REG - Non-Standard Fin - Final Results <Origin Href="QuoteRef">NSF.L</Origin> - Part 3
03/03/2017 07:05
- Part 3: For the preceding part double click ID:nRSC4116Yb
4,259
Cash and cash equivalents 1,807 - 1,807
Trade and other payables (7,342) - (7,342)
Corporation tax liability (1,949) - (1,949)
Deferred tax liabilities3 - (7,551) (7,551)
112,901 30,204 143,105
Goodwill 91,895
Total consideration 235,000
Satisfied by:
Cash and shares 235,000
Net cash outflow arising on acquisition:
Cash consideration 215,000
Share consideration 20,000
Cash and cash equivalents acquired (1,807)
Corporation tax credit (1,864)
Other acquired asset (545)
230,784
1 £2,050,000 has been attributed to the fair value of Everyday Loans'
customer list £4,233,000 to the broker relationship, £1,447,000 to the
Everyday Loans brand and £49,000 to the Trusttwo brand and £6,227,000 to
technology.
2 An adjustment to receivables of £23,749,000 has been made to reflect the
fair value of the receivables book at the acquisition date. Refer to note 10.
3 Deferred tax liability £7,551,000 recognised on the intangibles and the
fair value adjustment of the receivable book at acquisition. Refer to note
11.
Everyday Loans (including Trusttwo) contributed £38,929,000 to the Group's
revenue and £12,327,000 profit before tax (before fair value adjustments) to
the Group's operating profit for the period from the date of acquisition to
the year ended 31 December 2016.
The goodwill of £91.9m represents the benefit of the Group's synergies
available from the acquisition in respect of collections and distribution
channels.
The fair value measurement of acquired assets is based upon financial
forecasts, which are categorised as level 3 within the IFRS 13 fair value
hierarchy.
Acquisition of Loans at Home
On 4 August 2015, the Group obtained control of SD Taylor Limited, trading as
Loans at Home (formerly Loansathome4u) through the purchase of 100% of the
share capital.
A detailed conversion of Loans at Home's financial statements, to align
accounting policies, has been completed post-acquisition which reduced Loans
at Home's net assets on acquisition by £5,956,000, principally in respect of
higher impairment provisions due to the impact of a more conservative approach
to recognising impairment.
The fair values of the identifiable assets and liabilities of Loans at Home as
at the acquisition date were as follows:
Amounts recognised at acquisition date £'000 Fair value adjustments £'000 Total £'000
Intangible assets1 - 18,149 18,149
Property, plant and equipment 1,627 - 1,627
Inventories 9 - 9
Amounts receivable from customers2 22,591 5,882 28,473
Trade receivables 277 - 277
Cash and cash equivalents 1,296 - 1,296
Trade and other payables3 (2,040) (732) (2,772)
Deferred tax liabilities4 (22) (4,806) (4,828)
23,738 18,493 42,231
Goodwill 40,176
Total consideration 82,407
Satisfied by:
Cash 82,407
Net cash outflow arising on acquisition:
Cash consideration 82,407
Cash and cash equivalents acquired (1,296)
81,111
1. £17,312,000 has been attributed to the fair value of Loans at Home's
customer list, £540,000 to the agent network and £297,000 to the brand.
2. An adjustment to receivables of £5,882,000 has been made to reflect the
fair value of the receivables book at the acquisition date. Refer to note 10.
3. An adjustment of £732,000 to accruals for a recognised dilapidations
provision on the properties owned by Loans at Home.
4. Deferred tax liability £4,806,000 recognised on the intangibles and the
fair value adjustment of the receivable book at acquisition. Refer to note
11.
The goodwill of £40.2m represents the benefit of the Group's synergies
available from the acquisition in respect of collections and distribution
channels.
The fair value measurement of acquired assets is based upon financial
forecasts, which are categorised as level 3 within the IFRS 13 fair value
hierarchy.
13. Share capital and share premium
On incorporation, 8 July 2014, the issued share capital of the Company was £1
consisting of one Ordinary Share, fully paid up.
On 5 November 2014, the ordinary share of £1 was subdivided into 20 ordinary
shares of £0.05 each.
On 2 December 2014, the share capital was increased by the issuance of 999,980
Ordinary Shares of £0.05 each at par to John van Kuffeler in settlement of a
liability of £49,999.
On 4 February 2015 the share capital was further increased by the issuance of
1,960,527 Ordinary Shares of £0.05 each at a premium of £0.33 each to John van
Kuffeler, Nick Teunon, Miles Cresswell-Turner, Robin Ashton and Charles
Gregson.
On 19 February 2015, the share capital was further increased by the floatation
of the Company and issuance of 102,323,918 Ordinary Shares of £0.05 each at a
premium of £0.95 each.
On 7 January 2016, the share capital was increased by the issuance of
188,235,825 Ordinary Shares of £0.05 each at a premium of £0.80 each.
Upon completion of the acquisition of the Everyday Loans Group from Secure
Trust Bank plc on 13 April 2016, the share capital was further increased by
the issuance of 23,529,412 Ordinary Shares of £0.05 each at a premium of £0.80
each to Secure Trust Bank plc.
All shares in issue are ordinary 'A' shares consisting of £0.05 per share. All
shares are fully paid up.
The Company's share capital is denominated in Sterling. The Ordinary Shares
rank in full for all dividends or other distributions, made or paid on the
ordinary share capital of the Company.
Share movements
Number
Balance at date of incorporation -
Shares issued during the period 105,284,445
Balance at 31 December 2015 105,284,445
Shares issued during the year 211,765,237
Balance at 31 December 2016 317,049,682
14. Net cash used in operating activities
Year ended31 Dec 2016 £'000 Period from incorporation to
31 Dec 2015 £'000
Operating loss (5,838) (16,162)
Taxation paid (1,341) (350)
Depreciation 690 198
Amortisation of intangible assets 10,714 4,030
Fair value unwind on acquired loan book 8,342 5,456
(Profit)/loss on disposal of property, plant and equipment (363) 51
Decrease in inventories 3 6
Increase in amounts receivable from customers (21,039) (5,394)
Increase in receivables (7,757) (15,217)
(Decrease)/increase in payables (6,952) 17,850
Cash used in operating activities (23,541) (9,532)
Appendix - Regulatory overview
During 2016 there were a number of regulatory developments that may have a
bearing on the Group's activities and business operations in the future. Some
of the more pertinent developments are summarised below.
· On 26 May 2016 the FCA responded to the Competition and Markets Authority (CMA) recommendations on high-cost, short-term credit (HCSTC) and stated that it would make only minor changes to its suggested rules in this area. The new rules came into force on 1
December 2016.
· On 30 June 2016 new rules on dispute resolution came into force extending the length of time that firms have to handle complaints from "next business day" to the close of business three days after the date of receipt. All complaints must be reported within
three business days.
· On 25 October 2016 the FCA announced a consultation on proposed guidance setting out its proposed interpretation of the law in relation to guarantor loans. This guidance was finalised on 19 January 2017 and the FCA has confirmed that there is no
requirement for a statutory default notice to be issued where payment is requested of (not demanded), or volunteered by a guarantor and continuous payment authority can be used against the guarantor provided notice is given sufficiently in advance (five
working days is suggested) to afford them the opportunity to object/cancel the CPA.
· On 29 November 2016, the FCA issued a call for input to inform further work on high-cost credit, including a review of the HCSTC price cap. Non-Standard Finance plc has submitted its views to the FCA.
· The FCA published its thematic review on early arrears management in unsecured lending in December 2016. Its findings were that many firms are improving the way they deal with customers in early arrears. However, in some areas consumer credit firms still
need to improve their practices.
· Also in December 2016 the FCA launched a consultation on the future funding of the Financial Services Compensation Scheme (FSCS) and has also launched a consultation on a number of specific changes to its scheme rules. One proposal is that the FSCS should
be extended to cover UK-based debt management firms and that this should be funded by a levy on consumer credit firms. According to the FCA and assuming an annual requirement of £45m, this would equate to a levy of 0.22% of annual income on all consumer
credit firms.
· As at 31 March 2016 the FCA had authorised 30,309consumer credit firms and a further 3,544 Interim Permissions were still awaiting to complete the process. In home collected credit, over 386 firms had been authorised as at 31 March 20161.
1 Information from FCA Data Bulletin (Issue 6) June 2016
This information is provided by RNS
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