REG - TruFin PLC TruFin PLC - Trading Update

TrufinAnnouncement

08/02/2024 07:15

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RNS Number : 4073C  TruFin PLC  08 February 2024

8 February 2024

 

TruFin plc

("TruFin" or the "Company")

 

Trading Update

 

 

Highlights

 

·    Revenue for the 12 months ended 31 December 2023 is expected to be
no less than £20.2m (FY22(1): £15.3m), representing year-on-year growth
in excess of 32%

·    Adjusted EBITDA loss(2) is expected to be ahead of prior expectations
at no more than £(3.0)m, representing an improvement of more than 47%
year-on-year (FY22(1): £(5.7)m)

·    Adjusted Loss Before Tax(2) is expected to be in line with market
expectations, excluding the exceptional loss on the sale of Vertus Capital Ltd
("Vertus"), at no more than £(6.3)m (FY22(1): £(8.2)m)

·    Oxygen Finance Group Limited ("Oxygen") grew 2023 revenue by more
than 18% to no less than £6.2m (FY22: £5.3m)

·    Satago Financial Solutions Limited ("Satago") grew 2023 revenue by
72% to £3.8m (FY22: £2.2m)

·    Playstack Limited ("Playstack") is expected to be EBITDA profitable
during 2023, supported by the successful launch of The Last Faith in Q4 2023

·    Cash at year end is no less than £9m, of which unrestricted cash is
no less than £5.5m, and the Group is fully funded to profitability

 

Oxygen

 

Oxygen reinforced its number one position in the market in 2023. It completed
a planned investment of more than £1.2m in its platform and people, with
returns on this investment expected to support scaling revenue and
profitability in 2024 and beyond. It also acquired bidstats.uk, the UK's No 1
portal for public sector tendering.

 

Revenue for 2023 is expected to be no less than £6.2m (FY22: £5.3m). Core
Early Payment revenue, accounting for more than 65% of total revenue, grew in
excess of 25%. These gains were tempered by flat revenue at its data analytics
arm Insight Solutions. This was caused by ongoing market disruption and
consolidation which Oxygen is set to benefit from in the short to medium term.

 

Notwithstanding its planned investment programme, Oxygen delivered another
year of profitable growth, generating EBITDA of no less than £1.3m (FY22:
£1.1m).

 

In addition to planned investment and the purchase of bidstats.uk, Oxygen made
its second cash dividend payment to TruFin. This totalled £0.5m, up 100% on
the previous year (FY22: £0.25m).

 

By the end of FY23, 4,922 suppliers had chosen to participate in Oxygen's
Early Payment programmes, transacting £1bn of invoices during the year.
Additionally, Oxygen's innovative FreePay programme saw 15,286 small suppliers
(FY22: 10,528) benefit from free early payments totalling £0.6bn. This
significantly boosted liquidity in Oxygen clients' local economies.

 

Highlighting the strength of Oxygen's client relationships and its
cross-selling opportunities, approximately half of Oxygen's Early Payment
clients purchased two or more products in 2023 (FY22: c17%). These factors,
combined with its market leading position and profitable growth trajectory,
underscore the Board's confidence in Oxygen's ability to deliver significant
value for shareholders and its attraction to potential acquirers.

 

Oxygen has successfully integrated bidstats.uk, which is performing in line
with management expectations.

 

Looking ahead, with a pipeline exceeding 100 potential Early Payment clients
(40 of which are in the active engagement, commercial negotiation or
documentation stages) Oxygen's outlook is enviable.

 

Satago

 

2023 saw Satago continue to build momentum and hit significant milestones.
Notably, Lloyds Banking Group (the "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.

 

Satago also delivered the next phase of its platform in 2023, allowing the
onboarding of the first 'new to Bank' customer onto the platform. Satago will
continue further functionality development during 2024 in support of new
client onboarding and migration activities.

 

Looking ahead, Satago has attracted significant interest in its digitised
proposition both from UK and overseas banks which it will foster whilst
remaining focused on developing its Lending as a Service ("LaaS") and Embedded
Finance solutions for existing clients.

 

During 2023, revenue increased more than 70% to £3.8m (FY22: £2.2m). Growth
was predominately driven by Satago's successful rollout of its LaaS product
and growing its factoring book. This proprietary lending book continues to
perform well and is integral to the marketing of the overall product suite for
commercial partners.

 

Satago's subscription packages performed strongly in 2023, with the number of
paying subscribers more than doubling to 967 (FY22: 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.

 

Satago's strong performance in 2023 reflects its ongoing commitment to
reducing late payment and improving access to finance to an ever-growing pool
of small and medium-sized businesses.

 

Playstack

 

During 2023 Playstack launched three critically acclaimed games, The Last
Faith, AK-Xolotl and CityScapes: Sim Builder. It also secured six platform
deals across five separate titles, demonstrating the broad appeal of its IP.
Revenue for 2023 was no less than £8.0m (FY22: £6.3m). This was short of
expectations due to platform deal delays.

 

Despite these delayed platform deals, Playstack achieved its target of EBITDA
profitability in 2023 after postponing some budgeted costs to mitigate the
impact of the revenue shortfall. Playstack remains in advanced negotiations on
the delayed platform deals.

 

In 2021, 85% of Playstack's revenue was generated from one game; in 2023
Playstack generated 85% of its revenue from eight games. With a healthy back
catalogue and a further six major games slated for release in 2024, this trend
of revenue diversification is set to continue.

 

Playstack is focusing its capital on its core strengths - sourcing and
publishing console games. Since Playstack's inception, including all PC and
console game launches:

 

·    Average return on invested capital ("ROIC") on PC/console game
'advances' to developers is 384% with a weighted average internal rate of
return ("IRR") per game of more than 300%

o  Excluding the highest grossing game, the average ROIC in PC/console game
'advances' to developers is 91%, with a weighted average IRR per game of over
200%

o  The highest ROIC from a single game is currently more than 1,000%

·    Only one game published is expected to see negative ROIC

o  If this game sold no more copies, Playstack would lose a total of £16k on
this title

 

Despite lower-than-expected performance in Q4, Playstack's appealing returns
profile - underpinned by its disciplined and repeatable process for sourcing
and selecting games - gives the Board confidence that Playstack will become
meaningfully EBITDA profitable in 2024 and beyond.

 

Notes

 

(1) adjusted as if Vertus was sold on the corresponding date in 2022 ie 4
October

(2) loss adjusted to remove share-based payment charges implemented during
2023

 

 

 

For further information, please contact:

 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

 

TruFin plc is the holding company of an operating group comprising three
growth-focused technology businesses operating in niche markets: early payment
provision, invoice 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.

 

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