TIDMTRU TIDMTRU
RNS Number : 8017V
TruFin PLC
19 April 2021
19 April 2021
TruFin plc
("TruFin" or the "Company" or together with its subsidiaries
"TruFin Group" or the "Group")
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2020
Full year results demonstrate resilient growth and strong
momentum into 2021
TruFin is pleased to announce its audited results for the year
ended 31 December 2020. TruFin's complete annual report and
accounts, which set out these results in full detail with
accompanying commentary, are now available on TruFin's website:
www.Trufin.com/investors .
Financial Highlights
-- Gross revenues from continuing operations were GBP14.8m for
the year ended 31 December 2020, representing year-on-year growth
of 102%
-- Loss Before Tax ("LBT") from continuing operations excluding
share-based payment charge was GBP8.4m
-- In December 2020, Distribution Finance Capital Ltd ("DFC")
repaid in full the outstanding loan and associated interest and
costs, totalling GBP9.5m to TruFin. Cash and cash equivalents at
year end totalled GBP17.7 million
Operational Highlights
-- Playstack Limited ("Playstack") launched their critically
acclaimed game, Mortal Shell, which sold over 500,000 units
-- LBT at Oxygen Finance Group Limited (together with its
subsidiaries, Oxygen Finance Limited, Oxygen Finance Americas, Inc.
and Porge Ltd) ("Oxygen") declined from GBP2.1m to GBP1.4m, with
three consecutive quarters of positive EBITDA
-- Satago Financial Solutions Limited ("Satago") launched their
Lending as a Service ("LaaS") offering, announcing a six-month
commercial pilot with a Tier-1 Bank during Q4 2020
Current Trading and Prospects
-- Group revenues for Q1 2020 were not less than GBP2.5m
(unaudited), representing growth in excess of 20% over the same
period in 2020
-- Oxygen recorded their fourth consecutive quarter of EBITDA profitability in Q1 2021
-- Playstack's first major release, Mortal Shell, is seeing
continued growth in 'wish lists' ahead of the Summer 2021 release
on the Steam Platform
-- Vertus Capital Limited ("Vertus") approved GBP9.6m in new
loan facilities during Q1, compared to new facilities of GBP4.9m
for the whole of 2020
James van den Bergh, TruFin CEO, said:
"2020 was a significant year for the TruFin Group. Many of the
investments we made in previous years started to yield fruit and we
now have a clear line of sight on profitability at a number of our
subsidiaries. Existing partnerships were strengthened whilst new
partnerships were forged, and we remain fully funded to achieve
profitability as a Group.
Much of the momentum we experienced in 2020 is continuing into
2021 and we remain optimistic about our prospects for 2021 and
beyond.
I would also like to extend my thanks to the group of investors,
both current and new, that recently participated in the purchase of
53.83% of TruFin Group from our largest shareholder, Arrowgrass
Master Fund Limited ("Arrowgrass"). The placing, which reduced
Arrowgrass' stake in the Group to 19.99%, served to further widen
our investor base and leaves us with an enviable shareholder
register of blue-chip institutional investors."
For further information, please contact:
TruFin plc
James van den Bergh, Chief Executive Officer 0203 743 1340
Kam Bansil, Investor Relations 07779 229508
Liberum Capital Limited (NOMAD and Broker)
Chris Clarke
Louis Davies 0203 100 2000
About TruFin plc:
TruFin plc is the holding company for an operating group of
companies that are niche lenders and early payment providers.
TruFin Group combines the benefits of both the traditional
relationship banking model and developments in the fintech sector.
The Company was admitted to AIM in February 2018 and trades under
the ticker symbol: TRU. More information is available on the
Company website www.TruFin.com
The information contained within this Announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No.596/2014. By the publication of
this Announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain. The
person responsible for arranging for the release of this
Announcement on behalf of the Company is Annie Styler.
CHAIRMAN'S STATEMENT
I was appointed Chairman of TruFin during a period of great
uncertainty and instability due to the Covid-19 pandemic. During
2020, our focus was to build on the successes of 2019 and ensure
that our companies could weather the pandemic and national
lockdowns. The excellent work from our employees within the
individual subsidiaries and the TruFin executive team during the
crisis, as well as the resilience shown by the businesses cannot be
underestimated. The Board is incredibly grateful for all their hard
work in extremely challenging circumstances. TruFin is emerging not
only relatively unscathed from the pandemic but is even better
placed to continue to prosper.
Highlights throughout the year include:
-- Playstack Limited ("Playstack") publishing Mortal Shell, a
hit game that has had over 500,000 downloads and physical sales to
date
-- Satago Financial Solutions Limited ("Satago") signing a
six-month commercial pilot with the invoice finance division of a
Tier 1 UK Bank
-- Oxygen Finance Limited ("Oxygen") recording its first quarter
of positive EBITDA in Q2 2020, followed by two more quarters of
EBITDA profitability in Q3 and Q4 2020
-- Vertus Capital Limited ("Vertus") experiencing zero credit
losses throughout the crisis demonstrating the efficacy of its
underwriting and doubling its loan book
Whereas 2019 was dominated by corporate activity at the Group
level, this year's highlights were much more focused on the
operational side of TruFin's subsidiaries. Oxygen's operational
leverage is starting to become evident whilst maintaining its
leading market position. Satago's strategic partnership with the
Tier 1 UK Bank has allowed them to leverage their market leading
software suite. Playstack's position in the games sector was
solidified as a result of the successful launch of their first
major title. It was also very pleasing to witness Vertus's ever
growing customer pipeline despite the Covid-19 pandemic
uncertainty.
Due to the Group's hard work over the last few years, each
subsidiary is very well positioned within their niche, and, given
their performance throughout the Covid-19 pandemic, I am looking
forward to further success as TruFin enters a period of
stability.
When I became Chairman in June 2020, TruFin's share price was at
a depressed level mainly due, I believe, to the uncertainty related
to the Company's shareholder base. This was clearly disappointing
for our investors, most of whom had been with us since IPO. The
share price is now trading substantially higher than the nadir and
that is in no small part due to the milestones that each subsidiary
has passed (as described above) but also due to the significant
sale of shares by Arrowgrass Master Fund Limited ("AMFL") in
February 2021 when their shareholding reduced from 73.82% to
19.99%.
AMFL have been very supportive through our journey, in both the
public arena and previously on the private market. The addition of
Stephen Greene to the Board as AMFL's representative in April 2020
also contributed to our excellent relationship with our then
majority shareholder. In February 2021, following AMFL's share
sale, we were pleased to welcome a raft of new, high quality
institutional investors to the TruFin register which has increased
the free float of TruFin and helped further unlock the value of the
Group.
On behalf of the Board, I would like to thank our previous
Chairman, Henry Kenner, for his contribution to the Group and we
wish him well in his future endeavours.
As a Group we have an exciting year ahead, with a number of our
subsidiaries moving towards profitability and others working
towards securing further milestone transactions that will deliver
value over the coming years. I look forward to updating the market
as to our continued progress over the course of the year and would
like to thank all our employees and shareholders, new and old, for
their continued support.
CEO'S REVIEW
It is very pleasing to report considerable success across the
Group despite the challenges we faced during the year. After a busy
2019 - demerging our largest subsidiary, Distribution Finance
Capital Ltd ("DFC"), exiting our investment in Zopa Group Limited
("Zopa") and acquiring Vertus and Playstack - we were looking to
build on our organic growth during 2020. Despite the challenges
faced, I am pleased to say that all our subsidiaries performed
strongly and continued to serve their customer bases successfully.
This allowed us to outperform market expectations twice during the
year.
Creating a stable environment for our subsidiaries is one of the
key objectives for the Group; although challenging at times, the
value of this has rarely been more evident than in 2020. This
stability ensured TruFin's subsidiaries not only held the gains
made in 2019 but also allowed for some step changes in underlying
performance which bodes well for 2021 and beyond.
TruFin's performance in 2020
The Group fully adapted to remote working in 2020 but inevitably
growth was impeded by the Covid-19 pandemic and ongoing lockdown.
However, the Group still achieved very strong revenue growth of
102% to GBP14.8m across the continuing operations. More
specifically:
Oxygen
-- Revenue growth in the year, coupled with strong cost
management resulted in a reduction of Loss Before Tax ("LBT") from
GBP2.1m to GBP1.4m
-- Positive EBITDA generation for the last three quarters of
2020
-- Trade spend of Oxygen's Early Payment clients rose by
GBP1.0bn to GBP22.1bn
-- Achieved year-end target of 50 early payment clients
-- Out of the Early Payment client base at the year-end, 22%
generated revenue for the first time in 2020 and 10% were signed up
during 2020
-- Appointed as sole supplier for an Early Payment service
launched by North East Procurement Organisation ("NEPO") in May
2020. NEPO undertakes high value procurement in major strategic
areas of spend working in partnership with North East local
authorities. The initial framework agreement is for 4 years
Satago
-- Achieved target of 2,000 paid subscribers to the technology
platform
-- Launched the Lending as a Service ("LaaS") model with a
six-month commercial pilot agreed with a Tier 1 Bank during Q4 2020
which, if successful, will lead to a five-year commercial
agreement
-- GBP5m revolving credit facility signed to support loan book
growth
Playstack
-- Transformational revenue growth from GBP1.2m (on full year
basis) to GBP8.4m in 2020
-- Global launch of their first major title, Mortal Shell, which
received critical acclaim and resulted in over 500,000 units
sold
-- Despite significant disruption from the Covid-19 pandemic,
the development of the brand technology business remained a key
focus for the team
-- PlayIgnite facilitated GBP8.2m of loans during 2020,
constrained only by capital
Vertus
-- Despite the significant impact of the Covid-19 pandemic on
deal closing timelines, 2020 revenue grew from GBP0.7m in 2019 (on
a full year basis) to GBP1.0m in 2020
-- Loan book growth of 21% to GBP12.2m
-- Zero defaults or impairments
-- Completed implementation of new CRM and loan management
systems for greater scalability
Following DFC's full loan repayment in December 2020, the year
ended with a cash balance of GBP17.7m and the Group remains fully
funded to achieve profitability.
Current trading and prospects
I am pleased to report that the Group's performance has remained
resilient with Group revenues for the first quarter ended 31 March
2021 of not less than GBP2.5m (unaudited), representing growth in
excess of 20% over the same period in 2020.
Much of the momentum we experienced in 2020 is continuing into
2021 and we remain optimistic for 2021 and beyond. In light of
this, the Board has suspended the processes to explore options for
Oxygen and Vertus until such time that it believes appropriate
value can be realised.
Oxygen
-- Current trading in line with budget and expectations for both
early payment and insight solutions
-- EBITDA profitable in Q1 2021, resulting in four consecutive
quarters of EBITDA profitability
-- Early payments client portfolio strengthened with the
addition of Bristol City Council in February 2021
-- Strong supplier on-boarding in the first quarter of 2021,
with an increase of 19% over the same period in 2020 and a 57%
increase over the fourth quarter of 2020
-- The launch, with Ernst & Young of the "Local Government
Third Party Spend 2019/2020 Almanac"
-- Unique client count exceeding 100 for the first time (June
2020: 92 clients)
Satago
-- Performance impacted by the continued lockdown, with business
well set for increased activity post lockdown
-- Refocus from traditional direct client contact methods to
more digitally focussed client interaction from initial contact
through to onboarding
-- Increased activity and growth from existing and new
partnerships expected as UK recovers
-- Extension of lending products to include a whole book
solution, R&D tax credits and Revolving Credit Facilities
Playstack
-- Mortal Shell release for next generation consoles occurred in
March 2021
-- Mortal Shell 'wish lists' on the Steam Platform continuing to
build for the Summer 2021 release
-- Early indications of solid revenue growth across a mix of
games and business units to provide a stable trading platform going
forward
Vertus
-- Significant loan demand as a result of the potential CGT
review, latent demand from 2020 and increasing consolidation in the
IFA market
-- GBP9.6m in new facilities approved in Q1, compared to new
facilities of GBP4.9m for the whole of 2020
-- Zero defaults or impairments
Outlook
2020 was a year of many potential pitfalls but I am proud to say
that TruFin astutely negotiated these challenges and has emerged
stronger as relationships with both partners and customers have
strengthened. TruFin and its subsidiaries will be able to say that
we stood by customers and partners throughout this crisis and can
be proud of the results of our actions. We are confident that, as
the pandemic abates and the UK emerges from lockdown, TruFin is
well-placed to dominate our chosen niches in the coming years.
Focus on our technological advantages, coupled with strong
partnerships, proved its value in 2020. This is set to continue in
2021 as we continually strengthen the technology offering of each
of our subsidiaries to further build their resilience and allow for
expanded product offerings - as requested by our partners and
customers. 2021 will be a year of new milestones for the Group as a
number of the subsidiaries move into profitability. I look forward
to updating investors as to TruFin's progress in due course.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes 2020 2019
GBP'000 GBP'000
============================================= ======= ======================== =========
Interest income 3 2,578 3,347
Fee income 3 3,846 3,445
Publishing income 3 8,408 547
Interest, fee and publishing expenses (6,512) (1,115)
------------------------ ---------
Net revenue 8,320 6,224
======================== =========
Staff costs 5 (11,532) (12,722)
Other operating expenses (4,927) (4,406)
Depreciation & amortisation (799) (963)
Net impairment gain on financial assets 8 11 18
------------------------ ---------
Operating loss before share of profit
from joint venture (8,927) (11,849)
------------------------ ---------
Share of profit from associates accounted
for using the equity method - 15
------------------------ ---------
Loss before tax (8,927) (11,834)
======================== =========
Taxation 11 (2,476) (3,090)
------------------------ ---------
Loss from continuing operations (11,403) (14,924)
======================== =========
Loss from discontinued operations 10 - (3,463)
------------------------ ---------
Loss for the year (11,403) (18,387)
======================== =========
Other comprehensive income
Items that may be reclassified subsequently
to profit and loss
Exchange differences on translating
foreign operations 85 81
Other comprehensive income for the
year, net of tax 85 81
======================== =========
Total comprehensive loss for the year (11,318) (18,306)
======================== =========
Loss from continuing operations attributable
to:
Owners of TruFin plc (10,971) (14,783)
Non-controlling interests (432) (141)
------------------------ ---------
(11,403) (14,924)
======================== =========
Loss from discontinued operations
attributable to:
Owners of TruFin plc - (3,287)
Non-controlling interests - (176)
------------------------ ---------
- (3,463)
======================== =========
Notes 2020 2019
GBP'000 GBP'000
======================================== ======== ======================== =========
Total comprehensive loss for the period
attributable to the owners of TruFin
plc from
Continuing operations (10,886) (14,702)
Discontinued operations - (3,287)
(10,886) (17,989)
======================== =========
Earnings per Share
2020 2019
Notes pence pence
====================== ======= ======= =======
Basic and Diluted EPS 24 (13.6) (19.2)
Adjusted EPS 24 (12.9) (13.1)
COMPANY STATEMENT OF COMPREHENSIVE INCOME
Notes 2020 2019
GBP'000 GBP'000
============================ ======= ======================== =========
Revenue 3 2,192 2,977
======================== =========
Staff costs 5 (1,920) (6,554)
Other operating expenses (975) (2,786)
Depreciation & amortisation (1) (167)
Loss before tax (704) (6,530)
======================== =========
Taxation 11 - -
------------------------ ---------
Loss for the year (704) (6,530)
======================== =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes 2020 2019
GBP'000 GBP'000
==================================== ======= ========================= =========
Assets
Non-current assets
Intangible assets 12 21,041 20,571
Property, plant and equipment 13 140 237
Deferred tax asset 11 43 2,503
Loans and advances 16 9,301 -
------------------------- ---------
Total non-current assets 30,525 23,311
========================= =========
Current assets
Cash and cash equivalents 17,728 6,971
Loans and advances 16 5,359 27,705
Trade receivables 17 1,992 1,075
Other receivables 17 1,962 2,932
------------------------- ---------
Total current assets 27,041 38,683
========================= =========
Total assets 57,566 61,994
========================= =========
Equity and liabilities
Equity
Issued share capital 18 73,548 73,548
Retained earnings (10,730) (63)
Foreign exchange reserve 45 (40)
Other reserves (24,395) (24,395)
------------------------- ---------
Equity attributable to owners of
the company 38,468 49,050
------------------------- ---------
Non-controlling interest 22 1,268 1,293
------------------------- ---------
Total equity 39,736 50,343
========================= =========
Liabilities
Non-current liabilities
Borrowings 19 8,507 -
------------------------- ---------
Total non-current liabilities 8,507 -
========================= =========
Current liabilities
Borrowings 19 2,204 6,194
Trade and other payables 20 7,119 4,757
Provision for commitments and other
liabilities 7 - 700
------------------------- ---------
Total current liabilities 9,323 11,651
========================= =========
Total liabilities 17,830 11,651
========================= =========
Total equity and liabilities 57,566 61,994
========================= =========
The financial statements were approved by the Board of Directors
and authorised for issue on 16 April 2021. They were signed on its
behalf by:
James van den Bergh
Chief Executive Officer
COMPANY STATEMENT OF FINANCIAL POSITION
Notes 2020 2019
GBP'000 GBP'000
=================================== ======= ========================= =========
Assets
Non-current assets
Property, plant and equipment 13 - 1
Investments in subsidiaries 15 30,189 30,189
Amounts owed by group undertakings 47,066 49,083
------------------------- ---------
Total non-current assets 77,255 79,273
========================= =========
Current assets
Cash and cash equivalents 578 184
Trade and other receivables 17 658 195
------------------------- ---------
Total current assets 1,236 379
========================= =========
Total assets 78,491 79,652
========================= =========
Equity and liabilities
Equity
Issued share capital 18 73,548 73,548
Retained earnings (5,165) (5,006)
Other reserves 8,966 8,966
------------------------- ---------
Total equity 77,349 77,508
========================= =========
Liabilities
Current liabilities
Trade and other payables 20 1,142 1,444
Provisions - 700
------------------------- ---------
Total current liabilities 1,142 2,144
========================= =========
Total liabilities 1,142 2,144
========================= =========
Total equity and liabilities 78,491 79,652
========================= =========
The financial statements were approved by the Board of Directors
and authorised for issue on 16 April 2021. They were signed on its
behalf by:
James van den Bergh
Chief Executive Officer
CONSOLIDATED 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
2020 73,548 (63) (40) (24,395) 49,050 1,293 50,343
Loss for the year - (10,971) - - (10,971) (432) (11,403)
Other comprehensive
income for the
year - - 85 - 85 - 85
Total comprehensive
loss for the year - (10,971) 85 - (10,886) (432) (11,318)
-------- --------- --------- --------- -------- ------------ --------
Share based payment - 545 - - 545 - 545
Issuance of subsidiary
shares to employees - (322) - - (322) 488 166
Adjustment arising
from change in
non-controlling
interest - 81 - - 81 (81) -
-------- --------- --------- --------- -------- ------------ --------
Balance at 31
December 2020 73,548 (10,730) 45 (24,395) 38,468 1,268 39,736
======== ========= ========= ========= ======== ============ ========
Balance at 1 January
2019 185,000 15,375 (121) (50,261) 149,993 3,255 153,248
IFRS 16 adjustment - (18) - - (18) 1 (17)
Revised Balance
at 1 January 2019 185,000 15,357 (121) (50,261) 149,975 3,256 153,231
Loss for the year - (14,783) - - (14,783) (141) (14,924)
Other comprehensive
income for the
year - - 81 - 81 - 81
Loss from discontinued
operations - (3,287) - - (3,287) (176) (3,463)
-------- --------- --------- --------- -------- ------------ --------
Total comprehensive
loss for the year - (18,070) 81 - (17,989) (317) (18,306)
-------- --------- --------- --------- -------- ------------ --------
Acquisition of
subsidiaries - - - - - 1,435 1,435
Demerger of subsidiary (96,395) (13,916) - 34,866 (75,445) (3,081) (78,526)
Share buyback (15,057) 5,057 - - (10,000) - (10,000)
Share based payment - 2,509 - - 2,509 - 2,509
Reduction of capital - 9,000 - (9,000) - - -
-------- --------- --------- --------- -------- ------------ --------
Balance at 31
December 2019 73,548 (63) (40) (24,395) 49,050 1,293 50,343
======== ========= ========= ========= ======== ============ ========
Share capital
Share capital represents the nominal value of equity share
capital issued.
Retained earnings
The retained earnings reserve represents cumulative net gains
and losses.
Foreign exchange reserve
The foreign exchange reserve represents exchange differences
which arise on consolidation from the translation of the financial
statements of foreign subsidiaries.
Other reserves
Other reserves consist of the merger reserve and the share
revaluation reserve.
The merger reserve arose as a result of combining businesses
that are under common control. As at 31 December 2020 it was a
debit balance of GBP33,360,000 (2019: GBP33,360,000)
The share revaluation reserve arose from the share cancellation
that took place in February 2018. As at 31 December 2020 its
balance was GBP8,966,000 (2019: GBP8,966,000).
Non-Controlling Interest
The non-controlling interest relates to the minority interest
held in Bandana Media Limited, Playstack OY, Vertus Capital
Limited, Vertus SPV1 Limited, Satago Financial Solutions Limited,
Satago SPV1 Limited, Satago SPV2 Limited, Altlending Limited and
Satago z.o.o.
COMPANY STATEMENT OF CHANGES IN EQUITY
Share capital Retained earnings Other reserves Total equity
GBP'000 GBP'000 GBP'000 GBP'000
========================= =============== =================== ================ ==============
Balance at 1 January
2020 73,548 (5,006) 8,966 77,508
Total comprehensive loss
for the year - (704) - (704)
Share based payment - 545 - 545
--------------- ------------------- ---------------- --------------
Balance at 31 December
2020 73,548 (5,165) 8,966 77,349
=============== =================== ================ ==============
Balance at 1 January
2019 185,000 (6,033) 8,966 187,933
IFRS 16 adjustment - (9) - (9)
Revised balance at 1
January 2019 185,000 (6,042) 8,966 187,924
Total comprehensive loss
for the year - (6,530) - (6,530)
Share buyback (15,057) 5,057 - (10,000)
Demerger of subsidiary (96,395) - - (96,395)
Share based payment - 2,509 - 2,509
--------------- ------------------- ---------------- --------------
Balance at 31 December
2019 73,548 (5,006) 8,966 77,508
=============== =================== ================ ==============
CONSOLIDATED STATEMENT OF CASH FLOWS
2020 2019
GBP'000 GBP'000
=========================================== ======================== =========
Cash flows from operating activities
Loss before income tax
Continuing operations (8,927) (11,849)
Discontinued operations - (3,463)
Adjustments for
Depreciation of property, plant and
equipment 128 307
Amortisation of intangible fixed
assets 1,209 1,032
Share based payments 545 2,509
(Decrease)/increase in provision (700) 506
Finance costs 412 39
Impairment of intangible assets 222 186
Fair value increase of demerged subsidiary - (2,618)
Underlying trading loss on discontinued
operations - 2,963
Working capital adjustments (7,111) (10,388)
Movement in Loans and advances 13,045 770
Decrease/(increase) in trade and
other receivables 30 (2,637)
Increase in trade and other payables 2,384 1,165
Net payables on acquisition of subsidiary - 1,162
IFRS 16 adjustment - (462)
15,459 (2)
Tax paid (17) (36)
Interest and finance costs paid (276) (357)
------------------------ ---------
Net cash from/(used in) operating
activities 8,055 (10,783)
======================== =========
Cash flows from investing activities:
Additions to intangible assets (1,905) (1,695)
Additions to property, plant and
equipment (31) (38)
Acquisition of subsidiaries - (1,105)
Movement in loans in year to subsidiaries
pre acquisition - (7,201)
Cash from acquisition of subsidiaries - 516
Disposal of equity investment - 44,500
Net cash generated (used in)/from
investing activities (1,936) 34,977
Cash flows from financing activities:
Issue of ordinary share capital of
subsidiary 166 30
New borrowings 4,382 5,329
Share buybacks - (10,000)
Net cash generated from financing
activities 4,548 (4,641)
------------------------ ---------
Net increase in cash and cash equivalents
from continuing operations 10,667 19,553
Net cash from discontinued operations - (37,556)
------------------------ ---------
Cash and cash equivalents at beginning
of the year 6,971 24,888
Effect of foreign exchange rate changes 90 86
------------------------ ---------
Cash and cash equivalents at end
of the year 17,728 6,971
======================== =========
All cash and cash equivalents are cash at bank.
COMPANY STATEMENT OF CASH FLOWS
2020 2019
GBP'000 GBP'000
===================================================== ======================== =========
Cash flows from operating activities
Loss before income tax (704) (6,530)
Adjustments for:
Depreciation of property, plant and equipment 1 167
Fair value of intangible fixed assets - (2,618)
Share based payments 545 2,509
Decrease/(increase) in provision (700) 700
------------------------ ---------
Working capital adjustments (858) (5,772)
(Increase)/decrease in trade and other receivables (369) 190
(Decrease)/increase in trade and other payables (304) 140
------------------------ ---------
(673) 330
------------------------ ---------
Net cash used in operating activities (1,531) (5,442)
------------------------ ---------
Cash flows from investing activities
Decrease in intragroup loans 1,925 7,178
Net cash generated from investing activities 1,925 7,178
Cash flows from financing activities
Share buyback - (10,000)
------------------------ ---------
Net cash used in financing activities - (10,000)
Net increase/(decrease) in cash and cash equivalents 394 (8,264)
------------------------ ---------
Cash and cash equivalents at beginning of the
year 184 8,448
------------------------ ---------
Cash and cash equivalents at end of the year 578 184
======================== =========
All cash and cash equivalents are cash at bank.
NOTES TO THE CONSILDATED FINANCIAL STATEMENTS
Statutory information
TruFin plc is a Company registered in Jersey and incorporated
under Companies (Jersey) Law 1991. The Company's ordinary shares
were listed on the Alternative Investment Market of the London
Stock Exchange on 21 February 2018. The address of the registered
office is 26 New Street, St Helier, Jersey, JE2 3RA.
1. Accounting policies
General information
The TruFin Group (the "Group") is the consolidation of TruFin
plc and the companies set out in the "Basis of consolidation"
(below).
The principal activities of the Group are the provision of niche
lending, early payment services and mobile game publishing.
The financial statements are presented in Pounds Sterling, which
is the currency of the primary economic environment in which the
Group operates. Amounts are rounded to the nearest thousand.
Basis of accounting
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS").
Prior to 29 November 2017 and before the incorporation of TruFin
plc and TruFin Holdings, the entities named above were under common
control and therefore, have been accounted for as a common control
transaction - that is a business combination in which all the
combining entities or businesses are ultimately controlled by the
same company both before and after the combination. IFRS 3 provides
no specific guidance on accounting for entities under common
control and therefore other relevant standards have been
considered. These standards refer to pooling of assets and merger
accounting and this is the methodology that has been used to
consolidate the Group.
After 29 December 2017, post the reorganisation, the entities
constitute a legal group and accordingly the consolidated financial
statements have been prepared by applying relevant principles
underlying the consolidation procedures of IFRS.
Basis of preparation
The results of the Group companies have been included in the
consolidated statement of comprehensive income. Where necessary,
adjustments have been made to the underlying financial information
of the companies to bring the accounting policies used into line
with those used by the Group. All intra-group transactions,
balances, income and expenses are eliminated on consolidation.
The consolidated financial statements contained in this document
consolidates the statements of total comprehensive income,
statements of financial position, cash flow statements, statements
of changes in equity and related notes for each of the companies
listed in the "Basis of consolidation" below, which have been
prepared in accordance with IFRS.
Non-controlling interests, presented as part of equity,
represent the portion of a subsidiary's profit or loss and net
assets that is not held by the Group. The Group attributes total
comprehensive income or loss of subsidiaries between the owners of
the parent and the non-controlling interests based on their
respective ownership interests.
Basis of consolidation
The consolidated financial statements include all of the
companies controlled by the Group, which are as follows:
Country Nature of % voting rights
Entities of Registered address the business and shares
incorporation held
========================== =============== =========================== ======================= ===================
TruFin Holdings Limited Jersey 26 New Street, Holding Company 100% of ordinary
("THL") St Helier, Jersey shares
JE2 3RA
========================== =============== =========================== ======================= ===================
Satago Financial UK 48 Warwick Street, Provision 85.1% of ordinary
Solutions London, United of short term shares*
Limited ("Satago") Kingdom, W1B 5AW finance
========================== =============== =========================== ======================= ===================
Satago SPV 1 Limited UK 48 Warwick Street, Provision 85.1% of ordinary
("Satago SPV 1") - London, United of short term shares*
incorporated Kingdom, W1B 5AW finance
on 11 September 2019
========================== =============== =========================== ======================= ===================
Satago SPV 2 Limited UK 48 Warwick Street, Provision 85.1% of ordinary
("Satago SPV 2") - London, United of short term shares*
incorporated Kingdom, W1B 5AW finance
on 8 January 2020
========================== =============== =========================== ======================= ===================
Satago z.o.o (Satago Poland 32-023 Krakow ul. Provision 85.1% of ordinary
Poland) Sw. Krzyza 19/6 of short term shares*
Poland finance
========================== =============== =========================== ======================= ===================
Oxygen Finance Group UK Cathedral Place, Holding Company 91.4% of ordinary
Limited ("OFGL") 42-44 Waterloo shares**
(together Street, Birmingham,
with OFL and OFAI) United Kingdom,
("Oxygen") B2 5QB
========================== =============== =========================== ======================= ===================
Oxygen Finance Limited UK Cathedral Place, Provision 91.4% of ordinary
("OFL") 42-44 Waterloo of early payment shares**
Street, Birmingham, services
United Kingdom,
B2 5QB
========================== =============== =========================== ======================= ===================
Oxygen Finance Americas, USA Corporation Trust Provision 91.4% of ordinary
Inc ("OFAI") Center, 1209 Orange of early payment shares**
Street, City of services
Wilmington, County
of New Castle,
Delaware 19801,
USA
========================== =============== =========================== ======================= ===================
Porge Ltd ("Porge") UK Cathedral Place, Provision 91.4% of ordinary
*** 42-44 Waterloo of market shares**
Street, Birmingham, research information.
United Kingdom,
B2 5QB
========================== =============== =========================== ======================= ===================
TruFin Software Limited UK 48 Warwick Street, Provision 100% of ordinary
("TSL") London, United of technology shares
Kingdom, W1B 5AW services
========================== =============== =========================== ======================= ===================
AltLending UK Limited UK 48 Warwick Street, Provision 85.1% of ordinary
("AltLending") London, United of short term shares*
Kingdom, W1B 5AW finance
========================== =============== =========================== ======================= ===================
Vertus Capital Limited UK Building 1 Chalfont Provision 51% of ordinary
("Vertus Capital") Park, Gerrards of short term shares
(together Cross, United Kingdom, finance
with Vertus SPV 1 SL9 0BG
Limited)
("Vertus")
========================== =============== =========================== ======================= ===================
Vertus Capital SPV 1 UK Building 1 Chalfont Provision 51% of ordinary
Limited ("Vertus SPV Park, Gerrards of short term shares
1") Cross, United Kingdom, finance
SL9 0BG
========================== =============== =========================== ======================= ===================
Playstack Limited UK 56a Poland Street, Publishing 100% of ordinary
("Playstack")**** London United Kingdom, of computer shares
W1F 7NN games
========================== =============== =========================== ======================= ===================
Bandana Media Limited UK 56a Poland Street, Publishing 72% of ordinary
("Bandana")**** London United Kingdom, of computer shares
W1F 7NN games
========================== =============== =========================== ======================= ===================
PlayIgnite Ltd UK 56a Poland Street, Business and 100% of ordinary
("PlayIgnite")**** London United Kingdom, domestic software shares
W1F 7NN developer
========================== =============== =========================== ======================= ===================
Playtest Limited UK 56a Poland Street, Publishing 100% of ordinary
("Playtest")**** London United Kingdom, of computer shares
- dissolved on 24 March W1F 7NN games
2020
========================== =============== =========================== ======================= ===================
Playstack z.o.o ("PS Poland Kamienna 21, 31-403 Publishing 100% of ordinary
Poland") **** Krakow, Poland activities shares
in the field
of computer
games
========================== =============== =========================== ======================= ===================
Playstack OY ("PS Finland Mikonkatu 17 B, Publishing 75% of ordinary
Finland")**** 00100 Helsinki, activities shares
Finland in the field
of computer
games
========================== =============== =========================== ======================= ===================
Playstack AB ("PS Sweden Solbergavägen Developing, 100% of ordinary
Sweden")**** 17, 17998 Färentuna, publishing shares - (80%
- renamed from Foxgloves Sweden and selling until 8 October
Studios AB on 8 October electronic 2020)
2020 games
========================== =============== =========================== ======================= ===================
Playstack Inc ("Playstack USA Gust Delaware, Publishing 100% of ordinary
USA")**** 16192 Coastal Hwy, of computer shares
Lewes, DE 19958 games
========================== =============== =========================== ======================= ===================
PlayIgnite Inc USA Cogency Global Business and 100% of ordinary
("PlayIgnite Inc, 850 New Burton domestic software shares
USA")**** Road, Suite 201, developer
Dover DE 19904
========================== =============== =========================== ======================= ===================
* Following the grant of the Satago Management Incentive Plan
("Satago MIP"), the effective economic ownership of these companies
is 93.7% based on their Statements of Financial Position at the
Reporting Date.
** Nominal ownership of these companies is 91.4% due to the
Oxygen Management Incentive Plan ("Oxygen MIP"). Effective economic
ownership is 100% based on their Statements of Financial Position
at the Reporting Date.
*** On 31 August 2020, OFL purchased the Trade and Assets of
Porge. The purchase price was set at the Net Book Value of the
assets acquired at the time of the transaction.
**** These companies (together the "Playstack Group") were
acquired on 11 September 2019. The Group had a 40% interest in
PlayIgnite prior to this date and until then was accounted for
using the equity method. The Playstack Group acquisition also
include 4 associate companies incorporated in the UK which have
been accounted for using the equity method. These are:
-- A 49% interest in PlayFinder Games Ltd
-- A 49% interest in Snackbox Games Ltd
-- A 42% interest in Military Games International Ltd
-- A 26% interest in Stormchaser Games Ltd
Principal accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below. These policies have
been applied consistently to all the financial periods
presented.
The consolidated financial statements have been prepared in
accordance with European Union Endorsed International Financial
Reporting Standards (IFRSs) and the IFRS Interpretations Committee
(formerly the International Financial Reporting Interpretations
Committee (IFRIC)) interpretations. These statements have been
prepared on a going concern basis and under the historical cost
convention except for the treatment of certain financial
instruments.
Going concern
The Group's forecasts and projections, taking into account
reasonable possible changes in trading performance, show that the
Group should be able to operate in the foreseeable future. As a
consequence, the Directors have a reasonable expectation that the
Group will have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the Directors
have adopted the going concern basis in preparing these financial
statements. This assessment takes into consideration the potential
uncertainties arising from Covid-19 mentioned earlier in the
report.
Revenue recognition
Net revenue
Interest income and expense
Interest income and expense for all financial instruments except
for those classified as held for trading or measured or designated
as at Fair Value Through Profit and Loss ("FVTPL") are recognised
in "Net revenue" as "Interest income" and "Interest, fee and
publishing expenses" in the profit or loss account using the
effective interest method.
The Effective Interest Rate ("EIR") is the rate that exactly
discounts estimated future cash flows of the financial instrument
through the expected life of the financial instrument or, where
appropriate, a shorter period, to the net carrying amount of the
financial asset or financial liability. The future cash flows are
estimated taking into account all the contractual terms of the
instrument.
The calculation of the EIR includes all fees and points paid or
received between parties to the contract that are incremental and
directly attributable to the specific lending arrangement,
transaction costs and all other premiums or discounts.
The interest income/expense is calculated by applying the EIR to
the gross carrying amount of non-credit impaired financial assets
(that is, to the amortised cost of the financial asset before
adjusting for any expected credit loss allowance), or to the
amortised cost of financial liabilities.
For credit-impaired financial assets, as defined in the
financial instruments accounting policy, the interest income is
calculated by applying the EIR to the amortised cost of the
credit-impaired financial assets, that is, to the gross carrying
amount less the allowance for Expected Credit Losses ("ECLs").
Fee income
Fee income for the Group is earned from payments services fees
provided by Oxygen and subscription fees from Porge and Satago.
Payment services provided by Oxygen comprises the following
elements:
Early Payment Programme Services ("EPPS") contracts
Oxygen's EPPS generate rebates (i.e. discounts on invoice value)
for its clients by facilitating the early payment of supplier
invoices. Oxygen's single performance obligation is to make its
intellectual property and software platform available to its
clients for the duration of their contracts.
Oxygen bills its clients monthly for a contractually agreed
share of supplier rebates generated by their respective Early
Payment Programmes during the previous month. This revenue is
recognised in the month the rebates are generated.
Implementation fees
Oxygen Implementation fees
Implementation fees are charged to some clients in establishing
a client's technological access to the EPPS and in otherwise
readying a client to benefit from the Services. Establishing access
to the company's intellectual property and software platform does
not amount to a distinct service as the client cannot benefit from
the initial access except by the company continuing to provide
access for the contract period. Where an implementation fee is
charged, it is therefore a component of the aggregate transaction
price of the EPPS. Accordingly, such revenue is initially deferred
and then recognised in the statement of comprehensive income over
the life of the related EPPS.
Satago Implementation fees
Implementation fees have also been recognised by Satago in full
on the signing of new contracts with partners.
Consultancy fees
Oxygen provides stand-alone advisory services to clients.
Revenue is accrued as the underlying services are provided to the
client.
Subscription fees
Insight services subscription fees
The Insight Services offered by OFL (previously within Porge)
provide focussed public sector procurement data and analytics on a
subscription basis. Clients cover both the Private sector, enabling
them to improve and develop their engagement with the public
sector, and Public sector organisations, enabling them to make more
informed procurement decisions. Subscriptions are typically
received in advance and recognised over the length of the contract
as access to the database is provided.
Satago subscription fees
These are monthly fees for access to Satago's platform.
Subscriptions are received in advance and recognised during the
month the subscription relates to.
Fee expenses
Fee expenses are directly attributable costs, associated with
the Oxygen's EPPS. The expenses include amortisation arising from
capitalised contract costs incurred directly through activities
which generate fee income. Amortisation arising from other
intangible assets is recognised in depreciation and amortisation of
non-financial assets before operating profit/loss.
Publishing income
Publishing income for the Group is earned by companies in the
Playstack Group and comprises the following elements. Publishing
income is recognised at the fair value of consideration received or
receivable for goods and services provided and is shown net of VAT
and any other sales taxes. The fair value takes into account any
trade or volume discounts and commission retained.
In App Purchases (IAP) revenue
IAP revenue is earned on the sale of mobile games and features
within those games. It is recognised when the game or feature is
sold.
Advertising revenue
Advertising revenue is earnings from featuring third party
advertising within mobile games. It is recognised when these
advertisements are featured within the games.
Console revenue
Console revenue is earned on the sale of video games for
consoles. It is recognised when the game is sold.
Brand revenue
Brand revenue is when a mobile game player signs up to an
advertised brand in a mobile game. Revenue is recognised when the
brand has confirmed acquisition of the customer.
Publishing expenses
Publishing expenses are directly attributable costs, associated
with the Playstack Group's publishing income. These costs are
included at their invoiced value and are net of VAT and any other
sales tax.
Other income from financial instruments
Dividends from equity investments measured at Fair Value Through
Other Comprehensive Income ("FVTOCI") are recognised in profit and
loss when the Group becomes entitled to them.
For financial instruments that are classified as FVTPL, any
interest or fee income is included in the profit and loss account
within the fair value gain or loss.
Debt securities are measured at fair value through other
comprehensive income. The securities are measured at their closing
bid prices at the reporting date with any unrealised gain or loss
recognised through other comprehensive income.
The Group presently holds no financial instruments for trading
or hedging purposes, nor has it designated any other items as
FVTPL.
Operating profit/loss
Operating profit/loss is net interest and fee income less staff
costs, depreciation and amortisation, impairment loss on financial
assets and other operating expenses.
Foreign currencies
The results and financial position of each group company are
expressed in Pounds Sterling, which is the functional currency of
the UK based members of the Group and the presentation currency for
the consolidated financial statements.
Transactions in foreign currencies are translated to the Group
companies' functional currency at the foreign exchange rate ruling
at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are
retranslated to the functional currency at the foreign exchange
rate ruling at that date. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Foreign exchange differences arising on translation are recognised
in the consolidated statement of comprehensive income.
In preparing the consolidated financial statements, the assets
and liabilities of the group's foreign operations are translated at
the exchange rate at the reporting date. Income and expense items
are translated at the average exchange rates for the year. Exchange
differences arising, are recognised in other comprehensive income
and are accumulated in the Foreign exchange reserve equity
section.
Property, plant and equipment
All property, plant and equipment is stated at historical cost
(or deemed historical cost) less accumulated depreciation and less
any identified impairment. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset
to its working condition for its intended use.
Depreciation is provided on all property, plant and equipment at
rates calculated to write each asset down to its estimated residual
value on a straight line basis at the following annual rates:
Leasehold improvements - 5 years
Office equipment - 3 years
Computer equipment - 3 -5 years
Useful economic lives and estimated residual values are reviewed
annually and adjusted as appropriate.
Intangible and contract assets
Identifiable intangible assets are recognised when the Group
controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Group and the cost of the
asset can be reliably measured.
Intangible assets with finite lives are stated at acquisition or
development cost less accumulated amortisation and less any
identified impairment. The amortisation period and method is
reviewed at least annually. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits
embodied in the asset are accounted for by changing the
amortisation period or method, as appropriate and are treated as
changes in accounting estimates.
Computer software
Computer software which has been purchased by the Group from
third party vendors is measured at initial cost less accumulated
amortisation and less accumulated impairments.
Computer software also comprises internally developed platforms
and the costs directly associated with the production of these
identifiable and unique software products controlled by the Group.
They are probable of producing future economic benefits. They
primarily include employee costs and directly attributable
overheads.
Internally generated intangible assets are only recognised by
the Group when the recognition criteria have been met in accordance
with IAS 38: Intangible Assets as follows:
-- expenditure can be reliably measured;
-- the product or process is technically and commercially
feasible;
-- future economic benefits are likely to be received;
-- intention and ability to complete the development; and
-- view to either use or sell the asset in the future.
The Group will only recognise an internally-generated asset
should it meet all the above criteria. In the event of a
development not meeting the criteria it will be recognised within
the statement of profit or loss in the period incurred.
Capitalised costs include all directly attributable costs to the
development of the asset. Internally generated assets are measured
at capitalised cost less accumulated amortisation less accumulated
impairment losses. The internally generated asset is amortised at
the point the asset is available for use or sale. The asset is
amortised on a straight-line basis over the useful economic life
with the remaining useful economic life and residual value being
assessed annually.
Any subsequent expenditure on the internally generated asset is
only capitalised if the cost increases the future economic benefits
of the related asset. Otherwise all additional expenditure should
be recognised through the statement of profit or loss in the period
it occurs.
Contract assets
Contract assets comprise the directly attributable costs
incurred at the beginning of an Early Payment Scheme Service
contract to revise a client's existing payment systems and provide
access to the Group's software and other intellectual property.
These implementation (or "set up") costs are comprised primarily of
employee costs.
Amortisation is charged to the statement of comprehensive income
over the estimated useful lives of intangible assets from the date
they are available for use, on a straight-line basis. The
amortisation basis adopted for each class of intangible asset
reflects the Group's consumption of the economic benefit from that
asset.
Estimated useful lives
The estimated useful lives of finite intangible assets are as
follows:
Computer software - 3 -5 years
Contract assets - Life of underlying contract (typically
5 years)
Goodwill
Goodwill arising on acquisition represents the excess cost of a
business combination over the fair values of the Group's share of
the identifiable assets and liabilities at the date of the
acquisition. When part of the consideration transferred by the
Group is deferred or contingent, this is valued at its acquisition
date fair value, and is included in the consideration transferred
in a business combination. Changes in the deferred or contingent
consideration, which occur in the measurement period, are adjusted
retrospectively, with corresponding adjustments to goodwill.
Goodwill is not amortised but is reviewed at least annually for
impairment. For the purpose of impairment testing, goodwill is
allocated to each Cash Generating Unit ("CGU"). Each CGU is
consistent with the Group's primary reporting segment. Any
impairment is recognised immediately through the income statement
and is not subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of profit or loss on disposal.
Assets classified as held for sale
Whilst assessing whether any assets should be classified as held
for sale, the management of the Group ensure that the status of the
asset satisfies all of the following criteria as set out within
IFRS 5:
-- the carrying amount of the asset will be recovered
principally through a sale transaction rather than through
continuing use;
-- the asset is available for immediate sale in its present
condition subject only to terms that are usual and customary for
sales of such assets;
-- its sale must be highly probable and within one year from the
date of classification;
-- management must be committed to a plan to sell the asset;
and
-- the asset is being actively marketed for sale at a sales
price reasonable in relation to its fair value.
In the event an asset satisfies the criteria, prior to
reclassification the asset should be valued in accordance with IFRS
accounting standards applicable to the asset in question.
At initial recognition the asset is measured at the lower of
carrying amount and fair value less costs to sell. Any unrealised
gains or losses are recognised in the profit and loss account.
Financial instruments
Initial recognition
Financial assets and financial liabilities are recognised in the
Group's statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of the financial assets
and financial liabilities (other than financial assets and
financial liabilities at FVTPL) are respectively added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs that are directly attributable to the acquisition of
financial assets and financial liabilities at FVTPL are recognised
immediately in profit or loss.
Financial assets
Classification and reclassification of financial assets
Recognised financial assets within the scope of IFRS 9 are
required to be classified as subsequently measured at amortised
cost, FVTOCI or FVTPL on the basis of both the Group's business
model for managing the financial assets and the contractual cash
flow characteristics of the financial assets.
Financial assets are reclassified if and only if, the business
model under which they are held is changed. There has been no such
change in the allocation of assets to business models in the
periods under review.
Loans and advances
Other than convertible debt instruments, loans and advances are
held within a business model whose objective is to hold those
financial assets in order to collect contractual cash flows. The
contractual terms of the loan agreements give rise on specified
dates to cash flows that are solely payments of principal and
interest or fees on the principal amount outstanding.
After initial measurement, loans and advance to customers are
subsequently measured at amortised cost using the Effective
Interest Rate method (EIR) less impairment. Amortised cost is
calculated by taking into account any fees or costs that are an
integral part of the EIR. The EIR amortisation is included in
interest and similar income in the statement of comprehensive
income. The losses arising from impairment are recognised in the
statement of comprehensive income and disclosed with any other
similar losses within the line item "Net impairment losses on
financial assets".
Where cash flows are significantly different from the original
expectations used to determine EIR, but where this difference does
not arise from a modification of the terms of the financial
instrument, the Group revises its estimates of receipts and adjusts
the gross carrying amount of the financial asset to reflect actual
and revised estimated contractual cash flows. The Group
recalculates the gross carrying amount of the financial asset as
the present value of the estimated future contractual cash flows
discounted at the financial instrument's original EIR. The
adjustment is recognised in statement of comprehensive income as
income or expense.
Convertible debt instruments
Convertible debt instruments, included within loans and
advances, are held by the Group and are measured at Fair Value
through Profit and Loss as they fail the contractual cash flow
characteristics test required by IFRS 9 for classification under
amortised cost. Movements in the fair value of these assets are
recognised in the profit and loss account.
Trade and other receivables
Trade receivables do not contain any significant financing
component and accordingly are recognised initially at transaction
price, and subsequently measured at cost less expected credit
losses.
Investments in equity shares
Prior to its disposal the Group's investment in the equity
shares of Zopa was not held for trading. The Group made an
irrevocable election to classify and subsequently measure the
investment at FVTOCI. Movements in the fair value of the investment
were recognised in the statement of other comprehensive income and
were not reclassified to profit on loss on derecognition.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less
impairment in the Company's financial statements.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and demand
deposits and short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
Impairment
The Group (and Company) recognises loss allowances for Expected
Credit Losses ("ECLs") on the following financial instruments that
are not measured at FVTPL:
-- Loans and advances;
-- Other receivables;
-- Trade receivables; and
-- Intercompany receivables
ECLs are measured through loss allowances calculated on the
following bases:
ECLs are a probability-weighted estimate of the present value of
credit losses. These are measured as the present value of the
difference between the cash flows due to the Group under the
contract and the cash flows that the Group expects to receive
arising from the weighting of future economic scenarios, discounted
at the asset's EIR within the current performing book.
The Group measures ECL on an individual basis, or on a
collective basis for portfolios of loans that share similar credit
risk characteristics. The loss allowance is measured as the present
value of the difference between the contractual cash flows and cash
flows that the Group expects to receive using the asset's original
EIR, regardless of whether it is measured on an individual basis or
a collective basis.
A financial asset that gives rise to credit risk, is referred to
(and analysed in the notes to this financial information) as being
in "Stage 1" provided that since initial recognition (or since the
previous reporting date) there has not been a significant increase
in credit risk, nor has it has become credit impaired.
For a Stage 1 asset, the loss allowance is the "12-month ECL",
that is, the ECL that results from those default events on the
financial instrument that are possible within 12 months from the
reporting date.
A financial asset that gives rise to credit risk is referred to
(and analysed in the notes to this financial information) as being
in "Stage 2" if since initial recognition there has been a
significant increase in credit risk but it is not credit
impaired.
For a Stage 2 asset, the loss allowance is the "lifetime ECL",
that is, the ECL that results from all possible default events over
the life of the financial instrument.
A financial asset that gives rise to credit risk is referred to
(and analysed in the notes to this financial information) as being
in "Stage 3" if since initial recognition it has become credit
impaired.
For a Stage 3 asset, the loss allowance is the difference
between the asset's gross carrying amount and the present value of
estimated future cash flows discounted at the financial asset's
original EIR. Further, the recognition of interest income is
calculated on the carrying amount net of impairment rather than the
gross carrying amount as for stage 1 and stage 2 assets.
If circumstances change sufficiently at subsequent reporting
dates, an asset is referred to by its newly appropriate Stage and
is re-analysed in the notes to the financial information.
Where an asset is expected to mature in 12 months or less, the
"12 month ECL" and the "lifetime ECL" have the same effective
meaning and accordingly for such assets the calculated loss
allowance will be the same whether such an asset is at Stage 1 or
Stage 2. However, the Group monitors significant increase in credit
risk for all assets so that it can accurately disclose Stage 1 and
Stage 2 assets at each reporting date.
Lifetime ECLs are recognised for all trade receivables using the
simplified approach.
Significant increase in credit risk - policies and procedures
for identifying Stage 2 assets
The Group compares the risk of a default occurring on the
financial instrument as at the reporting date with the risk of a
default occurring on the financial instrument as at the date of
initial recognition in order to determine whether credit risk has
increased significantly.
See note 22 for further details about how the Group assesses
increases in significant credit risk.
Definition of a default
Critical to the determination of significant increases in credit
risk (and to the determination of ECLs) is the definition of
default. Default is a component of the Probability of Default
("PD"), changes in which lead to the identification of a
significant increase in credit risk and PD is then a factor in the
measurement of ECLs.
The Group's definition of default for this purpose is:
-- a counterparty defaults on a payment due under a loan
agreement and that payment is more than 90 days overdue, or
-- within the core invoice finance proposition, where one or
more individual finance repayments are beyond 90 days overdue,
management judgement is applied in considering default status of
the client.
-- the collateral that secures, all or in part, the loan
agreement has been sold or is otherwise not available for sale and
the proceeds have not been paid to the lending company; or
-- a counterparty commits an event of default under the terms
and conditions of the loan agreement which leads the lending
company to believe that the borrower's ability to meet its credit
obligations to the lending company is in doubt.
The definition of default is similarly critical in the
determination of whether an asset is credit-impaired (as explained
below).
Credit-impaired financial assets - policies and procedures for
identifying Stage 3 assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash flows
of the financial asset have occurred. IFRS 9 states that evidence
of credit-impairment includes observable data about the following
events:
-- Significant financial difficulty of the borrower;
-- A breach of contract such as a default (as defined above) or
past due event, or
-- The Group, for economic or contractual reasons relating to
the borrower's financial difficulty, having granted to the borrower
a concession that the Group would not otherwise consider.
The Group assesses whether debt instruments that are financial
assets measured at amortised cost or at FVTOCI are credit-impaired
at each reporting date. When assessing whether there is evidence of
credit- impairment, the Group takes into account both qualitative
and quantitative indicators relating to both the borrower and to
the asset. The information assessed depends on the borrower and the
type of the asset. It may not be possible to identify a single
discrete event - instead, the combined effect of several events may
have caused financial assets to become credit-impaired.
See note 22 for further details about how the Group identifies
credit-impaired assets.
Presentation of allowance for ECL in the statement of financial
position
Loss allowances for ECL are presented in the statement of
financial position as follows:
-- For financial assets measured at amortised cost: as a
deduction from the gross carrying amount of the assets;
-- For loan commitments: as a provision; and
-- For debt instruments measured at FVTOCI: no loss allowance is
recognised in the statement of financial position as the carrying
amount is at fair value. However, the loss allowance is included as
part of the revaluation amount in the investment revaluation
reserve.
Modification of financial assets
A modification of a financial asset occurs when the contractual
terms governing a financial asset are renegotiated without the
original contract being replaced and derecognised and:
-- The gross carrying amount of the asset is recalculated and a
modification gain or loss is recognised in profit or loss;
-- Any fees charged are added to the asset and amortised over
the new expected life of the asset; and
-- The asset is individually assessed to determine whether there
has been a significant increase in credit risk.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
derecognised when the rights to receive cash flows from the asset
have expired. The Group also derecognises the assets if it has both
transferred the asset and the transfer qualifies for
derecognition.
A transfer only qualifies for derecognition if either
-- The Group has transferred substantially all the risks and
rewards of the asset; or
-- The Group has neither transferred nor retained substantially
all the risks and rewards of the asset but has transferred control
of the asset.
Write offs
Loans and advances are written off when the Group has no
reasonable expectation of recovering the financial asset (either in
its entirety or a portion of it). This is the case when the Group
determines that the borrower does not have assets or sources of
income that could generate sufficient cash flows to repay the
amounts subject to the write-off. A write-off constitutes a
derecognition event. The Group may apply enforcement activities to
financial assets written off. Recoveries resulting from the Group's
enforcement activities will result in impairment gains.
Debt securities
Debt securities are financial assets that are not held for
trading and are intended to be held within a business model to
collect contractual cash flows or sell. These are initially
measured at fair value plus transaction costs that are directly
attributable to the financial asset. Subsequently changes in the
fair value are recognised in other comprehensive income except for
interest calculated at the asset's EIR, foreign exchange and
impairment gains and losses.
Financial liabilities
Financial liabilities and equity
Debt and equity instruments that are issued are classified as
either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
A financial liability is a contractual obligation to deliver
cash or another financial asset or to exchange financial assets or
financial liabilities with another entity under conditions that are
potentially unfavourable to the Group or a non-derivative contract
that will or may be settled in a variable number of the Group's own
equity instruments, or a derivative contract over own equity that
will or may be settled other than by the exchange of a fixed amount
of cash (or another financial asset) for a fixed number of the
Group's own equity instruments.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
as at the proceeds received, net of direct issue costs.
Distributions on equity instruments are recognised directly in
equity.
Financial liabilities
Financial liabilities are classified as either financial
liabilities at FVTPL or other financial liabilities.
Financial liabilities at Fair Value through Profit or Loss
Financial liabilities at FVTPL may include financial liabilities
held for trading. Financial liabilities are classified as held for
trading if they are acquired for the purpose of selling in the near
term.
During the period under review the Group has held no financial
liabilities for trading, nor designated any financial liabilities
upon initial recognition as at fair value through profit or
loss.
Other financial liabilities
Interest bearing borrowings are measured at amortised cost using
the effective interest rate method. Gains and losses are recognised
in the income statement when the liabilities are derecognised as
well as through the effective interest rate method (EIR). Amortised
cost is calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortisation is included in "Interest and fee
expenses" in the profit and loss account.
Derecognition of financial liabilities
The Group derecognises financial liabilities when and only when,
the Group's obligations are discharged, cancelled or they
expire.
Impairment of non-financial assets
The carrying amounts of the entity's non-financial assets, other
than goodwill and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset's
recoverable amount is estimated. The recoverable amount of an asset
or cash-generating unit is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset.
For the purposes of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups
of assets (the Cash-Generating Unit or "CGU").
Contract assets are reviewed for impairment based on the
performance of the underlying contract.
Goodwill is tested annually for impairment in accordance with
IFRS. The goodwill acquired in a business combination, for the
purpose of impairment testing is allocated to CGU that are expected
to benefit from the synergies of the combination. For the purpose
of goodwill impairment testing, if goodwill cannot be allocated to
individual CGUs or groups of CGUs on a non-arbitrary basis, the
impairment of goodwill is determined using the recoverable amount
of the acquired entity in its entirety, or if the acquired entity
has been integrated then the entire group of entities into which it
has been integrated.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in the statement of comprehensive
income. Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amounts of
other assets in the unit (or group of units) on a pro rata
basis.
An impairment loss is reversed if and only if the reasons for
the impairment have ceased to apply. An impairment loss recognised
for goodwill is not reversed.
Impairment losses recognised in prior periods are assessed at
each reporting date for any indication that the loss has decreased
or no longer exists. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Current and deferred income tax
Income tax on the result for the period comprises current and
deferred income tax. Income tax is recognised in the consolidated
statement of comprehensive income except to the extent that it
relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income for the period, using tax rates enacted or
substantively enacted at the reporting date and any adjustment to
tax payable in respect of previous periods.
Deferred tax is provided using the balance sheet liability
method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The amount of deferred
tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the reporting
date.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax assets and
liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and
liabilities on a net basis.
Employee benefits - pension costs
A defined contribution plan is a post-employment benefit plan
under which the Group pays fixed contributions into a separate
entity and will have a legal or constructive obligation to pay
further amounts. Contributions to defined contribution schemes are
charged to the statement of comprehensive income as they become
payable in accordance with the rules of the scheme. Differences
between contributions payable in the year and contributions
actually paid are shown as either accruals or prepayments in the
statement of financial position.
Provisions for commitments and other liabilities
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the
cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (discounted at the
Group's weighted average cost of capital when the effect of the
time value of money is material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset only if it is virtually
certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
Merger reserve
Prior to 29 December 2017, the entities within the Group were
held by Arrowgrass Master Fund Limited. On 29 December 2017, these
entities were acquired by TruFin plc via TruFin Holdings Limited.
The consideration provided to Arrowgrass for the companies acquired
was in exchange for shares of TruFin plc based on the fair value of
the underlying companies. Upon consolidation of the group, the
difference between the book value of the entities and the amount of
the consideration paid was accounted through a merger reserve, in
accordance with relevant accounting standards relating to
businesses under common control.
Investments in associates
Associates are entities in which the Group has between 20% and
50% of the voting rights, or is otherwise able to exercise
significant influence, but which it does not control or jointly
control. Investments in associates are accounted for under the
equity method and are initially recognised at costs, including
goodwill. Subsequent changes in the carrying value reflect the
post-acquisition changes in the Group's share of net assets of the
associate. The Group's share of its associates profits or losses is
recognised in the consolidated income statement. However, when the
Group's share of losses in an associate equals or exceeds its
interest in the associate, the Group does not recognise further
losses, unless the Group is obliged to make further payments to, or
on behalf of the associate.
Segmental reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions
with other components of the same entity) and whose operating
results are regularly reviewed by the Board of Directors in order
to make decisions about resources to be allocated to that component
and assess its performance and for which discrete financial
information is available.
For the purposes of the financial statements, the Directors
consider the Group's operations to be made up of four operating
segments: the provision of short term finance, payment services,
publishing and other operations.
The accounting policies of the reportable segments are
consistent with the accounting policies of the Group as a
whole.
Further details are provided in note 4.
Share based payments
Where the Group engages in share--based payment transactions in
respect of services received from certain of its employees, these
are accounted for as equity--settled share--based payments in
accordance with IFRS 2 'Share--based payments'. The equity is in
the form of ordinary shares.
The grant date fair value of a share--based payment transaction
is recognised as an employee expense, with a corresponding increase
in equity over the period that the employees become unconditionally
entitled to the awards. In the absence of market prices, the fair
value of the equity at the date of the grant is estimated using an
appropriate valuation technique
The amount recognised as an expense is adjusted to reflect the
actual number of awards for which the related services and
non--market vesting conditions are expected to be met such that the
amount ultimately recognised as an expense is based on the number
of awards that do meet the related service and non--market
performance conditions at the vesting date.
For share--based payment awards with market performance
conditions the grant date fair value of the award is measured to
reflect such conditions and there is no true--up for differences
between expected and actual outcomes.
Refer to note 6 for the amounts disclosed.
Leases
Leases are accounted for under IFRS 16. IFRS 16 distinguishes
leases and service contracts on the basis of whether an identified
asset is controlled by a customer. A model where a right-of-use
asset and a corresponding liability are 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.
Government grants
Government grants are not recognised until there is reasonable
assurance that the group will comply with the conditions attaching
to them and that the grants will be received.
Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related
costs are recognised in profit or loss in the period in which they
become receivable. These grants are deducted from the expense that
the grant is related to.
2. Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial information in accordance with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and reported
amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apart from other sources. The
estimates and underlying assumptions are reviewed on an ongoing
basis. Actual results may differ from these estimates.
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in financial statements.
Critical accounting judgements
-- Early Payment Programme Services set up costs: the Group
capitalises the direct costs of implementing Early Payment
Programme Services contracts for clients. These costs are essential
to the satisfaction of the Group's performance obligation under
that contract and accordingly the Group considers that these costs
meet the applicable criteria for recognition as contract
assets.
The amount capitalised is disclosed in note 12.
-- Deferred tax asset: There is inherent uncertainty in
forecasting beyond the immediate future and significant judgement
is required to estimate whether future taxable profits are probable
in order to utilise the carried forward tax losses. However, in
this current year and following the COVID-19 pandemic and its
immediate short term impact, the Group has assessed a shorter time
frame in assessing the evidence to support the recognition of a
deferred tax asset in respect of carried forward tax losses for
Oxygen. On the basis of this change, the deferred tax asset has
been derecognised at this year end.
Other companies in the Group have carried forward losses which
will be utilised against future taxable profits. However, a
deferred tax asset has not been recognised for these companies,
except for Vertus Capital SPV 1 as there is uncertainty surrounding
the timing of when these losses will be used.
Refer to note 11 for more information on the deferred tax
asset.
-- The accounts of the trustee (the "EBT Trustee") of the
Company's Employee Benefit Trust ("EBT") have not been consolidated
as it is the Directors' opinion that the Company does not have
control over the EBT. The EBT is a discretionary trust, which means
that the EBT Trustee has discretion how to act, provided that the
action taken by the EBT Trustee is considered by the EBT Trustee to
be in the interest of one of more EBT beneficiaries (being
employees and former employees (and certain of their relatives) of
the Company and its subsidiaries.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting period that may have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below:
Expected credit losses
-- Where an asset has a maturity of 12 months or less, the "12
month ECL" and the "lifetime ECL" have the same effective meaning
and accordingly for such assets the calculated loss allowance will
be the same whether such an asset is at stage 1 or stage 2.
-- The Probability of Default ("PD") is an estimate of the
likelihood of default over a given time horizon and is a key input
to the ECL calculation. The Group primarily uses credit scores from
credit reference agencies to calculate the PD for loans and
advances. The score is a 12-month predictor of credit failure and,
in the absence of internally generated loss history, the Group
believes that it provides the best proxy for the credit quality of
the loan portfolio.
-- Exposure At Default ("EAD") is an estimate of the exposure at
a future default date, taking into account expected changes in the
exposure after the reporting date, including repayments of
principal and interest, whether scheduled by contract or otherwise,
expected drawdowns on committed facilities and accrued interest
from missed payments.
-- Loss Given Default ("LGD") is an estimate of the loss arising
on default. It is based on the difference between the contractual
cash flows due and those that the lender would expect to receive,
in particular taking into account wholesale collateral values and
certain buy back options.
Measurement of fair values of level 3 instruments
In estimating the fair value of a financial asset or liability,
the Group uses market observable data to the extent that it is
available. Where such level 1 inputs are not available, the Group
uses valuation models to estimate the fair value of its financial
instruments.
Refer to note 14 for more information on fair value
measurement.
3. Gross revenue
2020 2019
Group GBP'000 GBP'000
======================== ======================= ========
Revenue
Interest income 2,578 3,347
----------------------- --------
Total interest income 2,578 3,347
----------------------- --------
EPPS contracts 2,243 2,502
Consultancy fees 288 45
Implementation fees* 301 -
Subscription fees 1,014 898
----------------------- --------
Total fee income 3,846 3,445
----------------------- --------
IAP revenue 410 223
Advertising revenue 410 181
Console revenue 7,500 98
Brand revenue 88 45
----------------------- --------
Total publishing income 8,408 547
----------------------- --------
Gross revenue 14,832 7,339
======================= ========
*In 2020, Implementation fees also included fees recognised by
Satago in full on the signing of new contracts with partners.
2020 2019
Company GBP'000 GBP'000
============================= ======================= ========
Intercompany interest income 2,073 2,738
Intercompany fee income 118 225
Other interest income 1 14
----------------------- --------
Gross revenue 2,192 2,977
======================= ========
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 Satago, Vertus and AltLending.
Payment services
Provision of Early Payment Programme Services. For results
during the reporting period, this corresponds to the results of
Oxygen and Porge.
Publishing
Publishing of video games. For results during the reporting
period, this corresponds to the results of the Playstack Group.
Other
Revenue and costs arising from investment activities. For
results during the reporting period, this corresponds to the
results of TSL, THL and TruFin plc.
The results of each segment, prepared using accounting policies
consistent with those of the Group as a whole, are as follows:
Short term Payment
Year ended 31 December finance services Publishing Other Total
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= ========== ========= ============ ========== =========
Gross revenue 2,020 3,490 8,408 914 14,832
Cost of sales (730) (760) (5,022) - (6,512)
---------- --------- ------------ ---------- ---------
Net revenue 1,290 2,730 3,386 914 8,320
---------- --------- ------------ ---------- ---------
Adjusted operating loss* (3,318) (1,111) (2,458) (1,495) (8,382)
Loss before tax (3,318) (1,111) (2,458) (2,040) (8,927)
Taxation 42 (2,504) (14) - 2,476
Loss for the year (3,276) (3,615) (2,472) (2,040) (11,403)
========== ========= ============ ========== =========
Total assets 22,798 7,430 17,765 9,573 57,566
Total liabilities (11,276) (1,858) (3,559) (1,137) (17,830)
---------- --------- ------------ ---------- ---------
Net assets 11,522 5,572 14,206 8,436 39,736
========== ========= ============ ========== =========
*adjusted operating loss before tax excludes share-based payment
expense
Short term Payment
Year ended 31 December finance services Publishing Other Total
2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================ ========== ========= ============ ========== =========
Gross revenue 2,752 3,436 547 604 7,339
Cost of sales (269) (562) (284) - (1,115)
---------- --------- ------------ ---------- ---------
Net revenue 2,483 2,874 263 604 6,224
---------- --------- ------------ ---------- ---------
Adjusted operating loss* (880) (2,015) (2,003) (4,442) (9,340)
Share of profit from associates 15 - - - 15
Loss before tax (865) (2,015) (2,003) (6,951) (11,834)
Taxation - (3,090) - - (3,090)
Loss for the year from
continuing operations (865) (5,105) (2,003) (6,951) (14,924)
Loss for the year from
discontinued operations (2,963) - - (500) (3,463)
Loss for the year (3,828) (5,105) (2,003) (7,451) (18,387)
========== ========= ============ ========== =========
Total assets 21,385 9,440 15,804 15,365 61,994
Total liabilities (7,010) (1,814) (673) (2,154) (11,651)
---------- --------- ------------ ---------- ---------
Net assets 14,375 7,626 15,131 13,211 50,343
---------- --------- ------------ ---------- ---------
5. Staff costs
Analysis of staff costs:
Group Company
================== ==================
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
================================= ======== ======== ======== ========
Wages and salaries 9,311 8,203 1,327 3,176
Consulting costs 313 506 - 29
Social security costs 1,019 1,275 22 804
Pension costs arising on defined
contribution schemes 442 229 26 36
Share based payment 545 2,509 545 2,509
Government grants (98) - - -
-------- -------- -------- --------
11,532 12,722 1,920 6,554
======== ======== ======== ========
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:
2020 2019
Number Number
================== ================== =======
Management 17 15
Finance 8 6
Sales & marketing 33 20
Operations 37 42
Technology 54 36
------------------ -------
149 119
================== =======
Directors' emoluments
The number of directors who received share options during the
year was as follows:
2020 2019
Number Number
============================ ================== =======
Long term incentive schemes 1 1
There were no directors who exercised share options during the
year.
The directors' aggregate emoluments in respect of qualifying
services were:
Salary Bonus Settlement Transaction Pension 2020 2019
dependent and Benefits Total Total
payment GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============== ======== ======== ========== =========== ============= ======== ========
Executive
Directors:
S H Kenner* 64 - 33 - - 97 1,091
J v d Bergh 256 214 - 256 9 735 1,204
R Kapashi** - - - - - - 521
-------- -------- ---------- ----------- ------------- -------- --------
320 214 33 256 9 832 2,816
======== ======== ========== =========== ============= ======== ========
Non-executive
Directors:
S Baldwin 85 - - - - 85 70
P Judd 65 - - - - 65 60
P Dentskevich 50 - - - - 50 50
P Whiting*** - - - - - - 45
-------- -------- ---------- ----------- ------------- -------- --------
200 - - - - 200 225
======== ======== ========== =========== ============= ======== ========
* S H Kenner left the Group in June 2020
** R Kapashi left the Group in July 2019
*** P Whiting left the Group in July 2019
Transaction dependent payment relates to a one-off amount, that
had been provided for in 2019. See Note 7 for further
information.
Key management
The Directors consider that key management personnel include the
Executive Director of TruFin plc. This individual has the authority
and responsibility for planning, directing and controlling the
activities of the Group.
6. Employee share-based payment transactions
The employment share-based payment charge comprises:
2020 2019
GBP'000 GBP'000
================================================= ======== ========
Performance Share Plan and Joint Share Ownership
Plan Founder Award 465 2,430
Performance Share Plan Market Value Award 80 79
Performance Share Plan 2019 Award - -
Performance Share Plan 2018 Award - -
Total 545 2,509
======== ========
Performance Share Plan and Joint Share Ownership Plan Founder
Award ("Founder Award")
On 21 February 2018, 3,407,895 shares were granted to selected
founder members of senior management of which the share price at
date of grant was GBP1.90 per share. The awards are structured as a
Performance Share Plan and a Joint Share Ownership Plan. The
Performance Share Plan is structured as a nil cost option with no
performance conditions attached. The awards were also granted
subject to continued employment until February 2021. The Joint
Share Ownership Plan allows the employee to participate in the
growth in value over and above the grant price of GBP1.90. The
shares vest 25% on each anniversary of the grant date.
The first 25% of shares (851,973 shares) vested on 21 February
2019 when the share price was GBP1.98. As a result, 817,550 shares
subject to the Joint Share Ownership Plan became fully owned by the
trustee of the Company's employee benefit trust (the "EBT") and
34,423 became fully owned by senior management.
At the time of Distribution Finance Capital Ltd's ("DFC")
demerger from the Group, there was a modification to the Founder
Award. The GBP1.90 price above which the employee was able to
participate in value growth under the Joint Share Ownership Plan
was adjusted proportionally by reference to the respective share
prices of DFC and TruFin to GBP0.85. This modification has not
resulted in a change in the valuation of the award and this
continues to be recognised over the remainder of the original
vesting period.
As part of the demerger, holders of Founder Awards also received
an award in respect of DFC shares which gave rise to an Employers
National Insurance liability of GBP419,000, which was paid in July
2019.
On 11 September 2019, in connection with his change of role, the
unvested Founder Awards in respect of 1,369,244 shares held by
Henry Kenner fully vested, the result of which was that all of the
relevant shares ceased to be subject to the Joint Share Ownership
Plan and instead become fully owned by the EBT. In addition,
1,369,244 shares subject to the Performance Share Plan ceased to be
subject to continued employment condition.
The second 25% of Founder Awards held by James van den Bergh
vested on 21 February 2020 when the share price was GBP0.26. As a
result, 395,560 shares subject to the Join Share Ownership Plan
became fully owned by EBT and James' nil cost option under the
Performance Share Plan vested in respect of the same number of
shares.
On 27 November 2020, Henry Kenner exercised his nil cost option
under the Performance Share Plan which resulted in 1,807,217 shares
being transferred from the EBT to Henry Kenner on 22 December 2020.
This gave rise to an Employer's National Insurance liability of
GBP82,000 which was paid in January 2021.
Performance Share Plan Market Value Award ("PSP Market Value
Award")
On 21 February 2018, options to acquire 4,868,420 shares were
granted to the senior management team. The vesting of this award is
based on market--based performance conditions. The vesting of these
awards is subject to the holder remaining an employee of the
Company and the Company's share price achieving five distinct
milestones - vesting at 20% each milestone. The exercise price of
the awards at the time of grant was GBP1.90 per share. A Monte
Carlo simulation was used to determine the fair value of these
options. The model used an expected volatility of 10% and a risk
free rate of 1.3%.
In order to reflect the impact of the demerger, the PSP Market
Value Award was split into two:
-- Part of the award remained as an option in respect of TruFin
shares ("TruFin Market Value Award")
-- Part of the award became an award in respect of DFC shares
("DFC market Value Award")
The TruFin Market Value Award is on the same terms as the
original PSP Market Value Award except that:
-- The exercise price was adjusted to GBP0.85, and the share
price milestones were adjusted to reflect the demerger
-- The exercise price was further adjusted to GBP0.80 and the
share price milestones were further adjusted, to reflect the return
of value to shareholders in June 2019
-- The exercise price was further adjusted to GBP0.71, and the
share price milestones were further adjusted to reflect the return
of value to shareholders in December 2019
The modification has not resulted in a change in the valuation
of the award and this continues to be recognised over the remainder
of the original vesting period.
The grant of the DFC Market Value Award gave rise to an
Employer's national insurance liability for the Company of
GBP265,000 which was paid in July 2019.
Performance Share Plan 2018 Award ("PSP 2018 Award")
On 21 February 2018, options to acquire 1,000,001 shares were
granted to the senior management team. The PSP 2018 Award is
structured as a nil cost option. The vesting of this award is
subject to the holder being in continued employment until February
2021 and the subsidiary companies achieving certain financial
metrics over a three--year period.
In order to reflect the impact of the demerger, and as the
performance condition relating to the business of DFC was deemed to
be achieved in full due to the demerger, the PSP 2018 Award was
adjusted as follows:
-- the award part vested and was satisfied by way of a cash
payment calculated by reference to 50% of the shares subject to the
award and a price of GBP1.90 per share. The cash payments were made
in September 2019; and
-- the awards have otherwise continued in respect of 100% of the
TruFin shares, but the performance condition now relates solely to
the business of Oxygen
During the prior year, PSP 2018 Awards in respect of 736,843
shares lapsed following members of senior management leaving the
Group and changing roles.
The fair value of the unvested part of the award as at 31
December 2020 was deemed to be nil as it is highly improbable that
the vesting conditions will be met.
Performance Share Plan 2019 Award ("PSP 2019 Award")
On 11 September 2019 an option to acquire 320,000 shares was
granted to James van den Bergh. The PSP 2019 Award is structured as
a nil cost option. The vesting of this award is subject to the
holder being in continued employment until September 2022 and
subsidiary companies achieving certain financial metrics over a
three--year period. The fair value of the award as at 31 December
2020 was deemed to be nil as it is highly improbable that the
vesting conditions will be met.
Details of share based awards during the year:
JSOP Founder PSP Founder PSP Market
Award* Award* Value
-------------------------------- ------------ ----------- -----------
Type of instrument granted Shares (#) Options (#) Options (#)
Outstanding at 1 January 2020 1,186,678 3,373,472 4,868,420
Granted during the year - - -
Vested during the year (395,560) - -
Exercised during the year - (1,807,217) -
------------ ----------- -----------
Outstanding at 31 December 2020 791,118 1,566,255 4,868,420
============ =========== ===========
Exercisable at 31 December 2020 775,137 -
=========== ===========
*The JSOP Founder Awards and PSP Founder Awards will together
deliver, in aggregate, a maximum of 3,407,895 TruFin shares.
PSP 2018 PSP 2019
-------------------------------- ----------- -----------
Type of instrument granted Options (#) Options (#)
Outstanding at 1 January 2020 263,158 320,000
Granted during the year - -
Vested during the year - -
Exercised during the year - -
----------- -----------
Outstanding at 31 December 2020 263,158 320,000
=========== ===========
Exercisable at 31 December 2020 - -
=========== ===========
No options expired during the year.
The weighted average remaining contractual life for the share
options outstanding as at 31 December 2020 was 7.21 years (2019:
8.20 years).
The charges incurred as a result of the prior year demerger and
subsequent modifications of the awards have been included within
discontinued operations in note 10.
A breakdown of these charges is shown below:
2020 2019
GBP'000 GBP'000
============================================== ======== ========
PSP and JSOP Employer's NI charge - 419
PSP Market Value Employers NI charge - 265
PSP 2018 - DFC portion - 1,081
DFC Banking licence contingent liability (See
note 7) - 700
- 2,465
======== ========
Employees are responsible for settling their own tax obligations
related to these awards as and when they arise. The Company will
pay any Employers NI that becomes due on these awards.
7. Provision for commitments and other liabilities
A provision of GBP700,000 which includes Employer's National
Insurance had been provided for as a contingent liability to be
paid to management as part of the management incentive plan agreed
at the time of the IPO. The payment was conditional on DFC being
granted a bank licence by the PRA.
In September 2020 DFC was granted a bank licence by the PRA, and
in October 2020 the corresponding payment was made to the relevant
individuals.
Group GBP'000
==================== =======
At 1 January 2020 700
Payment (700)
At 31 December 2020 -
=======
The Company had no provisions at the year end.
Group GBP'000
========================================= =======
At 1 January 2019 1,053
Demerger of subsidiary (109)
Deferred consideration paid (750)
Net additional provision during the year 506
-------
At 31 December 2019 700
=======
8. Net impairment loss on financial assets
2020 2019
GBP'000 GBP'000
================================ ======================= ========
At 1 January 123 319
On demerger of subsidiary - (180)
Charge for impairment loss (11) (14)
Amounts written off in the year (102) (2)
At 31 December 10 123
======================= ========
At 31 December 2020, the Group had an impairment balance of
GBP10,000 which was allocated against loans and advances. At 31
December 2019, all of the impairment balance was allocated against
loans and advances.
The net impairment charge on financial assets during the year
ended 31 December 2020 all related to loans and advances.
The net impairment charge on financial assets during the year
ended 31 December 2019 all related to loans and advances.
9. Loss before income tax
Loss before income tax is stated after charging:
2020 2019
GBP'000 GBP'000
============================================== ======================= ========
Depreciation of property, plant and equipment 128 307
Amortisation of intangible assets 1,209 1,032
Staff costs including share based payments
charge 11,532 12,722
Crowe LLP) (2018: Deloitte LLP)
2020 2019
Fees payable to the Group's auditor (Crowe GBP'000 GBP'000
LLP)
============================================= ======================= ========
Fees payable for the audit of the company's
annual accounts 44 44
Fees payable for the audit of the company's
subsidiaries 83 78
----------------------- --------
Total audit fees 127 122
======================= ========
Non audit services
Other assurance services 12 12
----------------------- --------
Total non-audit fees 12 12
======================= ========
10. Discontinued operations
On 8 May 2019, DFC was demerged from the group into a separate
AIM listed company (Distribution Finance Capital Holdings plc),
with the existing TruFin plc shareholders being given one new share
in DFC for each existing TruFin B share they held. These B shares
were subsequently cancelled (as mentioned in note 19); the value of
these cancelled shares was GBP96.4m and is the deemed consideration
of the transaction. The carrying value of DFC prior to demerger was
GBP93.8m which gave rise to a fair value uplift of GBP2.6m.
DFC's results for the period from the start of the prior year to
the date of demerger have been included within this note.
2020 2019
DFC results for the period to demerger GBP'000 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.
2020 2019
GBP'000 GBP'000
DFC loss before tax - (2,963)
Other items included within discontinued
operations
Fair value uplift in value of DFC - 2,618
Costs of demerger - (653)
MIP related demerger costs - (2,465)
------------ ------------
Loss from discontinued operations - (3,463)
============ ============
The assets other than cash or cash equivalents in DFC at the
time of demerger were GBP157m and liabilities were GBP125m.
2020 2019
DFC Cash flow GBP'000 GBP'000
===================================== ============ ============
DFC loss before tax - (2,963)
Working capital adjustments - (33,435)
------------ ------------
Cash flows from operating activities - (36,398)
Cash flows from investing activities - (123)
Cash flows from financing activities - 71,876
Net increase in cash - 35,355
Cash leaving the group on date of
demerger - (42,911)
------------ ------------
(7,556)
Less intragroup transfers - (30,000)
------------ ------------
Cash used by discontinued operations - (37,556)
============ ============
11. Taxation
Analysis of tax charge recognised in the period
2020 2019
GBP'000 GBP'000
==================== ======================= ========
Current tax charge 16 14
Deferred tax charge 2,460 3,076
----------------------- --------
Total tax charge 2,476 3,090
======================= ========
Reconciliation of loss before tax to total tax credit
recognised
2020 2019
Group GBP'000 GBP'000
===================================================== ======================== ========================
Loss before tax (8,927) (15,311)
Loss before tax multiplied by the standard
rate of corporation tax in the UK of 19% (2019:
19%) (1,696) (2,842)
Tax effect of:
Expenses not deductible 161 478
Depreciation in excess of capital allowances 132 27
Capital allowances (57) (17)
Other short term timing differences (129) (2)
Capitalised revenue expenditure - -
Unrecognised deferred tax on brought forward
assets (7,787) (2,790)
Unrecognised deferred tax from acquired subsidiaries - (1,815)
Unrecognised deferred tax from demerged subsidiary - 2,400
Adjust closing deferred tax to rate at which
losses expect to be utilised - (80)
Adjustments in respect of prior periods (1,353) (58)
Deferred tax not recognised 13,204 7,789
Effect of different tax rates of subsidiaries
operating in other jurisdictions 1 -
------------------------ ------------------------
Total tax charge 2,476 3,090
======================== ========================
2020 2019
Company GBP'000 GBP'000
===================================================== ======================== ========================
Loss before tax (704) (6,530)
Loss before tax multiplied by the standard
rate of corporation tax in the UK of 19% (2019:
19%) (134) (1,241)
Tax effect of:
Expenses not deductible 169 378
Other short term timing differences (133) -
Unrecognised deferred tax on brought forward
assets (1,097) (289)
Adjust closing deferred tax to rate at which
losses expect to be utilised - 55
Adjustments in respect of prior periods 132 -
Deferred tax not recognised 1,063 1,097
Total tax charge - -
======================== ========================
The UK Government enacted changes to the UK tax rate in 2020,
resulting in the rate remaining at 19% (instead of the previously
intended reduction from 19% to 17% from 1 April 2020). The deferred
tax assets and liabilities at 31 December 2020 have been based on
the rates substantively enacted at the reporting date.
In the 2020 Budget, the UK chancellor announced that legislation
would be proposed to increase the main rate of corporation tax to
25% from 1 April 2023, although this has not been enacted at the
date of approval of the financial statements.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
Deferred tax asset
2020 2019
Group GBP'000 GBP'000
================================================ ======================= ========
Balance at start of the year 2,503 5,579
Charge to the statement of comprehensive income (2,460) (3,076)
----------------------- --------
Balance at end of the year 43 2,503
======================= ========
Comprised of:
Losses 43 2,503
----------------------- --------
Total deferred tax asset 43 2,503
======================= ========
In respect of Oxygen, no deferred tax asset has been recognised.
The Group has considered the probability of future taxable profits
in the short term and has opted to derecognise a deferred tax asset
of GBP2.5m, following the immediate impact arising in this year due
to the COVID-19 pandemic. This is without prejudice to the expected
profits in the medium to longer term in the Oxygen group, which the
Group continues to see crystallising.
A deferred tax asset has been recognised in respect of Vertus
Capital SPV 1, as it became profitable in the year.
12. Intangible assets
Client contracts Separately
Software identifiable
licenses intangible
and similar Assets Goodwill Total
assets
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================= ================== ================== ============= ========== =======
Cost
At 1 January 2020 3,574 1,109 1,642 15,796 22,121
Additions 1,180 725 - - 1,905
Disposals (61) - - - (61)
Exchange differences (4) - - - (4)
-------------
At 31 December
2020 4,689 1,834 1,642 15,796 23,961
================== ================== ============= ========== =======
Amortisation
At 1 January 2020 (479) (471) (414) - (1,364)
Charge (538) (343) (328) - (1,209)
Disposals 61 - - - 61
-------------
At 31 December
2020 (956) (814) (742) - (2,512)
================== ================== ============= ========== =======
Accumulated impairment
losses
At 1 January 2020 (186) - - - (186)
Charge (222) - - - (222)
------------------ ------------------ ------------- ---------- -------
At 31 December
2020 (408) - - - (408)
================== ================== ============= ========== =======
Net book value
------------------ ------------------ ------------- ---------- -------
At 31 December
2020 3,325 1,020 900 15,796 21,041
================== ================== ============= ========== =======
At 31 December
2019 2,909 638 1,228 15,796 20,571
================== ================== ============= ========== =======
Client contracts Separately
Software identifiable
licenses intangible
and similar Assets Goodwill Total
assets
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================= ================== ================== ============= ========== =======
Cost
At 1 January 2019 2,165 1,495 1,387 1,372 6,419
Additions 1,409 283 - - 1,692
Arising on acquisition
of subsidiary - - 255 14,424 14,679
Demerger of subsidiary - (669) - - (669)
-------------
At 31 December
2019 3,574 1,109 1,642 15,796 22,121
================== ================== ============= ========== =======
Amortisation
At 1 January 2019 (103) (278) - - (381)
Charge (376) (242) (414) - (1,032)
Demerger of subsidiary - 49 - - 49
-------------
At 31 December
2019 (479) (471) (414) - (1,364)
================== ================== ============= ========== =======
Accumulated impairment
losses
At 1 January 2019 - - - - -
Charge (186) - - - (186)
------------------ ------------------ ------------- ---------- -------
At 31 December
2019 (186) - - - (186)
================== ================== ============= ========== =======
Net book value
------------------ ------------------ ------------- ---------- -------
At 31 December
2019 2,909 638 1,228 15,796 20,571
================== ================== ============= ========== =======
At 31 December
2018 2,062 1,217 1,387 1,372 6,038
================== ================== ============= ========== =======
The Company had no intangibles assets at the year end.
Client contracts comprise the directly attributable costs
incurred at the beginning of an Early Payment Scheme Service
contract to revise a client's existing payment systems and provide
access to the Group's software and other intellectual property.
These implementation (or "set up") costs are comprised primarily of
employee costs.
The useful economic life for each individual asset is deemed to
be the term of the underlying Client Contract (generally 5 years)
which has been deemed appropriate and for impairment review
purposes, projected cash flows have been discounted over this
period.
The amortisation charge is recognised in fee expenses within the
statement of comprehensive income, as these costs are incurred
directly through activities which generate fee income.
The Group performed an impairment review at 31 December 2020 and
has impaired GBP222,000 in relation to underperforming
contracts.
Software, licenses and similar assets comprises separately
acquired software, as well as costs directly attributable to
internally developed platforms across the Group. These directly
attributable costs are associated with the production of
identifiable and unique software products controlled by the Group
and are probable of producing future economic benefits. They
primarily include employee costs and directly attributable
overheads.
A useful economic life of 3 to 5 years has been deemed
appropriate and for impairment review purposes projected cash flows
have been discounted over this period.
The amortisation charge is recognised in depreciation and
amortisation on non-financial assets within the statement of
comprehensive income.
The Group performed an impairment review at 31 December 2020 and
concluded no impairment was required.
The 'Software, licenses and similar assets' net book value
balance related to internally generated intangible assets at 31
December 2020 was GBP1,020,000 (2019: GBP638,000). This consists of
cost of GBP1,834,000 (2019: GBP1,108,000) and accumulated
amortisation of GBP814,000 (2019: GBP472,000). During the year
there were additions of GBP725,000 (2019: GBP283,000) and
amortisation of GBP343,000 (2019: GBP242,000).
Goodwill and "Separately identifiable intangible assets" arise
from acquisitions made by the Group.
Porge (now Insight Services within OFL)
Porge was acquired by OFGL in August 2018 and goodwill of
GBP2,759,000 that arose from this acquisition was included within
the payments services segment of the Group. Following the
acquisition, separately identifiable intangible assets of
GBP1,387,000 primarily relating to the value of the contracts in
the business at acquisition were recognised. These are being
amortised over 5 years resulting in an amortisation charge of
GBP393,000 (2019: GBP277,000) during the year. Net Book value of
these assets at 31 December 2020 was GBP994,000 (2019: GBP717,000).
Goodwill related to this transaction excluding these assets at 31
December 2020 was GBP1,372,000.
On 31 August 2020, OFL purchased the Trade and Assets of Porge.
The purchase price was set at the Net book value of the assets
acquired at the time of the transaction.
Vertus
In July 2019, the Group converted into ordinary shares its
existing convertible loan with Vertus Capital in full satisfaction
and discharge of the loan. This, together with a further cash
payment, gave the Group 51% ownership of Vertus Capital and Vertus
SPV 1.
Goodwill of GBP1,714,000 arose from this transaction and has
been included within the short term finance segment of the
business. Separately identifiable intangible assets of GBP255,000
primarily related to the value of existing third party
relationships on acquisition have been identified. These are being
amortised over 5 years and the amortisation charge for the year was
GBP51,000 (2019: GBP21,000). Net Book value of these assets at 31
December 2020 was GBP204,000 (2019: GBP234,000). Goodwill related
to Vertus excluding these assets at 31 December 2020 was
GBP1,459,000 (2019: GBP1,459,000)
Playstack
In September 2019, the Group converted into ordinary shares its
existing convertible loans with Playstack Ltd in full satisfaction
and discharge of the loans. This gave the Group ownership of
Playstack Ltd and the other companies within the Playstack Group.
Further details of the acquisition are included in note 24.
Goodwill of GBP12,965,000 arose from this transaction and has
been included within the publishing segment of the business.
Impairment testing of intangibles
An impairment review of goodwill was carried out at the year
end.
The insight services segment of OFL was valued using the
discounted cash flow methodology. Its net earnings were forecasted
to 2025, a discount rate of 12% was used and terminal growth rate
of 2%. This valuation was greater than the amount of goodwill and
therefore the goodwill is not deemed to be impaired.
Vertus was valued using the discounted cash flow methodology.
The net earnings of Vertus were forecasted to 2030, a discount rate
of 12% was used and terminal growth rate of 3%. The valuation of
Vertus was greater than the amount of goodwill and therefore the
goodwill is not deemed to be impaired.
Playstack was valued using the discounted cash flow methodology.
The net earnings of Playstack were forecasted to 2030, a discount
rate of 20% was used and terminal growth rate of 3%. The valuation
of Playstack was greater than the amount of goodwill and therefore
the goodwill is not deemed to be impaired.
13. Property, plant and equipment
Leasehold Fixtures Computer Right-of-Use
improvements & equipment Asset Total
fittings
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
==================== ============= ========= ========== ============ =======
Cost
At 1 January 2020 44 247 36 429 756
Additions - 7 24 - 31
Disposals (44) (202) - - (246)
At 31 December
2020 - 52 60 429 541
------------- --------- ---------- ------------ -------
Depreciation
At 1 January 2020 (36) (219) (9) (255) (519)
Charge (8) (19) (17) (84) (128)
Disposals 44 202 - - 246
At 31 December
2020 - (36) (26) (339) (401)
------------- --------- ---------- ------------ -------
Net book value
------------- --------- ---------- ------------ -------
At 31 December
2020 - 16 34 90 140
============= ========= ========== ============ =======
At 31 December
2019 8 28 27 174 237
============= ========= ========== ============ =======
Leasehold Fixtures Computer Right-of-Use
improvements & equipment Asset Total
fittings
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================= ============= ========= ========== ============ =======
Cost
At 1 January 2019 67 337 177 - 581
Additions - 14 24 - 38
On adoption of
IFRS 16 - - - 429 429
Acquisition of
subsidiary - - 5 - 5
Demerger of subsidiary (23) (104) (170) - (297)
At 31 December
2019 44 247 36 429 756
------------- --------- ---------- ------------ -------
Depreciation
At 1 January 2019 (24) (205) (49) - (278)
Charge (15) (32) (5) (255) (307)
Acquisition of
subsidiary - - (3) - (3)
Demerger of subsidiary 3 18 48 - 69
------------
At 31 December
2019 (36) (219) (9) (255) (519)
------------- --------- ---------- ------------ -------
Net book value
------------- --------- ---------- ------------ -------
At 31 December
2019 8 28 27 174 237
============= ========= ========== ============ =======
At 31 December
2018 43 132 128 - 303
============= ========= ========== ============ =======
Computer equipment Right-of-use
asset Total
Company GBP'000 GBP'000 GBP'000
==================== ========================= =================== =================
Cost
At 1 January 2020 3 167 170
Additions - - -
At 31 December 2020 3 167 170
------------------------- ------------------- -----------------
Depreciation
At 1 January 2020 (2) (167) (169)
Charge (1) - (1)
------------------------- ------------------- -----------------
At 31 December 2020 (3) (167) (170)
------------------------- ------------------- -----------------
Net book value
------------------------- ------------------- -----------------
At 31 December 2020 - - -
========================= =================== =================
At 31 December 2019 1 - 1
========================= =================== =================
Computer equipment Right-of-use
asset Total
Company GBP'000 GBP'000 GBP'000
==================== ========================= =================== ===================
Cost
At 1 January 2019 3 - 3
Additions - - -
On adoption of IFRS
16 - 167 167
------------------------- ------------------- -------------------
At 31 December 2019 3 167 170
------------------------- ------------------- -------------------
Depreciation
At 1 January 2019 (1) - (1)
Charge (1) (167) (168)
------------------------- ------------------- -------------------
At 31 December 2019 (2) - (169)
------------------------- ------------------- -------------------
Net book value
------------------------- ------------------- -------------------
At 31 December 2019 1 - 1
========================= =================== ===================
At 31 December 2018 2 - 2
========================= =================== ===================
The Right of use assets in the Group and Company relates to
leases for office buildings.
14. Other investments
2020 2019
Group GBP'000 GBP'000
================================= ======================= ========
Investments in equity instruments - -
Debt securities - -
----------------------- --------
- -
======================= ========
Investment in equity instruments
Group Level
3 valuation Company
GBP'000 GBP'000
============================== ========================= ========================
Fair value at 1 January 2020 - -
Disposal of investment - -
Fair value at 31 December 2020 - -
========================= ========================
Group Level
3 valuation Company
GBP'000 GBP'000
=============================== ========================= ========================
Fair value at 1 January 2019 44,500 -
Disposal of investment (44,500) -
Fair value at 31 December 2019 - -
========================= ========================
On 7 May 2019, the Group sold its investment in Zopa to
Arrowgrass for a gross cash consideration of GBP44.5m which was
equal to the fair value of Zopa.
Group 2020 2019
============== ==== ====
Undiluted 0.0% 0.0%
Fully diluted 0.0% 0.0%
A level 3 valuation is one that relies on unobservable inputs to
the valuation process.
Debt Securities
Group GBP'000
============================ =======
Balance at 1 January 2020 -
Demerger of subsidiary -
Balance at 31 December 2020 -
=======
Balance at 1 January 2019 4,994
Demerger of subsidiary (4,994)
-------
Balance at 31 December 2019 -
=======
Following the demerger of DFC from the Group in 2019, the Group
no longer holds any debt securities.
The Company had no debt securities at the year end (2019:
GBPnil).
15. Investment in subsidiaries
Company GBP'000
=============================================== ========
Balance at 1 January 2020 and 31 December 2020 30,189
Balance at 1 January 2019 123,966
Demerger of subsidiary (93,777)
Balance at 31 December 2019 30,189
========
16. Loans and advances
2020 2019
Group GBP'000 GBP'000
========================= ======================= ========
Total loans and advances 14,670 27,828
Less: loss allowance (10) (123)
14,660 27,705
======================= ========
The aging of loans and advances are analysed as follows:
2020 2019
GBP'000 GBP'000
============================== ======================= ========
Neither past due nor impaired 14,401 27,126
Past due: 0-30 days 254 490
Past due: 31-60 days 2 61
Past due: 61-90 days - 23
Past due: more than 91 days 3 5
14,660 27,705
======================= ========
The Company had no loans and advances at the year end (2019:
GBPnil).
17. Trade and other receivables
Group Company
------------------ ------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other receivables 1,992 1,075 - -
Prepayments 421 368 39 41
Accrued Income 263 178 - -
VAT - 25 15 61
Other debtors 1,278 2,361 7 93
Amounts due from Group
Undertakings - - 597 -
3,954 4,007 658 195
======== ======== ======== ========
Trade receivables above are stated net of a loss allowance of
GBPnil (2019: GBPnil). All receivables are due within one year.
The aging of trade receivables is analysed as follows:
Group Company
------------------ ------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Not yet due 1,411 447 - -
Past due: 0-30 days 121 254 - -
Past due: 31-60 days 92 106 - -
Past due: 61-90 days 50 67 - -
Past due: more than
91 days 318 201 - -
1,992 1,075 - -
======== ======== ======== ========
18. Share capital
Share Capital Total
Group and Company GBP'000 GBP'000
======================================= ============= ========
80,822,204 shares at GBP0.91 per share 73,548 73,548
All ordinary shares carry equal entitlements to any
distributions by the company. No dividends were proposed by the
Directors for the year ended 31 December 2020.
19. Borrowings
2020 2019
Group GBP'000 GBP'000
=========================== ======================= ========
Loans due within one year 2,204 6,194
Loans due in over one year 8,507 -
10,711 6,194
======================= ========
Movements in borrowings during the year
The below table identifies the movements in borrowings during
the year.
Group GBP'000
============================ ========================
Balance at 1 January 2020 6,194
Funding drawdown 5,840
Interest expense 279
Origination fees paid (2)
Fee amortisation 133
Repayments (1,458)
Interest paid (275)
------------------------
Balance at 31 December 2020 10,711
========================
Group GBP'000
============================ ========================
Balance at 1 January 2019 59,041
Demerger of subsidiary (59,041)
Acquisition of subsidiary 1,183
Funding drawdown 5,350
Interest expense 39
Origination fees paid (357)
Repayments (21)
------------------------
Balance at 31 December 2019 6,194
========================
The primary borrowings of the Group are comprised of the
following:
-- A 24-month revolving facility agreement with a 12-month
term-out period, maturing in September 2022. Interest is payable
monthly with the principal balance rolled over monthly, subject to
ongoing compliance with the agreement. The facility is secured by a
debenture over all assets of Vertus Capital.
-- Unsecured interest bearing facility due in 2026, with
interest payable quarterly.
-- 2 Unsecured interest-bearing facilities due in 2025, with
interest payable monthly.
-- A revolving credit facility with a minimum term period to
March 21, after which the facility continues under notice is given
by either the lender (3 months) or borrower (6 months). The
facility is secured by a fixed and floating charge over Satago SPV1
and interest is payable monthly.
The Company had no borrowings during the period or at year
end.
20. Trade and other payables
Group Company
------------------ ------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 1,553 651 32 85
Accruals 4,179 3,001 569 947
Other payables 247 379 2 3
Corporation tax 1 22 - -
Other taxation and social
security 960 704 539 409
VAT 179 - - -
-------- -------- -------- --------
7,119 4,757 1,142 1,444
======== ======== ======== ========
21. Financial instruments
The Directors have performed an assessment of the risks
affecting the Group through its use of financial instruments and
believe the principal risks to be: capital risk; credit risk, and
market risk including interest rate risk.
This note describes the Group's objectives, policies and
processes for managing the material risks and the methods used to
measure them. The significant accounting policies regarding
financial instruments are disclosed in note 1.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while providing an
adequate return to shareholders.
The capital structure of the Group consists of borrowings
disclosed in note 19 and equity of the Group (comprising issued
capital, reserves, retained earnings and non-controlling interests
as disclosed in note 18 and note 22).
The Group is not subject to any externally imposed capital
requirements.
Principal financial instruments
The principal financial instruments to which the Group is party
and from which financial instrument risk arises, are as
follows:
-- Loans and advances, primarily credit risk and liquidity
risk;
-- Trade receivables, primarily credit risk and liquidity
risk;
-- Investments, primarily fair value or market price risk;
-- Cash and cash equivalents, which can be a source of credit
risk but are primarily liquid assets available to further business
objectives or to settle liabilities as necessary;
-- Trade and other payables; and
-- Borrowings which are used as sources of funds and to manage
liquidity risk.
Analysis of financial instruments by valuation model
There are no financial assets or liabilities included in the
statement of financial position at fair value.
31 December 2020
Financial assets and financial liabilities included in the
statement of financial position that are not measured at fair
value:
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 14,660 14,660 - - 14,660
Trade
receivables 1,992 1,992 - - 1,992
Other
receivables 1,541 1,541 - - 1,541
Cash and
cash
equivalents 17,728 17,728 17,728 - -
=================== ================== =================== =================== ===================
35,921 35,921 17,728 - 18,193
=================== ================== =================== =================== ===================
Financial liabilities not measured
at fair value
Borrowings 10,711 10,711 - - 10,711
Trade, other
payables
and
accruals 6,578 6,578 - - 6,578
=================== ================== =================== =================== ===================
17,289 17,289 - - 17,289
=================== ================== =================== =================== ===================
31 December 2019
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 27,705 27,705 - - 27,705
Trade
receivables 1,075 1,075 - - 1,075
Other
receivables 2,907 2,907 - - 2,907
Cash and
cash
equivalents 6,971 6,971 6,971 - -
=================== ================== =================== =================== ===================
38,658 38,658 6,971 - 31,687
=================== ================== =================== =================== ===================
Financial liabilities not measured
at fair value
Borrowings 6,194 6,194 - - 6,194
Trade, other
payables
and
accruals 4,029 4,029 - - 4,029
=================== ================== =================== =================== ===================
10,223 10,223 - - 10,223
=================== ================== =================== =================== ===================
31 December 2020
Carrying Fair
Company 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
Amounts owed
by group
undertakings 47,066 47,066 - - 47,066
Other
receivables 619 619 - - 619
Cash and cash
equivalents 578 578 578 - -
=================== ================== =================== =================== ===================
48,263 48,263 578 - 47,685
=================== ================== =================== =================== ===================
Financial liabilities not measured
at fair value
Trade, other
payables
and accruals 1,142 1,142 - - 1,142
=================== ================== =================== =================== ===================
1,142 1,142 - - 1,142
=================== ================== =================== =================== ===================
31 December 2019
Carrying Fair
Company 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
Amounts owed
by group
undertakings 49,083 49,083 - - 49,083
Other
receivables 134 134 - - 134
Cash and cash
equivalents 184 184 184 - -
=================== ================== =================== =================== ===================
49,401 49,401 184 - 49,217
=================== ================== =================== =================== ===================
Financial liabilities not measured
at fair value
Trade, other
payables
and accruals 1,035 1,035 - - 1,035
=================== ================== =================== =================== ===================
1,035 1,035 - - 1,035
=================== ================== =================== =================== ===================
Fair values for level 3 assets and liabilities were calculated
using a discounted cash flow model and the Directors consider that
the carrying amounts of financial assets and liabilities recorded
at amortised cost in the financial statements approximate to their
fair values.
Loans and advances
Due to the short-term nature of loans and advances and/or
expected credit losses recognised, their carrying value is
considered to be approximately equal to their fair value.
Trade and other receivables, borrowings, trade and other
payables, and accruals
These represent short term receivables and payables and as such
their carrying value is considered to be equal to their fair
value.
Financial risk management
The Group's activities and the existence of the above financial
instruments expose it to a variety of financial risks.
The Board of Directors has overall responsibility for the
determination of the Group's risk management objectives and
policies. The overall objective of the Board of Directors is to set
policies that seek to reduce ongoing risk as far as possible
without unduly affecting the Group's competitiveness and
flexibility.
The Group is exposed to the following financial risks:
-- Credit risk
-- Liquidity risk
-- Market risk
-- Interest rate risk
Further details regarding these policies are set out below.
Credit risk
Credit risk is the risk that a customer or counterparty will
default on its contractual obligations resulting in financial loss
to the Group. One of the Group's main income generating activities
is lending to customers and therefore credit risk is a principal
risk. Credit risk mainly arises from loans and advances. The Group
considers all elements of credit risk exposure such as counterparty
default risk, geographical risk and sector risk for risk management
purposes.
Credit risk management
The credit committees within the wider Group are responsible for
managing the credit risk by:
-- Ensuring that it has appropriate credit risk practices,
including an effective system of internal control;
-- Identifying, assessing and measuring credit risks across the
Group from an individual instrument to a portfolio level;
-- Creating credit policies to protect the Group against the
identified risks including the requirements to obtain collateral
from borrowers, to perform robust ongoing credit assessment of
borrowers and to continually monitor exposures against internal
risk limits;
-- Limiting concentrations of exposure by type of asset,
counterparty, industry, credit rating, geographical location;
-- Establishing a robust control framework regarding the
authorisation structure for the approval and renewal of credit
facilities;
-- Developing and maintaining the risk grading to categorise
exposures according to the degree of risk of default. Risk grades
are subject to regular reviews; and
-- Developing and maintaining the processes for measuring
Expected Credit Loss (ECL) including monitoring of credit risk,
incorporation of forward-looking information and the method used to
measure ECL.
Significant increase in credit risk
The Group continuously monitors all assets subject to Expected
Credit Loss as to whether there has been a significant increase in
credit risk since initial recognition, either through a significant
increase in Probability of Default ("PD") or in Loss Given Default
("LGD").
The following is based on the procedures adopted by the
Group:
Granting of credit
The Business Development Team prepare a Risk Summary which sets
out the rationale and the pricing for the proposed loan facility
and confirms that it meets the Group's product risk and pricing
policies. The Application will include the proposed counterparty's
latest financial information and any other relevant information but
as a minimum:
-- Details of the limit requirement e.g. product, amount, tenor,
repayment plan etc.;
-- Facility purpose or reason for increase;
-- Counterparty details, background, management, financials and
ratios (actuals and forecast);
-- Key risks and mitigants for the application;
-- Conditions, covenants & information (and monitoring
proposals) and security (including comments on valuation);
-- Pricing;
-- Confirmation that the proposed exposure falls within risk
appetite; and
-- Clear indication where the application falls outside of risk
appetite.
The Credit Risk Department will analyse the financial
information, obtain reports from credit reference agencies,
allocate a risk rating and make a decision on the application. The
process may require further dialogue with the Business Development
Team to ascertain additional information or clarification.
Each mandate holder and Committee is authorised to approve loans
up to agreed financial limits provided that the risk rating of the
counterparty is within agreed parameters. If the financial limit
requested is higher than the credit authority of the first reviewer
of the loan facility request, the application is sent to the next
credit authority level with a recommendation.
The Executive Risk Committee reviews all applications that are
outside the credit approval mandate of the mandate holder due to
the financial limit requested or if the risk rating is outside of
policy but there is a rationale and/or mitigation for considering
the loan on an exceptional basis.
Applications where the counterparty has a high risk rating are
sent to the Executive Risk Committee for a decision based on a
positive recommendation from the Credit Risk department. Where a
limited company has such a risk rating, the Executive Risk
Committee will consider the following mitigants:
-- Existing counterparty which has met all obligations in time
and in accordance with loan agreements,
-- Counterparty known to Group personnel who can confirm
positive experience,
-- Additional security, either tangible or personal guarantees
where there is verifiable evidence of personal net worth,
-- A commercial rationale for approving the application,
although this mitigant will generally be in addition to at least
one of the other mitigants.
Identifying significant increases in credit risk
The Group measures a change in a counterparty's credit risk
mainly on payment, on updated from credit reference agencies and
adverse changes with a counterparty's debtors. The Group views a
significant increase in credit risk as:
-- A two-notch reduction in the Group's counterparty's risk
rating since origination, as notified through the credit rating
agency;
-- A counterparty defaults on a payment due under a loan agreement;
-- Late contractual payments which although cured, re-occur on a regular basis;
-- Evidence of a reduction in a counterparty's working capital
facilities which has had an adverse effect on its liquidity; or
-- Evidence of actual or attempted sales out of trust or of
double financing of assets funded by the Group.
-- Deterioration in the underlying business (held as part of the
security package) indicated through significant loss of revenue and
higher than average client attrition.
An increase in significant credit risk is identified when any of
the above events happen after the date of initial recognition.
Default
Identifying loans and advances in default and credit
impaired
The Group's definition of default for this purpose is:
-- A counterparty defaults on a payment due under a loan
agreement and that payment is overdue on its terms, or
-- The collateral that secures, all or in part, the loan
agreement has been sold or is otherwise not available for sale and
the proceeds have not been paid to the lending company, or
-- A counterparty commits an event of default under the terms
and conditions of the loan agreement which leads the lending
company to believe that the borrower's ability to meet its credit
obligations to the lending company is in doubt.
Exposure at default
Exposure at default ("EAD") is the expected loan balance at the
point of default and, for the purpose of calculating the Expected
Credit Losses ("ECL"), management have assumed this to be the
balance at the reporting date.
Expected Credit Losses
The ECL on an individual loan is based on the credit losses
expected to arise over the life of the loan, being defined as the
difference between all the contractual cash flows that are due to
the Group and the cash flows that it actually expects to
receive.
This difference is then discounted at the original effective
interest rate on the loan to reflect the disposal period of
underlying collateral.
Regardless of the loan status stage, the aggregated ECL is the
value that the Group expects to lose on its current loan book
having assessed each loan individually.
To calculate the ECL on a loan, the Group considers:
1. Counterparty PD; and
2. LGD on the asset
whereby: ECL = EAD x PD x LGD
Maximum exposure to credit risk
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 17,728 6,971 578 184
Loans and advances 14,660 27,705 - -
Amounts owed by group
undertakings - - 47,066 49,083
Trade and other receivables 3,532 3,983 658 195
======== ======== ======== ========
Maximum exposure to
credit risk 35,920 38,659 48,302 49,462
======== ======== ======== ========
Loans and advances:
Collateral held as security
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
================================= ======== -------- -------- ========
Fully collateralised
Loan-to-value* ratio:
Less than 50% - 3 - -
50% to 70% 75 75 - -
71% to 80% 163 250 - -
81% to 90% 2,185 3,465 - -
91% to 100% - 6 - -
======== ======== ======== ========
2,423 3,799 - -
======== ======== ======== ========
Partially collateralised
Collateral value relating
to loans over 100% loan-to-value - - - -
-------- -------- -------- --------
Unsecured lending 12,247 24,032 - -
======== ======== ======== ========
* Calculated using wholesale collateral values
Concentration of credit risk
The Group maintains policies and procedures to manage
concentrations of credit at the counterparty level and industry
level to achieve a diversified loan portfolio.
Credit quality
An analysis of the Group's credit risk exposure for loan and
advances per class of financial asset, internal rating and "stage"
is provided in the following tables. A description of the meanings
of stages 1, 2 and 3 is given in the accounting policies set out in
note 1.
2020 2019
Risk rating Stage 1 Stage 2 Stage 3 Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============= ------------------- ------------------- ------------------- ------------------ ---------------------
Above average
(risk
rating 1-2) 6,360 - - 6,360 8,247
Average (risk
rating
3-5) 6,670 - 5 6,675 5,283
Below average
(risk
rating 6+) 1,635 - - 1,635 372
------------------- ------------------- ------------------- ------------------ ---------------------
Gross
carrying
amount 14,665 - 5 14,770 13,902
------------------- ------------------- ------------------- ------------------ ---------------------
Loss
allowance (5) - (5) (10) (123)
------------------- ------------------- ------------------- ------------------ ---------------------
Carrying
amount 14,660 - - 14,660 13,779
=================== =================== =================== ================== =====================
Total
Stage 1 Stage 2 Stage 3 GBP'000
Gross Carrying Amount GBP'000 GBP'000 GBP'000
======================== ==================== ==================== ==================== ====================
As at 1 January 2020 13,801 - 101 13,902
Transfer to stage - - - -
1
Transfer to stage - - - -
2
Transfer to stage - - - -
3
Net Loans
originated/(repaid) 864 - (96) 768
As at 31 December
2020 14,665 - 5 14,670
==================== ==================== ==================== ====================
Trade receivables
Status at reporting date
The Group has assessed the trade and other receivables in
accordance with IFRS 9 and determined that, at the balance sheet
date, the lifetime ECL is GBPnil (2019: GBPnil).
The contractual amount outstanding on financial assets that were
written off during the reporting period and are still subject to
enforcement activity is GBPnil at 31 December 2020 (2019:
GBPnil).
Liquidity risk
Liquidity risk is the risk that the Group does not have
sufficient financial resources to meet its obligations as they fall
due or will have to do so at an excessive cost. This risk arises
from mismatches in the timing of cash flows which is inherent in
all banking operations and can be affected by a range of Group
specific and market-wide events.
Liquidity risk management
Group Finance performs treasury management for the Group, with
responsibility for the treasury for each business entity being
delegated to the individual subsidiaries. However, in line with the
wider Group governance structure, Group Finance performs an
important oversight role in the wider treasury considerations of
the Group. The primary mechanism for maintaining this oversight is
a formal requirement that subsidiaries' Finance teams notify all
material Treasury matters to Group Finance.
The main Group responsibilities are to maintain banking
relationships, manage and maximise the efficiency of the Group's
working capital and long-term funding and ensure ongoing compliance
with banking arrangements. The Group currently does not have any
offsetting arrangements.
Liquidity stress testing
The Group regularly conducts liquidity stress tests, based on a
range of different scenarios to ensure it can meet all of its
liabilities as they fall due.
Maturity analysis for financial assets and financial
liabilities
The following maturity analysis is based on expected gross cash
flows.
As at 31 December Carrying Less 1-3 months 3 months 1-5 years >5 years
2020 Amount than GBP'000 to 1 GBP'000
GBP'000 1 month year GBP'000
GBP'000 GBP'000
----------------------- --------- --------- ----------- --------- ---------- ---------
Financial Assets
Cash and cash
equivalents 17,728 17,728 - - - -
Trade and other
receivables 3,533 1,956 404 761 372 -
Loans and advances 14,660 2,648 476 2,235 9,077 224
35,921 22,332 880 2,996 9,449 224
========= ========= =========== ========= ========== =========
Financial Liabilities
Trade payables,
other payables
and accruals 6,578 3,307 2,627 575 69 -
Borrowings 10,711 25 - 2,179 5,607 2,900
--------- --------- ----------- --------- ---------- ---------
17,289 3,332 2,627 2,754 5,676 2,900
========= ========= =========== ========= ========== =========
Market risk
Market risk is the risk that movements in market factors, such
as foreign exchange rates, interest rates, credit spreads, equity
prices and commodity prices will reduce the TruFin Group's income
or the value of its portfolios.
Market risk management
The TruFin Group's management objective is to manage and control
market risk exposures in order to optimise return on risk while
ensuring solvency.
The core market risk management activities are:
-- The identification of all key market risk and their
drivers,
-- The independent measurement and evaluation of key market
risks and their drivers,
-- The use of results and estimates as the basis for the TruFin
Group's risk/return-oriented management, and
-- Monitoring risks and reporting on them.
Interest rate risk management
The TruFin Group is exposed to the risk of loss from
fluctuations in the future cash flows or fair values of financial
instruments because of the change in market interest rates.
Interest rate risk
Interest rates on loans and advances are charged at competitive
rates given current market condition. Should rates fluctuate, this
will be reviewed and pricing will be adjusted accordingly.
Vertus's has interest income that is variable in relation to the
Bank of England base rate, and interest expense variable to both
LIBOR and the Bank of England base rate.
22. Non-controlling interests
The summarised financial information below represents financial
information for each subsidiary that has non-controlling interest
that are material to the Group. The amounts disclosed for each
subsidiary are before intragroup eliminations.
The Group had a 51% ownership share of Vertus Capital and Vertus
SPV1 during the year.
Statement of Vertus Capital Vertus SPV1
Financial
Position
------------------------------------------------ ----------------------------------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
================ ----------------------- ----------------------- ====================== ======================
Current assets 4,670 4,757 12,538 10,344
Non-current
assets 5 3 - -
Current
liabilities (144) (75) (12,731) (10,616)
Equity
attributable to
owners of the
Company 2,311 2,390 (98) (139)
Non-controlling
interests 2,220 2,295 (95) (133)
Income Statement Vertus Capital Vertus SPV1
------------------------------------------------ ----------------------------------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
================ ----------------------- ----------------------- ====================== ======================
Revenue 469 268 1,018 339
Expenses (623) (247) (940) (441)
Profit/(loss)
after tax (154) 21 78 (102)
Profit/(loss)
after tax
attributable to
owners
of the Company (79) 11 40 (52)
Profit/(loss)
after tax
attributable to
the
non-controlling
interests (75) 10 38 (50)
Cash Flow Statement Vertus Capital Vertus SPV1
------------------------------------------------ ----------------------------------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
==================== ----------------------- ----------------------- ====================== ======================
Net cash used in
operating
activities (390) (182) (2,035) (3,316)
Net cash used in
investing
activities 331 71 - -
Net cash generated
from
financing
activities - - 2,043 3,507
----------------------- ----------------------- ---------------------- ----------------------
Net
(decrease)/decrease
in cash and cash
equivalents (59) (111) 8 191
======================= ======================= ====================== ======================
Vertus Capital Vertus SPV1
------------------------------------------------ -----------------------------------------------
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
============= ----------------------- ----------------------- ====================== =======================
Balance at 1
January 2,295 - (134) -
NCI on
acquisition - 2,285 - (84)
Share of loss
for the
year (75) 10 39 (50)
----------------------- ----------------------- ---------------------- -----------------------
Balance at 31
December 2,220 2,295 (95) (134)
======================= ======================= ====================== =======================
The Group had a 72% ownership share of Bandana Media Ltd during
the year.
2020 2019
Bandana Media Ltd GBP'000 GBP'000
============================================= ======================= =======================
Current assets 61 51
Current liabilities (4,293) (3,457)
Equity attributable to owners of the Company (3,063) (2,465)
Non-controlling interests (1,169) (941)
2020 2019
Bandana Media Ltd GBP'000 GBP'000
=================================================== ======================= =======================
Revenue - -
Expenses (824) (392)
Loss after tax (824) (392)
Loss after tax attributable to owners of the
Company (596) (284)
Loss after tax attributable to the non-controlling
interests (228) (108)
2020 2019
Bandana Media Ltd GBP'000 GBP'000
------------------------------------------ ------------------------ --------
Net cash used in operating activities 1 (1)
------------------------ --------
Net decrease in cash and cash equivalents 1 (1)
======================== ========
2020 2019
Bandana Media Ltd GBP'000 GBP'000
--------------------------- ------------------------ ------------------------
Balance at 1 January (941) -
NCI on acquisition - (833)
Share of loss for the year (228) (108)
------------------------ ------------------------
Balance at 31 December (1,169) (941)
======================== ========================
The Group had a 93.7% effective economic ownership share of
Satago Financial Solutions limited at the reporting date.
2020
Satago Financial Solutions Ltd GBP'000
============================================= =======================
Current assets 5,256
Non-current assets 631
Current liabilities (713)
Equity attributable to owners of the Company 4,880
Non-controlling interests 294
2020
Satago Financial Solutions Ltd GBP'000
=================================================== =======================
Revenue 591
Expenses (3,508)
Loss after tax (2,916)
Loss after tax attributable to owners of the
Company (2,787)
Loss after tax attributable to the non-controlling
interests (129)
2020
Satago Financial Solutions Ltd GBP'000
------------------------------------------ --------
Net cash used in operating activities (751)
Net cash used in investing activities (305)
--------
Net decrease in cash and cash equivalents (1,056)
========
2020
Satago Financial Solutions Ltd GBP'000
------------------------------------------------ ------------------------
NCI on grant of Satago MIP 496
Share of loss for the year (129)
Arising from change in non-controlling interest (73)
------------------------
Balance at 31 December 2020 294
========================
23. Leases
The carrying amounts of the right-of-use assets recognised and
the movements during the period are shown in note 13.
The lease liability and movement during the period were:
Group GBP'000
============================================= =========
Lease liability recognised at 1 January 2020 232
Interest 3
Payments (115)
---------
Balance at 31 December 2020 120
=========
24. 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:
2020 2019
=============================================== =================== ==========
Number of shares (#)
At year end 80,822,204 80,822,204
Weighted average 80,822,204 94,043,175
Earnings attributable to ordinary shareholders GBP'000 GBP'000
Loss after tax attributable to the owners of
TruFin plc (10,971) (18,070)
Adjusted earnings attributable to ordinary
shareholders
Loss after tax attributable to the owners of
TruFin plc (10,971) (18,070)
Adjusted for share-based payment 545 2,509
Loss from discontinued operations - 3,287
Adjusted loss after tax attributable to the
owners of TruFin plc (10,426) (12,274)
Earnings per share* Pence Pence
Basic and Diluted (13.6) (19.2)
Adjusted(1) (12.9) (13.1)
* All Earnings per share figures are undiluted and diluted.
Adjusted(1) EPS excludes share-based payment expense and loss
from discontinued operations from loss after tax
Management has been granted 5,451,578 share options in TruFin
plc (see note 6 for details). These could potentially dilute basic
EPS in the future, but were not included in the calculation of
diluted EPS as they are antidilutive for the years presented as the
Group is loss making.
25. Related party disclosures
Transactions with Directors
Transactions with Directors, or entities in which a Director or
recent Director is also a Director or partner:
2020 2019
GBP'000 GBP'000
------------------------------------------------ -------- --------
Payment to an ex-Director (see Note 7) 359 -
Consultancy services provided by an ex-Director 29 -
Other related parties 2 8
Key management personnel disclosures are provided in note 5 and
6.
26. Post balance sheet events
Since the year end Oxygen has updated its Management Incentive
Plan ("Oxygen MIP"). Under the Oxygen MIP, as reported at the time
of TruFin's IPO, participants are entitled to 12.5% of the growth
in the value of Oxygen Finance Group over a set hurdle at the time
of a sale or flotation of Oxygen Finance Group. This hurdle has now
been realigned to reflect only the aggregate amount invested in
Oxygen Finance Group, by the Company or any subsidiary or holding
company of the Company (by way of either debt or equity), since the
TruFin IPO.
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