REG - Vector Capital PLC - Full year results
25/04/2022 07:00
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RNS Number : 1246J Vector Capital PLC 25 April 2022
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
25 April 2022
Vector Capital plc
("Vector Capital", the "Company" or the "Group")
Full year results for the year ended 31 December 2021
"Continued Strong Growth with Opportunities to Scale"
Vector Capital plc (AIM: VCAP), a commercial lending group that offers secured
loans primarily to businesses located in the United Kingdom, is pleased to
announce its final results for the year ended 31 December 2021.
Highlights
· Loan book growth of 27.2% to £46.3m (FY20: £36.4m)
· Revenue growth of 22.0% to £5.3m (FY20: £4.3m)
· PBT growth up 20.4% to £2.8m (FY20: £2.3m)
· EPS of 5.24p (FY20: 5.58p)
· Proposed final dividend for the year of 1.51p per share (FY20: 1.43p)
Agam Jain, CEO of Vector Capital, commented: " We have delivered an excellent
performance in the year under review and achieved strong growth across our key
performance indicators, Including impressive growth of 27.2% in our loan book
to £46.3m
We continue to grow and explore further options to expand our loan book,
maximise shareholder returns and further establish our place in the market
segment.
Subject to the approval of shareholders at the Company's annual general
meeting ("AGM"), the Directors are proposing a final dividend of 1.51p per
share (2020: 1.43p), reflecting the Boards aim to reward investors with a
progressive dividend policy. The dividend timetable will be announced at the
time of posting of the AGM notice.
For further information please contact:
Vector Capital plc
Robin Stevens (Chairman)
020 8191 7615
Agam Jain (CEO)
WH Ireland Limited
020 7220 1666
Chris Hardie, Jessica Cave, Megan Liddell
IFC Advisory
Limited
020 3934 6630
Graham Herring, Florence Chandler, Zach Cohen
Notes to Editors
Vector Capital Plc provides secured, business-to-business loans to SMEs based
principally in England and Wales. Loans are typically secured by a first
legal charge against real estate. The Group's customers typically borrow for
general working capital purposes, bridging ahead of refinancing, land
development and property acquisition. The loans provided by the Group are
typically for renewable 12-month terms with fixed interest rates.
For more information on Vector visit: www.vectorcapital.co.uk
CHAIRMAN'S STATEMENT
I'm delighted to present our 2021 Annual Report and Accounts, which reflect
the results of the continued growth in Vector's loan book, the extension of
our network of business introducers and the creation of a strong and growing
presence in our chosen market, being the provision of secured loans to the SME
sector. Vector's customers are mainly small property developers operating in
England who buy properties to develop or refurbish and then re-sell.
Having achieved admission to the AIM market in December 2020, the Company
returned to the market in June 2021 to raise a further £1.5m from
shareholders which was applied to grow the loan book, together with retained
profits, increased wholesale bank facilities of £35m and finance received
from co-lending arrangements. This deployment of debt and equity facilities is
reflected in the Group's outstanding results for the year, achieving revenue
growth of 22.0% to £5.3m, an increase in profits before tax of 20.4% to
£2.8m, and a 27.2% rise in the value of the loan book from £36.4m to
£46.3m. Such growth is also attributable to the efforts and abilities of the
operational team, the strength of the underlying loan management systems and
the robust nature of the Vector business model.
We are keen to build on these strong foundations and to continue to grow the
loan book utilising our own resources and the external facilities provided by
our wholesale lenders. However, we are also fully aware of the attendant risk
and uncertainty arising from the economic and financial implications in the
post COVID-19 pandemic era and the outlook for the UK economy where inflation
and higher interest rates are going to be with us for the foreseeable future.
We continue to factor in these risks and uncertainties as we progress our
strategies in the coming months and beyond, building on our team's
considerable experience, and we will report on progress on a timely and open
basis.
As a Board we are also mindful and accepting of our responsibilities to act
responsibly and ethically in all we do, and to follow the core principles of
corporate governance set out in the Quoted Company Alliance Code. These
principles will be followed in all we do as a public company. We also
recognise our wider environmental, social and governance responsibilities to
shareholders and other stakeholders and we have developed, from what we
believe to be market best practice, underlying principles and developing
procedures to address these important issues. Details of our ESG policies and
procedures, aimed principally at responsible lending and encouraging
sustainability and avoidance of waste in all we do, are set out on the
Company's website, www.vectorcapital.co.uk (http://www.vectorcapital.co.uk) .
The results for the period were only possible due to the efforts of Vector's
employees and my fellow Board members and considerable thanks are due to them.
I am delighted that post the year end we were able to welcome to the Board
Gordon Robinson, a banking professional steeped in relevant operational and
business development experience in the lending sector, as our third
non-executive Director.
We are also indebted to our business partners, our past and current advisers
and of course our shareholders, with whom we look forward to a continuing and
rewarding relationship. This relationship is in part reflected in our proposed
final dividend for the year of 1.51 pence per share, an increase of 0.08 pence
(5.59%) over 2020, consistent with our stated intention to adopt a progressive
dividend policy.
I am confident that we have the skills, strategy and experience to navigate
the economic challenges that will surely arise and to capitalise on the market
opportunities that exist, and thereby continue our growth through 2022.
Robin Stevens
Chairman
22 April 2022
CEO REVIEW
A very strong performance and continued growth
I am pleased to report an extremely healthy set of results achieved in a very
competitive market. We are proud to be one of the select group of AIM quoted
companies paying dividends and showing consistent capital growth.
Our Loan book was £46.3m at 31 December 2021 (2020: £36.4m). This represents
an impressive 27.2% year on year growth. The average monthly loan book for the
12 months period was £40.8m (2020: £ 34.8m).
The average interest rate charged over the year increased to 11.84% p.a.
(2020: 11.53%).
Pre-tax profit for the year was £2.8m, representing a 20.4% increase over the
previous year (2020: £2.3m).
Diverse market spread
Our loan book is primarily secured by 1(st) charges over a diverse spread of
property sectors.
Residential (internal refurbishment, investment, buy to let) £24,580,323 53.1%
Commercial (retail, hotel, golf, etc.) £12,773,180 27.6%
Land & Development £5,429,273 11.7%
Mixed (Residential & Commercial) £2,997,977 6.5%
2nd charge £532,023 1.1%
£46,312,776 100.0%
Note: Market segmentation as at 31 December2021
We are also issuing selected loans against 2(nd) charge residential where the
equity in the security is substantial.
We have seen growth potential in all segments but we retain a weighting
towards residential as that is the preference of our wholesale banking lines.
Funding
We returned to the market in June 2021 with a Placing of 3,191,490 new shares
at 47 pence each to raise £1.5m gross.
We also negotiated significant increases during the year in our 2 banking
lines to £35m in aggregate (2020: £25m). We continue to maintain
constructive dialogue with other debt funders.
Our liquidity remains healthy and we have good capacity to fund selected new
loan opportunities.
Outside our property backed wholesale funding our gearing remains negligible
and so we have scope to grow using suitable new debt facilities. We have
designed a co-funding instrument and tested it in the market. The initial
response has been good, and we will make further iterative refinements going
forward.
Information Technology
We continue to initiate further improvements to the bespoke software platform
which we licence, by continuously reviewing and re-mapping our processes and
we are now in the process of implementing the new enhanced version.
Headcount
We did not need to increase headcount during the year but we invested
significant effort in staff training which has increased the expertise and
productivity of each team member. As a result, we have the capacity to handle
increased activity and handle more complex transactions with the same team.
Marketing
During the year we have expanded our connection with new business introducers
and brokers and at a corporate level we started our YouTube channel. We also
maintained a market presence at industry conferences and shows, notably the
ASTL (Association of Short-Term Lenders) AGM and the Asian Jewish Business
Network event.
Outlook
The market has been buoyant with many lenders on a growth path. In 2021 we
saw the value of UK bridging loan books top £5bn (source - ASTL) for the
first time as short-term property lending continued to grow. More brokers are
recognising the uses of bridging loans for their clients and, increasingly,
bridging can be seen as an integral cog in the workings of the wider property
market - saving transactions from falling through, enabling investors to buy,
convert and refurbish otherwise un-mortgageable property and providing a fast
and flexible means of raising capital.
No doubt a correction is due at some stage so we will always temper our growth
plans with caution and sound underwriting.
We are confident of delivering further significant growth in 2022.
Agam Jain
Chief Executive Officer
22 April 2022
Consolidated Income Statement
for the Year Ended 31 December 2021
2021 2020
Notes £'000 £'000
CONTINUING OPERATIONS
Revenue 5,275 4,325
Cost of sales (502) (321)
GROSS PROFIT 4,773 4,004
Other income 4 - 29
Administrative expenses (703) (668)
OPERATING PROFIT 4,070 3,365
Finance costs (1,245) (1,018)
Finance income 2 -
PROFIT BEFORE INCOME TAX 6 2,827 2,347
Income tax 7 (538) (445)
PROFIT FOR THE YEAR 2,289 1,902
Profit attributable to:
Shareholders 2,289 1,902
Earnings per share expressed 10
in pence per share:
Basic 5.24 5.58
Diluted 5.24 5.58
Consolidated Income Statement and Other Comprehensive Income
for the Year Ended 31 December 2021
2021 2020
Notes £'000 £'000
PROFIT FOR THE YEAR 2,289 1,902
OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2,289 1,902
Total comprehensive income attributable to:
Owners of the parent 2,289 1,902
The notes form part of these financial statements
Consolidated Statement of Financial Position
31 December 2021
2021 2020
Notes £'000 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 11 3 4
Trade and other receivables 13 - -
TOTAL NON-CURRENT ASSETS 3 4
CURRENT ASSETS
Trade and other receivables 13 46,565 36.963
Cash and cash equivalents 14 1,527 2.569
TOTAL CURRENT ASSETS 48,092 39.532
TOTAL ASSETS 48,095 39,536
SHAREHOLDERS' EQUITY
Called up share capital 16 226 210
Share premium 17 20,876 19,502
Group reorganisation reserve 17 188 188
Retained earnings 17 2,659 1,401
TOTAL EQUITY 23,949 21,301
Trade and other payables 15 23,858 18,030
Tax payable 288 205
TOTAL LIABILITIES 24,146 18,235
TOTAL EQUITY AND LIABILITIES 48,095 39,536
The financial statements were approved by the Board of Directors on 22 April
2022. And were signed on its behalf by:
….......................................................
J Pugsley - Director
The notes form part of these financial statements
Company Statement of Financial Position
31 December 2021
2021 2020
Notes £'000 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 11 3 4
Investments 12 17,000 17,000
TOTAL NON-CURRENT ASSETS 17,003 17,004
CURRENT ASSETS
Trade and other receivables 13 8,467 5,174
Cash and cash equivalents 14 121 1,899
TOTAL CURRENT ASSETS 8,588 7,073
TOTAL ASSETS 25,591 24,077
SHAREHOLDERS' EQUITY
Called up share capital 16 226 210
Share premium 17 20,876 19,502
Retained earnings 17 1,454 1,210
TOTAL EQUITY 22,556 20,922
Trade and other payables 15 3,035 3,155
TOTAL LIABILITIES 3,035 3,155
TOTAL EQUITY AND LIABILITIES 25,591 20,922
As permitted by Section 408 of the Companies Act 2006, the income statement
of the parent company is not presented as part of these financial
statements. The parent company's profit for the financial year was
£1,275,687 (2020 - £1,609,732).
The financial statements were approved by the Board of Directors on 22 April
2022 and were signed on its behalf by:
..........................................................
J Pugsley - Director
The notes form part of these financial statements
Consolidated Statement of Changes in Equity
for the Year Ended 31 December 2021
Called up share capital Retained earnings Share premium Group reorganisation reserve Total equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2020 170 (101) 16,830 188 17,087
Changes in equity
Issue of share capital 40 - 2,672 - 2,712
Dividends - (400) - - (400)
Total comprehensive income - 1,902 - - 1,902
Balance at 31 December 2020 210 1,401 19,502 188 21,301
Changes in equity
Issue of share capital 16 - 1,374 - 1,390
Dividends - (1,031) - - (1,031)
Total comprehensive income - 2,289 - - 2,289
Balance at 31 December 2021 226 2,659 20,8776 188 23,949
Company Statement of Changes in Equity
for the Year Ended 31 December 2021
Called up share capital Retained earnings Share premium Total equity
£'000 £'000 £'000 £'000
Balance at 31 December 2019 170 - 16,830 17,000
Changes in equity
Issue of share capital 40 - 2,672 2,712
Dividends - (400) - (400)
Total comprehensive income - 1,610 - 1,610
Balance at 31 December 2020 210 1,210 19,502 20,922
Changes in equity
Issue of share capital 16 - 1,374 1,390
Dividends - (1,031) - (1,031)
Total comprehensive income - 1,275 - 1,275
Balance at 31 December 2021 226 1,454 20,876 22,556
Consolidated Statement of Cash Flows
for the Year Ended 31 December 2021
2021 2020
Notes £'000 £'000
Cash flows from operating activities
Cash generated from operations 1 247 (913)
Interest paid (1,195) (1,018)
Tax paid (455) (614)
Net cash from operating activities (1,403) (2,545)
Cash flows from investing activities
Purchase of tangible fixed assets - (5)
Interest received 2 -
Net cash from investing activities 2 (5)
Cash flows from financing activities
Intercompany loans - 2,473
Amount withdrawn by directors - (3)
Issue of new shares 1,390 2,712
Equity dividends paid (1,031) (400)
Net cash from financing activities 359 4,782
Increase in cash and cash equivalents (1,042) 2,232
Cash and cash equivalents at beginning of year 2 2,569 337
Cash and cash equivalents at end of year 2 1,527 2,569
Company Statement of Cash Flows
for the Year Ended 31 December 2021
2021 2020
Notes £'000 £'000
Cash flows from operating activities
Cash generated from operations 1 (727) (383)
Interest paid (150) (5)
Tax paid
Net cash from operating activities (877) (388)
Cash flows from investing activities
Purchase of tangible fixed assets - (5)
Dividends received 2,050 2,100
Net cash from investing activities 2,050 2,095
Cash flows from financing activities
Intercompany loans (3,310) (2,184)
Amount withdrawn by directors (2) (2)
Issue of new shares 1,390 2,712
Equity dividends paid (1,031) (400)
Net cash from financing activities (2,952) 126
Increase in cash and cash equivalents (1,779) 1.833
Cash and cash equivalents at beginning of year 2 1,899 66
Cash and cash equivalents at end of year 2 121 1.899
Notes to the Statements of Cash Flows
for the Year Ended 31 December 2021
1. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
Group
2021 2020
£'000 £'000
Profit before income tax 2,827 2,347
Depreciation charges 1 1
Finance costs 1,195 1,018
Finance income (2)
4,021 3,366
Increase in trade and other receivables (9,602) (2,713)
(Decrease)/increase in trade and other payables 5,828 (1,566)
Cash absorbed in operations 247 (913)
Company
2021 2020
£'000 £'000
Profit before income tax 1,275 1,610
Depreciation charges 1 1
Finance costs 150 5
Dividend income (2,050) (2,100)
(624) (484)
Increase in trade and other receivables 17 (28)
Increase in trade and other payables (120) 129
Cash absorbed in operations (727) (383)
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statements of Cash Flows in respect of cash and
cash equivalents are in respect of these Statement of Financial Position
amounts:
Group Company
31.12.21 1.1.21 31.12.21 1.1.21
£'000 £'000 £'000 £'000
Year ended 31 December 2020
Cash and cash equivalents 1,527 2,569 121 1,899
Year ended 31 December 2019
Cash and cash equivalents 2,569 337 1,899 66
STATUTORY INFORMATION
Vector Capital Plc is a public limited company, registered in England and
Wales. The Company's registered number and registered office address can be
found on the General Information page.
3. ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements of the Group have been prepared using
the historical cost convention, on a going concern basis and in accordance
with UK-adopted international accounting standards and the Companies Act 2006
applicable to companies reporting under IFRS, using accounting policies which
are set out below and which have been consistently applied to all years
presented, unless otherwise stated.
On 31 December 2020 IFRS as adopted by the European Union were brought into UK
law and became UK-adopted international accounting standards with future
changes being subject to endorsement by the UK Endorsement Board.
The financial statements of the Company have been prepared in accordance with
Financial Reporting Standard 101 "Reduced Disclosure Framework" ('FRS 101')
and the requirements of the Companies Act 2006. The Company will continue to
prepare its financial statements in accordance with FRS 101 on an ongoing
basis until such time as it notifies shareholders of any change to its chosen
accounting framework.
In accordance with FRS 101, the Company has taken advantage of the following
exemptions:
· Requirements of IAS 24, 'Related Party Disclosures' to disclose related party
transactions entered into between two or more members of a group;
· the requirements of paragraphs 134(d) to 134(f) and 135(c) to 135(e) of IAS 36
Impairments of Assets;
· the requirements of IFRS 7 Financial Instruments: Disclosures;
· the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B,
40C, 40D and 111 of IAS 1 Presentation of Financial Statements;
· the requirements of paragraphs 134 to 136 of IAS 1 Presentation of Financial
Statements;
· the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors.
New and amended standards adopted by the Group
There are a number of new and revised IFRSs that have been issued but are not
yet effective that the Company has decided not to adopt early.
The most significant new standards and interpretations adopted are as follows:
Ref Title Summary Application date of standards (periods commencing)
IFRS9, IAS39 and IFRS7 Interest Rate Benchmark Reform Phase 2 Amendments regarding measurement and classification 1 January 2021
New standards and interpretations not yet adopted
Unless material the Group does not adopt new accounting standards and
interpretations which have been published and that are not mandatory for 31
December 2021 reporting periods.
No new standards or interpretations issued by the International Accounting
Standards Board ('IASB') or the IFRS Interpretations Committee ('IFRIC') as
adopted by the UK Endorsement Board have led to any material changes in the
Company's accounting policies or disclosures during each reporting period.
The most significant new standards and interpretations to be adopted in the
future are as follows:
Ref Title Summary Application date of standards (periods commencing)
IAS1 Presentation of Financial Statements Amendments regarding the classification of liabilities 1 January 2023
Amendments to defer effective date of the January 2020 amendments 1 January 2023
Going concern
The financial statements are prepared on a going concern basis as the
Directors are satisfied that the Group's forecasts and projections, taking
into account potential changes in trading patterns, indicate that the Group
will be able to continue current operations for the foreseeable future.
The Group's wholesale borrowing facilities totalling £35m are due for renewal
in July and October 2022, on a rolling annual contract, the Group maintain a
good working relationship with both providers and are confident the facilities
will be renewed.
The Directors have obtained comfort from its majority shareholder, Vector
Holdings Limited, that Group loans totalling £3m, will not be recalled within
12 months of the year end.
In addition, the Directors have obtained comfort from other companies within
the wider related party Group that they will provide financial support should
the need arise and will not seek repayment of Group loans within 12 months of
the date of approval of these financial statements. Accordingly, the Directors
continue to adopt the going concern basis in preparing the financial
statements.
Basis of consolidation
Subsidiaries are all entities over which the Group has control. The
subsidiaries consolidated in these Group accounts were acquired via group
re-organisation and as such merger accounting principles have been applied.
The subsidiaries financial figures are included for their entire financial
year rather than from the date the Company took control of them.
The Company acquired its 100% interest in Vector Asset Finance Limited ("VAF")
and Vector Business Finance Ltd ("VBF") in 2019 by way of a share for share
exchange. This is a business combination involving entities under common
control and the consolidated financial statements are issued in the name of
the Group but they are a continuance of those of VAF and VBF. Therefore, the
assets and liabilities of VAF and VBF have been recognised and measured in
these consolidated financial statements at their pre combination carrying
values. The retained earnings and other equity balances recognised in these
consolidated financial statements are the retained earnings and other equity
balances of the Company, VAF and VBF. The equity structure appearing in
these consolidated financial statements (the number and the type of equity
instruments issued) reflect the equity structure of the Company including
equity instruments issued by the Company to affect the consolidation. The
difference between consideration given and net assets of VAF and VBF at the
date of acquisition is included in a Group reorganisation reserve.
Inter-company transactions, balances and unrealised gains on transactions
between Group companies are eliminated during the consolidation process.
The subsidiaries prepare their accounts to 31 December under FRS101, there are
no deviations from the accounting standards implemented by the company.
Where necessary accounting policies of subsidiaries have been changed to
ensure consistency with the policies adopted by the Group.
Property, plant and equipment
Depreciation is provided at the following annual rates in order to write off
each asset over its estimated useful life.
Fixtures and fittings - 20% on cost
Computer equipment - 25% on cost
Taxation
Current taxes are based on the results shown in the financial statements and
are calculated according to local tax rules, using tax rates enacted or
substantially enacted by the statement of financial position date.
Employee benefit costs
The Group operates a defined contribution pension scheme. Contributions
payable to the Group's pension scheme are charged to the income statement in
the period to which they relate.
Government grants
The Company recognises government support grants as other income, accrued for
the period of eligibility. Government grants relate to the Job Retention
Scheme which is designed to safeguard employment due to pressures imposed by
the Covid-19 pandemic.
Significant accounting policies
a) Revenue Recognition
Turnover is measured at the fair value of the consideration received or
receivable net of trade discounts. Turnover includes revenue earned from the
rendering of service, namely commercial lending in the unregulated secured
loan market, the policies adopted are as follows -
- Interest income is recognised on an accrual basis using the actual interest
rate as stipulated within the terms of the contractual agreement.
- Setup and renewal fees are recognised in accordance with the stage of
completion.
Dividend and interest income
Interest income, other than from commercial loans, is recognised using the
effective interest method and dividend income is recognised as the company's
right to receive payment is established. Each is then shown separately in the
income statement and other comprehensive income.
b) Investments
Investment in subsidiaries is initially measured at cost and subsequently each
year re-measured at fair value. Gains or losses arising from changes in fair
values of investments are included in income statement in the period in which
they arise.
c) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and time, call and current
balances with banks and similar institutions, which are readily convertible to
known amounts of cash and which are subject to insignificant risk of changes
in value. This definition is also used for the statement of cash flows.
d) Financial instruments
Financial assets and financial liabilities are recognised when the company
becomes 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 (other than financial assets
or liabilities at fair value through the income statement) are added to or
deducted from the fair value as appropriate, on initial recognition.
e) Financial assets
Financial assets are subsequently classified into the following specified
categories:
- financial assets at fair value through the income statement, including held
for trading;
- fair value through other comprehensive income; or
- amortised cost.
The classification depends on the nature and purpose of the financial asset
(ie. the Company's business model for managing the financial assets and the
contractual terms of the cash flows) and is determined at the time of initial
recognition.
Financial assets are classified as at fair value through other comprehensive
income if they are held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets, and the
contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal
amount outstanding. They are measured at amortised cost if they are held
within a business mode whose objective is to hold financial assets in order to
collect contractual cash flows and the contractual terms give rise on
specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Financial assets not held at amortised cost or fair value through other
comprehensive income are held at fair value through the income statement.
f) Trade receivables
Trade receivables are amounts due from customers in relation to commercial
lending provided as part of the ordinary course of business. If collection is
expected in one year or less (as is the normal operating cycle of the
business), the receivables are classified as current assets, if not, they are
presented as non-current assets.
Loans made by the Group are initially recognised at cost, being the fair value
of the consideration received or paid associated with the loan or borrowing.
Loans are subsequently measured at amortised cost using the effective interest
method where appropriate, less any impairment for loans. The loan will be
de-recognised when the Group is no longer eligible for the cash flows from it.
The credit risk of trade receivables is considered low due to the legal
charges held by the Group. The Directors regularly review the trade
receivables to ensure security held is sufficient to maintain a low level of
risk. Where defaults occur, the company uses its legal powers to seize assets
held as security and liquidate them in order to recover the debt. Should the
security diminish in value and credit risk is re-assessed as higher the
Directors will make a provision for bad debts which will represent a charge to
the Income statement.
There is no Grouping for credit risk, each trade receivable is reviewed on its
own merit.
g) Financial liabilities
Financial liabilities are contractual obligations to deliver cash or another
financial asset.
All financial liabilities are measured at amortised cost, except for financial
liabilities at fair value through the income statement. Such liabilities
include derivatives, other liabilities held for trading, and liabilities that
an entity designates to be measured at fair value through profit or loss (see
'fair value option' below).
All interest-bearing loans and borrowings are classified as financial
liabilities at amortised cost.
h) Fair value option
An entity may, at initial recognition, irrevocably designate a financial asset
or liability that would otherwise have to be measured at amortised cost or
fair value through other comprehensive income to be measured at fair value
through the income statement if doing so would eliminate or significantly
reduce a measurement or recognition inconsistency (sometimes referred to as an
'accounting mismatch') or otherwise results in more relevant information.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an open transaction between free market participants.
i) De-recognition
De-recognition of financial assets and liabilities is the point at which an
asset or liability is removed from the financial statement.
Financial assets are de-recognised when the rights to receive cashflows from
the assets have ceased and the Company has transferred substantially all the
risk and rewards of ownership of the asset.
Financial liabilities are de-recognised when the obligation is discharged,
cancelled or expired.
j) Impairment
Impairment of financial assets is recognised in stages:
Stage 1 - as soon as a financial instrument is originated or purchased,
12-month expected credit losses are recognised in the income statement and a
loss allowance is established. This serves as a proxy for the initial
expectations of credit losses. For financial assets, interest revenue is
calculated on the gross carrying amount (ie without deduction for expected
credit losses).
Stage 2 - if the credit risk increases significantly and is not considered
low, full lifetime expected credit losses are recognised in the income
statement. The calculation of interest revenue is the same as for Stage 1.
Stage 3 - if the credit risk of a financial asset increases to the point that
it is considered credit-impaired, interest revenue is calculated based on the
amortised cost (ie the gross carrying amount less the loss allowance).
Financial assets in this stage will be assessed individually. Lifetime
expected credit losses are recognised on these financial assets.
On an ongoing basis the Company reviews and assesses whether a financial asset
is impaired.
Expected credit losses are calculated based on the Company review using
objective tests of security held, defaults, market conditions and other
reasonable information available to the Company at the time of review. There
is no Grouping for credit risk, each trade receivable is reviewed on its own
merit.
Losses as a result of the review are recognised in the Income Statement.
k) Borrowing costs
All borrowing costs are recognised in the Income Statement in the period in
which they are incurred.
Critical accounting estimates and judgements
The preparation of financial information requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and assumptions are reviewed by the Directors on an ongoing basis.
Revisions or amendments to the accounting estimates are recognised in the
period in which the estimate is revised and in any future periods affected.
The Directors consider that loan impairment provision is the most important to
the true reflection of the Company's and the Group's position.
Loan impairment provisions
The Directors monitor debts carefully, the company operates tight controls to
ensure bad debts are minimised, including the holding of adequate legal
security. Where debts become overdue management assess the collectability of
the debt on a case by case basis, where doubts exist over the recoverability
provisions will be made and charged to the Income statement.
Financial risk management
The Group's risk management is controlled by the board of Directors. The
Board identify, evaluate and mitigates financial risks across the Group.
Financial risks identified and how these risks could affect the Group's future
financial performance are listed below;
Market risk - interest rate
The Group holds borrowings from banks at variable rates which are linked to
lending provided to customers. The risk is measured through sensitivity
analysis. The risk is managed via monitoring of base rates when new loans
and renewals are issued to maintain a suitable margin above cost. Since
loans are short term the exposure to higher rates is low.
Credit risk
The Group lends to third parties as included in trade debtors, there is a risk
of default from a borrower. Risk is measured by review of security held
compared to credit provided. the risk is management by undertaking thorough
valuations of security, obtaining legal charge and stringent onboarding
processes. At the year end Group trade debtors of £46,262,775 (2020:
£36,373,856) represented 54% (2020: 44%) of the security held.
Liquidity risk
The risk the Company cannot meet its financial responsibilities such as
finance and operating expenses. The risk is measured by way of rolling cash
flow forecasts prepared by management, including undrawn borrowing facilities
and cash and cash equivalents. The risk is controlled by the timing and
availability of new finance for customers.
Capital risk
The Group's objective when managing capital is to safeguard the Group's
ability to continue as a going concern and to be profitable for its
shareholders. The board monitors capital by assessing liquidity, forecasts
and demand for lending on an ongoing basis.
4. OPERATING SEGMENTS
The entire revenue and results of the Group are from a single operating
segment. The Group therefore does not consider requirement to disclose
segmental information necessary.
5. OTHER INCOME
2021 2020
£'000 £'000
Grant income: Coronavirus job retention scheme - 29
- 29
6. EMPLOYEES AND DIRECTORS
2021 2020
£'000 £'000
Wages and salaries 320 294
Social security costs 31 28
Other pension costs 24 2
375 324
The average number of employees during the year was as follows:
2021 2020
No. No.
Administrative 8 7
Directors' remuneration
2021 2020
£'000 £'000
Salaries 169 194
Pension contributions 20 -
189 194
The highest paid director, Agam Jain, was paid remuneration of £120,000
(2020, £100,000) during the year.
7. PROFIT BEFORE INCOME TAX
2021 2020
£'000 £'000
Broker's commission 502 321
Depreciation - owned assets 1 1
Auditors' remuneration
Audit of Group 35 31
Non-audit services 3 19
38 50
Bad debts 50 43
8. INCOME TAX
Analysis of tax expense
2021 2020
£'000 £'000
Current tax:
Corporation tax 538 445
Total tax expense in consolidated statement of profit or loss 538 445
Factors affecting the tax expense
The tax assessed for the year is higher than (2020 - lower than) the standard
rate of corporation tax in the UK. The difference is explained below:
2021 2020
£'000 £'000
Profit before income tax 2,827 2,347
Profit multiplied by the standard rate of corporation tax in the UK of 19% 537 446
(2019 - 19%)
Effects of:
Accelerated capital allowances (1)
Rounding 1
Tax expense 538 445
9. PROFIT OF THE COMPANY
As permitted by Section 408 of the Companies Act 2006, the income statement of
the parent company is not presented as part of these financial statements.
The Company's profit for the financial year was £1,275,687 (2020 -
£1,609,732).
10. DIVIDENDS
2021 2020
£'000 £'000
Ordinary shares of £0.01 each
Final 601 -
Interim 430 400
430 400
The interim dividend for the year of 0.95 pence per share was paid on 24
September 2021
11. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of
shares adjusted to assume the conversion of all dilutive potential ordinary
shares.
Reconciliations are set out below.
2021
Earnings £'000 Weighted average number of shares Per-share amount pence
Basic EPS
Earnings attributable to ordinary shareholders 2,289 43,687,987 5.24
Effect of dilutive securities - - -
Diluted EPS
Adjusted earnings 2,289 43,687,987 5.24
2020
Earnings £'000 Weighted average number of shares Per-share amount pence
Basic EPS
Earnings attributable to ordinary shareholders 1,902 34,066,007 5.58
Effect of dilutive securities - - -
Diluted EPS
Adjusted earnings 1,902 34,066,007 5.58
12. PROPERTY, PLANT AND EQUIPMENT
Group
Fixtures and fittings Computer equipment Totals
£'000 £'000 £'000
COST
At 1 January 2021 and 31 December 2021 1 4 5
DEPRECIATION
At 1 January 2021 - 1 1
Charge for year - 1 1
At 31 December 2021 - 2 2
NET BOOK VALUE
At 31 December 2021 1 2 3
At 31 December 2020 1 3 4
Company
Fixtures and fittings Computer equipment Totals
£'000 £'000 £'000
COST
At 1 January 2021 and 31 December 2021 1 4 5
DEPRECIATION
At 1 January 2021 - 1 1
Charge for year - 1 1
At 31 December 2021 - 2 2
NET BOOK VALUE
At 31 December 2021 1 2 3
At 31 December 2020 1 3 4
13. INVESTMENTS
Company
Shares in Group Undertakings
£'000
COST
At 1 January 2021 and 31 December 2021 17,000
NET BOOK VALUE
At 31 December 2021 17,000
At 31 December 2020 17,000
Shares in Group Undertakings comprises;
Name of entity Country of incorporation Ownership held Principal activities
2021 2020
Commercial lending
Vector Business Finance Ltd England and Wales 100% 100%
Vector Asset Finance Ltd England and Wales 100% 100% Commercial lending
14. TRADE AND OTHER RECEIVABLES
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Current:
Trade debtors 46,263 36,374 - -
Amounts owed by Group undertakings - - 8,456 5,146
Prepayments and accrued income 302 589 11 28
46,585 36,963 8,467 5,174
Trade receivables are stated after provisions for impairment of £Nil (2020;
£Nil).
68% of trade receivables were held by third party secure funding (2020, 73%).
Trade and other receivables are stated at amortised cost.
15. CASH AND CASH EQUIVALENTS
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Bank deposit account 1,527 2,569 121 1,899
16. TRADE AND OTHER PAYABLES
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Current:
Trade creditors 3 18 2 18
Amounts owed to Group undertakings 3,000 3,000 3,000 3,000
Social security and other taxes 11 9 11 9
Other creditors 20,335 14,814 - -
Accruals and deferred income 509 189 22 128
23,858 18,030 3,035 3,155
The following secured debts are included within creditors:
Group Company
£'000 £'000
Other creditors under 1 year 20,335 -
Other creditors includes bank finance which is secured against the associated
loans assigned to it by way of block discounting. These balances have not
been classified as banking facilities as the discounting facility is available
to drawdown against customer loans issued and have to be secured over the
property of the customer. Neither Vector Asset Finance Limited nor Vector
Business Finance Limited can use these facilities for working capital
requirements.
Vector Holdings Limited has provided a guarantee to Aldermore Bank and
Shawbrook Bank covering all monies and liabilities due from Vector Asset
Finance Limited and Vector Business Finance Limited.
17. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid:
Number: Class: Nominal value: 2021 2020
£'000 £'000
45,244,385 (2020: 42,052,895) Ordinary £0.005 226 210
On 28 June 2021 3,191,490 Ordinary £0.005 shares were allotted for cash.
18. RESERVES
Group
Retained earnings Share premium Group reorganisation reserve Totals
£'000 £'000 £'000 £'000
At 1 January 2021 1,401 19,502 188 21,091
Profit for the year 2,289 - - 2,289
Dividends (1,031) - - (1,031)
Cash share issue - 1,374 - 1,374
At 31 December 2021 2,659 20,876 188 23,723
Company
Retained earnings Share premium Totals
£'000 £'000 £'000
At 1 January 2021 1,210 19,502 20,712
Profit for the year 1,275 - 1,275
Dividends (1,031) - (1,031)
Cash share issue - 1,374 1,374
At 31 December 2021 1,454 20,876 22,330
19. ULTIMATE PARENT COMPANY
Vector Holdings Limited is regarded by the Directors as being the Company's
ultimate parent company.
20. RELATED PARTY DISCLOSURES
All figures quoted in £'000s
Vector Business Finance Ltd - wholly owned subsidiary
- Monies paid from subsidiary £1,550 (2020; £220)
- Funds paid to subsidiary £1,550 (2020; £530)
- Transfer of assets to subsidiary £Nil (2020; £1,634)
- Dividends voted from subsidiary £1,550 (2020; £1,450)
- Balance owed to the Company at year end £5,494 (2020; £3,944)
Vector Asset Finance Ltd - wholly owned subsidiary
- Monies paid from subsidiary £240 (2020; £1,575)
- Funds paid to subsidiary £1,600 (2020; £2,000)
- Transfer of assets from subsidiary £Nil (2020; £123)
- Dividends voted from subsidiary £500 (2020; £650)
- Balance owed to the Company at year end £2,903 (2020; £1,202)
Vector Holdings Ltd - ultimate parent company
- The Group owed £3,000 to the parent company (2020; £3,000)
- Interest is payable at a rate of 5% per annum, there is no requirement to make
capital repayments.
- Dividends totalling £809 were paid to the parent company (2020; £400)
- Vector Holdings Ltd has provided a guarantee to Aldermore Bank and Shawbrook
Bank covering all monies and liabilities due from the Group.
Key Management Personnel
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the entity, directly
or indirectly, including any Directors (whether executive or otherwise). Key
Management Personnel are defined as the Directors, executive and
non-executive. The aggregate remuneration for Key Management Personnel is
£239 (2020: £194).
Jonathan Pugsley - Director
During the year, Allazo Ltd, a company controlled by Jonathan Pugsley, charged
accountancy fees of £8 (2020: £28) to the Group.
21. ULTIMATE CONTROLLING PARTY
Mr A Jain, Director, is considered the ultimate controlling party by virtue of
his shareholding in Vector Holdings Limited, the ultimate parent company.
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