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RNS Number : 4094E Sancus Lending Group Limited 17 September 2024
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations
2019. The person responsible for making this announcement on behalf of the
Company is Rory Mepham.
Sancus Lending Group Limited
("Sancus", the "Company" or "Group")
Interim Results for the six month period ended 30 June 2024
17 September 2024
HIGHLIGHTS
Rory Mepham, Chief Executive Officer of Sancus Lending Group Limited,
commented:
In the first half of 2024 (H1 2024) the Group has achieved revenues of £7.5m
versus £5.4m in H1 2023 despite the headwinds caused by the higher interest
rate in our three core markets of the UK, Ireland and Channel Islands which
continue to impact housing sales and borrower confidence. The 39% increase in
revenue reflects our success in driving increased fee income. Our Assets Under
Management increased to £209m versus £202m as at 31 December 2023 and we
continue to strive to move from loss to profitability.
Financial Highlights
• New loan facilities written in H1 2024 of £51m (H1 2023: £57m).
• Group revenue H1 2024 of £7.5m (H1 2023: £5.4m).
• A reduction in IFRS 9 provisions in H1 2024 of £0.5m (H1 2023: increase of
£0.8m).
• Reduction in Group Borrowing Costs to £1.2m (H1 2023: £1.7m) and a gain on
repurchase of ZDPs of c. £1.1m (H1 2023: £nil).
• Group operating loss H1 2024 of £1.5m (H1 2023: loss £3.3m).
• Net loss after tax H1 2024 of £0.6m (H1 2023: loss £3.3m).
Strategic and Operating Highlights
• Joint venture with Hawk Lending Limited launched. The joint venture business
has now started writing new business.
• Geographic focus remains unchanged, with three core markets UK, Ireland and
Offshore. UK represents 36% of the current loan book, Channel Islands 45%
and Ireland 19%.
• Continued progress in diversifying our sources of funding and improving
funding costs. The £25m Morton Family facility is now live.
• The Group remains focused on maintaining credit
discipline.
For further information, please contact:
Sancus Lending Group Limited +44 (0)1534 708 900
Rory Mepham
Keith Lawrence
Liberum (Nominated Adviser and Corporate Broker) +44 (0) 20 3100 2000
Lauren Kettle
Chris Clarke
William King
Instinctif Partners (PR Adviser) +44 (0)207 457 2020
Vivian Lai
Hannah Scott
Sanne Fund Services (Guernsey) Limited +44 (0)1481 755530
(Company Secretary)
Matt Falla
CHAIRMAN'S STATEMENT
Introduction
The Company has continued to make strategic progress against the current
backdrop of economic uncertainty. Whilst the Group reported a loss of £(0.6)m
for H1 2024, the loss is materially improved from the loss of £(3.3)m in H1
2023 and has also been helped by the exceptional gain of c. £1.1m on the ZDP
shares. The Company remained disciplined in the volume of new loans written in
H1 2024 and enters H2 2024 cautiously optimistic about its new business
opportunities. The joint venture we announced with Hawk Lending Limited in
December 2023 became operational in H1 2024 and the business has now started
writing new business. The management team is taking all necessary steps to
ensure it becomes a profitable contributor to the Group.
Our People
As detailed in the 2023 Annual Report, Keith Lawrence was appointed as our new
Group Chief Financial Officer in March 2024, succeeding Tracy Clarke who had
acted as Interim Chief Financial Officer since March 2023. Tracy has now
resumed her role as a non-executive director of the Group.
Capital
In April 2024 Somerston, the Group's largest shareholder, subscribed for £5m
of preference shares in Sancus Loans Limited, one of our core subsidiaries.
Also in April, the Group repurchased 1.4m of its ZDP shares at a cost of
£1.5m, resulting in an accounting gain of c. £1.1m.
Dividend and Shareholders
It is the Board's intention to reinvest surplus resources for growth. As such,
the Group does not intend to declare a dividend for the period. The dividend
policy will be revisited at the appropriate time, should the profitability and
cash flow profile support the reinstatement of a dividend.
On behalf of the Board, I would like to thank shareholders for their
continuing support and patience and for the efforts of the management and
employees.
As I noted in the Chairman's statement in the 2023 annual report, we remain
cautious about the continuing challenges ahead. I firmly believe that we have
the right strategy, systems and personnel to put the business onto a stronger
footing and return to profitability and I look forward to reporting more
positive developments in the coming period.
Steve Smith
Chairman
16 September 2024
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
In the first half of 2024 we continued to navigate the negative impacts of a
sustained period of higher interest rates on the housing market. Against this
backdrop, we remain focused on the steps required to ensure we become a
profitable property private credit business in our core markets of the UK,
Ireland and Channel Islands.
Revenues in H1 2024 were £7.5m versus £5.4m in H1 2023. This reflects modest
growth in our loan book and also increased fee income in the UK in particular.
Loan book origination in H1 2024 was £51m versus £57m written in H1 2023,
partly due to continued low market confidence in all of our core markets. As
at 30 June 2024 we had Assets Under Management ("AUM") of £209m versus £202m
as at 31 December 2023. As we enter the second half of 2024 we are optimistic
that market conditions will improve, especially in the UK, allowing us to
increase our loan volumes whilst retaining our underwriting discipline.
Our Strategy
We provide an update below against the strategic pillars set out in our 2023
Annual Report:
Focusing on revenue growth
• The Revenue rose 39% to £7.5m compared to £5.4m in H1 2023. This increase
reflects fee income growth, especially in the UK and also modest growth in our
AUM.
Achieving operating and cost efficiency
• Our reported operating expenses were £2.8m in H1 2024 versus £3.3m in H1
2023. We remain committed to achieving further expense savings and operating
efficiency.
Becoming a capital efficient business
• The amount of own capital within loans continues to be maintained at a low
level, which at 30 June 2024 represented 0.4% of the total loan book, in
comparison to 4.5% at 30 June 2023.
• We continue to make progress in diversifying our sources of fundings. As at 30
June 2024 our Loan Note programme funding was £28m, modestly higher than the
balance as at 31 December 2023 of £27m. The £25m Morton Family facility we
agreed as part of our joint venture with Hawk Lending Limited is now live and
we expect to use this facility during H2 2024. Both the Loan Note programme
and the Morton Family facility have interest rates lower than our
institutional funding line.
• As at 30 June 2024 £87.75m of our loans were financed by an institutional
line arranged by Pollen Street Capital (31 December 2023: £77.75m).
Our AUM, pro-forma for our joint venture with Hawk Lending, increased 3% from
£202m as at 31 December 2023 to £209m as at 30 June 2024.
Financial Summary
We have reported an operating loss of £1.5m for H1 2024 versus an operating
loss of £3.8m in H1 2023. The loss before tax in H1 2024 was £0.6m versus
£3.3m in H1 2023. In addition to the revenue growth outlined above, this
reflects:
• Operating expenses being £2.8m in H1 2024 versus £3.3m in H1 2023,
reflecting both our continued focus on achieving operating efficiency and the
transfer of certain costs, including staff costs, to the joint venture with
Hawk Lending and which is reported as a "Share of net loss of joint venture."
• Group borrowing costs of £1.2m in H1 2024 versus £1.7m in H1 2023 following
our purchase of 1.4m ZDPs in April 2024. This purchase of ZDPs also resulted
in an accounting gain of £1.1m (recorded within "Other net gains").
• £0.5m reduction in expected credit losses (versus a £0.8m charge in H1
2023). Our H1 2023 and full year 2023 results were materially impacted by our
need to recognise expected credit losses against historic loans.
• Our share of the loss from our joint venture with Hawk Lending was £262k (H1
2023: £nil), due to the delay between the launch of the joint venture and the
start of writing new business. The joint venture is now fully operational
and we are focussed on ensuring it becomes a profit contributor to the Group.
ESG
At Sancus, we are committed to taking Environmental, Social and Governance
("ESG") factors seriously. We recognise our responsibility to incorporate
sustainability throughout the operations of our business, to be custodians of
the environment and to practise good stewardship of our stakeholders'
interests.
Alongside the publication of our 2023 Results we published our second
Environmental, Social, and Governance report, marking the start of our journey
towards greater transparency and sustainability. The report highlights our
progress and achievements in the areas of environmental protection, social
responsibility and governance, as well as the challenges and opportunities
that we face.
Outlook
We continue to believe there are grounds for optimism and that with our
strategic focus and progress the long-term profitable growth potential for our
business is clear. Whilst the operating environment was somewhat uncertain for
much of H1 2024 we are cautiously optimistic as we enter H2 2024.
Rory Mepham
Chief Executive Officer
16 September 2024
RISKS, UNCERTAINTIES AND RESPONSIBILITY STATEMENT
Risks and uncertainties
There are a number of potential risks and uncertainties which could have a
material impact on the Group's performance over the remainder of the financial
year. These include, but are not limited to, Capital and liquidity risk,
Regulatory and compliance risk, Market risk, Credit risk with respect to the
loan book (primarily bridging loans and, increasingly, development loans),
Operational risk and the execution of Sancus strategy. These risks remain
unchanged from the year ended 31 December 2023 and were not expected to change
in the 6 months to the end of the 2024 financial year. Further details on
these risks and uncertainties can be found in the 2023 Annual Report.
Responsibility statement
The Directors confirm that to the best of their knowledge:
• The Interim Report has been prepared in accordance with the AIM rules of the
London Stock Exchange;
• This financial information has been prepared in accordance with IAS 34 as
adopted by the UK;
• The interim results include a fair review of the important events during the
first half of the financial year and their impact on the financial information
as required by DTR 4.2.7R; and
• The interim results include a fair review of the disclosure of related party
transactions as required by DTR 4.2.8R.
Approved and signed on behalf of the Board of Directors
16 September 2024
INDEPENDENT REVIEW REPORT ON INTERIM FINANCIAL INFORMATION
Conclusion
We have been engaged by Sancus Lending Group Limited (the 'Company') to review
the condensed set of consolidated financial statements in the Interim Report
for the six months ended 30 June 2024 which comprises the condensed
consolidated statement of comprehensive income, the condensed consolidated
statement of financial position, the condensed consolidated statement of
changes in shareholders' equity, the condensed consolidated statement of cash
flows and related Notes 1 to 20.
We have read the other information contained in the Interim Report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of Consolidated
Financial Statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 June 2024 is not
prepared, in all material respects, in accordance with International
Accounting Standard 34 as adopted by the UK and the AIM Rules of the London
Stock Exchange.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2 of the interim condensed consolidated financial
statements, the financial statements of the Company are prepared in accordance
with IFRSs as adopted by the UK. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with the International Accounting Standard 34, "Interim Financial Reporting",
as adopted by the UK.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of directors
The Interim Report is the responsibility of, and has been approved by, the
Directors. The Directors are responsible for preparing the Interim Report in
accordance with the AIM Rules of the London Stock Exchange.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of consolidated financial statements
in the half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Moore Kingston Smith LLP
9 Appold Street,
London,
EC2A 2AP
16 September 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
Notes Period ended Period ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
£'000 £'000
Revenue 4 7,499 5,407
Cost of sales 5 (5,445) (3,441)
Gross profit 2,054 1,966
Operating expenses 6 (2,846) (3,318)
Group borrowing costs 7 (1,182) (1,664)
Changes in expected credit losses 19 466 (799)
Operating loss (1,508) (3,815)
FinTech Ventures fair value movement 19 - 362
Other net gains 16 1,158 37
Loss on disposal of other assets - (202)
Profit on disposal of other assets 14 - 303
Share of net loss of joint ventures accounted for using the equity method 10 (262) -
Loss for the period before tax (612) (3,315)
Income tax expense (35) 2
Loss for the period after tax (647) (3,313)
Items that may be reclassified subsequently to profit and loss
Foreign exchange arising on consolidation (30) (20)
Other comprehensive loss for the period after tax (30) (20)
Total comprehensive loss for the period (677) (3,333)
Basic loss per Ordinary Share 8 (0.12)p (0.57)p
Diluted loss per Ordinary Share 8 (0.12)p (0.57)p
The accompanying Notes in the "Notes to the Financial Statements" section form
an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)
30 June 2024 31 December 2023 (audited)
(unaudited)
ASSETS Notes £'000 £'000
Non-current assets
Property, plant and equipment 9 200 294
Goodwill 11 - -
Other intangible assets 12 - -
Sancus loans and loan equivalents 19 11,946 10,148
FinTech Ventures investments 19 - -
Investments in equity-accounted joint ventures and associates 10 14,370 14,255
Other investments 50 50
Total non-current assets 26,566 24,747
Current assets
Other assets 14 - -
Sancus loans and loan equivalents 19 75,556 68,617
Trade and other receivables 13 10,816 8,058
Cash and cash equivalents 5,995 4,990
Total current assets 92,367 81,665
Total assets 118,933 106,412
EQUITY
Share premium 15 118,340 118,340
Treasury shares 15 (1,172) (1,172)
Other reserves (119,821) (119,144)
Total Equity (2,653) (1,976)
LIABILITIES
Non-current liabilities
Borrowings 119,228 106,086
Other liabilities 84 130
Total non-current liabilities 16 119,312 106,216
Current liabilities
Trade and other payables 1,046 925
Hedging contracts 118 231
Tax liabilities 110 76
Lease liabilities 90 152
Provisions 11 18
Interest payable 899 770
Total current liabilities 16 2,274 2,172
Total liabilities 121,586 108,388
Total equity and liabilities 118,933 106,412
The financial statements were approved by the Board of Directors on 16
September 2024 and were signed on its behalf by:
Director: John Whittle
The accompanying Notes in the "Notes to the Financial Statements" section form
an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
Share Treasury Shares Warrants Outstanding Foreign Exchange Reserve Retained Earnings/ 207BTotal
208BEquity
Premium (Losses)
0B£'000 1B£'000 2B£'000 3B£'000 4B£'000 £'000
Balance at 31 December 2023 (audited) 118,340 (1,172) - 15 (119,159) (1,976)
Transactions with owners 5B- 6B- 7B- 8B- 9B- -
Total comprehensive loss for the period 10B- 11B- 12B- 13B(30) 14B(647) (677)
Balance at 30 June 2024 (unaudited) 15B118,340 16B(1,172) 17B- 19B (15) 19B(119,806) (2,653)
Balance at 31 December 2022 (audited) 118,340 (1,172) - 31 (110,025) 7,174
Transactions with owners - - - - - -
Total comprehensive loss for the period - - - (20) (3,313) (3,333)
Balance at 30 June 2023 (unaudited) 118,340 (1,172) - 11 (113,338) 3,841
The accompanying Notes in the "Notes to the Financial Statements" section form
an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Period ended Period ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
Notes £'000 £'000
(3,175) (4,374)
Cash outflow from operations, excluding loan movements 17
Decrease / (Increase) in Sancus loans 126 (211)
Increase in loans through the Pollen facility (8,862) (9,237)
Net cash outflow from operating activities (11,911) (13,822)
Cash (outflow) / inflow from investing activities
Net investments in FinTech Ventures - 125
Investment in joint ventures 10 (427) (50)
Sale of Sancus Properties Limited - 1,008
Expenditure on fixed assets and intangibles (18) (5)
Net cash (outflow) / inflow from investing activities (445) 1,078
Cash inflows from financing activities
Drawdown of Pollen facility 17 10,000 10,000
Issue of preference shares 17 5,000 -
Capital element of lease payments 17 (108) (109)
Debt issue costs - 32
(Purchase) / Sale of ZDPs 17 (1,501) 3,000
Net cash inflow from financing activities 13,391 12,923
Effects of Foreign Exchange (30) (20)
Net increase in cash and cash equivalents 1,005 159
Cash and cash equivalents at beginning of period 4,990 4,134
Cash and cash equivalents at end of period 5,995 4,293
£3.5m of the £6.0m cash held at 30 June 2024 is for the exclusive use of
Sancus Loans Limited (30 June 2023: £2.2m of the £4.3m).
The accompanying Notes in the "Notes to the Financial Statements" section form
an integral part of these financial statements.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Sancus Lending Group Limited (the "Company"), together with its subsidiaries,
(the "Group") was incorporated, and domiciled in Guernsey, Channel Islands, as
a company limited by shares and with limited liability, on 9 June 2005 in
accordance with The Companies (Guernsey) Law, 1994 (since superseded by The
Companies (Guernsey) Law, 2008). Until 25 March 2015, the Company was an
Authorised Closed-ended Investment Scheme and was subject to the Authorised
Closed-ended Investment Scheme Rules 2008 issued by the Guernsey Financial
Services Commission ("GFSC"). On 25 March 2015, the Company was registered
with the GFSC as a Non-Regulated Financial Services Business ("NRFSB"), at
which point the Company's authorised fund status was revoked. The Company's
Ordinary Shares were admitted to trading on the AIM market of the London Stock
Exchange on 5 August 2005 and its issued zero dividend preference shares were
listed and traded on the Standard listing Segment of the main market of the
London Stock Exchange with effect from 5 October 2015. The Company changed
where its business is managed and controlled, from Guernsey to Jersey,
effective 1 April 2023. The Board agreed that the Company should revoke its
NRFSB status, which was completed on 23 June 2023.
The Company does not have a fixed life and the Company's Memorandum and
Articles of Incorporation (the "Articles") do not contain any trigger events
for a voluntary liquidation of the Company. The Company is an operating
company for the purpose of the AIM rules. The Executive Team is responsible
for the management of the Company.
The Company has taken advantage of the exemption conferred by the Companies
(Guernsey) Law, 2008, Section 244, not to prepare company only financial
statements which is consistent with the 2023 Annual Report.
2. ACCOUNTING POLICIES
(a) Basis of preparation
These condensed consolidated financial statements ("financial statements")
have been prepared in accordance with International Financial Reporting
Standard (IAS) 34 'Interim Financial Reporting', as adopted by the United
Kingdom and all applicable requirements of Guernsey Company Law. They do not
include all the information and disclosures required in annual financial
statements and should be read in conjunction with the Company's annual audited
financial statements for the year ended 31 December 2023, which have been
prepared in accordance with International Financial Reporting Standards
("IFRS") as adopted by the United Kingdom.
The Group does not operate in an industry where significant or cyclical
variations, as a result of seasonal activity, are experienced during any
particular financial period.
These financial statements were authorised for issue by the Company Directors
on 16 September 2024.
(b) Principal accounting policies
The same accounting policies and methods of computation are followed in these
financial statements as in the last annual financial statements for the year
ended 31 December 2023.
(c) Going concern
The Directors have considered the going concern basis in the preparation of
the financial statements as supported by the Director's assessment of the
Company's and Group's ability to pay its liabilities as they fall due and have
assessed the current position and the principal risks facing the business with
a view to assessing the prospects of the Company. The Directors have prepared
a cash flow forecast for the period to 30 September 2025 which shows that the
Company and the Group will have sufficient cash resources to meet their
ongoing liabilities as they fall due for at least twelve months from the date
of approval of these financial statements. Following the extension of the ZDPs
at the end of 2022, for a further 5 years to 5 December 2027 and with the
Bonds maturity date not until 31 December 2025, the Company does not have any
debt liabilities that fall due within the next 12 months. Based on this,
along with the issuance of preference shares by a subsidiary of the Group in
April 2024, the Directors are of the opinion that the Company and Group has
adequate financial resources to continue in operation and meet its liabilities
as they fall due for the foreseeable future.
It is however expected, whereby equity is required to facilitate an increase
in drawdown from institutional funding lines that the Company will require
growth capital to fund the continued growth of the loan book. The Company's
largest shareholder, Somerston, has indicated their willingness to support the
Company's growth plans. The Company will be looking at options available to
raise additional growth capital over the course of the year, which may include
a form of equity raise or sale by the Company of ZDP shares held in treasury.
The Directors therefore believe it is appropriate to continue to adopt the
going concern basis in preparing the financial statements.
(d) Critical accounting estimates and judgements in applying
accounting policies
The critical accounting estimates and judgements are as outlined in the
financial statements for the year ended 31 December 2023.
3. SEGMENTAL REPORTING
Operating segments are reported in a manner consistent with the manner in
which the Executive Team reports to the Board, which is regarded to be the
Chief Operating Decision Maker (CODM) as defined under IFRS 8. The main focus
of the Group is Sancus. Bearing this in mind the Executive team have
identified 4 segments based on operations and geography.
Finance costs and Head Office costs are not allocated to segments as such
costs are driven by central teams who provide, amongst other services,
finance, treasury, secretarial and other administrative functions based on
need. The Group's borrowings are not allocated to segments as these are
managed by the Central team. Segment assets and liabilities are measured in
the same way as in these financial statements and are allocated to segments
based on the operations of the segment and the physical location of those
assets and liabilities.
The four segments based on geography, whose operations are identical (within
reason), are listed below. Note that Sancus Loans Limited, although based in
the UK, is reported separately as a stand-alone entity to the Board and as
such is considered to be a segment in its own right.
1. Offshore
Contains the operations of Sancus Lending (Jersey) Limited, Sancus Lending
(Guernsey) Limited, Sancus Properties Limited, Sancus Group Holdings Limited
and the JV.
2. United Kingdom (UK)
Contains the operations of Sancus Lending (UK) Limited and Sancus Holdings
(UK) Limited.
3. Ireland
Contains the operations of Sancus Lending (Ireland) Limited.
4. Sancus Loans Limited
Contains the operations of Sancus Loans Limited.
Reconciliation to Consolidated Financial Statements
Six months to 30 June 2024 Offshore UK Ireland Sancus Loans Limited (SLL) Sancus Debt Costs Total Sancus Head Office SLL Debt Costs FinTech Ventures Fair Value & Forex Other Consolidated Financial Statements
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 350 2,056 719 (720) - 2,405 - 5,094 - - 7,499
Operating Profit/(loss) * (66) 252 261 (741) - (294) (493) - - (5) (792)
Credit Losses 395 24 - 47 - 466 - - - - 466
Debt Costs - - - - (1,182) (1,182) - - - - (1,182)
Other Gains/(losses) (44) - 18 103 - 77 1,131 - - - 1,208
Loss on JVs and associates (262) - - - - (262) - - - (50) (312)
Taxation - - (35) - - (35) - - - - (35)
Profit/(loss) After Tax 23 276 244 (591) (1,182) (1,230) 638 - - (55) (647)
Six months to 30 June 2023 Offshore UK Ireland Sancus Loans Limited (SLL) Sancus Debt Costs Total Sancus Head Office SLL Debt Costs FinTech Ventures Fair Value Other Consolidated Financial Statements
& Forex
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 721 1,131 886 (603) - 2,135 - 3,272 - - 5,407
Operating Profit/(loss) * (228) (160) 320 (625) - (693) (662) - - (9) (1,364)
Credit Losses (122) (29) - (648) - (799) - - - - (799)
Debt Costs - - - - (1,652) (1,652) - - - - (1,652)
Other Gains/(losses) 101 - 8 84 - 193 - - 362 (5) 550
Loss on JVs and associates - - - - - - - - - (50) (50)
Taxation 2 - - - - 2 - - - - 2
Profit After Tax (247) (189) 328 (1,189) (1,652) (2,949) (662) - 362 (64) (3,313)
* Operating Profit/(loss) before credit losses and debt costs
Sancus Loans Limited is consolidated into the Group's results as it is a 100%
owned subsidiary of the Group. Sancus Loans Limited is considered a Co-Funder,
the same as any other Co-Funder. As a result the Board reviews the economic
performance of Sancus Loans Limited in the same way as any other Co-Funder,
with revenue being stated net of debt costs. Operating expenses include
recharges from UK to Offshore £nil (2023: £244,000), Offshore to Ireland
£37,000 (2023: £37,000), Head Office to Offshore £62,500 (2023: £68,000)
and UK to Head Office £nil (2023: £96,000). "Other" includes FinTech
(excluding fair value and forex).
At 30 June 2024 Offshore UK Ireland Sancus Loans Limited (SLL) Total Sancus Head Office Fintech Portfolio Other Inter Company Balances Consolidated Financial Statements
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total Assets 45,065 16,108 2,083 98,117 161,373 42,616 - 5 (85,061) 118,933
Total Liabilities (53,157) (16,999) (474) (108,719) (179,349) (27,293) - (5) 85,061 (121,586)
Net Assets/ (liabilities) (8,092) (891) 1,609 (10,602) (17,976) 15,323 - - - (2,653)
At 31 December 2023
Total Assets 32,329 17,298 1,668 86,822 138,117 59,306 - 9 (91,020) 106,412
Total Liabilities (54,670) (18,494) (273) (96,832) (170,269) (29,130) - (9) 91,020 (108,388)
Net Assets/(liabilities) (22,341) (1,196) 1,395 (10,010) (32,152) 30,176 - - - (1,976)
Head Office liabilities include borrowings £26.9m (December 2023: £28.9m).
Other FinTech assets and liabilities are included within "Other."
4. REVENUE
30 June 2024 30 June 2023
(unaudited) (unaudited)
45B£'000 46B£'000
Co-Funder fees 47B1,577 47B1,228
Earn out (exit) fees 49B350 49B394
Transaction fees 51B1,129 51B1,024
Total revenue from contracts with customers 53B3,056 53B2,646
Interest on loans 55B26 55B86
Sancus Loans Limited interest income 57B4,375 57B2,669
Other income 59B42 59B6
Total Revenue 61B7,499 61B5,407
5. COST OF SALES
30 June 2024 30 June 2023
(unaudited) (unaudited)
63B£'000 64B£'000
Sancus Loans Limited interest cost 67B5,105 67B3,272
Other cost of sales 69B340 69B169
Total cost of sales 71B5,445 71B3,441
6. OPERATING EXPENSES
30 June 2024 30 June 2023
(unaudited) (unaudited)
73B£'000 74B£'000
Administration and secretarial fees 75B61 75B47
Amortisation and depreciation 77B112 77B118
Audit fees 79B184 79B63
Corporate Insurance 54 81B4
Directors Remuneration 83B88 83B55
Employment costs 85B1,662 85B2,157
Investor relations expenses 87B30 87B30
Legal and professional fees 89B93 89B185
Marketing expenses 91B2 91B55
NOMAD fees 93B70 93B38
Other office and administration costs 95B431 95B502
Pension costs 97B40 97B46
Registrar fees 99B15 99B15
Sundry 101B4 101B3
Total operating expenses 103B2,846 103B3,318
7. GROUP BORROWING COSTS
Group borrowing costs reflect the interest cost of the Corporate bond and ZDPs
(see note 16).
115B30 June 2024 116B30 June 2023
(unaudited)
(unaudited)
£'000 £,000
Group Borrowing Costs 127B1,182 128B1,664
8. LOSS PER ORDINARY SHARE
Consolidated loss per Ordinary Share has been calculated by dividing the
consolidated loss attributable to Ordinary Shareholders in the period by the
weighted average number of Ordinary Shares outstanding (excluding treasury
shares) during the period.
Note 15 describes the warrants in issue which are currently out of the money,
and therefore are not considered to have a dilutive effect on the calculation
of Loss per Ordinary Share.
30 June 2024 30 June 2023
(unaudited) (unaudited)
Number of shares in issue 105B584,138,346 105B584,138,346
Weighted average number of shares outstanding 107B584,138,346 107B584,138,346
Loss attributable to Ordinary Shareholders in the period 109B£677,000 109B£3,333,000
Basic Loss per Ordinary Share 111B(0.12)p 111B(0.57)p
Diluted Loss per Ordinary Share 113B(0.12)p 113B(0.57)p
9. PROPERTY, PLANT AND EQUIPMENT
Right of use assets Property & Equipment Total
Cost £'000 £'000 £'000
At 31 December 2023 1,365 419 1,784
Additions in the period - 18 18
Disposals in the period - - -
At 30 June 2024 1,365 437 1,802
Accumulated depreciation £'000 £'000 £'000
At 31 December 2023 1,084 406 1,490
Charge in the period 106 6 112
Disposals in the period - - -
At 30 June 2024 1,190 412 1,602
Net book value 30 June 2024 175 25 200
Net book value 31 December 2023 281 13 294
10. INVESTMENTS IN JOINT VENTURES
115B30 June 2024 116B31 December 2023
(unaudited)
(audited)
117B£'000 118B£'000
At beginning of year 119B14,255 120B-
Additions - joint venture 121B427 122B100
Additions - goodwill 123B- 124B14,255
Impairment of joint venture 125B(50) 126B(100)
Share of net loss of joint ventures accounted for using the equity method 125B(262) 126B-
127B14,370 128B14,255
The Group has a 50% share in Amberton Limited. Additions in the period include
£50,000 of investment in Amberton Limited and which was subsequently written
down to a carrying value of £Nil. Amberton Limited, which is a Jersey
registered entity, was incorporated in January 2021 and has been established
as a joint venture to manage the loan note programme going forward.
On 5 December 2023, the Group entered into a Joint Venture ("JV") agreement
with Hawk Family Office Limited for a new bridge and development lending
business in the Channel Islands. Sancus Lending (Jersey) Limited ("SLJL")
entered into a Business and Asset Purchase Agreement ("BAPA") with Hawk
Lending Limited (the previous lending business of Hawk Family Office Limited)
and Hawkbridge Limited (the new joint venture lending business)
("Hawkbridge"). Under the terms of the BAPA, SLJL sold to Hawkbridge Limited
its business as a going concern including goodwill, business information,
moveable assets, records and third party rights. The consideration for the
business of SLJL was the issue of 12 shares in the newly formed JV holding
company, Hawkbridge Limited, giving Sancus Group Holdings Limited a 50%
ownership in the JV. Hawkbridge Limited has two wholly owned subsidiaries,
Hawkbridge Lending Limited and Westmead Debt Services Limited. The Group has
contributed £377,000 of capital into the JV in order to cover initial costs
and operating expenses before the JV became cash generative.
Under the joint venture shareholder agreement, all new Channel Islands lending
business will be written through Hawkbridge. Hawkbridge will also provide
administration and other services to SLJL and Hawk Lending Limited.
Under IFRS 11, this joint arrangement is classified as a joint venture and has
been included in the consolidated financial statements using the equity
method.
Summarised financial information in relation to the joint venture is presented
below:
115B30 June 2024 116B31 December 2023
(unaudited)
(audited)
117B£'000 118B£'000
Current assets 119B381 120B-
Non-current assets 121B28,517 122B28,510
Current liabilities 123B157 124B-
Non-current liabilities 125B- 126B-
Included in the above amounts are:
Cash and cash equivalents 125B255 126B-
Current financial liabilities (excluding trade payables) 125B62 126B-
Non-current financial liabilities (excluding trade payables) 125B- 126B-
Net assets (100%) 127B28,741 128B28,510
Group share of net assets (50%) 127B14,370 128B14,255
Revenues 119B244 120B-
Loss and total comprehensive loss for the period (100%) 121(524) 122B-
Group share of total comprehensive income (50%) 123B(262) 124B-
Included in the above amounts are:
Depreciation and amortisation 125B(50) 126B(100)
Income tax expense 125B(50) 126B(100)
No dividends were received from the JV during the period ended 30 June 2024.
The JV is a private company; therefore no quoted market prices are available
for its shares.
The Group has no additional commitments relating to the JV.
11. GOODWILL
115B30 June 2024 116B31 December 2023
(unaudited)
(audited)
117B£'000 118B£'000
At 31 December 2023 119B- 120B14,255
Impairment of goodwill 121B- 122B-
Disposal of goodwill 123B- 124B(14,255)
127B- 128B-
On 5 December 2023, the Group entered into a Joint Venture ("JV") agreement
with Hawk Family Office Limited for a new bridge and development lending
business in the Channel Islands. Sancus Lending (Jersey) Limited ("SLJL")
entered into a Business and Asset Purchase Agreement ("BAPA") with Hawk
Lending Limited (the previous lending business of Hawk Family Office Limited)
and Hawkbridge Limited (the new joint venture lending business)
("Hawkbridge"). Under the terms of the BAPA, SLJL sold to Hawkbridge Limited
its business as a going concern including goodwill, business information,
moveable assets, records and third party rights. The consideration for the
business of SLJL was the issue of 12 shares in the newly formed JV holding
company, Hawkbridge Limited, giving Sancus Group Holdings Limited a 50%
ownership in the JV. Hawkbridge Limited has two wholly owned subsidiaries,
Hawkbridge Lending Limited and Westmead Debt Services Limited.
Under the joint venture shareholder agreement, all new Channel Islands lending
business will be written through Hawkbridge. Hawkbridge will also provide
administration and other services to SLJL and Hawk Lending Limited.
Following the sale of the business of SLJL to Hawkbridge Limited on 5 December
2023, the remaining business is in run off. As detailed in Note 10, the
investment in the joint venture has been recognised separately on the Balance
Sheet and has been accounted for using the equity method.
12. OTHER INTANGIBLE ASSETS
£'000
Cost
At 30 June 2024 and 31 December 2023 1,584
Amortisation
At 31 December 2023 1,584
Charge for the period -
At 30 June 2024 1,584
Net book value at 30 June 2024 -
Net book value at 31 December 2023 -
Other Intangible assets comprise capitalised contractors' costs and costs
related to core systems development. The assets have been fully amortised.
13. TRADE AND OTHER RECEIVABLES
115B30 June 2024 116B31 December 2023
(unaudited)
(audited)
Current 117B£'000 118B£'000
Loan fees, interest and similar receivable 119B9,879 120B7,235
Taxation 123B- 124B5
Other trade receivables and prepaid expenses 125B937 126B818
127B10,816 128B8,058
14. OTHER ASSETS
Development properties
Cost £'000
At 31 December 2022 706
Additions -
Disposals (706)
At 31 December 2023 -
Disposals -
At 30 June 2024 -
Other assets are development properties previously held as security against
certain loans which have defaulted. Other assets are held at the lower of cost
and net realisable value. All development properties classified as Other
Assets were sold during 2023 with a profit on disposal of £303k recognised in
the Condensed Consolidated Statement of Comprehensive Income.
15. SHARE CAPITAL, SHARE PREMIUM & DISTRIBUTABLE RESERVE
Sancus Lending Group Limited has the power under the Articles to issue an
unlimited number of Ordinary Shares of nil par value.
No Ordinary Shares were issued in the period to 30 June 2024 (Period to 30
June 2023: Nil).
Share Capital
Number of Ordinary Shares - nil par value
At 30 June 2024 (unaudited) and 31 December 2023 (audited) 129B584,138,346
Share Premium
Ordinary Shares - nil par value 130B£'000
At 30 June 2024 (unaudited) and 31 December 2023 (audited) 131B118,340
Ordinary shareholders have the right to attend and vote at Annual General
Meetings and the right to any dividends or other distributions which the
Company may make in relation to that class of share.
Treasury Shares
132B30 June 2024 133B31 December 2023
(unaudited)
(audited)
Number of shares Number of shares
Balance at start and end of period/year 134B11,852,676 135B11,852,676
136B30 June 2024 137B31 December 2023
(unaudited)
(audited)
£'000 £'000
Balance at start end of period/year 138B1,172 139B1,172
Warrants in Issue
As at 30 June 2024 there were 89,396,438 Warrants in issue to subscribe for
new Ordinary Shares at a subscription price of 2.25 pence per ordinary share.
The Warrants are exercisable on at least 30 days notice within the period
ending 31 December 2025. The Warrants in issue are classified as equity
instruments because a fixed amount of cash is exchangeable for a fixed amount
of equity, there being no other features which could justify a financial
liability classification. The fair value of the warrants at 30 June 2024 is
£Nil (31 December 2023: £Nil).
16. LIABILITIES
Non-current liabilities 30 June 2024 141B31 December 2023
(unaudited)
(audited)
142B£'000 143B£'000
Corporate bond (1) 144B14,963 145B14,950
Pollen facility (2) 146B87,281 147B77,169
ZDP shares (3) 148B11,984 149B13,967
Preference shares (4) 148B5,000 149B-
Lease liability B84 151B130
Total non-current liabilities 152B119,312 153B106,216
Current liabilities 30 June 2024 155B31 December 2023
(unaudited)
(audited)
156B£'000 157B£'000
Accounts payable 158B319 159B126
Accruals and other payables 727 799
Taxation 162B110 163B76
Interest payable 166B899 167B770
Derivative contracts (note 19) 168B118 169B231
Provisions for financial guarantees 170B11 171B18
Lease liability 172B90 173B152
Total current liabilities 2,274 174B2,172
Movement on provision for financial guarantees
175B£'000
At 31 December 2022 176B413
Profit and loss charge in the year 177B(395)
At 31 December 2023 178B18
Profit and loss charge in the period 179B(7)
At 30 June 2024 180B11
Provisions for financial guarantees are recognised in relation to Expected
Credit Losses ("ECLs") on off-balance sheet loans and receivables where the
Company has provided a subordinated position or other guarantee (see Note 19).
The fair value is determined using the exact same methodology as that used in
determining ECLs (Note 19).
(1) Corporate bond
The £15m (31 December 2023: £15m) Corporate bonds bear interest at 7% (2023:
7%). The bonds have a maturity date of 31 December 2025.
(2) Pollen facility (previously HIT Facility)
On 28 January 2018, Sancus signed a funding facility with Honeycomb Investment
Trust plc (HIT), now Pollen Street PLC ("Pollen"). The funding line initially
had a term of 3 years and comprised of a £45m accordion and revolving credit
facility. On 3 December 2020 this facility was extended to a 6 year term to
end on 28 January 2024 and on 23 November 2022 this was extended further to 23
November 2026. In addition to the extension the facility was increased to
£75m in December 2020 and to £125m in November 2022.
The Pollen facility has portfolio performance covenants including that actual
loss rates are not to exceed 4% in any twelve month period and underperforming
loans are not to exceed 10% of the portfolio. Sancus Group participates 10% on
every drawdown with a first loss position on the Pollen facility. Sancus has
also provided Pollen with a guarantee, capped at £4m that will continue to
ensure the orderly wind down of the loan book, in the event of the insolvency
of Sancus Group, given its position as facility and security agent. Refer to
Note 20 Guarantees.
(3) ZDPs
The ZDP Shares have a maturity date of 5 December 2027, following a 5 year
extension of the final capital repayment approved on 5 December 2022. The
final capital entitlement is £2.5332 per ZDP Share.
Under the Companies (Guernsey) Law, 2008 shares in the Company can only be
redeemed if the Company can satisfy the solvency test prescribed under that
law. Refer to the Company's Memorandum and Articles of Incorporation for full
detail of the rights attached to the ZDP Shares. This document can be accessed
via the Company's website www.sancus.com.
The ZDP shares bore interest at an average rate of 8% until 5 December 2022.
As part of the extension agreement noted above the interest rate increased to
an average of 9% per annum with effect from 5 December 2022, through to the
final repayment date of 5 December 2027. In accordance with article 7.5.5 of
the Company's Memorandum and Articles of Incorporation, the Company may not
incur more than £30m of long term debt without prior approval from the ZDP
shareholders. The Memorandum and Articles (section 7.6) also specify that two
debt cover tests must be met in relation to the ZDPs. At 30 June 2024 the
Company was in compliance with these covenants as Cover Test A was 2.39
(minimum of 1.7) and the adjusted Cover Test B was 3.70 (minimum of 2.05). At
30 June 2024 senior debt borrowing capacity amounted to £15m. The Pollen
facility does not impact on this capacity as it is non-recourse to Sancus.
The Company purchased 1,388,889 Zero Dividend Preference shares of no par
value at a price of £1.08 per ZDP share on 29 April 2024. All of the ZDP
shares purchased will be held as treasury shares.
At 30 June 2024 the Company held 11,894,628 ZDP shares in Treasury (31
December 2023: 10,505,739) with an aggregate value of £22,893,204 (31
December 2023: £19,291,480).
(4) Preference Shares
In April 2024, Somerston Fintech Limited, a subsidiary of Somerston Group, the
majority shareholder of the Company, subscribed for £5,000,000 of preference
shares in Sancus Loans Limited ("Sancus Loans"). The Preference Shares have a
non-cash, cumulative coupon of 15% and a maturity date of 23 November 2026.
17. NOTES TO THE CASH FLOW STATEMENT
Cash outflow from operations (excluding loan movements) 181B30 June 2024 182B30 June 2023
(unaudited)
(unaudited)
183B£'000 184B£'000
Loss for the period 185B(647) 185B(3,313)
Adjustments for:
Net gain on FinTech Ventures 187B- 187B(362)
Other net gains 189B(769) 189B(195)
Loss on disposal of subsidiary 189B- 189B202
Accrued interest on ZDPs 191B636 191B1,106
Impairment of financial assets 193B(466) 193B799
Taxation 195B4 195B45
Amortisation / depreciation of property, plant and equipment 197B112 197B118
Amortisation of debt issue costs 199B138 199B195
Changes in working capital:
Trade and other receivables 201B(2,297) 201B(2,133)
Trade and other payables 203B114 203B(836)
Cash outflow from operations, excluding loan movements 205B(3,175) 205B(4,374)
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from
financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities are those for which cash flows were, or
future cash flows will be classified in the Group's consolidated cash flow
statement as cash flows from financing activities.
1 January 2024 Financing cash flows(1) Amortisation of debt issue costs Other 30 June 2024
Non-cash Non-cash
£'000 £'000 £'000 £'000 £'000
ZDPs 13,967 (1,501) 13 (495)(2) 11,984
Corporate Bond 14,950 - 13 - 14,963
Pollen Facility 77,169 10,000 112 - 87,281
Preference Shares - 5,000 - - 5,000
Lease Liability 282 (108) - - 174
Total liabilities from financing activities 106,368 13,391 138 (495) 119,402
1 January 2023 Financing cash flows(1) Amortisation of debt issue costs Other 30 June 2023
Non-cash Non-cash
£'000 £'000 £'000 £'000 £'000
ZDPs 9,117 3,000 12 1,139(2) 13,268
Corporate Bond 14,925 - 12 - 14,937
Pollen Facility 66,826 10,000 171 - 76,997
Lease Liability 364 (109) - (99) 156
Total liabilities from financing activities 91,232 12,891 195 1,040 105,358
(1) These amounts can be found under financing cash flows in the cash flow
statement.
(2) Interest accruals.
18. RELATED PARTY TRANSACTIONS
Transactions with the Directors/Executive Team
Non-executive Directors
As at 30 June 2024, the non-executive Directors' annualised fees, excluding
all reasonable expenses incurred in the course of their duties which were
reimbursed by the Company, were as detailed in the table below:
30 June 2024 30 June 2023
£ £
Stephen Smith (Chairman) 50,000 50,000
John Whittle 42,500 42,500
Tracy Clarke (stepped down as non-executive director 30 March 2023, 35,000 35,000
reappointed 31 March 2024)
Tracy Clarke was appointed Interim Group CFO and joined the Executive Team on
30 March 2023. She subsequently stepped down on 31 March 2024 and returned to
her role of non-executive Director. Fees paid to her include £32,500 in
respect of her role as Interim CFO.
Total Directors' fees charged to the Company for the period ended 30 June 2024
were £87,500 (30 June 2023: £55,000).
Executive Team
For the period ended 30 June 2024, the Executive Team members' remuneration
from the Company, excluding all reasonable expenses incurred in the course of
their duties which were reimbursed by the Company, were as detailed in the
table below:
30 June 2024 30 June 2023
£'000 £'000
Aggregate remuneration in respect of qualifying service - fixed salary 149 284
Aggregate amounts contributed to Money Purchase pension schemes 6 10
Aggregate bonus paid - -
All amounts have been charged to Operating Expenses.
On 30 March 2023 Carlton Management Services Limited ("Carlton"), was
appointed to manage and develop the Group's finance function, including new
technology integrations for forecasting, performance and treasury management
under a service agreement. The agreement was terminated on 31 March 2024. The
annualised fee for the service was £170,000. Carlton sub-lease office space
in the Group's offices in Jersey, with a sub lease end date of 31 August 2024,
at an annual cost of c.£100,000 p.a.
On 30 March 2023 Carlton entered into a Director service agreement with Sancus
Lending Group Limited for the provision of Tracy Clarke as Interim Group CFO,
with an annual fee of £130,000. This agreement terminated on 31 March 2024.
Tracy Clarke is Managing Director of Carlton Management Services Limited.
From time to time, the Somerston Group may participate as a Co-Funder in
Sancus loans, on the same commercial terms available to other Co-Funders.
In April 2024, Somerston Fintech Limited, a subsidiary of Somerston Group, the
majority shareholder of the Company, subscribed for £5,000,000 of preference
shares in Sancus Loans Limited ("Sancus Loans"). The Preference Shares have a
non-cash, cumulative coupon of 15% and a maturity date of 23 November 2026.
The Group has not recorded any other transactions with any Somerston Group
companies for the period ended 30 June 2024 (2023: none).
Directors' and Persons Discharging Managerial Responsibilities ("PDMR")
shareholdings in the Company
As at 30 June 2024, the Directors had the following beneficial interests in
the Ordinary Shares of the Company:
30 June 2024 31 December 2023
No. of Ordinary Shares Held % of total issued Ordinary Shares No. of Ordinary Shares Held % of total issued Ordinary Shares
John Whittle 138,052 0.02 138,052 0.02
Rory Mepham 2,000,000 0.34 2,000,000 0.34
( )
In the six month period to 30 June 2024 and the year to 31 December 2023, none
of the above received any amounts relating to their shareholding.
Transactions with connected entities
There were no significant transactions with connected entities that took place
during the current period.
There is no ultimate controlling party of the Company.
19. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT
Sancus loans and loan equivalents
30 June 2024 (unaudited) 31 December 2023 (audited)
Non-current £'000 £'000
Sancus loans - -
Sancus Loans Limited loans 11,946 10,148
Total Non-current Sancus loans and loan equivalents 11,946 10,148
Current
Sancus loans 334 460
Sancus Loans Limited loans 75,222 68,157
Total Current Sancus loans and loan equivalents 75,556 68,617
Total Sancus loans and loan equivalents 87,502 78,765
Fair Value Estimation
The financial assets and liabilities measured at fair value in the
Consolidated Statement of Financial Position are grouped into the fair value
hierarchy as follows:
30 June 2024 31 December 2023 (audited)
(unaudited)
Level 2 Level 3 Level 2 Level 3
£'000 £'000 £'000 £'000
Fintech Ventures investments - - - -
Derivative contracts (118) - (231) -
Total assets / liabilities at fair value (118) - (231) -
The classification and valuation methodology remains as noted in the 2023
Annual Report.
All of the FinTech Ventures investments are categorised as Level 3 in the fair
value hierarchy. In the past the Directors have estimated the fair value of
financial instruments using discounted cash flow methodology, comparable
market transactions, recent capital raises and other transactional data
including the performance of the respective businesses. Having considered the
terms, rights and characteristics of the equity and loan stock held by the
Group in the FinTech Ventures investments, the Board's estimate of liquidation
value of these assets is £Nil at 30 June 2024 (31 December 2023: £Nil).
Changes in the performance of these businesses and access to future returns
via its current holdings could affect the amounts ultimately realised on the
disposal of these investments, which may be greater or less than £Nil. There
have been no transfers between levels in the period (2023: None).
Assets at Amortised Cost
30 June 2024 31 December 2023
(unaudited) (audited)
£'000 £'000
Sancus loans and loan equivalents 87,502 78,765
Trade and other receivables 9,879 7,240
Cash and cash equivalents 5,995 4,990
Total assets at amortised cost 103,376 90,995
Liabilities at Amortised Cost
30 June 2024 31 December 2023
(unaudited) (audited)
£'000 £'000
ZDPs 11,984 13,967
Corporate bond 14,963 14,950
Pollen facility 87,281 77,169
Preference shares 5,000 -
Trade and other payables 2,229 2,053
Provisions in respect of guarantees 11 18
Total liabilities at amortised cost 121,468 108,157
Refer to Note 16 for further information on liabilities.
Total Portfolio
FinTech Ventures Investments
30 June 2024 £'000
At 31 December 2023 -
Net new investments / loan repaid -
Realised gain recognised in profit and loss -
At 30 June 2024 -
Total Portfolio
31 December 2023 £'000
At 31 December 2022 -
Net new investments / (divestments) 715
Realised losses recognised in profit and loss (715)
At 31 December 2023 -
Credit Risk
Credit risk is defined as the risk that a borrower/debtor may fail to make
required repayments within the contracted timescale. The Group invests in
senior debt, senior subordinated debt, junior subordinated debt and secured
loans. Credit risk is taken in direct lending to third party borrowers,
investing in loan funds, lending to associated platforms and loans arranged by
associated platforms. The Group mitigates credit risk by only entering into
agreements related to loan instruments in which there is sufficient security
held against the loans or where the operating strength of the investee
companies is considered sufficient to support the loan amounts outstanding.
Credit risk is determined on initial recognition of each loan and re-assessed
at each balance sheet date. It is categorized into Stage 1, Stage 2 and Stage
3 with Stage 1 being to recognise 12 month ECLs, Stage 2 being to recognise
Lifetime ECLs not credit impaired and Stage 3 being to recognise Lifetime ECLs
credit impaired.
Foreign Exchange Risk - Derivative instruments
The Treasury Committee Team monitors the Group's currency position on a
regular basis, and the Board of Directors reviews it on a quarterly basis.
Loans denominated in Euros which are taken out through the Pollen facility are
hedged. Forward contracts to sell Euros at loan maturity dates are entered
into when loans are drawn in Euros. At 30 June 2024 the following forward
foreign exchange contracts were open:
June 2024
Counterparty Settlement date Buy Currency Buy Amount £'000 Sell currency Sell amount €'000 Unrealised gain/(loss) £'000
Alpha Jun 2024 to July 2024 GBP 7,827 Euro 9,245 (11)
Lumon Risk Management Jun 2023 to July 2023 GBP 27,428 Euro 32,460 (107)
(118)
December 2023
Counterparty Settlement date Buy Currency Buy Amount £'000 Sell currency Sell amount €'000 Unrealised loss £'000
Alpha Dec 2023 to Jan 2024 GBP 7,710 Euro 9,000 (97)
Lumon Risk Management Dec 2023 to Jan 2024 GBP 23,851 Euro 27,640 (134)
(231)
No hedging has been taken out against investments in the FinTech Ventures
platforms (2023: £Nil).
Provision for ECL
Provision for ECL is made using the credit risk, the probability of default
(PD) and the probability of loss given default (PL) all of which are
underpinned by the Loan to Value (LTV), historical position, forward looking
considerations and on occasion, subsequent events and the subjective judgement
of the Board. Preliminary calculations for ECL are performed on a loan by loan
basis using the simple formula: Outstanding Loan Value x PD x PL and are then
amended as necessary according to the more subjective measures as noted above.
A probability of default is assigned to each loan. This probability of default
is arrived at by reference to historical data and the ongoing status of each
loan which is reviewed on a regular basis. The probability of loss is arrived
at with reference to the LTV and consideration of cash that can be redeemed on
recovery.
Movement of provision for ECL
Trade Receivables £'000
Loans Guarantees £'000 Total
£'000 £'000
Loss allowance at 31 December 2022 6,835 6,493 413 13,741
Charge/(credit) for the year 2023 4,032 1,180 (395) 4,817
Utilised in the year 2023 (2,383) (1,211) - (3,594)
Loss allowance at 31 December 2023 8,484 6,462 18 14,964
Credit for the period to June 2024 (303) (156) (7) (466)
Utilised in the period to June 2024 (4,319) - - (4,319)
Loss allowance at 30 June 2024 3,862 6,306 11 10,179
20. GUARANTEES
The Group undertakes a number of Guarantees and first loss positions which are
not deemed to be contingent liabilities under IAS37 as there is no present
obligation for these guarantees and it is considered unlikely that these
liabilities will crystallise.
Pollen Facility
Sancus Group participates 10% on every loan funded by the Pollen facility,
taking a first loss position. Sancus Group Lending Limited has provided Pollen
with a guarantee capped at £4m following the restructure of the Pollen
facility in November 2022 (previously was capped at £2m) and that it will
continue to ensure the orderly wind down of the Pollen funded loan book, in
the event of the insolvency of Sancus Group, given its position as facility
and security agent. No provision has been provided in the financial statements
(2023: £Nil).
Sancus Loan Notes
Loan Note 7 was launched in May 2021 and was repaid in September 2023.
Loan Note 8 was launched in January 2022 and currently stands at c.£30.0m.
Loan Note 8 matures on 1 December 2026 and has a coupon of 8% p.a. (payable
quarterly), with Sancus providing a 20% first loss guarantee.
Unfunded Commitments
As at 30 June 2024 the Group has unfunded commitments of £81.4m (31 December
2023: £72.5m). These unfunded commitments primarily represent the undrawn
portion of development finance facilities. Drawdowns are conditional on
satisfaction of specified conditions precedent, including that the borrower is
not in breach of its representations or covenants under the loan or security
documents. The figure quoted is the maximum exposure assuming that all such
conditions for drawdown are met. Directors expect the majority of these
commitments to be filled by Co-Funders.
OFFICERS AND PROFESSIONAL ADVISERS
Directors
Non-executive Stephen Smith
John Richard Whittle
Tracy Clarke (appointed 31 March 2024)
Executive Rory Mepham
Tracy Clarke (resigned 31 March 2024)
The address of the Directors is the company's registered office.
Executive Team:
Chief Executive Officer Rory Mepham
Chief Financial Officer Keith Lawrence (appointed 31 March 2024); Tracy Clarke (resigned 31 March
2024)
Chief Investment Officer James Waghorn
Registered Office Suite 1, First Floor
Windsor House, Lower Pollet
St Peter Port
Guernsey, GY1 1WF
Channel Islands
Nominated Advisor and Broker Panmure Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London, EC2Y 9LY
United Kingdom
Company Secretary Sanne Fund Services (Guernsey) Limited
Sarnia House
Le Truchot
St Peter Port
Guernsey, GY1 1GR
Channel Islands
Legal Advisors, Channel Islands Carey Olsen
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey, GY1 4BZ
Channel Islands
Legal Advisors, UK Stephenson Harwood
1 Finsbury Circus
London, EC2M 7SH
United Kingdom
Legal Advisors, USA Troutman Pepper
3000 Two Logon Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
United States
Bankers Barclays International
1(st) Floor, 39041 Broad Street
St Helier
Jersey, JE4 8NE
Auditors Moore Kingston Smith LLP
9 Appold Street
London
EC2A 2AP
Registrar Link Market Services Limited
The Registry, 34 Beckenham Road
Beckenham
Kent, BR3 4TU
United Kingdom
Public Relations Instinctif Partners Limited
65 Gresham Street
London, EC2V 7NQ
United Kingdom
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