TIDMTRU TIDMTRU
RNS Number : 8930L
TruFin PLC
11 September 2019
11 September 2019
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE MARKET ABUSE REGULATION (EU) NO.596/2014.
TruFin plc
("TruFin" or the "Company" or together with its subsidiaries the
"TruFin Group")
INTERIM FINANCIAL REPORT FOR THE SIX MONTHSED 30 JUNE 2019,
MANAGEMENT CHANGE OF ROLES, ACQUISITION OF PLAYSTACK LIMITED
("PLAYSTACK") AND WRITTEN RESOLUTIONS
The Company announces:
-- unaudited interim results for the six months ended 30 June 2019;
-- a change in roles of Executive Chairman and Chief Executive
Officer, Henry Kenner and Deputy Chief Executive Officer, James van
den Bergh;
-- the acquisition of a majority stake in PlayStack; and
-- the circulation of certain written resolutions to its
shareholders (the "Written Resolutions").
Financial Highlights
-- Combined gross revenues at Oxygen Finance Group Limited
(together with its subsidiaries, Oxygen Finance Limited, Oxygen
Finance Americas, Inc. and Porge Limited) ("Oxygen") and Satago
Financial Solutions Limited ("Satago") were GBP3.1m for the six
months ended 30 June 2019 (six months ended 30 June 2018: GBP1.7m),
representing growth of 88%.
-- Gross revenues at Oxygen were GBP1.7m for the six months
ended 30 June 2019 (six months ended 30 June 2018: GBP1.2m),
representing growth of 42%.
-- Oxygen's clients' total procurement spend reached GBP20.8bn
as at 30 June 2019 (as at 30 June 2018: GBP15.7bn), representing
year-on-year growth of 32%.
-- Satago's gross interest income increased to GBP1.3m for the
six months ended 30 June 2019 (six months ended 30 June 2018:
GBP0.4m), representing year-on-year growth in excess of 200%.
-- Volumes in Satago's core invoice financing business increased
by 124% for the six months ended 30 June 2019 compared to the six
months ended 30 June 2018.
-- TruFin Group's loss before tax from continuing operations was
GBP3.7m for the six months ended 30 June 2019 (six months ended 30
June 2018: GBP5.2m).
-- Distribution Capital Finance Limited ("DFC") was successfully
demerged from the TruFin Group in May 2019, which has had a
material impact on the scale and operations of the overall TruFin
Group.
-- The investment in Zopa Group Limited ("Zopa") was sold in May
2019 for GBP44.5m, which was a 22% increase from its valuation at
the time of the TruFin Group's IPO in February 2018.
6 months to 6 months to 6 months to
30 June 31 December 30 June
2019 2018 2018
Financials and KPI's GBP'000 GBP'000 GBP'000
(Unaudited)
Gross Revenue 3,138 2,697 1,668
Loss before tax from
continuing operations (3,722) (4,588) (5,241)
Loss before tax from
continuing operations
includes:
share--based payment
charge (972) (1,548) (1,191)
Net Assets (GBP 000's) 61,147 153,248* 158,743
*Audited figures
Trading Update and Further Developments
-- The Company has previously announced on 29 July 2019 a
restructuring in order to reduce Head Office costs and this
continues today with Henry Kenner, the Executive Chairman and Chief
Executive Officer, changing role to become Non-Executive Chairman
and James van den Bergh, the current Deputy Chief Executive
Officer, becoming Chief Executive Officer.
-- In spite of the significant restructuring that has occurred
in the last few months the Board is confident of a successful
remainder to the year. The integration of the acquisitions of 51%
of Vertus Capital Limited ("Vertus") and PlayStack will be a key
focus for management in the coming months and also for the Investor
Day later in the year where we will expand on the prospects for all
our businesses.
-- The TruFin Group announced in July that it had acquired 51%
of Vertus and today we are pleased to further announce that Vertus
has concluded a secured debt facility for an initial GBP15m with a
UK high street Bank. This will enable Vertus to continue its
expansion and service its large and growing pipeline.
-- Further, the TruFin Group is today pleased to announce the
conversion into ordinary shares of its outstanding GBP3.5 million
convertible loans in PlayStack, a mobile games publisher and
financier, in full satisfaction and discharge of the loans,
together with a further equity investment of GBP1.5m in PlayStack,
in order to obtain a majority controlling stake. The conversion and
further investment will complete later today. Growing on our
existing lending relationship, this investment represents an
opportunity for the TruFin Group to solidify its niche financing
business in this fast-growing global sector.
The Company is circulating written resolutions to shareholders
of the Company this morning proposing to:
(i) grant an increased authority for the buyback of shares,
(ii) approve an increase in the Company's authorised share
capital and amendments to the Company's articles of association to
remove provisions relating to the B ordinary shares and non-voting
preference shares that are no longer required and as such these
shares have either been cancelled or redeemed; and
(iii) approve an updated remuneration policy which the Company
is proposing to reflect recent changes in the senior management and
structure of the Company
Henry Kenner, Chairman and Chief Executive Officer
commented:
"This has been another busy period of activity for the TruFin
Group resulting in a material reorganisation of the TruFin Group in
terms of the nature and scale of its operations. Following the
successful demerger and IPO of DFC and the sale of our stake in
Zopa, the management has been focused on:
-- re-scaling the business appropriately through an assertive
reduction in Head Office costs with many functions being outsourced
to other entities within the TruFin Group;
-- increasing investment in its existing businesses to
successfully secure their development path; and
-- conversion of the TruFin Group's remaining convertible debt
positions in line with its consistent strategy of building a stable
of niche lenders. To that end, the TruFin Group has recently
announced the acquisition of Vertus and today that of
PlayStack.
Finally, I have today announced a change in my role as Chief
Executive Officer and Executive Chairman to becoming that of
Non-Executive Chairman. In making this step I will be handing the
day-to-day executive reins to the talented current Deputy Chief
Executive Officer, James van den Bergh, with whom I have worked for
several years. This planned handover further reduces Head Office
costs, whilst enabling the TruFin Group to implement the next stage
in TruFin's life cycle. The Board is delighted that James has
accepted this exciting and challenging role and looks forward to
continue working with him to ensure TruFin achieves its wider
strategic goals."
First half review
Alongside the transactions that have occurred, the remaining and
new subsidiaries within the TruFin Group have performed well in the
first six months of 2019 and we remain confident for the remainder
of 2019. We look forward to the Investor Day later this year where
we will highlight the significant value and opportunity set within
each business.
In more detail:
Oxygen
Oxygen is a niche technology and professional services platform
enabling the public and private sector to make early payments to
their suppliers.
Oxygen's gross revenues were GBP1.7m for the six months ended 30
June 2019 compared to GBP1.2m for the six months ended 30 June
2018, representing growth of 42%.
The Early Payment client base has increased from 33 as at 30
June 2018 to 45 as at 30 June 2019. As a result of these client
wins, total procurement spend of Early Payment clients increased to
GBP20.8bn as at 30 June 2019 from GBP15.7bn as at 30 June 2018.
Oxygen also maintained its 100% renewal record across Early Payment
clients in local government with all contracts up for renewal in
the period being renewed for five years.
Oxygen continues to see strong growth and traction in the UK
local government market with the mature pipeline converting well.
However, as previously highlighted, the core means of monetisation,
namely that of on-boarding suppliers remains a consistent
challenge, but measures taken last year are expected to start
reaping benefits in the coming months and years.
Oxygen's net loss of GBP0.9m for the six months ended 30 June
2019 compared to a net loss of GBP1.3m for the six months ended 30
June 2018 represents an improvement of over 30%.
Porge Limited, acquired in 2018, is performing in-line with our
expectations and the integration with Oxygen has gone smoothly.
There has been a high level of existing customer licence renewals
and indications from the increased sales effort is that the
pipeline of new customers is looking materially positive.
Satago
Satago offers its customers a technically advanced invoice
finance system via its online platform, which is designed to help
businesses manage their cashflow.
At the start of 2019 the management of TruFin focused its
resources on supporting the fast-growing balance sheet of DFC,
resulting in a temporarily reduced capital allocation to Satago.
Notwithstanding this, volumes in Satago's core invoice financing
business increased by 124% for the six months ended 30 June 2019
compared to the same period in 2018.
Satago expects this momentum to continue into the second half of
the year as it continues to see increasing interest from its direct
origination efforts together with new demand resulting from several
strategic partnerships. These strategic partnerships include a
number of joint initiatives expected to launch over the next 12
months which are designed to bring Satago's technology and product
offerings to other large corporates and their customer bases.
To further support these strategic partnerships, and in response
to demand from its own established client base, Satago is
introducing a wider product offering during the final quarter of
2019 which is focused on providing efficient and ethical finance
facilities to SMEs. This includes whole book and selective debtor
facilities which empower these traditional factoring facility types
with Satago's best-in-class technology. Satago is also introducing
its own revolving credit facility product bringing a new form of
flexible working capital to the market.
Satago continues to invest in its leading-edge technology with
the recent opening of a Polish office. This will ensure that it
remains an innovative leader within the SME finance sector and is
able to support its growth and increasing market presence.
To support the anticipated demand for these new products, Satago
has been seeking to secure its initial external funding capacity in
addition to its own internal facilities. With negotiations at
advanced stages with several credit funds and other financial
institutions, it is anticipated that Satago will make an
announcement as to a successful conclusion in the near future.
Customer satisfaction levels remain high and Satago continues to
win numerous industry awards for its compelling customer-focused
product offering. The "Best Alternative Finance Provider" at the
British Bank Awards being a recent example.
As previously disclosed, share incentive arrangements for the
senior management of Satago are being implemented so as to ensure
that management is fully aligned with existing shareholders through
the issue of Satago shares.
Vertus
Vertus provides succession finance for the IFA space through its
exclusive agreement with IntegraFin plc. This is a truly scalable
niche lending space and we are very excited by the opportunity to
help Vertus grow in this space.
As previously announced the TruFin Group acquired 51% of Vertus
in July this year through the conversion of its existing GBP3.65
million convertible loan and today the TruFin Group is pleased to
announce that Vertus has concluded a secured debt facility of
GBP15m with a UK high street bank which will allow it to service
its large and growing pipeline.
Vertus made a loss before tax in the year to 30 June 2019 of
GBP0.2m (unaudited), and the TruFin Group expects Vertus to turn
profitable in 2020.
PlayStack
PlayStack provides publishing and financing services to the
mobile game and console sector and, as previously outlined to
shareholders, is the TruFin Group's entry point into the highly
attractive growth market of mobile game lending.
The TruFin Group is pleased to announce that it is converting
its outstanding GBP3.5m convertible loans into PlayStack ordinary
shares in full satisfaction and discharge of the loan, together
with a further equity investment of GBP1.5m in PlayStack in order
to obtain a controlling majority stake. This transaction will
result in a holding of circa 99% in PlayStack, which may be diluted
to between 75% and 99% subject to the level of take-up of
pre-emptive rights by certain existing shareholders which will be
known within 20 business days of this announcement. The conversion
and further investment will complete automatically later this
morning.
PlayStack made a loss in the year to 30 December 2018 of GBP5.2m
and had net assets of (negative) GBP6.5m.
We look forward to giving shareholders more details about the
opportunity set for PlayStack and PlayIgnite Limited, its funding
business, during the Investor Day.
Written resolutions
The Company is today circulating written resolutions to
shareholders of the Company this morning proposing, to:
(i) grant an increased authority for the buyback of shares to
13,789,997 ordinary shares (representing 15% of the Company's
current issued share capital),
(ii) approve an increase in the Company's authorised share
capital and amendments to the Company's articles of association;
and
(iii) approve an updated remuneration policy to reflect the
recent changes in the senior management and structure of the TruFin
Group.
The Company has received an irrevocable undertaking to vote in
favour of the resolutions from its major shareholder the Arrowgrass
Master Fund Ltd. holding, in total, 68,377,819 ordinary shares in
the Company, representing, in aggregate, 74.38% of the Company's
issued ordinary share capital. Given the size of this shareholding,
upon Arrowgrass complying with its irrevocable undertaking the
ordinary resolution approving the updated remuneration policy will
be passed, whilst the remaining special resolutions must be signed
by members of the Company holding at least three-quarters of the
total voting rights in the Company in order to be passed.
In the opinion of the Directors, each of the resolutions
proposed is in the best interests of the Company and shareholders
as a whole. Accordingly, the Directors unanimously recommend that
shareholders vote in favour of the resolutions.
A copy of the Written Resolutions will be made available on the
Company's website www.TruFin.com
Restructure of Management Incentive Plan
In connection with Henry Kenner becoming Non-Executive Chairman
and James van den Bergh becoming Chief Executive Officer, certain
amendments to the terms of the Company's Management Incentive Plan
have been approved by the Company's Remuneration Committee and the
Board. The key amendments to the terms of the Management Incentive
Plan can be summarised as follows:
Henry Kenner
-- It is intended that Henry's PSP Founder Award and JSOP
Founder Award (as such terms are referred to in the Company's
Admission Document) shall vest in full on cessation of his role as
Chief Executive Officer, the result of which is that Henry will be
able to exercise his PSP Founder Award in respect of 1,369,244
ordinary shares in the Company and a corresponding number of shares
will become solely owned by the trustee of the TruFin plc Employee
Benefit Trust;
-- It is intended that Henry will surrender his PSP Market Value
Award and his PSP Awards (as such terms are referred to in the
Company's Admission Document) in respect of an aggregate of
2,559,210 ordinary shares in the Company for nil consideration;
-- The Company will not grant Henry any further awards under the Company's share plans; and
-- Henry will receive a fixed annual fee of: (i) GBP100,000 for
his new role as Non-Executive Chairman of the Company; (ii)
GBP15,000 for his role as director of Satago Financial Solutions
Limited; and (iii) GBP15,000 for his role as director of Oxygen
Finance Group Limited.
James van den Bergh
-- It is intended that James will receive a grant of: (i)
Options (PSP Market Value Awards) over a total of 3,164,763
ordinary shares in the Company, with a strike price of GBP0.803 per
share; and (ii) PSP Awards over a total of 320,000 ordinary shares
in the Company, with performance targets set by the Remuneration
Committee; and
-- James' current service agreement with the Company will be
amended such that whilst his salary and annual bonus arrangements
remain unchanged, his employment is fixed for two years during
which six months' notice is required from James to terminate.
Following the fixed two year period, a six month notice period will
be required from both James and the Company to terminate his
employment.
For further information, please contact:
TruFin plc
Henry Kenner, Chairman
James van den Bergh, Chief Executive Officer 0203 743 1340
Macquarie Capital (Europe) Limited (NOMAD and joint
broker)
Alex Reynolds 0203 037 2000
Liberum Capital Limited (Joint broker)
Chris Clarke
Louis Davies 0203 100 2000
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.
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
INDEPENT REVIEW REPORT TO TRUFIN PLC
We have been engaged by the company to review the condensed set
of financial statements in the half--yearly financial report for
the six months ended 30 June 2019 which comprises the income
statement, the balance sheet, the statement of changes in equity,
the cash flow statement and related notes 1 to 22. We have read the
other information contained in the half--yearly financial report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review 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, for our review
work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half--yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half--yearly financial report in accordance with
the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the
TruFin Group are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements
included in this half--yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half--yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half--yearly financial report for the six months ended 30
June 2019 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the AIM Rules of the London Stock Exchange.
Crowe U.K. LLP
Statutory Auditor
London, United Kingdom
10 September 2019
UNAUDITED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
Notes 6 months ended 6 months ended Year ended
30 June 2018 31 December
2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) GBP'000 GBP'000
GBP'000
=========================================== ====== =================== =================== =================
Interest income 3 1,415 452 1,467
Fee income 3 1,723 1,216 2,898
------------------- ------------------- -----------------
Gross revenue 3 3,138 1,668 4,365
Interest and fee expenses (219) (42) (157)
------------------- ------------------- -----------------
Net revenue 2,919 1,626 4,208
=================== =================== =================
Staff costs 5 (4,868) (5,094) (10,244)
Other operating expenses (1,479) (1,665) (3,490)
Depreciation & amortisation (256) (87) (175)
Net impairment loss on financial
assets (38) (21) (128)
------------------- ------------------- -----------------
Loss before tax (3,722) (5,241) (9,829)
=================== =================== =================
Taxation 10 (1,789) 179 390
------------------- ------------------- -----------------
Loss from continuing operations (5,511) (5,062) (9,439)
=================== =================== =================
Loss from discontinued operations 9 (4,005) (3,082) (5,671)
------------------- ------------------- -----------------
Loss for the period (9,516) (8,144) (15,110)
=================== =================== =================
Other comprehensive income
Items that will not be reclassified subsequently
to profit and loss
Gains on investments in equity instruments 13 - 8,000 8,000
Items that may be reclassified subsequently
to profit and loss
Exchange differences on translating
foreign operations (14) (213) 275
Other comprehensive income for the
year, net of tax (14) 7,787 8,275
=================== =================== =================
Total comprehensive loss for the
year (9,530) (357) (6,835)
=================== =================== =================
Loss from continuing operations
attributable to:
Owners of TruFin plc (5,511) (5,062) (9,439)
Non-controlling interests - - -
------------------- ------------------- -----------------
(5,511) (5,062) (9,439)
=================== =================== =================
Loss from discontinued operations
attributable to:
Owners of TruFin plc (3,831) (2,841) (5,249)
Non-controlling interests (174) (241) (422)
------------------- ------------------- -----------------
(4,005) (3,082) (5,671)
=================== =================== =================
Total comprehensive loss for the
year attributable to:
Owners of TruFin plc (9,356) (116) (6,413)
Non-controlling interests (174) (241) (422)
------------------- ------------------- -----------------
(9,530) (357) (6,835)
=================== =================== =================
Total comprehensive loss for the
period attributable to the owners
of TruFin plc from:
Continuing operations (5,525) 2,725 (1,164)
Discontinued operations (3,831) (2,841) (5,249)
------------------- ------------------- -----------------
(9,356) (116) (6,413)
=================== =================== =================
EARNINGS PER SHARE
Notes 6 months ended 6 months ended Year ended
30 June 2018 31 December
2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) Pence pence
pence
====================== ====== =================== =================== =================
Basic and Diluted EPS 19 (9.7) (9.0) (15.8)
Adjusted EPS 19 (4.7) (4.4) (7.2)
Adjusted EPS (2) 19 (4.7) 4.7 1.4
UNAUDITED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
As at As at 31
Notes 30 June 2019 December 2018
GBP'000 GBP'000
(Unaudited) (Audited)
==================================== ====== =================== ==============
Assets
Non-current assets
Intangible assets 11 6,089 6,038
Property, plant and equipment 12 331 303
Deferred tax asset 10 3,789 5,579
------------------- --------------
Total non-current assets 10,209 11,920
=================== ==============
Current assets
Cash and cash equivalents 17,700 24,888
Loan and advances 14 40,404 129,221
Other investments 13 - 49,494
Assets classified as held for sale 15 - 266
Trade receivables 1,201 417
Other receivables 943 3,202
------------------- --------------
Total current assets 60,248 207,488
=================== ==============
Total assets 70,457 219,408
=================== ==============
Equity and liabilities
Equity
Issued share capital 16 83,659 185,000
Retained earnings (6,928) 15,375
Foreign exchange reserve (135) (121)
Other reserves (15,449) (50,261)
------------------- --------------
Equity attributable to owners of
the company 61,147 149,993
------------------- --------------
Non-controlling interest - 3,255
------------------- --------------
Total equity 61,147 153,248
=================== ==============
Liabilities
Current liabilities
Borrowings 17 - 59,041
Trade and other payables 8,010 6,066
Provision for commitments and other
liabilities 7 1,300 1,053
------------------- --------------
Total current liabilities 9,310 66,160
=================== ==============
Total liabilities 9,310 66,160
=================== ==============
Total equity and liabilities 70,457 219,408
=================== ==============
The financial statements were approved by the Board of Directors
on 10 September 2019 and were signed on its behalf by:
Henry Kenner
Chairman and Chief Executive Officer
UNAUDITED CONDENSED INTERIM STATEMENT OF CHANGES IN 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 period - (5,511) - - (5,511) - (5,511)
Other comprehensive
income for the
year - - (14) - (14) - (14)
Loss from discontinued
operations - (3,831) - - (3,831) (174) (4,005)
-------- --------- --------- --------- -------- ------------ --------
Total comprehensive
loss for the year - (9,342) (14) - (9,356) (174) (9,530)
-------- --------- --------- --------- -------- ------------ --------
Demerger of subsidiary (96,395) (13,914) - 34,866 (75,443) (3,082) (78,525)
Share buyback (4,946) - - (54) (5,000) - (5,000)
Share based payment - 971 - - 971 - 971
Balance at 30
June 2019 (Unaudited) 83,659 (6,928) (135) (15,449) 61,147 - 61,147
======== ========= ========= ========= ======== ============ ========
Balance at 1 January
2018 123,966 (4,962) (396) (26,919) 91,689 (293) 91,396
Loss for the year - (7,903) - - (7,903) (241) (8,144)
Other comprehensive
income for the
year - 8,000 (213) - 7,787 - 7,787
------- ------- ----- -------- ------- ----- -------
Total comprehensive
loss for the year - 97 (213) - (116) (241) (357)
------- ----- -------- ------- ----- -------
New issue of shares 70,000 (3,658) - - 66,342 - 66,342
Share cancellation (8,966) - - 8,966 - - -
Share based payment - 1,191 - - 1,191 - 1,191
Reduction of Capital - 28,752 - (28,752) - 1,819 1,819
NCI Share Premium - - - - - 1,482 1,482
Arising on consolidation - 111 - (3,911) (3,800) 670 (3,130)
------- ------- ----- -------- ------- ----- -------
Balance at 30
June 2018 (Unaudited) 185,000 21,531 (609) (50,616) 155,306 3,437 158,743
======= ======= ===== ======== ======= ===== =======
UNAUDITED CONDENSED INTERIM STATEMENT OF CASH FLOWS
6 months 6 months Year ended
ended ended 30 31 December
June 2018 2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) GBP'000 GBP'000
GBP'000
============================================= ============================ ============ ============
Cash flows from operating activities
Loss before income tax from
Continuing operations (3,722) (5,241) (9,829)
Discontinued operations (4,005) (3,082) (5,671)
Adjustments for
Depreciation of property, plant and
equipment 143 41 109
Amortisation of intangible fixed assets 266 83 225
Share based payments 971 1,191 2,739
Increase in provision 1,106 98 -
Fair value increase of demerged subsidiary (2,618) - -
Underlying trading loss on discontinued
operations 2,963 - -
---------------------------- ------------ ------------
(4,896) (6,910) (12,427)
Working capital adjustments
Loans to customers (22,266) (106,908) (270,457)
Loans repaid by customers 16,709 65,718 173,945
Increase in trade and other receivables (998) (950) (1,311)
Increase in trade and other payables 4,179 5,675 3,318
Net payables on acquisition of subsidiary - - (325)
Additions to assets held for sale - - (266)
(2,376) (36,465) (95,096)
Tax paid - - (36)
---------------------------- ------------ ------------
Net cash used in operating activities
from continuing operations (7,272) (43,375) (107,559)
============================ ============ ============
Cash flows from investing activities:
Additions to intangible assets (937) (1,298) (2,855)
Additions to property, plant and equipment (9) (121) (275)
Net increase in debt securities - - (4,993)
Acquisition of subsidiary (750) - (2,014)
Cash on acquisition of subsidiary - - 382
Disposal of equity investment 44,500 - -
Net cash generated from/(used in) investing
activities from continuing operations 42,804 (1,419) (9,755)
Cash flows from financing activities:
Issue of ordinary share capital - 70,000 70,000
Share issue costs - (3,658) (3,661)
New borrowings - 14,603 49,926
Share buyback (5,000) - -
Lease payments (137) - -
Net cash (used in)/generated from financing
activities from continuing operations (5,137) 80,945 116,265
---------------------------- ------------ ------------
Net increase/(decrease) in cash and
cash equivalents from continuing operations 30,395 36,151 (1,049)
---------------------------- ------------ ------------
Net cash used in discontinued operations (37,556) - -
Cash and cash equivalents at beginning
of the period/year 24,888 26,049 26,049
Effect of foreign exchange rate changes (27) 42 (112)
---------------------------- ------------ ------------
Cash and cash equivalents at end of
the period/year 17,700 62,158 24,888
============================ ============ ============
NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED
FINANCIALSTATEMENTS
1. Accounting policies
Basis of preparation
The annual financial statements of TruFin plc are prepared in
accordance with International Financial Reporting Standards
('IFRS') as adopted by the European Union.
The condensed set of financial statements included in this
Interim Financial Report has been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting'
('IAS 34'). This condensed set of Financial Statements has, with
exception of the adoption of IFRS 16 Accounting for Leases, been
prepared by applying the accounting policies and presentation that
were applied in the preparation of the TruFin Group's published
Financial Statements for the year ended 31 December 2018.
The condensed set of financial statements included in this
Interim Financial Report for the six months ended 30 June 2019
should be read in conjunction with the annual audited financial
statements of TruFin plc for the year ended 31 December 2018.
Following the demerger of DFC from the Group, the comparatives
of the condensed interim statement of comprehensive income and
relevant supporting notes have been re-presented, disclosing
separately results for continuing and discontinued operations.
Going concern
The Directors are satisfied that the TruFin Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of the report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed financial statements.
Group information
The TruFin Group ("the Group") is the consolidation of TruFin
plc, TruFin Holdings Limited ("THL"), Oxygen Finance Group Limited
("OFGL"), Oxygen Finance Limited ("OFL"), Oxygen Finance Americas
Inc.("OFAI"), Porge Limited ("Porge"), TruFin Software Limited
("TSL"), Satago Financial Solutions Limited ("SFSL"), Satago
Financial Solutions z.o.o., Distribution Finance Capital Limited
("DFC") (which Demerged from the Group in May 2019) and AltLending
(UK) Limited.
Additionally, the Company held:
-- a 50% interest in a joint venture - Clear Funding Limited
("Clear Funding"), which was struck off on 30 April 2019.
-- a 40% interest in an associate, PlayIgnite Ltd, which is not material to the Group.
-- a minority interest investment in Zopa Group Limited, which was sold in May 2019.
The principal activities of the Group are the provision of niche
lending and early payment services.
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.
Significant accounting policies and use of estimates and
judgements
The preparation of interim consolidated financial statements in
compliance with IAS 34 requires the use of certain critical
accounting judgements and key sources of estimation uncertainty. It
also requires the exercise of judgement in applying the TruFin
Group's accounting policies. There have been no material revisions
to the nature and the assumptions used in estimating amounts
reported in the annual audited financial statements of TruFin plc
for the year ended 31 December 2018.
The accounting policies, presentation and methods of computation
in the audited financial statements have been followed in the
condensed set of financial statements. Any new or amended policies
are included below.
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.
2. General information
TruFin plc is a public limited company incorporated in Jersey.
The shares of the Company are listed on the Alternative Investment
Market. The address of the registered office is 26 New Street, St
Helier, Jersey, JE2 3RA.
A copy of this Interim Financial Report including Condensed
Financial Statements for the period ended 30 June 2019 is available
at the Company's registered office and on the Company's investor
relations website (www.trufin.com).
3. Interest and fee income
6 months ended 6 months ended Year ended
30 June 2018 31 December
2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) GBP'000 GBP'000
GBP'000
====================== ============================= ============== ============
Interest income 1,415 452 1,467
----------------------------- -------------- ------------
Total interest income 1,415 452 1,467
----------------------------- -------------- ------------
EPPS* contracts 1,246 1,060 2,373
Assessment fees - 145 145
Consultancy fees 23 11 35
Subscription fees 454 - 345
----------------------------- -------------- ------------
Total fee income 1,723 1,216 2,898
----------------------------- -------------- ------------
Gross revenue 3,138 1,668 4,365
============================= ============== ============
*Early Payment Programme Services
The above figures are from continuing activities with
comparatives restated accordingly based on information drawn from
prior period 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, SFSL and AltLending.
Payment services:
Provision of Early Payment Programme Services. For results
during the reporting period, this corresponds to the results of
OFGL, OFL, OFAI and Porge.
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 TruFin Software Limited, TruFin
Holdings Limited, the Group's investment in Zopa 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 Payment services
Period ended 30 June term GBP'000 Other Total
2019 finance GBP'000 GBP'000
GBP'000
===================== ===================== ==================== ===================== =====================
Interest and fee
income 1,268 1,723 147 3,138
Interest and fee
expenses (66) (153) - (219)
--------------------- -------------------- --------------------- ---------------------
Net interest and fee
income 1,202 1,570 147 2,919
--------------------- -------------------- --------------------- ---------------------
Adjusted operating
loss* (118) (862) (1,642) (2,622)
Loss before tax (118) (862) (2,742) (3,722)
--------------------- -------------------- --------------------- ---------------------
Taxation - (1,789) - (1,789)
--------------------- -------------------- --------------------- ---------------------
Loss for the year
from continuing
operations (118) (2,651) (2,742) (5,511)
--------------------- -------------------- --------------------- ---------------------
Loss for the year
from discontinued
operations (2,963) - (1,042) (4,005)
--------------------- -------------------- --------------------- ---------------------
Loss for the year (3,081) (2,651) (3,784) (9,516)
===================== ==================== ===================== =====================
Total assets 24,138 11,383 34,936 70,457
Total liabilities (692) (2,117) (6,501) (9,310)
--------------------- -------------------- --------------------- ---------------------
Net assets 23,446 9,266 28,435 61,147
--------------------- -------------------- --------------------- ---------------------
*adjusted operating loss excludes share-based payment
expense
Short term Payment
Period ended 30 June 2018 Finance services Other Total
GBP'000 GBP'000 GBP'000 GBP'000
==================================== -------------- -------------- ----------------- -------------------
Interest and fee income 415 1,210 43 1,668
Interest and fee expenses (24) (18) - (42)
-------------- -------------- ----------------- -------------------
Net interest and fee income 391 1,192 43 1,626
-------------- -------------- ----------------- -------------------
Adjusted operating loss* (756) (1,433) (1,852) (4,050)
Loss before tax (756) (1,433) (3,043) (5,241)
-------------- -------------- ----------------- -------------------
Taxation - 179 - 179
Loss for the year from continuing
operations (756) (1,254) (3,043) (5,062)
Loss for the year from discontinued
operations (3,082) - - (3,082)
-------------- -------------- ----------------- -------------------
Loss for the year (3,847) (1,254) (3,043) (8,144)
============== ============== ================= ===================
Total assets 129,337 2,360 59,561 191,258
Total liabilities (29,632) (1,544) (1,339) (32,515)
-------------- -------------- ----------------- -------------------
Net assets 99,705 816 58,222 158,743
-------------- -------------- ----------------- -------------------
Short term Payment
Year ended 31 December 2018 Finance services Other Total
GBP'000 GBP'000 GBP'000 GBP'000
==================================== -------------- -------------- ----------------- -------------------
Interest and fee income 1,411 2,894 60 4,365
Interest and fee expenses (106) (51) - (157)
-------------- -------------- ----------------- -------------------
Net interest and fee income 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:
6 months ended 6 months ended Year ended
30 June 2018 31 December
2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) GBP'000 GBP'000
GBP'000
============================================== ============================= ============== ============
Wages and salaries 2,890 3,058 5,673
Consulting costs 263 327 783
Social security costs 651 452 898
Pension costs arising on defined contribution
schemes 92 66 151
Share based payment 972 1,191 2,739
----------------------------- -------------- ------------
4,868 5,094 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:
6 months ended 6 months ended Year ended
30 June 2019 30 June 2018 31 December
2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
================== ============== ============== ============
Management 12 8 8
Finance 8 5 7
Sales & marketing 19 14 16
Operations 36 39 46
Technology 14 12 15
-------------- -------------- ------------
89 78 92
============== ============== ============
Key management
6 months ended 6 months ended Year ended
30 June 2019 30 June 2018 31 December
2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
====================== ============== ============== ============
Combined remuneration 601 587 1,181
The Directors consider that key management personnel include the
Executive Directors of TruFin plc and the Chief Operating Officer.
These individuals have the authority and responsibility for
planning, directing and controlling the activities of the
Group.
The figures in this note are from continuing activities with
comparatives restated accordingly based on information drawn from
prior period financial statements.
6. Employee share-based payment transactions
The employment share-based payment charge comprises:
6 months ended 6 months ended Year ended
30 June 2019 30 June 2018 31 December
2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
======================================= ============== ============== ============
Performance Share Plan and Joint Share
Ownership Plan Founder Award 913 1,106 2,671
Performance Share Plan Market Value
Award (63) 85 68
Performance Share Plan 2019 Award 122 - -
Performance Share Plan 2018 Award - - -
Total 972 1,191 2,739
============== ============== ============
Performance Share Plan and Joint Share Ownership Plan Founder
Award ("PSP and JSOP")
In 2018, 3,407,895 shares were granted to selected members of
senior management of which the share price at date of grant was
GBP1.90 per share. The award was structured as a Performance Share
Plan and a Joint Share Ownership Plan. The Performance Share Plan
was structured as a nil cost option with no performance conditions
attached, although the individuals are subject to continued
employment until February 2021. The Joint Share Ownership Plan
allowed 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.
Following the demerger, there was a modification to the award.
The GBP1.90 price above which the employee was able to participate
in value growth 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 all TruFin shareholders received one DFC
listed share for each TruFin share held. As the option holders were
entitled to TruFin shares, they were given one DFC share for each
option held. The effect of this gave rise to an Employers National
Insurance liability of GBP419,000, which was paid in July 2019.
Performance Share Plan Market Value Award ("PSP Market
Value")
In 2018, 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 shares on vesting 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 Awards was split into two:
-- Part of the award remained as an option in respect of TruFin
shares ("TruFin Market Value Awards")
-- Part of the award is in respect of DFC listed shares
The TruFin Market Value Awards is on the same terms as the
original PSP Market Value Awards except that:
-- The exercise price has been adjusted to GBP0.85 to reflect the demerger
-- Following the return of value to shareholders in June 2019,
the exercise price was further adjusted to GBP0.80.
The DFC Market Value award took the form of a restricted share
award of 2% of the DFC Listed Shares under which the award holder
will receive nil cost DFC listed shares. These transfer
restrictions and clawback fall away over time (i.e. 33.33% per year
over three years). The first 33% will become freely transferable
and cease to be subject to clawback on 21 February 2020 and each
subsequent tranche on the following two anniversaries. The effect
of this award gave rise to an Employer's national insurance
liability on TruFin plc of GBP265,000 which was paid in July
2019.
Performance Share Plan 2018 Award ("PSP 2018")
In 2018, 1,000,001 shares were granted to the senior management
team. The PSP 2018 award was structured as a nil cost option. The
vesting of this award was subject to the holder being in continued
employment until February 2021 and the Company 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 will be
achieved in full due to the demerger, the PSP 2018 award was
adjusted as follows:
-- the awards part vested and were satisfied by way of a cash
payment calculated by reference to 50% of the shares subject to the
award and a price of 190p per share. The cash payment will be made
at the time of the annual bonus cycle in February 2020.
-- the awards have continued in respect of 100% of the TruFin
shares, but the performance condition will relate solely to the
business of Oxygen.
Due to the part vesting as a result of the demerger, a charge of
GBP950,000 and GBP131,000 Employers National Insurance has been
accrued for.
Performance Share Plan 2019 Award ("PSP 2019")
The PSP 2019 award was structured as a nil cost option. The
vesting of this award was subject to the holder being in continued
employment until February 2022 and the Company achieving certain
financial metrics over a three--year period.
In order to reflect the impact of the demerger and a new
performance condition related to the granting of a bank licence to
DFC, the PSP 2019 award was adjusted as follows:
-- if the new performance condition related to DFC is met, the
award will be satisfied by way of a cash payment calculated by
reference to 50% of the award. The cash payment will be made at the
time of the annual bonus cycle in February 2020.
-- the awards have continued in respect of 50% of the TruFin
shares, but the performance condition will relate to the businesses
of Satago and Oxygen.
A charge of GBP972,000 and GBP134,000 Employers National
Insurance has been provided for as a contingent liability for the
DFC related performance condition of the PSP 2019. While the
granting of a licence is at the discretion of the regulator, the
Board is of the view that the performance condition will be
met.
The charges incurred as a result of the demerger and subsequent
modifications of the awards have been included within discontinued
operations in Note 9.
A breakdown of these charges is shown below.
6 months ended 6 months ended Year ended
30 June 2019 30 June 2018 31 December
2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
===================================== ============== ============== ============
PSP and JSOP Employers NI charge 419 - -
PSP Market Value Employers NI charge 265 - -
PSP Market Value Return of Value 285 - -
PSP 2018 - DFC portion 1,081 - -
PSP 2019 - DFC portion 1,106 - -
Total 3,156 - -
============== ============== ============
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
Management have recognised a provision of GBP194,000 (31
December 2018: GBP299,000) in relation to uncertain tax positions
prior to 31 December 2016. Although advice has been taken, the
legislation is complex and could result in different
interpretations. The amount recognised is the best estimate of the
consideration required to settle the present obligation at the
balance sheet date. GBP105,000 of the provision had been recognised
by DFC and as such following the demerger, the provision is no
longer part of the Group.
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 paid in the second quarter of 2019 as
Porge met certain revenue targets.
A provision of GBP1,106,000 has been included for the cash
settled portion of the PSP 2019 award (as shown in Note 6).
GBP'000
================================================== =======
At 1 January 2019 (audited) 1,053
Demerger of subsidiary (109)
Deferred consideration paid (750)
Additional provision during the year (see note 6) 1,106
-------
At 30 June 2019 (unaudited) 1,300
=======
GBP'000
===================================== =======
At 1 January 2018 (audited) 299
Additional provision during the year 754
-------
At 31 December 2018 (audited) 1,053
=======
8. Loss before income tax
Loss before income tax is stated after charging:
6 months ended 6 months ended Year ended
30 June 2018 31 December
2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) GBP'000 GBP'000
GBP'000
==================================== ============================= ============== ============
Depreciation of property, plant and
equipment 143 41 109
Amortisation of intangible assets 266 83 225
Staff costs including share based
payments charge 4,868 5,094 10,244
Audit fees payable to the Group's
auditor 54 60 200
Non-audit fees payable to Group's
auditor 12 59 68
9. Discontinued operations
On 8 May 2019, DFC was demerged from the group. Its results for
the period from the start of the year to the date of demerger have
been included within this note.
6 months ended
30 June 2019
(Unaudited)
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.
6 months ended
30 June 2019
(Unaudited)
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 (504)
MIP related demerger costs (3,156)
------------------
Loss from discontinued operations (4,005)
==================
6 months ended
30 June 2019
(Unaudited)
Cash flow GBP'000
===================================== ================= ==================
Loss from discontinued operations (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)
==================
10. Taxation
Analysis of tax (charge)/credit recognised in the period
6 months ended 6 months ended Year ended
30 June 2018 31 December
2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) GBP'000 GBP'000
GBP'000
============================= ============================= ============== ============
Deferred tax (charge)/credit (1,789) 179 390
----------------------------- -------------- ------------
Total tax (charge)/credit (1,789) 179 390
============================= ============== ============
Deferred tax asset
6 months ended 6 months ended Year ended
30 June 2018 31 December
2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) GBP'000 GBP'000
GBP'000
==================================== ============================= ============== ============
Balance at start of the year 5,579 5,189 5,189
(Charge)/Credit to the statement of
comprehensive income (1,789) 179 390
----------------------------- -------------- ------------
Balance at end of the year 3,790 5,368 5,579
============================= ============== ============
Comprised of:
Losses 3,790 5,368 5,579
----------------------------- -------------- ------------
Total deferred tax asset 3,790 5,368 5,579
============================= ============== ============
The deferred tax asset is in respect of Oxygen's historical tax
losses and it is considered probable that future taxable profits of
Oxygen and the wider Group will be able to be relieved against
these losses. Although the Board remain satisfied that Oxygen is
still able to deliver its expected growth and profitability, the
Directors have undertaken an impairment review and reassessed the
period over which losses may be utilised. Based on this
reassessment an impairment of GBP1,789,000 has been recorded.
Although impaired, the losses do remain available to carry forward
and may regain value in future periods.
11. Intangible assets
Software licences
Client contracts and similar
assets Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000
======================= ====================== ====================== ========== =======
Cost
At 1 January 2019 2,165 1,495 2,759 6,419
Additions 805 132 - 937
Demerger of subsidiary - (669) - (669)
---------------------- ---------------------- ---------- -------
At 30 June 2019 2,970 958 2,759 6,687
====================== ====================== ========== =======
Amortisation
At 1 January 2019 (103) (278) - (381)
Charge (153) (113) - (266)
Demerger of subsidiary - 49 - 49
---------------------- ---------------------- ---------- -------
At 30 June 2019 (256) (342) - (598)
====================== ====================== ========== =======
Accumulated impairment
losses
At 1 January 2019 - - - -
Charge - - - -
---------------------- ---------------------- ---------- -------
At 30 June 2019 - - - -
====================== ====================== ========== =======
Net book value
---------------------- ---------------------- ---------- -------
At 30 June 2019 2,714 616 2,759 6,089
====================== ====================== ========== =======
At 31 December 2018 2,062 1,217 2,759 6,038
====================== ====================== ========== =======
Software licences
Client contracts and similar
assets Goodwill Total
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 6,687
====================== ====================== ========== =======
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
====================== ====================== ========== =======
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.
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.
Goodwill relates to Oxygen Finance Group Limited and arose from
the acquisition of Porge Limited in August 2018. As stated in the
December 2018 financial statements we have one year to finalise the
initial accounting for a business combination, and our assessment
and measurement of separately identifiable intangible assets is
ongoing. The Directors believe that the majority of the purchase
price represents goodwill.
The Directors have assessed the impact on the June 2019 interim
results if half the goodwill was determined to consist of
separately identifiable assets. Assuming a 5 year useful economic
life this would result in an amortisation charge of GBP138k for the
6 months.
The goodwill balance has been reviewed and based on performance
to date and future expectations its carrying value is considered
appropriate and is not impaired.
12. Property, plant and equipment
Leasehold Fixtures Computer Right of Use
improvements & fittings equipment Asset Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================= ============= =========== =========== ============ =======
Cost
At 1 January 2019 67 337 177 - 581
Additions - 9 - - 9
On adoption of
IFRS 16 - - - 392 392
Demerger of subsidiary (23) (104) (172) - (299)
------------- ----------- ----------- ------------ -------
At 30 June 2019 44 242 5 392 683
------------- ----------- ----------- ------------ -------
Depreciation
At 1 January 2019 (24) (205) (49) - (278)
Charge (7) (18) (1) (117) (143)
Demerger of subsidiary 3 18 48 - 69
------------
At 30 June 2019 (28) (205) (2) (117) (352)
------------- ----------- ----------- ------------ -------
Net book value
------------- ----------- ----------- ------------ -------
At 30 June 2019 16 37 3 275 331
============= =========== =========== ============ =======
At 31 December
2018 43 132 128 - 303
============= =========== =========== ============ =======
Leasehold Fixtures & Computer equipment
improvements fittings Total
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
====================== ======================= ========================= =======
13. Other investments
30 June 2019 31 December
2018
(Unaudited) (Audited)
GBP'000 GBP'000
================================== ============ ===========
Investments in equity instruments - 44,500
Debt securities - 4,944
------------ -----------
- 49,494
============ ===========
Investment in equity instruments
Level 3 valuation
GBP'000
======================================= ============================
Fair value at 1 January 2019 44,500
Disposal of investment (44,500)
Fair value at 30 June 2019 (Unaudited) -
============================
Level 3 valuation
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 (Audited) 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.
30 June 2019 31 December
2018
(Unaudited) (Audited)
============== ============ ===========
Undiluted 0.0% 13.3%
Fully diluted 0.0% 12.5%
Debt Securities
GBP'000
====================================== =======
Balance at 1 January 2019 4,994
Demerger of subsidiary (4,994)
Balance at 30 June 2019 (Unaudited) -
=======
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 (Audited) 4,994
=======
Following the demerger of DFC from the Group, the Group no
longer holds any debt securities.
14. Loans and advances
30 June 2019 31 December
2018
(Unaudited) (Audited)
GBP'000 GBP'000
========================= ============ ===========
Total loans and advances 40,581 129,678
Less: loss allowance (177) (308)
Less: deferred income - (149)
40,404 129,221
============ ===========
30 June 2019 31 December
2018
(Unaudited) (Audited)
Total loans and advances are made up of: GBP'000 GBP'000
========================================= ============ ===========
Loans and advances 33,431 122,528
Financial assets at Fair Value 7,150 7,150
------------ -----------
40,581 129,678
============ ===========
The financial assets held at fair value correspond to
convertible loan notes of GBP3.5 million to a company called
PlayStack Limited ("PlayStack") and a convertible loan note of
GBP3.65 million to a company called Vertus Capital Limited
("Vertus"). These loans are valued at fair value using a
combination of income and market-based approach and any recent
funding rounds.
Past due receivables relating to loans and advances are analysed
as follows:
30 June 2019 31 December
2018
(Unaudited) (Audited)
GBP'000 GBP'000
============================== ============ ===========
Neither past due nor impaired 39,957 128,341
Past due: 0-30 days 252 742
Past due: 31-60 days 62 219
Past due: 61-90 days 43 30
Past due: more than 91 days 91 38
40,404 129,370
============ ===========
The financial risk management procedures disclosed in the 31
December 2018 audited financial statements have been and remain in
place for the period to 30 June 2019.
15. 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.
16. Share capital
Share Capital Total
GBP'000 GBP'000
======================================= =============== =========
91,933,316 shares at GBP0.91 per share
at 30 June 2019 (unaudited) 83,659 83,659
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, thereby reducing the share capital of
TruFin plc by GBP96,364,737, 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.
All ordinary shares carry equal entitlements to any
distributions by the company. No dividends were proposed by the
Directors for the period ended 30 June 2019.
17. Borrowings
30 June 2019 31 December
2018
(Unaudited) (Audited)
GBP'000 GBP'000
========================== ============= ===========
Loans due within one year - 59,041
Loans due in over a year - -
------------- -----------
- 59,041
============= ===========
In 2017, DFC entered into a two-year senior debt facility with a
leading bank which was secured on a floating pool of underlying
assets. Interest is payable at 3 month LIBOR + 4%.
Following the demerger of DFC from the Group, the Group's
balance at 30 June 2019 is GBPnil.
Movements in borrowings during the year
The below table identifies the movements in borrowings during
the year.
GBP'000
====================================== ========================
Balance at 1 January 2019 59,041
Demerger of subsidiary (59,041)
Balance at 30 June 2019 (Unaudited) -
========================
Balance at 1 January 2018 9,035
Funding drawdown 49,926
Interest expense 2,145
Interest paid (2,065)
========================
Balance at 31 December 2018 (Audited) 59,041
========================
18. Financial instruments
Fair Value of Financial Instruments
Financial assets included in the statement of financial position
at fair value:
30 June 2019 31 December
2018
(Unaudited) (Audited)
GBP'000 GBP'000
========================================= ============ ===========
Debt securities (level 1) - 4,994
Investments (level 3) - 44,500
Financial assets at fair value (level 3) 7,150 7,150
Debt securities carried at fair value by the Group were treasury
bills held by DFC. 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
have 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 year-end Zopa valuation was calculated by reference to
the independent valuer's valuation. This valuation utilised,
amongst other things, recent financial data provided by Zopa, peer
group valuation metrics and the most recent funding round. A
combination of these provided the best estimate for the
investment's market value. Zopa was sold at this valuation in May
2019.
-- Financial assets at fair value have been valued by
considering the valuation of the convertible loans as well as the
value of the underlying companies (PlayStack and Vertus).
-- 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
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)
Balance at 30 June 2019
(Unaudited) - 7,150 7,150
====================== =========== ===================
There are no financial liabilities included in the statement of
financial position at fair value.
30 June 2019
Financial assets and financial liabilities included in the
statement of financial position that are not measured at fair
value:
Carrying Fair value Level 1 Level 2 Level 3
amount GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
========================= ======== ========== =================== =================== ===================
Financial assets not measured
at fair value
Loans and advances 33,254 33,254 - - 33,254
Trade receivables 1,201 1,201 - - 1,201
Other receivables 943 943 - - 943
Cash and cash equivalents 17,700 17,700 17,700 - -
======== ========== =================== =================== ===================
53,098 53,098 17,700 - 35,398
======== ========== =================== =================== ===================
Financial liabilities not measured
at fair value
Trade, other payables
and accruals 4,385 4,385 - - 4,385
======== ========== =================== =================== ===================
4,385 4,385 - - 4,385
======== ========== =================== =================== ===================
31 December 2018
Carrying Fair
Group amount value Level 1 Level 2 Level 3
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
=================== ================== =================== =================== ===================
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.
19. 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:
6 months ended 6 months ended Year ended
30 June 2018 31 December
2018
30 June 2019 (Unaudited) (Audited)
(Unaudited) GBP'000 GBP'000
GBP'000
======================================== ============================== =================== =================
Number of shares
At period/year end 91,933,316 97,368,421 97,368,421
Weighted average 96,617,716 88,139,624 92,791,949
Earnings attributable to ordinary GBP'000 GBP'000 GBP'000
shareholders
Loss after tax attributable to the
owners
of TruFin plc (9,342) (7,903) (14,688)
Adjusted earnings attributable to
ordinary
shareholders
Loss for the year attributable to the
owners of TruFin plc (9,342) (7,903) (14,688)
Adjusted for
Share-based payment 972 1,191 2,739
Loss from discontinued operations 3,831 2,841 5,249
Adjusted loss after tax attributable
to the owners of TruFin plc (4,539) (3,871) (6,700)
Earnings per share* Pence Pence Pence
Basic and Diluted (9.7) (9.0) (15.8)
Adjusted(1) (4.7) (4.4) (7.2)
Adjusted(2) (4.7) 4.7 1.4
* All Earnings per share figures are undiluted and diluted.
Adjusted1 EPS excludes share-based payment expense, exceptional
items and discontinued operations from loss after tax
Adjusted2 EPS includes the unrealised gain on the revaluation of
the TruFin Group's investment in Zopa - GBP0.0m for the period
ended 30 June 2019 (2018: GBP8.0m)
Changes to share capital during the period are described in Note
17.
Management has been granted share options in TruFin plc. 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 periods presented, as the Group is loss making.
20. 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 sheet 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 (44)
Lease liability recognised at 1 January 2019 433
========================
Right of use assets have been recognised for property leases
within the group and have been measured on a retrospective basis as
if the new rules had always been applied.
21. Related party disclosures
Transactions with Directors
Key management personnel disclosures are provided in notes 5 and
6.
The Group's equity investment in Zopa was sold to Arrowgrass
Master Fund, a significant shareholder of TruFin plc.
Loans issued to Henry Kenner (GBP74,878) and James van den Bergh
(GBP64,894) in 2018 remain outstanding at the period end. These
have a GBPnil interest charge.
22. Post balance sheet events
On 29 July 2019, the Group converted its GBP3.65 million
convertible loan held in Vertus Capital Limited ("Vertus") in full
satisfaction and discharge of the loan. This has resulted in the
Company's wholly-owned subsidiary, TruFin Holdings Limited,
becoming the 51% controlling shareholder in Vertus. Vertus is a
funding provider to the Independent Financial Adviser sector.
In September, Vertus concluded a GBP15 million secured debt
facility with a UK high street bank, which will allow it to service
its large and growing pipeline.
On 10 September 2019, the Group converted its outstanding GBP3.5
million convertible loans in PlayStack Limited ("PlayStack") into
ordinary shares, in full satisfaction and discharge of the loans,
together with a further equity investment of GBP1.5 million in
PlayStack, in order to obtain a majority controlling stake. The
transaction will likely result in a holding of c. 99% in PlayStack.
PlayStack is a mobile games publisher and financier.
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
IR LMMMTMBABTLL
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