REG - Non-Standard Finance - Acquisition of Everyday Loans for £235 million <Origin Href="QuoteRef">NSF.L</Origin> - Part 2
04/12/2015 07:11
- Part 2: For the preceding part double click ID:nRSD0022Ia
The Directors are in
the process of introducing new methodology for estimating revenue and impairment accounting that will be applicable to
Loansathome4u.
Everyday Loans
Everyday Loans' results of operations since 30 June 2015 have been broadly consistent with trends witnessed during the
periods under review and total outstanding loan balances have continued to grow. Everyday Loans' management expects to make
modest increases in its capital expenditures in the near term related to information technology as a result of the
separation of its technology infrastructure which is currently shared with STB from STB following the completion of the
Acquisition.
Since 30 June 2015, Everyday Loans has decreased its expenditures on television advertising, in particular related to its
TrustTwo product. Everyday Loans has also introduced enhanced loan forbearance policies by providing delinquent customers
with additional time before initiating recoveries from guarantors on such customers' loans and from customers of
non-guarantor loans, which would increase the loan loss provision in the year ending 31 December 2015. In connection with
this change in August 2015 Everyday Loans established a provision of £0.6 million to cover the anticipated decrease in
collections.
On 30 November 2015, Everyday Loans Holdings Limited declared a dividend of £11.5 million to STB, which increased the
amount of intercompany debt owed by the Everyday Loans Group to STB to approximately £108 million.
11. Overseas Shareholders
Subject to certain exceptions, the Placing and Open Offer is not being made to shareholders in the United States or into
any of the other Excluded Territories (as defined in the Appendix to this Announcement).
Persons who have registered addresses in or who are resident in, or who are citizens of, countries other than the United
Kingdom should consult their professional advisers whether they require any governmental or other consents or need to
observe any other formalities to enable them to take up any New Ordinary Shares.
The Prospectus and any accompanying documents will not be made available to Overseas Shareholders with registered addresses
in any Excluded Territory (subject to limited exceptions) and may not be treated as an invitation to subscribe for any New
Ordinary Shares by any person resident or located in such jurisdictions or any other Excluded Territory.
The New Ordinary Shares have not been, and will not be, registered under the applicable securities laws of any Excluded
Territory. Accordingly, the New Ordinary Shares may not be offered, sold, delivered or transferred, directly or indirectly,
in or into any Excluded Territory to or for the account or benefit of any national, resident or citizen of any Excluded
Territory.
NONE OF THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT SHALL BE SOLD, ISSUED OR TRANSFERRED IN ANY JURISDICTION IN
CONTRAVENTION OF APPLICABLE LAW.
12. The New Ordinary Shares
The New Ordinary Shares will be issued credited as fully paid and will rank pari passu in all respects with the Company's
existing Ordinary Shares. The New Ordinary Shares will be created under the Companies Act 2006 and the legislation made
thereunder, will be issued in registered form and will be capable of being held in both certificated and uncertificated
form.
Approval of the creation and issue of the New Ordinary Shares will be sought at the General Meeting.
13. Settlement, Listing and Dealings of the New Ordinary Shares and Readmission
Applications will be made to the U.K. Listing Authority for the New Ordinary Shares to be admitted to the Official List
with a Standard Listing and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on the
London Stock Exchange's Main Market for listed securities. It is expected that Admission will become effective and that
dealings for normal settlement in the New Ordinary Shares will commence on the London Stock Exchange at or shortly after
8.00am on 7 January 2016.
The Company's existing Ordinary Shares are already admitted to the Standard Listing segment of the Official List and to
trading on the London Stock Exchange's main market for listed securities and to CREST. It is expected that all of the New
Ordinary Shares, when issued and fully paid, will be capable of being held and transferred by means of CREST. The New
Ordinary Shares will trade under ISIN GB00BRJ6JV17.
As the Acquisition is classified as a reverse takeover, upon Completion (expected to occur in the first quarter of 2016)
the listing of all of the Company's Ordinary Shares then in issue (save for the Consideration Shares, which will not be
listed at such time) will be cancelled. Application will be made to the U.K. Listing Authority and to the London Stock
Exchange for such Ordinary Shares and the Consideration Shares to be admitted to a Standard Listing on the Official List
and to trading on the London Stock Exchange's Main Market for listed securities as soon as practicable after such
cancellation. It is noted that there is no guarantee that such re-admission will be granted. If the Ordinary Shares were
not re-admitted to listing and trading, this would materially reduce liquidity in the Ordinary Shares.
14. General Meeting
The Capital Raising is subject to a number of conditions, including Shareholders' approval of the Resolutions to be
proposed at the General Meeting. Notice convening the General Meeting to be held at 11 a.m. on 6 January 2016 at 10
Greycoat Place, London, SW1P 1SB will be set out in the Prospectus.
15. Further information
Further details in relation to the Acquisition and the Capital Raising will be set out in the Prospectus which is expected
to be published on 7 December 2015.
UNAUDITED HISTORICAL AND INTERIM FINANCIAL INFORMATION ON THE EVERYDAY LOANS GROUP
SECTION A: CONSOLIDATED HISTORICAL FINANCIAL INFORMATION OF THE EVERYDAY LOANS GROUP
CONSOLIDATED INCOME STATEMENTS
Notes Year ended31 December 2012 Year ended31 December 2013 Year ended31 December 2014
£'000 £'000 £'000
Continuing operations:
Revenue 1 28,848 33,341 40,034
Cost of sales (excluding interest) (482) (510) (638)
Interest costs (2,337) (2,516) (2,590)
Gross Profit 26,029 30,315 36,806
Administrative expenses (15,133) (14,496) (17,088)
Management Charge 4 - - (8,745)
Impairment losses on loans and advances to customers (5,139) (6,339) (6,841)
Operating profit 5,757 9,480 4,132
Finance costs 5 (4,711) - -
Finance income 5 2 - -
Profit before taxation 1,048 9,480 4,132
Taxation 6 5,210 (2,443) (2,901)
Profit and total comprehensive income for the period 6,258 7,037 1,231
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Retained earnings Total
£'000 £'000 £'000 £'000
Balance at 1 January 2012 2 215 (45,739) (45,522)
Recategorisation of 'A' and 'B' Ordinary Shares from other liabilities 8 345 - 353
Shares issued during the year 29,525 - - 29,525
Cancellation of share premium - (560) 560 -
Comprehensive income for the financial year - - 6,258 6,258
Capital contribution - - 8,321 8,321
Balance at 31 December 2012 29,535 - (30,600) (1,065)
Comprehensive income for the financial year - - 7,037 7,037
Balance at 31 December 2013 29,535 - (23,563) 5,972
Comprehensive income for the financial period - - 1,231 1,231
Dividends paid - - (5,021) (5,021)
Balance at 31 December 2014 29,535 - (27,353) 2,182
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Notes 31 December 2012 31 December2013 31 December2014
£'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 7 16 200 160
Property, plant and equipment 8 378 356 312
Deferred tax asset 11 5,210 2,669 671
Loans and advances to customers 9 42,331 45,514 55,835
Total non-current assets 47,935 48,739 56,978
Current assets
Loans and advances to customers 9 23,846 30,298 35,206
Other receivables 10 2,772 2,826 3,149
Cash and cash equivalents 1,566 819 1,621
Total current assets 28,184 33,943 39,976
TOTAL ASSETS 76,119 82,682 96,954
EQUITY AND LIABILITIES
Equity attributable to equity holders
Share capital 13 29,535 29,535 29,535
Retained earnings 13 (30,600) (23,563) (27,353)
Total equity attributable to equity holders (1,065) 5,972 2,182
Current liabilities
Financial liabilities 18 72,115 72,568 88,329
Current tax liabilities - 192 1,095
Trade and other payables 12 5,069 3,950 5,348
Total liabilities 77,184 76,710 94,772
TOTAL EQUITY AND LIABILITIES 76,119 82,682 96,954
CONSOLIDATED CASH FLOW STATEMENTS
Notes Year ended31 December2012 Year ended31 December2013 Year ended31 December2014
£'000 £'000 £'000
Cash flow from operating activities 14 1,851 (2,267) 4,366
Cash flow from investing activities
Purchase of non-current assets (49) (460) (123)
Interest received 2 - -
Net cash outflow from investing activities (47) (460) (123)
Cash flow from financing activities
Borrowings (2,988) 1,980 1,580
Interest paid (91) - -
Dividends paid - - (5,021)
Net cash inflow from financing activities (3,079) 1,980 (3,441)
Net (decrease)/increase in cash and cash equivalents (1,275) (747) 802
Cash and cash equivalents at beginning of the period 2,841 1,566 819
Cash and cash equivalents at the end of the period 1,566 819 1,621
Notes to the Consolidated Historical Financial Information
1. Accounting policies
The principal accounting policies adopted by Everyday Loans Holdings Limited, Everyday Loans Limited and Everyday Lending
Limited (together the "Everyday Loans Group" or the "Group") in the preparation of its Consolidated Historical Financial
Information for the years ended 31 December 2014, 31 December 2013 and 31 December 2012, are set out below. The accounting
policies have been consistently applied, unless otherwise stated.
1.1 General information
The Consolidated Historic Financial Information has been prepared by consolidating the financial statements of Everyday
Loans Holdings Limited, Everyday Loans Limited and Everyday Lending Limited.
The Everyday Loans Group comprises three private companies incorporated in the United Kingdom under the Companies Act 2006.
The address of the registered office of the Everyday Loans Group entities is One Arleston Way, Solihull, West Midlands, B90
4LH and their principal business address is Secure Trust House, Boston Drive, Bourne End, Bucks, SL8 5YS. All operations
are situated in the United Kingdom.
The Everyday Loans Group provides secured and unsecured personal instalment loans.
The principal accounting policies applied in the preparation of this Consolidated Historical Financial Information are set
out below. These policies have been consistently applied to all periods presented, unless otherwise stated.
1.2 Basis of preparation
The Consolidated Historical Financial Information has been prepared in accordance with International Financial Reporting
Standards (as adopted and endorsed by the EU) ("IFRS"), IFRIC Interpretations and the Companies Act 2006 applicable to
companies reporting under IFRS. It has been prepared under the historical cost convention.
The preparation of Consolidated Historic Financial Information in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates
are significant to the Consolidated Historic Financial Information are disclosed in note 1.11.
The Consolidated Historic Financial Information has been prepared on a going concern basis.
New standards and interpretations adopted in the current year
The following new and revised standards and interpretations have been adopted in the current year.
§ IFRS 10 'Consolidated Financial Statements'
§ IFRS 11 'Joint Arrangements'
§ IFRS 12 'Disclosures of Interests in Other Entities'
§ IAS 27 'Separate Financial Statements'
§ IAS 28 'Investments in Associates and Joint Ventures'
The application of the above standards had no material effect on the Consolidated Historic Financial Information of the
group for the period presented.
Future amendments to standards and interpretations
At the date of authorisation of this Consolidated Historic Financial Information, the following standards and
interpretations, applicable to the group, which have not been applied in this Consolidated Historic Financial Information,
were in issue but not yet mandatorily effective for the group.
§ IFRS 9 'Financial Instruments', effective for periods beginning on or after 1 January 2018 (not yet EU endorsed)
§ IFRS 15 'Revenue from Contracts with Customers', effective for periods beginning on or after 1 January 2017 (not yet EU
endorsed)
§ Amendments to IAS 16 'Property, Plant and Equipment' and IAS 38 'Intangible Assets', effective for periods beginning on
or after 1 January 2016 (not yet EU endorsed)
§ Amendments to IAS 1 'Presentation of Financial Statements', effective for periods beginning on or after 1 January 2016
(not yet EU endorsed)
IFRS 9 'Financial instruments' addresses the classification, measurement and recognition of financial assets and financial
liabilities. The final version of the standard was issued in July 2014. The standard primarily impacts the classification
and measurement of financial assets and liabilities and introduces the 'expected credit loss' model for the measurement of
the impairment of financial assets so it is no longer necessary for a credit event to have occurred before a credit loss is
recognised. The Group are in the process of assessing the impact of the standard and will adopt the standard in line with
the mandatory effective date of 1 January 2018, subject to endorsement by the EU.
The other standards and amendments to existing standards noted above are unlikely to have a material impact on the Group.
Principles applied in preparing the Consolidated Historical Financial Information
Intercompany transactions and transactions with related parties
As noted above, the Consolidated Historical Financial Information has been prepared on a basis that consolidates the
results, assets and liabilities of the Everyday Loans Group businesses. This is done by applying the principles underlying
the consolidation procedures of IFRS 10 'Consolidated Financial Statements' ("IFRS 10") for each of the three years ended
31 December 2014, 31 December 2013 and 31 December 2012. All intercompany transactions and balances within the operations
of the Everyday Loans Group have been eliminated.
1.3 Revenue Recognition
Interest income represents interest receivable on advances to customers. Interest income is recognised in the Statement of
Comprehensive Income for all instruments measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability
and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate
that discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when
appropriate, a shorter period to the net carrying amount of the financial asset. When calculating the effective interest
rate, the Everyday Loans Group takes into account all contractual terms of the financial instrument but does not consider
future credit losses. The calculation includes all fees paid or received between parties to the contract that are an
integral part of the effective interest rate, transaction costs and all other premiums or discounts. Fees and commissions
which are not considered integral to the effective interest rate are generally recognised on a cash basis. These consist
principally of arrears fees.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss,
interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of
measuring the impairment loss. Interest is effectively provided on accounts which are more than 60 days past due.
1.4 Financial assets
Loans and advances to customers
Loans and advances to customers are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They arise when the Group provides money or services directly to a debtor with no intention of trading
the receivable. Loans are recognised at fair value on origination. Loans and advances to customers are carried at amortised
cost using the effective interest method.
Amortised cost measurement
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial
liability is measured at initial recognition, minus principal payments, plus or minus the cumulative amortisation using the
effective interest method of any difference between the initial amount recognised and the maturity amount, minus any
reduction for impairment.
1.5 Impairment of financial assets
Assets carried at amortised cost
On an ongoing basis the Group assesses whether there is objective evidence that a financial asset or group of financial
assets is impaired. Objective evidence is the occurrence of a loss event after the initial recognition of the asset that
impacts on the estimated future cash flows of the financial asset or group of financial assets, and can be reliably
estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include, but are not
limited to, the following:
§ Delinquency in contractual payments of principal or interest;
§ Cash flow difficulties experienced by the borrower; and
§ Initiation of bankruptcy proceedings.
If there is objective evidence that an impairment loss on loans and advances to customers carried at amortised cost has
been incurred, the amount of the loss is measured as the loan amount multiplied by the likelihood of eventual loss, based
on prior experience with similar loans. The carrying amount of the asset is reduced through the use of a provision and the
amount of the loss is recognised in the statement of comprehensive income.
When a loan is uncollectible it is written off against the related provision for loan impairment. Such loans are written
off when they reach 180 days contractually past due or after all the necessary procedures have been completed and the
amount of the loss has been determined if earlier. Subsequent recoveries of amounts previously written off decrease the
amount of the provision for loan impairment in the Statement of Comprehensive Income.
A customer's account may be modified to assist customers who are in or have recently overcome financial difficulties and
have demonstrated both the ability and willingness to meet the current or modified loan contractual payments. Loans that
have renegotiated or deferred terms are no longer considered to be past due but are treated as new loans, provided the
customers comply with the renegotiated or deferred terms.
1.6 Property, plant and equipment
Leasehold improvements, plant and equipment are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets by equal
instalments over their estimated useful economic lives as follows:
Leaseholdimprovements shorteroflifeofleaseor7years
Computerandotherequipment 3to5years
Furniture, fixturesandfittings 10years
1.7 Intangible assets - computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortised on the basis of the expected useful lives (three to five years).
1.8 Taxation
Current income tax which is payable on taxable profits is recognised as an expense in the period in which the profits
arise. Income tax recoverable on tax allowable losses is recognised as an asset only to the extent that it is regarded as
recoverable by offset against current or future taxable profits.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the Statement of Financial Position date and are expected to
apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised where it is probable that future taxable profits will be available against which the
temporary differences can be utilised.
1.9 Pensions
The Everyday Loans Group operates a defined contribution pension scheme. The assets of the scheme are held separately from
those of the group in an independently administered fund. The amount charged to the income statement represents the
contributions payable to the scheme in respect of the accounting period. Differences between contributions payable in the
year and contributions actually paid are shown as either accruals or prepayments in the statement of financial position.
1.10 Leases
Assets acquired under finance leases are capitalised and the outstanding future lease obligations are shown in creditors.
Operating lease rentals are charged to the income statement on a straight line basis over the period of the lease. Where
the underlying asset is no longer in use, provision is made for the future costs expected to be incurred.
1.11 Critical accounting judgements and key sources of estimation uncertainty
The Group makes certain estimates and assumptions which affect the reported amounts of assets and liabilities. Estimates
and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
Impairment losses on loans and advances
The Group reviews its loan portfolios to assess impairment on a regular basis. In determining whether an impairment loss
should be recorded in the Statement of Comprehensive Income, the Company makes judgements as to whether there is any
observable data indicating that there is a measurable decrease in the estimate future cash flows from a portfolio of loans
before the decrease can be identified with an individual loan in that portfolio. Management uses estimates based on
historical loss experience for assets with similar credit risk characteristics and objective evidence of impairment similar
to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both
the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and
actual loss experience.
Provision for PPI claim costs and associated losses
The Group reviews its provision for PPI claim costs and associated losses on a regular basis. Management uses estimates
based on historical experience in determining the adequacy of the provision balance recorded within the balance sheet. The
Group also makes judgements as to whether there is any observable data indicating differences in the volume of recent
claims activity which may impact on the estimated volume of future claims against the existing loan portfolio. The
methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to
reduce any differences between provision estimates and actual costs incurred. The PPI provision remains at £0.8m for 30
June 2015 and 31 December 2014.
2. Operating segments
All of the Everyday Loans Group's assets and liabilities, revenue and profit before tax are attributable to the provision
of consumer credit.
No geographical analysis is presented because all operations are situated in the United Kingdom.
3. Information regarding employees
Year ended31 December 2012 Year ended31 December 2013 Year ended31 December 2014
Average number of persons employed
Sales 105 124 143
Management and administration 28 24 30
133 148 173
Year ended31 December 2012 £'000 Year ended31 December 2013 £'000 Year ended31 December 2014 £'000
Wages and salaries 8,629 7,817 9,338
Social security costs 1,040 891 1,060
Pension costs 455 509 472
10,124 9,217 10,870
4. Operating profit
Year ended31 December 2012 Year ended31 December2013 Year ended31 December2014
£'000 £'000 £'000
Operating profit is stated after charging/(crediting):
Depreciation and amortisation:
Owned assets 347 258 207
Management charge - - (8,745)
PPI provisioning charge/ (credit) 983 (72) (44)
Rentals under operating leases 479 587 730
Loss on sale of fixed assets 12 40 -
The management charge for the year ended 31 December 2014 was £8,745,348 and was from the immediate parent company, Secure
Trust Bank PLC.
5. Finance cost and finance income
Year ended31 December 2012 Year ended31 December2013 Year ended31 December2014
£'000 £'000 £'000
Interest payable (4,711) - -
Bank interest receivable 2 - -
(4,709) - -
6. Taxation
Year ended31 December 2012 Year ended31 December2013 Year ended31 December2014
£'000 £'000 £'000
Corporation taxat21.5%(2013:23.25%;2012:24.5%) - 191 964
Adjustments in respect of prior years - (289) (61)
Deferred tax:
Deferred tax timing differences 939 2,035 1,818
Adjustments in respect of prior years (6,415) 289 115
Effect of changes in tax rates 266 217 65
(5,210) 2,443 2,901
The UK corporation tax is calculated at 21.50% (2013: 23.25%; 2012: 24.5%) of the estimated assessable profits for the
year. The standard rate of corporation tax was reduced from 24% to 23% with effect from 1 April 2013 and from 23% to 21%
with effect from 1 April 2014.
The actual tax charge for the current and the previous year is below the standard rate for the reasons set out in the
following reconciliation.
Year ended31 December 2012 Year ended31 December2013 Year ended31 December2014
£'000 £'000 £'000
Profit before tax 1,048 9,480 4,132
Theoretical tax charge at standard rate of 21.5% (2013: 23.25%; 2012: 24.5%) 257 2,204 888
Factors affecting charge for the year:
Expenses not deductible for tax purposes 100 22 1,833
Disallowed interest 582 - -
Effects of change in tax rates 266 217 65
Adjustment in respect of prior years (6,415) - 115
Total tax charge for the year (5,210) 2,443 2,901
7. Intangible assets
Computer Software
£'000
Cost
At 1 January 2012 1,823
At 31 December 2012 1,823
Additions 223
Disposals (38)
At 31 December 2013 2,008
Additions 43
At 31 December 2014 2,051
Depreciation
At 1 January 2012 (1,725)
Charge for the year (82)
At 31 December 2012 (1,807)
Charge for the period (39)
Eliminated on disposal 38
At 31 December 2013 (1,808)
Charge for the period (83)
At 31 December 2014 (1,891)
Net book value
At 31 December 2012 16
At 31 December 2013 200
At 31 December 2014 160
8. Property, plant and equipment
Leasehold improvements Computer and other equipment Furniture, fixtures and fittings Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2012 1,311 1,738 219 3,268
Additions 8 39 2 49
Disposals (79) (74) (6) (159)
At 31 December 2012 1,240 1,703 215 3,158
Additions 122 107 8 237
Disposals (107) (1,216) (6) (1,329)
At 31 December 2013 1,255 594 217 2,066
Additions 30 34 16 80
At 31 December 2014 1,285 628 233 2,146
Depreciation
At 1 January 2012 (935) (1,609) (118) (2,662)
Charge for the year (158) (87) (20) (265)
Eliminated on disposal 74 67 6 147
At 31 December 2012 (1,019) (1,629) (132) (2,780)
Charge for the period (159) (43) (17) (219)
Eliminated on disposal 97 1,186 6 1,289
At 31 December 2013 (1,081) (486) (143) (1,710)
Charge for the period (67) (34) (23) (124)
At 31 December 2014 (1,148) (520) (166) (1,834)
Net book value
At 31 December 2012 221 74 83 378
At 31 December 2013 174 108 74 356
At 31 December 2014 137 108 67 312
9. Loans and advances to customers
As at31 December 2012 As at31 December 2013 As at31 December 2014
£'000 £'000 £'000
Credit receivables 69,717 79,982 95,527
Less: Loan loss provision (3,540) (4,170) (4,486)
Amounts receivable from customers 66,177 75,812 91,041
Analysis of overdue
Neither past due nor impaired 63,852 73,666 89,054
Past due up to 3 months but not impaired 3,857 3,970 4,077
Past due over 3 months but not impaired 2,008 2,346 2,396
Amounts receivable from customers 69,717 79,982 95,527
Loans comprise both secured and unsecured consumer loans. The credit risk inherent in amounts receivable from customers is
reviewed under impairment as per note 1.4 and under this review the credit quality of assets which are neither past due nor
impaired was considered to be good. The average rate of interest for the portfolio at period end was 42% (2013: 39%, 2012:
36%) and the average contractual term at origination for the loans outstanding at the end of the period was 32 months
(2013: 33 months, 2012: 34 months).
The fair value of loans and advances to customers is considered to be line with their carrying value as each loan is priced
individually.
The maturity profile of these loans and advances is detailed in Note 18.
Analysis of movements on loan loss provisions £'000
At1January2012 4,096
Utilisedduringtheyear 5,695
Increaseinprovision 5,139
At1January2013 3,540
Utilisedduringtheyear 5,709
Increaseinprovision 6,339
At1January2014 4,170
Utilisedduringtheyear (6,525)
Increaseinprovision 6,841
At 31 December 2014 4,486
There has been no material change in the average discount rate used to calculate the loan loss provision during the years
to 31 December 2014, 31 December 2013 and 31 December 2012.
10. Other receivables
As at31 December 2012 As at31 December 2013 As at31 December 2014
£'000 £'000 £'000
Rental deposits 10 11 12
Prepayments 2,762 2,815 3,137
2,772 2,826 3,149
11. Deferred tax
Tax losses Accelerated tax depreciation IFRS transitional adjustment General provisions Total
£'000 £'000 £'000 £'000 £'000
At1January 2012 - - - - -
(Charge)/credittoincome 4,321 396 460 33 5,210
At 31 December 2012 4,321 396 460 33 5,210
(Charge)/ credit toincome (2,465) (48) (87) 59 (2,541)
At 31 December 2013 1,856 348 373 92 2,669
(Charge) /credit toincome (1,856) (30) (62) (50) (1,998)
At 31 December 2014 - 318 311 42 671
As at 31 December 2012 the Company had accumulated tax losses of £22,652,000. Following the change in ownership during
2012, the new directors took the view that the immediate parent company, Secure Trust Bank PLC provides more secure and
cheaper funding and therefore the tax losses would be recovered within future periods. Consequently the Company recognised
a deferred tax asset and a tax credit in the statement of comprehensive income of £5,210,000.
12. Trade and other payables
As at31 December2012 As at31 December 2013 As at 31 December 2014
£'000 £'000 £'000
Trade and other payables 3,991 2,944 4,386
PPI provision 1,078 1,006 962
5,069 3,950 5,348
Analysis of movements on PPI provision £'000
At1January2012 94
Utilisedduringtheyear (245)
Increaseinprovision 1,229
At1January2013 1,078
Utilisedduringtheyear (424)
Increaseinprovision 352
At1January2014 1,006
Utilisedduringtheyear (282)
Increaseinprovision 238
At 31 December 2014 962
13. Share capital and reserves
As at31 December2012
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