Rate method (EIR) less impairment. Amortised cost is
calculated by taking into account any fees or costs that are an
integral part of the EIR. The EIR amortisation is included in
interest and similar income in the statement of comprehensive
income. The losses arising from impairment are recognised in the
statement of comprehensive income and disclosed with any other
similar losses within the line item "Net impairment losses on
financial assets".
Where cash flows are significantly different from the original
expectations used to determine EIR, but where this difference does
not arise from a modification of the terms of the financial
instrument, the Group revises its estimates of receipts and adjusts
the gross carrying amount of the financial asset to reflect actual
and revised estimated contractual cash flows. The Group
recalculates the gross carrying amount of the financial asset as
the present value of the estimated future contractual cash flows
discounted at the financial instrument's original EIR. The
adjustment is recognised in statement of comprehensive income as
income or expense.
Convertible debt instruments
Convertible debt instruments, included within loans and
advances, are held by the Group and are measured at Fair Value
through Profit and Loss as they fail the contractual cash flow
characteristics test required by IFRS 9 for classification under
amortised cost. Movements in the fair value of these assets are
recognised in the profit and loss account.
Trade and other receivables
Trade receivables do not contain any significant financing
component and accordingly are recognised initially at transaction
price, and subsequently measured at cost less expected credit
losses.
Investments in equity shares
Prior to its disposal the Group's investment in the equity
shares of Zopa was not held for trading. The Group made an
irrevocable election to classify and subsequently measure the
investment at FVTOCI. Movements in the fair value of the investment
were recognised in the statement of other comprehensive income and
were not reclassified to profit on loss on derecognition.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less
impairment in the Company's financial statements.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and demand
deposits and short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
Impairment
The Group (and Company) recognises loss allowances for Expected
Credit Losses ("ECLs") on the following financial instruments that
are not measured at FVTPL:
-- Loans and advances;
-- Other receivables;
-- Trade receivables; and
-- Intercompany receivables
ECLs are measured through loss allowances calculated on the
following bases:
ECLs are a probability-weighted estimate of the present value of
credit losses. These are measured as the present value of the
difference between the cash flows due to the Group under the
contract and the cash flows that the Group expects to receive
arising from the weighting of future economic scenarios, discounted
at the asset's EIR within the current performing book.
The Group measures ECL on an individual basis, or on a
collective basis for portfolios of loans that share similar credit
risk characteristics. The loss allowance is measured as the present
value of the difference between the contractual cash flows and cash
flows that the Group expects to receive using the asset's original
EIR, regardless of whether it is measured on an individual basis or
a collective basis.
A financial asset that gives rise to credit risk, is referred to
(and analysed in the notes to this financial information) as being
in "Stage 1" provided that since initial recognition (or since the
previous reporting date) there has not been a significant increase
in credit risk, nor has it has become credit impaired.
For a Stage 1 asset, the loss allowance is the "12-month ECL",
that is, the ECL that results from those default events on the
financial instrument that are possible within 12 months from the
reporting date.
A financial asset that gives rise to credit risk is referred to
(and analysed in the notes to this financial information) as being
in "Stage 2" if since initial recognition there has been a
significant increase in credit risk but it is not credit
impaired.
For a Stage 2 asset, the loss allowance is the "lifetime ECL",
that is, the ECL that results from all possible default events over
the life of the financial instrument.
A financial asset that gives rise to credit risk is referred to
(and analysed in the notes to this financial information) as being
in "Stage 3" if since initial recognition it has become credit
impaired.
For a Stage 3 asset, the loss allowance is the difference
between the asset's gross carrying amount and the present value of
estimated future cash flows discounted at the financial asset's
original EIR. Further, the recognition of interest income is
calculated on the carrying amount net of impairment rather than the
gross carrying amount as for stage 1 and stage 2 assets.
If circumstances change sufficiently at subsequent reporting
dates, an asset is referred to by its newly appropriate Stage and
is re-analysed in the notes to the financial information.
Where an asset is expected to mature in 12 months or less, the
"12 month ECL" and the "lifetime ECL" have the same effective
meaning and accordingly for such assets the calculated loss
allowance will be the same whether such an asset is at Stage 1 or
Stage 2. However, the Group monitors significant increase in credit
risk for all assets so that it can accurately disclose Stage 1 and
Stage 2 assets at each reporting date.
Lifetime ECLs are recognised for all trade receivables using the
simplified approach.
Significant increase in credit risk - policies and procedures
for identifying Stage 2 assets
The Group compares the risk of a default occurring on the
financial instrument as at the reporting date with the risk of a
default occurring on the financial instrument as at the date of
initial recognition in order to determine whether credit risk has
increased significantly.
See note 22 for further details about how the Group assesses
increases in significant credit risk.
Definition of a default
Critical to the determination of significant increases in credit
risk (and to the determination of ECLs) is the definition of
default. Default is a component of the Probability of Default
("PD"), changes in which lead to the identification of a
significant increase in credit risk and PD is then a factor in the
measurement of ECLs.
The Group's definition of default for this purpose is:
-- a counterparty defaults on a payment due under a loan
agreement and that payment is more than 90 days overdue, or
-- within the core invoice finance proposition, where one or
more individual finance repayments are beyond 90 days overdue,
management judgement is applied in considering default status of
the client.
-- the collateral that secures, all or in part, the loan
agreement has been sold or is otherwise not available for sale and
the proceeds have not been paid to the lending company; or
-- a counterparty commits an event of default under the terms
and conditions of the loan agreement which leads the lending
company to believe that the borrower's ability to meet its credit
obligations to the lending company is in doubt.
The definition of default is similarly critical in the
determination of whether an asset is credit-impaired (as explained
below).
Credit-impaired financial assets - policies and procedures for
identifying Stage 3 assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash flows
of the financial asset have occurred. IFRS 9 states that evidence
of credit-impairment includes observable data about the following
events:
-- Significant financial difficulty of the borrower or
issuer;
-- A breach of contract such as a default (as defined above) or
past due event, or
-- The Group, for economic or contractual reasons relating to
the borrower's financial difficulty, having granted to the borrower
a concession that the Group would not otherwise consider.
The Group assesses whether debt instruments that are financial
assets measured at amortised cost or at FVTOCI are credit-impaired
at each reporting date. When assessing whether there is evidence of
credit- impairment, the Group takes into account both qualitative
and quantitative indicators relating to both the borrower and to
the asset. The information assessed depends on the borrower and the
type of the asset. It may not be possible to identify a single
discrete event - instead, the combined effect of several events may
have caused financial assets to become credit-impaired.
See note 22 for further details about how the Group identifies
credit-impaired assets.
Presentation of allowance for ECL in the statement of financial
position
Loss allowances for ECL are presented in the statement of
financial position as follows:
-- For financial assets measured at amortised cost: as a
deduction from the gross carrying amount of the assets;
-- For loan commitments: as a provision; and
-- For debt instruments measured at FVTOCI: no loss allowance is
recognised in the statement of financial position as the carrying
amount is at fair value. However, the loss allowance is included as
part of the revaluation amount in the investment revaluation
reserve.
Modification of financial assets
A modification of a financial asset occurs when the contractual
terms governing a financial asset are renegotiated without the
original contract being replaced and derecognised and:
-- The gross carrying amount of the asset is recalculated and a
modification gain or loss is recognised in profit or loss;
-- Any fees charged are added to the asset and amortised over
the new expected life of the asset; and
-- The asset is individually assessed to determine whether there
has been a significant increase in credit risk.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
derecognised when the rights to receive cash flows from the asset
have expired. The Group also derecognises the assets if it has both
transferred the asset and the transfer qualifies for
derecognition.
A transfer only qualifies for derecognition if either
-- The Group has transferred substantially all the risks and
rewards of the asset; or
-- The Group has neither transferred nor retained substantially
all the risks and rewards of the asset but has transferred control
of the asset.
Write offs
Loans and advances are written off when the Group has no
reasonable expectation of recovering the financial asset (either in
its entirety or a portion of it). This is the case when the Group
determines that the borrower does not have assets or sources of
income that could generate sufficient cash flows to repay the
amounts subject to the write-off. A write-off constitutes a
derecognition event. The Group may apply enforcement activities to
financial assets written off. Recoveries resulting from the Group's
enforcement activities will result in impairment gains.
Debt securities
Debt securities are financial assets that are not held for
trading and are intended to be held within a business model to
collect contractual cash flows or sell. These are initially
measured at fair value plus transaction costs that are directly
attributable to the financial asset. Subsequently changes in the
fair value are recognised in other comprehensive income except for
interest calculated at the asset's EIR, foreign exchange and
impairment gains and losses.
Financial liabilities
Financial liabilities and equity
Debt and equity instruments that are issued are classified as
either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
A financial liability is a contractual obligation to deliver
cash or another financial asset or to exchange financial assets or
financial liabilities with another entity under conditions that are
potentially unfavourable to the Group or a non-derivative contract
that will or may be settled in a variable number of the Group's own
equity instruments, or a derivative contract over own equity that
will or may be settled other than by the exchange of a fixed amount
of cash (or another financial asset) for a fixed number of the
Group's own equity instruments.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
as at the proceeds received, net of direct issue costs.
Distributions on equity instruments are recognised directly in
equity.
Financial liabilities
Financial liabilities are classified as either financial
liabilities at FVTPL or other financial liabilities.
Financial liabilities at Fair Value through Profit or Loss
Financial liabilities at FVTPL may include financial liabilities
held for trading. Financial liabilities are classified as held for
trading if they are acquired for the purpose of selling in the near
term.
During the period under review the Group has held no financial
liabilities for trading, nor designated any financial liabilities
upon initial recognition as at fair value through profit or
loss.
Other financial liabilities
Interest bearing borrowings are measured at amortised cost using
the effective interest rate method. Gains and losses are recognised
in the income statement when the liabilities are derecognised as
well as through the effective interest rate method (EIR). Amortised
cost is calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortisation is included in "Interest and fee
expenses" in the profit and loss account.
Derecognition of financial liabilities
The Group derecognises financial liabilities when and only when,
the Group's obligations are discharged, cancelled or they
expire.
Impairment of non-financial assets
The carrying amounts of the entity's non-financial assets, other
than goodwill and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset's
recoverable amount is estimated. The recoverable amount of an asset
or cash-generating unit is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset.
For the purposes of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups
of assets (the Cash-Generating Unit or "CGU").
Contract assets are reviewed for impairment based on the
performance of the underlying contract.
Goodwill is tested annually for impairment in accordance with
IFRS. The goodwill acquired in a business combination, for the
purpose of impairment testing is allocated to CGU that are expected
to benefit from the synergies of the combination. For the purpose
of goodwill impairment testing, if goodwill cannot be allocated to
individual CGUs or groups of CGUs on a non-arbitrary basis, the
impairment of goodwill is determined using the recoverable amount
of the acquired entity in its entirety, or if the acquired entity
has been integrated then the entire group of entities into which it
has been integrated.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in the statement of comprehensive
income. Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amounts of
other assets in the unit (or group of units) on a pro rata
basis.
An impairment loss is reversed if and only if the reasons for
the impairment have ceased to apply. An impairment loss recognised
for goodwill is not reversed.
Impairment losses recognised in prior periods are assessed at
each reporting date for any indication that the loss has decreased
or no longer exists. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Current and deferred income tax
Income tax on the result for the period comprises current and
deferred income tax. Income tax is recognised in the consolidated
statement of comprehensive income except to the extent that it
relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income for the period, using tax rates enacted or
substantively enacted at the reporting date and any adjustment to
tax payable in respect of previous periods.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The amount of deferred
tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the reporting
date.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax assets and
liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and
liabilities on a net basis.
Employee benefits - pension costs
A defined contribution plan is a post-employment benefit plan
under which the Group pays fixed contributions into a separate
entity and will have a legal or constructive obligation to pay
further amounts. Contributions to defined contribution schemes are
charged to the statement of comprehensive income as they become
payable in accordance with the rules of the scheme. Differences
between contributions payable in the year and contributions
actually paid are shown as either accruals or prepayments in the
statement of financial position.
Provisions for commitments and other liabilities
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the
cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (discounted at the
Group's weighted average cost of capital when the effect of the
time value of money is material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset only if it is virtually
certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
Merger reserve
Prior to 29 December 2017, the entities within the Group were
held by Arrowgrass Master Fund Limited. On 29 December 2017, these
entities were acquired by TruFin plc via TruFin Holdings Limited.
The consideration provided to Arrowgrass for the companies acquired
was in exchange for shares of TruFin plc based on the fair value of
the underlying companies. Upon consolidation of the group, the
difference between the book value of the entities and the amount of
the consideration paid was accounted through a merger reserve, in
accordance with relevant accounting standards relating to
businesses under common control.
Investments in associates
Associates are entities in which the Group has between 20% and
50% of the voting rights, or is otherwise able to exercise
significant influence, but which it does not control or jointly
control. Investments in associates are accounted for under the
equity method and are initially recognised at costs, including
goodwill. Subsequent changes in the carrying value reflect the
post-acquisition changes in the Group's share of net assets of the
associate. The Group's share of its associates profits or losses is
recognised in the consolidated income statement. However, when the
Group's share of losses in an associate equals or exceeds its
interest in the associate, the Group does not recognise further
losses, unless the Group is obliged to make further payments to, or
on behalf of the associate.
Segmental reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions
with other components of the same entity) and whose operating
results are regularly reviewed by the Board of Directors in order
to make decisions about resources to be allocated to that component
and assess its performance and for which discrete financial
information is available.
For the purposes of the financial statements, the Directors
consider the Group's operations to be made up of four operating
segments: the provision of short term finance, payment services,
publishing and other operations.
The accounting policies of the reportable segments are
consistent with the accounting policies of the Group as a
whole.
Further details are provided in note 4.
Share based payments
Where the Group engages in share -- based payment transactions
in respect of services received from certain of its employees,
these are accounted for as equity -- settled share -- based
payments in accordance with IFRS 2 'Share -- based payments'. The
equity is in the form of ordinary shares.
The grant date fair value of a share -- based payment
transaction is recognised as an employee expense, with a
corresponding increase in equity over the period that the employees
become unconditionally entitled to the awards. In the absence of
market prices, the fair value of the equity at the date of the
grant is estimated using an appropriate valuation technique
The amount recognised as an expense is adjusted to reflect the
actual number of awards for which the related services and non --
market vesting conditions are expected to be met such that the
amount ultimately recognised as an expense is based on the number
of awards that do meet the related service and non -- market
performance conditions at the vesting date.
For share -- based payment awards with market performance
conditions the grant date fair value of the award is measured to
reflect such conditions and there is no true -- up for differences
between expected and actual outcomes.
Refer to note 6 for the amounts disclosed.
New standards and interpretations
IFRS 16 - Leases
IFRS 16 became effective for accounting periods beginning on or
after 1 January 2019 and has superseded IAS 17 Leases.
IFRS 16 distinguishes leases and service contracts on the basis
of whether an identified asset is controlled by a customer.
Distinctions of operating leases (off balance sheet) and finance
leases (on balance sheet) are removed for lessee accounting and has
been replaced by a model where a right-of-use asset and a
corresponding liability have to be recognised for all leases by
lessees (i.e. all on balance sheet) except for short term leases
and leases of low value assets.
The right-of-use asset is initially measured at cost and
subsequently measured at cost (subject to certain exceptions) less
accumulated depreciation and impairment losses, adjusted for any
remeasurement of the lease liability. The lease liability is
initially measured at the present value of the lease payments that
are not paid at that date. Subsequently, the lease liability is
adjusted for interest and lease payments, as well as the impact of
lease modifications, amongst others.
Note 25 explains the impact of the adoption of this standard on
the Group's financial statements.
2. Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial information in accordance with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and reported
amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apart from other sources. The
estimates and underlying assumptions are reviewed on an ongoing
basis. Actual results may differ from these estimates.
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in financial statements .
Critical accounting judgements
-- Early Payment Programme Services set up costs: the Group
capitalises the direct costs of implementing Early Payment
Programme Services contracts for clients. These costs are essential
to the satisfaction of the Group's performance obligation under
that contract and accordingly the Group considers that these costs
meet the applicable criteria for recognition as contract
assets.
The amount capitalised is disclosed in note 12.
-- Deferred tax asset: There is inherent uncertainty in
forecasting beyond the immediate future and significant judgement
is required to estimate whether future taxable profits are probable
in order to utilise the carried forward tax losses. However, the
Group has determined that convincing evidence exists to support the
recognition of a deferred tax asset in respect of carried forward
losses for Oxygen.
For Oxygen, a high proportion of the forecast revenue is
expected to be generated from clients that are either already
"live" or have already signed contracts with Oxygen. Oxygen's fixed
cost base is already scaled for continued business growth and
variable cost growth is not expected to be significant.
Other companies in the Group have carried forward losses which
will be utilised against future taxable profits. However, a
deferred tax asset has not been recognised for these companies as
there is uncertainty surrounding the timing of when these losses
will be used.
Refer to note 11 for more information on the deferred tax
asset.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting period that may have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below:
Expected credit losses
-- Where an asset has a maturity of 12 months or less, the "12
month ECL" and the "lifetime ECL" have the same effective meaning
and accordingly for such assets the calculated loss allowance will
be the same whether such an asset is at stage 1 or stage 2.
-- The Probability of Default ("PD") is an estimate of the
likelihood of default over a given time horizon and is a key input
to the ECL calculation. The Group primarily uses credit scores from
credit reference agencies to calculate the PD for loans and
advances. The score is a 12-month predictor of credit failure and,
in the absence of internally generated loss history, the Group
believes that it provides the best proxy for the credit quality of
the loan portfolio.
-- Exposure At Default ("EAD") is an estimate of the exposure at
a future default date, taking into account expected changes in the
exposure after the reporting date, including repayments of
principal and interest, whether scheduled by contract or otherwise,
expected drawdowns on committed facilities and accrued interest
from missed payments.
-- Loss Given Default ("LGD") is an estimate of the loss arising
on default. It is based on the difference between the contractual
cash flows due and those that the lender would expect to receive,
in particular taking into account wholesale collateral values and
certain buy back options.
Measurement of fair values of level 3 instruments
In estimating the fair value of a financial asset or liability,
the Group uses market observable data to the extent that it is
available. Where such level 1 inputs are not available, the Group
uses valuation models to estimate the fair value of its financial
instruments.
Refer to note 14 for more information on fair value
measurement.
3. Gross revenue
2019 2018
GBP'000 GBP'000
======================== ======================= ========
Revenue
Interest income 3,347 1,467
----------------------- --------
Total interest income 3,347 1,467
----------------------- --------
EPPS* contracts 2,502 2,373
Assessment fees - 145
Consultancy fees 45 35
Subscription fees 898 345
----------------------- --------
Total fee income 3,445 2,898
----------------------- --------
IAP revenue 223 -
Advertising revenue 181 -
Console revenue 98 -
Brand revenue 45 -
----------------------- --------
Total publishing income 547 -
----------------------- --------
Gross revenue 7,339 4,365
======================= ========
*Early Payment Programme Services
The above figures are from continuing activities with
comparatives restated accordingly based on information drawn from
prior financial statements.
4. Segmental reporting
The results of the Group are broken down into segments based on
the products and services from which it derives its revenue:
Short term finance:
Provision of distribution finance products and invoice
discounting. For results during the reporting period, this
corresponds to the results of DFC, Satago, Vertus and
AltLending.
Payment services:
Provision of Early Payment Programme Services. For results
during the reporting period, this corresponds to the results of
Oxygen and Porge.
Publishing
Publishing of video games. For results during the reporting
period, this corresponds to the results of the Playstack Group.
Other:
Revenue and costs arising from investment activities and
peer-to-peer lending. For results during the reporting period, this
corresponds to the results of TSL, THL, the Group's investment in
Zopa and joint venture in Clear Funding, and TruFin plc.
The results of each segment, prepared using accounting policies
consistent with those of the Group as a whole, are as follows:
Short term Payment services
Year ended 31 December finance GBP'000 Publishing Other Total
2019 GBP'000 GBP'000 GBP'000 GBP'000
================================ ========== ================ ============ ========== =========
Gross revenue 2,752 3,436 547 604 7,339
Cost of sales (269) (562) (284) - (1,115)
---------- ---------------- ------------ ---------- ---------
Net revenue 2,483 2,874 263 604 6,224
---------- ---------------- ------------ ---------- ---------
Adjusted operating loss* (880) (2,015) (2,003) (4,442) (9,340)
Share of profit from associates 15 - - - 15
Loss before tax (865) (2,015) (2,003) (6,951) (11,834)
Taxation - (3,090) - - (3,090)
Loss for the year from
continuing operations (865) (5,105) (2,003) (6,951) (14,924)
Loss for the year from
discontinued operations (2,963) - - (500) (3,463)
Loss for the year (3,828) (5,105) (2,003) (7,451) (18,387)
========== ================ ============ ========== =========
Total assets 21,385 9,440 15,804 15,365 61,994
Total liabilities (7,010) (1,814) (673) (2,154) (11,651)
---------- ---------------- ------------ ---------- ---------
Net assets 14,375 7,626 15,131 13,211 50,343
========== ================ ============ ========== =========
*adjusted operating loss before tax excludes share-based payment
expense
Short term Payment
Year ended 31 December 2018 Finance services Other Total
GBP'000 GBP'000 GBP'000 GBP'000
==================================== ---------- -------------- ----------------- -------------------
Gross revenue 1,411 2,894 60 4,365
Cost of sales (106) (51) - (157)
---------- -------------- ----------------- -------------------
Net revenue 1,305 2,843 60 4,208
---------- -------------- ----------------- -------------------
Adjusted operating loss* (956) (2,333) (3,801) (7,090)
Loss before tax (956) (2,333) (6,540) (9,829)
Taxation - 390 - 390
Loss for the year from continuing
operations (956) (1,943) (6,540) (9,439)
Loss for the year from discontinued
operations (5,671) - - (5,671)
Loss for the year (6,627) (1,943) (6,540) (15,110)
========== ============== ================= ===================
Total assets 153,451 11,889 54,068 219,408
Total liabilities (62,331) (2,649) (1,180) (66,160)
---------- -------------- ----------------- -------------------
Net assets 91,120 9,240 52,888 153,248
========== ============== ================= ===================
The figures in this note are from continuing activities with
comparatives restated accordingly based on information drawn from
prior period financial statements.
5. Staff costs
Analysis of staff costs:
2019 2018
GBP'000 GBP'000
============================================== ======================= ========
Wages and salaries 8,203 5,673
Consulting costs 506 783
Social security costs 1,275 898
Pension costs arising on defined contribution
schemes 229 151
Share based payment 2,509 2,739
----------------------- --------
12,722 10,244
======================= ========
Consulting costs are recognised within staff costs where the
work performed would otherwise have been performed by employees.
Consulting costs arising from the performance of other services are
included within other operating expenses.
Average monthly number of persons (including Executive
Directors) employed:
2019 2018
Number Number
================== ================== =======
Management 15 8
Finance 6 7
Sales & marketing 20 16
Operations 42 46
Technology 36 15
------------------ -------
119 92
================== =======
Directors' emoluments
The number of directors who received share options during the
year was as follows:
2019 2018
Number Number
============================ ================== =======
Long term incentive schemes 1 3
There were no directors who exercised share options during the
year.
The figures in this note are from continuing activities with
comparatives restated accordingly based on information drawn from
prior period financial statements.
The directors' aggregate emoluments in respect of qualifying
services were:
Salary Bonus Change of Transaction Pension 2019 2018
role/ dependent and Benefits Total Total
Settlement payments GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============== ======== ======== =========== =========== ============= ======== ========
Executive
Directors:
S H Kenner 285 - 224 575 7 1,091 628
J v d Bergh 255 79 122 739 9 1,204 456
R Kapashi* 111 - 207 200 3 521 319
-------- -------- ----------- ----------- ------------- -------- --------
651 79 553 1,514 19 2,816 1,403
======== ======== =========== =========== ============= ======== ========
Non-executive
Directors:
S Baldwin 70 - - - - 70 69
P Whiting** 45 - - - - 45 58
P Judd 60 - - - - 60 58
P Dentskevich 50 - - - - 50 49
-------- -------- ----------- ----------- ------------- -------- --------
225 - - - - 225 234
======== ======== =========== =========== ============= ======== ========
* R Kapashi left the Group in July 2019
** P Whiting left the Group in July 2019
Transaction dependent payments relate to one-off amounts, that
were payable as a result of the successful Zopa sale, the
subsequent returns of value and DFC demerger that took place in
2019.
The change of role payments for Henry Kenner were due to his
change of role from an executive to a non-executive director.
Key management
The Directors consider that key management personnel include the
Executive Directors of TruFin plc and the Chief Operating Officer
(the Chief Operating Officer left the Group in July 2019). These
individuals have the authority and responsibility for planning,
directing and controlling the activities of the Group.
6. Employee share-based payment transactions
The employment share-based payment charge comprises:
2019 2018
GBP'000 GBP'000
================================================= ======== ========
Performance Share Plan and Joint Share Ownership
Plan Founder Award 2,430 2,671
Performance Share Plan Market Value Award 79 68
Performance Share Plan 2018 Award - -
Performance Share Plan 2019 Award - -
Total 2,509 2,739
======== ========
Performance Share Plan and Joint Share Ownership Plan Founder
Award ("Founder Award")
On 21 February 2018, 3,407,895 shares were granted to selected
founder members of senior management of which the share price at
date of grant was GBP1.90 per share. The awards are structured as a
Performance Share Plan and a Joint Share Ownership Plan. The
Performance Share Plan is structured as a nil cost option with no
performance conditions attached. The awards were also granted
subject to continued employment until February 2021. The Joint
Share Ownership Plan allows the employee to participate in the
growth in value over and above the grant price of GBP1.90. The
shares vest 25% on each anniversary of the grant date.
The first 25% of shares (851,973 shares) vested on 21 February
2019 when the share price was GBP1.98. As a result 817,550 shares
subject to the Joint Share Ownership Plan became fully owned by the
trustee of the Company's employee benefit trust (the "EBT") and
34,423 became fully owned by senior management.
At the time of DFC's demerger from the Group, there was a
modification to the Founder Award. The GBP1.90 price above which
the employee was able to participate in value growth under the
Joint Share Ownership Plan was adjusted proportionally by reference
to the respective share prices of DFC and TruFin to GBP0.85. This
modification has not resulted in a change in the valuation of the
award and this continues to be recognised over the remainder of the
original vesting period.
As part of the demerger, holders of Founder Awards also received
an award in respect of DFC shares which gave rise to an Employers
National Insurance liability of GBP419,000, which was paid in July
2019.
On 11 September 2019, in connection with his change of role, the
unvested Founder Awards in respect of 1,369,244 shares held by
Henry Kenner fully vested, the result of which was that all of the
relevant shares ceased to be subject to the Joint Share Ownership
Plan and instead become fully owned by the EBT. In addition,
1,369,244 shares subject to the Performance Share Plan ceased to be
subject to continued employment condition.
Performance Share Plan Market Value Award ("PSP Market Value
Award")
On 21 February 2018, options to acquire 4,868,420 shares were
granted to the senior management team. The vesting of this award is
based on market -- based performance conditions. The vesting of
these awards is subject to the holder remaining an employee of the
Company and the Company's share price achieving five distinct
milestones - vesting at 20% each milestone. The exercise price of
the awards at the time of grant was GBP1.90 per share. A Monte
Carlo simulation was used to determine the fair value of these
options. The model used an expected volatility of 10% and a risk
free rate of 1.3%.
In order to reflect the impact of the demerger, the PSP Market
Value Award was split into two:
-- Part of the award remained as an option in respect of TruFin
shares ("TruFin Market Value Award")
-- Part of the award became an award in respect of DFC shares
("DFC market Value Award")
The TruFin Market Value Award is on the same terms as the
original PSP Market Value Award except that:
-- The exercise price was adjusted to GBP0.85, and the share
price milestones were adjusted to reflect the demerger
-- The exercise price was further adjusted to GBP0.80 and the
share price milestones were further adjusted, to reflect the return
of value to shareholders in June 2019
-- The exercise price will be further adjusted to GBP0.71, and
the share price milestones will be further adjusted to reflect the
return of value to shareholders in December 2019
The modification has not resulted in a change in the valuation
of the award and this continues to be recognised over the remainder
of the original vesting period.
The grant of the DFC Market Value Award gave rise to an
Employer's national insurance liability for the Company of
GBP265,000 which was paid in July 2019.
Performance Share Plan 2018 Award ("PSP 2018 Award")
On 21 February 2018, options to acquire 1,000,001 shares were
granted to the senior management team. The PSP 2018 Award is
structured as a nil cost option. The vesting of this award is
subject to the holder being in continued employment until February
2021 and the subsidiary companies achieving certain financial
metrics over a three -- year period.
In order to reflect the impact of the demerger, and as the
performance condition relating to the business of DFC was deemed to
be achieved in full due to the demerger, the PSP 2018 Award was
adjusted as follows:
-- the award part vested and was satisfied by way of a cash
payment calculated by reference to 50% of the shares subject to the
award and a price of GBP1.90 per share. The cash payments were made
in September 2019; and
-- the awards have otherwise continued in respect of 100% of the
TruFin shares, but the performance condition now relates solely to
the business of Oxygen
During the year, PSP 2018 Awards in respect of 736,843 shares
lapsed following members of senior management leaving the Group and
changing roles.
The fair value of the unvested part of the award as at 31
December 2019 was deemed to be nil as it is highly improbable that
the vesting conditions will be met.
Performance Share Plan 2019 Award ("PSP 2019 Award")
On 11 September 2019 an option to acquire 320,000 shares was
granted to James van den Bergh. The PSP 2019 Award is structured as
a nil cost option. The vesting of this award is subject to the
holder being in continued employment until September 2022 and
subsidiary companies achieving certain financial metrics over a
three -- year period. The fair value of the award as at 31 December
2019 was deemed to be nil as it is highly improbable that the
vesting conditions will be met.
Details of share based awards during the year:
JSOP Founder PSP Founder PSP Market PSP 2018 PSP 2019
Award* Award* Value
--------------------------- ------------ ----------- ---------- --------- --------
Type of instrument granted Shares (#) Shares (#) Options Options Options
(#) (#) (#)
Outstanding at 1 January
2019 3,407,895 3,407,895 4,868,420 1,000,001 -
Granted during the year - - - - 320,000
Vested during the year (2,221,217) - - - -
Lapsed during the year - (34,423) - (736,843) -
------------ ----------- ---------- --------- --------
Outstanding at 31 December
2019 1,186,678 3,373,472 4,868,420 263,158 320,000
============ =========== ========== ========= ========
Exercisable at 31 December
2019 NA 2,186,794 - - -
============ =========== ========== ========= ========
*The JSOP Founder Awards and PSP Founder Awards will together
deliver, in aggregate, a maximum of 3,407,895 TruFin shares.
No options expired during the year.
The weighted average remaining contractual life for the share
options outstanding as at 31 December 2019 was 8.41 years (2018:
9.47 years).
The charges incurred as a result of the demerger and subsequent
modifications of the awards have been included within discontinued
operations in note 10.
A breakdown of these charges is shown below:
2019 2018
GBP'000 GBP'000
============================================== ======== ========
PSP and JSOP Employer's NI charge 419 -
PSP Market Value Employers NI charge 265 -
PSP 2018 - DFC portion 1,081 -
DFC Banking licence contingent liability (See
note 7) 700 -
2,465 -
======== ========
Employees are responsible for settling their own tax obligations
related to these awards as and when they arise. The Company will
pay any Employers NI that becomes due on these awards.
7. Provision for commitments and other liabilities
A provision of GBP750,000 had been made in 2018 for the deferred
consideration payable for the acquisition of Porge by Oxygen. The
deferred consideration was dependent upon Porge meeting certain
revenue targets which Porge met and was paid in the second quarter
of 2019.
A provision of GBP700,000 which includes Employer's National
Insurance has been provided for as a contingent liability to be
paid to management as part of the management incentive plan agreed
at the time of the IPO. The payment is condition on DFC being
granted a bank licence, which is at the discretion of the PRA.
Management have reviewed aged provisions totalling GBP194,000 in
relation to uncertain liabilities that originate prior to 31
December 2016. Management have considered these liabilities and
consider the likelihood of a payment obligation arising as remote
and have therefore deemed the provision to be no longer
required.
Provisions recognised by DFC totalling GBP109,000 as at 31
December 2018 are no longer part of the balance following DFC's
demerger from the Group.
Group GBP'000
========================================= =======
At 1 January 2019 1,053
Demerger of subsidiary (109)
Deferred consideration paid (750)
Net additional provision during the year 506
-------
At 31 December 2019 700
=======
Group GBP'000
===================================== =======
At 1 January 2018 299
Additional provision during the year 754
-------
At 31 December 2018 1,053
=======
The Company had no provisions at the year end.
8. Net impairment loss on financial assets
2019 2018
GBP'000 GBP'000
================================ ======================= ========
At 1 January 319 126
On demerger of subsidiary (180) -
Charge for impairment loss (14) 248
Amounts written off in the year (2) (55)
At 31 December 123 319
======================= ========
At 31 December 2019, the Group had an impairment balance of
GBP123,000 which was allocated against loans and advances. At 31
December 2018, GBP308,000 of the impairment balance was allocated
against loans and advances, which the residual balance against
trade receivables.
The net impairment charge on financial assets during the year
ended 31 December 2019 all related to loans and advances.
The net impairment charge on financial assets during the year
ended 31 December 2018 derived from GBP237,000 for loans to
customers and the residual GBP11,000 for trade receivables.
9. Loss before income tax
Loss before income tax is stated after charging:
2019 2018
GBP'000 GBP'000
============================================== ======================= ========
Depreciation of property, plant and equipment 307 50
Amortisation of intangible assets 1,032 176
Staff costs including share based payments
charge 12,722 10,244
The above figures are from continuing activities with
comparatives restated accordingly based on information drawn from
prior financial statements.
Crowe LLP) (2018: Deloitte LLP)
2019 2018
Fees payable to the Group's auditor (Crowe GBP'000 GBP'000
LLP) (2018: Deloitte LLP)
============================================= ======================== ========
Fees payable for the audit of the company's
annual accounts 44 68
Fees payable for the audit of the company's
subsidiaries 78 132
------------------------ --------
Total audit fees 122 200
======================== ========
Non audit services
Other assurance services 12 68
------------------------ --------
Total non audit fees 12 68
======================== ========
10. Discontinued operations
On 8 May 2019, DFC was demerged from the group into a separate
AIM listed company (Distribution Finance Capital Holdings plc),
with the existing TruFin plc shareholders being given one new share
in DFC for each existing TruFin B share they held. These B shares
were subsequently cancelled (as mentioned in note 19); the value of
these cancelled shares was GBP96.4 million and is the deemed
consideration of the transaction. The carrying value of DFC prior
to demerger was GBP93.8 million which gave rise to a fair value
uplift of GBP2.6 million.
DFC's results for the period from the start of the year to the
date of demerger have been included within this note.
2019
DFC results for the period to demerger GBP'000
======================================= =============
Revenue 3,601
Expenses excluding IPO and demerger
costs (6,564)
-------------
Loss before tax (2,963)
=============
Also included within this note are; the costs to the Group
associated with the demerger and the fair value uplift in the value
of DFC prior to its demerger from the Group.
2019
GBP'000
DFC loss before tax (2,963)
Other items included within discontinued
operations
Fair value uplift in value of DFC 2,618
Costs of demerger (653)
MIP related demerger costs (2,465)
-------------
Loss from discontinued operations (3,463)
=============
The assets other than cash or cash equivalents in DFC at the
time of demerger were GBP157 million and liabilities were GBP125
million.
2019
DFC Cash flow GBP'000
===================================== =============
DFC loss before tax (2,963)
Working capital adjustments (33,435)
-------------
Cash flows from operating activities (36,398)
Cash flows from investing activities (123)
Cash flows from financing activities 71,876
Net increase in cash 35,355
Cash leaving the group on date of
demerger (42,911)
-------------
(7,556)
Less intragroup transfers (30,000)
-------------
Cash used by discontinued operations (37,556)
=============
11. Taxation
Analysis of tax charge/(credit) recognised in the period
2019 2018
GBP'000 GBP'000
============================= ======================= ========
Current tax charge 14 -
Deferred tax charge/(credit) 3,076 (390)
----------------------- --------
Total tax credit 3,090 (390)
======================= ========
Reconciliation of loss before tax to total tax credit
recognised
2019 2018
GBP'000 GBP'000
===================================================== ======================== ========================
Loss before tax (15,311) (15,500)
Loss before tax multiplied by the standard
rate of corporation tax in the UK of (19%) (2,842) (2,884)
Tax effect of:
Expenses not deductible 478 543
Depreciation in excess of capital allowances 27 23
Capital allowances (17) (10)
Other short term timing differences (2) 4
Capitalised revenue expenditure - 1
Unrecognised deferred tax on brought forward
assets (2,790) (1,461)
Unrecognised deferred tax from acquired subsidiaries (1,815) -
Unrecognised deferred tax from demerged subsidiary 2,400 -
Adjust closing deferred tax to rate at which
losses expect to be utilised (17%) (80) 560
Adjust closing deferred tax to average rate
of 19% - 656
Adjust opening deferred tax to average rate
of 19% (58) (612)
Deferred tax not recognised 7,789 2,790
------------------------ ------------------------
Total tax charge/(credit) 3,090 (390)
======================== ========================
Reductions in the UK corporation tax rate from 19% (effective
from 1 April 2017) and to 18% (effective 1 April 2020) were
substantively enacted on 26 October 2015. An additional reduction
to 17% (effective from 1 April 2020) was substantively enacted on 6
September 2016. This will reduce the Group's future current tax
charge accordingly. The deferred tax assets and liabilities at 31
December 2019 have been based on the rates substantively enacted at
the balance sheet date.
Deferred tax asset
2019 2018
Group GBP'000 GBP'000
================================================= ======================= ========
Balance at start of the year 5,579 5,189
(Debit)/Credit to the statement of comprehensive
income (3,076) 390
----------------------- --------
Balance at end of the year 2,503 5,579
======================= ========
Comprised of:
Losses 2,503 5,579
----------------------- --------
Total deferred tax asset 2,503 5,579
======================= ========
A deferred tax asset has been recognised in respect of Oxygen.
It is considered probable that future taxable profits will be
available to be realised against Oxygen's historical losses. This
determination is based on Oxygen's forecasts. A high proportion of
the revenue forecast is expected to be generated from clients which
have either already onboarded or which have already signed
contracts with Oxygen. Oxygen's fixed cost base is already scaled
for continued business growth, whilst variable costs are not
expected to be material.
12. Intangible assets
Software licenses
Client contracts and similar
assets Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
======================= ====================== ====================== ========== =======
Cost
At 1 January 2019 2,165 1,495 2,759 6,419
Additions 1,409 283 - 1,692
Arising on acquisition
of subsidiary - - 14,679 14,679
Demerger of subsidiary - (669) - (669)
---------------------- ---------------------- ---------- -------
At 31 December 2019 3,574 1,109 17,438 22,121
====================== ====================== ========== =======
Amortisation
At 1 January 2019 (103) (278) - (381)
Charge (376) (242) (414) (1,032)
Demerger of subsidiary - 49 - 49
---------------------- ---------------------- ---------- -------
At 31 December 2019 (479) (471) (414) (1,364)
====================== ====================== ========== =======
Accumulated impairment
losses
At 1 January 2019 - - - -
Charge (186) - - (186)
---------------------- ---------------------- ---------- -------
At 31 December 2019 (186) - - (186)
====================== ====================== ========== =======
Net book value
---------------------- ---------------------- ---------- -------
At 31 December 2019 2,909 638 17,024 20,571
====================== ====================== ========== =======
At 31 December 2018 2,062 1,217 2,759 6,038
====================== ====================== ========== =======
Software licenses
Client contracts and similar
assets Goodwill Total
Group GBP'000 GBP'000 GBP'000 GBP'000
======================= ====================== ====================== ========== =======
Cost
At 1 January 2018 305 500 - 805
Additions 1,860 995 - 2,855
Arising on acquisition
of subsidiary - - 2,759 2,759
At 31 December 2018 2,165 1,495 2,759 6,419
====================== ====================== ========== =======
Amortisation
At 1 January 2018 (52) (104) - (156)
Charge (51) (174) - (225)
At 31 December 2018 (103) (278) - (381)
====================== ====================== ========== =======
Accumulated impairment
losses
At 1 January 2018 - - - -
Charge - - - -
---------------------- ---------------------- ---------- -------
At 31 December 2018 - - - -
====================== ====================== ========== =======
Net book value
---------------------- ---------------------- ---------- -------
At 31 December 2018 2,062 1,217 2,759 6,038
====================== ====================== ========== =======
At 31 December 2017 253 396 - 649
====================== ====================== ========== =======
The Company had no intangibles assets at the year end.
Client contracts comprise the directly attributable costs
incurred at the beginning of an Early Payment Scheme Service
contract to revise a client's existing payment systems and provide
access to the Group's software and other intellectual property.
These implementation (or "set up") costs are comprised primarily of
employee costs.
The useful economic life for each individual asset is deemed to
be the term of the underlying Client Contract (generally 5 years)
which has been deemed appropriate and for impairment review
purposes, projected cash flows have been discounted over this
period.
The amortisation charge is recognised in fee expenses within the
statement of comprehensive income, as these costs are incurred
directly through activities which generate fee income.
The Group performed an impairment review at 31 December 2019 and
has impaired GBP186,000 in relation to an underperforming
contract.
Software, licenses and similar assets comprises separately
acquired software, as well as costs directly attributable to
internally developed platforms across the Group. These directly
attributable costs are associated with the production of
identifiable and unique software products controlled by the Group
and are probable of producing future economic benefits. They
primarily include employee costs and directly attributable
overheads.
A useful economic life of 3 to 5 years has been deemed
appropriate and for impairment review purposes projected cash flows
have been discounted over this period.
The amortisation charge is recognised in depreciation and
amortisation on non-financial assets within the statement of
comprehensive income.
The Group performed an impairment review at 31 December 2019 and
concluded no impairment was required.
The 'Software, licenses and similar assets' net book value
balance related to internally generated intangible assets at 31
December 2019 was GBP636,000 (2018: GBP1,198,000). This consists of
cost of GBP1,108,000 (2018: GBP1,471,000) and accumulated
amortisation of GBP472,000 (2018: GBP273,000). During the year
there were additions of GBP283,000 (2018: GBP971,000) and
amortisation of GBP242,000 (2018: GBP169,000). At the prior year
end the net book value of internally generated intangible assets
held by DFC was GBP602,000 are no longer part of the Group
following its demerger from the Group.
Goodwill arises from acquisitions made by the Group.
Porge
Porge was acquired by OFGL in August 2018 and goodwill of
GBP2,759,000 that arose from this acquisition was included within
the payments services segment of the Group. Following the
acquisition, separately identifiable intangible assets of
GBP1,387,000 primarily relating to the value of the contracts in
the business at acquisition were recognised. These are being
amortised over 5 years resulting in an amortisation charge of
GBP393,000 during the year. Goodwill related to Porge excluding
these assets at 31 December 2019 was GBP1,372,000.
Vertus
In July 2019, the Group converted into ordinary shares its
existing convertible loan with Vertus Capital in full satisfaction
and discharge of the loan. This, together with a further cash
payment, gave the Group 51% ownership of Vertus Capital and Vertus
SPV 1. Further details of the acquisition are included in note
24.
Goodwill of GBP1,714,000 arose from this transaction and has
been included within the short term finance segment of the
business. Separately identifiable intangible assets of GBP255,000
primarily related to the value of existing third party
relationships on acquisition have been identified. These are being
amortised over 5 years and the amortisation charge for the year was
GBP21,000. Goodwill related to Vertus excluding these assets at 31
December 2019 was GBP1,459,000.
Playstack
In September 2019, the Group converted into ordinary shares its
existing convertible loans with Playstack Ltd in full satisfaction
and discharge of the loans. This gave the Group ownership of
Playstack Ltd and the other companies within the Playstack Group.
Further details of the acquisition are included in note 24.
Goodwill of GBP12,965,000 arose from this transaction and has
been included within the publishing segment of the business.
Impairment testing of intangibles
An impairment review of goodwill was carried out at the year
end.
Porge was valued using the discounted cash flow methodology. The
net earnings of Porge were forecasted to 2024, a discount rate of
12% was used and terminal growth rate of 2%. The valuation of Porge
was greater than the amount of goodwill and therefore the goodwill
is not deemed to be impaired.
Vertus was valued using the discounted cash flow methodology.
The net earnings of Vertus were forecasted to 2028, a discount rate
of 12% was used and terminal growth rate of 3%. The valuation of
Vertus was greater than the amount of goodwill and therefore the
goodwill is not deemed to be impaired.
Playstack was valued using the discounted cash flow methodology.
The net earnings of Playstack were forecasted to 2028, a discount
rate of 20% was used and terminal growth rate of 3%. The valuation
of Playstack was greater than the amount of goodwill and therefore
the goodwill is not deemed to be impaired.
13. Property, plant and equipment
Leasehold Fixtures Computer Right-of-Use
improvements & equipment Asset Total
fittings
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================= ============= ========= ========== ============ =======
Cost
At 1 January
2019 67 337 177 - 581
Additions - 14 24 - 38
On adoption of
IFRS 16 - - - 429 429
Acquisition of
subsidiary - - 5 - 5
Demerger of subsidiary (23) (104) (170) - (297)
At 31 December
2019 44 247 36 429 756
------------- --------- ---------- ------------ -------
Depreciation
At 1 January
2019 (24) (205) (49) - (278)
Charge (15) (32) (5) (255) (307)
Acquisition of
subsidiary - - (3) - (3)
Demerger of subsidiary 3 18 48 - 69
------------
At 31 December
2019 (36) (219) (9) (255) (519)
------------- --------- ---------- ------------ -------
Net book value
------------- --------- ---------- ------------ -------
At 31 December
2019 8 28 27 174 237
============= ========= ========== ============ =======
At 31 December
2018 43 132 128 - 303
============= ========= ========== ============ =======
Leasehold Fixtures & Computer equipment
improvements fittings Total
Group GBP'000 GBP'000 GBP'000 GBP'000
======================= ========================== ======================= ========================= =======
Cost
At 1 January 2018 44 221 35 300
Additions 23 113 139 275
Arising on acquisition
of subsidiary - 3 3 6
-------------------------- ----------------------- ------------------------- -------
At 31 December 2018 67 337 177 581
-------------------------- ----------------------- ------------------------- -------
Depreciation
At 1 January 2018 (6) (157) (6) (169)
Charge (18) (48) (43) (109)
At 31 December 2018 (24) (205) (49) (278)
-------------------------- ----------------------- ------------------------- -------
Net book value
-------------------------- ----------------------- ------------------------- -------
At 31 December 2018 43 132 128 303
========================== ======================= ========================= =======
At 31 December 2017 38 64 29 131
========================== ======================= ========================= =======
Computer equipment Right-of-use
asset Total
Company GBP'000 GBP'000 GBP'000
==================== ========================= =================== ===================
Cost
At 1 January 2019 3 - 3
Additions - - -
On adoption of IFRS
16 - 167 167
------------------------- ------------------- -------------------
At 31 December 2019 3 167 170
------------------------- ------------------- -------------------
Depreciation
At 1 January 2019 (1) - (1)
Charge (1) (167) (168)
------------------------- ------------------- -------------------
At 31 December 2019 (2) - (169)
------------------------- ------------------- -------------------
Net book value
------------------------- ------------------- -------------------
At 31 December 2019 1 - 1
========================= =================== ===================
At 31 December 2018 2 - 2
========================= =================== ===================
Computer equipment
Total
Company GBP'000 GBP'000
==================== ========================= =================
Cost
At 1 January 2018 - -
Additions 3 3
------------------------- -----------------
At 31 December 2018 3 3
------------------------- -----------------
Depreciation
At 1 January 2018 - -
Charge (1) (1)
------------------------- -----------------
At 31 December 2018 (1) (1)
------------------------- -----------------
Net book value
------------------------- -----------------
At 31 December 2018 2 2
========================= =================
14. Other investments
2019 2018
Group GBP'000 GBP'000
================================== ======================= ========
Investments in equity instruments - 44,500
Debt securities - 4,944
----------------------- --------
- 49,494
======================= ========
Investment in equity instruments
Group Level
3 valuation Company
GBP'000 GBP'000
=============================== ========================= ========================
Fair value at 1 January 2019 44,500 -
Disposal of investment (44,500) -
Fair value at 31 December 2019 - -
========================= ========================
Group Level
3 valuation Company
GBP'000 GBP'000
======================================== ========================= ========================
Fair value at 1 January 2018 36,500 -
Gain on revaluation at 31 December 2018 8,000 -
Fair value at 31 December 2018 44,500 -
========================= ========================
On 7 May 2019, the Group sold its investment in Zopa to
Arrowgrass for a gross cash consideration of GBP44.5 million which
was equal to the fair value of Zopa.
Group 2019 2018
============== ==== =====
Undiluted 0.0% 13.3%
Fully diluted 0.0% 12.5%
A level 3 valuation is one that relies on unobservable inputs to
the valuation process.
Debt Securities
Group GBP'000
================================== =======
Balance at 1 January 2019 4,994
Demerger of subsidiary (4,994)
Balance at 31 December 2019 -
=======
Balance at 1 January 2018 -
Purchased debt securities 5,993
-------
Fair value gain 1
-------
Proceeds from maturing securities (1,000)
-------
Balance at 31 December 2018 4,994
=======
Following the demerger of DFC from the Group, the Group no
longer holds any debt securities.
The Company had no debt securities at the year end (GBPnil).
15. Investment in subsidiaries
Company GBP'000
=============================================== ========
Balance at 1 January 2019 123,966
Demerger of subsidiary (93,777)
Balance at 31 December 2019 30,189
========
Balance at 1 January 2018 and 31 December 2018 123,966
The Group has considered its market capitalisation as at 31
December 2019 as part of the impairment review consideration.
Although the Group's market capitalisation as at 31 December 2019
was below the carrying value of the investment and loans in its
subsidiaries, the Group has determined based on the present value
of forecast future cash flows that no impairment is required. The
Group's determination of whether investment and loans in subsidiary
undertaking are impaired requires an estimation of the value in use
of the cash generating units to which the relevant investment is
allocated. This requires estimation of future cash flows and the
selection of a suitable discount rate. The recoverable amount of
the cash generating unit has been determined based on fair value
calculated using discounted future cash flows, which are subject to
significant estimates due to the growth phase of the business.
Further information on the assumptions used in this assessment are
included in note 12.
16. Loans and advances
2019 2018
Group GBP'000 GBP'000
========================= ======================= ========
Total loans and advances 27,828 129,678
Less: loss allowance (123) (308)
Less: deferred income - (149)
-----------------------
27,705 129,221
======================= ========
2019 2018
Total loans and advances are made up of GBP'000 GBP'000
======================================== ======================= ========
Loans and advances 27,828 122,528
Financial assets at Fair Value - 7,150
----------------------- --------
27,828 129,678
======================= ========
At 31 December 2018 the Group held Financial assets held at Fair
Value which corresponded to convertible loan notes of GBP3.5
million in Playstack and a convertible loan note of GBP3.65 million
in Vertus Capital. During the year, the Group exercised the
conversion rights on the loans with both companies. Further
information on these transactions is in note 24.
The aging of loans and advances are analysed as follows:
2019 2018
GBP'000 GBP'000
============================== ======================= ========
Neither past due nor impaired 27,126 128,341
Past due: 0-30 days 490 742
Past due: 31-60 days 61 219
Past due: 61-90 days 23 30
Past due: more than 91 days 5 38
27,705 129,370
======================= ========
The Company had no loans and advances at the year end (2018:
GBPnil).
17. Assets classified as held for sale
At 31 December 2018, the Group had one asset classified as held
for sale valued at GBP266,000. This asset was within DFC, so
following the demerger this is no longer within the Group.
18. Trade and other receivables
Group Company
------------------ ------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 1,075 417 - -
Prepayments 368 1,387 41 72
Accrued Income 178 676 - -
VAT 25 - 61 24
Other debtors 2,361 1,139 93 296
Amounts owed to group
undertakings - - - 56,261
-------- -------- -------- --------
4,007 3,619 195 56,652
======== ======== ======== ========
Trade receivables above are stated net of a loss allowance of
GBPnil (2018: GBP11,000). All receivables are due within one
year.
The aging of trade receivables are analysed as follows:
Group Company
------------------ ------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Not yet due 447 135 - -
Past due: 0-30 days 254 90 - -
Past due: 31-60 days 106 66 - -
Past due: 61-90 days 67 10 - -
Past due: more than
91 days 201 116 - -
1,075 417 - -
======== ======== ======== ========
19. Share capital
Share Capital Total
Group and Company GBP'000 GBP'000
======================================= =============== =========
80,822,204 shares at GBP0.91 per share 73,548 73,548
At 31 December 2018, 97,368,421 shares of no par value were in
issue. In May 2019, these were converted into 97,368,421 ordinary
shares of GBP1.90 each. On 8 May 2019, each share was subdivided
and redesignated into one ordinary share of GBP0.91 each and one
ordinary B share of GBP0.99 each. The B shares were subsequently
cancelled on the same day as part of the DFC demerger, thereby
reducing the share capital of TruFin plc by GBP96,394,737, to
GBP88,605,263.
In June 2019, TruFin plc returned GBP5,000,297 to Eligible
shareholders through a purchase of 5,435,105 ordinary shares at a
Tender Price of GBP0.92 per share.
In December 2019, TruFin plc returned GBP5,000,000 to eligible
shareholders through a purchase of 11,111,112 ordinary share at a
Tender Price of GBP0.45 per share.
All ordinary shares carry equal entitlements to any
distributions by the company. No dividends were proposed by the
Directors for the year ended 31 December 2019.
20. Borrowings
2019 2018
Group GBP'000 GBP'000
========================== ======================= ========
Loans due within one year 6,194 59,041
6,194 59,041
======================= ========
Movements in borrowings during the year
The below table identifies the movements in borrowings during
the year.
Group GBP'000
============================ ========================
Balance at 1 January 2019 59,041
Demerger of subsidiary (59,041)
Acquisition of subsidiary 1,183
Funding drawdown 5,350
Interest expense 39
Origination fees paid (357)
Repayments (21)
------------------------
Balance at 31 December 2019 6,194
========================
Balance at 1 January 2018 9,035
Funding drawdown 49,926
Interest expense 2,145
Interest paid (2,065)
=======
Balance at 31 December 2018 59,041
=======
At 31 December 2019, borrowings consisted of facilities that
Vertus SPV 1 has with two lenders.
The 31 December 2018 balance related to DFC's senior debt
facility.
21. Trade and other payables
Group Company
------------------ ------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 651 1,606 85 24
Accruals 3,001 3,526 947 1,045
Other payables 379 228 3 1
Corporation tax 22 22 - -
Other taxation and social
security 704 438 409 65
VAT - 246 - -
-------- -------- -------- --------
4,757 6,066 1,444 1,135
======== ======== ======== ========
22. Financial instruments
The Directors have performed an assessment of the risks
affecting the Group through its use of financial instruments and
believe the principal risks to be: capital risk; credit risk, and
market risk including interest rate risk.
This note describes the Group's objectives, policies and
processes for managing the material risks and the methods used to
measure them. The significant accounting policies regarding
financial instruments are disclosed in note 1.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while providing an
adequate return to shareholders.
The capital structure of the Group consists of borrowings
disclosed in note 20 and equity of the Group (comprising issued
capital, reserves, retained earnings and non-controlling interests
as disclosed in note 19 and note 23).
The Group is not subject to any externally imposed capital
requirements.
Principal financial instruments
The principal financial instruments to which the Group is party
and from which financial instrument risk arises, are as
follows:
-- Loans and advances, primarily credit risk and liquidity
risk;
-- Trade receivables, primarily credit risk and liquidity
risk;
-- Investments, primarily fair value or market price risk;
-- Cash and cash equivalents, which can be a source of credit
risk but are primarily liquid assets available to further business
objectives or to settle liabilities as necessary;
-- Trade and other payables; and
-- Borrowings which are used as sources of funds and to manage
liquidity risk.
Analysis of financial instruments by valuation model
Financial assets included in the statement of financial position
at fair value:
2019 2018
Group GBP'000 GBP'000
========================================= ======== ========
Debt securities (level 1) - 4,994
Investments (level 3) - 44,500
Financial assets at fair value (level 3) - 7,150
Debt securities carried at fair value by the Group were treasury
bills. Treasury bills are traded in active markets and fair values
are based on quoted market prices. There were no transfers between
levels during the periods, all debt securities were been measured
at level 1 from acquisition to the demerger date.
A level 3 valuation is one that relies on unobservable inputs to
the valuation process.
-- The 31 December 2018 Zopa valuation was calculated by
reference to the independent valuer's valuation. This valuation has
utilised, amongst other things, recent financial data provided by
Zopa, peer group valuation metrics and the most recent funding
round. A combination of these provide the best estimate for the
investment's market value. Zopa was sold at this valuation in May
2019.
-- Financial assets at fair value were valued by considering the
valuation of the convertible loans as well as the value of the
underlying companies (Playstack and Vertus). The conversion rights
on these loans were exercised during the year.
There were no transfers of assets between level 1 and level 2
during the current or prior year.
Reconciliation of level 3 financial assets included in the
statement of financial position at fair value:
Financial
Group assets at
Investments fair value Total
GBP'000 GBP'000 GBP'000
========================== ====================== =========== ===================
Balance at 1 January
2019 44,500 7,150 51,650
Disposals (44,500) - (44,500)
Conversion of convertible
loans - (7,150) (7,150)
Balance at 31 December - - -
2019
====================== =========== ===================
There are no financial liabilities included in the statement of
financial position at fair value.
31 December 2019
Financial assets and financial liabilities included in the
statement of financial position that are not measured at fair
value:
Carrying Fair Level 1 Level 2 Level 3
Group amount value GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
========================== =================== =================== ======== ======== ========
Financial assets not measured
at fair value
Loans and advances 27,705 27,705 - - 27,705
Trade receivables 1,075 1,075 - - 1,075
Other receivables 2,907 2,907 - - 2,907
Cash and cash equivalents 6,971 6,971 6,971 - -
=================== =================== ======== ======== ========
38,658 38,658 6,971 - 31,687
=================== =================== ======== ======== ========
Financial liabilities not measured
at fair value
Borrowings 6,194 6,194 - - 6,194
Trade, other payables
and accruals 4,029 4,029 - - 4,029
=================== =================== ======== ======== ========
10,223 10,223 - - 10,223
=================== =================== ======== ======== ========
31 December 2018
Carrying Fair Level 1 Level 2 Level 3
Group amount value GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
========================== =================== =================== ======== ======== ========
Financial assets not measured
at fair value
Loans and advances 122,071 122,071 - - 122,071
Trade receivables 417 417 - - 417
Other receivables 3,202 3,202 - - 3,202
Cash and cash equivalents 24,888 24,888 24,888 - -
=================== =================== ======== ======== ========
150,578 150,578 24,888 - 125,690
=================== =================== ======== ======== ========
Financial liabilities not measured
at fair value
Borrowings 59,041 59,041 - - 59,041
Trade, other payables
and accruals 5,361 5,361 - - 5,361
=================== =================== ======== ======== ========
64,402 64,402 - - 64,402
=================== =================== ======== ======== ========
31 December 2019
Carrying Fair Level 1 Level 2 Level 3
Company amount value GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
========================== =================== =================== ======== ======== ========
Financial assets not measured at fair
value
Amounts owed by
group undertakings 49,083 49,083 - - 49,083
Other receivables 134 134 - - 134
Cash and cash equivalents 184 184 184 - -
=================== =================== ======== ======== ========
49,401 49,401 184 - 49,217
=================== =================== ======== ======== ========
Financial liabilities not measured
at fair value
Trade, other payables
and accruals 1,035 1,035 - - 1,035
=================== =================== ======== ======== ========
1,035 1,035 - - 1,035
=================== =================== ======== ======== ========
31 December 2018
Carrying Fair Level 1 Level 2 Level 3
Company amount value GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
================= =================== ================ ================ ================ ================
Financial assets not measured at fair
value
Amounts owed by
group
undertakings 56,261 56,261 - - 56,261
Other receivables 368 368 - - 368
Cash and cash
equivalents 8,448 8,448 8,448 - -
=================== ================ ================ ================ ================
65,076 65,076 8,448 - 56,628
=================== ================ ================ ================ ================
Financial liabilities not measured
at fair value
Trade, other
payables
and accruals 1,070 1,070 - - 1,070
=================== ================ ================ ================ ================
1,070 1,070 - - 1,070
=================== ================ ================ ================ ================
Fair values for level 3 assets and liabilities were calculated
using a discounted cash flow model and the Directors consider that
the carrying amounts of financial assets and liabilities recorded
at amortised cost in the financial statements approximate to their
fair values.
Loans and advances
Due to the short term nature of loans and advances, their
carrying value is considered to be approximately equal to their
fair value. These items are short term in nature such that the
impact of the choice of discount rate would not make a material
difference to the calculations.
Trade and other receivables, other borrowings and other
liabilities
These represent short term receivables and payables and as such
their carrying value is considered to be equal to their fair
value.
Financial risk management
The Group's activities and the existence of the above financial
instruments expose it to a variety of financial risks.
The Board of Directors has overall responsibility for the
determination of the Group's risk management objectives and
policies. The overall objective of the Board of Directors is to set
policies that seek to reduce ongoing risk as far as possible
without unduly affecting the Group's competitiveness and
flexibility.
The Group is exposed to the following financial risks:
-- Credit risk
-- Liquidity risk
-- Market risk
-- Interest rate risk
Further details regarding these policies are set out below.
Credit risk
Credit risk is the risk that a customer or counterparty will
default on its contractual obligations resulting in financial loss
to the Group. One of the Group's main income generating activities
is lending to customers and therefore credit risk is a principal
risk. Credit risk mainly arises from loans and advances. The Group
considers all elements of credit risk exposure such as counterparty
default risk, geographical risk and sector risk for risk management
purposes.
Credit risk management
The credit committees within the wider Group are responsible for
managing the credit risk by:
-- Ensuring that it has appropriate credit risk practices,
including an effective system of internal control;
-- Identifying, assessing and measuring credit risks across the
Group from an individual instrument to a portfolio level;
-- Creating credit policies to protect the Group against the
identified risks including the requirements to obtain collateral
from borrowers, to perform robust ongoing credit assessment of
borrowers and to continually monitor exposures against internal
risk limits;
-- Limiting concentrations of exposure by type of asset,
counterparty, industry, credit rating, geographical location;
-- Establishing a robust control framework regarding the
authorisation structure for the approval and renewal of credit
facilities;
-- Developing and maintaining the risk grading to categorise
exposures according to the degree of risk of default. Risk grades
are subject to regular reviews; and
-- Developing and maintaining the processes for measuring
Expected Credit Loss (ECL) including monitoring of credit risk,
incorporation of forward-looking information and the method used to
measure ECL.
Significant increase in credit risk
The Group continuously monitors all assets subject to Expected
Credit Loss as to whether there has been a significant increase in
credit risk since initial recognition, either through a significant
increase in Probability of Default ("PD") or in Loss Given Default
("LGD").
The following is based on the procedures adopted by the
Group:
Granting of credit
The Business Development Team prepare a Risk Summary which sets
out the rationale and the pricing for the proposed loan facility
and confirms that it meets the Group's product risk and pricing
policies. The Application will include the proposed counterparty's
latest financial information and any other relevant information but
as a minimum:
-- Details of the limit requirement e.g. product, amount, tenor,
repayment plan etc.;
-- Facility purpose or reason for increase;
-- Counterparty details, background, management, financials and
ratios (actuals and forecast);
-- Key risks and mitigants for the application;
-- Conditions, covenants & information (and monitoring
proposals) and security (including comments on valuation);
-- Pricing;
-- Confirmation that the proposed exposure falls within risk
appetite; and
-- Clear indication where the application falls outside of risk
appetite.
The Credit Risk Department will analyse the financial
information, obtain reports from credit reference agencies,
allocate a risk rating and make a decision on the application. The
process may require further dialogue with the Business Development
Team to ascertain additional information or clarification.
Each mandate holder and Committee is authorised to approve loans
up to agreed financial limits provided that the risk rating of the
counterparty is within agreed parameters. If the financial limit
requested is higher than the credit authority of the first reviewer
of the loan facility request, the application is sent to the next
credit authority level with a recommendation.
The Executive Risk Committee reviews all applications that are
outside the credit approval mandate of the mandate holder due to
the financial limit requested or if the risk rating is outside of
policy but there is a rationale and/or mitigation for considering
the loan on an exceptional basis.
Applications where the counterparty has a high risk rating are
sent to the Executive Risk Committee for a decision based on a
positive recommendation from the Credit Risk department. Where a
limited company has such a risk rating, the Executive Risk
Committee will consider the following mitigants:
-- Existing counterparty which has met all obligations in time
and in accordance with loan agreements,
-- Counterparty known to Group personnel who can confirm
positive experience,
-- Additional security, either tangible or personal guarantees
where there is verifiable evidence of personal net worth,
-- A commercial rationale for approving the application,
although this mitigant will generally be in addition to at least
one of the other mitigants.
Identifying significant increases in credit risk
The Group measures a change in a counterparty's credit risk
mainly on payment, on updated from credit reference agencies and
adverse changes with a counterparty's debtors. The Group views a
significant increase in credit risk as:
-- A two-notch reduction in the Group's counterparty's risk
rating since origination, as notified through the credit rating
agency;
-- A counterparty defaults on a payment due under a loan
agreement;
-- Late contractual payments which although cured, re-occur on a
regular basis;
-- Evidence of a reduction in a counterparty's working capital
facilities which has had an adverse effect on its liquidity; or
-- Evidence of actual or attempted sales out of trust or of
double financing of assets funded by the Group.
-- Deterioration in the underlying business (held as part of the
security package) indicated through significant loss of revenue and
higher than average client attrition.
An increase in significant credit risk is identified when any of
the above events happen after the date of initial recognition.
Default
Identifying loans and advances in default and credit
impaired
The Group's definition of default for this purpose is:
-- A counterparty defaults on a payment due under a loan
agreement and that payment is overdue on its terms, or
-- The collateral that secures, all or in part, the loan
agreement has been sold or is otherwise not available for sale and
the proceeds have not been paid to the lending company, or
-- A counterparty commits an event of default under the terms
and conditions of the loan agreement which leads the lending
company to believe that the borrower's ability to meet its credit
obligations to the lending company is in doubt.
Exposure at default
Exposure at default ("EAD") is the expected loan balance at the
point of default and, for the purpose of calculating the Expected
Credit Losses ("ECL"), management have assumed this to be the
balance at the reporting date.
Expected Credit Losses
The ECL on an individual loan is based on the credit losses
expected to arise over the life of the loan, being defined as the
difference between all the contractual cash flows that are due to
the Group and the cash flows that it actually expects to
receive.
This difference is then discounted at the original effective
interest rate on the loan to reflect the disposal period of
underlying collateral.
Regardless of the loan status stage, the aggregated ECL is the
value that the Group expects to lose on its current loan book
having assessed each loan individually.
To calculate the ECL on a loan, the Group considers:
1. Counterparty PD; and
2. LGD on the asset
whereby: ECL = EAD x PD x LGD
Maximum exposure to credit risk
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 6,971 24,888 184 8,448
Loans and advances 27,705 129,221 - -
Amounts owed by group
undertakings - - 49,083 56,261
Trade and other receivables 3,983 3,619 195 368
======== ======== ======== ========
Maximum exposure to
credit risk 38,659 157,728 49,462 65,077
======== ======== ======== ========
Loans and advances:
Collateral held as security
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
================================= ======== -------- -------- ========
Fully collateralised
Loan-to-value* ratio:
Less than 50% 3 2,408 - -
50% to 70% 75 6,000 - -
71% to 80% 250 36,126 - -
81% to 90% 3,465 31,756 - -
91% to 100% 6 45,994 - -
======== ======== ======== ========
3,799 122,284 - -
======== ======== ======== ========
Partially collateralised
Collateral value relating
to loans over 100% loan-to-value - - - -
-------- -------- -------- --------
Unsecured lending 24,032 160 - -
======== ======== ======== ========
* Calculated using wholesale collateral values
Concentration of credit risk
The Group maintains policies and procedures to manage
concentrations of credit at the counterparty level and industry
level to achieve a diversified loan portfolio.
Credit quality
An analysis of the Group's credit risk exposure for loan and
advances per class of financial asset, internal rating and "stage"
is provided in the following tables. A description of the meanings
of stages 1, 2 and 3 is given in the accounting policies set out in
note 1.
2019 2018
Risk rating Stage 1 Stage 2 Stage 3 Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================== --------------- ----------------- --------- ------------------- ---------------------
Above average (risk
rating 1-2) 8,247 - - 8,247 55,698
Average (risk
rating
3-5) 5,283 - - 5,283 46,784
Below average (risk
rating 6+) 271 - 101 372 20,046
--------------- ----------------- --------- ------------------- ---------------------
Gross carrying
amount 13,801 - 101 13,902 122,528
--------------- ----------------- --------- ------------------- ---------------------
Loss allowance (26) - (97) (123) (308)
--------------- ----------------- --------- ------------------- ---------------------
Carrying amount 13,775 - 4 13,779 122,220
=============== ================= ========= =================== =====================
Stage 1 Stage 2 Stage 3 Total
Gross Carrying Amount GBP'000 GBP'000 GBP'000 GBP'000
============================== ========= ========= ========= ====================
As at 1 January 2019 99,757 22,621 150 122,528
Transfer to stage - - - -
1
Transfer to stage - - - -
2
Transfer to stage
3 (86) - 86 -
Acquisition of subsidiary 6,727 - - 6,727
Demerger of subsidiary (91,359) (22,621) (135) (114,115)
Net Loans originated/(repaid) (1,238) - - (1,238)
As at 31 December
2019 13,801 - 101 13,902
========= ========= ========= ====================
Trade receivables
Status at reporting date
The Group has assessed the trade and other receivables in
accordance with IFRS 9 and determined that, at the balance sheet
date, the lifetime ECL is GBPnil (2018: GBP11,000).
The contractual amount outstanding on financial assets that were
written off during the reporting period and are still subject to
enforcement activity is GBPnil at 31 December 2019 (2018:
GBPnil).
Liquidity risk
Liquidity risk is the risk that the Group does not have
sufficient financial resources to meet its obligations as they fall
due or will have to do so at an excessive cost. This risk arises
from mismatches in the timing of cash flows which is inherent in
all banking operations and can be affected by a range of Group
specific and market-wide events.
Liquidity risk management
Group Finance performs treasury management for the Group, with
responsibility for the treasury for each business entity being
delegated to the individual subsidiaries. However, in line with the
wider Group governance structure, Group Finance performs an
important oversight role in the wider treasury considerations of
the Group. The primary mechanism for maintaining this oversight is
a formal requirement that subsidiaries' Finance teams notify all
material Treasury matters to Group Finance.
The main Group responsibilities are to maintain banking
relationships, manage and maximise the efficiency of the Group's
working capital and long term funding and ensure ongoing compliance
with banking arrangements. The Group currently does not have any
offsetting arrangements.
Liquidity stress testing
The Group regularly conducts liquidity stress tests, based on a
range of different scenarios to ensure it can meet all of its
liabilities as they fall due.
Maturity analysis for financial assets and financial
liabilities
The following maturity analysis is based on expected gross cash
flows.
As at 31 December Carrying Less 1-3 months 3 months 1-5 years >5 years
2019 Amount than GBP'000 to 1 GBP'000
GBP'000 1 month year GBP'000
GBP'000 GBP'000
----------------------- --------- --------- ----------- --------- ---------- ---------
Financial Assets
Cash and cash
equivalents 6,971 6,971 - - - -
Trade receivables 1,075 1,075 - - - -
Loans and advances 27,705 3,841 335 16,017 7,677 349
35,751 11,887 335 16,017 7,677 349
========= ========= =========== ========= ========== =========
Financial Liabilities
Trade other payables
and accruals 4,029 4,023 - - - -
Borrowings 6,194 21 - - 3,943 2,230
--------- --------- ----------- --------- ---------- ---------
10,223 4,050 - - 3,943 2,230
========= ========= =========== ========= ========== =========
Market risk
Market risk is the risk that movements in market factors, such
as foreign exchange rates, interest rates, credit spreads, equity
prices and commodity prices will reduce the TruFin Group's income
or the value of its portfolios.
Market risk management
The TruFin Group's management objective is to manage and control
market risk exposures in order to optimise return on risk while
ensuring solvency.
The core market risk management activities are:
-- The identification of all key market risk and their
drivers,
-- The independent measurement and evaluation of key market
risks and their drivers,
-- The use of results and estimates as the basis for the TruFin
Group's risk/return-oriented management, and
-- Monitoring risks and reporting on them.
Interest rate risk management
The TruFin Group is exposed to the risk of loss from
fluctuations in the future cash flows or fair values of financial
instruments because of the change in market interest rates.
Interest rate risk
Interest rates on loans and advances are charged at competitive
rates given current market condition. Should rates fluctuate, this
will be reviewed and pricing will be adjusted accordingly.
Vertus's has interest income that is variable in relation to the
Bank of England base rate, and interest expense variable to both
LIBOR and the Bank of England base rate.
23. Non-controlling interests
The summarised financial information below represents financial
information for each subsidiary that has non-controlling interest
that are material to the Group. The amounts disclosed for each
subsidiary are before intragroup eliminations.
The Group had a 51% ownership share of Vertus Capital and Vertus
SPV1 during the period from acquisition to the year end.
Balance Sheet Vertus Capital Vertus SPV1
------------------------------------------------ ----------------------------------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
================ ----------------------- ----------------------- ====================== ======================
Current assets 4,757 - 10,344 -
Non-current
assets 3 - - -
Current
liabilities (75) - (10,616) -
Equity
attributable to
owners of the
Company 2,388 - (139) -
Non-controlling
interests 2,295 - (133) -
Income Statement Vertus Capital Vertus SPV1
------------------------------------------------ ----------------------------------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
================ ----------------------- ----------------------- ====================== ======================
Revenue 268 - 339 -
Expenses (247) - (441) -
Profit/(loss)
after tax 21 - (102) -
Profit/(loss)
after tax
attributable to
owners
of the Company 11 - (52) -
Profit/(loss)
after tax
attributable to
the
non-controlling
interests 10 - (50) -
Cash Flow Statement Vertus Capital Vertus SPV1
------------------------------------------------ ----------------------------------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
==================== ----------------------- ----------------------- ====================== ======================
Net cash used in
operating
activities (182) - (3,316) -
Net cash used in
investing
activities 71 - - -
Net cash generated
from
financing
activities - - 3,507 -
----------------------- ----------------------- ---------------------- ----------------------
Net
increase/(decrease)
in cash and cash
equivalents (111) - 191 -
======================= ======================= ====================== ======================
Vertus Capital Vertus SPV1
------------------------------------------------ -----------------------------------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
============= ----------------------- ----------------------- ====================== =======================
Balance at
acquisition
29 July 2019 2,285 - (84) -
Share of loss
for the
year 10 - (50) -
----------------------- ----------------------- ---------------------- -----------------------
Balance at 31
December
2019 2,295 - (134) -
======================= ======================= ====================== =======================
The Group had a 72% ownership share of Bandana Media Ltd during
the period from acquisition to the year end.
2019 2018
Bandana Media Ltd GBP'000 GBP'000
============================================= ======================= =======================
Current assets 51 -
Current liabilities (3,457) -
Equity attributable to owners of the Company (2,465) -
Non-controlling interests (941) -
2019 2018
Bandana Media Ltd GBP'000 GBP'000
=================================================== ======================= =======================
Revenue - -
Expenses (392) -
Loss after tax (392) -
Loss after tax attributable to owners of the
Company (284) -
Loss after tax attributable to the non-controlling
interests (108) -
2019 2018
Bandana Media Ltd GBP'000 GBP'000
------------------------------------------ ------------------------ --------
Net cash used in operating activities (1) -
Net decrease in cash and cash equivalents (1) -
2019 2018
Bandana Media Ltd GBP'000 GBP'000
------------------------------------ ------------------------ ------------------------
Balance at acquisition 29 July 2019 (833) -
Share of loss for the year (108) -
------------------------ ------------------------
Balance at 31 December 2019 (941) -
======================== ========================
24. Acquisition of Subsidiaries
Vertus
On 29 July 2019, the Group converted into ordinary shares its
existing GBP3.65 million convertible loan with Vertus Capital in
full satisfaction and discharge of the loan. This, together with a
further cash payment of approximately GBP355,000 resulted in TruFin
Holdings becoming the 51% controlling shareholder in Vertus Capital
and its 100% owned subsidiary Vertus SPV1. Vertus is a funding
provider to the Independent Financial Adviser sector and the Group
considers Vertus to be best in class with significant opportunities
arising from a sector trend of consolidation.
Vertus's financial year end date is 31 December 2019. Its
results have been consolidated from the date of acquisition to 31
December 2019, in line with the Group's financial year end. The
loss for the period from acquisition consolidated in the Group's
accounts was GBP81,000. Had the acquisition taken place on 1
January 2019, the loss from Vertus consolidated in the Group would
have been GBP59,000. This amount includes transactions with other
Group companies during the year.
The amounts recognised in respect of the identifiable net assets
of Vertus acquired are as set out in the table below:
GBP'000
=================================================== =======
Net assets at acquisition 4,493
TruFin share of net assets 2,292
Goodwill arising on acquisition
Total consideration 4,005
Less: fair value of identifiable net assets
acquired (2,292)
-------
1,713
-------
Separately identifiable intangible assets 255
Goodwill net of separately identifiable intangible
assets 1,458
Consideration satisfied by:
Conversion of loan notes 3,650
Cash 355
In accordance with IFRS 3, we have recognised and measured the
separately identifiable intangible assets acquired as part of the
transaction. These have been valued at GBP255,000 and primarily
relate to the value of Vertus's relationships with third
parties.
Playstack Group
On 11 September 2019, the Group converted into ordinary shares
its existing GBP3.5 million convertible loans with Playstack Ltd in
full satisfaction and discharge of the loan. This resulted in
TruFin Holdings becoming the c99% controlling shareholder in
Playstack Ltd and the other companies within the Playstack Group
(as per note 1).
Playstack's financial year end date is 31 December 2019. Its
results have been consolidated from the date of acquisition to 31
December 2019, in line with the Group's financial year end. The
loss for the period from acquisition consolidated in the Group's
accounts was GBP2,349,000. Had the acquisition taken place on 1
January 2019, the loss from the Playstack Group that would have
been consolidated in the Group would have been GBP9,612,000. This
amount includes transactions with other Group companies during the
year.
The amounts recognised in respect of the identifiable net assets
of the Playstack Group are as set out in the table below:
GBP'000
============================================ ========
Net assets at acquisition (10,269)
TruFin share of net assets (9,450)
Goodwill arising on acquisition
Total consideration 3,515
Less: fair value of identifiable net assets
acquired 9,450
--------
12,965
--------
Consideration satisfied by:
Conversion of loan notes 3,500
Share of associate income to date 15
25. Changes in accounting policies
This note explains the impact of the adoption of IFRS 16 Leases
on the Group's financial statements. The Group has adopted IFRS 16
retrospectively from 1 January 2019, but has not restated
comparatives for the 2018 reporting period, as permitted under the
specific transitional provisions in the standard. The
reclassifications and the adjustments arising from the new leasing
rules are therefore recognised in the opening balance on 1 January
2019.
Balances recognised on adoption of IFRS 16
Lease Liability GBP'000
===================================================== =========
Operating lease commitments disclosed at 31
December 2018 1,192
Lease commitments related to discontinued operations (715)
Adjustments (7)
---------
Lease liability recognised at 1 January 2019 470
=========
26. Leases
The carrying amounts of the right-of-use assets recognised and
the movements during the period are shown in note 13.
The lease liability and movement during the period were:
Group GBP'000
============================================= =========
Lease liability recognised at 1 January 2019 470
Interest 13
Payments (251)
---------
Balance at 31 December 2019 232
=========
27. Earnings per share
Earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year.
The calculation of the basis and adjusted earnings per share is
based on the following data:
2019 2018
=============================================== =================== ==========
Number of shares
At year end 80,822,204 97,368,421
Weighted average 94,043,175 92,791,949
Earnings attributable to ordinary shareholders GBP'000 GBP'000
Loss after tax attributable to the owners of
TruFin plc (18,070) (14,688)
Adjusted earnings attributable to ordinary
shareholders
Loss after tax attributable to the owners of
TruFin plc (18,070) (14,688)
Adjusted for share-based payment 2,509 2,739
Loss from discontinued operations 3,287 5,249
Adjusted loss after tax attributable to the
owners of TruFin plc (12,274) (6,700)
Earnings per share* Pence pence
Basic and Diluted (19.2) (15.8)
Adjusted(1) (13.1) (7.2)
Adjusted(2) (13.1) 1.4
* All Earnings per share figures are undiluted and diluted.
Adjusted(1) EPS excludes share-based payment expense and loss
from discontinued operations from loss after tax
Adjusted(2) EPS includes the unrealised gain on the revaluation
of the TruFin Group's investment in Zopa: GBPnil for the year ended
31 December 2019 (2018: GBP8.0 million)
Comparative figures have been restated to adjust for
discontinued operations
Changes to share capital during the period are described in note
19.
Management has been granted 5,451,578 share options in TruFin
plc (see note 6 for details). These could potentially dilute basic
EPS in the future, but were not included in the calculation of
diluted EPS as they are antidilutive for the years presented as the
Group is loss making.
28. Related party disclosures
Transactions with Directors
Transactions with Directors, or entities in which a Director is
also a Director or partner:
2019 2018
GBP'000 GBP'000
---------------------------- -------- --------
Loans provided to directors - 140
Other related parties 8 9
Key management personnel disclosures are provided in note 5 and
6.
Loans were issued to Henry Kenner (GBP74,878) and James van den
Bergh (GBP64,894) in 2018 were repaid in full during the year.
29. Post balance sheet events
Since the year end, it has become clear that the spread of the
Covid-19 coronavirus will have a material impact on many economies
globally both through the effects of the virus itself and the
measures taken by governments to restrict its spread.
Given the emergence and spread of the Covid-19 virus is not
considered to provide more information about conditions that
existed as at the balance sheet date, this is considered to be a
non-adjusting post balance sheet event and so the measurement of
assets and liabilities in the accounts have not been adjusted for
its potential impact.
Since the year end Satago has implemented its Management
Incentive Plan ("Satago MIP"). Under the Satago MIP key Satago
managers were given the opportunity to acquire new created ordinary
shares in the capital of Satago Financial Solutions Limited. 20%
(750,000 ordinary shares) of the fully diluted share capital has
been made available under the Satago MIP and, to date, 590,625
ordinary shares have been issued to Satago managers. It is expected
that Satago MIP participants will receive value for their shares on
an exit event in relation to Satago.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR AIMMTMTIBTLM
(END) Dow Jones Newswires
May 15, 2020 02:00 ET (06:00 GMT)
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