REG - Vector Capital PLC - Results for the year ended 31 December 2022
18/04/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230418:nRSR5034Wa&default-theme=true
RNS Number : 5034W Vector Capital PLC 18 April 2023
18 April 2023
Vector Capital plc
("Vector Capital", the "Company" or the "Group")
Full year results for the year ended 31 December 2022
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 2022.
Highlights
· The Group shows continued growth despite uncertain economic conditions
· Loan book growth of 14.9% to £53.2m (FY21: £46.6m)
· Revenue growth of 12.4% to £5.9m (FY21: 5.3m)
· Consistent profit before tax of £2.8m (FY21: 2.8m)
· Continued growth in shareholders equity whilst following a consistent and
progressive dividend policy recognising the importance to shareholders of the
dividend as part of their overall return.
· Annual growth in Net Asset Value, shown as per share. Net Assets were £25.1m
as at 31 December 2022 (£24.0m at 2021 and £21.3m at 2020).
· Proposed final dividend 1.53 pence per share (FY21: 1.51p)
· Near terms focus of maintaining the quality of the loan book against the
current uncertain market back drop
Agam Jain, CEO of Vector Capital, commented: "I am pleased to present our 2022
results. The Company performed well during the year despite the difficult
market conditions. We were able to grow our loan book by 14.9% to £53.2
million and the Group's positive operational performance has been achieved
despite the increase in external borrowing costs on new loans provided by our
wholesale funders and co-lenders. The Group has been able to pass on the
majority of these increases to customers and in some cases reduce gearing to
maintain margins.
We continue to look and explore further options to expand our loan book,
maximise shareholder returns and further establish our place in the market
segment."
Enquiries
Vector Capital plc 020 8191 7615
Robin Stevens (Chairman)
Agam Jain (CEO)
WH Ireland Limited 020 7220 1666
Hugh Morgan, Chris Hardie, Darshan Patel
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.
CHAIRMAN'S STATEMENT
I am pleased to present our 2022 Annual Report and Accounts, which reflect the
results of the continued growth in Vector's secured loan book in the UK small
and medium-sized enterprises (SMEs) sector. Vector's customers are generally
smaller property developers who buy properties to develop or refurbish and
then re-sell or refinance.
The Company performed well in the year in difficult market conditions and was
able to grow our loan book by utilising retained profits, increased wholesale
bank facilities now standing at £40m as at 31 December 2022 and finance
received from co lending arrangements. This financing, reflecting effective
gearing on our capital base underpins the Group's strong results for the year,
achieving revenue growth of 12.4% to £5.9m, consistent profit before tax of
£2.8m, and a 14.9% rise in the value of the loan book from £46.3m to
£53.2m. Such growth is of course 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.
The Group's positive operational performance has been achieved despite the
increase in external borrowing costs on new loans provided by our wholesale
funders and co-lenders. The Group has been able to pass on the majority of
these increases to customers and in some cases reduce gearing to maintain
margins.
Despite the Group's own resilience in these challenging economic and financial
conditions, certain borrowers have been adversely affected by delays in
completions, the supply chain, cost issues and a general softening of values
in the residential property market. As a result, the above results include a
provision of £0.2m for doubtful debts which may or may not be required.
Recovery of all debts will continue to be actively pursued.
We have a determined strategy to continue to increase our loan book within the
context of the continuing uncertain and challenging conditions which exist in
the UK, achieved by utilising our own resources and the external facilities
provided by our wholesale lenders and co lenders. As part of this process, we
intend to further increase the loan gearing we are able to achieve on borrowed
funds by strategically rebalancing our loan book. This is intended to lower
average value advances but is considered a prudent measure by the Board.
We continue to factor in the implications on the property market of uncertain
valuations, the return of double digit inflation and higher than normal
interest rates and we are fortunate to be able to draw on our team's
considerable experience during these challenging times.
As a Board we continue to take very seriously our obligations 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 are maintained in all we do as a public company and we recognise
our wider environmental, social and governance responsibilities to
shareholders and other stakeholders.
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.
The results for the year are only possible by the efforts of Vector's
employees and my fellow Board members, including Gordon Robinson who I'm
delighted joined us with his extensive banking experience in February 2022,
and considerable thanks are due to them, as well as our business partners and
professional advisers.
We are also indebted to our shareholders, with whom we look forward to
developing a rewarding relationship as market conditions improve. This
relationship is recognised in our proposed final dividend for the year of 1.53
pence per share, represents an increase of 0.02 pence or 1.3% over 2021,
in-line with our stated intention to adopt a progressive dividend policy as we
acknowledge the importance to shareholders of the dividend as part of their
overall return.
I am more confident than ever that we have the skills, strategy and experience
to capitalise on the market opportunities that exist in these uncertain times
and thereby continue to prosper thorough 2023.
Robin Stevens
Chairman
17 April 2023
CHIEF EXECUTIVE'S STATEMENT
A strong performance in uncertain times
I am pleased to report a healthy set of results achieved in a very uncertain
market. The economy faced the challenges of rocketing energy prices due to the
Ukraine war, rising costs and long lead times of building materials, political
turmoil and repeated Bank of England rate rises. Despite this we are proud to
remain one of the select group of AIM quoted companies paying consistent
dividends and showing consistent capital growth.
Our loan book was £53.2m at 31 December 2022, up from £46.3m at 31 December
2021. This is a commendable 14.9% year on year growth. The average monthly
loan book for the 12 months period was £52m (2021: £40.8m) an increase of
27.4%.
The achieved average interest rate for the year was 11.18% p.a. (2021: 11.84%)
and the average loan to value was 57.12% (2021: 53.52%).
Pre-tax profit for the year was £2.8m, similar to that achieved in 2021 of
£2.8m. This was achieved despite making a provision of £0.2m for potential
doubtful debts, all of which will be actively pursued.
On the basis of this performance a final dividend for the year of 1.53p per
share is proposed (2021: 1.51p).
Diverse market spread
Our loan book is secured by properties in a diverse spread of sectors.
Market segmentation at 31 December2022
2022 % 2021 %
Residential £30,351,346 56.81% £24,580,323 53.07%
Commercial £11,643,949 21.79% £12,773,180 27.58%
Land & Development £4,881,424 9.14% £5,429,273 11.72%
Mixed £4,707,648 8.81% £2,997,977 6.47%
2nd charge £1,545,273 2.89% £532,023 1.15%
Other £300,000 0.56%
£53,429,641 100.00% £46,312,775 100.00%
Our direction of travel is towards smaller residential loans for the
foreseeable future where we can utilise a higher proportion of our wholesale
debt funding and thereby grow the loan book more quickly with our existing
capital base.
We are also issuing selected loans against second charge where the equity
value in the property is substantial.
Funding
We achieved increases in our wholesale bank funding lines during the year to
£40m (up from £35m in 2021). Our wholesale bank providers remain prepared
to entertain a further increase in facilities as and when we require.
Our first drawdown on co-funding from a Swiss investment fund started in
December 2022 and we expect these facilities to be utilised further during
2023.
Our liquidity remains healthy, and we have good capacity to fund selected new
loan opportunities meeting our criteria.
Our Team
Gordon Robinson was appointed as a Non-Executive Director in February 2022.
Gordon has over 30 years of senior banking experience and has added valuable
sector expertise to the board.
Apart from this appointment, our head count has remained the same and the
current operational team is well positioned to handle the projected activity
for 2023.
Outlook
Data provided by members of the Association of Short-Term Lenders, shows that
UK bridging completions were just over £1.4bn in Q3, 2022, representing an
increase of 15.9% on the June 2022 quarter. This is the latest data at the
time of writing. However, Q4 is likely to show temporary stalling as lenders
take stock of the macro-economic circumstances now prevailing.
Going forward into 2023, we along with other lenders will continue to exercise
caution in our underwriting and stress testing. This means our focus during Q1
and Q2 of 2023 has been and will remain more on caution and safety instead of
aggressive growth. Our borrowers will have to deal with higher monthly
payments due to the multiple rate rises and are likely to find it more
challenging to exit via sale or through re-finance with the high street banks.
Once the market has settled, however we would hope to return to a higher
growth trajectory from Q3 onwards.
Agam Jain
Chief Executive Officer
17 April 2023
CONSOLIDATED INCOME STATEMENT
2022 2021
Notes £'000 £'000
CONTINUING OPERATIONS
Revenue 5,928 5,275
Cost of sales (429) (502)
GROSS PROFIT 5,499 4,773
Administrative expenses (911) (703)
OPERATING PROFIT 4,588 4,070
Finance costs (1,782) (1,245)
Finance income 3 2
PROFIT BEFORE INCOME TAX 5 2,809 2,827
Income tax 6 (534) (538)
PROFIT FOR THE YEAR 2,275 2,289
Profit attributable to:
Owners of the parent 2,275 2,289
Earnings per share expressed in pence per share: 9
Basic 5.03 5.24
Diluted 5.03 5.24
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
2022 2021
£'000 £'000
PROFIT FOR THE YEAR 2,275 2,289
Other comprehensive income - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2,275 2,289
Total comprehensive income attributable to:
Owners of the parent 2,275 2,289
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2022 2021
Notes £'000 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10 1 3
1 3
CURRENT ASSETS
Trade and other receivables 12 53,997 46,565
Cash and cash equivalents 13 688 1,527
54,685 48,092
TOTAL ASSETS 54,686 48,095
SHAREHOLDERS' EQUITY
Called up share capital 15 226 226
Share premium 20,876 20,876
Group reorganisation reserve 188 188
Retained earnings 3,798 2,659
TOTAL EQUITY 25,088 23,949
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 14 25,800 23,858
Tax payable 240 288
26,040 24,146
NON-CURRENT LIABILITIES
Trade and other payables 14 3,558 -
TOTAL LIABILITIES 29,598 24,146
TOTAL EQUITY AND LIABILITIES 54,686 48,095
The notes form part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
2022 2021
Notes £'000 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10 1 3
Investments 11 17,000 17,000
17,001 17,003
CURRENT ASSETS
Trade and other receivables 12 8,832 8,467
Cash and cash equivalents 13 117 121
8,949 8,588
TOTAL ASSETS 25,950 25,591
SHAREHOLDERS' EQUITY
Called up share capital 15 226 226
Share premium 20,876 20,876
Retained earnings 1,700 1,454
TOTAL EQUITY 22,802 22,556
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 14 148 3,035
148 3,035
NON-CURRENT LIABILITIES
Trade and other payables 14 3,000 -
TOTAL LIABILITIES 3,148 3,035
TOTAL EQUITY AND LIABILITIES 25,950 25,591
As permitted by Section 408 of the Companies Act 2006, the income statement of
the Company is not presented as part of these financial statements. The
Company's profit for the financial year was £1,381,301 (2021 - £1,275,687).
The financial statements were approved by the Board of Directors on date and
were signed on its behalf by:
J Pugsley - Director
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called up share capital Retained earnings Share premium Group reorganisation reserve Total equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021 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 20,876 188 23,949
CHANGES IN EQUITY
Dividends - (1,136) - - (1,136)
Total comprehensive income - 2,275 - - 2,275
BALANCE AT 31 DECEMBER 2022 226 3,798 20,876 188 25,088
Notes:
• Share premium relates to the consideration paid for ordinary share capital in
excess of the nominal value of the ordinary share capital.
• The group reorganisation reserve relates to adjustments to the retained
earnings of the group upon consolidation of the financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
Called up share capital Retained earnings Share premium Total equity
£'000 £'000 £'000 £'000
Balance at 1 January 2021 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
CHANGES IN EQUITY
Dividends - (1,136) - (1,136)
Total comprehensive income - 1,382 - 1,382
BALANCE AT 31 DECEMBER 2022 226 1,700 20,876 22,802
Notes:
• Share premium relates to the consideration paid for ordinary share capital in
excess of the nominal value of the ordinary share capital.
CONSOLIDATED STATEMENT OF CASH FLOWS
2022 2021
Notes £'000 £'000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 1 2,656 247
Interest paid (1,782) (1,195)
Tax paid (581) (455)
NET CASH FROM OPERATING ACTIVITIES 293 (1,403)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 3 2
NET CASH FROM INVESTING ACTIVITIES 3 2
CASH FLOWS FROM FINANCING ACTIVITIES
Amounts introduced by directors 1
Share issue - 16
Share premium - 1,374
Equity dividends paid (1,136) (1,031)
NET CASH FROM FINANCING ACTIVITIES (1,135) 359
Decrease in cash and cash equivalents (839) (1,042)
Cash and cash equivalents at beginning of year 2 1,527 2,569
CASH AND CASH EQUIVALENTS AT END OF YEAR 2 688 1,527
COMPANY STATEMENT OF CASH FLOWS
2022 2021
Notes £'000 £'000
Cash flows from operating activities
Cash generated from operations 1 (559) (727)
Interest paid (150) (150)
Net cash from operating activities (709) (877)
Cash flows from investing activities
Dividends received 2,200 2,050
Net cash from investing activities 2,200 2,050
Cash flows from financing activities
Intercompany loans (360) (3,310)
Amount introduced by directors 1 -
Share issue - 16
Share premium - 1,373
Equity dividends paid (1,136) (1,031)
Net cash from financing activities (1,495) (2,952)
Decrease in cash and cash equivalents (4) (1,779)
Cash and cash equivalents at beginning of year 2 121 1,899
Cash and cash equivalents at end of year 2 117 121
NOTES TO THE STATEMENTS OF CASH FLOWS
1. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
GROUP
2022 2021
£'000 £'000
Profit before income tax 2,809 2,827
Depreciation charges 1 1
Finance costs 1,782 1,195
Finance income (3) (2)
4,589 4,021
Increase in trade and other receivables (7,432) (9,602)
Increase in trade and other payables 5,499 5,828
Cash generated from operations 2,656 247
COMPANY
2022 2021
£'000 £'000
Profit before income tax 1,382 1,275
Depreciation charges 1 1
Finance costs 150 150
Dividend income (2,200) (2,050)
(667) (624)
(Increase)/decrease in trade and other receivables (4) 17
Increase/(decrease) in trade and other payables 112 (120)
Cash absorbed by operations (559) (727)
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
Year ended 31 December 2022
31.12.22 01.01.22 31.12.22 01.01.22
£'000 £'000 £'000 £'000
Cash and cash equivalents 688 1,527 117 121
Year ended 31 December 2021
31.12.21 01.01.21 31.12.21 01.01.21
£'000 £'000 £'000 £'000
Cash and cash equivalents 1,527 2,569 121 1,899
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. 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.
2. ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements of the Group have been prepared using
both the historical cost convention and fair value measurement basis, 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.
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 135I to 135(e) of IAS 36
Impairments of Assets;
· the requirements of IFRS 7 Financial Instruments: Disclosures in relation to
the significance of financial instruments along with the nature and extent of
risks arising from those financial instruments;
· 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)
IFRS 3 Conceptual Framework for Financial Reporting (Amendments to IFRS 3) 1 January 2022
IAS 37 IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment - Specifying which costs an entity includes in determining the cost of 1 January 2022
Onerous Contracts - Cost of Fulfilling a Contract) fulfilling a contract for the purposes of assessing whether the contract is
onerous.
IAS 16 IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended Prohibits a company deducting amounts received from selling items produced 1 January 2022
Use) while the company is preparing assets for its intended use from the cost of
PPE.
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 2022 reporting periods.
No new standards or interpretations issued by the International Accounting
Standards Board ('I'SB') or the IFRS Interpretations Committee ('IF'IC') 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
IFRS 17 Insurance contract Internationally consistent approach to the accounting for insurance contracts. 1 January 2023
IAS 8 Definition of Accounting Estimates Defines accounting estimates and clarifies that the effects of a change in an 1 January 2023
input or measurement technique are changes in accounting estimates.
IAS 12 Deferred Tax relating to Assets and liabilities arising from a Single Additional criterion for the initial recognition exemption under IAS 12.15, 1 January 2023
Transaction (Amendments to IAS 12) whereby the exemption does not apply to the initial recognition of an asset or
liability which at the time of the transaction, gives rise to equal taxable
and deductible temporary differences.
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 £40m 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
Property, plant and equipment is initially measured at cost and subsequently
measured at cost or valuation, net of depreciation and any impairment
losses. 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.
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 using the effective interest method. The
effective interest method calculates the amortised cost of a financial asset
and allocates the interest income over the relevant period. The effective
interest rate is the rate that discounts estimated future cash payments or
receipts through the expected life of the financial instrument or, when
appropriate, a shorter period to the net carrying amount of the financial
asset. When calculating the effective interest rate, all contractual terms of
the financial instrument and lifetime expected credit losses are considered.
- 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
(i.e. 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 (i.e. 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 £53,229,641 (2021:
£46,262,775) represented 57% (2021: 54%) of the aggregate 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.
3. 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.
4. EMPLOYEES AND DIRECTORS
2022 2021
£'000 £'000
Wages and salaries 352 320
Social security costs 35 31
Other pension costs 24 24
411 375
The average number of employees during the year was as follows:
2022 2021
No. No.
Administrative 9 8
Directors' remuneration 2022 2021
£'000 £'000
Salaries 197 169
Pension contributions 20 20
217 189
The highest paid director, Agam Jain, was paid remuneration of £120,000
(2021: £120,000) during the year, as disclosed in the Report of the
Directors.
5. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2022 2021
£'000 £'000
Brokers' commission 429 502
Depreciation - owned assets 1 1
Auditors' remuneration
Audit of Group 40 35
Non-audit services 3 3
43 38
Bad debts 212 50
6. INCOME TAX
Analysis of tax expense
2022 2021
£'000 £'000
Current tax: Corporation tax 534 538
Total tax expense in consolidated income statement 534 538
Factors affecting the tax expense
The tax assessed for the year is higher than the standard rate of corporation
tax in the UK. The difference is explained below:
2022 2021
£'000 £'000
Profit before income tax 2,809 2,827
Profit multiplied by the standard rate of corporation tax in the UK of 19% 534 537
(2021 - 19%)
Effects of:
Tax on interest paid to individuals - 1
(CT61)
Tax expense 534 538
7. DIVIDENDS
2022 2021
£'000 £'000
Ordinary shares of £0.005 each
Final 683 601
Interim 453 430
1,136 1,031
The interim dividend for the year of 1.00 pence per share was paid on 30
September 2022.
8. 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.
2022
Earnings £'000 Weighted average number of shares Per-share amount pence
Basic EPS
Earnings attributable to ordinary shareholders 2,275 45,244,385 5.03
Effect of dilutive securities - - -
Diluted EPS
Adjusted earnings 2,275 45,244,385 5.03
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
9. PROPERTY, PLANT AND EQUIPMENT
Group
Fixtures and fittings Computer equipment Totals
£'000 £'000 £'000
COST
At 1 January 2022 and 31 December 2022 1 4 5
DEPRECIATION
At 1 January 2022 - 2 2
Charge for year 1 1 2
At 31 December 2022 1 3 4
NET BOOK VALUE
At 31 December 2022 - 1 1
At 31 December 2021 1 2 3
Company
Fixtures and fittings Computer equipment Totals
£'000 £'000 £'000
COST
At 1 January 2022 and 31 December 2022 1 4 5
DEPRECIATION
At 1 January 2022 - 2 2
Charge for year 1 1 2
At 31 December 2022 1 3 4
NET BOOK VALUE
At 31 December 2022 - 1 1
At 31 December 2021 1 2 3
10. INVESTMENTS
Company
Shares in Group undertakings
£'000
COST
At 1 January 2022 and 31 December 2022 17,000
NET BOOK VALUE
At 31 December 2022 17,000
At 31 December 2021 17,000
Shares in Group Undertakings comprises;
Name of entity Country of incorporation Ownership held Principal activities
2022 2021
Commercial lending
Vector Business Finance Ltd England and Wales 100% 100%
Vector Asset Finance Ltd England and Wales 100% 100% Commercial lending
11. TRADE AND OTHER RECEIVABLES
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Current:
Trade debtors 51,709 46,263
Amounts owed by Group undertakings - - 8,816 8,456
Prepayments and accrued income 768 302 16 11
52,477 46,565 5,832 8,467
Non-Current:
Trade debtors 1,520 - - -
53,997 46,565 8,832 8,467
Trade receivables are stated after provisions for impairment of £212 (2021;
£50).
72% of trade receivables were held by third party secure funding (2021, 68%).
Trade receivables due after more than 1 year is not considered material and
therefore not reflected on the Balance Sheet.
12. CASH AND CASH EQUIVALENTS
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Bank account 688 1,527 117 121
13. TRADE AND OTHER PAYABLES
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Current:
Trade creditors 11 3 2 2
Amounts owed to Group undertakings - 3,000 - 3,000
Social security and other taxes 12 11 12 11
Other creditors 25,544 20,335 1 -
Accruals and deferred income 233 509 133 22
25,800 23,858 148 3,035
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Non-Current:
Amounts owed to Group undertakings 3,000 - 3,000 -
creditors 558 - - -
3,558 - 3,000 -
Trade and other payables are stated at amortised
cost.
Following the renegotiation of the loan from Vector Holdings Limited on 28
December 2022, it is now classified as being due more than one year
The following secured debts are included within creditors:
Group Company
£'000 £'000
Other creditors under 1 year 25,542 -
Other creditors over 1 year 558 -
26,100
Other creditors include 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.
14. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid:
Number: Class: Nominal 2022 2021
value: £'000 £'000
45,244,385 Ordinary £0.005 226 226
(2021: 45,244,385)
Holders of ordinary shares are entitled to dividends as declared from time to
time and are entitled to on vote per share at general meetings of the company.
15. ULTIMATE PARENT COMPANY
Vector Holdings Limited is regarded by the Directors as being the Company's
ultimate parent company.
Mr A Jain, Director, is considered the ultimate controlling party by virtue of
his shareholding in Vector Holdings Limited, the ultimate parent company.
16. RELATED PARTY DISCLOSURES
All figures quoted in £'000s
Vector Holdings Ltd - ultimate parent company
- The Group owed £3,000 to the parent company (2021; £3,000)
- Interest is payable at a rate of 5% per annum, there is no requirement to
make capital repayments. On 28 December 2022 the company renewed the loan
with the parent company, the rate of interest increased 6.25% per annum to be
reflective of the market rates.
- Dividends totalling £853 were paid to the parent company (2021; £809)
- 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
£268 (2021: £239).
Jonathan Pugsley - Director
During the year, Allazo Ltd, a company controlled by Jonathan Pugsley, charged
accountancy fees of £9 (2021: £8) to the Group.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR UBAKROWUSAARRecent news on Vector Capital
See all newsREG - Vector Capital PLC - Results for the year ended 31 December 2023
AnnouncementREG - Vector Capital PLC - Year-end Trading Update
AnnouncementREG - Vector Capital PLC - Update on the Aggregate Loan Book
AnnouncementREG - Vector Capital PLC - Trading Update
AnnouncementREG - Vector Capital PLC - Interim Dividend Declaration
Announcement