TIDMORCH
RNS Number : 5139R
Orchard Funding Group PLC
09 March 2021
Orchard Funding Group PLC
("Orchard Funding Group" or the "company" or the "group")
Half Year Results
For the six months ended 31 January 2021
Orchard Funding Group, the finance group which specialises in
insurance premium finance and the professions funding market, is
pleased to announce its unaudited results for the six months ended
31 January 2021.
Highlights - in the six months to 31 January 2021, compared to
the six months to 31 January 2020:
6 months to 6 months % increase/
All amounts are in GBPm unless 31 January to 31 January (decrease)
otherwise stated 2021 2020
Lending volume 30.04 37.85 (20.64%)
Average interest earning assets 27.61 33.07 (16.51%)
Total revenue 2.31 2.86 (19.41%)
Net interest income 1.64 2.10 (21.90%)
Profit before tax ("PBT") 0.61 1.00 (39.00%)
Profit after tax ("PAT") 0.47 0.80 (41.25%)
EPS (pence) 2.19 3.75 (41.60%)
Operating costs 1.27 1.22 4.10%
Average external funding 10.43 15.05 (30.70%)
Cost of external funds 0.22 0.33 (33.33%)
Cost of funds/funds ratio (%) 4.45% 4.54% (2.08%)
Own resources (net current financial
assets) 15.47 15.15 2.11%
Barclays Bank has agreed to maintain our facility at GBP17m and
Conister Bank at GBP2m, confirming the confidence that they have in
the group. In addition, Toyota Financial Services (UK) PLC has
provided the Group with a limited facility to fund Toyota insurance
products only.
The board is again recommending an interim dividend of 1 pence
per share (31 January 2020: 1 pence).
More detail on the financial highlights is given in the CFO's
summary.
Ravi Takhar, Chief Executive Officer of the company, stated:
"Covid-19 continues to reduce demand for borrowing across our
markets. We have the benefit of short-term lending products, which
in the main fund essential services and therefore our existing book
has proven to be resilient despite the unprecedented credit
conditions. We look forward to coming out of lock-down and resuming
normalised lending in our core markets, whilst growing our lending
in our new markets."
For further information, please contact:
Orchard Funding Group PLC +44 (0)1582 346 248
Ravi Takhar, Chief Executive Officer
Liberum (Nomad and Broker) +44 (0)20 3100 3222
Investment banking
Neil Patel
Richard Bootle
For Investor Relations please go to:
www.orchardfundinggroupplc.com
Chairman's statement
I joined the group as Chairman just as we had come out of the
first lockdown caused by the COVID-19 pandemic. We were aware of
the risk of a second wave of the pandemic and sadly it transpired
resulting in tiered lockdowns across the country. This has caused a
further economic shock and impacted on the business environment in
which we operate impacting on our business. Through this we have
not forgotten all those who have lost their lives and those who
work so hard every day to keep us safe.
We have seen reduced demand for our lending products,
particularly in leisure, school fees and static caravan site fees.
Lending volumes are down 20.64% compared to the equivalent period
in 2020 with a consequential fall in Total Revenue, Profit Before
Tax and Profit After Tax. We function with a lean operational cost
base and have not considered reducing these as to do so may leave
our business unable to operate effectively. Operational costs are
up by just over 4% on the six months to 31 January 2020. More
financial detail is given in the CFO's summary.
I should very much like to thank our staff for their support
through these trying times. Despite the fact that most have been
working from home, this has had negligible impact on our customers.
They have continued to receive the same high level of service that
they have become used to in dealing with Orchard.
The Chancellor's budget indicated that the economy is still in
need of support and he has focused on ensuring business stability
and securing a recovery. This approach should lead to a much softer
landing for the economy and Orchard will be in a position to
benefit from that.
We have a strong capital position and adequate resources (both
internal and external) to see us through this pandemic and keep us
on a sound financial footing. The Board is confident that we are
well placed to take advantage of growth in the economy when it
comes. We shall continue to pursue our strategic priorities by
developing the business model organically, continuing our entry
into new lending markets and pursuing equally attractive
acquisition opportunities, should such opportunities lead to
something which would enhance the business and build shareholder
value.
Steven Hicks
Chairman
Chief Financial Officer's summary
Unprecedented economic conditions have continued through this
six month period, with ongoing uncertainty surrounding the future
financial impact that may arise from the COVID-19 pandemic. The
Government has announced its roadmap for coming out of the current
lockdown. It now seems highly likely that we shall come to the end
of the latest lockdown completely within the next four months, with
partial easing beginning for certain businesses from 12 April. It
is the Government's cautious hope that there will be no further
lockdowns.
Lending volume, average interest earning assets, total revenue
and PBT were all down on the equivalent period in 2020 (by 20.64%,
16.51%, 19.41% and 39.00% respectively). This was not unexpected
given the situation over the last year and our investors understand
this.
Notwithstanding the above, our core lending in the direct
insurance market has actually risen slightly with falls in all
other areas, particularly in those which would be expected given
the pandemic (leisure, school fees and static caravan site fees).
We are confident that as the lockdown is lifted this type of
business will start to increase again.
As our operational cost base is already lean, we have not
considered reducing operating costs. We operate in regulated
markets and reduction of operating costs may leave our business
exposed and unable to operate effectively. As always, however, the
situation will be kept under review.
Throughout the last six months our attitude has been to give
support - to our workforce, our partners and our customers. This is
the best way of ensuring that we maintain the goodwill of those
groups as well as the wider community.
The safety and wellbeing of our team, including their mental
health, is of the utmost importance to us. With the exception of
two senior staff members, all employees have been working from home
and we have not called upon the Coronavirus Job Retention Scheme as
no-one has been furloughed. We maintain regular contact with our
staff and ensure that if anyone is feeling any sort of pressure
from home-working, they report it to us. Should this happen we
would endeavour to assist them with advice and other support. Our
systems are robust enough to be able to manage this home-working in
a seamless manner.
We have supported our partners by reducing the need for physical
contact. This has been done through our enhanced systems which
still allow for face-to-face contact for those who want it via
technology such as Microsoft Teams. Our partners are happy to make
use of our technology as it ensures a speedy and straightforward
response to their requirements.
It has also been a period in which some of our customers have
needed our help. We have done this by both allowing payment
holidays and waiving charges for late payment where applicable. In
the six months to 31 January 2020 we charged GBP27k for late
payments. In the last six months these have been GBPnil.
We are still in a strong financial position despite the
downturn. At 31 January 2021 we had net current financial assets of
GBP15.47m (31 January 2020 GBP15.15m) a fact which gives strong
confidence to our investors and other stakeholders of our ability
to meet our financial commitments for the foreseeable future. In
addition, we had GBP9.13m of unused borrowing facility. Together,
this shows a strong capital, funding and liquidity position.
Our impairment provisions are based on the carrying value of our
financial assets. The provision takes account of our estimate of
any increase needed because of COVID-19. The provision at 31
January 2021 was GBP109k (31 January 2020 GBP473k). During the six
months to 31 July 2020 GBP315k of debt which had already been
provided was found to be irrecoverable and written off against the
provision,
Our underwriting processes remain effective in this environment
and our risk management, robust. The principal risks that we face,
are credit risk, liquidity risk, interest rate risk, IT disruption
risk and conduct risk. A full explanation of each of them together
with their impact and mitigation are detailed in the annual report
to 31 July 2020. The lockdown since November 2020 has had very
little impact on how we view and mitigate risk.
As stated in the full year financial statements to 31 July 2020,
the plan for the current year was to test a limited amount of
longer term lending and we have begun this process. In doing so we
have applied the same strict underwriting procedures as we have for
other lending.
Key Performance Indicators (KPIs)
KPIs for the group are the means by which the board monitors the
efficiency of the business. These are set so that fluctuations
outside a certain tolerance would trigger an examination of our
operations to establish why they have occurred and, if necessary,
take any remedial action deemed necessary. The last six months have
clearly necessitated such a review. Being fully aware of the
economic situation, the evaluation by the board has been to assess
whether there is any need for remedial action to be taken. The
conclusion was that there is none needed. The causes of the
downturn are well documented and it is important that we remain in
a position to take advantage quickly of the return to some
normality of business.
Our KPIs revolve around lending and the cost of lending. Our
model remains to apply a sound underwriting process and multiple
layers of credit protection wherever possible. Lending, however, is
not risk free.
The group's core business is still insurance premium funding and
funding for professionals but we were continuing to grow our other
short term lending markets until the pandemic caused these to
reduce. Indeed, we have still been looking at other markets and
during the last six months we have begun funding insurance products
for Toyota, the Japanese car manufacturer. This is a full recourse
product and the risk of loss to the group is extremely remote. We
still continue to look at complimentary markets which fit with our
model.
All these parts are managed on a similar basis, carry similar
risks and rewards and need to comply with similar regulations. They
are therefore combined for reporting purposes.
The table below gives a breakdown of group KPIs. This also
includes those items not considered KPIs but which give a better
understanding of the figures.
Return on average equity is based on PAT divided by the average
of equity at the end of the previous reporting period and that of
the current period. This measure is seen as more useful than simply
looking at equity at the end of the period, particularly when there
are large fluctuations in equity as has been the case since April
2020. Neither return on equity nor return on capital employed are
annualised as to do so would require estimates for future results.
Their purpose is to get a comparison with the equivalent period in
the previous year.
Average external funding is based on the amount borrowed for the
exact number of days for which the advance was made.
Key performance indicators
6 months 6 months Year to
All amounts are GBPm unless otherwise to 31 January to 31 January 31 July
stated 2021 2020 2020
Lending volume 30.04 37.85 65.53
Average interest earning assets
(1) 27.61 33.07 29.72
Total revenue 2.31 2.86 5.28
Net interest margin (% actual)
(2) 5.94% 6.35% 13.22%
Average external funding 10.43 15.05 12.82
Cost of external funds 0.22 0.33 0.62
Cost of funds/funds ratio 4.45% 4.54% 4.84%
Own resources (net current financial
assets) 15.47 15.15 15.50
Operating costs 1.27 1.22 2.44
Return on average equity (% actual)
(2) 3.01% 5.28% 8.31%
Financial summary - other performance indicators
6 months 6 months Year to
to 31 January to 31 January 31 July
2021 2020 2020
Net interest income(3) 1.64 2.10 3.93
Profit before tax 0.61 1.00 0.62
Profit after tax 0.47 0.80 0.05
EPS (pence)(4) 2.19 3.75 15.50
DPS (pence)(5) 1 1 3
Return on capital employed (% actual)
(2) 2.97% 4.18% 6.73%
1. Average interest earning assets consist of the average of the
opening and closing loan book after taking account of the
impairment provision.
2. These ratios are based on actual amounts for the six months
rather than on an annualised basis.
3. Net interest income was part of what was described in the
past as gross profit and now contains direct charges which were
previously classified as administrative expenses. A reconciliation
is provided in note 3.
4. There are no factors which would dilute earnings therefore
fully diluted earnings per share are identical.
5. Dividends per share are based on the interim dividend to be
declared for the six months to 31 January 2021 and 31 January 2020.
Dividends per share for the year to 31 July 2020 are based on the
interim dividends paid in the year and the proposed final dividend
in respect of the year to 31 July 2020.
To go into detail on each item would not give any meaningful
information. Activity is down because of COVID-19 and the figures
reflect this.
Other operating costs, however, have risen. As stated earlier,
direct insurance is the only area of our lending which has
increased in volume. We pay commission on direct insurance products
and therefore commission has increased.
In addition, IT costs increased with further development to the
system to cater for the changing needs of our customers. Staff
costs have also increased by 2.3% over the six months to 31 January
2020 as a result of taking on additional staff.
Other costs have fallen.
We also have the continuing process of assessing financial
assets for expected credit losses. In establishing the amount of
provision, account has been taken of the pandemic. In previous
periods provision was made for certain loans where any recoverable
amounts were not fully taken into account. Where it is clear that
an amount is fully recoverable and there can be no credit loss the
provision is now based on the loan net of these amounts. Together
with a recovery of debt already provided for and a fall in the
required provision in respect of other lending, this has led to a
credit to profit in the income statement .
At 31 January 2021 we were employing GBP9.36m of our facility of
GBP17.00m from Barclays Bank (at 31 January 2020, GBP12.13 of
GBP17.00m). We were also utilising GBP0.50m of our GBP2.00m
facility from Conister Bank (31 January 2020, GBP2.00m from
GBP2.00m). We also have a facility from Toyota Financial Services
(UK) PLC to be used specifically to fund Toyota insurance
products.
Despite the challenges which have faced the economy in the last
six months, the board is pleased to maintain and declare an interim
dividend of 1 pence per share to be paid on 25 June 2021 to
shareholders on the register at 11 June 2021, with an associated
ex-dividend date of 10 June 2021.
Liam McShane
Chief Financial Officer
Consolidated statement of comprehensive income
6 Months 6 Months
to to
31 January 31 January Year to
2021 2020 31 July 2020
Notes GBP000 GBP000 GBP000
Continuing operations
Interest receivable and similar
income 2 1,883 2,444 4,558
Interest payable and similar
charges (243) (346) (624)
---------------------------------------- --- --------- -------- --------
Net interest income 1,640 2,098 3,934
---------------------------------------- --- --------- -------- --------
Other trading income 2 425 419 722
Other direct costs (300) (250) (533)
---------------------------------------- --- --------- -------- --------
Net other income 125 169 189
---------------------------------------- --- --------- -------- --------
Net total income 1,765 2,267 4,123
---------------------------------------- --- --------- -------- --------
Other operating costs (1,267) (1,216) (2,436)
Net impairment gains/(losses)
on financial assets 109 (52) (130)
Operating profit 607 999 1,557
Interest receivable - 4 6
Interest payable (2) (1) (2)
---------------------------------------- --- --------- -------- --------
Profit before tax 605 1,002 1,561
Tax 4 (134) (202) (288)
---------------------------------------- --- --------- -------- --------
Profit for the period from
continuing operations attributable
to the owners of the parent 471 800 1,273
---------------------------------------- --- --------- -------- --------
Other comprehensive income - - -
Total comprehensive income
for the period from continuing
operations attributable to
the owners of the parent 471 800 1,273
---------------------------------------- --- --------- -------- --------
Earnings per share attributable to the owners of the parent during
the period (pence)
Basic and diluted 5 2.19 3.75 5.96
---------------------------------------- --- --------- -------- --------
The format of the consolidated income statement differs from the
format applied last year.
Details of the restatement are shown in note 3.
Consolidated statement of financial position
At 31 January At 31 January At 31 July
2021 2020 2020
GBP000 GBP000 GBP000
------------------------------- -------------- -------------- -----------
Assets
Non-current assets
Property, plant and equipment 30 36 39
Right of use assets 76 29 96
Intangible assets 11 26 16
Deferred tax asset - 1 6
Investment at fair value
through profit and loss
consolidated income 6 6 6
Loans to customers 22 - -
Other receivables 4 10 7
-------------------------------- -------------- -------------- -----------
149 108 170
------------------------------- -------------- -------------- -----------
Current assets
Loans to customers 27,898 33,997 27,300
Other receivables and
prepayments 199 199 120
Cash and cash equivalents:
Bank balances and cash
in hand 4,146 4,444 2,300
-------------------------------- -------------- -------------- -----------
32,243 38,640 29,720
------------------------------- -------------- -------------- -----------
Total assets 32,392 38,748 29,890
--------------------------------
Liabilities and equity
Current liabilities
Trade and other payables 6,512 8,684 2,939
Borrowings 10,112 14,152 11,004
Tax payable 60 564 273
-------------------------------- -------------- -------------- -----------
16,684 23,400 14,216
------------------------------- -------------- -------------- -----------
Non-current liabilities
Borrowings 58 - 72
Deferred tax 4 5 -
-------------------------------- -------------- -------------- -----------
62 5 72
------------------------------- -------------- -------------- -----------
Total liabilities 16,746 23,405 14,288
-------------------------------- -------------- -------------- -----------
Equity attributable to
the owners of the parent
Called up share capital 214 214 214
Share premium 8,692 8,692 8,692
Merger reserve 891 891 891
Retained earnings 5,849 5,546 5,805
-------------------------------- -------------- -------------- -----------
Total equity 15,646 15,343 15,602
-------------------------------- -------------- -------------- -----------
Total equity and liabilities 32,392 38,748 29,890
-------------------------------- -------------- -------------- -----------
Consolidated statement of changes in equity
Called
up
Share Retained Share Merger Total
capital earnings premium reserve Equity
GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------------- -------- --------- -------- -------- -------
Balance at 1 August
2019 214 5,173 8,692 891 14,970
-------------------------------- -------- --------- -------- -------- -------
Changes in equity
Profit and total comprehensive
income - 800 - - 800
Transactions with
owners:
Dividends paid - (427) - - (427)
--------------------------------
Balance at 31 January
2020 214 5,546 8,692 891 15,343
-------------------------------- -------- --------- -------- -------- -------
Changes in equity
Profit and total comprehensive
income - 473 - - 473
Transactions with
owners:
Dividends paid - (214) - - (214)
--------------------------------
Balance at 31 July
2020 214 5,805 8,692 891 15,602
-------------------------------- -------- --------- -------- -------- -------
Changes in equity
Profit and total comprehensive
income - 471 - - 471
Transactions with
owners:
Dividends paid - (427) - - (427)
--------------------------------
Balance at 31 January
2021 214 5,849 8,692 891 15,646
-------------------------------- -------- --------- -------- -------- -------
The merger reserve arose through the formation of the group on
23 June 2015 using the consolidation method which treats the merged
companies as if they had been combined throughout the current and
comparative accounting periods. The accounting principles for these
combinations gave rise to a merger reserve in the consolidated
statement of financial position, being the difference between the
nominal value of new shares issued by the company for the
acquisition of the shares of the subsidiaries and each subsidiary's
own share capital.
The share premium account arose on the issue of shares on the
IPO on 1 July 2015 at a premium of 95p per share. Costs directly
attributable to the issue of shares have been deducted from the
account.
Consolidated statement of cash flows
6 Months 6 Months
to to Year to
31 January 31 January 31 July
2021 2020 2020
GBP000 GBP000 GBP000
--------------------------------------- ------------ ----------
Cash flows from operating activities:
Operating profit 607 999 1,557
Adjustment for depreciation and
amortisation 36 44 86
643 1,043 1,643
(Increase)/decrease in trade
and other receivables (696) (1,895) 4,882
Increase/(decrease) in trade
and other payables 3,573 5,670 (76)
---------------------------------------
3,520 4,818 6,449
Tax paid (339) - (387)
---------------------------------------
Net cash generated by operating
activities 3,181 4,818 6,062
---------------------------------------
Cash flows from investing activities
Interest received - 4 6
Purchases of property, plant
and equipment (1) (17) (29)
Sales of property, plant and
equipment - 9 9
Net cash absorbed by investing
activities (1) (4) (14)
---------------------------------------
Cash flows from financing activities
Dividends paid (427) (427) (641)
Net proceeds from borrowings 224 1,500 1,000
Borrowings repaid (1,116) (3,558) (6,207)
Lease repayments (15) (24) (39)
---------------------------------------
Net cash absorbed by financing
activities (1,334) (2,509) (5,887)
---------------------------------------
Net increase in cash and cash
equivalents 1,846 2,305 161
Cash and cash equivalents at
the beginning of the period 2,300 2,139 2,139
---------------------------------------
Cash and cash equivalents at
the end of period 4,146 4,444 2,300
---------------------------------------
Cash and cash equivalents consists of bank balances.
Notes to the financial statements
1. General information
Orchard Funding Group PLC ("the company") and its subsidiaries
(together "the group") provide funding and funding support systems
for insurance premiums, professional and equivalent fees and other
leisure activities. The group operates in the United Kingdom.
The company is a public company listed on AIM, a market operated
by the London Stock Exchange, incorporated and domiciled in the
United Kingdom. The address of its registered office is 721
Capability Green, Luton, Bedfordshire LU1 3LU.
The condensed consolidated interim financial information for the
six months ended 31 January 2021 has been prepared in accordance
with the presentation, recognition and measurement requirements of
applicable International Financial Reporting Standards adopted by
the European Union ('IFRS') except that the group has not applied
IAS 34, Interim Financial Reporting, which is not mandatory for UK
groups listed on AIM, in the preparation of the condensed
consolidated interim financial information.
The financial information does not include all of the
information required for full annual financial statements and
should be read in conjunction with the financial statements of the
group for the year ended 31 July 2020 which are prepared in
accordance with IFRS.
The accounting policies used in the preparation of condensed
consolidated interim financial information for the six months ended
31 January 2021 are in accordance with the presentation,
recognition and measurement criteria of IFRS and are consistent
with those which are expected to be adopted in the annual statutory
financial statements for the year ending 31 July 2021. A number of
IFRSs and Interpretations have been endorsed by the EU that will
apply for the first time in the period to 31 July 2021. These are
either not relevant to the group's activities or require accounting
which is consistent with the group's current accounting
policies.
Under the expected credit loss (ECL) model required in IFRS 9,
there has been a recovery of previously provided for debt credited
to consolidated income amounting to GBP109k (31 January 2020 charge
of GBP52k). This is because in the past the provision was based on
the gross carrying amount of certain loans to customers which did
not take account of amounts which were fully recoverable. This has
been amended for this reporting period. No adjustment is required
in either the six months to 31 January 2020 or the year to 31 July
2020. In assessing potential provisions, the group has adopted the
simplified approach which requires the entity to recognise a loss
allowance based on lifetime ECLs at each reporting date, right from
origination. Part of this process has been to examine the impact of
the coronavirus epidemic and part of the provision is in respect of
this.
The group's 2020 annual report provides full details of
significant judgements and estimates used in the application of the
group's accounting policies. There have been no significant changes
to these judgements and estimates during the period.
The financial information included in this document is unaudited
and does not comprise statutory accounts within the meaning of
section 434 of the Companies Act 2006. The comparative figures for
the financial year ended 31 July 2020 are the group's statutory
accounts for that financial year. Those accounts have been reported
on by the company's auditor and delivered to the registrar of
companies. The report of the auditor was (i) unqualified, (ii) did
not include a reference to matters to which the auditor drew
attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
2. Segmental reporting
The group operates wholly within the United Kingdom, therefore
there is no meaningful information that could be given on a
geographical basis.
The group still lends into insurance premium funding, funding
for professionals, school fee and leisure lending.
Our lending meets the criteria for aggregation as the
underwriting process, management of the loans, distribution
channels, risks and rewards are all similar. The customer base does
differ (insurance brokers, professional firms, schools and leisure)
but our lending is still subject to strict underwriting
processes.
Notes to the financial statements
Although in the six months to 31 January 2020 we allocated costs
between finance and central functions, central costs were those
costs which were incurred by the parent. The board has reviewed
this method of reporting and has concluded that separating out
costs in a subjective way does not add benefit to the users and may
be detrimental. Therefore, in the year to 31 July 2020 we dispensed
with this arbitrary analysis. As there is no meaningful information
that could be given on a segmental basis, revenue by type is shown
below.
The business of Orchard is not a seasonal business and therefore
there will be no disproportionate impact of the pandemic on any
single part of the year.
Revenue
6 Months 6 Months
to to
31 January 31 January Year to
2021 2020 31 July 2020
-------------------------------------- ------------- ------------ ---------------
GBP000 GBP000 GBP000
-------------------------------------- ------------- ------------ ---------------
Revenue
-------------------------------------- ------------- ------------ ---------------
Interest revenue using the effective
interest rate method 1,883 2,444 4,558
Other revenue 425 419 722
--------------------------------------
2,308 2,863 5,280
-------------------------------------- ------------- ------------ ---------------
Timing of revenue recognition:
At a point in time - direct
debit charges 352 225 505
At a point in time - non utilisation
fees and loan administrative
fees 101 131 390
At a point in time - default
and settlement fees 1 83 81
Over time - licence fees 73 70 103
Over time - interest revenue
outside the scope of IFRS 15 1,781 2,354 4,201
--------------------------------------
2,308 2,863 5,280
-------------------------------------- ------------- ------------ ---------------
3. Revised format of the Consolidated income statement
The format of the Consolidated income statement has been amended
to better reflect the group's activities as a lending company, to
bring reporting in line with other financial entities and give
better comparisons for investors and other users of the financial
statements. In the past the statement showed interest and other
revenue from which were deducted finance and other operational
costs to arrive at a gross profit figure. Costs directly associated
with interest income are now deducted from it to arrive at a net
interest income figure. Costs directly associated with other income
are deducted from that to arrive at a net other income figure. In
addition, bank charges which relate directly to interest or other
income are included as part of those respective direct costs.
Previously they were included as part of administrative expenses.
The reconciliation between the two measures for 2019 is shown
below:
Notes to the financial statements
As originally
stated Adjustments As restated
Prior period description Current period description Notes GBP000 GBP000 GBP000
------------------------- --------------------------- ----- ------------- ----------- -----------
Continuing operations
Interest receivable
Interest revenue and similar income 1 2,382 62 2,444
Other revenue Other trading income 1 481 (62) 419
2,863 - 2,863
Interest payable
Finance costs and similar charges 2 (278) (68) (346)
Other operational
costs Other direct costs 2 (30) (220) (250)
Gross profit Net total income 2,555 (288) 2,267
Administrative expenses Other operating costs 2 (1,504) 288 (1,216)
Net impairment losses
on financial and Net impairment losses
contract assets on financial assets (52) - (52)
Net gain on financial Net gain on financial
assets at fair value assets at fair value
through consolidated through consolidated
income income - - -
Operating profit 999 - 999
Interest receivable
on bank balances Interest receivable 4 - 4
Interest payable Interest payable (1) - (1)
------------------------- --------------------------- -----
Profit before tax Profit before tax 1,002 - 1,002
Tax Tax (202) - (202)
Profit for the year Profit for the year 800 - 800
Note 1 - In previous periods, non-use fees were treated as other
income. The board considers that these properly belong as part of
interest receivable and similar income which is in line with
reporting by other financial entities.
Note 2 - In previous periods all bank fees were treated as an
administrative expense. The board considers that those fees which
relate to borrowing funds to lend on to customers (arrangement fees
including associated legal costs) should properly be treated as
interest payable and similar charges. In addition, certain fees
were incurred which were recharged to customers and these have been
moved to other direct costs. The respective amounts were GBP68k and
GBP220k. The total of GBP228k has been removed from what would have
been administrative expenses (now other operating costs). Bank
account management fees of GBP10k are included in other operating
costs.
Notes to the financial statements
4. Taxation
The tax assessed for the period differs from the main
corporation tax rates in the UK (19% for the half years to 31
January 2021 and 2020 and for the full year to 31 July 2020)
because of the effect of items disallowed for tax and accelerated
capital allowances.
5. Earnings per share
Earnings per share are based on the total comprehensive income
shown above, for each relevant period, and the weighted average
number of ordinary shares in issue during each period. For all
three periods, this was 21,354,167. There are no options or other
factors which would dilute these, therefore the fully diluted
earnings per share is identical.
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IR LVLFBFXLFBBF
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