26
March 2024
TruFin plc
("TruFin" or the "Company" or
together with its subsidiaries "TruFin Group" or the
"Group")
FINAL
RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2023
TruFin is pleased to announce its
audited results for the 12 months ended 31 December 2023. 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 revenue grew 34% to £20.51m
(2022: £15.32m) driven by growth across all the
subsidiaries
·
Gross profit margin grew to 72% (2022:
70%)
·
Adjusted EBITDA3 was £(3.0)m (2022:
£(5.7) 2m), a 48% year-over-year improvement
·
Adjusted Loss Before Tax3 ("LBT") was
£(6.1)2m (2022: £8.2m)
·
Cash and cash equivalents at year end totalled
£10.1m (£6.0m unrestricted)
Company Highlights
·
Oxygen Finance Limited ("Oxygen") EBITDA
increased 11% to £1.3m (2022: £1.1m)
·
Satago Financial Solutions Limited
("Satago") grew revenue by more than 71% to £3.8m (2022: £2.2m)
after its platform was chosen to support invoice factoring
solutions for Lloyds Bank plc ("Lloyds Bank" or the "Bank")
customers
·
Playstack Limited ("Playstack") grew revenue by
more than 27% to £8.0m (2022: £6.3m) and secured the rights to the
Mortal Shell
franchise
·
Vertus Capital Limited ("Vertus") was disposed of
in October 2023 for £3.2m
Current Trading and Prospects
·
Group revenue at 29 February 2024 was not less
than £5.8m (unaudited), growing 271% compared to same period in
2023. Much of this exceptional growth rate is as a result of the
successful launch of Playstack's fastest selling game. Whilst it is
still early in the year, this excellent start to 2024 provides a
strong platform for the Group
·
Oxygen revenue to 29 February 2024 grew 35% when
compared to the same period in 2023
·
Satago has secured Bank of Ireland as its
embedded finance partner in Ireland. This is Satago's first Tier-1
bank outside of the UK and signals significant interest in its
platform globally
·
Playstack released their fastest selling game on
February 20 with more than one million units sold in the first 30
days. Playstack expects to release a further 5 games during
2024
James van den Bergh, TruFin CEO, said:
"The overarching goal of 2023 was to
solidify the Group's position in preparation for step changes in
growth and profitability in the years ahead; we achieved this
objective with growth and consolidation for all of the
subsidiaries.
Given the continued consistent
performance of Oxygen, managed by Ben Jackson, it is only
appropriate to repeat the same phrase we used last year and the
year before: Oxygen, yet again, grew its client base, revenues and
EBITDA. Shareholders can expect to hear that mantra repeated for
many years to come. With more than 87% of the next four year's
revenue already contracted, it is clear to me that the
attractiveness of Oxygen will rise with every passing year. In
addition, there is an exciting pipeline of opportunities for
further growth within the existing client base.
Oxygen also completed a planned
investment of more than £1.2m in its platform and people
and acquired bidstats.uk, the UK's No 1 portal for public
sector tendering. The financial benefits of this investment and
acquisition is expected to be seen in 2024 and beyond.
Having secured a landmark contract
and investment from Lloyds, and signed an embedded finance
agreement with Sage, this was a year of growth and consolidation
for Satago. Working with such innovative and respected
organisations as Lloyds and Sage is a privilege and we look forward
to more developments with these partnerships in the coming months.
Since the year end, Sinead McHale and her team have secured Bank of
Ireland as their first Tier-1 Bank outside the UK. The list of
blue-chip organisations that are looking to onboard Satago's
platform continues to grow.
Playstack optimised its operations
over the year to focus on what the business is great at - sourcing
and publishing PC and console games. With a growing back book, soon
expected to reach more than 50% of revenues, and multiple new game
releases secured, Playstack is now a diversified and run-rate
profitable business with a repeatable and scalable business model.
Securing the Mortal Shell
franchise was also a welcome milestone - made possible by our
exceptional shareholder base.
The successful launch of
Balatro this February
deserves a mention - to sell one million units in less than 30 days
is an incredible achievement. For TruFin, the important thing to
note is that Balatro
pushes Playstack's PC and console publishing business' "hit ratio"
(success: failure ratio) to >95%. This bodes well for the
future.
2024 will be an exciting year and I
look forward to updating shareholders as to progress in the coming
months."
Notes
1 Includes revenues for Vertus until its disposal from the
Group on 4 October 2023. Revenue per the statutory accounts P&L
only reflects revenues for continuing operations at £18.1m (2022:
£13.9m).
2 Adjusted as if Vertus sold on the corresponding date in 2022
i.e. 4 October
3 Includes performance for Vertus until its disposal from the
Group on 4 October 2023, and adjusted to remove share-based payment
charges implemented during 2023
Enquiries:
TruFin plc James van den Bergh, Chief Executive Officer
Kam Bansil, Investor Relations
|
0203 743 1340
07779 229508
|
Liberum Capital Limited (Nominated
Adviser and Corporate broker)
Chris Clarke
Edward Thomas
|
0203 100 2000
|
About TruFin plc:
TruFin plc is the holding company of
an operating group comprising four growth-focused technology
businesses operating in niche markets: early payment provision,
invoice finance, IFA finance and mobile games publishing. 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.
Chair's Statement
I am pleased to present TruFin's
Annual Report and Accounts for 2023. I am equally pleased to report
that the past 12 months have seen all of our businesses continue to
deliver strong performances in the face of persisting macroeconomic
challenges.
Though the inflationary pressures
that have marked the post-pandemic era are easing, monetary policy
remains tight and central banks' next moves are hard to predict.
Geopolitical uncertainty on multiple fronts, from the conflicts in
Ukraine and Gaza to the upcoming US and UK elections, continues to
build and impact the financial and economic outlook. We are not out
of the woods yet.
Despite this, TruFin delivered on
its objectives during 2023 and is well positioned for the year
ahead. During the year the Group realised £3.2m from the sale of
Vertus, whilst all three remaining investments posted double digit
revenue growth. As a result, Group revenues were up by almost a
third on the previous year. Such achievements are testament to the
skill and resilience of our people and the strength of their
visions.
In a year of considerable progress,
two key milestones at the Group level stand out. In June the
management completed a heavily oversubscribed fundraising,
strengthening the Group balance sheet and allowing further
investment into Playstack's growing portfolio of game releases. The
disposal of Vertus in October was also a significant moment in
TruFin's strategic development, enabling management to focus on
maximising-value in its three remaining businesses.
In addition, there has been a
determined focus on growing recurring revenues - software and
licensing fee sales and game royalties - across the board. Looking
ahead, this augurs well for predictability of future income, Group
profitability, and shareholder value alike.
It is especially pleasing to note
that Playstack achieved its major goal for the year of achieving
EBITDA profitability for the first time. It looks set for more of
the same in 2024 thanks to its recent run of critically acclaimed
game releases. It is also gratifying that Satago and Oxygen both
performed in line with expectations, continuing their operational
and financial progress.
Such consistent positive momentum
speaks to the success of the Group's strategy and marks a maturing
of the business. Notably, the Group beat market expectations by
significantly reducing EBITDA loss in 2023. We enter 2024
financially strong and on a clear path to future profitability.
This continued upward trajectory is remarkable given the challenges
of operating amid ongoing global instability and is a clear
demonstration that TruFin possesses the resilience to prosper,
despite the global headwinds.
It remains only for me to thank all
our staff for their commitment and hard work, as well as our
shareholders for their continued support.
Steve Baldwin
Chair
CEO's Review
TruFin made significant progress in
2023.
Undeterred by the unfavourable
macroeconomic and corporate climate, our market-leading businesses
have once again prospered, all recording double digit growth and
laying the foundations for meaningful growth in the years
ahead.
As ever, Group support has been key
to ensuring the ongoing success of TruFin's subsidiaries,
particularly in such a challenging environment. The £7.6m
fundraising in June 2023 and the £3.2m sale of Vertus in October
2023 have enabled the Group to continue to invest in its three
remaining businesses and solidify their market
positions.
Moreover, the Vertus deal marks
another step in executing the Group's strategy - to focus our
assets on recurring and predictable sources of income in order to
deliver significant value to our shareholders.
2023 Group performance
Mirroring the strong performance of
our subsidiaries, Group revenue increased 31% year-on-year to
£18.1m. Of this, 92% was from recurring software sales and
licensing fees evidencing the continued success of TruFin's
strategic pivot towards predictable and repeatable revenue
sources.
Key growth drivers during the period
included 71% growth in revenues in Satago which more than doubled
its paid subscribers (to 967) and deepened its ties with major
partner Lloyds Bank as it began successfully migrating the Bank's
existing customers onto its platform. Meanwhile Oxygen's core Early
Payment business grew by 26% year-on-year, generating 65% of the
subsidiary's total revenue. Playstack's revenues grew 27% on the
back of an ever increasingly diversified portfolio of games. With
three critically acclaimed releases during the year and a
significant increase in its revenue-generating back catalogue -
anticipated to contribute a meaningful proportion of 2024 revenues
- Playstack is in an enviable position.
At year end the Group had a cash
balance of £10.1m (including cash of £4.1m in Satago which is not
100% owned). As such, unrestricted cash is no less than £6.0m and
the Group is fully funded to profitability.
Current trading and prospects
TruFin has had a strong start to the
year with Group revenues for January and February expected to be
not less than £5.8m; a 271% increase over the same period in 2023.
Playstack's latest game launch, Balatro, has contributed to much of
this growth. It is important to note that this pace of growth is
not expected to continue throughout the year.
As always, growth, profitability and
value crystallisation remain integral to TruFin's purpose and
vision. Following the strong start in 2024, the Group's vision is
even more tangible.
Outlook
If 2023 was the year of double-digit
growth across the Group, 2024 is set to be the year of both further
growth and improving profitability.
Whilst mindful of the unsettled
global political and economic picture, TruFin's steady yet
ambitious stewardship of its subsidiaries in pursuit of shareholder
value will continue. Targeted investment in all three businesses
during the last 12 months is expected to produce scaled revenues
and accelerate profitability. Ultimately this will result in
significant shareholder returns.
As we enter 2024 our businesses are
well positioned for the years ahead, with two of the three now
EBITDA profitable and the third poised to follow. Oxygen is set to
consolidate its market dominance having invested heavily in its
platform and people in 2023 as well as acquiring and successfully
integrating bidstats.uk. With significant interest in its digitised
proposition from both UK and overseas banks, Satago is ready to
replicate the success of its flagship relationship with Lloyds Bank
as well as capitalise further on its high-performing
Lending-as-a-Service and Embedded Finance subscription
services.
Meanwhile Playstack, fresh from
achieving its 2023 aim of EBITDA profitability, is close to
concluding several major platform deals and will continue to focus
relentlessly on its core strengths of sourcing and publishing video
games. Its first release in 2024, the poker game Balatro, achieved
profitability within an hour, earning it the accolade of
Playstack's fastest selling game.
Each of these achievements is
underpinned by our ongoing investment in building lasting
relationships with our customers and partners and delivering
services tailored to their needs. Each one takes us ever closer to
our ultimate goal of rewarding shareholders with significant
value-creating transactions.
On behalf of the Board, our staff,
partners and stakeholders I would like to extend my thanks to our
shareholders for continuing to stand behind TruFin, despite the
headwinds we collectively face. We are buoyed by the progress made
in 2023 and looking forward to compounding these gains by pursuing
our objectives with optimism and determination in 2024.
James van den Bergh
Chief Executive
Officer
OXYGEN REVIEW
2023
performance
Oxygen delivered revenues of £6.2m,
up 16% (2022: £5.3m), with the increase driven by strong
performance across all principal revenue streams. Such is Oxygen's
confidence in the future, a £1.2m investment was made during the
year, and staff numbers increased by 15 to 72 to accelerate
revenues in 2024 on beyond. In addition Oxygen was able to acquire
and integrate bidstats.uk and make a dividend payment to the Group
of £0.5m, twice Oxygen's maiden dividend of £0.25m in
2022.
New business continued to progress
well, with Oxygen still dominating the local government market.
Combined trade-spending by Oxygen's Early Payment Programme clients
increased by £2.8bn, to a record of £26.8bn. Oxygen's SaaS product
portfolio also expanded, with new products creating incremental
revenue. Over 50% of Oxygen's local authority Early Payment
Programme clients also committed to at least one Oxygen SaaS
subscription, up from 27% in 2022.
The average Early Payment Programme
client tenure, a measure of customer loyalty and Oxygen's success
in renewing contracts, reached 7.1 years at the end of 2023 (2022:
6.6 years), adding additional resilience to Oxygen's recurring
revenue streams.
Early Payment Programme clients
committed £1.3bn in spending to more than 4,900 suppliers during
2023 (2022: £1.1bn). New spend added during the year hit a record
£385m (2022: £330m), 16% higher than the prior year.
Oxygen's position as a financial
technology company delivering social value strengthened
significantly. Throughout 2023 more than 15,000 small businesses
within Oxygen clients' local communities received over £0.6bn in
early payments - at no cost to the supplier. Oxygen made its Carbon
Reporting tool freely available to the public sector to support the
reduction of Scope 3 emissions and the consequential carbon
impact.
Current trading and
prospects
Indications from initial trading in
2024 are strong with double digit growth for recurring revenue
streams continuing. Encouragingly, during 2023 circa £1.5bn was
issued for tender with early payment (EP) terms included by our
clients, an increase of 35% on the previous year which bodes well
for supplier participation in 2024. EP revenue in January was up
40% on 2023 YoY.
Continued economic volatility and
higher interest rates make Oxygen's EP solution increasingly
attractive. Similarly, business development opportunities made
available through the 60,000 monthly visitors to bidstats.uk will
support SaaS growth in 2023.
Interest from new early payment
clients is strong, with more opportunities in the pipeline than
ever before.
SATAGO REVIEW
2023 performance
During 2023, revenue increased more than 70% to £3.8m (2022:
£2.2m).
2023 was a year of consolidation
and growth for Satago. Importantly, Lloyds Bank began migrating
existing factoring clients onto Satago's proprietary platform in H2
2023. Following this successful test phase, a material portion of
existing Bank clients are expected to migrate during
2024.
The next phase of the Satago
platform was also successfully delivered during 2023, allowing the
onboarding of the first 'new to Bank' customer.
Delivering Lending as a Service
("LaaS") and Embedded Finance solutions for existing clients
remains Satago's top priority. Looking ahead, the hard work carried
out over the last five years has ensured the platform is ready to
be leveraged by other partners - giving 10s of thousands of SMEs
access to all the benefits of the Satago platform in the coming
years. Satago's partners and pipeline are testament to the exciting
future ahead.
Satago's subscription packages
performed strongly in 2023, with the number of paying subscribers
more than doubling to 967 (2022: 430). Significant subscriber
growth is expected to continue in 2024 and beyond. The platform's
credit control and risk insights tools in particular are proving
transformational to customers.
Current trading and
prospects
Early 2024 has focused on product
delivery for the Bank and the next phase of client wins. Meanwhile,
the deep strategic relationship with Sage, the global leader in
accounting software, will allow Satago to extend its core offerings
of credit control and risk insights to SMEs globally.
Satago has a growing pipeline of
LaaS and Embedded Finance customers in the UK and Europe with a
number of significant partnerships expected to launch throughout
the year.
PLAYSTACK REVIEW
2023 performance
During the year, Playstack focused
on scaling into a profitable and sustainable business, achieving
full-year EBITDA profitability aided in part by an increasingly
strong portfolio of games that reduced dependencies on the success
of a single title. In 2023, over 85% of Playstack revenue was
derived from six front-line titles; compared to four games in 2022
and one game in 2021.
The future line-up of games
continues to be extremely strong, largely due to the effectiveness
of 'Magnitude', Playstack's proprietary sourcing toolset which
assessed over 11,000 games during the year (up 275% compared to
2023) and continues to discover more than 80% of Playstack's
pipeline - with multiple games now secured for 2024 and 2025 as a
result of the technology.
Playstack's game studio subsidiary,
Magic Fuel Games Inc, successfully launched Cityscapes: Sim Builder
as an exclusive release on Apple Arcade. The game was subsequently
nominated for Best Game on Apple Arcade in 2023, and frequently
features in the top-20 games on the service.
Playstack launched two further
titles during 2023: AK‑Xolotl and The Last Faith, and two expansion packs for The
Case of the Golden Idol, reinforcing Playstack's focus on
broadening its portfolio of franchises and increasing long-term
performance potential through reinvesting in successful games after
release. During the year Playstack secured two new technology
partner contracts, each bringing an additional revenue stream to
the business over multiple years and providing long-term
predictability.
Current trading and
prospects
Playstack's publishing portfolio is
the centre of its 2024 strategy, with regular planned updates to
existing games and a minimum of five new games for release across
the year, including two games to be released in partnership with
platforms. The first new release of 2024, Balatro, quickly exceeded
all expectations, reaching game profitably in one hour and
surpassing one million units sold within a month. With the 2024
line-up already secured, the game discovery focus has turned to
2025 and 2026 to ensure an increasingly strong pipeline of titles
for the years ahead.
Back-book games remain a key
component of future revenue modelling, with a minimum of 40% of
2024 revenues forecast to be derived from games introduced to
market in 2022 and 2023.
Playstack continues to assert its
position as a leader in the games industry, and is navigating
well-publicised industry challenges through carefully curated and
selected games, a focus on cost management, and sustainable
profitability.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
|
Notes
|
2023
£'000
|
2022
£'000
|
Interest income
|
3
|
1,470
|
405
|
Fee income
|
3
|
9,348
|
7,138
|
Publishing income
|
3
|
7,313
|
6,317
|
Gross revenue
|
3
|
18,131
|
13,860
|
Interest, fee and publishing
expenses
|
|
(5,027)
|
(4,207)
|
Net revenue
|
|
13,104
|
9,653
|
Staff costs
|
5
|
(12.558)
|
(11,641)
|
Other operating
expenses
|
|
(5,850)
|
(4,616)
|
Depreciation &
amortisation
|
|
(1,922)
|
(1,529)
|
Net impairment on financial
assets
|
7
|
(109)
|
(50)
|
Share of (loss)/profit from
associates
|
|
(4)
|
1
|
Loss before tax
|
|
(7,339)
|
(8,182)
|
Taxation
|
2, 9
|
962
|
1,267
|
Loss from continuing operations
|
|
(6,377)
|
(6,915)
|
(Loss)/profit from discontinued operations
|
10
|
(963)
|
109
|
Loss for the year
|
|
(7,340)
|
(6,806)
|
Other comprehensive
income
|
|
|
|
Items that may be reclassified subsequently to profit and
loss
|
|
|
|
Exchange differences on translating foreign
operations
|
|
126
|
(65)
|
Other comprehensive income for the year, net of tax
|
|
126
|
(65)
|
Total comprehensive
loss for
the year
|
|
(7,214)
|
(6,871)
|
Loss for the year attributable to
the owners of: TruFin plc
|
|
|
|
TruFin plc
|
|
(6,472)
|
(6,637)
|
Non-controlling
interests
|
|
(868)
|
(169)
|
|
|
(7,340)
|
(6,806)
|
Total comprehensive loss for the
year attributable to the owners of:
|
|
|
|
TruFin plc
|
|
(6,350)
|
(6,704)
|
Non-controlling
interests
|
|
(864)
|
(167)
|
|
|
(7,214)
|
(6,871)
|
Total comprehensive (loss)/profit
for the year attributable to Owners of TruFin plc from
|
|
|
|
Continuing operations
|
|
(5,190)
|
(6,744)
|
Discontinued operations
|
|
(1,160)
|
40
|
|
|
(6,350)
|
(6,704)
|
Earnings per Share
|
|
|
Notes
|
2023
pence
|
2022
pence
|
Basic and diluted EPS
|
22
|
(6.5)
|
(7.3)
|
Basic and diluted EPS from
continuing operations
|
|
(5.3)
|
(7.4)
|
COMPANY STATEMENT OF COMPREHENSIVE INCOME
|
|
|
|
|
Notes
|
2023
£'000
|
2022
£'000
|
Revenue
|
3
|
1,765
|
2,293
|
|
|
|
|
Staff costs
|
5
|
(2,106)
|
(1,673)
|
Other operating expenses
|
|
(633)
|
(660)
|
Depreciation & amortisation
|
|
(2)
|
(2)
|
Loss before tax
|
|
(976)
|
(42)
|
|
|
|
|
Taxation
|
9
|
-
|
-
|
Loss and total comprehensive income for the year
|
|
(976)
|
(42)
|
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
|
Notes
|
2023
£'000
|
2022
£'000
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Intangible assets
|
11
|
25,417
|
24,411
|
Property, plant and equipment
|
12
|
275
|
345
|
Deferred tax asse
|
9
|
250
|
250
|
Loans and advances
|
14
|
-
|
15,016
|
Total non-current
assets
|
|
25,942
|
40,022
|
Current assets
|
|
|
|
Cash and cash equivalents
|
|
10,140
|
10,273
|
Loans and advances
|
14
|
7,234
|
9,145
|
Interest in associate
|
|
-
|
4
|
Trade receivables
|
15
|
2,385
|
2,149
|
Other receivables
|
15
|
4,975
|
3,899
|
Total current
assets
|
|
24,734
|
25,470
|
Total assets
|
|
50,676
|
65,492
|
Equity and liabilities
|
|
|
|
Equity
|
|
|
|
Issued share capital
|
16
|
96,311
|
85,706
|
Retained earnings
|
|
(31,017)
|
(24,884)
|
Foreign exchange reserve
|
|
59
|
(63)
|
Other reserves
|
|
(29,798)
|
(26,531)
|
Equity attributable to owners of the company
|
|
35,555
|
34,228
|
Non-controlling
interest
|
20
|
2,385
|
5,876
|
Total equity
|
|
37,940
|
40,104
|
Liabilities
|
|
|
|
Non-current liabilities
|
|
|
|
Borrowings
|
17
|
1,047
|
16,764
|
Total non-current
liabilities
|
|
1,047
|
16,764
|
Current liabilities
|
|
Borrowings
|
17
|
6,157
|
1,783
|
Trade and other
payables
|
18
|
5,532
|
6.841
|
Total current
liabilities
|
|
11,689
|
8,624
|
Total liabilities
|
|
12,736
|
25,388
|
Total equity and liabilities
|
|
50,676
|
65,492
|
|
|
|
| |
COMPANY STATEMENT OF FINANCIAL POSITION
|
Notes
|
2023
£'000
|
2022
£'000
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Property, plant and equipment
|
|
2
|
4
|
Investments in subsidiaries
|
13
|
30,189
|
30,189
|
Amounts owed by group undertakings
|
|
59,089
|
54,835
|
Total non-current
assets
|
|
89,280
|
85,028
|
Current assets
|
|
|
|
Cash and cash equivalents
|
|
4,723
|
2,260
|
Trade and other receivables
|
15
|
161
|
138
|
Total current
assets
|
|
4,884
|
2,398
|
Total assets
|
|
94,164
|
87,426
|
Equity and liabilities
|
|
|
|
Equity
|
|
|
|
Issued share capital
|
16
|
96,311
|
85,706
|
Retained earnings
|
|
(6,679)
|
(6,042)
|
Other reserves
|
|
3,798
|
6,828
|
Total equity
|
|
93,430
|
86,492
|
Liabilities
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
18
|
734
|
934
|
Total current
liabilities
|
|
734
|
934
|
Total liabilities
|
|
734
|
934
|
Total equity and liabilities
|
|
94,164
|
87,426
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
|
Retained
|
Foreign
exchange
|
Other
|
|
Non-
controlling
|
Total
|
capital
|
earnings
|
reserve
|
reserves
|
Total
|
interest
|
equity
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Balance at 1 January 2023
|
85,706
|
(24,884)
|
(63)
|
(26,531)
|
34,228
|
5,876
|
40,104
|
Loss for the year from
continuing
|
|
|
|
|
|
|
|
operations
|
-
|
(5,312)
|
-
|
-
|
(5,312)
|
(1,065)
|
(6,377)
|
Other comprehensive income for the
year
|
-
|
-
|
122
|
-
|
122
|
4
|
126
|
Loss from discontinued
operations
|
-
|
(1,160)
|
-
|
-
|
(1,160)
|
197
|
(963)
|
Total comprehensive loss for the year
|
-
|
(6,472)
|
122
|
-
|
(6,350)
|
(864)
|
(7,214)
|
Issuance of shares
|
10,605
|
(427)
|
-
|
(3,030)
|
7,148
|
-
|
7,148
|
Share based payment
|
-
|
766
|
-
|
-
|
766
|
-
|
766
|
Disposal of subsidiary
|
-
|
-
|
-
|
-
|
-
|
(2,620)
|
(2,620)
|
Purchase of subsidiary
shares
|
-
|
-
|
-
|
(237)
|
(237)
|
(7)
|
(244)
|
Balance at 31 December 2023
|
96,311
|
(31,017)
|
59
|
(29,798)
|
35,555
|
2,385
|
37,940
|
Balance at 1 January 2022
|
73,548
|
(17,731)
|
4
|
(24,393)
|
31,428
|
1,023
|
32,451
|
Loss for the year
|
-
|
(6,637)
|
-
|
-
|
(6,637)
|
(169)
|
(6,806)
|
Other comprehensive income for the
year
|
-
|
-
|
(67)
|
-
|
(67)
|
2
|
(65)
|
Total comprehensive loss for the year
|
-
|
(6,637)
|
(67)
|
-
|
(6,704)
|
(167)
|
(6,871)
|
Issuance of shares
|
12,158
|
(496)
|
-
|
(2,138)
|
9,524
|
-
|
9,524
|
Issuance of shares by subsidiary
|
-
|
(20)
|
-
|
-
|
(20)
|
5,020
|
5,000
|
Balance at 31 December 2022
|
85,706
|
(24,884)
|
(63)
|
(26,531)
|
34,228
|
5,876
|
40,104
|
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, the share revaluation reserve and shares issued at
a discount.
The merger reserve arose as a
result of combining businesses that are under common control. As at
31 December 2023 it was a debit balance of £33,358,000 (2022:
£33,358,000).
The share revaluation reserve
arose from the share cancellation that took place in February 2018.
As at 31 December 2023 its balance was £8,966,000 (2022:
£8,966,000).
Shares issued at a discount arose
from the share issuances that took place in April 2022 and July
2023. As at 31 December 2023 its balance was £5,168,000 (2021:
£2,138,000). See Note 16 for further information.
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 and Satago z.o.o.
COMPANY STATEMENT OF CHANGES IN
EQUITY
Share capital
|
Retained
earnings
Other reserves
|
Total
equity
|
£'000
|
£'000
£'000
|
£'000
|
Balance at 1 January 2023
|
85,706
|
(6,042)
|
6,828
|
86,492
|
Total comprehensive loss for the year
|
-
|
(976)
|
-
|
(976)
|
Issuance of shares
|
10,605
|
(427)
|
(3,030)
|
7,148
|
Share based payment
|
-
|
766
|
-
|
766
|
Balance at 31 December 2023
|
96,311
|
(6,679)
|
3,798
|
93,430
|
Balance at 1 January 2022
|
73,548
|
(5,504)
|
8,966
|
77,010
|
Total comprehensive loss for the year
|
-
|
(42)
|
-
|
(42)
|
Issuance of shares
|
12,158
|
(496)
|
(2,138)
|
9,524
|
Balance at 31 December 2022
|
85,706
|
(6,042)
|
6,828
|
86,492
|
The notes on pages 50 to 89 are an
integral part of these financial statements.
|
|
|
|
|
CONSOLIDATED STATEMENT OF CASH
FLOWS
|
Notes
|
2023
£'000
|
2022
£'000
|
Cash flows from operating activities
|
|
|
|
Loss before tax
|
|
|
|
Continuing operations
|
|
(7,339)
|
(8,182)
|
Discontinued operations
|
|
(963)
|
162
|
Adjustments for
|
|
|
|
Depreciation of property, plant
and equipment
|
|
107
|
104
|
Amortisation of intangible assets
|
|
2,893
|
2,314
|
Share based payments
|
|
766
|
-
|
Finance costs
|
|
569
|
175
|
Share of loss/(profit) from
associate
|
|
4
|
(1)
|
Loss on disposal of subsidiary
|
|
1,358
|
-
|
Underlying trading profit from
discontinued operations
|
|
(396)
|
(162)
|
|
|
(3,001)
|
(5,590)
|
Working capital adjustments
|
|
|
|
Movement in loans and advances
|
|
(4,491)
|
(2,181)
|
Increase in trade and other
receivables
|
|
(1,398)
|
(32)
|
Increase/(decrease) in trade and
other payables
|
|
390
|
(88)
|
Net payables on acquisition of
subsidiary
|
|
-
|
(67)
|
|
|
(5,499)
|
(2,368)
|
Tax credit received
|
|
768
|
668
|
Interest and finance costs
|
|
(416)
|
(162)
|
Net cash used in operating activities from continuing
operations
|
|
(8,148)
|
(7,452)
|
Cash flows from investing activities:
|
|
|
|
Additions to intangible
assets
|
|
(5,452)
|
(3,085)
|
Additions to property, plant and
equipment
|
|
(42)
|
(107)
|
Acquisition of subsidiaries
|
|
(1,421)
|
(1,217)
|
Disposal of subsidiary
|
|
3,147
|
-
|
Cash on acquisition of
subsidiary
|
|
-
|
19
|
Cash in subsidiary on disposal
|
|
(938)
|
-
|
Net cash used in investing activities from continuing
operations
|
|
(4,706)
|
(4,390)
|
Cash flows from financing activities:
|
|
|
|
Issue of ordinary share
capital
|
|
7,148
|
9,524
|
Issue of ordinary share capital of
subsidiary
|
|
-
|
5,000
|
Net borrowings
|
17
|
5,393
|
(55)
|
Lease payments
|
|
(81)
|
(28)
|
Net cash generated from financing activities from continuing
operations
|
|
12,460
|
14,441
|
Net (decrease)/increase in cash and cash equivalents from
continuing operations
|
|
(394)
|
2,599
|
Net cash from discontinued operations
|
|
199
|
56
|
Cash and cash equivalents at
beginning of the year
|
|
10,273
|
7,608
|
Effect of foreign exchange rate changes
|
|
62
|
10
|
Cash and cash equivalents at end of the year
|
|
10,140
|
10,273
|
COMPANY STATEMENT OF CASH
FLOWS
|
2023
£'000
|
2022
£'000
|
Cash flows from operating activities
|
|
|
Loss before income tax
|
(976)
|
(42)
|
Adjustments for:
|
|
|
Depreciation of property, plant
and equipment
|
2
|
2
|
Interest income
|
(1,657)
|
(2,166)
|
Share based payments
|
766
|
-
|
Working capital adjustments
|
(1,865)
|
(2,206)
|
(Increase)/decrease in trade and
other receivables
|
(22)
|
6
|
Decrease in trade and other
payables
|
(200)
|
(94)
|
|
(222)
|
(88)
|
Interest received
|
117
|
-
|
Net cash used in operating activities
|
(1,970)
|
(2,294)
|
Cash flows from investing activities
|
|
|
Intragroup loans cash advanced
|
(6,156)
|
(5,750)
|
Intragroup loans cash received
|
3,442
|
-
|
Additions to property, plant and
equipment
|
-
|
(6)
|
Net cash generated used in investing activities
|
(2,714)
|
(5,756)
|
Cash flows from financing activities
Issue of ordinary share
capital
|
7,147
|
9,524
|
Net cash generated from financing activities
|
7,147
|
9,524
|
Net increase in cash and cash equivalents
|
2,463
|
1,474
|
Cash and cash equivalents at
beginning of the year
|
2,260
|
786
|
Cash and cash equivalents at end of the year
|
4,723
|
2,260
|
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Statutory information
TruFin plc is a Company registered
in Jersey and incorporated under Companies (Jersey) Law 1991. The
Company's ordinary shares were listed on the Alternative Investment
Market of the London Stock Exchange 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" on pages 51-52.
The principal activities of the
Group are the provision of niche lending, early payment services
and 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" on pages 51-52, 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:
Entities
|
Country of incorporation
|
Registered address
|
Nature of the business
|
%
voting rights and shares held
|
|
|
26 New Street, St Helier,
|
|
|
TruFin Holdings Limited
("THL")
|
Jersey
|
Jersey JE2 3RA
|
Holding Company
|
100% of ordinary shares
|
Satago Financial Solutions
Limited
|
|
|
|
|
("Satago") (together with Satago
|
|
120 Regent Street,
|
|
|
SPV 1, Satago SPV 2 and
Satago
|
|
London, United Kingdom,
|
Provision of short term
|
|
Poland) ("Satago Group")
|
UK
|
W1B 5FE
|
finance
|
72% of ordinary shares*
|
|
|
120 Regent Street,
|
|
|
|
|
London, United Kingdom,
|
Provision of short term
|
|
Satago SPV 1 Limited ("Satago SPV
1")
|
UK
|
W1B 5FE
|
finance
|
72% of ordinary shares*
|
|
|
120 Regent Street,
|
|
|
|
|
London, United Kingdom,
|
Provision of short term
|
|
Satago SPV 2 Limited ("Satago SPV
2")
|
UK
|
W1B 5FE
|
finance
|
72% of ordinary shares*
|
|
|
32-023 Krakow ul. Sw.
|
Provision of short term
|
|
Satago z.o.o (Satago Poland)
|
Poland
|
Krzyza 19/6 Poland
|
finance
|
72% of ordinary shares*
|
|
|
1st Floor Enterprise House,
|
|
|
Oxygen Finance Group Limited
("OFGL")
|
|
115 Edmund Street,
|
|
|
(together with OFL, BPL and
OFAI)
|
|
Birmingham, United
|
|
|
("Oxygen")
|
UK
|
Kingdom, B3 2HJ
|
Holding Company
|
85% of ordinary shares**
|
|
|
1st Floor Enterprise House,
|
|
|
|
|
115 Edmund Street,
|
|
|
|
|
Birmingham, United
|
Provision of early
|
|
Oxygen Finance Limited
("OFL")
|
UK
|
Kingdom, B3 2HJ
|
payment services
|
85% of ordinary shares**
|
|
|
1st Floor Enterprise House,
|
|
|
|
|
115 Edmund Street,
|
|
|
|
|
Birmingham, United
|
|
|
Birmingham Procurement Limited
("BPL")
|
UK
|
Kingdom, B3 2HJ
|
Not trading
|
85% of ordinary shares**
|
|
|
Corporation Trust Center,
|
|
|
|
|
1209 Orange Street, City
|
|
|
|
|
of Wilmington, County
|
|
|
|
|
of New Castle, Delaware
|
Provision of early
|
|
Oxygen Finance Americas, Inc
("OFAI")
|
USA
|
19801, USA
|
payment services
|
85% of ordinary shares**
|
|
|
120 Regent Street,
|
|
|
|
|
London, United Kingdom,
|
Provision of technology
|
|
TruFin Software Limited
("TSL")
|
UK
|
W1B 5FE
|
services
|
100% of ordinary shares
|
|
|
120 Regent Street,
|
|
|
|
|
London, United Kingdom,
|
Provision of short term
|
|
AltLending UK Limited ("AltLending")
|
UK
|
W1B 5FE
|
finance
|
100% of ordinary shares
|
|
|
56a Poland Street,
|
|
|
|
|
London, United Kingdom,
|
Publishing of computer
|
|
Playstack Limited ("Playstack")***
|
UK
|
W1F 7NN
|
games
|
100% of ordinary shares
|
|
|
56a Poland Street,
|
|
|
|
|
London, United Kingdom,
|
Publishing of computer
|
|
Bandana Media Limited ("Bandana")***
|
UK
|
W1F 7NN
|
games
|
72% of ordinary shares
|
|
|
56a Poland Street,
|
|
|
|
|
London, United Kingdom,
|
Business and domestic
|
|
PlayIgnite Ltd ("PlayIgnite")***
|
UK
|
W1F 7NN
|
software developer
|
100% of ordinary shares
|
|
|
|
Publishing activities in
|
|
|
|
Kamienna 21, 31-403
|
the field of computer
|
|
Playstack z.o.o ("PS Poland")***
|
Poland
|
Krakow, Poland
|
games
|
100% of ordinary shares
|
|
|
|
Publishing activities in
|
|
|
|
Mikonkatu 17 B, 00100
|
the field of computer
|
|
Playstack OY ("PS Finland")***
|
Finland
|
Helsinki, Finland
|
games
|
75% of ordinary shares
|
Entities
|
Country of incorporation
|
Registered address
|
Nature of the business
|
%
voting rights and shares held
|
|
|
|
Developing, publishing
|
|
|
|
Solbergavägen 17, 17998
|
and selling electronic
|
|
Playstack AB ("PS Sweden")***
|
Sweden
|
Färentuna, Sweden
|
games
|
100% of ordinary shares
|
|
|
Gust Delaware, 16192
|
|
|
|
|
Coastal Hwy, Lewes,
|
Publishing of computer
|
|
Playstack Inc ("Playstack
USA")***
|
USA
|
DE 19958
|
games
|
100% of ordinary shares
|
|
|
Cogency Global Inc, 850
|
|
|
|
|
New Burton Road, Suite
|
Business and domestic
|
|
PlayIgnite Inc ("PlayIgnite
USA")***
|
USA
|
201, Dover DE 19904
|
software developer
|
100% of ordinary shares
|
|
|
5424 Sunol Blvd Ste 10
|
|
|
|
|
PMB 1021, Pleasanton, CA
|
|
|
Magic Fuel Inc ("Magic
Fuel")
|
USA
|
94566-7705
|
Game developer
|
100% of ordinary shares
|
* See Note 20 for the Group's
effective economic ownership of the Satago Group.
** Nominal ownership of these companies is 85% 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.
*** The Playstack Group includes two associate companies
incorporated in the UK which have been accounted for using the
equity method. These are:
· A 27% interest in Storm
Chaser Games Limited ("Storm Chaser Games")
· A 49% interest in Snackbox
Games Ltd
The Playstack Group included one associate company
incorporated in the UK which was dissolved in the year
· A 42% interest in Military
Games International Limited (dissolved on 18 April 2023)
The Playstack Group disposed of its 49% interest in
PlayFinder Games Ltd, an associate company incorporated in the
UK
On 4 October 2023, the Group
disposed of its 54% ownership of Vertus Capital Limited and Vertus
SPV Limited (together "Vertus"). The results for Vertus up to its
disposal have been included within Discontinued operations, with
comparatives restated accordingly.
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 directors have prepared and
reviewed detailed financial forecasts of the Group and, in
particular, considered the cash flow requirements for the period
from the date of approval of these financial statements to the end
of June 2025. These forecasts sit within the Group's latest
estimate and within the longer-term financial plan, both of which
have been updated on a regular basis. The directors are also
mindful of the impact that the other risks and uncertainties set
out on page 31 may have on these estimates and have considered
several scenarios based on revenue, cost and funding sensitivities.
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.
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, implementation fees, consultancy fees
and subscription fees.
Payment services provided by
Oxygen comprises the following elements:
Early Payment Programme Services
("EPPS") contracts
Oxygen's EPPS generate rebates (ie
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 are in line
with contractual agreements and relate to Lending as a Service
projects.
Consultancy fees
Oxygen provides stand-alone
advisory services to clients. Revenue is accrued as the underlying
services are provided to the client. Playstack earns revenue where
one or more people are billed directly to a client for the
provision of services.
Subscription fees
Insight services subscription
fees
The Insight Services offered by
OFL 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.
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 and Platform revenue
Console revenue is earned on the
sale of video games for consoles. It is recognised when the game is
sold. Platform revenue is earned through partnership directly with
hardware platform holders in return for exclusive access to one or
more games on their service.
Revenue is recognised either on
the completion of agreed milestones, across the term of the
agreement for live-managed games, or a combination of the
two.
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.
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
|
Fixtures and fittings
|
-
|
3 years
|
Computer equipment
|
-
|
3 -5 years
|
Useful economic lives and
estimated residual values are reviewed annually and adjusted as
appropriate.
Intangible 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.
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
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 advances 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.
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 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 19 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 19 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
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.
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
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 CGU 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 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. Where there
are uncertain tax positions, the Group assesses whether it is
probable that the position adopted in tax filings will be accepted
by the relevant tax authority, with the results of this assessment
determining the accounting that follows.
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 no 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.
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
At the inception of a contract,
the Group assesses if the contract contains a lease. A contract
contains a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration. Reassessment is only required when the terms and
conditions of the contract are changed.
Right-of-use assets
The Group recognises a
right-of-use asset and lease liability at the date which the
underlying asset is available for use. Right-of-use assets are
measured at cost which comprises the initial measurement of lease
liabilities adjusted for any lease payments made at or before the
commencement date and lease incentives received. Any initial direct
costs that would not have been incurred if the lease had not been
obtained are added to the carrying amount of the right-of-use
assets.
These right-of-use assets are
subsequently depreciated using the straight-line method from the
commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term.
Right-of-use assets (except for
those which meet the definition of an investment property) are
presented within "Property, plant and equipment".
Right of use assets which meet the
definition of property, plant and equipment are presented and
accounted for in accordance with this policy.
Lease liabilities
The initial measurement of a lease
liability is measured at the present value of the lease payments
discounted using the interest rate implicit in the lease, if the
rate can be readily determined. If that rate cannot be readily
determined, the borrower shall use its incremental borrowing
rate.
Lease liabilities are measured at
amortised cost using the effective interest method.
Lease liabilities are remeasured
with a corresponding adjustment to the right-of-use asset, or is
recorded in profit or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
Short term and low value
leases
The Group has elected to not
recognise right-of-use assets and lease liabilities for short-term
leases that have lease terms of 12 months or less and leases of low
value leases. Lease payments relating to these leases are expensed
to profit or loss on a straight-line basis over the lease
term.
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 11.
· 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. 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 Oxygen Finance Limited
as there is uncertainty surrounding the timing of when these losses
will be used.
Refer to Note 9 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.
Note 19 presents the carrying
amounts of the Expected Credit Losses in further detail.
Impairment of Intangibles
The Group is required to test,
whether intangible and tangible assets have suffered any impairment
based on the recoverable amount of its CGUs, when there are
indicators for impairment. Determining whether an impairment has
occurred requires an estimation of the value in use of the CGU to
which these assets are allocated. Key sources of estimation
uncertainty in the value in use calculation include the estimation
of future cash flows of the CGU affected by expected changes in
underlying revenues and direct costs, and administration costs
through the forecast period, the long-term growth rates and a
suitable discount rate to apply to the aforementioned cash flows in
order to calculate the net present value. Further information
regarding the assumptions used in the calculations have been
provided in Note 11.
Impairment of investment in
subsidiary
The Company's investment in its
subsidiary is assessed annually to determine if there is any
indication of impairment. This requires an estimation of the value
in use of this subsidiary. Key sources of estimation uncertainty in
the value in use calculation include the estimation of future cash
flows of the CGU affected by expected changes in underlying revenues
and direct costs, and administration costs through the forecast
period, the long-term growth rates and a suitable discount rate to
apply to the aforementioned cash flows in order to calculate the net
present value. Further information regarding the assumptions used
in the calculations have been provided in Note 11.
3. Gross revenue
Group
|
2023
£'000
|
2022
£'000
|
Revenue
|
|
|
Interest income
|
1,470
|
405
|
Total interest income
|
1,470
|
405
|
EPPS contracts
|
4,346
|
3,335
|
Consultancy fees
|
1,135
|
552
|
Implementation fees
|
2,131
|
1,644
|
Subscription fees
|
1,736
|
1,607
|
Total fee income
|
9,348
|
7,138
|
IAP revenue
|
117
|
342
|
Advertising revenue
|
109
|
453
|
Console revenue
|
7,087
|
5,521
|
Brand revenue
|
-
|
1
|
Total publishing income
|
7,313
|
6,317
|
Gross revenue
|
18,131
|
13,860
|
The above figures are from
continuing activities with comparatives restated accordingly based
on information drawn from prior financial statements.
Company
|
2023
£'000
|
2022
£'000
|
Intercompany interest income
|
1,540
|
2,166
|
Intercompany fee income
|
108
|
118
|
Other interest income
|
117
|
9
|
Gross revenue
|
1,765
|
2,293
|
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.
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:
Year ended 31 December 2023
|
Short term
finance
£'000
|
Payment
services
£'000
|
Publishing
£'000
|
Other
£'000
|
Total
£'000
|
Gross revenue
|
3,788
|
6,188
|
8,038
|
117
|
18,131
|
Cost of sales
|
(718)
|
(1,078)
|
(3,231)
|
-
|
(5,027)
|
Net revenue
|
3,070
|
5,110
|
4,807
|
117
|
13,104
|
Adjusted loss before tax*
|
(4,134)
|
(348)
|
(188)
|
(1,903)
|
(6,573)
|
Loss before tax
|
(4,134)
|
(348)
|
(188)
|
(2,669)
|
(7,339)
|
Taxation
|
433
|
554
|
(25)
|
-
|
962
|
Loss for the year from continuing operations
|
(3,701)
|
206
|
(213)
|
(2,669)
|
(6,377)
|
Loss for the year from discontinued operations
|
(963)
|
-
|
-
|
-
|
(963)
|
(Loss)/profit for the year
|
(4,664)
|
206
|
(213)
|
(2,669)
|
(7,340)
|
Total assets
|
13,797
|
8,121
|
23,463
|
5,295
|
50,676
|
Total liabilities
|
(8,228)
|
(1,988)
|
(1,786)
|
(734)
|
(12,736)
|
Net assets
|
5,569
|
6,133
|
21,677
|
4,561
|
37,940
|
* adjusted loss before tax excludes share-based payment
expense
|
|
|
Short term
finance
|
Payment services
|
Publishing
|
Other
|
Total
|
Year ended 31 December 2022
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Gross revenue
|
2,210
|
5,311
|
6,330
|
9
|
13,860
|
Cost of sales
|
(285)
|
(889)
|
(3,033)
|
-
|
(4,207)
|
Net revenue
|
1,925
|
4,422
|
3,297
|
9
|
9,653
|
Adjusted loss before tax*
|
(4,041)
|
(220)
|
(1,569)
|
(2,352)
|
(8,182)
|
Loss before tax
|
(4,041)
|
(220)
|
(1,569)
|
(2,352)
|
(8,182)
|
Taxation
|
271
|
395
|
601
|
-
|
1,267
|
Loss for the year from continuing operations
|
(3,770)
|
175
|
(968)
|
(2,352)
|
(6,915)
|
Profit for the year from discontinued operations
|
109
|
-
|
-
|
-
|
109
|
(Loss)/profit for the year
|
(3,661)
|
175
|
(968)
|
(2,352)
|
(6,806)
|
Total assets
|
34,200
|
8,258
|
20,407
|
2,627
|
65,492
|
Total liabilities
|
(19,747)
|
(1,792)
|
(2,911)
|
(938)
|
(25,388)
|
Net assets
|
14,453
|
6,466
|
17,496
|
1,689
|
40,104
|
*
adjusted loss
before tax
excludes share-based
payment expense
The above figures are from
continuing activities with comparatives restated accordingly based
on information drawn from prior financial statements.
The majority of the Group's
activities (98% of revenues) are within the UK, with 2% earned in
USA and 0% in Europe.
5. Staff costs
Analysis of staff costs:
|
Group
|
Company
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
Wages and salaries
|
9,188
|
9,506
|
1,
223
|
1,384
|
Consulting costs
|
1,059
|
379
|
-
|
-
|
Social security costs
|
1,104
|
1,338
|
82
|
251
|
Pension costs arising on defined
contribution schemes
|
441
|
418
|
35
|
38
|
Share based payment
|
766
|
-
|
766
|
-
|
|
12,558
|
11,641
|
2,106
|
1,673
|
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:
|
2023
Number
|
2022
Number
|
Management
|
16
|
16
|
Finance
|
11
|
9
|
Sales & marketing
|
42
|
28
|
Operations
|
57
|
76
|
Technology
|
65
|
43
|
|
191
|
172
|
The figures in this note are from
continuing activities with comparatives restated accordingly based
on information drawn from prior period financial
statements.
Directors' emoluments
The number of directors who
received share options during the year was as follows:
|
2023
Number
|
2022
Number
|
Long-term incentive schemes
|
1
|
-
|
There were no directors who
exercised share options during the year.
The directors' aggregate
emoluments in respect of qualifying services were:
|
Salary
£'000
|
Bonus
£'000
|
Pension
and Benefits
£'000
|
2023
Total
£'000
|
2022
Total
£'000
|
Executive Directors:
|
|
|
|
|
|
J van den Bergh
|
256
|
220
|
9
|
485
|
485
|
|
256
|
220
|
9
|
485
|
485
|
Non-executive
|
|
|
|
|
|
Directors:
|
|
|
|
|
|
S Baldwin
|
100
|
-
|
-
|
100
|
100
|
P Judd
|
70
|
-
|
-
|
70
|
70
|
P Dentskevich
|
60
|
-
|
-
|
60
|
60
|
A Wilhelmsen
|
-
|
-
|
-
|
-
|
-
|
|
230
|
-
|
-
|
230
|
230
|
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:
|
2023
£'000
|
2022
£'000
|
Service Criteria Award
|
552
|
-
|
TruFin Share Price
Award
|
151
|
-
|
Subsidiary Performance
Award
|
63
|
-
|
Total
|
766
|
-
|
Awards granted in 2023
Service Criteria Award
On 27 July 2023, options to
acquire 1,350,000 shares were granted to the senior management team
and employees of the Group. The award is structured as a nil cost
option. The vesting of this award is subject to the holder being in
continued employment until the vesting dates of this award. The
award has been granted in 3 tranches; the first tranche vested on 31
December 2023, the second and third will vest on 31 December 2024
and 31 December 2025 respectively. Awards granted to the Group CEO
are subject to an additional 1 year holding period. A Black-Scholes
model was used to determine the fair value of these options. The
model used an expected volatility of 50% and risk free rate of
5%.
TruFin Share Price Award
On 27 July 2023, options to
acquire 1,229,167 shares were granted to the senior management team
and employees of the Group. The award is structured as a nil cost
option. The vesting of this award is subject to the holder being in
continued employment until the vesting dates of this award, and the
Company's share price satisfying share price targets in relation to
the other companies listed on AIM . The award has been granted in 2
tranches; the first tranche will vest on 31 December 2024 and the
second on 31 December 2025. Awards granted to the Group CEO are
subject to an additional 1 year holding period. A Monte Carlo
simulation was used to determine the fair value of these options.
The model used an expected volatility of 50% and a risk free rate
of 5%.
Subsidiary Performance
Award
On 27 July 2023, options to
acquire 537,500 shares were granted to employees of the Group. The
award is structured as a nil cost option. The vesting of this award
is subject to the holder being in continued employment until the
vesting dates of this award, and subsidiary companies achieving
certain financial metrics over the vesting periods. The award has
been granted in 2 tranches; the first tranche will vest on 31
December 2024 and the second will vest on 31 December 2025. At 31
December 2023, 75% of the award is expected to vest based on the
latest performance metrics.
Awards granted before 2023
Performance Share Plan and Joint
Share Ownership Plan Founder Award ("Founder Award")
All the Founder Awards held by the
Group CEO have vested. 1,566,255 shares subject to the Joint Share
Ownership Plan are fully owned by the EBT. The Group CEO's nil cost
options in respect of the same number of shares under the
Performance Share Plan have also fully vested.
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 £1.90 per share.
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 has since been adjusted to £0.71, and the
share price milestones were adjusted to reflect the demerger, and
returns of value in 2019.
The modification did not result in
a change in the valuation of the award and was recognised over the
remainder of the original vesting period.
Details of share based awards
during the year:
Type of
instrument granted
|
JSOP Founder
Award* Shares
(#)
|
PSP Founder
Award* Options
(#)
|
PSP Market
Value Options
(#)
|
Outstanding at 1 January
2023
|
-
|
-
|
4,868,420
|
Granted during the year
|
-
|
-
|
-
|
Exercised during the year
|
-
|
-
|
-
|
Outstanding at 31 December 2023
|
-
|
-
|
4,868,420
|
Exercisable at 31 December 2023
|
|
1,566,255
|
-
|
* The JSOP Founder Awards and PSP Founder Awards will
together deliver, in aggregate, a maximum of 3,407,895 TruFin
shares.
|
|
|
|
|
Service
|
TruFin Share
|
Subsidiary Performance
|
Type of
instrument granted
|
Criteria
Award (#)
|
Price Award (#)
|
Award
(#)
|
Outstanding at 1 January
2023
|
-
|
-
|
-
|
Granted during the year
|
1,350,000
|
1,229,167
|
537,500
|
Exercised during the year
|
-
|
-
|
-
|
Cancelled during the year
|
-
|
-
|
-
|
Outstanding at 31 December 2023
|
700,000
|
1,229,167
|
537,500
|
Exercisable at 31 December 2023
|
650,000
|
-
|
-
|
No options expired during the
year.
The weighted average remaining
contractual life for the share options outstanding as at 31
December 2023 was 5.61 years (2022: 5.21 years).
7.
Net impairment
loss on financial assets
|
2023
£'000
|
2022
£'000
|
At 1 January
|
54
|
4
|
Charge for impairment
loss
|
109
|
50
|
Amounts written off in the
year
|
(11)
|
-
|
Amounts recovered in the
year
|
21
|
-
|
At 31 December
|
173
|
54
|
At 31 December 2023, the Group had
an impairment balance of £173,000 which was allocated against loans
and advances. At 31 December 2022, all of the impairment balance
was allocated against loans and advances.
The net impairment charge on
financial assets during the year ended 31 December 2023 all related
to loans and advances.
The net impairment charge on
financial assets during the year ended 31 December 2022 all related
to loans and advances.
8.
Loss before
income tax
Loss before income tax is stated
after charging:
|
2023
£'000
|
2022
£'000
|
Depreciation of property, plant
and equipment
|
107
|
104
|
Amortisation of intangible assets
|
2,893
|
2,314
|
Staff costs including share based
payments charge
|
12,558
|
11,641
|
The figures in this note are from
continuing activities with comparatives restated accordingly based
on information drawn from prior period financial
statements.
Fees payable to the Group's auditor (Crowe UK LLP)
|
2023
£'000
|
2022
£'000
|
Fees payable for the audit of the
company's annual accounts
|
82
|
82
|
Fees payable for the audit of the
company's subsidiaries
|
95
|
98
|
Total audit fees
|
177
|
180
|
Non audit services
|
|
|
Other assurance services
|
14
|
14
|
Total non-audit
fees
|
14
|
14
|
9.
Taxation
Analysis of tax charge recognised
in the period
|
2023
£'000
|
2022
£'000
|
Current tax credit
|
(712)
|
(1,267)
|
Deferred tax credit
|
(250)
|
-
|
Total tax
credit
|
(962)
|
(1,267)
|
The figures in this note are from
continuing activities with comparatives restated accordingly based
on information drawn from prior period financial statements.
Reconciliation of loss before tax
to total tax credit recognised
Group
|
2023
£'000
|
2022
£'000
|
Loss before tax from continuing
operations
|
(7,339)
|
(8,182)
|
Loss before tax multiplied by the
standard rate of corporation tax in the UK of 23.52% (2022:
19%)
|
(1,726)
|
(1,553)
|
Tax effect of:
|
|
|
Expenses not deductible
|
176
|
4
|
Depreciation in excess of capital
allowances
|
395
|
253
|
Capital allowances
|
(373)
|
(318)
|
Other short term timing
differences
|
1
|
1
|
R&D tax credit
|
(743)
|
(1.274)
|
Impact of different foreign tax
rates
|
(7)
|
-
|
Deferred tax not
recognised
|
1,315
|
1,619
|
Total tax charge
|
(962)
|
(1,267)
|
Company
|
2023
£'000
|
2022
£'000
|
Loss before tax
|
(984)
|
(42)
|
Loss before tax multiplied by the
standard rate of corporation tax in the UK of 23.52% (2022:
19%)
|
(231)
|
(8)
|
Tax effect of:
|
|
|
Expenses not deductible
|
198
|
24
|
Other short term timing
differences
|
1
|
(1)
|
Brought forward losses
utilised
|
-
|
(15)
|
Deferred tax not
recognised
|
32
|
-
|
Total tax charge
|
-
|
-
|
The deferred tax assets and
liabilities at 31 December 2023 have been based on the rates
substantively enacted at the reporting date. Taxation for other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
Research and Development
(R&D)
The Group uses external
professional advisers to support with R&D tax submissions. The
impact of such transactions can be uncertain until agreed with the
relevant tax authorities.
Deferred tax asset
|
|
Group
|
2023
£'000
|
2022
£'000
|
Balance at start of the
year
|
250
|
250
|
Credit to the statement of
comprehensive income
|
250
|
-
|
On disposal of subsidiary
|
(250)
|
-
|
Credit from discontinued
operations
|
-
|
(53)
|
Balance at end of the year
|
250
|
250
|
Comprised of: Losses
|
250
|
250
|
Total deferred tax asset
|
250
|
250
|
A deferred tax asset from losses
in Oxygen Finance Limited has been recognised. Unutilised tax
losses in the remainder of the Group as at the reporting date were
£88,928,000 (2022: £83,102,000).
10. Discontinued operations
On 4 October 2023, the Group
disposed of its 54% holding in Vertus and is reported in the
current period as a discontinued operation. Financial information
relating to the disposal of the subsidiary and discontinued
operations for the period to the date of disposal is set out
below.
Details of the sale of the subsidiary
|
£'000
|
Cash consideration
|
3,167
|
Group's share of net assets
sold
|
(3,055)
|
Related goodwill and separately
identifiable assets at date of disposal
|
(1,451)
|
Costs of disposal
|
(20)
|
Loss on disposal
|
(1,359)
|
Results from discontinued operations
|
2023
£'000
|
2022
£'000
|
Revenue
|
2,385
|
2,259
|
Expenses
|
(1,935)
|
(2,056)
|
Profit before tax
|
450
|
203
|
Taxation
|
(23)
|
(53)
|
Profit after tax
|
427
|
150
|
Other items included within discontinued operations
|
|
|
Loss on disposal of Vertus (net of
tax)
|
(1,359)
|
-
|
Amortisation of separately identifiable intangible
asset
|
(38)
|
(51)
|
Intragroup charges
|
7
|
10
|
(Loss)/profit from discontinued
operations
|
(963)
|
109
|
Cash flows from discontinued operations
|
2023
£'000
|
2022
£'000
|
Profit before tax from discontinued operations
|
450
|
203
|
Working capital adjustments
|
(1,901)
|
(5,492)
|
Cash flows from operating
activities
|
(1,451)
|
(5,289)
|
Cash flows used in investing
activities
|
-
|
(80)
|
Cash flows from financing
activities
|
1,650
|
5,425
|
Net increase in cash from discontinued operations
|
199
|
56
|
The carrying amount of assets and
liabilities as at the date of sale were:
|
£'000
|
Non-current assets
|
23,612
|
Current assets
|
996
|
Non-current liabilities
|
(18,651)
|
Current liabilities
|
(283)
|
Net Assets
|
5,674
|
|
Client contracts
|
Software
licences
and
similar
assets
|
Separately
identifiable intangible
assets
|
Goodwill
|
Total
|
Group
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Cost
|
|
|
|
|
|
At 1 January 2023
|
6,399
|
4,773
|
3,237
|
16,569
|
30,978
|
Additions
|
852
|
4,148
|
333
|
119
|
5,452
|
On disposal of subsidiary
|
-
|
(74)
|
(255)
|
(1,408)
|
(1,737)
|
Disposals
|
(182)
|
-
|
-
|
-
|
(182)
|
Exchange differences
|
(3)
|
5
|
-
|
-
|
2
|
At 31 December 2023
|
7,066
|
8,852
|
3,315
|
15,280
|
34,513
|
Amortisation
|
|
|
|
|
|
At 1 January 2023
|
(2,496)
|
(2,082)
|
(1,581)
|
-
|
(6,159)
|
Charge
|
(1,078)
|
(1,334)
|
(519)
|
-
|
(2,931)
|
On disposal of subsidiary
|
-
|
12
|
213
|
-
|
225
|
Disposals
|
182
|
-
|
-
|
-
|
182
|
Exchange differences
|
-
|
(5)
|
-
|
-
|
(5)
|
At 31 December 2023
|
(3,392)
|
(3,409)
|
(1,887)
|
-
|
(8,688)
|
Accumulated impairment
losses
|
|
|
|
|
|
At 1 January 2023
|
(408)
|
-
|
-
|
-
|
(408)
|
At 31 December 2023
|
(408)
|
-
|
-
|
-
|
(408)
|
Net book value
|
|
|
|
|
|
At 31 December 2023
|
3,266
|
5,443
|
1,428
|
15,280
|
25,417
|
At 31 December 2022
|
3,495
|
2,691
|
1,656
|
16,569
|
24,411
|
11. Intangible
assets
|
Client contracts
|
Software
licences
and
similar
assets
|
Separately
identifiable intangible
assets
|
Goodwill
|
Total
|
Group
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Cost
At 1 January 2022
|
5,490
|
2,579
|
1,642
|
15,746
|
25,457
|
Additions
|
905
|
2,254
|
-
|
-
|
3,159
|
On Acquisition
|
-
|
3
|
1,595
|
823
|
2,421
|
Disposals
|
-
|
(75)
|
-
|
-
|
(75)
|
Exchange differences
|
4
|
12
|
-
|
-
|
16
|
At 31 December 2022
|
6,399
|
4,773
|
3,237
|
16,569
|
30,978
|
Amortisation
At 1 January 2022
|
(1,607)
|
(1,181)
|
(1,070)
|
-
|
(3,858)
|
Charge
|
(889)
|
(977)
|
(511)
|
-
|
(2,377)
|
Disposals
|
-
|
75
|
-
|
-
|
75
|
Exchange differences
|
-
|
1
|
-
|
-
|
1
|
At 31 December 2022
|
(2,496)
|
(2,082)
|
(1,581)
|
-
|
(6,159)
|
Accumulated impairment
losses
At 1 January 2022
|
(408)
|
-
|
-
|
-
|
(408)
|
At 31 December 2022
|
(408)
|
-
|
-
|
-
|
(408)
|
Net book value
At 31 December 2022
|
3,495
|
2,691
|
1,656
|
16,569
|
24,411
|
At 31 December 2021
|
3,475
|
1,398
|
572
|
15,746
|
21,191
|
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 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 five 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 2023 and there was no impairment in relation
to underperforming contracts.
Software, licences 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 three to
five 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 2023 and concluded no impairment was
required.
The 'Software, licences and
similar assets' net book value balance related to internally
generated intangible assets at 31 December 2023 was £5,443,000
(2022: £2,691,000 ). This consists of cost of £8,852,000 (2022:
£4,773,000) and accumulated amortisation of
£3,409,000 (2022: £2,082,000 ).
During the year there were additions of £4,148,000 (2022:
£2,254,000) and amortisation of
£1,334,000 (2022: £977,000).
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 £2,759,000 that arose from this
acquisition was included within the payments services segment of
the Group. Following the acquisition, separately identifiable
intangible assets of £1,387,000 primarily relating to the value of
the contracts in the business at acquisition were recognised. These
were amortised over five years resulting in an amortisation charge
of £162,000 (2022: £277,000) during the year. Net Book value of
these assets at 31 December 2023 was £nil (2022: £162,000).
Goodwill related to this transaction excluding these assets at 31
December 2023 was £1,372,000 (2022: £1,372,000).
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. In 2021, the Group increased
its ownership of Vertus Capital to 54%.
Goodwill of £1,664,000 arose from
these transactions and has been included within the short term
finance segment of the business. Following the acquisition
separately identifiable intangible assets of £255,000 primarily
related to the value of existing third party relationships on
acquisition were identified. These were being amortised over five
years and the amortisation charge for the year prior to the
disposal of Vertus was £38,000 (2022: £51,000). Details of the
disposal of Vertus are included in Note 10.
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.
Goodwill of £12,965,000 arose from
this transaction and has been included within the publishing
segment of the business.
Magic Fuel
On 6 June 2022, the Group acquired
a 100% equity interest in Magic Fuel Inc ("Magic Fuel"). Goodwill
of £2,417,000 arose from this transaction and was included within
the publishing segment of the business. Following the acquisition,
separately identifiable intangible assets of £1,595,000 relating to
the Intellectual Property of the Games in development by Magic Fuel
were recognised. These are being amortised over five years resulting
in an amortisation charge for the year of £319,000 (2022: £181,000)
during the year. Goodwill related to this transaction excluding
these assets at 31 December 2023 was £823,000 (2022:
£823,000).
bidstats.uk
In November 2023, Oxygen Finance
Limited acquired the business of bidstats.uk at a cost of £451,000.
Separately identifiable assets of £332,000 have been identified
relating to the value of the customer relationships and the
technology. These are to be amortised over five years commencing 1
January 2024. Goodwill of £119,000 has arisen on the acquisition
and this will be reviewed annually for impairment. As at 31
December 2023, the net book value of the bidstats.uk assets was
£451,000.
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 2028, a discount rate of 10% was used
and terminal growth rate of 2%. This valuation was greater than the
amount of CGU 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 2026, a discount rate of 10% was used and terminal
growth rate of 3%. Revenue growth was a key assumption and was
based on Playstack's pipeline of games over the forecast period.
This factors in a number of key projects with platforms and
streaming partners. In some instances, revenue projections have
been based on amounts outlined in agreed contracts in place with
customers, whilst others have been based on progressive discussions
with customers and historic sales for games of a similar nature.
The valuation of Playstack was greater than the amount of CGU and
therefore the goodwill is not deemed to be impaired.
Magic Fuel was valued using the
discounted cash flow methodology. It's net earnings along with
revenues earned in the rest of the group related to this
acquisition were forecasted to 2026, a discount rate of 10% was
used and a terminal growth rate of 3%. The valuation of this CGU
was greater than the value of goodwill and so was deemed not be
impaired.
The impairment review of Playstack
is most sensitive to a change in the planned revenue growth and
discount rate. A 70% reduction in this growth rate or an increase
in the discount rate to 25% could give rise to an impairment
charge.
No other reasonable change in the
other assumptions set out in this note would result currently in an
impairment charge.
12. Property, plant and
equipment
Group
|
Fixtures
&
fittings
£'000
|
Computer
equipment
£'000
|
Right-of-Use
Asset
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
|
At 1 January 2023
|
139
|
96
|
276
|
511
|
|
Additions
|
21
|
21
|
-
|
42
|
|
On disposal of subsidiary
|
-
|
(13)
|
-
|
(13)
|
|
Exchange differences
|
2
|
(1)
|
-
|
1
|
|
At 31 December 2023
|
162
|
103
|
276
|
541
|
|
Depreciation
|
|
|
|
|
At 1 January 2023
|
(60)
|
(61)
|
(44)
|
(165)
|
Charge
|
(32)
|
(20)
|
(55)
|
(107)
|
On disposal of subsidiary
|
-
|
6
|
-
|
6
|
Exchange differences
|
(1)
|
1
|
-
|
-
|
At 31 December 2023
|
(93)
|
(74)
|
(99)
|
(266)
|
Net book value
At 31 December 2023
|
69
|
29
|
177
|
275
|
|
|
|
|
|
|
|
| |
At 31 December 2022
|
79
|
34
|
232
|
345
|
|
Fixtures
&
fittings
|
Computer equipment
|
Right-of-Use
Asset
|
Total
|
Group
|
£'000
|
£'000
|
£'000
|
£'000
|
Cost
|
|
|
|
|
At 1 January 2022
|
53
|
78
|
429
|
560
|
Additions
|
86
|
27
|
276
|
389
|
Disposals
|
-
|
(9)
|
(429)
|
(438)
|
At 31 December 2022
|
139
|
96
|
276
|
511
|
Depreciation
|
|
|
|
|
At 1 January 2022
|
(44)
|
(44)
|
(407)
|
(495)
|
Charge
|
(16)
|
(26)
|
(66)
|
(108)
|
Disposals
|
-
|
9
|
429
|
438
|
At 31 December 2022
|
(60)
|
(62)
|
(44)
|
(166)
|
Net book value
|
|
|
|
|
At 31 December 2022
|
79
|
34
|
232
|
345
|
At 31 December 2021
|
9
|
34
|
22
|
65
|
13.
|
Investment in subsidiaries
|
|
Company
|
|
|
£'000
|
Balance at
|
1
January 2023 and 31 December 2023
|
|
30,189
|
Balance at
|
1 January 2022 and 31 December
2022
|
|
30,189
|
14.
|
Loans and advances
|
|
|
Group
|
2023
£'000
|
2022
£'000
|
Total loans and
advances
|
7,407
|
24,215
|
Less: loss allowance
|
(173)
|
(54)
|
|
7,234
|
24,161
|
The aging of loans and advances
are analysed as follows:
|
|
|
|
2023
£'000
|
2022
£'000
|
Neither past due nor impaired
|
7,082
|
23,875
|
Past due: 0-30 days
|
6
|
129
|
Past due: 31-60 days
|
22
|
77
|
Past due: 61-90 days
|
14
|
41
|
Past due: more than 91
days
|
105
|
39
|
Impaired
|
5
|
-
|
|
7,234
|
24,161
|
15. Trade and other receivables
|
Group
|
Company
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
Trade and other receivables
|
2,385
|
2,149
|
-
|
-
|
Prepayments
|
606
|
455
|
35
|
44
|
Accrued Income
|
685
|
890
|
-
|
-
|
VAT
|
-
|
-
|
15
|
11
|
Other debtors
|
3,684
|
2,554
|
-
|
-
|
Amounts due from Group
Undertakings
|
-
|
-
|
111
|
83
|
|
7,360
|
6,048
|
161
|
138
|
Trade receivables above are stated
net of a loss allowance of £nil (2022: £nil). All receivables are
due within one year. The aging of trade receivables is analysed as
follows:
|
Group
|
Company
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
Not yet due
|
1,621
|
1,960
|
-
|
-
|
Past due: 0-30 days
|
220
|
117
|
-
|
-
|
Past due: 31-60 days
|
146
|
6
|
-
|
-
|
Past due: 61-90 days
|
193
|
9
|
-
|
-
|
Past due: more than 91
days
|
205
|
57
|
-
|
-
|
|
2,385
|
2,149
|
-
|
-
|
16. Share capital
Share Capital
Total
Group and
Company
£'000
£'000
105,836,687 shares at £0.91 per
share
96,311
96,311
On 10 July 2023, the Company
issued 11,653,744 ordinary shares through a Placing and an Open
Offer. These were issued at £0.65 per share, raising gross proceeds
of £7,575,000. This was a discount to par value of £3,030,000,
which has been included in Other Reserves in the Statement of
Changes of Equity.
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
2023.
17. Borrowings
Group
|
2023
£'000
|
2022
£'000
|
Loans due within one
year
|
6,157
|
1,783
|
Loans due in over one
year
|
1,047
|
16,764
|
|
7,204
|
18,547
|
Movements in borrowings
during the year
The below table identifies the
movements in borrowings during the year.
Group
|
£'000
|
Balance at 1 January
2023
|
18,547
|
Funding drawdown
|
7,619
|
Interest expense
|
557
|
Origination fees paid
|
(56)
|
Repayments
|
(2,170)
|
Interest paid
|
(416)
|
Disposal of subsidiary
|
(16,874)
|
Exchange differences
|
(3)
|
Balance at 31 December 2023
|
7,204
|
Group
|
£'000
|
Balance at 1 January
2022
|
12,985
|
Funding drawdown
|
8,707
|
Interest expense
|
852
|
Fee amortisation
|
110
|
Repayments
|
(3,337)
|
Interest paid
|
(777)
|
Exchange differences
|
7
|
Balance at 31 December 2022
|
18,547
|
The primary borrowings of the
Group are comprised of the following:
· A
revolving credit facility under which one month notice is given by
either the lender or borrower. 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.
18. Trade and other payables
|
Group
|
Company
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
Trade payables
|
877
|
529
|
19
|
28
|
Accruals and deferred income
|
3,626
|
3,867
|
520
|
622
|
Other payables
|
416
|
1,636
|
7
|
-
|
Corporation tax
|
8
|
-
|
-
|
-
|
Other taxation and social
security
|
506
|
603
|
188
|
284
|
VAT
|
99
|
206
|
-
|
-
|
|
5,532
|
6,841
|
734
|
934
|
19. 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 17 and equity of the Group
(comprising issued capital, reserves, retained earnings and
non-controlling interests as disclosed in Note 16 and Note
20).
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 2023
Financial assets and financial
liabilities included in the statement of financial position that are
not measured at fair value:
Group
|
Carrying amount
£'000
|
Fair value
£'000
|
Level 1
£'000
|
Level 2
£'000
|
Level 3
£'000
|
Financial assets not measured at fair value
|
|
|
|
|
|
Loans and advances
|
7,234
|
7,234
|
-
|
-
|
7,234
|
Trade receivables
|
2,385
|
2,385
|
-
|
-
|
2,385
|
Other receivables
|
4,369
|
4,369
|
-
|
-
|
4,369
|
Cash and cash equivalents
|
10,140
|
10,140
|
10,140
|
-
|
-
|
|
24,128
|
24,128
|
10,140
|
-
|
13,988
|
Financial liabilities not measured at fair value
|
|
|
|
|
|
Borrowings
|
7,204
|
7,204
|
-
|
-
|
7,204
|
Trade, other payables and
accruals
|
4,889
|
4,889
|
-
|
-
|
4,889
|
|
12,093
|
12,093
|
-
|
-
|
12,093
|
31
December 2022
|
|
|
|
|
|
Group
|
Carrying amount
£'000
|
Fair value
£'000
|
Level 1
£'000
|
Level 2
£'000
|
Level 3
£'000
|
Financial assets not measured at fair value
|
|
|
|
|
|
Loans and advances
|
24,161
|
24,161
|
-
|
-
|
24,161
|
Trade receivables
|
2,149
|
2,149
|
-
|
-
|
2,149
|
Other receivables
|
3,444
|
3,444
|
-
|
-
|
3,444
|
Cash and cash equivalents
|
10,273
|
10,273
|
10,273
|
-
|
-
|
|
40,027
|
40,027
|
10,273
|
-
|
29,574
|
Financial liabilities not measured at fair value
|
|
|
|
|
|
Borrowings
|
18,547
|
18,547
|
-
|
-
|
18,547
|
Trade, other payables and
accruals
|
6,392
|
6,392
|
-
|
-
|
6,392
|
|
24,939
|
24,939
|
-
|
-
|
24,939
|
31 December 2023
|
|
Company
|
Carrying amount
£'000
|
Fair value
£'000
|
Level 1
£'000
|
Level 2
£'000
|
Level 3
£'000
|
Financial assets not measured at fair value
|
|
|
|
|
|
Amounts owed by group undertakings
|
59,089
|
59,089
|
-
|
-
|
59,089
|
Other receivables
|
126
|
126
|
-
|
-
|
126
|
Cash and cash equivalents
|
4,723
|
4,723
|
4,723
|
-
|
-
|
|
63,938
|
63,938
|
4,723
|
-
|
59,215
|
Financial liabilities not measured at fair value
|
|
|
|
|
|
Trade, other payables and
accruals
|
734
|
734
|
-
|
-
|
734
|
|
734
|
734
|
-
|
-
|
734
|
31 December 2022
|
|
Company
|
Carrying amount
£'000
|
Fair value
£'000
|
Level 1
£'000
|
Level 2
£'000
|
Level 3
£'000
|
Financial assets not measured at fair value
|
|
|
|
|
|
Amounts owed by group undertakings
|
54,835
|
54,835
|
-
|
-
|
54,835
|
Other receivables
|
94
|
94
|
-
|
-
|
94
|
Cash and cash equivalents
|
2,260
|
2,260
|
2,260
|
-
|
-
|
|
57,189
|
57,189
|
2,260
|
-
|
54,929
|
Financial liabilities not measured at fair value
|
|
|
|
|
|
Trade, other payables and
accruals
|
934
|
934
|
-
|
-
|
934
|
|
934
|
934
|
-
|
-
|
934
|
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 ECL 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, reoccur 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
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
Cash and cash equivalents
|
10,140
|
10,273
|
4,723
|
2,260
|
Loans and advances
|
7,234
|
24,161
|
-
|
-
|
Amounts owed by group undertakings
|
-
|
-
|
59,089
|
54,835
|
Trade and other receivables
|
6,754
|
5,593
|
126
|
138
|
Maximum exposure to credit risk
|
24,128
|
40,027
|
63,938
|
57,233
|
Loans and advances:
Collateral held as security
|
Group
|
Company
|
|
2023
£'000
|
2022
£'000
|
2023
£'000
|
2022
£'000
|
Fully collateralised
|
|
|
|
|
Loan-to-value* ratio
|
|
|
|
|
Less than 50%
|
654
|
800
|
-
|
-
|
50% to 70%
|
1,174
|
271
|
-
|
-
|
71% to 80%
|
554
|
500
|
-
|
-
|
81% to 90%
|
3,434
|
701
|
-
|
-
|
91% to 100%
|
651
|
-
|
-
|
-
|
|
6,467
|
2,272
|
-
|
-
|
Partially collateralised
|
|
|
|
|
Collateral value relating to loans over 100% loan-to-value
|
-
|
-
|
-
|
-
|
Unsecured lending
|
940
|
21,943
|
-
|
-
|
* 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.
Risk rating
|
Stage 1
£'000
|
Stage 2
£'000
|
Stage 3
£'000
|
2023
Total
£'000
|
2022
Total
£'000
|
Above average (risk rating
1-2)
|
940
|
-
|
-
|
940
|
11,035
|
Average (risk rating
3-5)
|
6,333
|
-
|
134
|
6,467
|
10,615
|
Below average (risk rating
6+)
|
-
|
-
|
-
|
-
|
2,565
|
Gross carrying amount
|
7,273
|
-
|
134
|
7,407
|
24,215
|
Loss allowance
|
(173)
|
-
|
-
|
(173)
|
(54)
|
Carrying amount
|
7,100
|
-
|
134
|
7,234
|
24,161
|
Gross Carrying Amount
|
Stage 1
£'000
|
Stage 2
£'000
|
Stage 3
£'000
|
Total
£'000
|
As at 1 January 2023
|
22,692
|
1,481
|
43
|
24,216
|
Transfer to stage 1
|
-
|
-
|
-
|
-
|
Transfer to stage 2
|
-
|
-
|
-
|
-
|
Transfer to stage 3
|
(30)
|
-
|
30
|
-
|
Disposal of subsidiary
|
(19,937)
|
(1,481)
|
-
|
(21,418)
|
Net Loans originated
|
4,548
|
-
|
61
|
4,609
|
As at 31 December 2023
|
7,273
|
-
|
134
|
7,407
|
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 £nil (2022:
£nil).
The contractual amount outstanding
on financial assets that were written off during the reporting
period and are still subject to enforcement activity is £nil at 31
December 2023 (2022: £nil).
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.
|
Carrying Amount
|
Less than
1 month
|
1-3 months
|
3 months to
1 year
|
1-5 years
|
>5 years
|
As at 31 December 2023
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Financial Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
10,140
|
10,140
|
-
|
-
|
-
|
-
|
Trade and other receivables
|
6,754
|
2,490
|
585
|
2,006
|
1,673
|
-
|
Loans and advances
|
7,234
|
6,321
|
36
|
(63)
|
940
|
-
|
|
24,128
|
18,951
|
621
|
1,943
|
2,613
|
-
|
Financial Liabilities
|
|
|
|
|
|
|
Trade payables, other payables and accruals
|
4,889
|
1,574
|
2,260
|
819
|
236
|
-
|
Borrowings
|
7,204
|
64
|
38
|
1,077
|
6,025
|
-
|
|
12,093
|
1,638
|
2,298
|
1,896
|
6,261
|
-
|
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
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
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.
20.
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 72% (2022: 72%)
ownership share of Bandana during the year.
Statement of Financial Position
|
Bandana
|
|
2023
£'000
|
2022
£'000
|
Current assets
|
-
|
1
|
Current liabilities
|
(5,464)
|
(5,465)
|
Equity attributable to owners of
the Company
|
(3,955)
|
(3,955)
|
Non-controlling
interests
|
(1,509)
|
(1,509)
|
Income Statement
|
Bandana
|
|
2023
£'000
|
2022
£'000
|
Revenue
|
-
|
-
|
Expenses
|
-
|
(251)
|
Loss after tax
|
-
|
(251)
|
Loss after tax attributable to
owners of the Company
|
-
|
(182)
|
Loss after tax attributable to the
non-controlling interests
|
-
|
(69)
|
Cash Flow Statement
|
Bandana
|
|
2023
£'000
|
2022
£'000
|
Net cash from operating
activities
|
-
|
-
|
Net increase in cash and cash
equivalents
|
-
|
-
|
Non-controlling interest
|
Bandana
|
|
2023
£'000
|
2022
£'000
|
Balance at 1 January
|
(1,509)
|
(1,440)
|
Share of loss for the year
|
-
|
(69)
|
Balance at 31 December
|
(1,509)
|
(1,509)
|
The Group's effective ownership
share of Satago Financial Solutions Limited ("Satago") at the
reporting date is based on the net assets of the Satago Group at
the reporting date, and the ownership waterfall following Lloyds
Banking Group's £5m investment in Satago in April 2022.
Statement of Financial Position
|
Satago
|
|
2023
£'000
|
2022
£'000
|
Current assets
|
9,705
|
10,397
|
Non-current assets
|
587
|
617
|
Current liabilities
|
(3,606)
|
(927)
|
Equity attributable to owners of
the Company
|
2,631
|
5,061
|
Non-controlling
interests
|
4,055
|
5,026
|
Income Statement
|
Satago
|
|
2023
£'000
|
2022
£'000
|
Revenue
|
2,523
|
1,860
|
Expenses
|
(5,923)
|
(3,926)
|
Loss after tax
|
(3,400)
|
(2,001)
|
Loss after tax attributable to
owners of the Company
|
(2,429)
|
1,910
|
Loss after tax attributable to the
non-controlling interests
|
(971)
|
(91)
|
Cash Flow Statement
|
Satago
|
|
2023
£'000
|
2022
£'000
|
Net cash used in operating
activities
|
(4,507)
|
(3,035)
|
Net cash used in investing
activities
|
(275)
|
(2,498)
|
Net cash generated from financing
activities
|
2,558
|
7,360
|
Net (decrease)/increase in cash
and cash equivalents
|
(2,224)
|
1,827
|
Non-controlling interest
|
Satago
|
|
2023
£'000
|
2022
£'000
|
Balance at 1 January
|
5,026
|
103
|
Share of loss for the year
|
(971)
|
(91)
|
Arising from change in
non-controlling interest
|
-
|
14
|
Equity Raise
|
-
|
5,000
|
Balance at 31 December
|
4,055
|
5,026
|
21.
|
Leases
|
The carrying amounts of the
right-of-use assets recognised and the movements during the period
are shown in Note 12.
The lease liability and movement
during the period were:
|
|
Group
|
£'000
|
Lease liability recognised at 1
January 2023
|
285
|
Interest
|
13
|
Payments
|
(82)
|
Balance at 31 December 2023
|
216
|
Group
|
£'000
|
Lease liability recognised at 1
January 2022
|
25
|
Lease recognised in year
|
276
|
Interest
|
12
|
Payments
|
(28)
|
Balance at 31 December 2022
|
285
|
|
| |
22. 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:
|
2023
|
2022
|
Number of shares (#)
At year end
|
105,836,687
|
94,182,943
|
Weighted average
|
99,770,355
|
90,485,862
|
Earnings attributable to ordinary shareholders
|
£'000
|
£'000
|
Loss after tax attributable to the
owners of TruFin plc
|
(6,472)
|
(6,637)
|
Adjusted earnings attributable to
ordinary shareholders
Loss after tax attributable to the
owners of TruFin plc
|
(6,472)
|
(6,637)
|
Loss after tax from continued
operations
|
(5,312)
|
(6,677)
|
(Loss)/profit from discontinued
operations
|
(1,160)
|
40
|
Share-based payments
|
766
|
-
|
Adjusted1 loss after tax attributable to the
owners of TruFin plc
|
(4,546)
|
(6,677)
|
Earnings per share*
|
Pence
|
Pence
|
Basic and diluted
|
(6.5)
|
(7.3)
|
Basic and diluted from continuing
operations
|
(5.3)
|
(7.4)
|
Adjusted1
|
(4.6)
|
(7.4)
|
* All Earnings per share figures are undiluted and
diluted.
|
|
|
Adjusted1 EPS
excludes share-based
payment expense
and loss
from discontinued
operations from
loss after
tax
|
|
|
Comparative figures have been restated to adjust for
discontinued operations
|
|
|
Management has been granted
9,551,342 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.
23. Related party disclosures
Key management personnel
disclosures are provided in Notes 5 and 6.
During the year, Playstack made
loans to Storm Chaser UG, a company based in Germany. Storm Chaser
UG is 100% owned by Storm Chaser Games -an associate company of
Playstack (See Note 1). The balance of the loans (including
interest) at the reporting date was £940,000 (2022:
£525,000).
24. Events after the Reporting
Date
In March 2024, Playstack disposed
of its augmented reality and gamification AdTech platform "Interact"
to VCI Global Limited for
$2,000,000 (£1,574,000).