REG - TruFin PLC TruFin PLC - Interim Results
20/09/2022 07:00
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RNS Number : 9301Z TruFin PLC 20 September 2022
20 September 2022
TruFin plc
("TruFin" or the "Company" or together with its subsidiaries "TruFin Group" or the "Group")
Interim Financial Report for the six months ended 30 June 2022 (Unaudited)
• Combined gross revenue for the Group increased 27% to £6.3m (H1 2021:
£4.9m)
• Gross revenue at Oxygen Finance Group Limited (together with its
subsidiaries) ("Oxygen") increased by 36% to £2.5m (H1 2021: £1.8m), driven
by growth across all revenue streams from new and existing clients
• Gross interest income and fee income at Satago Financial Solutions
Limited ("Satago") increased by 120% to £0.6m (H1 2021: £0.3m) as Satago
focused on Lending-as-a-Service ("LaaS") solutions with Lloyds Bank plc
("Lloyds Bank" or the "Bank")
• Playstack Ltd ("Playstack"), after a strong H1 2021, maintained gross
revenue levels with H1 2022 experiencing 4% growth to £2.3m (H1 2021: £2.2m)
• Gross interest income and fee income at Vertus Capital Limited
("Vertus") increased 43% to £0.9m (H1 2021: £0.6m), as a result of the
increase in new facilities, overall loan book and rising interest rates
• TruFin Group's loss before tax improved to £4.8m (H1 2021: £5.2m)
6 months to 6 months to 12 months to
30 June 30 June 31 December
2022 2021 2021*
Financials and KPI's (Unaudited) £'000 £'000 £'000
Gross Revenue 6,281 4,941 13,115
Loss before tax (4,795) (5,173) (8,422)
Loss before tax includes:
share‐based payment charge - (70) (70)
Net Assets 42,419 34,655 32,451
*Audited figures
Post period end developments and outlook
• Oxygen's early payment revenues continued to grow, reflecting the
strength of its local authority client base. By August, record numbers of
clients' suppliers had joined Oxygen's early payment programmes, driving an
all-time high in spend.
Revenue from Insight Solutions, Oxygen's market intelligence offering,
continues to make strides. Oxygen's total number of unique clients at the
end of H1 2022 was 128 (H1 2021: 108).
The return of in-person local government conferences following the lifting of
Covid restrictions has further strengthened Oxygen's new business pipeline.
Moreover, supply chain issues have led to suppliers holding more inventory,
thus increasing working capital requirements. These favourable tailwinds,
coupled with rising interest rates and inflation, make Oxygen's supply side
offer even more compelling.
Having delivered its first full year of EBITDA profit in 2021, Oxygen expects
to deliver profitable growth in 2022 and beyond.
• Satago's partnership with Lloyds Bank was cemented on 29 July, with
Satago signing a five-year commercial agreement for the Bank to license
Satago's software platform for use by its Single Invoice Finance and Whole of
Book Invoice Factoring customers. Ben Stephenson, Managing Director and Head
of Specialist Client Solutions at Lloyds Bank Commercial Banking has joined
Satago's board, and we look forward to reporting the progress of this
partnership, which is due to roll out to Lloyd's customers in Q4 2022.
• The release of Playstack's 2022 console line-up garnered over 1 million
views on YouTube and similar video streaming platforms - reinforcing the
strength of the IP identified and championed by the Playstack team. One PC
game launch has been rescheduled, from Q4 2022 to Q1 2023, but will allow
Playstack to release the game on multiple formats simultaneously.
• Following the acquisition of Magic Fuel in June 2022, the team has been
successfully integrated into the Playstack business and they are on track to
deliver revenue growth this year.
• Vertus expects to originate a significant portion of pipeline deals, backlogged by regulatory delays, in September and October. The company's loan book is forecast to grow by 50% in 2022, to £24m (from £16m as at 31 December 2021), with new loan facilities up 80%. Despite investments in technology and new product development, Vertus is forecast to achieve full-year profit in 2022.
James van den Bergh, Chief Executive Officer commented:
"We have had an encouraging first half to 2022, with broad-based growth across
the Group reflecting the strong competitive position of each of our companies.
Despite inflationary pressures on staff costs and the rising rate environment
we remain excited about the value creation opportunities ahead of us.
It is important to remember that our strategic goal remains unchanged: to
invest at the early stage of a company's life cycle, guiding the company
towards sustainable growth, profitability and ultimately an exit. And with
this in mind it is very satisfying to report that Oxygen and Vertus are both
expected to be profitable and cash flow positive on a full-year basis during
2022.
It was exceptionally pleasing to welcome Lloyds Bank as shareholders into
Satago and to report the signing of the five-year commercial agreement between
Satago and Lloyds Banking Group. The new digitised proposition for Lloyds Bank
will benefit thousands of Single Invoice Finance and Whole of Book Invoice
Factoring customers - which will be especially valuable to these clients as we
enter increasingly uncertain economic times.
We see significant further potential in Satago and, as announced on 9 June,
the signing of a Letter of Intent ("LOI") with Sage Group plc ("Sage") and
Lloyds Bank illustrates this, with further partnerships in the pipeline.
The actions we have taken over the last two years leave TruFin very well
positioned; with meaningful progress across all the subsidiaries, we look to
the future with confidence."
For further information, please contact:
TruFin plc
James van den Bergh, Chief Executive Officer 0203 743 1340
Kam Bansil, Investor Relations 07779 229508
Liberum Capital Limited (Nominated Adviser and Corporate broker) 0203 100 2000
Chris Clarke
Edward Thomas
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 (http://www.TruFin.com)
The subsidiaries within the TruFin Group have been resilient in the first six
months of 2022 and the board remains confident regarding prospects for the
remainder of 2022.
As at 31 August 2022, the following assets were not less than:
• £10.6m of cash or cash equivalents
• £1.6m of assets within the Satago Group's loan book
The TruFin Group has no more than £3.1m in near-term liabilities.
Oxygen
Momentum within Oxygen is building, with financial and operational performance
records continually being broken throughout the first half of 2022. The
strong revenue growth enjoyed in the second half of 2021 continued into 2022,
resulting in EBITDA profit reaching £0.4m in the first half of 2022, an
increase of 600% on H1 2021 (£0.1m).
Gross margins for the first half were 70%, up 10% year-on-year, with Oxygen's
infrastructure offering significant capacity to accommodate expanding revenues
with minimal incremental cost.
Oxygen continues to see strong demand for its progressive payment practices,
big data services and expertise which enable public sector and private
organisations to trade more effectively. Payments become frictionless and data
becomes information, driving growth and efficiency. The result is better
social and economic outcomes. In addition, Oxygen again co-published with EY
the Local Government Third-Party Spend Almanac 2022 which has become an
essential industry resource detailing local authority expenditure and, for the
first time this year, the carbon emissions of councils and their supply
chains.
Oxygen's "Early Payment" client portfolio is maturing. Supplier
participation in client Early Payment programmes is tracking forecasts and
improving upon historic performance. Strong demand for Oxygen's market
intelligence Insight Solutions services continues, evidenced by a growing
client base which values the opportunities Oxygen provides private sector
firms seeking to expand their business with the public sector.
Oxygen's Early Payment clients totalled 55 as at the end of June 2022 (up from
52 in June 2021), with combined supplier spend totalling £23bn.
Unprecedented numbers of clients' suppliers participated in Early Payment
programmes, with "on-boarded" annual supplier spend exceeding £1bn for the
first time. A record amount of new supplier spend (£165m) was added during H1
2022.
Another achievement during the first half of the year saw Oxygen make
significant progress helping clients deliver social value to their local
communities by offering "FreePay", a service enabling clients to pay its local
micro and small suppliers early at no cost. By the end of June 2022 more than
6,000 suppliers were participating in this programme. These local micro and
small suppliers enjoyed early invoice payments totalling £250m, without
charge, during the first six months of the year.
Strong relationships combined with its growing client portfolio have enabled
Oxygen to build new adjacent services and partnerships, many of which have
been monetised in H1 and will continue to deliver financially in the future.
Satago
Satago offers its customers a technically advanced invoice finance and
cashflow management system via its online software platform. During the first
half of 2022, the company was selected as the platform of choice to support
the provision of invoice factoring solutions to Lloyds Bank customers,
alongside a £5m investment from Lloyds Bank at a pre-money valuation of £20m
(the "£5m Investment"). The five-year commercial agreement sealing this
partnership was signed on 29 July.
The tie-up shows a shift from the predominantly "own balance sheet financing"
previously pursued by Satago to a hybrid model incorporating "partner balance
sheet financing", utilising Satago's LaaS solutions and embedded finance
model. It leverages Satago's best-in-class platform to allow third-party
working capital providers to distribute their much-needed capital more
efficiently across the economy. This approach mirrors the overall Group
strategy of moving towards recurring fee and subscription income and becoming
less reliant on capital intensive interest income; in doing so it removes a
key constraint from Satago's growth, allowing the management team to focus on
their two core strengths - developing industry-leading technology and forming
significant partnerships.
This cornerstone partnership with Lloyds has opened further opportunities - in
June Satago announced the signing of a LOI with Sage Group and Lloyds to use
Satago's technology to deliver Lloyds' lending products to Sage clients. It is
further partnerships like this, with its proprietary technology an invaluable
enabler, that Satago will build in the coming years.
Satago's revenue more than doubled in the first half of this year, to £0.6m,
compared with the same period in 2021, driven by implementation fees from the
Lloyds partnership (£348k), with interest and fee income falling modestly
(£252k versus £273k in H1 2021). Loss before tax in the first half of this
year increased by £373k, due to one-off professional fees surrounding the
finalisation of the Lloyds partnership and increasing staffing capacity to
fulfil the requirements of the commercial transaction.
As previously outlined, Satago is in discussions with several more potential
strategic partners which could, if successful, result in significant
additional growth for the business.
On 9 March 2022, TruFin announced, in conjunction with the commercial
agreement with Lloyds and the £5m Investment, that it had agreed to vary the
terms of an existing £3m loan to Satago so that it would be convertible into
equity capital in Satago at the same pre-money valuation. On 1 September 2022,
TruFin exercised its conversion right and converted the £3 million loan into
equity in Satago. Following the further £2 million equity investment
announced on 29 July 2022, TruFin now holds approximately 70% of the fully
diluted share capital of Satago.
Playstack
Playstack is a gaming technology business providing publishing and related
services to the mobile game and console sector. Playstack is the Group's entry
point into the highly attractive growth market of mobile and console
publishing.
Following solid performance in 2021, Playstack set out a three-year commercial
plan to deliver growth throughout 2022-2024. So far, we are pleased that this
has resulted in the acquisition of Magic Fuel Games Inc and the securing of a
major technology contract for 2022 and 2023.
Playstack continues to develop its own innovative technology suite that sets
it apart from market rivals.
Vertus
Vertus provides succession finance to Independent Financial Advisers ("IFAs").
The business originates deals through its collaboration with Integrafin
Holdings plc ("IntegraFin") and various business brokers focused on the IFA
market.
Significant consolidation in the advice market continues, despite current
market conditions, as Financial Planners continue to retire from the industry.
Firms are performing well financially and therefore the underlying valuations
remain resilient. PE-backed consolidators proliferate and continue to drive
high valuations and significant deal activity. In contrast, Vertus funds a
succession process that ensures planning firms can remain independent and meet
client demand for quality and bespoke advice.
The loan book continues to perform well, with the value of the underlying
security increasing as Vertus' borrowers consistently grow their client
bases. As such, Vertus remains without credit losses since inception.
The market is experiencing delays in regulatory approval of "change of
control" applications, which continue to increase origination lead times for
Vertus, but there are promising signs that this may ease somewhat in the
months ahead. Current market conditions, rising inflation and recession fears
have yet to show any significant impact on deal activity or credit risk for
Vertus.
After completing a successful renewal of terms with its high-street banking
senior debt provider, Vertus has expanded its distribution network beyond
IntegraFin exclusively during the first half of this year. The company has
successfully engaged with 14 IFA business brokers to position Vertus closer to
the transaction market and has expanded its online presence. As such, growth
in new facilities originated for the financial year 2022 are forecast to grow
by 80% (following new facilities growth of 71% in 2021).
During the first six months of the year, Vertus has invested in tech
infrastructure to enable scalable origination and is actively developing a new
product for the IFA market. Despite this outlay, Vertus is targeting
profitability in 2022. Following renewals of all capital lines on improved
terms in 2021, Vertus is now targeting a loan book of £24m by the end of 2022
(from £16m as at 31 December 2021) and has a near-term loan book goal of
£50m.
The Board looks to the future with confidence and will keep shareholders
updated on the Company's progress.
Independent auditor's review report
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2022 which comprises:
• unaudited condensed interim consolidated statement of comprehensive
income
• the unaudited condensed interim consolidated statement of financial
position
• the unaudited condensed interim consolidated statement of changes in
equity
• the unaudited condensed interim consolidated statement of cash flows,
and
• the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the United Kingdom and the Disclosure and the AiM rules for
Companies.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued for use in the United Kingdom. A
review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international account standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting".
Conclusions relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure and the AiM Rules for Companies.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditors responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our conclusions
relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with the International
Standard on Review Engagements 2410 (UK) "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" Issued by the
Financial Reporting Council. Our review work has been undertaken so that we
might state to the Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company for our review work, for this report, or for the conclusions
we have formed.
Crowe U.K. LLP
Statutory Auditor
London, United Kingdom
19 September 2022
6 months ended 6 months ended Year ended 31 December 2021
Notes 30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Interest income 3 1,003 813 1,681
Fee income 3 2,955 1,899 4,330
Publishing income 3 2,323 2,229 7,104
Interest, fee and publishing expenses (1,947) (2,196) (6,214)
Net revenue 4,334 2,745 6,901
5 (6,433) (5,766) (11,285)
Staff costs
Other operating expenses (2,215) (1,762) (3,257)
Depreciation & amortisation (479) (389) (794)
Net impairment (loss)/gain on financial assets (6) (1) 10
Share of profit from associates 4 - 3
Operating loss (4,795) (5,173) (8,422)
Loss before tax (4,795) (5,173) (8,422)
8 230 (20) 986
Taxation
Loss for the period/year (4,565) (5,193) (7,436)
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Exchange differences on translating foreign operations 9 21 (39)
Other comprehensive income for the period/year, net of tax 9 21 (39)
Total comprehensive loss for the period/year (4,556) (5,172) (7,475)
Loss after tax attributable to:
Owners of TruFin plc (3,716) (5,033) (7,071)
Non-controlling interests (849) (160) (365)
(4,565) (5,193) (7,436)
Total comprehensive loss for the period/year attributable to:
Owners of TruFin plc (3,706) (5,013) (7,112)
Non-controlling interests (850) (159) (363)
(4,556) (5,172) (7,475)
Earnings per share 6 months ended 6 months ended Year ended 31 December 2021
Notes 30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) pence
pence pence
Basic and Diluted EPS 15 (4.3) (6.2) (8.7)
As at As at 31
Notes 30 June 2022 December 2021
£'000 £'000
(Unaudited) (Audited)
Assets
Non-current assets
Intangible assets 9 23,950 21,191
Property, plant and equipment 10 358 65
Deferred tax asset 8 303 303
Loans and advances 11 15,016 11,575
Total non-current assets 39,627 33,134
Current assets
Cash and cash equivalents 12,905 7,608
Loans and advances 11 6,860 4,558
Interest in associate 7 3
Trade receivables 2,170 2,585
Other receivables 2,921 2,840
Total current assets 24,863 17,594
Total assets 64,490 50,728
Equity and liabilities
Equity
Issued share capital 12 85,706 73,548
Retained earnings (21,943) (17,731)
Foreign exchange reserve 14 4
Other reserves (26,531) (24,393)
Equity attributable to owners of the company 37,246 31,428
Non-controlling interest 5,173 1,023
Total equity 42,419 32,451
Liabilities
Non-current liabilities
Borrowings 13 15,059 11,351
Total non-current liabilities 15,059 11,351
Current liabilities
Borrowings 13 1,746 1,634
Trade and other payables 5,266 5,292
Total current liabilities 7,012 6,926
Total liabilities 22,071 18,277
Total equity and liabilities 64,490 50,728
The financial statements were approved by the Board of Directors on 19
September 2022 and were signed on its behalf by:
James van den Bergh
Chief Executive Officer
Share Retained Foreign Other Total Non- Total
capital earnings exchange reserves £'000 controlling equity
£'000 £'000 reserve £'000 interest £'000
£'000 £'000
Balance at 1 January 2022 73,548 (17,731) 4 (24,393) 31,428 1,023 32,451
Loss for the period - (3,716) - - (3,716) (849) (4,565)
Other comprehensive income for the period - - 10 - 10 (1) 9
Total comprehensive loss for the period - (3,716) 10 - (3,706) (850) (4,556)
Issuance of shares 12,158 (496) - (2,138) 9,524 - 9,524
Issuance of shares to subsidiary - - - - - 5,000 5,000
Balance at 30 June 2022 (Unaudited) 85,706 (21,943) 14 (26,531) 37,246 5,173 42,419
Balance at 1 January 2021 73,548 (10,730) 45 (24,395) 38,468 1,268 39,736
Loss for the period - (5,033) - - (5,033) (160) (5,193)
Other comprehensive income for the period - - 20 - 20 1 21
Total comprehensive loss for the period - (5,033) 20 - (5,013) (159) (5,172)
Share-based payment - 70 - - 70 - 70
Adjustment arising from change in non-controlling interest - 4 - - 4 (4) -
Issuance of subsidiary shares to employees - - - - - 19 19
Intragroup transfer of subsidiary - - - 2 2 - 2
Balance at 30 June 2021 (Unaudited) 73,548 (15,689) 65 (24,393) 33,531 1,124 34,655
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Cash flows from operating activities
Loss before income tax (4,795) (5,173) (8,422)
Adjustments for
Depreciation of property, plant and equipment 55 47 96
Amortisation of intangible fixed assets 822 646 1,571
Share-based payments - 70 70
Finance costs 380 310 656
Share of profit from associates (4) - (3)
Loss on disposal of fixed assets - 2 2
Loss on intragroup transfer of subsidiary - 2 2
(3,542) (4,096) (6,028)
Working capital adjustments
Movements in loans and advances (5,744) (215) (1,472)
Decrease /(increase) in trade and other receivables 566 870 (720)
Decrease in trade and other payables (1,258) (2,185) (1,831)
Net payables on acquisition of subsidiary (76) - -
(6,512) (1,530) (4,023)
Tax paid (4) (15) (2)
Interest and finance costs paid (308) (280) (716)
Net cash used in from operating activities (10,366) (5,921) (10,769)
Cash flows from investing activities:
Additions to intangible assets (1,054) (935) (1,779)
Additions to property, plant and equipment (348) (10) (24)
Acquisition of subsidiaries (1,234) - -
Cash on acquisition of subsidiary 19 - -
Net cash used in investing activities (2,617) (945) (1,803)
Cash flows from financing activities:
Issue of ordinary share capital 9,524 - -
Issue of ordinary share capital of subsidiary 5,000 - 148
New borrowings 3,744 1,347 2,353
Net cash generated from financing activities 18,268 1,347 2,501
Net increase/(decrease) in cash and cash equivalents 5,285 (5,519) (10,071)
Cash and cash equivalents at beginning of the period/year 7,608 17,728 17,728
Effect of foreign exchange rate changes 12 2 (49)
Cash and cash equivalents at end of the period/year 12,905 12,211 7,608
1. Accounting policies
Basis of preparation
The annual financial statements of TruFin plc are prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by the United
Kingdom.
The condensed set of financial statements included in this Interim Financial
Report has been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting' ('IAS 34'). This condensed set of Financial
Statements has been prepared by applying the accounting policies and
presentation that were applied in the preparation of the TruFin Group's
published Financial Statements for the year ended 31 December 2021.
The condensed set of financial statements included in this Interim Financial
Report for the six months ended 30 June 2022 should be read in conjunction
with the annual audited financial statements of TruFin plc for the year ended
31 December 2021, which were delivered to the Jersey Financial Services
Commission. The audit report for these accounts was unqualified and did not
draw attention to any matters by way of emphasis.
Going concern
The Directors are satisfied that the TruFin Group has sufficient resources to
continue in operation for the foreseeable future, a period of not less than 12
months from the date of the report. Accordingly, they continue to adopt the
going concern basis in preparing the condensed financial statements.
Group information
The TruFin Group ("the Group") is the consolidation of;
• TruFin plc,
• TruFin Holdings Limited,
• Oxygen Finance Group Limited, Oxygen Finance Limited, Oxygen Finance
Americas Inc. and Porge Ltd (dissolved 22 March 2022), together the ("Oxygen
Group"),
• TruFin Software Limited,
• Satago Financial Solutions Limited, Satago SPV 1 Limited, Satago SPV 2
Limited, Satago Financial Solutions z.o.o, together ("Satago"),
• AltLending (UK) Ltd,
• Vertus Capital Limited and Vertus SPV 1 Limited, together ("Vertus"),
and
• Playstack Limited, Bandana Media Ltd, Playignite Ltd, Playstack z.o.o,
Playstack OY, Foxglove Studios AB, Magic Fuel Games Inc, Playstack Inc and
Playignite Inc, together the ("Playstack Group").
Additionally, the Playstack Group also includes four associate companies
incorporated in the UK which have been accounted for using the equity method.
These are;
• A 49% interest in PlayFinder Games Ltd,
• A 49% interest in Snackbox Games Ltd,
• A 42% interest in Military Games International Ltd, and
• A 26% interest in Stormchaser Games Ltd.
The principal activities of the Group are the provision of niche lending,
early payment services and mobile 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.
Significant accounting policies and use of estimates and judgements
The preparation of interim consolidated financial statements in compliance
with IAS 34 requires the use of certain critical accounting judgements and key
sources of estimation uncertainty. It also requires the exercise of judgement
in applying the TruFin Group's accounting policies. There have been no
material revisions to the nature and the assumptions used in estimating
amounts reported in the annual audited financial statements of TruFin plc for
the year ended 31 December 2021.
The accounting policies, presentation and methods of computation in the
audited financial statements have been followed in the condensed set of
financial statements.
2. General information
TruFin plc is a public limited company incorporated in Jersey. The shares of
the Company are listed on the Alternative Investment Market. The address of
the registered office is 26 New Street, St Helier, Jersey, JE2 3RA.
A copy of this Interim Financial Report including Condensed Financial
Statements for the period ended 30 June 2022 is available at the Company's
registered office and on the Company's investor relations website
(www.trufin.com (http://www.trufin.com) ).
3. Gross revenue
21
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Interest income 1,003 813 1,681
Total interest income 1,003 813 1,681
EPPS* contracts 1,519 1,146 2,536
Consultancy fees 247 131 436
Implementation fees 412 26 70
Subscription fees 777 596 1,288
Total fee income 2,955 1,899 4,330
IAP revenue 207 200 428
Advertising revenue 299 139 378
Console revenue 1,816 1,880 6,285
Brand revenue 1 10 13
Total publishing income 2,323 2,229 7,104
Gross revenue 6,281 4,941 13,115
*Early Payment Programme Services
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 invoice discounting and succession financing for the IFA space.
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 the Oxygen Group.
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 TruFin Software Limited,
TruFin Holdings Limited 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 finance Payment services
6 months ended 30 June 2022 £'000 £'000 Publishing Other Total
(Unaudited) £'000 £'000 £'000
Gross revenue 1,491 2,467 2,323 - 6,281
Cost of sales (441) (398) (1,108) - (1,947)
Net revenue 1,050 2,069 1,215 - 4,334
Adjusted operating loss* (2,298) (232) (1,085) (1,180) (4,795)
Loss before tax (2,298) (232) (1,085) (1,180) (4,795)
Taxation (1) - 231 - 230
Loss for the period (2,299) (232) (854) (1,180) (4,565)
Total assets 30,837 8,208 19,406 6,039 64,490
Total liabilities (16,907) (1,859) (2,572) (733) (22,071)
Net assets 13,930 6,349 16,834 5,306 42,419
*adjusted operating loss excludes share-based payment expense
Short term finance Payment services
6 months ended 30 June 2021 £'000 £'000 Publishing Other Total
(Unaudited) £'000 £'000 £'000
Gross revenue 896 1,816 2,229 - 4,941
Cost of sales (424) (305) (1,467) - (2,196)
Net revenue 472 1,511 762 - 2,745
Adjusted operating loss* (1,993) (443) (1,463) (1,204) (5,103)
Loss before tax (1,993) (443) (1,463) (1,274) (5,173)
Taxation (17) - (3) - (20)
Loss for the period (2,010) (443) (1,466) (1,274) (5,193)
Total assets 21,894 7,267 15,001 7,477 51,639
Total liabilities (12,505) (1,649) (2,254) (576) (16,984)
Net assets 9,389 5,618 12,747 6,901 34,655
*adjusted operating loss excludes share-based payment expense
Short term finance Payment services
Year ended 31 December 2021 £'000 £'000 Publishing Other Total
(Audited) £'000 £'000 £'000
Gross revenue 1,878 4,133 7,104 - 13,115
Cost of sales (832) (873) (4,509) - (6,214)
Net revenue 1,046 3,260 2,595 - 6,901
Adjusted operating loss* (3,877) (548) (1,439) (2,488) (8,352)
Loss before tax (3,877) (548) (1,439) (2,558) (8,422)
Taxation 367 175 444 - 986
Loss for the period (3,510) (373) (995) (2,558) (7,436)
Total assets 24,607 8,331 16,774 1,016 50,728
Total liabilities (13,341) (1,747) (2,184) (1,005) (18,277)
Net assets 11,266 6,584 14,590 11 32,451
*adjusted operating loss excludes share-based payment expense
5. Staff costs
Analysis of staff costs:
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Wages and salaries 5,269 4,609 9,011
Consulting costs 193 183 395
Social security costs 744 703 1,409
Pension costs arising on defined contribution schemes 227 223 428
Share-based payment - 70 70
Government grants - (22) (28)
6,433 5,766 11,285
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:
6 months ended 6 months ended 30 June 2021 Year ended 31 December 2021
30 June 2022 (Unaudited) (Audited)
(Unaudited) Number Number
Number
Management 18 16 16
Finance 11 7 7
Sales & marketing 34 32 23
Operations 50 54 36
Technology 54 43 54
167 152 136
Directors' emoluments
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Combined remuneration 376 370 685
6. Employee share-based payment transactions
The employment share-based payment charge comprises:
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Performance Share Plan and Joint Share Ownership Plan Founder Award - 59 59
Performance Share Plan Market Value Award - 11 11
Performance Share Plan 2019 Award - - -
Performance Share Plan 2018 Award - - -
Total - 70 70
Performance Share Plan and Joint Share Ownership Plan Founder Award ("PSP and JSOP")
On 21 February 2018, 3,407,895 shares were granted to selected founder members
of senior management of which the share price at date of grant was £1.90 per
share. The awards are structured as a Performance Share Plan and a Joint Share
Ownership Plan. The Performance Share Plan is structured as a nil cost option
with no performance conditions attached. The awards were also granted subject
to continued employment until February 2021. The Joint Share Ownership Plan
allows the employee to participate in the growth in value over and above the
grant price of £1.90. The shares vest 25% on each anniversary of the grant
date.
The first 25% of shares (851,973 shares) vested on 21 February 2019 when the
share price was £1.98. As a result 817,550 shares subject to the Joint Share
Ownership Plan became fully owned by the trustee of the Company's employee
benefit trust (the "EBT") and 34,423 became fully owned by senior management.
At the time of Distribution Finance Capital Ltd's ("DFC's") demerger from the
Group, there was a modification to the Founder Award. The £1.90 price above
which the employee was able to participate in value growth under the Joint
Share Ownership Plan was adjusted proportionally by reference to the
respective share prices of DFC and TruFin to £0.85. This modification has not
resulted in a change in the valuation of the award and this continues to be
recognised over the remainder of the original vesting period.
As part of the demerger, holders of Founder Awards also received an award in
respect of DFC shares which gave rise to an employer's National Insurance
liability of £419,000, which was paid in July 2019.
On 11 September 2019, in connection with his change of role, the unvested
Founder Awards in respect of 1,369,244 shares held by Henry Kenner fully
vested, the result of which was that all of the relevant shares ceased to be
subject to the Joint Share Ownership Plan and instead become fully owned by
the EBT. In addition, 1,369,244 shares subject to the Performance Share Plan
ceased to be subject to continued employment condition.
The second 25% of Founder Awards held by James van den Bergh vested on 21
February 2020 when the share price was £0.26. As a result, 395,560 shares
subject to the Joint Share Ownership Plan became fully owned by the EBT and
James' nil cost option under the Performance Share Plan vested in respect of
the same number of shares.
On 27 November 2020, Henry Kenner exercised his nil cost option under the
Performance Share Plan which resulted in 1,807,217 shares being transferred
from the EBT to Henry Kenner on 22 December 2020. This gave rise to an
Employer's National Insurance liability of £82,000 which was paid in January
2021.
The third 25% of Founder Awards held by James van den Bergh vested on 21
February 2021 when the share price was £0.78. As a result, 395,560 shares
subject to the Joint Share Ownership Plan became fully owned by the EBT and
James' nil cost option under the Performance Share Plan vested in respect of
the same number of shares.
The final 25% of Founder Awards held by James van den Bergh vested on 22
February 2022 when the share price was £0.81. As a result, 395,558 shares
subject to the Joint Share Ownership Plan became fully owned by the EBT and
James' nil cost option under the Performance Share Plan vested in respect of
the same number of shares.
Performance Share Plan Market Value Award ("PSP Market Value")
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. A Monte Carlo
simulation was used to determine the fair value of these options. The model
used an expected volatility of 10% and a risk free rate of 1.3%.
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 plc 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 was adjusted to £0.85, and the share price
milestones were adjusted to reflect the demerger
• The exercise price was further adjusted to £0.80, and the share price
milestones were further adjusted, to reflect the return of value to
shareholders in June 2019
• The exercise price was further adjusted to £0.71, and the share price
milestones were further adjusted to reflect the return of value to
shareholders in December 2019
The modification has not resulted in a change in the valuation of the award
and this continues to be recognised over the remainder of the original vesting
period.
The grant of the DFC Market Value Award gave rise to an employer's National
Insurance liability for the Company of £265,000 which was paid in July 2019.
Performance Share Plan 2018 Award ("PSP 2018")
On 21 February 2018, options to acquire 1,000,001 shares were granted to the
senior management team. The PSP 2018 Award is structured as a nil cost option.
The vesting of this award was subject to the holder being in continued
employment until February 2021 and the subsidiary companies achieving certain
financial metrics over a three‐year period.
In order to reflect the impact of the demerger, and as the performance
condition relating to the business of DFC was deemed to be achieved in full
due to the demerger, the PSP 2018 Award was adjusted as follows:
• the award part vested and was satisfied by way of a cash payment
calculated by reference to 50% of the shares subject to the award and a price
of £1.90 per share. The cash payments were made in September 2019; and
• the awards otherwise continued in respect of 100% of the TruFin plc
shares, but the performance condition related solely to the business of the
Oxygen Group.
In 2019, PSP 2018 Awards in respect of 736,843 shares lapsed following members
of senior management leaving the Group and changing roles.
The remaining performance condition of this award was not met at the end of
the 3 year vesting period.
Performance Share Plan 2019 Award ("PSP 2019")
On 11 September 2019 an option to acquire 320,000 shares was granted to James
van den Bergh. The PSP 2019 Award is structured as a nil cost option. The
vesting of this award is subject to the holder being in continued employment
until September 2022 and subsidiary companies achieving certain financial
metrics over a three‐year period. The performance vesting conditions had not
been met at the end of the 3 year vesting period.
7. Loss before income tax
Loss before income tax is stated after charging:
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Depreciation of property, plant and equipment 55 47 96
Amortisation of intangible assets 822 646 1,571
Staff costs including share-based payments charge 6,433 5,766 11,285
8. Taxation
Analysis of tax credit/charge recognised in the period/year
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Current tax (credit)/charge (230) 4 (726)
Deferred tax (credit)/charge - 16 (260)
Total tax (credit)/charge (230) 20 (986)
Deferred tax asset
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Balance at start of the period/year 303 43 43
(Debit)/credit to the statement of comprehensive income - (16) 260
Balance at end of the period/year 303 27 303
Comprised of:
Losses 303 27 303
Total deferred tax asset 303 27 303
A deferred tax asset was recognised in 2021 in respect of Vertus Capital SPV 1
Limited, as it became profitable.
9. Intangible assets
Software licences and similar assets Separately identifiable intangible assets
Client contracts
Goodwill Total
£'000 £'000 £'000 £'000 £'000
Cost 5,490 2,579 1,642 15,746 25,457
At 1 January 2022
Additions 496 603 - - 1,099
Arising on acquisition of subsidiary - 3 - 2,522 2,525
Disposals (45) (75) - - (120)
Exchange differences 2 - - - 2
At 30 June 2022 (unaudited) 5,943 3,110 1,642 18,268 28,963
Amortisation (1,607) (1,181) (1,070) - (3,858)
At 1 January 2022
Charge for the period (398) (260) (164) - (822)
Disposals - 75 - - 75
At 30 June 2022 (unaudited) (2,005) (1,366) (1,234) - (4,605)
Accumulated impairment losses (408) - - - (408)
At 1 January 2022
At 30 June 2022 (unaudited) (408) - - - (408)
Net book value
At 30 June 2022 (unaudited) 3,530 1,744 408 18,268 23,950
At 31 December 2021 3,475 1,398 572 15,746 21,191
Software licences and similar assets Separately identifiable intangible assets
Client contracts
Goodwill Total
£'000 £'000 £'000 £'000 £'000
Cost 4,689 1,834 1,642 15,796 23,961
At 1 January 2021
Additions 1,056 757 - (50) 1,763
Disposals (256) - - - (256)
Exchange differences 1 (12) - - (11)
At 31 December 2021 5,490 2,579 1,642 15,746 25,457
Amortisation (956) (814) (742) - (2,512)
At 1 January 2021
Charge (873) (370) (328) - (1,571)
Disposals 222 - - - 222
Exchange differences - 3 - - 3
At 31 December 2021 (1,607) (1,181) (1,070) - (3,858)
Accumulated impairment losses (408) - - - (408)
At 1 January 2021
At 31 December 2021 (408) - - - (408)
Net book value
At 31 December 2021 3,475 1,398 572 15,746 21,191
At 31 December 2020 3,325 1,020 900 15,796 21,041
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 (or "set up") 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 5 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.
Software, licenses 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 3 to 5 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.
Goodwill and "Separately identifiable intangible assets" arise from
acquisitions made by the Group.
10. Property, plant and equipment
Fixtures & Computer equipment Right-of-Use Asset
fittings Total
Group £'000 £'000 £'000 £'000
Cost 53
At 1 January 2022 78 429 560
Additions 51 21 276 348
Disposals - (3) (393) (396)
At 30 June 2022 104 96 312 512
Depreciation (44) (44) (407) (495)
At 1 January 2022
Charge (4) (13) (38) (55)
Disposals - 3 393 396
At 30 June 2022 (48) (54) (52) (154)
Net book value
At 30 June 2022 56 42 260 358
At 31 December 2021 9 34 22 65
Fixtures & Computer equipment Right-of-Use Asset
fittings Total
Group £'000 £'000 £'000 £'000
Cost 52
At 1 January 2021 60 429 541
Additions 2 22 - 24
Disposals - (4) - (4)
Exchange differences (1) - (1)
At 31 December 2021 53 78 429 560
Depreciation (36) (26) (339) (401)
At 1 January 2021
Charge (8) (20) (68) (96)
Disposals - 2 - 2
At 31 December 2021 (44) (44) (407) (495)
Net book value
At 31 December 2021 9 34 22 65
At 31 December 2020 16 34 90 140
11. Loans and advances
30 June 2022 31 December 2021
(Unaudited) (Audited)
£'000 £'000
Total loans and advances 21,886 16,137
Less: loss allowance (10) (4)
21,876 16,133
Past due receivables relating to loans and advances are analysed as follows:
30 June 2022 31 December 2021
(Unaudited) (Audited)
£'000 £'000
Neither past due nor impaired 21,059 16,062
Past due: 0-30 days 794 32
Past due: 31-60 days 20 10
Past due: 61-90 days 1 28
Past due: more than 91 days 2 1
21,876 16,133
The financial risk management procedures disclosed in the 31 December 2021
audited financial statements have been and remain in place for the period to
30 June 2022.
12. Share capital
Share Capital Total
£'000 £'000
94,182,943 shares at £0.91 per share at 30 June 2022 (unaudited) 85,706 85,706
On 12 April 2022, the Company issued 13,360,739 ordinary shares through a
Placing and an Open Offer. These were issued at £0.75 per share, raising
gross proceeds of £10,020,554. This was a discount to par value of
£2,138,000, 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 period ended 30
June 2022.
13. Borrowings
30 June 2022 31 December 2021
(Unaudited) (Audited)
£'000 £'000
Loans due within one year 1,746 1,634
Loans due in over one year 15,059 11,351
16,805 12,985
Movements in borrowings during the period/year
The below table identifies the movements in borrowings during the period/year.
£'000
Balance at 1 January 2022 12,985
Loan Drawdowns 5,180
Loan repayments (1,435)
Fee amortisation 55
Interest expense 326
Interest paid (309)
Effect of foreign exchange rate changes 3
Balance at 30 June 2022 (Unaudited) 16,805
Balance at 1 January 2021 10,711
Funding drawdown 5,725
Interest expense 528
Origination fees paid (211)
Fee amortisation 141
Repayments (3,371)
Interest paid (506)
Loan written off (13)
Exchange differences (19)
Balance at 31 December 2021 (Audited) 12,985
14. Acquisition of Subsidiary
On 6 June 2022, Playstack Inc acquired Magic Fuel Games Inc. ("Magic Fuel"), a
remote games development studio based in San Francisco, USA.
The consideration for the acquisition was $3 million, $1.5 million of which
had been paid by the reporting date, and $1.5 million is payable in May 2023.
In accordance with IFRS 3, the Group has up to one year to finalise the
initial accounting for a business combination. At the reporting date, our
assessment in relation to the recognition and measurement of separately
identifiable intangible assets acquired is ongoing.
15. 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 period/year.
The calculation of the basis and adjusted earnings per share is based on the
following data:
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Number of shares
At period/year end 94,182,943 80,822,204 80,822,204
Weighted average 86,727,509 80,822,204 80,822,204
Earnings attributable to ordinary shareholders £'000 £'000 £'000
Loss after tax attributable to the owners of TruFin plc (3,716) (5,033) (7,071)
Adjusted earnings attributable to ordinary shareholders
Loss for the period/year attributable to the owners of TruFin plc (3,716) (5,033) (7,071)
Adjusted for:
Share-based payment - 70 70
Adjusted loss after tax attributable to the owners of TruFin plc (3,716) (4,963) (7,001)
Earnings per share* Pence Pence Pence
Basic and Diluted (4.3) (6.2) (8.7)
Adjusted(1) (4.3) (6.1) (8.7)
* All Earnings per share figures are undiluted and diluted.
Adjusted(1) EPS excludes share-based payment expense, exceptional items and
discontinued operations from loss after tax
Management has been granted 5,451,578 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 periods presented, as the Group is loss making.
16. Related party disclosures
Transactions with directors
Key management personnel disclosures are provided in notes 5 and 6.
Transactions with directors, or entities in which a director is also a
director or partner
6 months ended 6 months ended Year ended 31 December 2021
30 June 2022 30 June 2021 (Audited)
(Unaudited) (Unaudited) £'000
£'000 £'000
Consultancy services provided by an ex-director - 21 21
During the period, the Group 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 £320,000 (2021: £148,000).
17. Post balance sheet events
On 29 July 2022, the Group completed a further £2 million investment in
Satago. For the purposes of this investment, the valuation of Satago is the
same pre-money valuation that Lloyds Banking Group participated at for their
£5 million investment.
On 9 March 2022, TruFin announced, in conjunction with the commercial
agreement with Lloyds and the £5m Investment, that it had agreed to vary the
terms of an existing £3m loan to Satago so that it would be convertible into
equity capital in Satago at the same pre-money valuation. On 1 September 2022,
TruFin exercised its conversion right and converted the £3 million loan into
equity in Satago.
Following this transaction, the Group holds approximately 70% of the fully
diluted share capital of Satago.
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