REG - TruFin PLC TruFin PLC - Final Results for the 12 months ended 31 Dec 2023
26/03/2024 07:15
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RNS Number : 2435I TruFin PLC 26 March 2024
26 March 2024
TruFin plc
("TruFin" or the "Company" or together with its subsidiaries "TruFin Group" or
the "Group")
FINAL RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2023
TruFin is pleased to announce its audited results for the 12 months ended 31
December 2023. TruFin's complete annual report and accounts, which set out
these results in full detail with accompanying commentary, are now available
on TruFin's website: www.Trufin.com/investors
(https://gbr01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.trufin.com%2Finvestors&data=02%7C01%7Cjames.vandenbergh%40TruFin.com%7C6f10ba878ca34db183b408d7f7ee04fc%7C67937f35ec6246869ff319b660f3fd22%7C0%7C1%7C637250473973575045&sdata=Fb9CSvRWbJTpnwg32G0hfDg0SNKLZNCieX68%2Bcxzj8k%3D&reserved=0)
.
Financial Highlights
· Gross revenue grew 34% to £20.5(1)m (2022: £15.3(2)m) driven by
growth across all the subsidiaries
· Gross profit margin grew to 72% (2022: 70%)
· Adjusted EBITDA(3) was £(3.0)m (2022: £(5.7) (2)m), a 48%
year-over-year improvement
· Adjusted Loss Before Tax(3) ("LBT") was £(6.1)(2)m (2022: £8.2m)
· Cash and cash equivalents at year end totalled £10.1m (£6.0m
unrestricted)
Company Highlights
· Oxygen Finance Limited ("Oxygen") EBITDA increased 11% to £1.3m
(2022: £1.1m)
· Satago Financial Solutions Limited ("Satago") grew revenue by more
than 71% to £3.8m (2022: £2.2m) after its platform was chosen to support
invoice factoring solutions for Lloyds Bank plc ("Lloyds Bank" or the "Bank")
customers
· Playstack Limited ("Playstack") grew revenue by more than 27% to
£8.0m (2022: £6.3m) and secured the rights to the Mortal Shell franchise
· Vertus Capital Limited ("Vertus") was disposed of in October 2023 for
£3.2m
Current Trading and Prospects
· Group revenue at 29 February 2024 was not less than £5.8m
(unaudited), growing 271% compared to same period in 2023. Much of this
exceptional growth rate is as a result of the successful launch of Playstack's
fastest selling game. Whilst it is still early in the year, this excellent
start to 2024 provides a strong platform for the Group
· Oxygen revenue to 29 February 2024 grew 35% when compared to the same
period in 2023
· Satago has secured Bank of Ireland as its embedded finance partner in
Ireland. This is Satago's first Tier-1 bank outside of the UK and signals
significant interest in its platform globally
· Playstack released their fastest selling game on February 20 with
more than one million units sold in the first 30 days. Playstack expects to
release a further 5 games during 2024
James van den Bergh, TruFin CEO, said:
"The overarching goal of 2023 was to solidify the Group's position in
preparation for step changes in growth and profitability in the years ahead;
we achieved this objective with growth and consolidation for all of the
subsidiaries.
Given the continued consistent performance of Oxygen, managed by Ben Jackson,
it is only appropriate to repeat the same phrase we used last year and the
year before: Oxygen, yet again, grew its client base, revenues and EBITDA.
Shareholders can expect to hear that mantra repeated for many years to come.
With more than 87% of the next four year's revenue already contracted, it is
clear to me that the attractiveness of Oxygen will rise with every passing
year. In addition, there is an exciting pipeline of opportunities for further
growth within the existing client base.
Oxygen also completed a planned investment of more than £1.2m in its
platform and people and acquired bidstats.uk, the UK's No 1 portal for
public sector tendering. The financial benefits of this investment and
acquisition is expected to be seen in 2024 and beyond.
Having secured a landmark contract and investment from Lloyds, and signed an
embedded finance agreement with Sage, this was a year of growth and
consolidation for Satago. Working with such innovative and respected
organisations as Lloyds and Sage is a privilege and we look forward to more
developments with these partnerships in the coming months. Since the year end,
Sinead McHale and her team have secured Bank of Ireland as their first Tier-1
Bank outside the UK. The list of blue-chip organisations that are looking to
onboard Satago's platform continues to grow.
Playstack optimised its operations over the year to focus on what the business
is great at - sourcing and publishing PC and console games. With a growing
back book, soon expected to reach more than 50% of revenues, and multiple new
game releases secured, Playstack is now a diversified and run-rate profitable
business with a repeatable and scalable business model. Securing the Mortal
Shell franchise was also a welcome milestone - made possible by our
exceptional shareholder base.
The successful launch of Balatro this February deserves a mention - to sell
one million units in less than 30 days is an incredible achievement. For
TruFin, the important thing to note is that Balatro pushes Playstack's PC and
console publishing business' "hit ratio" (success: failure ratio) to >95%.
This bodes well for the future.
2024 will be an exciting year and I look forward to updating shareholders as
to progress in the coming months."
Notes
(1) Includes revenues for Vertus until its disposal from the Group on 4
October 2023. Revenue per the statutory accounts P&L only reflects
revenues for continuing operations at £18.1m (2022: £13.9m).
(2) Adjusted as if Vertus sold on the corresponding date in 2022 i.e. 4
October
(3) Includes performance for Vertus until its disposal from the Group on 4
October 2023, and adjusted to remove share-based payment charges implemented
during 2023
Enquiries:
TruFin plc 0203 743 1340
James van den Bergh, Chief Executive Officer
07779 229508
Kam Bansil, Investor Relations
Liberum Capital Limited (Nominated Adviser and Corporate broker) 0203 100 2000
Chris Clarke
Edward Thomas
About TruFin plc:
TruFin plc is the holding company of an operating group comprising four
growth-focused technology businesses operating in niche markets: early payment
provision, invoice finance, IFA finance and mobile games publishing. The
Company was admitted to AIM in February 2018 and trades under the ticker
symbol: TRU. More information is available on the Company website:
www.TruFin.com
(https://gbr01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.trufin.com%2F&data=05%7C01%7Cannie.styler%40trufin.com%7Cbaa78452ac0a47f8945108da28fa43e7%7C67937f35ec6246869ff319b660f3fd22%7C0%7C0%7C637867352602970809%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=KlrhCWwTxueK%2BL9vIsnyHiMNFfDmDQOWUnAQeFSgNQc%3D&reserved=0)
.
Chair's Statement
I am pleased to present TruFin's Annual Report and Accounts for 2023. I am
equally pleased to report that the past 12 months have seen all of our
businesses continue to deliver strong performances in the face of persisting
macroeconomic challenges.
Though the inflationary pressures that have marked the post-pandemic era are
easing, monetary policy remains tight and central banks' next moves are hard
to predict. Geopolitical uncertainty on multiple fronts, from the conflicts in
Ukraine and Gaza to the upcoming US and UK elections, continues to build and
impact the financial and economic outlook. We are not out of the woods yet.
Despite this, TruFin delivered on its objectives during 2023 and is well
positioned for the year ahead. During the year the Group realised £3.2m from
the sale of Vertus, whilst all three remaining investments posted double digit
revenue growth. As a result, Group revenues were up by almost a third on the
previous year. Such achievements are testament to the skill and resilience of
our people and the strength of their visions.
In a year of considerable progress, two key milestones at the Group level
stand out. In June the management completed a heavily oversubscribed
fundraising, strengthening the Group balance sheet and allowing further
investment into Playstack's growing portfolio of game releases. The disposal
of Vertus in October was also a significant moment in TruFin's strategic
development, enabling management to focus on maximising-value in its three
remaining businesses.
In addition, there has been a determined focus on growing recurring revenues -
software and licensing fee sales and game royalties - across the board.
Looking ahead, this augurs well for predictability of future income, Group
profitability, and shareholder value alike.
It is especially pleasing to note that Playstack achieved its major goal for
the year of achieving EBITDA profitability for the first time. It looks set
for more of the same in 2024 thanks to its recent run of critically acclaimed
game releases. It is also gratifying that Satago and Oxygen both performed in
line with expectations, continuing their operational and financial progress.
Such consistent positive momentum speaks to the success of the Group's
strategy and marks a maturing of the business. Notably, the Group beat market
expectations by significantly reducing EBITDA loss in 2023. We enter 2024
financially strong and on a clear path to future profitability. This continued
upward trajectory is remarkable given the challenges of operating amid ongoing
global instability and is a clear demonstration that TruFin possesses the
resilience to prosper, despite the global headwinds.
It remains only for me to thank all our staff for their commitment and hard
work, as well as our shareholders for their continued support.
Steve Baldwin
Chair
CEO's Review
TruFin made significant progress in 2023.
Undeterred by the unfavourable macroeconomic and corporate climate, our
market-leading businesses have once again prospered, all recording double
digit growth and laying the foundations for meaningful growth in the years
ahead.
As ever, Group support has been key to ensuring the ongoing success of
TruFin's subsidiaries, particularly in such a challenging environment. The
£7.6m fundraising in June 2023 and the £3.2m sale of Vertus in October 2023
have enabled the Group to continue to invest in its three remaining businesses
and solidify their market positions.
Moreover, the Vertus deal marks another step in executing the Group's strategy
- to focus our assets on recurring and predictable sources of income in order
to deliver significant value to our shareholders.
2023 Group performance
Mirroring the strong performance of our subsidiaries, Group revenue increased
31% year-on-year to £18.1m. Of this, 92% was from recurring software sales
and licensing fees evidencing the continued success of TruFin's strategic
pivot towards predictable and repeatable revenue sources.
Key growth drivers during the period included 71% growth in revenues in Satago
which more than doubled its paid subscribers (to 967) and deepened its ties
with major partner Lloyds Bank as it began successfully migrating the Bank's
existing customers onto its platform. Meanwhile Oxygen's core Early Payment
business grew by 26% year-on-year, generating 65% of the subsidiary's total
revenue. Playstack's revenues grew 27% on the back of an ever increasingly
diversified portfolio of games. With three critically acclaimed releases
during the year and a significant increase in its revenue-generating back
catalogue - anticipated to contribute a meaningful proportion of 2024 revenues
- Playstack is in an enviable position.
At year end the Group had a cash balance of £10.1m (including cash of £4.1m
in Satago which is not 100% owned). As such, unrestricted cash is no less than
£6.0m and the Group is fully funded to profitability.
Current trading and prospects
TruFin has had a strong start to the year with Group revenues for January and
February expected to be not less than £5.8m; a 271% increase over the same
period in 2023. Playstack's latest game launch, Balatro, has contributed to
much of this growth. It is important to note that this pace of growth is not
expected to continue throughout the year.
As always, growth, profitability and value crystallisation remain integral to
TruFin's purpose and vision. Following the strong start in 2024, the Group's
vision is even more tangible.
Outlook
If 2023 was the year of double-digit growth across the Group, 2024 is set to
be the year of both further growth and improving profitability.
Whilst mindful of the unsettled global political and economic picture,
TruFin's steady yet ambitious stewardship of its subsidiaries in pursuit of
shareholder value will continue. Targeted investment in all three businesses
during the last 12 months is expected to produce scaled revenues and
accelerate profitability. Ultimately this will result in significant
shareholder returns.
As we enter 2024 our businesses are well positioned for the years ahead, with
two of the three now EBITDA profitable and the third poised to follow. Oxygen
is set to consolidate its market dominance having invested heavily in its
platform and people in 2023 as well as acquiring and successfully integrating
bidstats.uk. With significant interest in its digitised proposition from both
UK and overseas banks, Satago is ready to replicate the success of its
flagship relationship with Lloyds Bank as well as capitalise further on its
high-performing Lending-as-a-Service and Embedded Finance subscription
services.
Meanwhile Playstack, fresh from achieving its 2023 aim of EBITDA
profitability, is close to concluding several major platform deals and will
continue to focus relentlessly on its core strengths of sourcing and
publishing video games. Its first release in 2024, the poker game Balatro,
achieved profitability within an hour, earning it the accolade of Playstack's
fastest selling game.
Each of these achievements is underpinned by our ongoing investment in
building lasting relationships with our customers and partners and delivering
services tailored to their needs. Each one takes us ever closer to our
ultimate goal of rewarding shareholders with significant value-creating
transactions.
On behalf of the Board, our staff, partners and stakeholders I would like to
extend my thanks to our shareholders for continuing to stand behind TruFin,
despite the headwinds we collectively face. We are buoyed by the progress made
in 2023 and looking forward to compounding these gains by pursuing our
objectives with optimism and determination in 2024.
James van den Bergh
Chief Executive Officer
OXYGEN REVIEW
2023 performance
Oxygen delivered revenues of £6.2m, up 16% (2022: £5.3m), with the increase
driven by strong performance across all principal revenue streams. Such is
Oxygen's confidence in the future, a £1.2m investment was made during the
year, and staff numbers increased by 15 to 72 to accelerate revenues in 2024
on beyond. In addition Oxygen was able to acquire and integrate bidstats.uk
and make a dividend payment to the Group of £0.5m, twice Oxygen's maiden
dividend of £0.25m in 2022.
New business continued to progress well, with Oxygen still dominating the
local government market. Combined trade-spending by Oxygen's Early Payment
Programme clients increased by £2.8bn, to a record of £26.8bn. Oxygen's SaaS
product portfolio also expanded, with new products creating incremental
revenue. Over 50% of Oxygen's local authority Early Payment Programme clients
also committed to at least one Oxygen SaaS subscription, up from 27% in 2022.
The average Early Payment Programme client tenure, a measure of customer
loyalty and Oxygen's success in renewing contracts, reached 7.1 years at the
end of 2023 (2022: 6.6 years), adding additional resilience to Oxygen's
recurring revenue streams.
Early Payment Programme clients committed £1.3bn in spending to more than
4,900 suppliers during 2023 (2022: £1.1bn). New spend added during the year
hit a record £385m (2022: £330m), 16% higher than the prior year.
Oxygen's position as a financial technology company delivering social value
strengthened significantly. Throughout 2023 more than 15,000 small businesses
within Oxygen clients' local communities received over £0.6bn in early
payments - at no cost to the supplier. Oxygen made its Carbon Reporting tool
freely available to the public sector to support the reduction of Scope 3
emissions and the consequential carbon impact.
Current trading and prospects
Indications from initial trading in 2024 are strong with double digit growth
for recurring revenue streams continuing. Encouragingly, during 2023 circa
£1.5bn was issued for tender with early payment (EP) terms included by our
clients, an increase of 35% on the previous year which bodes well for supplier
participation in 2024. EP revenue in January was up 40% on 2023 YoY.
Continued economic volatility and higher interest rates make Oxygen's EP
solution increasingly attractive. Similarly, business development
opportunities made available through the 60,000 monthly visitors to
bidstats.uk will support SaaS growth in 2023.
Interest from new early payment clients is strong, with more opportunities in
the pipeline than ever before.
SATAGO REVIEW
2023 performance
During 2023, revenue increased more than 70% to £3.8m (2022: £2.2m).
2023 was a year of consolidation and growth for Satago. Importantly, Lloyds
Bank began migrating existing factoring clients onto Satago's proprietary
platform in H2 2023. Following this successful test phase, a material portion
of existing Bank clients are expected to migrate during 2024.
The next phase of the Satago platform was also successfully delivered during
2023, allowing the onboarding of the first 'new to Bank' customer.
Delivering Lending as a Service ("LaaS") and Embedded Finance solutions for
existing clients remains Satago's top priority. Looking ahead, the hard work
carried out over the last five years has ensured the platform is ready to be
leveraged by other partners - giving 10s of thousands of SMEs access to all
the benefits of the Satago platform in the coming years. Satago's partners and
pipeline are testament to the exciting future ahead.
Satago's subscription packages performed strongly in 2023, with the number of
paying subscribers more than doubling to 967 (2022: 430). Significant
subscriber growth is expected to continue in 2024 and beyond. The platform's
credit control and risk insights tools in particular are proving
transformational to customers.
Current trading and prospects
Early 2024 has focused on product delivery for the Bank and the next phase of
client wins. Meanwhile, the deep strategic relationship with Sage, the global
leader in accounting software, will allow Satago to extend its core offerings
of credit control and risk insights to SMEs globally.
Satago has a growing pipeline of LaaS and Embedded Finance customers in the UK
and Europe with a number of significant partnerships expected to launch
throughout the year.
PLAYSTACK REVIEW
2023 performance
During the year, Playstack focused on scaling into a profitable and
sustainable business, achieving full-year EBITDA profitability aided in part
by an increasingly strong portfolio of games that reduced dependencies on the
success of a single title. In 2023, over 85% of Playstack revenue was derived
from six front-line titles; compared to four games in 2022 and one game in
2021.
The future line-up of games continues to be extremely strong, largely due to
the effectiveness of 'Magnitude', Playstack's proprietary sourcing toolset
which assessed over 11,000 games during the year (up 275% compared to 2023)
and continues to discover more than 80% of Playstack's pipeline - with
multiple games now secured for 2024 and 2025 as a result of the technology.
Playstack's game studio subsidiary, Magic Fuel Games Inc, successfully
launched Cityscapes: Sim Builder as an exclusive release on Apple Arcade. The
game was subsequently nominated for Best Game on Apple Arcade in 2023, and
frequently features in the top-20 games on the service.
Playstack launched two further titles during 2023: AK‑Xolotl and The Last
Faith, and two expansion packs for The Case of the Golden Idol, reinforcing
Playstack's focus on broadening its portfolio of franchises and increasing
long-term performance potential through reinvesting in successful games after
release. During the year Playstack secured two new technology partner
contracts, each bringing an additional revenue stream to the business over
multiple years and providing long-term predictability.
Current trading and prospects
Playstack's publishing portfolio is the centre of its 2024 strategy, with
regular planned updates to existing games and a minimum of five new games for
release across the year, including two games to be released in partnership
with platforms. The first new release of 2024, Balatro, quickly exceeded all
expectations, reaching game profitably in one hour and surpassing one million
units sold within a month. With the 2024 line-up already secured, the game
discovery focus has turned to 2025 and 2026 to ensure an increasingly strong
pipeline of titles for the years ahead.
Back-book games remain a key component of future revenue modelling, with a
minimum of 40% of 2024 revenues forecast to be derived from games introduced
to market in 2022 and 2023.
Playstack continues to assert its position as a leader in the games industry,
and is navigating well-publicised industry challenges through carefully
curated and selected games, a focus on cost management, and sustainable
profitability.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2023 2022
Notes £'000 £'000
Interest income 3 1,470 405
Fee income 3 9,348 7,138
Publishing income 3 7,313 6,317
Gross revenue 3 18,131 13,860
Interest, fee and publishing expenses (5,027) (4,207)
Net revenue 13,104 9,653
Staff costs 5 (12.558) (11,641)
Other operating expenses (5,850) (4,616)
Depreciation & amortisation (1,922) (1,529)
Net impairment on financial assets 7 (109) (50)
Share of (loss)/profit from associates (4) 1
Loss before tax (7,339) (8,182)
Taxation 2, 9 962 1,267
Loss from continuing operations (6,377) (6,915)
(Loss)/profit from discontinued operations 10 (963) 109
Loss for the year (7,340) (6,806)
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Exchange differences on translating foreign operations 126 (65)
Other comprehensive income for the year, net of tax 126 (65)
Total comprehensive loss for the year (7,214) (6,871)
Loss for the year attributable to the owners of: TruFin plc
TruFin plc (6,472) (6,637)
Non-controlling interests (868) (169)
(7,340) (6,806)
Total comprehensive loss for the year attributable to the owners of:
TruFin plc (6,350) (6,704)
Non-controlling interests (864) (167)
(7,214) (6,871)
Total comprehensive (loss)/profit for the year attributable to Owners of
TruFin plc from
Continuing operations (5,190) (6,744)
Discontinued operations (1,160) 40
(6,350) (6,704)
Earnings per Share
2023 2022
Notes pence pence
Basic and diluted EPS 22 (6.5) (7.3)
Basic and diluted EPS from continuing operations (5.3) (7.4)
COMPANY STATEMENT OF COMPREHENSIVE INCOME
2023 2022
Notes £'000 £'000
Revenue 3 1,765 2,293
Staff costs 5 (2,106) (1,673)
Other operating expenses (633) (660)
Depreciation & amortisation (2) (2)
Loss before tax (976) (42)
Taxation 9 - -
Loss and total comprehensive income for the year (976) (42)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2023 2022
Notes £'000 £'000
Assets
Non-current assets
Intangible assets 11 25,417 24,411
Property, plant and equipment 12 275 345
Deferred tax asse 9 250 250
Loans and advances 14 - 15,016
Total non-current assets 25,942 40,022
Current assets
Cash and cash equivalents 10,140 10,273
Loans and advances 14 7,234 9,145
Interest in associate - 4
Trade receivables 15 2,385 2,149
Other receivables 15 4,975 3,899
Total current assets 24,734 25,470
Total assets 50,676 65,492
Equity and liabilities
Equity
Issued share capital 16 96,311 85,706
Retained earnings (31,017) (24,884)
Foreign exchange reserve 59 (63)
Other reserves (29,798) (26,531)
Equity attributable to owners of the company 35,555 34,228
Non-controlling interest 20 2,385 5,876
Total equity 37,940 40,104
Liabilities
Non-current liabilities
Borrowings 17 1,047 16,764
Total non-current liabilities 1,047 16,764
Current liabilities
Borrowings 17 6,157 1,783
Trade and other payables 18 5,532 6.841
Total current liabilities 11,689 8,624
Total liabilities 12,736 25,388
Total equity and liabilities 50,676 65,492
COMPANY STATEMENT OF FINANCIAL POSITION
2023 2022
Notes £'000 £'000
Assets
Non-current assets
Property, plant and equipment 2 4
Investments in subsidiaries 13 30,189 30,189
Amounts owed by group undertakings 59,089 54,835
Total non-current assets 89,280 85,028
Current assets
Cash and cash equivalents 4,723 2,260
Trade and other receivables 15 161 138
Total current assets 4,884 2,398
Total assets 94,164 87,426
Equity and liabilities
Equity
Issued share capital 16 96,311 85,706
Retained earnings (6,679) (6,042)
Other reserves 3,798 6,828
Total equity 93,430 86,492
Liabilities
Current liabilities
Trade and other payables 18 734 934
Total current liabilities 734 934
Total liabilities 734 934
Total equity and liabilities 94,164 87,426
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign Non-
Share Retained exchange Other controlling Total
capital earnings reserve reserves Total interest equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 85,706 (24,884) (63) (26,531) 34,228 5,876 40,104
Loss for the year from continuing
operations - (5,312) - - (5,312) (1,065) (6,377)
Other comprehensive income for the year - - 122 - 122 4 126
Loss from discontinued operations - (1,160) - - (1,160) 197 (963)
Total comprehensive loss for the year - (6,472) 122 - (6,350) (864) (7,214)
Issuance of shares 10,605 (427) - (3,030) 7,148 - 7,148
Share based payment - 766 - - 766 - 766
Disposal of subsidiary - - - - - (2,620) (2,620)
Purchase of subsidiary shares - - - (237) (237) (7) (244)
Balance at 31 December 2023 96,311 (31,017) 59 (29,798) 35,555 2,385 37,940
Balance at 1 January 2022 73,548 (17,731) 4 (24,393) 31,428 1,023 32,451
Loss for the year - (6,637) - - (6,637) (169) (6,806)
Other comprehensive income for the year - - (67) - (67) 2 (65)
Total comprehensive loss for the year - (6,637) (67) - (6,704) (167) (6,871)
Issuance of shares 12,158 (496) - (2,138) 9,524 - 9,524
Issuance of shares by subsidiary - (20) - - (20) 5,020 5,000
Balance at 31 December 2022 85,706 (24,884) (63) (26,531) 34,228 5,876 40,104
Share capital
Share capital represents the nominal value of equity share capital issued.
Retained earnings
The retained earnings reserve represents cumulative net gains and losses.
Foreign exchange reserve
The foreign exchange reserve represents exchange differences which arise on
consolidation from the translation of the financial statements of foreign
subsidiaries.
Other reserves
Other reserves consist of the merger reserve, the share revaluation reserve
and shares issued at a discount.
The merger reserve arose as a result of combining businesses that are under
common control. As at 31 December 2023 it was a debit balance of £33,358,000
(2022: £33,358,000).
The share revaluation reserve arose from the share cancellation that took
place in February 2018. As at 31 December 2023 its balance was £8,966,000
(2022: £8,966,000).
Shares issued at a discount arose from the share issuances that took place in
April 2022 and July 2023. As at 31 December 2023 its balance was £5,168,000
(2021: £2,138,000). See Note 16 for further information.
Non-Controlling Interest
The non-controlling interest relates to the minority interest held in Bandana
Media Limited, Playstack OY, Vertus Capital Limited, Vertus SPV1 Limited,
Satago Financial Solutions Limited, Satago SPV1 Limited, Satago SPV2 Limited
and Satago z.o.o.
COMPANY STATEMENT OF CHANGES IN EQUITY
Retained
Share capital earnings Other reserves Total equity
£'000 £'000 £'000 £'000
Balance at 1 January 2023 85,706 (6,042) 6,828 86,492
Total comprehensive loss for the year - (976) - (976)
Issuance of shares 10,605 (427) (3,030) 7,148
Share based payment - 766 - 766
Balance at 31 December 2023 96,311 (6,679) 3,798 93,430
Balance at 1 January 2022 73,548 (5,504) 8,966 77,010
Total comprehensive loss for the year - (42) - (42)
Issuance of shares 12,158 (496) (2,138) 9,524
Balance at 31 December 2022 85,706 (6,042) 6,828 86,492
The notes on pages 50 to 89 are an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
2023 2022
Notes £'000 £'000
Cash flows from operating activities
Loss before tax
Continuing operations (7,339) (8,182)
Discontinued operations (963) 162
Adjustments for
Depreciation of property, plant and equipment 107 104
Amortisation of intangible assets 2,893 2,314
Share based payments 766 -
Finance costs 569 175
Share of loss/(profit) from associate 4 (1)
Loss on disposal of subsidiary 1,358 -
Underlying trading profit from discontinued operations (396) (162)
(3,001) (5,590)
Working capital adjustments
Movement in loans and advances (4,491) (2,181)
Increase in trade and other receivables (1,398) (32)
Increase/(decrease) in trade and other payables 390 (88)
Net payables on acquisition of subsidiary - (67)
(5,499) (2,368)
Tax credit received 768 668
Interest and finance costs (416) (162)
Net cash used in operating activities from continuing operations (8,148) (7,452)
Cash flows from investing activities:
Additions to intangible assets (5,452) (3,085)
Additions to property, plant and equipment (42) (107)
Acquisition of subsidiaries (1,421) (1,217)
Disposal of subsidiary 3,147 -
Cash on acquisition of subsidiary - 19
Cash in subsidiary on disposal (938) -
Net cash used in investing activities from continuing operations (4,706) (4,390)
Cash flows from financing activities:
Issue of ordinary share capital 7,148 9,524
Issue of ordinary share capital of subsidiary - 5,000
Net borrowings 17 5,393 (55)
Lease payments (81) (28)
Net cash generated from financing activities from continuing operations 12,460 14,441
Net (decrease)/increase in cash and cash equivalents from continuing (394) 2,599
operations
Net cash from discontinued operations 199 56
Cash and cash equivalents at beginning of the year 10,273 7,608
Effect of foreign exchange rate changes 62 10
Cash and cash equivalents at end of the year 10,140 10,273
COMPANY STATEMENT OF CASH FLOWS
2023 2022
£'000 £'000
Cash flows from operating activities
Loss before income tax (976) (42)
Adjustments for:
Depreciation of property, plant and equipment 2 2
Interest income (1,657) (2,166)
Share based payments 766 -
Working capital adjustments (1,865) (2,206)
(Increase)/decrease in trade and other receivables (22) 6
Decrease in trade and other payables (200) (94)
(222) (88)
Interest received 117 -
Net cash used in operating activities (1,970) (2,294)
Cash flows from investing activities
Intragroup loans cash advanced (6,156) (5,750)
Intragroup loans cash received 3,442 -
Additions to property, plant and equipment - (6)
Net cash generated used in investing activities (2,714) (5,756)
Cash flows from financing activities
Issue of ordinary share capital 7,147 9,524
Net cash generated from financing activities 7,147 9,524
Net increase in cash and cash equivalents 2,463 1,474
Cash and cash equivalents at beginning of the year 2,260 786
Cash and cash equivalents at end of the year 4,723 2,260
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Statutory information
TruFin plc is a Company registered in Jersey and incorporated under Companies
(Jersey) Law 1991. The Company's ordinary shares were listed on the
Alternative Investment Market of the London Stock Exchange on 21 February
2018. The address of the registered office is 26 New Street, St Helier,
Jersey, JE2 3RA.
1. Accounting policies
General information
The TruFin Group (the "Group") is the consolidation of TruFin plc and the
companies set out in the "Basis of consolidation" on pages 51-52.
The principal activities of the Group are the provision of niche lending,
early payment services and game publishing.
The financial statements are presented in Pounds Sterling, which is the
currency of the primary economic environment in which the Group operates.
Amounts are rounded to the nearest thousand.
Basis of accounting
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
("IFRS").
Prior to 29 November 2017 and before the incorporation of TruFin plc and
TruFin Holdings, the entities named above were under common control and
therefore, have been accounted for as a common control transaction -that is a
business combination in which all the combining entities or businesses are
ultimately controlled by the same company both before and after the
combination. IFRS 3 provides no specific guidance on accounting for entities
under common control and therefore other relevant standards have been
considered. These standards refer to pooling of assets and merger accounting
and this is the methodology that has been used to consolidate the Group.
After 29 December 2017, post the reorganisation, the entities constitute a
legal group and accordingly the consolidated financial statements have been
prepared by applying relevant principles underlying the consolidation
procedures of IFRS.
Basis of preparation
The results of the Group companies have been included in the consolidated
statement of comprehensive income. Where necessary, adjustments have been made
to the underlying financial information of the companies to bring the
accounting policies used into line with those used by the Group. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
The consolidated financial statements contained in this document consolidates
the statements of total comprehensive income, statements of financial
position, cash flow statements, statements of changes in equity and related
notes for each of the companies listed in the "Basis of consolidation" on
pages 51-52, which have been prepared in accordance with IFRS.
Non-controlling interests, presented as part of equity, represent the portion
of a subsidiary's profit or loss and net assets that is not held by the
Group. The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent and the non-controlling interests based on
their respective ownership interests.
Basis of consolidation
The consolidated financial statements include all of the companies controlled
by the Group, which are as follows:
Country of incorporation % voting rights and shares held
Entities Registered address Nature of the business
26 New Street, St Helier,
TruFin Holdings Limited ("THL") Jersey Jersey JE2 3RA Holding Company 100% of ordinary shares
Satago Financial Solutions Limited
("Satago") (together with Satago 120 Regent Street,
SPV 1, Satago SPV 2 and Satago London, United Kingdom, Provision of short term
Poland) ("Satago Group") UK W1B 5FE finance 72% of ordinary shares*
120 Regent Street,
London, United Kingdom, Provision of short term
Satago SPV 1 Limited ("Satago SPV 1") UK W1B 5FE finance 72% of ordinary shares*
120 Regent Street,
London, United Kingdom, Provision of short term
Satago SPV 2 Limited ("Satago SPV 2") UK W1B 5FE finance 72% of ordinary shares*
32-023 Krakow ul. Sw. Provision of short term
Satago z.o.o (Satago Poland) Poland Krzyza 19/6 Poland finance 72% of ordinary shares*
1st Floor Enterprise House,
Oxygen Finance Group Limited ("OFGL") 115 Edmund Street,
(together with OFL, BPL and OFAI) Birmingham, United
("Oxygen") UK Kingdom, B3 2HJ Holding Company 85% of ordinary shares**
1st Floor Enterprise House,
115 Edmund Street,
Birmingham, United Provision of early
Oxygen Finance Limited ("OFL") UK Kingdom, B3 2HJ payment services 85% of ordinary shares**
1st Floor Enterprise House,
115 Edmund Street,
Birmingham, United
Birmingham Procurement Limited ("BPL") UK Kingdom, B3 2HJ Not trading 85% of ordinary shares**
Corporation Trust Center,
1209 Orange Street, City
of Wilmington, County
of New Castle, Delaware Provision of early
Oxygen Finance Americas, Inc ("OFAI") USA 19801, USA payment services 85% of ordinary shares**
120 Regent Street,
London, United Kingdom, Provision of technology
TruFin Software Limited ("TSL") UK W1B 5FE services 100% of ordinary shares
120 Regent Street,
London, United Kingdom, Provision of short term
AltLending UK Limited ("AltLending") UK W1B 5FE finance 100% of ordinary shares
56a Poland Street,
London, United Kingdom, Publishing of computer
Playstack Limited ("Playstack")*** UK W1F 7NN games 100% of ordinary shares
56a Poland Street,
London, United Kingdom, Publishing of computer
Bandana Media Limited ("Bandana")*** UK W1F 7NN games 72% of ordinary shares
56a Poland Street,
London, United Kingdom, Business and domestic
PlayIgnite Ltd ("PlayIgnite")*** UK W1F 7NN software developer 100% of ordinary shares
Publishing activities in
Kamienna 21, 31-403 the field of computer
Playstack z.o.o ("PS Poland")*** Poland Krakow, Poland games 100% of ordinary shares
Publishing activities in
Mikonkatu 17 B, 00100 the field of computer
Playstack OY ("PS Finland")*** Finland Helsinki, Finland games 75% of ordinary shares
Country of incorporation % voting rights and shares held
Entities Registered address Nature of the business
Developing, publishing
Solbergavägen 17, 17998 and selling electronic
Playstack AB ("PS Sweden")*** Sweden Färentuna, Sweden games 100% of ordinary shares
Gust Delaware, 16192
Coastal Hwy, Lewes, Publishing of computer
Playstack Inc ("Playstack USA")*** USA DE 19958 games 100% of ordinary shares
Cogency Global Inc, 850
New Burton Road, Suite Business and domestic
PlayIgnite Inc ("PlayIgnite USA")*** USA 201, Dover DE 19904 software developer 100% of ordinary shares
5424 Sunol Blvd Ste 10
PMB 1021, Pleasanton, CA
Magic Fuel Inc ("Magic Fuel") USA 94566-7705 Game developer 100% of ordinary shares
* See Note 20 for the Group's effective economic ownership of the Satago
Group.
** Nominal ownership of these companies is 85% due to the Oxygen Management
Incentive Plan ("Oxygen MIP"). Effective economic ownership is 100% based on
their Statements of Financial Position at the Reporting Date.
*** The Playstack Group includes two associate companies incorporated in the
UK which have been accounted for using the equity method. These are:
· A 27% interest in Storm Chaser Games Limited ("Storm Chaser Games")
· A 49% interest in Snackbox Games Ltd
The Playstack Group included one associate company incorporated in the UK
which was dissolved in the year
· A 42% interest in Military Games International Limited (dissolved on 18
April 2023)
The Playstack Group disposed of its 49% interest in PlayFinder Games Ltd, an
associate company incorporated in the UK
On 4 October 2023, the Group disposed of its 54% ownership of Vertus Capital
Limited and Vertus SPV Limited (together "Vertus"). The results for Vertus up
to its disposal have been included within Discontinued operations, with
comparatives restated accordingly.
Principal accounting policies
The principal accounting policies adopted in the preparation of the financial
statements are set out below. These policies have been applied consistently to
all the financial periods presented.
The consolidated financial statements have been prepared in accordance with
European Union Endorsed International Financial Reporting Standards (IFRSs)
and the IFRS Interpretations Committee (formerly the International Financial
Reporting Interpretations Committee (IFRIC)) interpretations. These statements
have been prepared on a going concern basis and under the historical cost
convention except for the treatment of certain financial instruments.
Going concern
The directors have prepared and reviewed detailed financial forecasts of the
Group and, in particular, considered the cash flow requirements for the
period from the date of approval of these financial statements to the end of
June 2025. These forecasts sit within the Group's latest estimate and within
the longer-term financial plan, both of which have been updated on a regular
basis. The directors are also mindful of the impact that the other risks and
uncertainties set out on page 31 may have on these estimates and have
considered several scenarios based on revenue, cost and funding sensitivities.
As a consequence, the Directors have a reasonable expectation that the Group
will have adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the Directors have adopted the going concern
basis in preparing these financial statements.
Revenue recognition
Net revenue
Interest income and expense
Interest income and expense for all financial instruments except for those
classified as held for trading or measured or designated as at Fair Value
Through Profit and Loss ("FVTPL") are recognised in "Net revenue" as
"Interest income" and "Interest, fee and publishing expenses" in the profit
or loss account using the effective interest method.
The Effective Interest Rate ("EIR") is the rate that exactly discounts
estimated future cash flows of the financial instrument through the expected
life of the financial instrument or, where appropriate, a shorter period, to
the net carrying amount of the financial asset or financial liability. The
future cash flows are estimated taking into account all the contractual terms
of the instrument.
The calculation of the EIR includes all fees and points paid or received
between parties to the contract that are incremental and directly attributable
to the specific lending arrangement, transaction costs and all other premiums
or discounts.
The interest income/expense is calculated by applying the EIR to the gross
carrying amount of non-credit impaired financial assets (that is, to the
amortised cost of the financial asset before adjusting for any expected
credit loss allowance), or to the amortised cost of financial liabilities.
For credit-impaired financial assets, as defined in the financial
instruments accounting policy, the interest income is calculated by applying
the EIR to the amortised cost of the credit-impaired financial assets, that
is, to the gross carrying amount less the allowance for Expected Credit Losses
("ECLs").
Fee income
Fee income for the Group is earned from payments services fees, implementation
fees, consultancy fees and subscription fees.
Payment services provided by Oxygen comprises the following elements:
Early Payment Programme Services ("EPPS") contracts
Oxygen's EPPS generate rebates (ie discounts on invoice value) for its clients
by facilitating the early payment of supplier invoices. Oxygen's single
performance obligation is to make its intellectual property and software
platform available to its clients for the duration of their contracts.
Oxygen bills its clients monthly for a contractually agreed share of supplier
rebates generated by their respective Early Payment Programmes during the
previous month. This revenue is recognised in the month the rebates are
generated.
Implementation fees
Oxygen Implementation fees
Implementation fees are charged to some clients in establishing a client's
technological access to the EPPS and in otherwise readying a client to
benefit from the Services. Establishing access to the company's intellectual
property and software platform does not amount to a distinct service as the
client cannot benefit from the initial access except by the company
continuing to provide access for the contract period. Where an implementation
fee is charged, it is therefore a component of the aggregate transaction price
of the EPPS. Accordingly, such revenue is initially deferred and then
recognised in the statement of comprehensive income over the life of the
related EPPS.
Satago Implementation fees
Implementation fees are in line with contractual agreements and relate to
Lending as a Service projects.
Consultancy fees
Oxygen provides stand-alone advisory services to clients. Revenue is accrued
as the underlying services are provided to the client. Playstack earns revenue
where one or more people are billed directly to a client for the provision of
services.
Subscription fees
Insight services subscription fees
The Insight Services offered by OFL provide focussed public sector procurement
data and analytics on a subscription basis. Clients cover both the private
sector, enabling them to improve and develop their engagement with the public
sector, and public sector organisations, enabling them to make more informed
procurement decisions. Subscriptions are typically received in advance and
recognised over the length of the contract as access to the database is
provided.
Satago subscription fees
These are monthly fees for access to Satago's platform. Subscriptions are
received in advance and recognised during the month the subscription relates
to.
Fee expenses
Fee expenses are directly attributable costs, associated with the Oxygen's
EPPS. The expenses include amortisation arising from capitalised contract
costs incurred directly through activities which generate fee income.
Amortisation arising from other intangible assets is recognised in
depreciation and amortisation.
Publishing income
Publishing income for the Group is earned by companies in the Playstack Group
and comprises the following elements. Publishing income is recognised at the
fair value of consideration received or receivable for goods and services
provided and is shown net of VAT and any other sales taxes. The fair value
takes into account any trade or volume discounts and commission retained.
In App Purchases (IAP) revenue
IAP revenue is earned on the sale of mobile games and features within those
games. It is recognised when the game or feature is sold.
Advertising revenue
Advertising revenue is earnings from featuring third party advertising within
mobile games. It is recognised when these advertisements are featured within
the games.
Console and Platform revenue
Console revenue is earned on the sale of video games for consoles. It is
recognised when the game is sold. Platform revenue is earned through
partnership directly with hardware platform holders in return for exclusive
access to one or more games on their service.
Revenue is recognised either on the completion of agreed milestones, across
the term of the agreement for live-managed games, or a combination of the two.
Brand revenue
Brand revenue is when a mobile game player signs up to an advertised brand in
a mobile game. Revenue is recognised when the brand has confirmed acquisition
of the customer.
Publishing expenses
Publishing expenses are directly attributable costs, associated with the
Playstack Group's publishing income. These costs are included at their
invoiced value and are net of VAT and any other sales tax.
Foreign currencies
The results and financial position of each Group company are expressed in
Pounds Sterling, which is the functional currency of the UK based members of
the Group and the presentation currency for the consolidated financial
statements.
Transactions in foreign currencies are translated to the Group companies'
functional currency at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies
at the reporting date are retranslated to the functional currency at the
foreign exchange rate ruling at that date. Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction. Foreign
exchange differences arising on translation are recognised in the consolidated
statement of comprehensive income.
In preparing the consolidated financial statements, the assets and
liabilities of the Group's foreign operations are translated at the exchange
rate at the reporting date. Income and expense items are translated at the
average exchange rates for the year. Exchange differences arising, are
recognised in other comprehensive income and are accumulated in the Foreign
exchange reserve equity section.
Property, plant and equipment
All property, plant and equipment is stated at historical cost (or deemed
historical cost) less accumulated depreciation and less any identified
impairment. Cost includes the original purchase price of the asset and the
costs attributable to bringing the asset to its working condition for its
intended use.
Depreciation is provided on all property, plant and equipment at rates
calculated to write each asset down to its estimated residual value on a
straight line basis at the following annual rates:
Leasehold improvements - 5 years
Fixtures and fittings - 3 years
Computer equipment - 3 -5 years
Useful economic lives and estimated residual values are reviewed annually and
adjusted as appropriate.
Intangible assets
Identifiable intangible assets are recognised when the Group controls the
asset, it is probable that future economic benefits attributed to the asset
will flow to the Group and the cost of the asset can be reliably measured.
Intangible assets with finite lives are stated at acquisition or development
cost less accumulated amortisation and less any identified impairment. The
amortisation period and method is reviewed at least annually. Changes in the
expected useful life or the expected pattern of consumption of future economic
benefits embodied in the asset are accounted for by changing the amortisation
period or method, as appropriate and are treated as changes in accounting
estimates.
Computer software
Computer software which has been purchased by the Group from third party
vendors is measured at initial cost less accumulated amortisation and less
accumulated impairments.
Computer software also comprises internally developed platforms and the costs
directly associated with the production of these identifiable and unique
software products controlled by the Group. They are probable of producing
future economic benefits. They primarily include employee costs and directly
attributable overheads.
Internally generated intangible assets are only recognised by the Group when
the recognition criteria have been met in accordance with IAS 38: Intangible
Assets as follows:
· expenditure can be reliably measured
· the product or process is technically and commercially feasible
· future economic benefits are likely to be received
· intention and ability to complete the development, and
· view to either use or sell the asset in the future.
The Group will only recognise an internally-generated asset should it meet all
the above criteria. In the event of a development not meeting the criteria it
will be recognised within the statement of profit or loss in the period
incurred.
Capitalised costs include all directly attributable costs to the development
of the asset. Internally generated assets are measured at capitalised cost
less accumulated amortisation less accumulated impairment losses. The
internally generated asset is amortised at the point the asset is available
for use or sale. The asset is amortised on a straight-line basis over the
useful economic life with the remaining useful economic life and residual
value being assessed annually.
Any subsequent expenditure on the internally generated asset is only
capitalised if the cost increases the future economic benefits of the related
asset. Otherwise all additional expenditure should be recognised through the
statement of profit or loss in the period it occurs.
Contract assets
Contract assets comprise the directly attributable costs incurred at the
beginning of an Early Payment Scheme Service contract to revise a client's
existing payment systems and provide access to the Group's software and other
intellectual property. These implementation (or "set up") costs are comprised
primarily of employee costs.
Amortisation is charged to the statement of comprehensive income over the
estimated useful lives of intangible assets from the date they are available
for use, on a straight-line basis. The amortisation basis adopted for each
class of intangible asset reflects the Group's consumption of the economic
benefit from that asset.
Estimated useful lives
The estimated useful lives of finite intangible assets are as follows:
Computer software - 3 -5 years
Contract assets - Life of underlying contract (typically 5 years)
Goodwill
Goodwill arising on acquisition represents the excess cost of a business
combination over the fair values of the Group's share of the identifiable
assets and liabilities at the date of the acquisition. When part of the
consideration transferred by the Group is deferred or contingent, this is
valued at its acquisition date fair value, and is included in the
consideration transferred in a business combination. Changes in the deferred
or contingent consideration, which occur in the measurement period, are
adjusted retrospectively, with corresponding adjustments to goodwill.
Goodwill is not amortised but is reviewed at least annually for impairment.
For the purpose of impairment testing, goodwill is allocated to each Cash
Generating Unit ("CGU"). Each CGU is consistent with the Group's primary
reporting segment. Any impairment is recognised immediately through the income
statement and is not subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill is included
in the determination of profit or loss on disposal.
Financial instruments
Initial recognition
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or
issue of the financial assets and financial liabilities (other than
financial assets and financial liabilities at FVTPL) are respectively added
to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs that
are directly attributable to the acquisition of financial assets and
financial liabilities at FVTPL are recognised immediately in profit or loss.
Financial assets
Classification and reclassification of financial assets
Recognised financial assets within the scope of IFRS 9 are required to be
classified as subsequently measured at amortised cost, FVTOCI or FVTPL on the
basis of both the Group's business model for managing the financial assets
and the contractual cash flow characteristics of the financial assets.
Financial assets are reclassified if and only if, the business model under
which they are held is changed. There has been no such change in the
allocation of assets to business models in the periods under review.
Loans and advances
Loans and advances are held within a business model whose objective is to hold
those financial assets in order to collect contractual cash flows. The
contractual terms of the loan agreements give rise on specified dates to cash
flows that are solely payments of principal and interest or fees on the
principal amount outstanding.
After initial measurement, loans and advances to customers are subsequently
measured at amortised cost using the Effective Interest Rate method (EIR) less
impairment. Amortised cost is calculated by taking into account any fees or
costs that are an integral part of the EIR. The EIR amortisation is included
in interest and similar income in the statement of comprehensive income. The
losses arising from impairment are recognised in the statement of
comprehensive income and disclosed with any other similar losses within the
line item "Net impairment losses on financial assets".
Where cash flows are significantly different from the original expectations
used to determine EIR, but where this difference does not arise from a
modification of the terms of the financial instrument, the Group revises its
estimates of receipts and adjusts the gross carrying amount of the financial
asset to reflect actual and revised estimated contractual cash flows. The
Group recalculates the gross carrying amount of the financial asset as the
present value of the estimated future contractual cash flows discounted at
the financial instrument's original EIR. The adjustment is recognised in
statement of comprehensive income as income or expense.
Trade and other receivables
Trade receivables do not contain any significant financing component and
accordingly are recognised initially at transaction price, and subsequently
measured at cost less expected credit losses.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less impairment in the
Company's financial statements.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and demand deposits and short
term, highly liquid investments that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
Impairment
The Group (and Company) recognises loss allowances for Expected Credit Losses
("ECLs") on the following financial instruments that are not measured at
FVTPL:
· Loans and advances;
· Other receivables;
· Trade receivables; and
· Intercompany receivables
ECLs are measured through loss allowances calculated on the following bases:
ECLs are a probability-weighted estimate of the present value of credit
losses. These are measured as the present value of the difference between the
cash flows due to the Group under the contract and the cash flows that the
Group expects to receive arising from the weighting of future economic
scenarios, discounted at the asset's EIR within the current performing book.
The Group measures ECL on an individual basis, or on a collective basis for
portfolios of loans that share similar credit risk characteristics. The loss
allowance is measured as the present value of the difference between the
contractual cash flows and cash flows that the Group expects to receive
using the asset's original EIR, regardless of whether it is measured on an
individual basis or a collective basis.
A financial asset that gives rise to credit risk, is referred to (and
analysed in the notes to this financial information) as being in "Stage 1"
provided that since initial recognition (or since the previous reporting date)
there has not been a significant increase in credit risk, nor has it has
become credit impaired.
For a Stage 1 asset, the loss allowance is the "12-month ECL", that is, the
ECL that results from those default events on the financial instrument that
are possible within 12 months from the reporting date.
A financial asset that gives rise to credit risk is referred to (and analysed
in the notes to this financial information) as being in "Stage 2" if since
initial recognition there has been a significant increase in credit risk but
it is not credit impaired.
For a Stage 2 asset, the loss allowance is the "lifetime ECL", that is, the
ECL that results from all possible default events over the life of the
financial instrument.
A financial asset that gives rise to credit risk is referred to (and analysed
in the notes to this financial information) as being in "Stage 3" if since
initial recognition it has become credit impaired.
For a Stage 3 asset, the loss allowance is the difference between the asset's
gross carrying amount and the present value of estimated future cash flows
discounted at the financial asset's original EIR. Further, the recognition of
interest income is calculated on the carrying amount net of impairment rather
than the gross carrying amount as for stage 1 and stage 2 assets.
If circumstances change sufficiently at subsequent reporting dates, an asset
is referred to by its newly appropriate Stage and is re-analysed in the notes
to the financial information.
Where an asset is expected to mature in 12 months or less, the "12 month ECL"
and the "lifetime ECL" have the same effective meaning and accordingly for
such assets the calculated loss allowance will be the same whether such an
asset is at Stage 1 or Stage 2. However, the Group monitors significant
increase in credit risk for all assets so that it can accurately disclose
Stage 1 and Stage 2 assets at each reporting date.
Lifetime ECLs are recognised for all trade receivables using the simplified
approach.
Significant increase in credit risk -policies and procedures for identifying
Stage 2 assets
The Group compares the risk of a default occurring on the financial
instrument as at the reporting date with the risk of a default occurring on
the financial instrument as at the date of initial recognition in order to
determine whether credit risk has increased significantly.
See Note 19 for further details about how the Group assesses increases in
significant credit risk.
Definition of a default
Critical to the determination of significant increases in credit risk (and to
the determination of ECLs) is the definition of default. Default is a
component of the Probability of Default ("PD"), changes in which lead to the
identification of a significant increase in credit risk and PD is then a
factor in the measurement of ECLs.
The Group's definition of default for this purpose is:
· a counterparty defaults on a payment due under a loan agreement
and that payment is more than 90 days overdue, or
· within the core invoice finance proposition, where one or more
individual finance repayments are beyond 90 days overdue, management
judgement is applied in considering default status of the client.
· the collateral that secures, all or in part, the loan agreement
has been sold or is otherwise not available for sale and the proceeds have not
been paid to the lending company; or
· a counterparty commits an event of default under the terms and
conditions of the loan agreement which leads the lending company to believe
that the borrower's ability to meet its credit obligations to the lending
company is in doubt.
The definition of default is similarly critical in the determination of
whether an asset is credit-impaired (as explained below).
Credit-impaired financial assets -policies and procedures for identifying
Stage 3 assets
A financial asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset
have occurred. IFRS 9 states that evidence of credit-impairment includes
observable data about the following events:
· Significant financial difficulty of the borrower;
· A breach of contract such as a default (as defined above) or
past due event, or
· The Group, for economic or contractual reasons relating to the
borrower's financial difficulty, having granted to the borrower a concession
that the Group would not otherwise consider.
The Group assesses whether debt instruments that are financial assets
measured at amortised cost or at FVTOCI are credit-impaired at each reporting
date. When assessing whether there is evidence of credit-impairment, the Group
takes into account both qualitative and quantitative indicators relating to
both the borrower and to the asset. The information assessed depends on the
borrower and the type of the asset. It may not be possible to identify a
single discrete event - instead, the combined effect of several events may
have caused financial assets to become credit-impaired.
See Note 19 for further details about how the Group identifies
credit-impaired assets.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for ECL are presented in the statement of financial position
as follows:
· For financial assets measured at amortised cost: as a deduction
from the gross carrying amount of the assets;
· For loan commitments: as a provision; and
Modification of financial assets
A modification of a financial asset occurs when the contractual terms
governing a financial asset are renegotiated without the original contract
being replaced and derecognised and:
· The gross carrying amount of the asset is recalculated and a
modification gain or loss is recognised in profit or loss;
· Any fees charged are added to the asset and amortised over the
new expected life of the asset; and
· The asset is individually assessed to determine whether there has
been a significant increase in credit risk.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is derecognised when the rights to
receive cash flows from the asset have expired. The Group also derecognises
the assets if it has both transferred the asset and the transfer qualifies
for derecognition.
A transfer only qualifies for derecognition if either
The Group has transferred substantially all the risks and rewards of the
asset; or
The Group has neither transferred nor retained substantially all the risks and
rewards of the asset but has transferred control of the asset.
Write offs
Loans and advances are written off when the Group has no reasonable
expectation of recovering the financial asset (either in its entirety or a
portion of it). This is the case when the Group determines that the borrower
does not have assets or sources of income that could generate sufficient cash
flows to repay the amounts subject to the write-off. A write-off constitutes
a derecognition event. The Group may apply enforcement activities to
financial assets written off. Recoveries resulting from the Group's
enforcement activities will result in impairment gains.
Financial liabilities
Financial liabilities and equity
Debt and equity instruments that are issued are classified as either
financial liabilities or as equity in accordance with the substance of the
contractual arrangement.
A financial liability is a contractual obligation to deliver cash or another
financial asset or to exchange financial assets or financial liabilities
with another entity under conditions that are potentially unfavourable to the
Group or a non-derivative contract that will or may be settled in a variable
number of the Group's own equity instruments, or a derivative contract over
own equity that will or may be settled other than by the exchange of a fixed
amount of cash (or another financial asset) for a fixed number of the
Group's own equity instruments.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Group are recognised as at the proceeds received, net of direct
issue costs. Distributions on equity instruments are recognised directly in
equity.
Financial liabilities
Interest bearing borrowings are measured at amortised cost using the effective
interest rate method. Gains and losses are recognised in the income statement
when the liabilities are derecognised as well as through the effective
interest rate method (EIR). Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included in "Interest and
fee expenses" in the profit and loss account.
Derecognition of financial liabilities
The Group derecognises financial liabilities when and only when, the Group's
obligations are discharged, cancelled or they expire.
Impairment of non-financial assets
The carrying amounts of the entity's non-financial assets, other than
goodwill and deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such
indication exists, then the asset's recoverable amount is estimated. The
recoverable amount of an asset or CGU is the greater of its value in use and
its fair value less costs to sell. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
For the purposes of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of
the cash inflows of other assets or groups of assets (the CGU).
Contract assets are reviewed for impairment based on the performance of the
underlying contract.
Goodwill is tested annually for impairment in accordance with IFRS. The
goodwill acquired in a business combination, for the purpose of impairment
testing is allocated to CGU that are expected to benefit from the synergies
of the combination. For the purpose of goodwill impairment testing, if
goodwill cannot be allocated to individual CGUs or groups of CGUs on a
non-arbitrary basis, the impairment of goodwill is determined using the
recoverable amount of the acquired entity in its entirety, or if the acquired
entity has been integrated then the entire group of entities into which it has
been integrated.
An impairment loss is recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. Impairment losses are recognised in
the statement of comprehensive income. Impairment losses recognised in respect
of CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amounts of other assets
in the unit (or group of units) on a pro rata basis.
An impairment loss is reversed if and only if the reasons for the impairment
have ceased to apply. An impairment loss recognised for goodwill is not
reversed.
Impairment losses recognised in prior periods are assessed at each reporting
date for any indication that the loss has decreased or no longer exists. An
impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been
recognised.
Current and deferred income tax
Income tax on the result for the period comprises current and deferred income
tax. Income tax is recognised in the consolidated statement of comprehensive
income except to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity. Where there are uncertain
tax positions, the Group assesses whether it is probable that the position
adopted in tax filings will be accepted by the relevant tax authority, with
the results of this assessment determining the accounting that follows.
Current tax is the expected tax payable or receivable on the taxable income
for the period, using tax rates enacted or substantively enacted at the
reporting date and any adjustment to tax payable in respect of previous
periods.
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for
taxation purposes. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the
reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Employee benefits - pension costs
A defined contribution plan is a post-employment benefit plan under which
the Group pays fixed contributions into a separate entity and will have no
legal or constructive obligation to pay further amounts. Contributions to
defined contribution schemes are charged to the statement of comprehensive
income as they become payable in accordance with the rules of the scheme.
Differences between contributions payable in the year and contributions
actually paid are shown as either accruals or prepayments in the statement of
financial position.
Merger reserve
Prior to 29 December 2017, the entities within the Group were held by
Arrowgrass Master Fund Limited. On 29 December 2017, these entities were
acquired by TruFin plc via TruFin Holdings Limited. The consideration provided
to Arrowgrass for the companies acquired was in exchange for shares of TruFin
plc based on the fair value of the underlying companies. Upon consolidation of
the Group, the difference between the book value of the entities and the
amount of the consideration paid was accounted through a merger reserve, in
accordance with relevant accounting standards relating to businesses under
common control.
Investments in associates
Associates are entities in which the Group has between 20% and 50% of the
voting rights, or is otherwise able to exercise significant influence, but
which it does not control or jointly control. Investments in associates are
accounted for under the equity method and are initially recognised at costs,
including goodwill. Subsequent changes in the carrying value reflect the
post-acquisition changes in the Group's share of net assets of the associate.
The Group's share of its associates profits or losses is recognised in the
consolidated income statement. However, when the Group's share of losses in an
associate equals or exceeds its interest in the associate, the Group does not
recognise further losses, unless the Group is obliged to make further payments
to, or on behalf of the associate.
Segmental reporting
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses (including
revenues and expenses relating to transactions with other components of the
same entity) and whose operating results are regularly reviewed by the Board
of Directors in order to make decisions about resources to be allocated to
that component and assess its performance and for which discrete financial
information is available.
For the purposes of the financial statements, the Directors consider the
Group's operations to be made up of four operating segments: the provision of
short term finance, payment services, publishing and other operations.
The accounting policies of the reportable segments are consistent with the
accounting policies of the Group as a whole.
Further details are provided in Note 4.
Share based payments
Where the Group engages in share-based payment transactions in respect of
services received from certain of its employees, these are accounted for as
equity-settled share-based payments in accordance with IFRS 2 'Share-based
payments'. The equity is in the form of ordinary shares.
The grant date fair value of a share-based payment transaction is recognised
as an employee expense, with a corresponding increase in equity over the
period that the employees become unconditionally entitled to the awards. In
the absence of market prices, the fair value of the equity at the date of the
grant is estimated using an appropriate valuation technique.
The amount recognised as an expense is adjusted to reflect the actual number
of awards for which the related services and
non-market vesting conditions are expected to be met such that the amount
ultimately recognised as an expense is based on the number of awards that do
meet the related service and non-market performance conditions at the vesting
date.
For share-based payment awards with market performance conditions the grant
date fair value of the award is measured to reflect such conditions and there
is no true-up for differences between expected and actual outcomes.
Refer to Note 6 for the amounts disclosed.
Leases
At the inception of a contract, the Group assesses if the contract contains a
lease. A contract contains a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for
consideration. Reassessment is only required when the terms and conditions of
the contract are changed.
Right-of-use assets
The Group recognises a right-of-use asset and lease liability at the date
which the underlying asset is available for use. Right-of-use assets are
measured at cost which comprises the initial measurement of lease liabilities
adjusted for any lease payments made at or before the commencement date and
lease incentives received. Any initial direct costs that would not have been
incurred if the lease had not been obtained are added to the carrying amount
of the right-of-use assets.
These right-of-use assets are subsequently depreciated using the straight-line
method from the commencement date to the earlier of the end of the useful life
of the right-of-use asset or the end of the lease term.
Right-of-use assets (except for those which meet the definition of an
investment property) are presented within "Property, plant and equipment".
Right of use assets which meet the definition of property, plant and
equipment are presented and accounted for in accordance with this policy.
Lease liabilities
The initial measurement of a lease liability is measured at the present value
of the lease payments discounted using the interest rate implicit in the
lease, if the rate can be readily determined. If that rate cannot be readily
determined, the borrower shall use its incremental borrowing rate.
Lease liabilities are measured at amortised cost using the effective interest
method.
Lease liabilities are remeasured with a corresponding adjustment to the
right-of-use asset, or is recorded in profit or loss if the carrying amount
of the right-of-use asset has been reduced to zero.
Short term and low value leases
The Group has elected to not recognise right-of-use assets and lease
liabilities for short-term leases that have lease terms of 12 months or less
and leases of low value leases. Lease payments relating to these leases are
expensed to profit or loss on a straight-line basis over the lease term.
Government grants
Government grants are not recognised until there is reasonable assurance that
the Group will comply with the conditions attaching to them and that the
grants will be received.
Government grants that are receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate financial support to
the Group with no future related costs are recognised in profit or loss in
the period in which they become receivable. These grants are deducted from the
expense that the grant is related to.
2. Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial information in accordance with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and reported amounts of assets and
liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apart
from other sources. The estimates and underlying assumptions are reviewed on
an ongoing basis. Actual results may differ from these estimates.
The following are the critical judgements, apart from those involving
estimations (which are dealt with separately below), that the directors have
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in financial
statements.
Critical accounting judgements
· Early Payment Programme Services set up costs: the Group
capitalises the direct costs of implementing Early Payment Programme Services
contracts for clients. These costs are essential to the satisfaction of the
Group's performance obligation under that contract and accordingly the Group
considers that these costs meet the applicable criteria for recognition as
contract assets.
The amount capitalised is disclosed in Note 11.
· Deferred tax asset: There is inherent uncertainty in forecasting
beyond the immediate future and significant judgement is required to estimate
whether future taxable profits are probable in order to utilise the carried
forward tax losses. Companies in the Group have carried forward losses which
will be utilised against future taxable profits. However, a deferred tax
asset has not been recognised for these companies, except for Oxygen Finance
Limited as there is uncertainty surrounding the timing of when these losses
will be used.
Refer to Note 9 for more information on the deferred tax asset.
· The accounts of the trustee (the "EBT Trustee") of the Company's
Employee Benefit Trust ("EBT") have not been consolidated as it is the
Directors' opinion that the Company does not have control over the EBT. The
EBT is a discretionary trust, which means that the EBT Trustee has discretion
how to act, provided that the action taken by the EBT Trustee is considered by
the EBT Trustee to be in the interest of one of more EBT beneficiaries (being
employees and former employees (and certain of their relatives) of the Company
and its subsidiaries.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting period that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below:
Expected credit losses
· Where an asset has a maturity of 12 months or less, the "12 month
ECL" and the "lifetime ECL" have the same effective meaning and accordingly
for such assets the calculated loss allowance will be the same whether such an
asset is at stage 1 or stage 2.
· The Probability of Default ("PD") is an estimate of the
likelihood of default over a given time horizon and is a key input to the ECL
calculation. The Group primarily uses credit scores from credit reference
agencies to calculate the PD for loans and advances. The score is a 12-month
predictor of credit failure and, in the absence of internally generated loss
history, the Group believes that it provides the best proxy for the credit
quality of the loan portfolio.
· Exposure At Default ("EAD") is an estimate of the exposure at a
future default date, taking into account expected changes in the exposure
after the reporting date, including repayments of principal and interest,
whether scheduled by contract or otherwise, expected drawdowns on committed
facilities and accrued interest from missed payments.
· Loss Given Default ("LGD") is an estimate of the loss arising on
default. It is based on the difference between the contractual cash flows due
and those that the lender would expect to receive, in particular taking into
account wholesale collateral values and certain buy back options.
Note 19 presents the carrying amounts of the Expected Credit Losses in further
detail.
Impairment of Intangibles
The Group is required to test, whether intangible and tangible assets have
suffered any impairment based on the recoverable amount of its CGUs, when
there are indicators for impairment. Determining whether an impairment has
occurred requires an estimation of the value in use of the CGU to which these
assets are allocated. Key sources of estimation uncertainty in the value in
use calculation include the estimation of future cash flows of the CGU
affected by expected changes in underlying revenues and direct costs, and
administration costs through the forecast period, the long-term growth rates
and a suitable discount rate to apply to the aforementioned cash flows in
order to calculate the net present value. Further information regarding the
assumptions used in the calculations have been provided in Note 11.
Impairment of investment in subsidiary
The Company's investment in its subsidiary is assessed annually to determine
if there is any indication of impairment. This requires an estimation of the
value in use of this subsidiary. Key sources of estimation uncertainty in the
value in use calculation include the estimation of future cash flows of the
CGU affected by expected changes in underlying revenues and direct costs, and
administration costs through the forecast period, the long-term growth rates
and a suitable discount rate to apply to the aforementioned cash flows in
order to calculate the net present value. Further information regarding the
assumptions used in the calculations have been provided in Note 11.
3. Gross revenue
2023 2022
Group £'000 £'000
Revenue
Interest income 1,470 405
Total interest income 1,470 405
EPPS contracts 4,346 3,335
Consultancy fees 1,135 552
Implementation fees 2,131 1,644
Subscription fees 1,736 1,607
Total fee income 9,348 7,138
IAP revenue 117 342
Advertising revenue 109 453
Console revenue 7,087 5,521
Brand revenue - 1
Total publishing income 7,313 6,317
Gross revenue 18,131 13,860
The above figures are from continuing activities with comparatives restated
accordingly based on information drawn from prior financial statements.
2023 2022
Company £'000 £'000
Intercompany interest income 1,540 2,166
Intercompany fee income 108 118
Other interest income 117 9
Gross revenue 1,765 2,293
4. Segmental reporting
The results of the Group are broken down into segments based on the products
and services from which it derives its revenue:
Short term finance
Provision of distribution finance products and invoice discounting. For
results during the reporting period, this corresponds to the results of
Satago, Vertus and AltLending.
Payment services
Provision of Early Payment Programme Services. For results during the
reporting period, this corresponds to the results of Oxygen.
Publishing
Publishing of video games. For results during the reporting period, this
corresponds to the results of the Playstack Group.
Other
Revenue and costs arising from investment activities. For results during the
reporting period, this corresponds to the results of TSL, THL and TruFin plc.
The results of each segment, prepared using accounting policies consistent
with those of the Group as a whole, are as follows:
Short term Payment services
finance £'000 Publishing Other Total
Year ended 31 December 2023 £'000 £'000 £'000 £'000
Gross revenue 3,788 6,188 8,038 117 18,131
Cost of sales (718) (1,078) (3,231) - (5,027)
Net revenue 3,070 5,110 4,807 117 13,104
Adjusted loss before tax* (4,134) (348) (188) (1,903) (6,573)
Loss before tax (4,134) (348) (188) (2,669) (7,339)
Taxation 433 554 (25) - 962
Loss for the year from continuing operations (3,701) 206 (213) (2,669) (6,377)
Loss for the year from discontinued operations (963) - - - (963)
(Loss)/profit for the year (4,664) 206 (213) (2,669) (7,340)
Total assets 13,797 8,121 23,463 5,295 50,676
Total liabilities (8,228) (1,988) (1,786) (734) (12,736)
Net assets 5,569 6,133 21,677 4,561 37,940
* adjusted loss before tax excludes share-based payment expense
Short term Payment services
finance Publishing Other Total
Year ended 31 December 2022 £'000 £'000 £'000 £'000 £'000
Gross revenue 2,210 5,311 6,330 9 13,860
Cost of sales (285) (889) (3,033) - (4,207)
Net revenue 1,925 4,422 3,297 9 9,653
Adjusted loss before tax* (4,041) (220) (1,569) (2,352) (8,182)
Loss before tax (4,041) (220) (1,569) (2,352) (8,182)
Taxation 271 395 601 - 1,267
Loss for the year from continuing operations (3,770) 175 (968) (2,352) (6,915)
Profit for the year from discontinued operations 109 - - - 109
(Loss)/profit for the year (3,661) 175 (968) (2,352) (6,806)
Total assets 34,200 8,258 20,407 2,627 65,492
Total liabilities (19,747) (1,792) (2,911) (938) (25,388)
Net assets 14,453 6,466 17,496 1,689 40,104
* adjusted loss before tax excludes share-based payment
expense
The above figures are from continuing activities with comparatives restated
accordingly based on information drawn from prior financial statements.
The majority of the Group's activities (98% of revenues) are within the UK,
with 2% earned in USA and 0% in Europe.
5. Staff costs
Analysis of staff costs:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Wages and salaries 9,188 9,506 1, 223 1,384
Consulting costs 1,059 379 - -
Social security costs 1,104 1,338 82 251
Pension costs arising on defined contribution schemes 441 418 35 38
Share based payment 766 - 766 -
12,558 11,641 2,106 1,673
Consulting costs are recognised within staff costs where the work performed
would otherwise have been performed by employees. Consulting costs arising
from the performance of other services are included within other operating
expenses.
Average monthly number of persons (including Executive Directors) employed:
2023 2022
Number Number
Management 16 16
Finance 11 9
Sales & marketing 42 28
Operations 57 76
Technology 65 43
191 172
The figures in this note are from continuing activities with comparatives
restated accordingly based on information drawn from prior period financial
statements.
Directors' emoluments
The number of directors who received share options during the year was as
follows:
2023 2022
Number Number
Long-term incentive schemes 1 -
There were no directors who exercised share options during the year.
The directors' aggregate emoluments in respect of qualifying services were:
Pension and Benefits 2023 2022
Salary Bonus £'000 Total Total
£'000 £'000 £'000 £'000
Executive Directors:
J van den Bergh 256 220 9 485 485
256 220 9 485 485
Non-executive
Directors:
S Baldwin 100 - - 100 100
P Judd 70 - - 70 70
P Dentskevich 60 - - 60 60
A Wilhelmsen - - - - -
230 - - 230 230
Key management
The Directors consider that key management personnel include the Executive
Director of TruFin plc. This individual has the authority and responsibility
for planning, directing and controlling the activities of the Group.
6. Employee share-based payment transactions
The employment share-based payment charge comprises:
2023 2022
£'000 £'000
Service Criteria Award 552 -
TruFin Share Price Award 151 -
Subsidiary Performance Award 63 -
Total 766 -
Awards granted in 2023
Service Criteria Award
On 27 July 2023, options to acquire 1,350,000 shares were granted to the
senior management team and employees of the Group. The award is structured as
a nil cost option. The vesting of this award is subject to the holder being in
continued employment until the vesting dates of this award. The award has been
granted in 3 tranches; the first tranche vested on 31 December 2023, the
second and third will vest on 31 December 2024 and 31 December 2025
respectively. Awards granted to the Group CEO are subject to an additional 1
year holding period. A Black-Scholes model was used to determine the fair
value of these options. The model used an expected volatility of 50% and risk
free rate of 5%.
TruFin Share Price Award
On 27 July 2023, options to acquire 1,229,167 shares were granted to the
senior management team and employees of the Group. The award is structured as
a nil cost option. The vesting of this award is subject to the holder being in
continued employment until the vesting dates of this award, and the Company's
share price satisfying share price targets in relation to the other companies
listed on AIM . The award has been granted in 2 tranches; the first tranche
will vest on 31 December 2024 and the second on 31 December 2025. Awards
granted to the Group CEO are subject to an additional 1 year holding period. A
Monte Carlo simulation was used to determine the fair value of these options.
The model used an expected volatility of 50% and a risk free rate of 5%.
Subsidiary Performance Award
On 27 July 2023, options to acquire 537,500 shares were granted to employees
of the Group. The award is structured as a nil cost option. The vesting of
this award is subject to the holder being in continued employment until the
vesting dates of this award, and subsidiary companies achieving certain
financial metrics over the vesting periods. The award has been granted in 2
tranches; the first tranche will vest on 31 December 2024 and the second will
vest on 31 December 2025. At 31 December 2023, 75% of the award is expected to
vest based on the latest performance metrics.
Awards granted before 2023
Performance Share Plan and Joint Share Ownership Plan Founder Award ("Founder
Award")
All the Founder Awards held by the Group CEO have vested. 1,566,255 shares
subject to the Joint Share Ownership Plan are fully owned by the EBT. The
Group CEO's nil cost options in respect of the same number of shares under the
Performance Share Plan have also fully vested.
Performance Share Plan Market Value Award ("PSP Market Value Award")
On 21 February 2018, options to acquire 4,868,420 shares were granted to the
senior management team. The vesting of this award is based on market-based
performance conditions. The vesting of these awards is subject to the holder
remaining an employee of the Company and the Company's share price achieving
five distinct milestones -vesting at 20% each milestone. The exercise price
of the awards at the time of grant was £1.90 per share.
In order to reflect the impact of the demerger, the PSP Market Value Award
was split into two:
· Part of the award remained as an option in respect of TruFin
shares ("TruFin Market Value Award")
· Part of the award became an award in respect of DFC shares ("DFC
market Value Award")
The TruFin Market Value Award is on the same terms as the original PSP Market
Value Award except that the exercise price has since been adjusted to £0.71,
and the share price milestones were adjusted to reflect the demerger, and
returns of value in 2019.
The modification did not result in a change in the valuation of the award and
was recognised over the remainder of the original vesting period.
Details of share based awards during the year:
JSOP Founder PSP Founder PSP Market
Type of instrument granted Award* Shares (#) Award* Options (#) Value Options (#)
Outstanding at 1 January 2023 - - 4,868,420
Granted during the year - - -
Exercised during the year - - -
Outstanding at 31 December 2023 - - 4,868,420
Exercisable at 31 December 2023 1,566,255 -
* The JSOP Founder Awards and PSP Founder Awards will together deliver, in
aggregate, a maximum of 3,407,895 TruFin shares.
Subsidiary Performance
Service TruFin Share
Type of instrument granted Criteria Award (#) Price Award (#) Award (#)
Outstanding at 1 January 2023 - - -
Granted during the year 1,350,000 1,229,167 537,500
Exercised during the year - - -
Cancelled during the year - - -
Outstanding at 31 December 2023 700,000 1,229,167 537,500
Exercisable at 31 December 2023 650,000 - -
No options expired during the year.
The weighted average remaining contractual life for the share options
outstanding as at 31 December 2023 was 5.61 years (2022: 5.21 years).
7. Net impairment loss on financial assets
2023 2022
£'000 £'000
At 1 January 54 4
Charge for impairment loss 109 50
Amounts written off in the year (11) -
Amounts recovered in the year 21 -
At 31 December 173 54
At 31 December 2023, the Group had an impairment balance of £173,000 which
was allocated against loans and advances. At 31 December 2022, all of the
impairment balance was allocated against loans and advances.
The net impairment charge on financial assets during the year ended 31
December 2023 all related to loans and advances.
The net impairment charge on financial assets during the year ended 31
December 2022 all related to loans and advances.
8. Loss before income tax
Loss before income tax is stated after charging:
2023 2022
£'000 £'000
Depreciation of property, plant and equipment 107 104
Amortisation of intangible assets 2,893 2,314
Staff costs including share based payments charge 12,558 11,641
The figures in this note are from continuing activities with comparatives
restated accordingly based on information drawn from prior period financial
statements.
2023 2022
Fees payable to the Group's auditor (Crowe UK LLP) £'000 £'000
Fees payable for the audit of the company's annual accounts 82 82
Fees payable for the audit of the company's subsidiaries 95 98
Total audit fees 177 180
Non audit services
Other assurance services 14 14
Total non-audit fees 14 14
9. Taxation
Analysis of tax charge recognised in the period
2023 2022
£'000 £'000
Current tax credit (712) (1,267)
Deferred tax credit (250) -
Total tax credit (962) (1,267)
The figures in this note are from continuing activities with comparatives
restated accordingly based on information drawn from prior period financial
statements.
Reconciliation of loss before tax to total tax credit recognised
2023 2022
Group £'000 £'000
Loss before tax from continuing operations (7,339) (8,182)
Loss before tax multiplied by the standard rate of corporation tax in the UK (1,726) (1,553)
of 23.52% (2022: 19%)
Tax effect of:
Expenses not deductible 176 4
Depreciation in excess of capital allowances 395 253
Capital allowances (373) (318)
Other short term timing differences 1 1
R&D tax credit (743) (1.274)
Impact of different foreign tax rates (7) -
Deferred tax not recognised 1,315 1,619
Total tax charge (962) (1,267)
2023 2022
Company £'000 £'000
Loss before tax (984) (42)
Loss before tax multiplied by the standard rate of corporation tax in the UK (231) (8)
of 23.52% (2022: 19%)
Tax effect of:
Expenses not deductible 198 24
Other short term timing differences 1 (1)
Brought forward losses utilised - (15)
Deferred tax not recognised 32 -
Total tax charge - -
The deferred tax assets and liabilities at 31 December 2023 have been based on
the rates substantively enacted at the reporting date. Taxation for other
jurisdictions is calculated at the rates prevailing in the respective
jurisdictions.
Research and Development (R&D)
The Group uses external professional advisers to support with R&D tax
submissions. The impact of such transactions can be uncertain until agreed
with the relevant tax authorities.
Deferred tax asset
2023 2022
Group £'000 £'000
Balance at start of the year 250 250
Credit to the statement of comprehensive income 250 -
On disposal of subsidiary (250) -
Credit from discontinued operations - (53)
Balance at end of the year 250 250
Comprised of: Losses 250 250
Total deferred tax asset 250 250
A deferred tax asset from losses in Oxygen Finance Limited has been
recognised. Unutilised tax losses in the remainder of the Group as at the
reporting date were £88,928,000 (2022: £83,102,000).
10. Discontinued operations
On 4 October 2023, the Group disposed of its 54% holding in Vertus and is
reported in the current period as a discontinued operation. Financial
information relating to the disposal of the subsidiary and discontinued
operations for the period to the date of disposal is set out below.
Details of the sale of the subsidiary £'000
Cash consideration 3,167
Group's share of net assets sold (3,055)
Related goodwill and separately identifiable assets at date of disposal (1,451)
Costs of disposal (20)
Loss on disposal (1,359)
2023 2022
Results from discontinued operations £'000 £'000
Revenue 2,385 2,259
Expenses (1,935) (2,056)
Profit before tax 450 203
Taxation (23) (53)
Profit after tax 427 150
Other items included within discontinued operations
Loss on disposal of Vertus (net of tax) (1,359) -
Amortisation of separately identifiable intangible asset (38) (51)
Intragroup charges 7 10
(Loss)/profit from discontinued operations (963) 109
2023 2022
Cash flows from discontinued operations £'000 £'000
Profit before tax from discontinued operations 450 203
Working capital adjustments (1,901) (5,492)
Cash flows from operating activities (1,451) (5,289)
Cash flows used in investing activities - (80)
Cash flows from financing activities 1,650 5,425
Net increase in cash from discontinued operations 199 56
The carrying amount of assets and liabilities as at the date of sale were:
£'000
Non-current assets 23,612
Current assets 996
Non-current liabilities (18,651)
Current liabilities (283)
Net Assets 5,674
Software licences and Separately identifiable intangible
similar assets
Client contracts assets
Goodwill Total
Group £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2023 6,399 4,773 3,237 16,569 30,978
Additions 852 4,148 333 119 5,452
On disposal of subsidiary - (74) (255) (1,408) (1,737)
Disposals (182) - - - (182)
Exchange differences (3) 5 - - 2
At 31 December 2023 7,066 8,852 3,315 15,280 34,513
Amortisation
At 1 January 2023 (2,496) (2,082) (1,581) - (6,159)
Charge (1,078) (1,334) (519) - (2,931)
On disposal of subsidiary - 12 213 - 225
Disposals 182 - - - 182
Exchange differences - (5) - - (5)
At 31 December 2023 (3,392) (3,409) (1,887) - (8,688)
Accumulated impairment losses
At 1 January 2023 (408) - - - (408)
At 31 December 2023 (408) - - - (408)
Net book value
At 31 December 2023 3,266 5,443 1,428 15,280 25,417
At 31 December 2022 3,495 2,691 1,656 16,569 24,411
11. Intangible assets
Software licences and Separately identifiable intangible
Client contracts similar assets
assets Goodwill Total
Group £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2022 5,490 2,579 1,642 15,746 25,457
Additions 905 2,254 - - 3,159
On Acquisition - 3 1,595 823 2,421
Disposals - (75) - - (75)
Exchange differences 4 12 - - 16
At 31 December 2022 6,399 4,773 3,237 16,569 30,978
Amortisation
At 1 January 2022 (1,607) (1,181) (1,070) - (3,858)
Charge (889) (977) (511) - (2,377)
Disposals - 75 - - 75
Exchange differences - 1 - - 1
At 31 December 2022 (2,496) (2,082) (1,581) - (6,159)
Accumulated impairment losses
At 1 January 2022 (408) - - - (408)
At 31 December 2022 (408) - - - (408)
Net book value
At 31 December 2022 3,495 2,691 1,656 16,569 24,411
At 31 December 2021 3,475 1,398 572 15,746 21,191
The Company had no intangibles assets at the year end.
Client contracts comprise the directly attributable costs incurred at the
beginning of an Early Payment Scheme Service contract to revise a client's
existing payment systems and provide access to the Group's software and other
intellectual property. These implementation costs are comprised primarily of
employee costs.
The useful economic life for each individual asset is deemed to be the term of
the underlying Client Contract (generally five years) which has been deemed
appropriate and for impairment review purposes, projected cash flows have
been discounted over this period.
The amortisation charge is recognised in fee expenses within the statement of
comprehensive income, as these costs are incurred directly through activities
which generate fee income.
The Group performed an impairment review at 31 December 2023 and there was no
impairment in relation to underperforming contracts.
Software, licences and similar assets comprises separately acquired software,
as well as costs directly attributable to internally developed platforms
across the Group. These directly attributable costs are associated with the
production of identifiable and unique software products controlled by the
Group and are probable of producing future economic benefits. They primarily
include employee costs and directly attributable overheads.
A useful economic life of three to five years has been deemed appropriate and
for impairment review purposes projected cash flows have been discounted over
this period.
The amortisation charge is recognised in depreciation and amortisation on
non-financial assets within the statement of comprehensive income.
The Group performed an impairment review at 31 December 2023 and concluded no
impairment was required.
The 'Software, licences and similar assets' net book value balance related to
internally generated intangible assets at 31 December 2023 was £5,443,000
(2022: £2,691,000 ). This consists of cost of £8,852,000 (2022: £4,773,000)
and accumulated amortisation of
£3,409,000 (2022: £2,082,000 ). During the year there were additions of
£4,148,000 (2022: £2,254,000) and amortisation of
£1,334,000 (2022: £977,000).
Goodwill and "Separately identifiable intangible assets" arise from
acquisitions made by the Group.
Porge (now Insight Services within OFL)
Porge was acquired by OFGL in August 2018 and goodwill of £2,759,000 that
arose from this acquisition was included within the payments services segment
of the Group. Following the acquisition, separately identifiable intangible
assets of £1,387,000 primarily relating to the value of the contracts in the
business at acquisition were recognised. These were amortised over five years
resulting in an amortisation charge of £162,000 (2022: £277,000) during the
year. Net Book value of these assets at 31 December 2023 was £nil (2022:
£162,000). Goodwill related to this transaction excluding these assets at 31
December 2023 was £1,372,000 (2022: £1,372,000).
On 31 August 2020, OFL purchased the Trade and Assets of Porge. The purchase
price was set at the net book value of the assets acquired at the time of the
transaction.
Vertus
In July 2019, the Group converted into ordinary shares its existing
convertible loan with Vertus Capital in full satisfaction and discharge of the
loan. This, together with a further cash payment, gave the Group 51% ownership
of Vertus Capital and Vertus SPV 1. In 2021, the Group increased its ownership
of Vertus Capital to 54%.
Goodwill of £1,664,000 arose from these transactions and has been included
within the short term finance segment of the business. Following the
acquisition separately identifiable intangible assets of £255,000 primarily
related to the value of existing third party relationships on acquisition were
identified. These were being amortised over five years and the amortisation
charge for the year prior to the disposal of Vertus was £38,000 (2022:
£51,000). Details of the disposal of Vertus are included in Note 10.
Playstack
In September 2019, the Group converted into ordinary shares its existing
convertible loans with Playstack Ltd in full satisfaction and discharge of the
loans. This gave the Group ownership of Playstack Ltd and the other companies
within the Playstack Group.
Goodwill of £12,965,000 arose from this transaction and has been included
within the publishing segment of the business.
Magic Fuel
On 6 June 2022, the Group acquired a 100% equity interest in Magic Fuel Inc
("Magic Fuel"). Goodwill of £2,417,000 arose from this transaction and was
included within the publishing segment of the business. Following the
acquisition, separately identifiable intangible assets of £1,595,000
relating to the Intellectual Property of the Games in development by Magic
Fuel were recognised. These are being amortised over five years resulting in
an amortisation charge for the year of £319,000 (2022: £181,000) during the
year. Goodwill related to this transaction excluding these assets at 31
December 2023 was £823,000 (2022: £823,000).
bidstats.uk
In November 2023, Oxygen Finance Limited acquired the business of bidstats.uk
at a cost of £451,000. Separately identifiable assets of £332,000 have been
identified relating to the value of the customer relationships and the
technology. These are to be amortised over five years commencing 1 January
2024. Goodwill of £119,000 has arisen on the acquisition and this will be
reviewed annually for impairment. As at 31 December 2023, the net book value
of the bidstats.uk assets was £451,000.
Impairment testing of intangibles
An impairment review of goodwill was carried out at the year end.
The insight services segment of OFL was valued using the discounted cash flow
methodology. Its net earnings were forecasted to 2028, a discount rate of 10%
was used and terminal growth rate of 2%. This valuation was greater than the
amount of CGU and therefore the goodwill is not deemed to be impaired.
Playstack was valued using the discounted cash flow methodology. The net
earnings of Playstack were forecasted to 2026, a discount rate of 10% was used
and terminal growth rate of 3%. Revenue growth was a key assumption and was
based on Playstack's pipeline of games over the forecast period. This factors
in a number of key projects with platforms and streaming partners. In some
instances, revenue projections have been based on amounts outlined in agreed
contracts in place with customers, whilst others have been based on
progressive discussions with customers and historic sales for games of a
similar nature. The valuation of Playstack was greater than the amount of CGU
and therefore the goodwill is not deemed to be impaired.
Magic Fuel was valued using the discounted cash flow methodology. It's net
earnings along with revenues earned in the rest of the group related to this
acquisition were forecasted to 2026, a discount rate of 10% was used and a
terminal growth rate of 3%. The valuation of this CGU was greater than the
value of goodwill and so was deemed not be impaired.
The impairment review of Playstack is most sensitive to a change in the
planned revenue growth and discount rate. A 70% reduction in this growth rate
or an increase in the discount rate to 25% could give rise to an impairment
charge.
No other reasonable change in the other assumptions set out in this note would
result currently in an impairment charge.
12. Property, plant and equipment
Fixtures & Computer equipment Right-of-Use
fittings £'000 Asset Total
Group £'000 £'000 £'000
Cost
At 1 January 2023 139 96 276 511
Additions 21 21 - 42
On disposal of subsidiary - (13) - (13)
Exchange differences 2 (1) - 1
At 31 December 2023 162 103 276 541
Depreciation
At 1 January 2023 (60) (61) (44) (165)
Charge (32) (20) (55) (107)
On disposal of subsidiary - 6 - 6
Exchange differences (1) 1 - -
At 31 December 2023 (93) (74) (99) (266)
Net book value
At 31 December 2023 69 29 177 275
At 31 December 2022 79 34 232 345
Fixtures & Computer equipment Right-of-Use
fittings Asset Total
Group £'000 £'000 £'000 £'000
Cost
At 1 January 2022 53 78 429 560
Additions 86 27 276 389
Disposals - (9) (429) (438)
At 31 December 2022 139 96 276 511
Depreciation
At 1 January 2022 (44) (44) (407) (495)
Charge (16) (26) (66) (108)
Disposals - 9 429 438
At 31 December 2022 (60) (62) (44) (166)
Net book value
At 31 December 2022 79 34 232 345
At 31 December 2021 9 34 22 65
13. Investment in subsidiaries
Company £'000
Balance at 1 January 2023 and 31 December 2023 30,189
Balance at 1 January 2022 and 31 December 2022 30,189
14. Loans and advances
2023 2022
Group £'000 £'000
Total loans and advances 7,407 24,215
Less: loss allowance (173) (54)
7,234 24,161
The aging of loans and advances are analysed as follows:
2023 2022
£'000 £'000
Neither past due nor impaired 7,082 23,875
Past due: 0-30 days 6 129
Past due: 31-60 days 22 77
Past due: 61-90 days 14 41
Past due: more than 91 days 105 39
Impaired 5 -
7,234 24,161
15. Trade and other receivables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade and other receivables 2,385 2,149 - -
Prepayments 606 455 35 44
Accrued Income 685 890 - -
VAT - - 15 11
Other debtors 3,684 2,554 - -
Amounts due from Group Undertakings - - 111 83
7,360 6,048 161 138
Trade receivables above are stated net of a loss allowance of £nil (2022:
£nil). All receivables are due within one year. The aging of trade
receivables is analysed as follows:
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Not yet due 1,621 1,960 - -
Past due: 0-30 days 220 117 - -
Past due: 31-60 days 146 6 - -
Past due: 61-90 days 193 9 - -
Past due: more than 91 days 205 57 - -
2,385 2,149 - -
16. Share capital
Share Capital Total
Group and Company £'000 £'000
105,836,687 shares at £0.91 per
share
96,311 96,311
On 10 July 2023, the Company issued 11,653,744 ordinary shares through a
Placing and an Open Offer. These were issued at £0.65 per share, raising
gross proceeds of £7,575,000. This was a discount to par value of
£3,030,000, which has been included in Other Reserves in the Statement of
Changes of Equity.
All ordinary shares carry equal entitlements to any distributions by the
Company. No dividends were proposed by the Directors for the year ended 31
December 2023.
17. Borrowings
2023 2022
£'000
Group £'000
Loans due within one year 6,157 1,783
Loans due in over one year 1,047 16,764
7,204 18,547
Movements in borrowings during the year
The below table identifies the movements in borrowings during the year.
Group £'000
Balance at 1 January 2023 18,547
Funding drawdown 7,619
Interest expense 557
Origination fees paid (56)
Repayments (2,170)
Interest paid (416)
Disposal of subsidiary (16,874)
Exchange differences (3)
Balance at 31 December 2023 7,204
Group £'000
Balance at 1 January 2022 12,985
Funding drawdown 8,707
Interest expense 852
Fee amortisation 110
Repayments (3,337)
Interest paid (777)
Exchange differences 7
Balance at 31 December 2022 18,547
The primary borrowings of the Group are comprised of the following:
· A revolving credit facility under which one month notice is given
by either the lender or borrower. The facility is secured by a fixed and
floating charge over Satago SPV1 and interest is payable monthly.
The Company had no borrowings during the period or at year end.
18. Trade and other payables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade payables 877 529 19 28
Accruals and deferred income 3,626 3,867 520 622
Other payables 416 1,636 7 -
Corporation tax 8 - - -
Other taxation and social security 506 603 188 284
VAT 99 206 - -
5,532 6,841 734 934
19. Financial instruments
The Directors have performed an assessment of the risks affecting the Group
through its use of financial instruments and believe the principal risks to
be: capital risk; credit risk, and market risk including interest rate risk.
This note describes the Group's objectives, policies and processes for
managing the material risks and the methods used to measure them. The
significant accounting policies regarding financial instruments are
disclosed in Note 1.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while providing an adequate return to
shareholders.
The capital structure of the Group consists of borrowings disclosed in Note 17
and equity of the Group (comprising issued capital, reserves, retained
earnings and non-controlling interests as disclosed in Note 16 and Note 20).
The Group is not subject to any externally imposed capital requirements.
Principal financial instruments
The principal financial instruments to which the Group is party and from
which financial instrument risk arises, are as follows:
· Loans and advances, primarily credit risk and liquidity risk
· Trade receivables, primarily credit risk and liquidity risk
· Investments, primarily fair value or market price risk
· Cash and cash equivalents, which can be a source of credit risk
but are primarily liquid assets available to further business objectives or to
settle liabilities as necessary
· Trade and other payables, and
· Borrowings which are used as sources of funds and to manage
liquidity risk.
Analysis of financial instruments by valuation model
There are no financial assets or liabilities included in the statement of
financial position at fair value.
31 December 2023
Financial assets and financial liabilities included in the statement of
financial position that are not measured at fair value:
Carrying amount Fair value Level 1 Level 2 Level 3
Group £'000 £'000 £'000 £'000 £'000
Financial assets not measured at fair value
Loans and advances 7,234 7,234 - - 7,234
Trade receivables 2,385 2,385 - - 2,385
Other receivables 4,369 4,369 - - 4,369
Cash and cash equivalents 10,140 10,140 10,140 - -
24,128 24,128 10,140 - 13,988
Financial liabilities not measured at fair value
Borrowings 7,204 7,204 - - 7,204
Trade, other payables and accruals 4,889 4,889 - - 4,889
12,093 12,093 - - 12,093
31 December 2022
Carrying amount Fair value Level 1 Level 2 Level 3
Group £'000 £'000 £'000 £'000 £'000
Financial assets not measured at fair value
Loans and advances 24,161 24,161 - - 24,161
Trade receivables 2,149 2,149 - - 2,149
Other receivables 3,444 3,444 - - 3,444
Cash and cash equivalents 10,273 10,273 10,273 - -
40,027 40,027 10,273 - 29,574
Financial liabilities not measured at fair value
Borrowings 18,547 18,547 - - 18,547
Trade, other payables and accruals 6,392 6,392 - - 6,392
24,939 24,939 - - 24,939
31 December 2023
Carrying amount Fair value Level 1 Level 2 Level 3
Company £'000 £'000 £'000 £'000 £'000
Financial assets not measured at fair value
Amounts owed by group undertakings 59,089 59,089 - - 59,089
Other receivables 126 126 - - 126
Cash and cash equivalents 4,723 4,723 4,723 - -
63,938 63,938 4,723 - 59,215
Financial liabilities not measured at fair value
Trade, other payables and accruals 734 734 - - 734
734 734 - - 734
31 December 2022
Carrying amount Fair value Level 1 Level 2 Level 3
Company £'000 £'000 £'000 £'000 £'000
Financial assets not measured at fair value
Amounts owed by group undertakings 54,835 54,835 - - 54,835
Other receivables 94 94 - - 94
Cash and cash equivalents 2,260 2,260 2,260 - -
57,189 57,189 2,260 - 54,929
Financial liabilities not measured at fair value
Trade, other payables and accruals 934 934 - - 934
934 934 - - 934
Fair values for Level 3 assets and liabilities were calculated using a
discounted cash flow model and the Directors consider that the carrying
amounts of financial assets and liabilities recorded at amortised cost in the
financial statements approximate to their fair values.
Loans and advances
Due to the short-term nature of loans and advances and/or expected credit
losses recognised, their carrying value is considered to be approximately
equal to their fair value.
Trade and other receivables, borrowings, trade and other payables, and
accruals
These represent short term receivables and payables and as such their carrying
value is considered to be equal to their fair value.
Financial risk management
The Group's activities and the existence of the above financial instruments
expose it to a variety of financial risks.
The Board of Directors has overall responsibility for the determination of the
Group's risk management objectives and policies. The overall objective of the
Board of Directors is to set policies that seek to reduce ongoing risk as far
as possible without unduly affecting the Group's competitiveness and
flexibility.
The Group is exposed to the following financial risks:
· Credit risk
· Liquidity risk
· Market risk
· Interest rate risk
Further details regarding these policies are set out below.
Credit risk
Credit risk is the risk that a customer or counterparty will default on its
contractual obligations resulting in financial loss to the Group. One of the
Group's main income generating activities is lending to customers and
therefore credit risk is a principal risk. Credit risk mainly arises from
loans and advances. The Group considers all elements of credit risk exposure
such as counterparty default risk, geographical risk and sector risk for risk
management purposes.
Credit risk management
The credit committees within the wider Group are responsible for managing the
credit risk by:
· Ensuring that it has appropriate credit risk practices, including
an effective system of internal control
· Identifying, assessing and measuring credit risks across the
Group from an individual instrument to a portfolio level
· Creating credit policies to protect the Group against the
identified risks including the requirements to obtain collateral from
borrowers, to perform robust ongoing credit assessment of borrowers and to
continually monitor exposures against internal risk limits
· Limiting concentrations of exposure by type of asset,
counterparty, industry, credit rating, geographical location
· Establishing a robust control framework regarding the
authorisation structure for the approval and renewal of credit facilities
· Developing and maintaining the risk grading to categorise
exposures according to the degree of risk of default. Risk grades are subject
to regular reviews, and
· Developing and maintaining the processes for measuring Expected
Credit Loss ("ECL") including monitoring of credit-risk, incorporation of
forward-looking information and the method used to measure ECL.
Significant increase in credit risk
The Group continuously monitors all assets subject to ECL as to whether there
has been a significant increase in credit risk since initial recognition,
either through a significant increase in Probability of Default ("PD") or in
Loss Given Default ("LGD").
The following is based on the procedures adopted by the Group:
Granting of credit
The business development team prepare a risk summary which sets out the
rationale and the pricing for the proposed loan facility and confirms that it
meets the Group's product risk and pricing policies. The application will
include the proposed counterparty's latest financial information and any
other relevant information but as a minimum:
· Details of the limit requirement e.g. product, amount, tenor,
repayment plan etc.
· Facility purpose or reason for increase
· Counterparty details, background, management, financials and
ratios (actuals and forecast)
· Key risks and mitigants for the application
· Conditions, covenants & information (and monitoring
proposals) and security (including comments on valuation)
· Pricing
· Confirmation that the proposed exposure falls within risk
appetite, and
· Clear indication where the application falls outside of risk
appetite.
The credit risk department will analyse the financial information, obtain
reports from credit reference agencies, allocate a risk rating and make a
decision on the application. The process may require further dialogue with the
business development team to ascertain additional information or
clarification.
Each mandate holder and committee is authorised to approve loans up to agreed
financial limits provided that the risk rating of the counterparty is within
agreed parameters. If the financial limit requested is higher than the credit
authority of the first reviewer of the loan facility request, the application
is sent to the next credit authority level with a recommendation.
The Executive Risk Committee reviews all applications that are outside the
credit approval mandate of the mandate holder due to the financial limit
requested or if the risk rating is outside of policy but there is a rationale
and/or mitigation for considering the loan on an exceptional basis.
Applications where the counterparty has a high risk rating are sent to the
Executive Risk Committee for a decision based on a positive recommendation
from the credit risk department. Where a limited company has such a risk
rating, the Executive Risk Committee will consider the following mitigants:
· Existing counterparty which has met all obligations in time and
in accordance with loan agreements
· Counterparty known to Group personnel who can confirm positive
experience
· Additional security, either tangible or personal guarantees where
there is verifiable evidence of personal net worth
· A commercial rationale for approving the application, although
this mitigant will generally be in addition to at least one of the other
mitigants.
Identifying significant increases in credit risk
The Group measures a change in a counterparty's credit risk mainly on payment,
on updated from credit reference agencies and adverse changes with a
counterparty's debtors. The Group views a significant increase in credit risk
as:
· A two-notch reduction in the Group's counterparty's risk rating
since origination, as notified through the credit rating agency
· A counterparty defaults on a payment due under a loan agreement
· Late contractual payments which although cured, reoccur on a
regular basis
· Evidence of a reduction in a counterparty's working capital
facilities which has had an adverse effect on its liquidity, or
· Evidence of actual or attempted sales out of trust or of double
financing of assets funded by the Group
· Deterioration in the underlying business (held as part of the
security package) indicated through significant loss of revenue and higher
than average client attrition.
An increase in significant credit risk is identified when any of the above
events happen after the date of initial recognition.
Default
Identifying loans and advances in default and credit impaired
The Group's definition of default for this purpose is:
· A counterparty defaults on a payment due under a loan agreement
and that payment is overdue on its terms, or
· The collateral that secures, all or in part, the loan agreement
has been sold or is otherwise not available for sale and the proceeds have not
been paid to the lending company, or
· A counterparty commits an event of default under the terms and
conditions of the loan agreement which leads the lending company to believe
that the borrower's ability to meet its credit obligations to the lending
company is in doubt.
Exposure at default
Exposure at default ("EAD") is the expected loan balance at the point of
default and, for the purpose of calculating the Expected Credit Losses
("ECL"), management have assumed this to be the balance at the reporting date.
Expected credit losses
The ECL on an individual loan is based on the credit losses expected to arise
over the life of the loan, being defined as the difference between all the
contractual cash flows that are due to the Group and the cash flows that it
actually expects to receive.
This difference is then discounted at the original effective interest rate on
the loan to reflect the disposal period of underlying collateral.
Regardless of the loan status stage, the aggregated ECL is the value that the
Group expects to lose on its current loan book having assessed each loan
individually.
To calculate the ECL on a loan, the Group considers:
1. Counterparty PD; and
2. LGD on the asset
whereby: ECL = EAD x PD x LGD
Maximum exposure to credit risk
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Cash and cash equivalents 10,140 10,273 4,723 2,260
Loans and advances 7,234 24,161 - -
Amounts owed by group undertakings - - 59,089 54,835
Trade and other receivables 6,754 5,593 126 138
Maximum exposure to credit risk 24,128 40,027 63,938 57,233
Loans and advances:
Collateral held as security
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Fully collateralised
Loan-to-value* ratio
Less than 50% 654 800 - -
50% to 70% 1,174 271 - -
71% to 80% 554 500 - -
81% to 90% 3,434 701 - -
91% to 100% 651 - - -
6,467 2,272 - -
Partially collateralised
Collateral value relating to loans over 100% loan-to-value - - - -
Unsecured lending 940 21,943 - -
* Calculated using wholesale collateral values
Concentration of credit risk
The Group maintains policies and procedures to manage concentrations of credit
at the counterparty level and industry level to achieve a diversified loan
portfolio.
Credit quality
An analysis of the Group's credit risk exposure for loan and advances per
class of financial asset, internal rating and "stage" is provided in the
following tables. A description of the meanings of stages 1, 2 and 3 is given
in the accounting policies set out in Note 1.
2023 2022
Stage 1 Stage 2 Stage 3 Total Total
Risk rating £'000 £'000 £'000 £'000 £'000
Above average (risk rating 1-2) 940 - - 940 11,035
Average (risk rating 3-5) 6,333 - 134 6,467 10,615
Below average (risk rating 6+) - - - - 2,565
Gross carrying amount 7,273 - 134 7,407 24,215
Loss allowance (173) - - (173) (54)
Carrying amount 7,100 - 134 7,234 24,161
Stage 1 Stage 2 Stage 3 Total
Gross Carrying Amount £'000 £'000 £'000 £'000
As at 1 January 2023 22,692 1,481 43 24,216
Transfer to stage 1 - - - -
Transfer to stage 2 - - - -
Transfer to stage 3 (30) - 30 -
Disposal of subsidiary (19,937) (1,481) - (21,418)
Net Loans originated 4,548 - 61 4,609
As at 31 December 2023 7,273 - 134 7,407
Trade receivables
Status at reporting date
The Group has assessed the trade and other receivables in accordance with IFRS
9 and determined that, at the balance sheet date, the lifetime ECL is £nil
(2022: £nil).
The contractual amount outstanding on financial assets that were written off
during the reporting period and are still subject to enforcement activity is
£nil at 31 December 2023 (2022: £nil).
Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient financial
resources to meet its obligations as they fall due or will have to do so at an
excessive cost. This risk arises from mismatches in the timing of cash flows
which is inherent in all banking operations and can be affected by a range of
Group specific and market-wide events.
Liquidity risk management
Group Finance performs treasury management for the Group, with responsibility
for the treasury for each business entity being delegated to the individual
subsidiaries. However, in line with the wider Group governance structure,
Group Finance performs an important oversight role in the wider treasury
considerations of the Group. The primary mechanism for maintaining this
oversight is a formal requirement that subsidiaries' Finance teams notify all
material Treasury matters to Group Finance.
The main Group responsibilities are to maintain banking relationships, manage
and maximise the efficiency of the Group's working capital and long-term
funding and ensure ongoing compliance with banking arrangements. The Group
currently does not have any offsetting arrangements.
Liquidity stress testing
The Group regularly conducts liquidity stress tests, based on a range of
different scenarios to ensure it can meet all of its liabilities as they fall
due.
Maturity analysis for financial assets and financial liabilities
The following maturity analysis is based on expected gross cash flows.
Carrying Amount Less than 1 month 3 months to
1-3 months 1 year 1-5 years >5 years
As at 31 December 2023 £'000 £'000 £'000 £'000 £'000 £'000
Financial Assets
Cash and cash equivalents 10,140 10,140 - - - -
Trade and other receivables 6,754 2,490 585 2,006 1,673 -
Loans and advances 7,234 6,321 36 (63) 940 -
24,128 18,951 621 1,943 2,613 -
Financial Liabilities
Trade payables, other payables and accruals 4,889 1,574 2,260 819 236 -
Borrowings 7,204 64 38 1,077 6,025 -
12,093 1,638 2,298 1,896 6,261 -
Market risk
Market risk is the risk that movements in market factors, such as foreign
exchange rates, interest rates, credit spreads, equity prices and commodity
prices will reduce the TruFin Group's income or the value of its portfolios.
Market risk management
TruFin Group's management objective is to manage and control market risk
exposures in order to optimise return on risk while ensuring solvency.
The core market risk management activities are:
· The identification of all key market risk and their drivers
· The independent measurement and evaluation of key market risks
and their drivers
· The use of results and estimates as the basis for the TruFin
Group's risk/return-oriented management, and
· Monitoring risks and reporting on them.
Interest rate risk management
TruFin Group is exposed to the risk of loss from fluctuations in the future
cash flows or fair values of financial instruments because of the change in
market interest rates.
Interest rate risk
Interest rates on loans and advances are charged at competitive rates given
current market condition. Should rates fluctuate, this will be reviewed and
pricing will be adjusted accordingly.
20. Non-controlling interests
The summarised financial information below represents financial information
for each subsidiary that has non-controlling interest that are material to the
Group. The amounts disclosed for each subsidiary are before intragroup
eliminations.
The Group had a 72% (2022: 72%) ownership share of Bandana during the year.
Statement of Financial Position Bandana
2023 2022
£'000 £'000
Current assets - 1
Current liabilities (5,464) (5,465)
Equity attributable to owners of the Company (3,955) (3,955)
Non-controlling interests (1,509) (1,509)
Income Statement Bandana
2023 2022
£'000 £'000
Revenue - -
Expenses - (251)
Loss after tax - (251)
Loss after tax attributable to owners of the Company - (182)
Loss after tax attributable to the non-controlling interests - (69)
Cash Flow Statement Bandana
2023 2022
£'000 £'000
Net cash from operating activities - -
Net increase in cash and cash equivalents - -
Non-controlling interest Bandana
2023 2022
£'000 £'000
Balance at 1 January (1,509) (1,440)
Share of loss for the year - (69)
Balance at 31 December (1,509) (1,509)
The Group's effective ownership share of Satago Financial Solutions Limited
("Satago") at the reporting date is based on the net assets of the Satago
Group at the reporting date, and the ownership waterfall following Lloyds
Banking Group's £5m investment in Satago in April 2022.
Statement of Financial Position Satago
2023 2022
£'000 £'000
Current assets 9,705 10,397
Non-current assets 587 617
Current liabilities (3,606) (927)
Equity attributable to owners of the Company 2,631 5,061
Non-controlling interests 4,055 5,026
Income Statement Satago
2023 2022
£'000 £'000
Revenue 2,523 1,860
Expenses (5,923) (3,926)
Loss after tax (3,400) (2,001)
Loss after tax attributable to owners of the Company (2,429) 1,910
Loss after tax attributable to the non-controlling interests (971) (91)
Cash Flow Statement Satago
2023 2022
£'000 £'000
Net cash used in operating activities (4,507) (3,035)
Net cash used in investing activities (275) (2,498)
Net cash generated from financing activities 2,558 7,360
Net (decrease)/increase in cash and cash equivalents (2,224) 1,827
Non-controlling interest Satago
2023 2022
£'000 £'000
Balance at 1 January 5,026 103
Share of loss for the year (971) (91)
Arising from change in non-controlling interest - 14
Equity Raise - 5,000
Balance at 31 December 4,055 5,026
21. Leases
The carrying amounts of the right-of-use assets recognised and the movements
during the period are shown in Note 12.
The lease liability and movement during the period were:
Group £'000
Lease liability recognised at 1 January 2023 285
Interest 13
Payments (82)
Balance at 31 December 2023 216
Group £'000
Lease liability recognised at 1 January 2022 25
Lease recognised in year 276
Interest 12
Payments (28)
Balance at 31 December 2022 285
22. Earnings per share
Earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the year.
The calculation of the basis and adjusted earnings per share is based on the
following data:
2023 2022
Number of shares (#)
At year end 105,836,687 94,182,943
Weighted average 99,770,355 90,485,862
Earnings attributable to ordinary shareholders £'000 £'000
Loss after tax attributable to the owners of TruFin plc (6,472) (6,637)
Adjusted earnings attributable to ordinary shareholders
Loss after tax attributable to the owners of TruFin plc (6,472) (6,637)
Loss after tax from continued operations (5,312) (6,677)
(Loss)/profit from discontinued operations (1,160) 40
Share-based payments 766 -
Adjusted1 loss after tax attributable to the owners of TruFin plc (4,546) (6,677)
Earnings per share* Pence Pence
Basic and diluted (6.5) (7.3)
Basic and diluted from continuing operations (5.3) (7.4)
Adjusted1 (4.6) (7.4)
* All Earnings per share figures are undiluted and diluted.
Adjusted1 EPS excludes share-based payment expense and loss from discontinued
operations from loss after tax
Comparative figures have been restated to adjust for discontinued operations
Management has been granted 9,551,342 share options in TruFin plc (see Note 6
for details). These could potentially dilute basic EPS in the future, but were
not included in the calculation of diluted EPS as they are antidilutive for
the years presented as the Group is loss making.
23. Related party disclosures
Key management personnel disclosures are provided in Notes 5 and 6.
During the year, Playstack made loans to Storm Chaser UG, a company based in
Germany. Storm Chaser UG is 100% owned by Storm Chaser Games -an associate
company of Playstack (See Note 1). The balance of the loans (including
interest) at the reporting date was £940,000 (2022: £525,000).
24. Events after the Reporting Date
In March 2024, Playstack disposed of its augmented reality and gamification
AdTech platform "Interact" to VCI Global Limited for
$2,000,000 (£1,574,000).
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