ANNUAL REPORT & ACCOUNTS
2022
2022 Annual Report and Accounts | 3
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT Company
Information
For the year ended
31 December 2022
Directors
Steve Baldwin (Chair)
James van den Bergh (Chief Executive Officer)
Penny Judd (Non-Executive Director)
Paul Dentskevich (Non-Executive Director)
Anders Wilhelmsen (Non-Executive Director)
(appointed 16 February 2022)
Company Secretary
Ocorian Secretaries (Jersey) Limited
Registered Office
26 New Street
St Helier
Jersey
JE2 3RA
Business Address
120 Regent Street
London
W1B 5FE
Registered Number
125245
Auditor
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
Nominated Advisor and Broker
Liberum Capital Limited
25 Ropemaker Street
London
EC2Y 9LY
Advisors
Travers Smith LLP (Solicitors – UK law)
10 Snow Hill
London
EC1A 2AL
Ogier (Solicitors – Jersey law)
44 Esplanade
St Helier
Jersey
JE4 9WG
Equiniti (Jersey) Limited (Registrar)
26 New Street
St Helier
Jersey
JE2 3RA
Contents
Strategic Report
2022 Highlights
Company Overview
Chair’s Statement
CEO’s Review
Oxygen review
Satago review
Playstack review
Vertus review
CFO’s Review
Corporate Governance
Board of Directors
Corporate Governance Statement
Audit Committee Report
Nomination Committee Report
Remuneration Committee Report
Report of the Directors
Compliance and Risk Report
ESG and Sustainability Report
Financial Statements
Report of the Independent Auditor
Consolidated Statement of Comprehensive Income
Company Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Consolidated Financial Statements
2
3
4
6
8
10
12
14
16
20
22
25
26
28
30
32
35
38
43
44
45
46
47
49
50
51
52
2022 Annual Report and Accounts | 1
2022 Highlights
REVENUE
£16.1m
REVENUE GROWTH
23%
REVENUE FROM RECURRING SOFTWARE AND
LICENSING FEES
84%
OVERSUBSCRIBED EQUITY RAISE
£10m
DIRECT EQUITY INVESTMENT IN SATAGO
BY LLOYDS BANKING GROUP
£5m (£25m post money valuation)
2 |
2 |
Company Overview
Investing in cutting edge
finance and technology:
creating long-term
value and significant
shareholder returns
Since 2017, TruFin has identified
and nurtured innovative UK
fintech companies, giving them
the resources to deliver world-
class products and services
while targeting meaningful long-
term value for our businesses,
customers and shareholders.
With offices in London and
Birmingham, Europe and the USA,
our companies Oxygen Finance
Limited (“Oxygen”), Satago Finance
Solutions Limited (“Satago”) and
Vertus Capital Limited (“Vertus”)
provide technology and niche
lending solutions to thousands
of UK and European businesses.
We also own the gaming company,
Playstack Limited (“Playstack”).
TruFin invests at the early stage
of a company’s lifecycle, guiding
it towards sustainable growth,
profitability and, ultimately, an exit.
Visit our website www.trufin.com
2022 Annual Report and Accounts | 3
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
Chair’s Statement
Steve Baldwin,
Chair
“As I look back over
a turbulent few years,
I am once again struck
by the remarkable
resilience of TruFin
and its subsidiaries
while facing a global
pandemic and ongoing
macroeconomic
uncertainty.”
4 |
I have great pleasure in presenting
this year’s Annual Report and
Accounts. It has been another year
of very positive developments for
the Group’s businesses despite
the unfavourable macroeconomic
headwinds that have once again
dominated the last 12 months.
After more than a decade of monetary
accommodation and historically low interest
rates, there has been a sea change in the economic
and financial climate. The economic legacy of
Covid-19 has been high inflation, as recovering
demand coincided with disrupted supply chains
– exacerbated by rapid commodity price rises due
to the war in Ukraine. In response, central banks
have pushed up interest rates and withdrawn or
reversed quantitative easing.
Although the market environment is unlikely to
get easier anytime soon, I am proud to say that the
Group is continuing on its growth trajectory and I
am certain that the commitment and determination
of our employees will enable the Group to skilfully
navigate this more unpredictable environment, just
as 2021 and 2022 saw TruFin prosper.
As anticipated in my statement last year, 2022
has been a year of considerable growth for three
out of four of our subsidiaries, alongside landmark
contracts and consolidation across the Group.
We head into 2023 set for further progress
across multiple fronts.
The foundations for the Group’s success were laid
in previous years, with the Group’s value-creating
shareholder restructure following the sale of
Arrowgrass’ stake, a successful pivot towards
recurring software sales and licensing fees and
a sustained relentless focus on exemplary client
service. These accomplishments paved the way
for an ambitious set of goals in 2022, which I am
happy to report have in the main been met, and
allowed us to set ever more challenging goals
for 2023 and beyond.
Chief among TruFin’s aims for the year was to
see Satago selected by Lloyds Bank plc (“Lloyds
Bank” or the “Bank”) as vendor of choice to
support its delivery of invoice financing –
this was achieved by early March. The same
month saw the Group fulfil a second key
goal: strengthening its balance sheet with an
oversubscribed placing. These achievements
sit alongside organic growth and development
across our businesses, positioning us for a
profitable future and increased value creation
for shareholders.
As I look back over a turbulent few years, I am
once again struck by the remarkable resilience
of TruFin and its subsidiaries while facing a
global pandemic and ongoing macroeconomic
uncertainty. The Group itself saw revenues
increase by 23% last year, evidencing solid
fundamentals underpinned by robust cost
controls and significant strategic progression.
The close of 2022 saw perhaps the clearest
demonstration yet of the value of – and
shareholder belief in – our proposition. In late
December, TruFin’s Board rejected a £26m
indicative offer for Oxygen, judging that it
undervalued the business and its prospects. It is
immensely satisfying to see the hard work, vision
and execution of the Group recognised in this
way and I have no doubt that we will see further
similar demonstrations in 2023 and beyond.
As ever, I look forward to updating shareholders
on our continued progress throughout the year
and my thanks go to all our employees and
shareholders, new and old, for their continued
support.
Steve Baldwin
Chair
14 March 2023
Highlights for 2022 include:
Satago signing landmark contracts
with Lloyds Bank, to help deliver
invoice financing, and Sage, the
leading small and mid-sized business
software provider, to embed Satago
services in certain products in the
UK and Ireland
Oxygen delivering another year
of profitable growth and making its
first dividend payment (of £0.25m)
to the Group
Playstack acquisition and successful
integration of Magic Fuel Games
Inc (“Magic Fuel”), a remote games
development studio based in San
Francisco, USA
Vertus recording its second full year
of profitability whilst growing its loan
book to £21.4m and increasing its
revenues by 61% to £2.2m
TruFin raising £10m via an
oversubscribed placing and open
offer to existing and new shareholders
2022 Annual Report and Accounts | 5
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
CEO’s Review
James van den Bergh,
Chief Executive Officer
“The Group remains
focused on delivering
growth, profitability and
value crystallisation.”
6 |
As our Chair has highlighted,
2022 was a year of important
structural development for TruFin.
Despite the macroeconomic
headwinds and challenging inflationary
pressures, our subsidiaries grew
their customer bases significantly,
strengthened their partnerships and
have positioned themselves for an
exciting 2023 and beyond.
At our inaugural Capital Markets Day in October,
we laid out our medium-term vision for growth
and sustainable profitability. With a medium-term
revenue target of £80-100m coupled with attractive
EBITDA margins, we are confident we will deliver
significant value to our shareholders.
It is also important to highlight that a key Group
objective is to create a stable environment for our
subsidiaries, never more so than amid a global
liquidity crisis and ongoing interest rate uncertainty.
The success of our £10m placing and open
offer in April 2022 supported by 17 institutional
shareholders, emphasises TruFin’s strong
institutional shareholder backing. This ensures
that our subsidiaries are enviably well-placed to
consolidate their market leading positions in the
years ahead.
2022 Group performance
Another Group strategic objective is to reorientate
income so that the majority comes from predictable
and repeatable sources. In 2022, 84% of Group
revenues came from recurring software and
licensing fees with our capital light model
positioning us to generate the high EBITDA margins
and return on equity that other software-as-a-
service (“SaaS”) businesses enjoy.
Overall Group revenues increased by 23% in 2022.
Within this, Satago enjoyed revenue growth of more
than 350% as a result of income generated from
contract wins with Lloyds Bank and Sage. Vertus
and Oxygen also grew strongly – 61% and 28%
respectively – continuing to follow their profitable
growth trajectory. Playstack meanwhile consolidated
its position during the year; revenues declined 11%
due to the previously announced delay of a key
console game release. The rescheduled game launch
is not expected to require TruFin to provide any
further support to Playstack.
The Group ended the year with a cash balance of
£10.3m (including cash of £5.6m in Satago and
£0.8m in Vertus which are not 100% owned).
Current trading and prospects
TruFin has meaningful targets for 2023 and Group
revenues for January 2023 were not less than
£0.98m (unaudited), a 26% increase over the same
period in 2022.
The Group remains focused on delivering growth,
profitability and value crystallisation and is excited
by the significant opportunities that lie ahead.
Outlook
During 2022 the Group successfully completed
several key transactions, positioning ourselves to
weather the global macroeconomic storms. In this
environment, global liquidity has dried up and other
market participants are now acting more rationally.
As others are forced to scrutinise their business
models more carefully, TruFin will continue to
plough its own course. We have steered two of our
four businesses towards profitability, with a third
anticipated to do the same during 2023.
The Board’s rejection of an unsolicited offer for
Oxygen is a sign of TruFin’s strength. As others
realise the embedded value and barriers to entry
within our businesses we expect to see further
interest and at the appropriate time we expect to
be rewarding our shareholders with value-creating
transactions.
We have intentionally invested in building lasting
relationships with our partners and we are beginning
to see the fruits of these investments. We work
closely with local councils, FTSE 100 companies and
global technology platforms – delivering software,
services and products to help meet their strategic
requirements. The investments we have made are
paying off and will generate significant shareholder
returns in the future.
My annual ’thank you’ to our shareholders is made
on behalf of the Board, our employees, partners and
all stakeholders for their support and faith during
these turbulent times. I would also like to take the
opportunity to welcome Anders Wilhelmsen as a
non-executive director. His presence and expertise
have proved invaluable additions to the Board since
his appointment in February 2022.
As always, there is a lot to do and a pile of wood to
chop in 2023, but we are brimming with confidence
and look forward to the opportunities that lie ahead.
James van den Bergh
Chief Executive Officer
14 March 2023
2022 Annual Report and Accounts | 7
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
Oxygen
review
“2022 has been
another year of great
achievement, with
revenue exceeding
£5m for the first
time. This improved
performance,
coupled with strong
financial management, enabled
Oxygen to return funds to TruFin
for the first time.”
Ben Jackson, CEO
REVENUE GROWTH
28%
EBITDA GROWTH TO £1.1M
62%
INCREASE IN COMMITTED SPENDING TO
£1.1bn
25% Increase
NEW SIGNED SPEND HIT A RECORD OF
£330M
24% Increase
8 |8 |
2022 performance
Current trading and prospects
Indications from initial trading in 2023 are strong
with double digit growth for recurring revenue
streams continuing.
Continued economic volatility makes Oxygen’s
products increasingly attractive; early payment
solutions are increasing relevant to our clients and
their suppliers. Similarly, business development
opportunities identified by our SaaS offer are
increasingly in demand from clients seeking
public sector insight.
Interest from new early payment clients is strong,
with several contracts expected to be signed in
Q1 2023. Equally major new client features added to
SaaS products in the second half of 2022 are rated
by existing clients and have generated strong
market interest.
“Client tenure, a measure of
customer loyalty and Oxygen’s
success in renewing contracts,
reached 6.6 years.”
Oxygen delivered revenues of £5.3m, up 28% (2021:
£4.1m), with the increase driven by strong performance
across all principal revenue streams. This helped to
increase EBITDA profits by 62% to £1.1m (2021: £0.7m).
Strong trading and working capital controls enabled
Oxygen to generate positive free cashflow – with no
Group funding required – and subsequently pay TruFin
a maiden dividend of £0.25m.
New business continued to progress well; combined
trade-spending by Oxygen’s early payment clients
increased by £0.3bn, totalling a record £24bn.
Oxygen’s SaaS product portfolio also expanded,
with new products creating incremental revenue.
Over 27% of Oxygen’s local authority Early Payment
Programme clients also committed to at least one
Oxygen SaaS subscription.
The average Early Payment Programme client tenure,
a measure of customer loyalty and Oxygen’s success
in renewing contracts, reached 6.6 years at the end of
2022 (2021: 5.8 years), adding to Oxygen’s recurring
revenue streams.
Early Payment Programme clients committed £1.1bn
in spending to more than 4,000 suppliers during 2022
(2021: £878m). New spend added during the year hit
a record £330m (2021: £267m), 24% higher than the
prior year.
Oxygen’s position as a financial technology company
delivering social value strengthened significantly.
Throughout 2022 more than 8,000 small businesses
within Oxygen clients’ local communities received
over £0.5bn in early payments – at no cost to the
client. And together with EY, Oxygen continued
to develop its Carbon Reporting tool which helps
councils understand the carbon footprint of
their supply chains.
2022 Annual Report and Accounts | 9
REVENUE GROWTH
EBITDA GROWTH TO £1.1M
INCREASE IN COMMITTED SPENDING TO
NEW SIGNED SPEND HIT A RECORD OF
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
STRATEGIC REPORT
Satago
review
“2022 has proven to be
an exciting year for
Satago – we have
pivoted from being
a specialist invoice
finance lender to
a leading digitised
working capital
solution for lenders.”
Sinead McHale, CEO
REVENUE GROWTH
+350%
WON CONTRACT WITH LLOYDS
BANK TO DELIVER THE FIRST
UNIFIED DIGITISED INVOICE
FINANCE SOLUTION TO THE UK
LENDING MARKET
LLOYDS BANK MADE A STRATEGIC
INVESTMENT IN SATAGO OF
£5M
SIGNED AGREEMENT WITH
SAGE TO FACILITATE SATAGO’S
SUBSCRIPTION SOLUTION BEING
OFFERED DIRECTLY TO THEIR SAGE
50 CUSTOMER BASE AS PART OF
THESE SUBSCRIPTION PACKAGES
10 |
10 |
REVENUE GROWTH
2022 performance
Current trading and prospects
Following conclusion of a commercial pilot and
competitive process, Satago was selected by
Lloyds Bank (the “Bank”) to deliver a new digitised
invoice financing platform for its UK customers.
Additionally, the Bank made a strategic investment
of £5m in Satago at a post-money valuation of £25m.
Satago hit numerous delivery milestones for
the Lloyds Bank contract throughout the year,
culminating in completing the trial phase of its
fully digitised end-to-end invoice finance solution for
the Bank in early 2023. The Bank is now testing
the digitised proposition ahead of customer
onboarding, expected in due course.
In June Satago signed a Letter of Intent with
Sage Group (“Sage”) and Lloyds, introducing
a significant partner to work alongside Satago
and the Bank.
These major contract wins coupled with a
continued pivot towards Lending-As-A-Service
(“LaaS”) saw revenues increase by over 350%
to £2.2m (2021: £0.5m).
Early 2023 has been dominated by continued
work with existing and prospective LaaS clients
and Embedded Finance partnerships. This has
culminated in the delivery of the trial phase of
Satago’s fully digitised end-to-end invoice finance
solution with Lloyds Bank.
Meaningful progress with the Embedded Finance
offering has resulted in a deepening of the
relationship with Sage and a signed statement
of work to embed Satago’s invoice finance service
into Sage 50, which launched in Q1 2023. Satago also
extended the agreement to provide Satago to certain
Sage 50 users as part of a subscription package
offering to the Irish market. Further extending
Satago’s core offerings of credit control and risk
insights to help SMEs better manage their debtor
book.
Satago has a growing pipeline of LaaS and
Embedded Finance customers in the UK and
Europe.
Demand for Satago’s own loan book offering
increased during the first two months of 2023.
“Satago hit numerous delivery
milestones for the Lloyds Bank
contract throughout the year,
culminating in completing the trial
phase of its fully digitised end-to-
end invoice finance solution for
the Bank in early 2023.”
>4M
Automated
credit control
messages sent
<2
minutes
Median time to
connect Accounting
Software Provider
IFM
First digitised
lending solution
for Tier 1 bank
>£150m
Lending to date
2022 Annual Report and Accounts | 11
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
Playstack
review
“2023 will be an
exciting year for
Playstack, with
multiple games
coming to market
across all platforms
and a focus on
building profitability.”
Harvey Elliott, CEO
ACQUISITION OF MAGIC FUEL,
A GAMES DEVELOPER BASED
IN SAN FRANCISCO
$3M
FOLLOWING THE ACQUISITION
OF MAGIC FUEL IN 2022,
PLAYSTACK HAS DELIVERED
ON ALL MILESTONES FOR ITS
GLOBAL TECHNOLOGY PARTNER
TITLES ANALYSED BY
MAGNITUDE IN 2022
4,000+
12 |
12 |
2022 performance
Current trading and prospects
Alongside the acquisition of Magic Fuel Games
Inc (“Magic Fuel”), and the concurrent signing of a
contract with a global technology platform, Playstack
announced a delay to a key console game title
which stunted the company’s annual growth.
Despite the delay, Playstack’s existing games
portfolio once again contributed more than 50% of
games revenue in 2022, through strong catalogue
management and platform partnerships.
Given the success of ‘Magnitude’, a proprietary
sourcing technology, in supporting the discovery
of new games, the Board has focused resources
on further developing this tool which is now
surfacing over 80% of all new game titles.
Playstack launched two new titles during 2022:
The Case of the Golden Idol and The Entropy Centre.
Both games have received significant critical acclaim,
with The Case of the Golden Idol earning a BAFTA
Nomination for best Debut Game, and also being
shortlisted for the prestigious Seumas McNally
Grand Prize at the annual Independent Game
Festival Awards in San Francisco.
In 2023 Playstack is focusing on game ecosystems
and will publish two new games with an extended
life well beyond their launch. This strategy aims to
extend revenue predictability and establish new,
longer-lasting partnerships with platform holders.
Playstack is well-placed to expand its game
portfolio in 2023 and beyond.
Playstack’s console portfolio will be further extended
in 2023, with expansions to existing games and two new
titles set for release, plus an increasingly strong pipeline
of titles for 2024 and beyond.
The mobile portfolio centres on six key titles for 2023,
including the ongoing delivery of the technology contract
by Magic Fuel.
Back-book games remain a key component of future
revenue modelling, with an increased focus on higher
quality, longer-duration titles.
2023 is expected to be a transformative year for the
business, with expectations of profitability on a full-year
basis with revenue derived from a diverse range of games.
“I am immensely proud of The Case
of the Golden Idol earning a BAFTA
Nomination for best Debut Game,
as well as being shortlisted for the
prestigious Seumas McNally Grand
Prize at the annual Independent
Game Festival Awards.”
2022 Annual Report and Accounts | 13
2022 Annual Report and Accounts | 13
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
Vertus
review
“2022 was our best
year since inception
for revenue growth,
new facilities
and profitability,
with all key
metrics improving
substantially. ”
Matt Marais, CEO
REVENUE GROWTH
61%
LOAN BOOK GROWTH
38%
DEFAULTS OR IMPAIRMENTS
ZERO
NEW LOAN FACILITIES
81%
14 |
14 |
2022 performance
Current trading and prospects
New loan facilities closed during 2022 increased
by 81% to £15.2m (2021: £8.4m), resulting in
interest income increasing by 61% to £2.2m
(2021: £1.4m).
Active facilities increased from 21 to 31 inclusive
of two early settlements. Overall loan book
increased by 38% to £21.4m (2021: £15.6m).
No defaults or impairments were recorded
across the book for the sixth consecutive year.
Increased market demand for IFAs and ongoing
consolidation ensures the value of security over
IFAs remains strong.
Ongoing consolidation in the IFA market is fuelling
demand for funding, positioning Vertus well for
further growth, as the only specialist capital provider
to the IFA sector. Furthermore, IFAs continue to
experience new-client enquiries and organic growth,
improving their top-line performance. We expect the
change in strategy to lend whole-of-market to continue
to benefit demand for capital in the coming year.
Offsetting the secular consolidation trends, the impact
of higher interest rates and increased competition in
the broader market environment has spilled over from
2022 into 2023, challenging loan book growth.
Early settlements remain a risk to overall loan book
growth, driven by higher cost of capital, customers
being sold to consolidators and alternative lenders
and banks entering the market to fund larger deals.
However, our focus remains on the smaller end of the
deal market and, although loan book growth may slow,
we still foresee steady demand to fund acquisitions
and MBOs in this space.
Lead times for closing facilities improved during the
last quarter, indicating a possible improvement
in FCA processing times. This will assist in
reducing deal cycles and improving closing
rates in the pipeline.
“Ongoing consolidation
in the IFA market is
fuelling demand for
funding, positioning
Vertus well for
further growth.”
2022 Annual Report and Accounts | 15
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
CFO’s Review
James Hussey,
Chief Financial Officer
“We are pleased to report strong
financial results driven by revenue
growth in three out of our four
subsidiaries. The overall 23%
growth in revenue resulted in
a smaller improvement in loss
before tax (5%) as we continue
to invest in our teams and
infrastructure for the Group’s
future growth opportunities.”
16 |
2022
£’000
2021
£’000
YoY
Change
Gross revenue
Net revenue
Net revenue %
Loss before tax
Loss after tax
16,119
13,115
11,044
6,901
69%
53%
(8,020)
(8,422)
(6,806)
(7,436)
Earnings per share (p)
(7.3)
(8.7)
Cash
10,273
7,608
23%
60%
16%
5%
8%
16%
35%
Gross revenue £’000
2022
2021
Net revenue £’000
2022
2021
Net revenue %
2022
2021
Loss before tax £’000
2022
(8,020)
2021
(8,422)
Loss after tax £’000
2022
(6,806)
2021
(7,436)
Earnings per share (p)
2022
(7.3)
2021
(8.7)
Cash £’000
2022
2021
16,119
13,115
11,044
6,901
69%
53%
10,273
7,608
Revenue
2022
£’000 % of rev
2021
£’000 % of rev
Interest income
2,619
16% 1,681
Fee income
7,183
Publishing income
6,317
Gross revenue
16,119
45%
39%
4,330
7,104
13,115
13%
33%
54%
EBITDA
EBITDA
Loss before tax
Depreciation and
amortisation
EBITDA
2022
£’000
2021
£’000
YoY
Change
(8,020)
(8,422)
5%
(2,485)
(5,535)
(1,667)
(6,755)
-49%
18%
Net revenue increased from 53% to 69% year on year.
This was driven by Playstack’s IP ownership strategy.
1,681
4,330
Revenue 2022 vs 2021
Interest income
2022
2021
Fee income
2022
2021
Publishing income
2022
2021
Revenue 2022 by category
2,619
7,183
6,317
7,104
Interest Income
Fee Income
Publishing Income
EBITDA improved by 18% to a loss of £5.5m (2021:
loss of £6.8m). Depreciation and amortisation includes
the amortisation of Client Contract Assets, which
are accounted for in fee expenses in the Statement
of Comprehensive Income.
Loss before tax
Loss before tax improved by 5% to a loss of £8.0m
(2021: loss of £8.4m). The 60% net revenue rise was
partially offset by increased spending in staff costs
as we continue to invest in our employees, increasing
by £1.3m to £12.6m (2021: £11.3m). Other operating
expenses increased by £1.5m to £4.8m (2021: £3.3m)
and depreciation and amortisation (excluding Client
Contract Assets amortisation) increased by £0.8m
to £1.6m (2021: £0.8m).
Earnings per share (“EPS”)
Basic EPS is calculated by dividing the net loss for
the year attributable to ordinary shareholders by the
weighted average number
of ordinary shares outstanding during the year.
Weighted average number of ordinary shares has been
adjusted to reflect the share issue that took place
in April 2022 (see Financial Statements Note 15).
Management has been granted 5,451,578 share
options in TruFin plc (see Financial Statements Note
6 for details). These could potentially dilute basic EPS
in the future, but were not included in the calculation
of diluted EPS as they are antidilutive for the years
presented as the Group is loss making.
Weighted average number
of ordinary shares (#)
Loss for the year attributable to
the owners of TruFin plc (£’000)
EPS (p)
2022
2021
90,485,862
80,822,204
(6,637)
(7.3)
(7,071)
(8.7)
2022 Annual Report and Accounts | 17
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
CFO’s Review continued
Cashflow
Cash used in operating activities in the year was
£12.7m. This was primarily made up of:
• Cash outflows from Loans and Advances of £8.0m
•
Loss for the year adjusted for non-cash items
of £4.6m
Cash used in investing activities was primarily
additions to intangible and fixed assets of £3.3m,
and £1.2m for the first payment for the acquisition
of Magic Fuel Games Inc by Playstack.
Cash generated from financing activities in the year
was £19.9m. This was made up of:
•
•
£9.5m share issue in April 2022 (net of fees)
Lloyds Banking Group making a £5m investment
into Satago
• Net borrowings of £5.4m
18 |
CORPORATE GOVERNANCE
2022 Annual Report and Accounts | 19
CORPORATE GOVERNANCE
Board of Directors
Steve Baldwin
Independent Non-Executive Chair
Penny Judd
Senior Independent Non-Executive Director
Steve has an extensive corporate finance background and is
currently a non-executive director at The Edinburgh Investment
Trust plc, Plus500 Limited and Wings Holdings Limited. He is
also a trustee of Howard de Walden Estate Limited. Steve was
the head of European equity capital markets and corporate
broking at Macquarie Capital until February 2015. Prior to this,
Steve was a director of corporate finance at JPMorgan Cazenove
for 10 years and was a vice president of corporate finance at
UBS from 1995 to 1998. He is a qualified Chartered Accountant.
Penny has over 30 years of experience in compliance,
regulation, corporate finance and audit and is currently a non-
executive director, senior independent director and chair of
the audit committee of AIM-listed Alpha Financial Management
Consulting. She is also a non-executive director and chair of the
audit committee of AIM-listed Team17 plc and LendInvest plc.
Penny started her career at KPMG, qualifying as a chartered
accountant and specialising in audit and corporate finance,
before joining the London Stock Exchange where she was head
of equity markets at the UKLA. She then moved to Cazenove &
Co as a corporate financier and was a consultant at the London
Investment Banking Association before moving into a career
in compliance. Penny was a managing director and EMEA
head of compliance firstly for UBS Limited and then Nomura
International plc before pursuing her current portfolio career.
Paul Dentskevich
Independent Non-Executive Director
Paul has over 30 years of financial services experience,
specialising in risk management, investment management and
corporate governance for hedge and other multi-asset funds.
Paul is currently risk director at Crestbridge and chair of the
risk committee at Abrdn. Prior to this, Paul was a member of the
manager’s investment committee at Brevan Howard, from 2008
to 2015. His ongoing non-executive roles include directorships
at Signal Credit GP Limited, Signal Alpha II CP Limited and
CloverTree Opportunities Fund Limited. Paul has a PhD in
Economics from Imperial College London.
20 |
Anders Wilhelmsen
Non-Executive Director
James van den Bergh
Executive Director
Anders is an investment professional and the nominated non-
executive representative of TruFin’s major shareholder, Watrium.
Anders currently serves on several boards within the Watrium
portfolio, including private equity firm, HitecVision and health-
tech company, Sensio. He holds an MA Honours in Financial
Economics from the University of St Andrews, and an MBA
from INSEAD.
James is the Chief Executive Officer of TruFin. James spun
TruFin out of Arrowgrass Capital Partners in 2018, where he led
the alternative finance team and private business. He began
his career at Merrill Lynch before transitioning into investment
management in 2003. James is a CFA Charterholder.
2022 Annual Report and Accounts | 21
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Corporate Governance Statement
The Directors acknowledge the importance of high standards
of corporate governance and how the Board and its Committees
operate. The corporate governance framework which TruFin
operates, including Board leadership and effectiveness, Board
remuneration, and internal control is based upon practices
which the Board believes are proportional to the size, risks,
complexity and operations of the business and is reflective
of the Group’s values.
On admission to AIM, the Board decided to adhere to the Quoted
Companies Alliance’s (“QCA”) Corporate Governance Code for
small and mid-size quoted companies (the “QCA Code”). The
Board considers this to be appropriate to the nature and size of
the Company and its subsidiaries. The QCA Code is constructed
around ten broad principles and a set of disclosures. The
QCA itself has stated what it considers to be appropriate
arrangements for growing companies and asks companies
to provide an explanation about how they are meeting the
principles through the prescribed disclosures.
The Board has considered how it applies each principle and
the extent to which the Board judges these to be appropriate
in the circumstances. Details of how TruFin adheres to these
principles can be found on our website www.TruFin.com.
The Board
TruFin is managed and governed by suitably qualified and
authorised personnel, under the governance of an experienced
and diverse Board of Directors. TruFin’s Board is established
with senior practitioners from the fintech industry and has
shareholder representation. The Directors act within the powers
granted by TruFin’s Articles of Association and are cognisant of
their overarching duty to promote the Group’s success and to
drive long term shareholder value. The experienced Directors
challenge the work of the executives, using care, skill and
diligence and exercising their independent judgment.
Board balance and independence
The Board currently consists of three independent non-
executive directors, one non-executive director and one
executive director. The Board is chaired by an independent
non-executive director.
The Board maintains a mix of independent and non-independent
directors in the interests of balance and good governance. The
Board considers its non-executive directors remain sufficiently
independent and of such calibre and number that their views
may be expected to be of sufficient weight that no individual or
small group can dominate the Board’s decision-making process.
The Board considers that its current composition and structure
is appropriate to maintain effective oversight of the Group’s
activities. The Board will continue to review its structure on
at least an annual basis in order to maintain an appropriate
corporate governance environment and independent oversight.
22 |
Role of the Board
It is the responsibility of the Board, through the senior
management, to ensure that TruFin maintains a suitable and
sustainable business model, overseeing that an appropriate
balance is achieved between promoting suitable long-term
growth and delivering short term objectives. The Board is
responsible for setting the strategy and maintaining the
decision-making framework in which it is implemented,
ensuring that the necessary resources are in place to
monitor performance and set values and standards in
governance matters. The Strategic Report on pages 2–18
further outlines the Board’s approach.
The Board is also responsible for the success of TruFin
within a framework of controls which enables risk to be
assessed and managed. The Compliance and Risk Report
on page 32 further details TruFin’s approach to risk.
The Chair is responsible for the leadership of the Board
and for facilitating the effective contribution of and
engagement of all Board members. The Chair has the
responsibility for ensuring the Board discharges its
responsibilities and implements the Board’s decisions.
The role of the non-executive directors is to constructively
challenge and help the Board with effective leadership
in relation to the Group’s strategy, performance, risk and
people management while ensuring a high standard of
financial control and corporate governance.
One of the independent Non-Executive Directors, Penny
Judd, has been selected as the senior independent director.
The Board is fully satisfied that the senior independent
director demonstrates complete independence and
robustness of character in this role. The senior independent
director is available to meet shareholders if they have
concerns that cannot be resolved through discussion with
the Chair or for matters where such contact would be
inappropriate.
The CEO manages the day to day operations of the Group
and reports to the Board on the performance of the Group
and progress on the strategic objectives. Implementation of
the Group’s strategies and day-to-day business is delegated
to the CEO and executive management. The Board has also
charged TruFin’s executive management to ensure that all
policies and procedures in relation to the governance of
the Group are fully integrated into its operations.
To ensure effective and independent stewardship, TruFin
has expressly set out the matters which are reserved for
the Board’s approval. Delegation of authority limits for the
Board of Directors and TruFin’s executive management
are also documented in an approved framework.
Board effectiveness
Board meetings
Five Board meetings are scheduled each year and additional
Board meetings are called as needed, if specific matters need
to be considered. In 2022, in addition to the scheduled Board
and Committee meetings, Directors attended a number of
ad-hoc Board meetings to consider additional matters, which
were predominantly related to the fundraise in April 2022.
Prior to each Board meeting, the Board and its Committees
receive relevant and timely information that will be addressed
at each meeting, together with a formal meeting agenda. The
primary focus at Board meetings is a review of the Group’s
performance and associated matters, and the Chair seeks
to encourage open debate between the Directors. Senior
executives below Board level attend Board meetings as
appropriate, and at each meeting, a subsidiary CEO is invited
to present their business update. The Directors are expected
to be present at all meetings scheduled during the year, either
in person or via video conference.
The table that follows sets out the number of formal Board and
Committee meetings held during the year ended 31 December
2022 and the number of meetings attended by each Director.
The effectiveness of the Board is the responsibility of the
Independent Non-Executive Chair and board performance
is reviewed on an annual basis. In line with the QCA Code, an
external performance review of the Board was conducted
in 2020. Nurole was appointed to administer a digital board
evaluation in Q1 2022 and the findings were presented to the
Nomination Committee and Board. For further details, please
see the report of the Nomination Committee on pages 26–27.
The result of these evaluations determined that the composition
and size of the Board and its Committees is considered
appropriate and its operation by Board members is effective.
The Board therefore believes that its members possess the
relevant qualifications and skills, as well as the balance of
personal qualities, necessary to effectively oversee and
execute the Group’s strategy.
Board committees
The Board has delegated specific responsibilities to the
Audit Committee, the Remuneration Committee and
the Nomination Committee.
Every year the Board reviews its composition and the
composition of its Committees. The Board and the Nomination
Committee oversee this process.
In view of the size of the Board and the nature of the Company,
all independent non-executive directors are members of each
Committee. Each Committee has adopted Terms of Reference,
clearly defining the Committee’s roles and responsibilities
that the members of each committee must observe in the
performance of their duties. These terms of reference are
subject to review on an annual basis and copies are available
for inspection on the Company’s website www.trufin.com.
The individual reports for the Board Committees can be found
on pages 25–29.
Board and committee attendance record
Board
Meetings
attended
13 / 13
13 / 13
11 / 13
10 / 13
7 / 10
James van den Bergh
Steve Baldwin
Penny Judd
Paul Dentskevich
Anders Wilhelmsen*
*Anders Wilhelmsen joined the Board on 16 February 2022
Committee Membership
Nomination
Committee
Audit
Committee
Remuneration
Committee
1 / 1
1 / 1
1 / 1
2 / 2
2 / 2
2 / 2
4 / 4
4 / 4
4 / 4
2022 Annual Report and Accounts | 23
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Corporate Governance Statement continued
Board culture
Shareholder engagement
The Board recognises the importance of a strong and coherent
corporate culture particularly as the Group grows. As such,
the Board seeks to establish and maintain a corporate culture
characterised by fairness in its treatment of employees and
stakeholders, whose efforts are collectively directed towards
delivering returns to shareholders in line with the Company’s
purpose and objectives.
The Board believes that corporate governance and a good
culture start at the top of any company and that the Directors
and senior management, together, drive the values, behaviours
and attitudes that support the Group’s strategy. The Board and
senior management will address any concerns that may arise
relating to the Group’s cultural environment and are prepared
to take appropriate action against unethical behaviour, violation
of company policies, or misconduct.
TruFin takes a zero-tolerance approach to bribery and
corruption and is committed to acting professionally, fairly and
with integrity in all its business dealings and relationships. It is
the Group’s policy to conduct all of its business in an honest and
ethical manner. TruFin, along with its subsidiaries, all operate an
Anti-Bribery & Corruption Policy and adopt appropriately robust
governance procedures to ensure compliance. The Board has
overall responsibility for ensuring this policy complies with its
legal and ethical obligations and that all those under its control
comply with it.
TruFin also operates a whistleblower policy for its employees.
The Board believes that fulfilling TruFin’s strategy depends
significantly on the support of its shareholders.
The Board strives to ensure that shareholders are kept up to
date on the Group’s operations, with clear and transparent
information being provided on a regular basis. The Board
maintains an active dialogue with shareholders and all material
information is released through notification via a Regulatory
News Service.
TruFin also engages with its shareholders through a subscription
news service and the Investors section on its website. The
Investors section has all publicly available information including
the latest news, investor presentations, financial results,
annual reports, governance materials, and AGM notifications.
The CEO is available to meet with TruFin shareholders
individually throughout the year or through investor roadshows
following the publication of TruFin’s financial results.
Additionally, the CEO’s of the subsidiaries are also available
to meet with TruFin shareholders if requested. Any shareholder
feedback is shared with the Directors at the Company’s
Board meetings.
TruFin concluded a successful £10m capital raise in April 2022.
As part of the fundraise, meetings were scheduled with existing
and prospective institutional shareholders to which the CEO
provided an update on the Group’s purpose for raising capital
and business plan.
Shareholders are welcome to attend the Company’s Annual
General Meeting (“AGM”) and any other general meetings of
the Company which are convened throughout the year. The
Board understands the importance of the AGM in allowing
shareholders to have open and direct dialogue with the Board
and management of the Company. If shareholders are not able
to attend the AGM, they are encouraged to contact the Directors
directly with questions prior to the meeting. All questions
received from shareholders at TruFin’s 2022 AGM were
responded to personally.
The appointment of Anders Wilhelmsen, as non-executive
director in February 2022, has facilitated direct shareholder
representation to the Board. Anders is the representative from
TruFin’s largest shareholder, Watrium AS (“Watrium”), who was
appointed, pursuant to a Relationship Agreement between
Watrium and TruFin. Anders’ appointment has brought the voice
of shareholders into board discussions which has been valuable
in making strategic decisions for the Group.
2023 Annual General Meeting
The Company anticipates holding its Annual General Meeting in June 2023.
The Notice of AGM and Form of Proxy will be posted to shareholders in due
course and a copy will be available at www.trufin.com. The location of the
AGM will be held in London, the exact location to be confirmed.
24 |
Audit Committee Report
Penny Judd
Chair of the Audit Committee
On behalf of the Board, I am pleased to present TruFin plc’s
Audit Committee Report for the year ended 31 December 2022.
The Audit Committee is responsible for monitoring the integrity
of the Company’s financial statements, reviewing significant
financial reporting issues, reviewing the effectiveness of the
Company’s internal control and risk management systems, and
overseeing the relationship with the external auditors (including
advising on their appointment, agreeing the scope of the audit
and reviewing the audit findings).
Members of the Committee
•
•
•
Penny Judd (Chair)
Steve Baldwin
Paul Dentskevich
Role of the Committee
The Audit Committee has primary responsibility for monitoring
the quality of internal controls and ensuring that the financial
performance of the Company is properly measured and
reported on. It receives and reviews reports from the Company’s
management and auditors related to the interim and annual
accounts and the accounting and internal control systems in
use throughout the Group. The Audit Committee meets at least
twice a year and has unrestricted access to the Company’s
auditors. A copy of the Audit Committee Terms of Reference
can be found on our website.
External audit
The Audit Committee approves the appointment and
remuneration of the Group’s external auditors. The Committee
also ensures that they are satisfied with the external auditors’
independence in relation to any other non-audit work
undertaken by them and also reviews their performance.
Internal audit
The Committee has considered the need for an internal
audit function during the year and continues to be of the view
that, given the size and nature of the Group’s operations and
finance team, there is no current requirement to establish
a separate internal audit function.
Significant issues considered in relation to the
financial statements
The Audit Committee assesses whether suitable accounting
policies have been adopted and whether appropriate
estimates and judgements have been made by management.
The Committee also reviews accounting papers prepared by
management, and reviews reports by the external auditors.
The specific areas reviewed by the Committee in respect of
the year were:
•
•
appropriateness of the calculation and valuation of
Goodwill recognised in the Group financial statements
appropriateness of going concern assumptions
Penny Judd
Chair of the Audit Committee
2022 Annual Report and Accounts | 25
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Nomination Committee Report
Steve Baldwin
Chair of the Nomination Committee
26 |
I am pleased to present my report as Chair of the
Nomination Committee (the “Committee”) for the year
ended 31 December 2022.
The Committee’s approach aligns to the Quoted
Companies Alliance Corporate Governance Code (“QCA
Code”) and operates under terms of reference. These
terms of reference are reviewed annually, approved by
the Committee and Board, and are made available on
TruFin’s website. The Committee meets at least once
a year, and otherwise as required.
The Committee’s objective is to assist the Board in
discharging its responsibilities relating to the composition
and performance of the Board and also ensuring effective
succession planning for the senior management of TruFin
and its subsidiaries (collectively the “Group”).
The Committee consists of three independent
non-executive directors:
•
•
•
Steve Baldwin (Chair)
Penny Judd
Paul Dentskevich
Although only members of the Committee have the right
to attend meetings, other individuals, such as the non-
executive and executive directors, may also be invited
to attend all or part of any meeting.
Role of the Committee
The key responsibilities of the Committee include:
•
•
•
•
Regularly reviewing the structure, size, and composition
(including the skills, knowledge, experience and
diversity) of the Board and all Board committees and
making recommendations to the Board with regard
to any changes
Giving full consideration to the succession planning
of Directors and other senior executives of the Group
Regularly reviewing the leadership needs of TruFin,
both executive and non-executive, with a view to
ensuring the continued ability for TruFin to compete
effectively in its marketplace
Identifying and nominating candidates to fill Board and
committee vacancies as and when they arise, taking into
account relevant experience and Diversity, and making
recommendations to the Board on such matters
•
Evaluating the Board’s performance on an annual basis
Appointment of NED
Looking ahead
We feel it is important to continually assess the composition
of the Board and senior management team to ensure that
TruFin has the right skills and experience to develop in line
with its strategic ambitions and commitment to create a
diverse and inclusive workplace. The Committee members
agreed that no changes to the Board composition were
needed at the present time.
Steve Baldwin
Chair of the Nomination Committee
TruFin announced changes to its Board composition on 16
February 2022 with the appointment of Anders Wilhelmsen.
Anders joined as a representative non-executive director
of TruFin’s largest shareholder, Watrium AS (“Watrium”),
pursuant to a relationship agreement which was entered into
between TruFin and Watrium.
As a long-standing and very supportive shareholder,
Watrium have significant experience and knowledge of
the Group’s businesses. Anders has brought considerable
expertise in designing and implementing growth strategies
which will continue to greatly benefit the Group going
forward.
Board effectiveness review
Under the QCA Code’s corporate governance requirements,
we are to consider an external performance review of the
Board every few years. In 2022, TruFin appointed Nurole
to administer a digital board evaluation. The findings were
presented to the Committee and Board in February 2022.
The evaluation required each of the Directors to submit
responses to an online review reflecting their individual
performance, the performance of the Board as a whole,
and the main areas under consideration by the Board and
its Committees. Responses were collated and analysed,
and benchmarked against boards of a similar standing.
Individual feedback reports were produced for each
director and an anonymised summary report was
produced for the Committee and Board to discuss.
The evaluation highlighted the depth and breadth of
expertise and experience across the Board and the positive
way in which its members engage with and challenge
Company management.
The evaluation also identified a number of areas for
improvement, which were addressed during the year.
Amongst other things, these have been the improvement
of Board material administration, with all directors now
having access to a centralised online Board Portal, and
the Company’s heightened focus on environmental and
social risk throughout the Group, via the revision and
implementation of its ESG Policy.
These evaluations concluded that the performance of the
Board, its Committees, the Chair and each of the Directors
is, and continues to be effective. All Directors demonstrated
commitment to their roles and contributed effectively
throughout the year.
2022 Annual Report and Accounts | 27
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT Members of the Committee
•
•
•
Paul Dentskevich (Chair)
Penny Judd
Steve Baldwin
Role of the Committee
The Committee develops and determines remuneration
packages for Executives of the Company in line with the
Company’s prevailing Remuneration Policy. It ensures that
remuneration decisions compensate executive directors
and other employees fairly and responsibly.
The key responsibilities of the Committee include:
•
•
•
•
•
•
Developing, maintaining, and recommending to the
Board, remuneration packages for Executives to
support the delivery of business objectives in the short,
medium and long-term, to deliver sustainable growth in
shareholder value
Aligning the interests of the Executives with the
interests of long-term shareholders
Applying performance criteria to encourage Executives
to operate within the risk parameters set by the Board
Rewarding the right behaviours, values, and culture
to support the delivery of TruFin’s business objectives
Ensuring that TruFin can recruit and retain high quality
Executives through fair and attractive, but not excessive,
packages
Ensuring that members of the Committee commit
sufficient time to the role and develop the necessary
skills and knowledge.
CORPORATE GOVERNANCE
Remuneration Committee Report
Paul Dentskevich
Chair of the Remuneration Committee
I am pleased to present my report as Chair of the
Remuneration Committee (the “Committee”). This report
covers the key remuneration themes and considerations of
the Committee for the year ended 31 December 2022. It sets
out the remuneration policy for the executive directors of
TruFin and other members of the senior management team as
deemed appropriate by the Board (collectively “Executives”).
TruFin’s remuneration objective is to attract, retain and
motivate Executives of the quality required to run the
Company successfully, having regard to the interests of
TruFin shareholders and other stakeholders. The philosophy
of the Committee is to achieve remuneration structures
that are transparent, fair, and consistent with its corporate
governance and regulatory obligations.
TruFin’s approach to remuneration aligns to the Quoted
Companies Alliance Corporate Governance Code. All of
TruFin’s independent non-executive directors are members
of the Committee and the representative director of TruFin’s
largest shareholder may also attend meetings of the
Committee as an observer. The Committee operates
under terms of reference, which are reviewed annually
and approved by the Committee and Board, and are made
available on TruFin’s website. The Committee meets at
least twice a year, and as necessary beyond that.
28 |
Directors’ remuneration
Executive
Salary1
£’000
Bonus2
£’000
Pension3
Benefits4
2022 Total
2021 Total
£’000
£’000
£’000
£’000
James van den Bergh
256
220
Non-executive
Steve Baldwin
Penny Judd
Paul Dentskevich
Anders Wilhelmsen
100
70
60
–
–
–
–
–
5
–
–
–
–
4
–
–
–
–
485
465
100
70
60
–
100
70
50
–
1 Full base salary during the relevant financial year
3 The value of the Company’s contribution to the individual’s pension scheme
2 Cash value of the bonus in respect of the year ended 31 December 2022
4 Benefits consist of private healthcare
Share based payments
Looking ahead
Details of share based payments and awards in issue
are disclosed in Note 6 to the Financial Statements.
Annual salary reviews
TruFin reviews the basic salary of all employees on an annual
basis, taking cost-of-living and inflation rates into account.
Where appropriate, the Committee will also benchmark salary
reviews against the market. Generally, employees who have
significant changes to their role or are paid outside of market
benchmarks, will receive adjustments to their basic salary.
Executive remuneration benchmark
During the year, the Committee appointed Pearl Meyer to review
market norms for comparable companies, both in size and
sector, to provide suitable context regarding the Chief Executive
Officer’s incentive compensation and advise
on competitive benchmarking of executive remuneration.
Pearl Meyer’s analysis determined that the Chief Executive
Officer’s total remuneration falls within the market benchmark.
As a committee, we will continue to monitor the
effectiveness of our current approach to remuneration,
whist staying consistent to our corporate governance
and regulatory values. Our objective to attract, motivate,
and retain talented employees will remain a top priority
across the Group to help deliver excellent outcomes for our
shareholders.
Paul Dentskevich
Chair of the Remuneration Committee
2022 Annual Report and Accounts | 29
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Report of the Directors
The Directors present their report with the financial
statements of the Company and the Group for the year
ended 31 December 2022.
Principal activity
The principal activities of the Group in the year under
review were those of providing niche lending, early
payment services and video games publishing.
Dividends
The Directors have confirmed that no dividends have been
declared for the year to 31 December 2022 (2021: £nil).
The Directors’ current view is that the earnings of the Group
will first be reinvested in the businesses to fund the Group’s
growth strategy and any surplus cash, if not reinvested in
the foreseeable future, will be returned to shareholders.
Directors
The Directors who held office during the year and up
to the date of the Directors’ report were as follows:
•
•
•
•
•
Steve Baldwin
James van den Bergh
Penny Judd
Paul Dentskevich
Anders Wilhelmsen (appointed 16 February 2022)
Directors insurance and indemnities
Throughout the year the Company has maintained Directors
and Officers liability insurance for the benefit of the Company,
the Directors and its officers. The Directors consider the level
of cover appropriate for the business and intend for it to remain
in place for the foreseeable future.
Significant shareholders
The following parties held greater than 3% of the issued share
capital of TruFin plc as at 31 December 2022:
% of
issued
share
capital
Number
of Shares
Watrium AS
21,653,323
22.99%
Gresham House Asset Management
9,485,237
10.07%
Premier Miton Investors
8,941,380
9.49%
Lombard Odier Investment Managers
7,107,986
7.55%
JO Hambro Capital Management
5,575,753
5.92%
Credit Suisse Private Banking
4,066,974
4.32%
GPIM
M&G Investments
3,799,535
4.03%
3,268,102
3.47%
The Directors’ interests in the shares of TruFin plc, all of which
were beneficial interests, at 31 December 2022 are as follows:
AXA Framlington Investment Managers
3,157,205
3.35%
Jupiter Asset Management
3,064,031
3.25%
Number of Shares
2022
2021
J van den Bergh
165,982
165,982
P Dentskevich
P Judd
Shares jointly held by the
trustee of the Company’s
employee benefit trust (the
“EBT”) and J van den Bergh
45,000
24,723
-
24,723
-
395,558
During the year 395,558 shares that were jointly held by the
EBT and James van den Bergh vested. 395,558 shares became
fully owned by the EBT. James van den Bergh holds a nil cost
option in respect of 1,566,255 shares.
Events after the Reporting Date
Since the year end, Satago has agreed to extend its agreement
with Sage. Initially, Satago services were offered to UK based
Sage 50 packages only, but this extension is to now include
certain packages in Ireland.
Additionally, Satago signed a statement of work to embed
Satago’s invoice finance service into Sage 50 and the solution
was launched during Q1 2023.
30 |
Statement of Directors’ responsibility
Statement of Going Concern
The Directors are required by the Companies (Jersey) Law 1991,
to prepare financial statements for each financial year which
give a true and fair view of the state of affairs of the Company
as at the end of the financial year and of the profit or loss of
the company for that period. The Directors have elected to
prepare the financial statements in accordance with applicable
law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union. In preparing these financial
statements, the Directors are required to:
•
•
•
•
Select suitable accounting policies and then apply them
consistently,
Make judgements and estimates that are reasonable
and prudent,
State whether applicable accounting standards have
been followed, subject to any material departures
disclosed and explained in the financial statements, and
Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company’s
transactions. These records must disclose with reasonable
accuracy at any time the financial position of the Company and
enable the Directors to ensure that any financial statements
prepared comply with the Companies (Jersey) Law 1991.
They are also responsible for safeguarding the assets of the
Company and, hence, for taking reasonable steps for the
prevention and detection of fraud, error and non-compliance
with law and regulations.
The Directors have completed a final assessment of
the Group’s financial resources, including forecasts.
Based on this review, the Directors believe that the Group
is well placed to manage its business risks successfully
within the expected economic outlook. Accordingly, they
continue to adopt the going concern basis in preparing
the Annual Report and Financial Statements.
Statement as to disclosure
of information to auditors
So far as the Directors are aware, there is no relevant
audit information of which the Company’s auditors are
unaware and each Director has taken all the steps that he
or she ought to have taken as a Director in order to make
himself or herself aware of any relevant audit information
and to establish that the Company’s auditors are aware
of that information.
ON BEHALF OF THE BOARD
Steve Baldwin
Chair
14 March 2023
2022 Annual Report and Accounts | 31
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
Risk reporting
At every Board meeting, the Chief Executive Officer reports
to the Board on the existing risks and any new areas of material
risk that have been identified to the Group.
Anything that requires escalation from a subsidiary level is
augmented by TruFin’s executive management who take
on the responsibility to report to the TruFin Board.
Having this layered approach ensures that risk management is
embraced throughout the subsidiaries and enables the Group
to effectively prioritise and manage risk within our target levels.
Risk Register
The Company operates a Risk Register which documents risks
that may prevent the Company from meeting its corporate and
strategic objectives. It records all risks including strategic,
operational, conflicts, compliance, financial and reporting,
and market risks. All risks are assessed against likelihood and
severity. Risks are reviewed at operational and strategic level to
ensure that they are in line with TruFin’s risk appetite. Controls
are put in place to mitigate against the identified potential
impact, and documented risk owners are put in place. Any
change in risk will trigger a review of the controls and mitigating
actions to ensure they are still relevant and suitable. Risks are
measured in respect of how they will impact the business.
Along with the Company’s risk policies, the Risk Register is
reviewed on an annual basis and any updates are reported
to the Board and the Audit Committee.
Principal risks and uncertainties
Principal risks are a risk or combination of risks that, given the
Group’s current position, could seriously affect the performance,
future prospects or reputation of the Group. These risks could
potentially threaten the businesses, performance, solvency or
liquidity, or prevent the delivery of the strategic objectives.
CORPORATE GOVERNANCE
Compliance and Risk Report
Culture is a key component of effective risk management.
At TruFin, we encourage, promote, and continuously seek
to demonstrate a culture of good governance throughout
our business. We have an inclusive, open environment, where
transparency, accountability and responsibility is at the core
of our organisation. The Board and executive management
are committed to creating an effective risk culture across
the Company.
We believe that the Group’s general risk appetite is moderate
and balanced, allowing the appropriate potential for growth
and scalability, whilst ensuring regulatory compliance. We
have adopted the Quoted Companies Alliance’s Corporate
Governance Code for small and mid-size quoted companies
to ensure the highest standards of corporate governance
and all our operations are audited on an annual basis.
Risk management
We manage risk, among other things, with robust systems and
processes, guidelines and policies, which are forward-looking,
clearly articulated, documented, and communicated throughout
the businesses, and which enable the accurate identification and
control of potentially problematic transactions and events.
We make complex judgements, including decisions about the
level and types of risk that we are willing to accept in order to
achieve our business objectives, and the maximum level of risk
the Group can assume before breaching constraints determined
by liquidity and regulatory needs.
The Board of Directors has the overall responsibility for
identifying and determining the nature and extent of the
significant risks it is willing to take in order to allow for the
execution and delivery of TruFin’s strategic objectives and
for ensuring that risks are managed effectively.
When identifying, assessing and managing risks, the Board is
assisted by the Audit Committee. The Audit Committee reviews
internal financial controls and the Company’s risk management
systems by overseeing risk procedures, including the review
and approval of key risk policies and processes.
Day-to-day risks are monitored and managed by TruFin’s
executive management. As well as external reviews and audits
from the Company’s statutory auditors, TruFin has internal
checks, and guidelines in place. The Company maintains a
framework of the key risks, with policies and processes devised
to monitor, manage and mitigate them where possible.
At subsidiary level, the responsibility for the establishment and
maintenance of adequate day-to-day management of key risks,
and formalised risk procedures, rests with the individual boards
and their management teams. Additionally, due to Satago
and Vertus being lending businesses, they each have their
own risk committees in place.
Systems and processes throughout the Group are continually
reviewed, updated, and effectively communicated to all
personnel to ensure that resources, governance, and
infrastructure, remains appropriate.
32 |
The key risks identified and which the Board has reasonable expectation are appropriately mitigated:
Risk
Potential Impact
Mitigation
Strategic Risk
Credit Risk
Funding Risk
Operational Risk
Strategic and business risk is the risk which
can affect the Group’s ability to achieve its
corporate and strategic objectives. The risk
on the performance of the Group arising from
its strategic decisions, change in the business
conditions, improper implementation of
decisions or lack of responsiveness to industry
changes. It is particularly important as the
Group continues its growth strategy.
The Group will not put its core strategic and
business objectives at a level of risk which is
beyond its financial resources and operational
capabilities. The Group will monitor and
continually review this risk.
The risk of default, potential write-off, financial
loss arising from a borrower or counterparty
failing to meet its financial obligations.
The Group adopts prescribed lending policies and
adheres to strict credit and underwriting criteria
specifically tailored to each business area.
The risk of the Group not being able to meet
its current and future financial obligations over
time, specifically that funding is not available
to meet the Group’s growth targets.
Vertus and Satago have secured external
funding, both debt and equity, with which
they can continue to grow their businesses.
The risk of financial loss and/or reputational
damage resulting from inadequate or failed
internal processes, people and systems (third
party or internal) or from external events. The
exposure to operational risk has increased from
the previous year as the businesses have grown.
The Group reviews its operational infrastructure
to ensure that it is secure and fit for purpose.
The Group maintains a strong internal control
environment and the Group has also factored in
the strengthening of processes and systems.
Supplier policies are in place to ensure regular
review of third parties and the associated costs
and key dependencies.
Currency Risk
The Group is located in the UK, USA and
Europe, and trades in GBP, USD, PLN, SEK, and
EUR.
The Group receives revenues in both GBP
and USD, which acts as a natural hedge
to costs incurred in USD.
There is an FX risk to the Group based on
external market conditions which may lead
to a realised or unrealised FX loss.
Cyber Risk
The Group is dependent of the security, integrity
and operational performance of the systems
and products it offers as well as the platform
partners it works with. A security breach or major
systems failure could significantly impact the
business and its ability to execute on its plans
and compromise sensitive data.
This would also result in adverse reputational
consequences for the Group.
The Group operates bank accounts in all Group
currencies to hedge against currency risk
exposure. The finance function monitor rolling
cashflow forecasts to indicate the Group’s
currency needs and plan accordingly.
Hedging will be considered as an appropriate
solution when the scale of European operations
becomes significant.
The Group has invested in its IT team and
infrastructure, implementing additional
cyber security processes and policies and
continues to regularly review its IT and
security provisions to ensure they are industry-
leading and in line with best practice. It has
put in place business continuity and disaster
recovery procedures with scheduled regular
testing such that should an event occur, the
disruption to the Group can be managed and
impact minimised as far as possible.
2022 Annual Report and Accounts | 33
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Compliance and Risk Report continued
Risk
Potential Impact
Mitigation
Inflation
and Interest
Rate Risk
Staff
Shortage
Risk
In recent times global economies have seen
increasing levels of inflation and interest rates.
There is a risk that this could have a material
adverse effect on the Group’s future financial
performance and levels of profitability.
The Group monitors operational costs and
interest rates to ensure competitive rates are
obtained, and, where appropriate, customer
pricing will be used to mitigate adverse
movements and manage financial performance.
Key to the Group achieving its short and
mid-term objectives is increased investment
in headcount and the recruitment of skilled
individuals. In some areas identifying such
skilled individuals has been challenging
and potentially could negatively impact
the achievement of the Group’s targets.
The Group is focused on ensuring its
remuneration packages and employee
policies remain competitive with market
rates and practices to ensure vacancies are
filled with high calibre, skilled individuals.
Looking ahead
The Directors of TruFin have carried out a robust
assessment of the principal risks facing the Group,
including those that would threaten its business model,
future performance, solvency or liquidity.
We will continue to monitor the impacts and associated
risks arising from the regulatory landscape and global
changes with a particular focus on consideration of emerging
risks. There will continue to be a focus on strengthening the
risk and control environment, including ESG risks.
In addition, focus will remain on ensuring a strong dialogue
between the compliance function and executive management,
the operations of the Group, and the Board of Directors.
34 |
Environmental Social and Governance (“ESG”)
and Sustainability Report
We believe that high standards of ESG and sustainability
within both the Company and its subsidiaries make good
business sense and have the potential to protect and
enhance shareholder returns. Consequently, best practice
is encouraged throughout the Group and TruFin’s investment
process ensures that ESG and sustainability issues are taken
into account from the outset.
TruFin has identified the key areas for consideration, across
the three ESG categories, which best align with its values
and are most relevant for companies operating in the fintech
industry. The key environmental consideration as identified
by TruFin is the potential impact of business operations on
the global issue of climate change. Social factors include the
risks and opportunities associated with diversity, data security
and privacy, and the impact the Group has on its employees,
customers, and community. Governance considerations
include anti-bribery and corruption, board structure and
independence, and compliance.
Environmental responsibility
As an investment company, with limited internal resource,
the Company has little impact on the environment. However,
we believe protecting the environment is a global mission
and we have our own part to play in helping the UK reduce
greenhouse gas emissions to net zero by 2050. Our offices
operate energy saving practices, our employees recycle waste,
and we discourage excessive printing of documents and will
continue to remove unnecessary paper wherever we can.
Social responsibility
Our aim is to embrace diversity and be truly representative
of all sections of society. We believe the foundations are
in place for the Group to uphold a diverse and inclusive
environment where employees feel they can fulfil their
career ambitions regardless of their gender, sexual orientation,
ethnicity, disability, or social upbringing. We aim to provide an
inclusive, progressive and sustainable environment where our
employees thrive.
We strive to uphold working environments free of bullying,
harassment, victimisation and unlawful discrimination, where
individual differences and contributions from all employees
are recognised and valued.
It is becoming increasingly clear that people care about
the ethical use of their data, demanding accountability and
transparency from the businesses they interact with. As
such, we believe our robust internal data protection and
security policies ensure regulatory compliance, providing
assurance that our data handling is ethical and strengthens
our governance.
We believe it is critical for boards of directors to benefit
from diverse perspectives and as such, the Company aims to
have a balance of relevant skills, experience and background
amongst the Directors on the Board. Further, we believe that
all Board appointments should be made on merit and with due
regard to the benefits of diversity. As well as the subsidiary
boards, we also encourage diversity in the management
teams of the subsidiaries and the promotion of the benefits
of diversity throughout Group.
Governance responsibility
We acknowledge the importance of high standards of
corporate governance and intend to comply with the principles
set out in the QCA Corporate Governance Code for Small and
Mid-Size quoted companies 2018. This sets out a standard
of minimum best practice for small and mid-size quoted
companies, particularly Alternative Investment Market (“AIM”)
companies. A statement regarding how we comply with the
QCA code can be found on the TruFin website.
Governance is a priority throughout the Group. We have
implemented a Group Governance Policy within each of
the subsidiaries which we believe provides the Group with
sufficient autonomy to be as successful as possible, whilst
ensuring we have adequate information about, and appropriate
control over, the significant activities and decisions of our
subsidiaries, ensuring that good governance is achieved.
The Group Governance Policy requires constant engagement
between the executive management of TruFin and its
subsidiaries, and expects ESG and sustainability issues
to be a key consideration for such communication. Within
each subsidiary, there are members of TruFin’s executive
management team with a board seat, or with board
observer status.
We are committed to carrying out business in an honest and
fair manner with a zero-tolerance approach to bribery, tax
evasion and corruption. As such, policies and procedures are
in place to prevent bribery and corruption. In carrying out its
activities, TruFin aims to conduct itself responsibly, ethically
and fairly, including in relation to social and human
rights issues.
2022 Annual Report and Accounts | 35
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Environmental Social and Governance (“ESG”)
and Sustainability Report continued
ESG and sustainability in action
Developments continue to be seen in ESG and sustainability practices across the subsidiaries, both in their business models
and operating procedures. However, it should be noted that the Group comprises of early stage companies and quantitative
data is not readily available. Below we highlight some examples.
Oxygen
Vertus
Oxygen exists to help businesses thrive and deliver
a wider benefit by funding public services within the
local community. Oxygen uses its technology platform
to promote social and environmentally efficient
procurement in the public sector supply chain. Its
solutions help public sector clients identify potential
spend and carbon emission efficiencies in their supply
chain, and give suppliers the tools to find new business
opportunities and understand how customers will
perceive their carbon impact.
Satago
Satago facilitates the best in class invoice finance
solutions through advanced technology and innovative
use of data to helping SMEs in the community. Satago’s
solutions solve problems by removing traditional
challenges experienced by lenders and SMEs. Satago
believes that all SME’s should have access to financing
capabilities to help them reach success.
Vertus supports independently minded business owners by
making it possible for them to sell their businesses by providing
independent capital, enabling internal deals and third-party
acquisitions of all shapes and sizes. Its unique approach
focusses on simple, fair deals, that put client continuity first,
meaning that borrowers can do right by the clients and staff
of the target firm. By doing this, Vertus preserves the quality
of the service provided to consumers, for the benefit of all.
Playstack
Headquartered in London, Playstack is a leading games
publisher with a diverse team of people working all over the
world. During the year, Playstack chose to support and fundraise
for Special Effect. Special Effect is a charity providing specialist
support for the physically disabled through the innovative use
of technology. Special Effect’s mission is to maximise fun and
quality of life by helping people control video games to their
best of their abilities, and much more. Special Effect will
remain Playstack’s chosen charity for 2023.
Looking ahead
We are pleased with the progress we have made
in evolving our ESG and sustainability agenda this
year, however we know there is much more we can
do. This as a long-term journey and something that
is core to our business model as a Group.
Getting it right for our employees, customers,
communities, environment, and shareholders,
is the cornerstone of our efforts.
We believe that having a focus on ESG and
sustainability builds greater resilience into our
business model and there will continue to be
a focus on strengthening the risk and control
environment, including those relating to ESG.
In 2023, TruFin will remain committed to:
•
•
•
•
Incorporating ESG and sustainability considerations
into its operating practices;
Providing ESG training and support to employees so that
they may perform their work in accordance with its philosophy;
Actively engaging with the subsidiaries to encourage
regular reporting and ongoing improvement of key
ESG areas; and
Annual reporting on ESG and sustainability via our
Annual Report and Accounts.
36 |
FINANCIAL STATEMENTS
2022 Annual Report and Accounts | 37
2022 Annual Report and Accounts | 37
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT Report of the Independent Auditor to the Shareholders of TruFin plc
For the year ended 31 December 2022
Opinion
We have audited the financial statements of TruFin plc (the “parent company”) and its subsidiaries (the “group”) for the year ended
31 December 2022, which comprise:
•
•
•
•
•
the group consolidated and parent company statements of comprehensive income for the year then ended;
the group consolidated and parent company statements of financial position as at 31 December 2022;
the group and parent company statements of changes in equity for the year then ended;
the group and parent company statements of cash flows for the year then ended; and
the notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at
31 December 2022 and of the group and parent company’s loss for the year then ended;
the group and parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union; and
the financial statements have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the parent company’s and
group’s ability to continue to adopt the going concern basis of accounting included:
•
•
•
•
Obtaining and reviewing the Board’s assessment of going concern;
Challenging budgets used by management in their going concern assessment by assessing the historical accuracy of the
management’s budgeting process by comparing the prior year budgets with actual figures and by comparing the first month of
the 2023 budget to the actual results;
Examining within the working capital forecasts the key inputs within the model and corroborating them through discussions with
management; and
Reviewing for accuracy the disclosures in relation to this matter in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group or parent company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
38 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Report of the Independent Auditor to the Shareholders of Trufin plc continued
For the year ended 31 December 2022
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be
expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus
our testing and to evaluate the impact of misstatements identified.
Based on our professional judgement, we determined overall materiality for the Group and Company financial statements as a whole
to be £650,000 (2021: £500,000) and £350,000 (2021: £165,000) respectively. In determining this, we considered a range of
benchmarks with specific focus on approximately based on 1% of Total Assets (2021: 1% of Total Assets). Entity materiality was based
on a benchmark of up to 0.5% of Total Assets.
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of the financial
statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk
and our evaluation of the specific risk of each audit area having regard to the internal control environment. The performance
materiality that was set was £390,000 for the group and £210,000 for the company.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and
directors’ remuneration.
We agreed with the Board of Directors to report to it all identified errors in excess of £33,000 (2021: £25,000). Errors below that
threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
The group consists of TruFin plc itself, TruFin Holdings Ltd (the holding entity) and the subsidiaries as disclosed in Note 1.
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the primary audit engagement team. The primary audit engagement team audited all the UK trading entities
within the group, except for the Oxygen business which was audited by a separate Crowe UK team. For the Oxygen business, we
determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had been obtained as a basis
for our opinion on the Group as a whole. The primary team led by the Senior Statutory Auditor was ultimately responsible for the
scope and direction of the audit process. The primary team interacted regularly with the component team where appropriate during
various stages of the audit, reviewed working papers and were responsible for the scope and direction of the audit process. This,
together with the additional procedures performed at Group level, such as performing analytical procedures on non significant
entities to the Group, gave us appropriate evidence for our opinion on the Group financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion.
2022 Annual Report and Accounts | 39
Report of the Independent Auditor to the Shareholders of Trufin plc continued
For the year ended 31 December 2022
This is not a complete list of all risks identified by our audit.
Revenue Recognition (Note 3)
Key audit matter
The Group derives its revenue from interest, fee and publishing income. During the year ended
31 December 2022, the Group recorded total gross revenue of £16,119k (2021: £13,115k).
Interest income is earned on loans and advances to customers by Vertus and Satago and
accounts for 16% of total revenue. Fee income is earned on payment services and subscription
fees provided by Oxygen and Satago which accounts for approximately 45% of total revenue.
Publishing income is earned by the companies in the Playstack group and accounts for
approximately 39% of total revenue.
Revenue is recognised in accordance with the accounting policy set out in the financial
statements. We focus on the risk of material misstatement in the recognition of revenue, as a
result of both fraud and error, because revenue is material and is an important determinant of the
Group’s profitability, which has a consequent impact on its share price performance.
How the scope of our audit
addressed the key audit matter
• For each company in the Group, we confirmed our understanding of its business model and
the services and products it delivers to its customers;
• Based on that understanding, we considered the performance obligations identified when
“control” passes to the customer and, consequently, when revenue is earned;
• We selected a sample of contracts to confirm our understanding of the principal terms and
obligations;
• We confirmed our understanding of the key systems used to capture and record that income
and evaluate any key controls;
• Where the Group utilises third party platforms we evaluated those platforms and the
safeguards management have in place to corroborate the output from those platforms;
• We performed an overall analytical review and corroborated the reasons for any large and
unusual variances;
• For a selection of transactions, we confirmed that the recognition criteria in relation to the
income earned in the period has been met and vouched to cash receipt;
• We reviewed and tested the basis for accrued and deferred income;
• We reviewed aged receivables profile and credit notes issued post year end; and
• Where relevant, we reviewed and tested revenue cut off procedures.
Carrying value of goodwill and other intangible assets (Note 10)
Key audit matter
How the scope of our audit
addressed the key audit matter
The Group’s intangible assets comprises of goodwill, separately identifiable intangible assets,
client contracts, software licenses and project costs.
When assessing the carrying value of goodwill and intangible assets, management make
judgements regarding the appropriate cash generating unit, strategy, future trading and
profitability and the assumptions underlying these. We considered the risk that goodwill and/or
other intangible assets were impaired.
• We reviewed and challenged the assessment made by management in establishing the cash
generating units.
• We evaluated, in comparison to the requirements set out in IAS 36, management’s
assessment (using discounted cash flow models) as to whether goodwill and/or other
intangible assets were impaired.
• We challenged, reviewed and considered by reference to external evidence, management’s
impairment and fair value models as appropriate and their key estimates, including the
discount rate and revenue. We reviewed the appropriateness and consistency of the process
for making such estimates.
• We reviewed the accuracy of the disclosures included in the financial statements.
40 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Report of the Independent Auditor to the Shareholders of Trufin plc continued
For the year ended 31 December 2022
Carrying value of the loan book (Note 18)
Key audit matter
There is a risk the loan book is not appropriately carried at the expected recoverable amount
which includes the expected credit loss required under IFRS 9. We also considered the ageing
analysis to ensure that an appropriate approach has been taken to dealing with any loans which
are deemed past due either in terms of capital or interest.
Due to the estimation needed in assessing the carrying value of the loan book, this is considered
a key audit matter.
How the scope of our audit
addressed the key audit matter
• We selected a sample of agreements entered into to confirm our understanding of the
principal terms and obligations.
• We examined the ageing analysis to ensure that an appropriate approach has been taken to
dealing with any loans which are deemed past due either in terms of capital or interest.
• We challenged management in relation to the assumptions applied in the ECL model by
holding discussions with the management and challenging the inputs applied in the Loss
Given Default assumption used in the ECL model.
Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on these matters individually and we express no such opinion.
Other information
The directors are responsible for the other information contained within the annual report. The other information comprises the
information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report to you in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to
you if, in our opinion:
•
•
•
proper accounting records have not been kept by the parent company, or proper returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
we have not received all the information and explanations we require for our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on page 31 the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative
but to do so.
2022 Annual Report and Accounts | 41
Report of the Independent Auditor to the Shareholders of Trufin plc continued
For the year ended 31 December 2022
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks within which the parent company operates, focusing on those
laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements.
The laws and regulations we considered in this context were the Companies (Jersey) Law 1991 and income tax rules.
As part of our audit planning process we assessed the different areas of the financial statements, including disclosures, for the risk of
material misstatement. This included considering the risk of fraud where direct enquiries were made of management and those
charged with governance concerning both whether they had any knowledge of actual or suspected fraud and their assessment of the
susceptibility of fraud. We considered the risk was greater in areas involve significant management estimate or judgement. Based on
this assessment we designed audit procedures to focus on the key areas of estimate or judgement, this included specific testing of
journal transactions, both at the year end and throughout the year.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial
statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). The
potential effects of inherent limitations are particularly significant in the case of misstatement resulting from fraud because fraud
may involve sophisticated and carefully organized schemes designed to conceal it, including deliberate failure to record transactions,
collusion or intentional misrepresentations being made to us.
A further description of our responsibilities for the audit of the financial statements is available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law
1991. Our audit work has been undertaken so that we might state to the parent company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the parent company and the parent company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Leo Malkin (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
14 March 2023
42 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Interest income
Fee income
Publishing income
Gross revenue
Interest, fee and publishing expenses
Net revenue
Staff costs
Other operating expenses
Depreciation & amortisation
Net impairment on financial assets
Share of profit from associates
Loss before tax
Taxation
Loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Exchange differences on translating foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Loss for the year attributable to:
Owners of TruFin plc
Non-controlling interests
Total comprehensive loss for the year attributable to:
Owners of TruFin plc
Non-controlling interests
Earnings per Share
Basic and Diluted EPS
Notes
3
3
3
3
5
7
2, 9
Notes
22
2022
£’000
2,619
7,183
6,317
16,119
(5,075)
11,044
(12,609)
(4,810)
(1,596)
(50)
1
(8,020)
1,214
(6,806)
2021
£’000
1,681
4,330
7,104
13,115
(6,214)
6,901
(11,285)
(3,257)
(794)
10
3
(8,422)
986
(7,436)
(65)
(65)
(39)
(39)
(6,871)
(7,475)
(6,637)
(169)
(6,806)
(6,704)
(167)
(6,871)
2022
pence
(7.3)
(7,071)
(365)
(7,436)
(7,112)
(363)
(7,475)
2021
pence
(8.7)
2022 Annual Report and Accounts | 43
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Company Statement of Comprehensive Income
For the year ended 31 December 2022
Revenue
Staff costs
Other operating expenses
Depreciation & amortisation
Loss before tax
Taxation
Loss and total comprehensive income for the year
Notes
3
5
9
2022
£’000
2,293
(1,673)
(660)
(2)
(42)
–
(42)
2021
£’000
2,126
(1,911)
(624)
–
(409)
–
(409)
44 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
As at 31 December 2022
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax asset
Loans and advances
Total non-current assets
Current assets
Cash and cash equivalents
Loans and advances
Interest in associate
Trade receivables
Other receivables
Total current assets
Total assets
Equity and liabilities
Equity
Issued share capital
Retained earnings
Foreign exchange reserve
Other reserves
Equity attributable to owners of the company
Non-controlling interest
Total equity
Liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Current liabilities
Borrowings
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2022
£’000
2021
£’000
10
11
9
13
13
14
14
15
19
16
16
17
24,411
345
250
15,016
40,022
10,273
9,145
4
2,149
3,899
25,470
65,492
85,706
(24,884)
(63)
(26,531)
34,228
5,876
40,104
21,191
65
303
11,575
33,134
7,608
4,558
3
2,585
2,840
17,594
50,728
73,548
(17,731)
4
(24,393)
31,428
1,023
32,451
16,764
16,764
11,351
11,351
1,783
6,841
8,624
25,388
65,492
1,634
5,292
6,926
18,277
50,728
The notes on pages 52 to 92 are an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 14 March 2023. They were signed on its
behalf by:
James van den Bergh
Chief Executive Officer
2022 Annual Report and Accounts | 45
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Company Statement of Financial Position
As at 31 December 2022
Notes
2022
£’000
2021
£’000
Assets
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Amounts owed by group undertakings
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Total assets
Equity and liabilities
Equity
Issued share capital
Retained earnings
Other reserves
Total equity
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
11
12
14
15
17
4
30,189
54,835
85,028
2,260
138
2,398
87,426
85,706
(6,042)
6,828
86,492
–
30,189
46,919
77,108
786
144
930
78,038
73,548
(5,504)
8,966
77,010
934
934
934
1,028
1,028
1,028
87,426
78,038
The notes on pages 52 to 92 are an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 14 March 2023. They were signed on its
behalf by:
James van den Bergh
Chief Executive Officer
46 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Balance at 1 January 2022
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Issuance of shares
Issuance of shares by subsidiary
Share
capital
£’000
73,548
–
–
–
12,158
–
Retained
earnings
£’000
(17,731)
(6,637)
–
(6,637)
(496)
(20)
Foreign
exchange
reserve
£’000
4
–
(67)
(67)
–
–
Other
reserves
£’000
(24,393)
–
–
–
(2,138)
–
Total
£’000
31,428
(6,637)
(67)
(6,704)
9,524
(20)
Balance at 31 December 2022
85,706
(24,884)
(63)
(26,531)
34,228
Balance at 1 January 2021
73,548
(10,730)
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Share based payment
Adjustment arising from change in
non-controlling interest
Issuance of subsidiary shares to employees
Intragroup transfer of subsidiary
Issuance of shares by subsidiary
–
–
–
–
–
–
–
–
(7,071)
–
(7,071)
70
4
–
–
(4)
45
–
(41)
(41)
–
–
–
–
–
(24,395)
38,468
–
–
–
–
–
–
2
–
(7,071)
(41)
(7,112)
70
4
–
2
(4)
Balance at 31 December 2021
73,548
(17,731)
4
(24,393)
31,428
The notes on pages 52 to 92 are an integral part of these financial statements.
Non-
controlling
interest
£’000
1,023
(169)
2
(167)
–
5,020
5,876
1,268
(365)
2
Total
equity
£’000
32,451
(6,806)
(65)
(6,871)
9,524
5,000
40,104
39,736
(7,436)
(39)
(363)
(7,475)
–
(4)
19
–
103
1,023
70
–
19
2
99
32,451
2022 Annual Report and Accounts | 47
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity continued
For the year ended 31 December 2022
Share capital
Share capital represents the nominal value of equity share capital issued.
Retained earnings
The retained earnings reserve represents cumulative net gains and losses.
Foreign exchange reserve
The foreign exchange reserve represents exchange differences which arise on consolidation from the translation of the financial
statements of foreign subsidiaries.
Other reserves
Other reserves consist of the merger reserve, the share revaluation reserve and shares issued at a discount.
The merger reserve arose as a result of combining businesses that are under common control. As at 31 December 2022 it was a debit
balance of £33,358,000 (2021: £33,358,000).
The share revaluation reserve arose from the share cancellation that took place in February 2018. As at 31 December 2022 its balance
was £8,966,000 (2021: £8,966,000).
Shares issued at a discount arose from the share issuance that took place in April 2022. As at 31 December 2022 its balance was
£2,138,000 (2021: £nil). See Note 15 for further information.
Non-Controlling Interest
The non-controlling interest relates to the minority interest held in Bandana Media Limited, Playstack OY, Vertus Capital Limited,
Vertus SPV1 Limited, Satago Financial Solutions Limited, Satago SPV1 Limited, Satago SPV2 Limited, Altlending Limited and
Satago z.o.o.
48 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
For the year ended 31 December 2022
Share capital
£’000
Retained
earnings Other reserves
£’000
£’000
Total equity
£’000
Balance at 1 January 2022
Total comprehensive loss for the year
Issuance of shares
Balance at 31 December 2022
Balance at 1 January 2021
Total comprehensive loss for the year
Share based payment
Balance at 31 December 2021
73,548
(5,504)
8,966
77,010
–
12,158
85,706
(42)
(496)
(6,042)
–
(2,138)
6,828
(42)
9,524
86,492
73,548
(5,165)
8,966
77,349
–
–
(409)
70
–
–
(409)
70
73,548
(5,504)
8,966
77,010
The notes on pages 52 to 92 are an integral part of these financial statements.
2022 Annual Report and Accounts | 49
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
Notes
2022
£’000
2021
£’000
Cash flows from operating activities
Loss before tax
(8,020)
(8,422)
Adjustments for
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share based payments
Finance costs
Share of profit from associate
Loss on disposal of Fixed Assets
Loss on intragroup transfer of subsidiary
Working capital adjustments
Movement in Loans and advances
Increase in trade and other receivables
Increase/(Decrease) in trade and other payables
Net payables on acquisition of subsidiary
Tax credit received/(paid)
Interest and finance costs paid
108
2,377
–
974
(1)
–
–
(4,562)
(8,029)
(34)
60
(67)
96
1,571
70
659
(3)
2
2
(6,025)
(1,472)
(720)
(1,735)
–
(8,070)
(3,927)
668
(777)
(2)
(716)
Net cash used in operating activities
(12,741)
(10,670)
Cash flows from investing activities:
Additions to intangible assets
Additions to property, plant and equipment
Acquisition of subsidiaries
Cash on acquisition of subsidiary
(3,159)
(113)
(1,217)
19
(1,779)
(24)
–
–
Net cash used in investing activities
(4,470)
(1,803)
Cash flows from financing activities:
Issue of ordinary share capital
Issue of ordinary share capital of subsidiary
Net borrowings 16
Lease payments
9,524
5,000
5,370
(28)
Net cash generated from financing activities
19,866
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of foreign exchange rate changes
2,655
7,608
10
Cash and cash equivalents at end of the year
10,273
–
148
2,353
(99)
2,402
(10,071)
17,728
(49)
7,608
All cash and cash equivalents are cash at bank.
The notes on pages 52 to 92 are an integral part of these financial statements
50 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Company Statement of Cash Flows
For the year ended 31 December 2022
Cash flows from operating activities
Loss before income tax
Adjustments for:
Depreciation of property, plant and equipment
Interest income
Share based payments
Working capital adjustments
Decrease in trade and other receivables
Decrease in trade and other payables
Net cash generated used in operating activities
Cash flows from investing activities
Intragroup loans cash (advanced)/received
Additions to property, plant and equipment
Net cash generated (used in)/from investing activities
Cash flows from financing activities
Issue of ordinary share capital
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
All cash and cash equivalents are cash at bank.
The notes on pages 52 to 92 are an integral part of these financial statements.
2022
£’000
2021
£’000
(42)
(409)
2
–
(2,166)
(2,008)
–
70
(2,206)
(2,347)
6
(94)
(88)
513
(114)
399
(2,294)
(1,948)
(5,750)
(6)
(5,756)
9,524
9,524
1,474
786
2,260
2,156
–
2,156
–
–
208
578
786
2022 Annual Report and Accounts | 51
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Statutory information
TruFin plc is a Company registered in Jersey and incorporated under Companies (Jersey) Law 1991. The Company’s ordinary shares
were listed on the Alternative Investment Market of the London Stock Exchange on 21 February 2018. The address of the registered
office is 26 New Street, St Helier, Jersey, JE2 3RA.
Accounting policies
1.
General information
The TruFin Group (the “Group”) is the consolidation of TruFin plc and the companies set out in the “Basis of consolidation” on pages
53-54.
The principal activities of the Group are the provision of niche lending, early payment services and game publishing.
The financial statements are presented in Pounds Sterling, which is the currency of the primary economic environment in which the
Group operates. Amounts are rounded to the nearest thousand.
Basis of accounting
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as
adopted by the European Union (“IFRS”).
Prior to 29 November 2017 and before the incorporation of TruFin plc and TruFin Holdings, the entities named above were under
common control and therefore, have been accounted for as a common control transaction – that is a business combination in which all
the combining entities or businesses are ultimately controlled by the same company both before and after the combination. IFRS 3
provides no specific guidance on accounting for entities under common control and therefore other relevant standards have been
considered. These standards refer to pooling of assets and merger accounting and this is the methodology that has been used to
consolidate the Group.
After 29 December 2017, post the reorganisation, the entities constitute a legal group and accordingly the consolidated financial
statements have been prepared by applying relevant principles underlying the consolidation procedures of IFRS.
Basis of preparation
The results of the Group companies have been included in the consolidated statement of comprehensive income. Where necessary,
adjustments have been made to the underlying financial information of the companies to bring the accounting policies used into line
with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
The consolidated financial statements contained in this document consolidates the statements of total comprehensive income,
statements of financial position, cash flow statements, statements of changes in equity and related notes for each of the companies
listed in the “Basis of consolidation” on pages 53-54, which have been prepared in accordance with IFRS.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not
held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the
non-controlling interests based on their respective ownership interests.
52 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Basis of consolidation
The consolidated financial statements include all of the companies controlled by the Group, which are as follows:
Entities
Country of
incorporation
Registered address
Nature of the business
% voting rights
and shares held
TruFin Holdings Limited (“THL”)
Jersey
Satago Financial Solutions Limited
(“Satago”) (together with Satago
SPV 1, Satago SPV 2 and Satago
Poland) (“Satago Group”)
Satago SPV 1 Limited (“Satago SPV 1”)
Satago SPV 2 Limited (“Satago SPV 2”)
UK
UK
UK
26 New Street, St Helier,
Jersey JE2 3RA
120 Regent Street,
London, United Kingdom,
W1B 5FE
120 Regent Street,
London, United Kingdom,
W1B 5FE
120 Regent Street,
London, United Kingdom,
W1B 5FE
Holding Company
100% of ordinary shares
Provision of short term
finance
72% of ordinary shares*
Provision of short term
finance
72% of ordinary shares*
Provision of short term
finance
72% of ordinary shares*
Satago z.o.o (Satago Poland)
Poland
32-023 Krakow ul. Sw.
Krzyza 19/6 Poland
Provision of short term
finance
72% of ordinary shares*
Oxygen Finance Group Limited (“OFGL”)
(together with OFL and OFAI) (“Oxygen”)
UK
Oxygen Finance Limited (“OFL”)
UK
Oxygen Finance Americas, Inc (“OFAI”)
USA
TruFin Software Limited (“TSL”)
UK
AltLending UK Limited (“AltLending”)
UK
Vertus Capital Limited (“Vertus Capital”)
(together with Vertus SPV 1 Limited)
(“Vertus”)
Vertus Capital SPV 1 Limited
(“Vertus SPV 1”)
Playstack Limited (“Playstack”)***
UK
UK
UK
Bandana Media Limited (“Bandana”)***
UK
PlayIgnite Ltd (“PlayIgnite”)***
UK
1st Floor Enterprise
House,
115 Edmund Street,
Birmingham, United
Kingdom, B3 2HJ
1st Floor Enterprise
House,
115 Edmund Street,
Birmingham, United
Kingdom, B3 2HJ
Corporation Trust Center,
1209 Orange Street, City
of Wilmington, County
of New Castle, Delaware
19801, USA
120 Regent Street,
London, United Kingdom,
W1B 5FE
120 Regent Street,
London, United Kingdom,
W1B 5FE
Building 1 Chalfont Park,
Gerrards Cross, United
Kingdom, SL9 0BG
Building 1 Chalfont Park,
Gerrards Cross, United
Kingdom, SL9 0BG
56a Poland Street,
London United Kingdom,
W1F 7NN
56a Poland Street,
London United Kingdom,
W1F 7NN
56a Poland Street,
London United Kingdom,
W1F 7NN
Holding Company
88% of ordinary shares**
Provision of early
payment services
88% of ordinary shares**
Provision of early
payment services
88% of ordinary shares**
Provision of technology
services
100% of ordinary shares
Provision of short term
finance
100% of ordinary shares*
Provision of short term
finance
54% of ordinary shares
Provision of short term
finance
54% of ordinary shares
Publishing of computer
games
100% of ordinary shares
Publishing of computer
games
72% of ordinary shares
Business and domestic
software developer
100% of ordinary shares
2022 Annual Report and Accounts | 53
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Entities
Country of
incorporation
Registered address
Nature of the business
% voting rights
and shares held
Playstack z.o.o (“PS Poland”)***
Poland
Playstack OY (“PS Finland”)***
Finland
Playstack AB (“PS Sweden”)***
Sweden
Playstack Inc (“Playstack USA”)***
USA
PlayIgnite Inc (“PlayIgnite USA”)***
USA
Magic Fuel Inc (“Magic Fuel”)
USA
Kamienna 21, 31-403
Krakow, Poland
Mikonkatu 17 B, 00100
Helsinki, Finland
Solbergavägen 17, 17998
Färentuna, Sweden
Gust Delaware, 16192
Coastal Hwy, Lewes,
DE 19958
Cogency Global Inc, 850
New Burton Road, Suite
201, Dover DE 19904
5424 Sunol Blvd Ste 10
PMB 1021, Pleasanton, CA
94566-7705
Publishing activities in
the field of computer
games
Publishing activities in
the field of computer
games
Developing, publishing
and selling electronic
games
100% of ordinary shares
75% of ordinary shares
100% of ordinary shares
Publishing of computer
games
100% of ordinary shares
Business and domestic
software developer
100% of ordinary shares
Game developer
100% of ordinary shares
* See Note 19 for the Group’s effective economic ownership of the Satago Group.
** Nominal ownership of these companies is 87.5% due to the Oxygen Management Incentive Plan (“Oxygen MIP”). Effective economic ownership is 100% based on their
Statements of Financial Position at the Reporting Date.
*** The Playstack Group includes 4 associate companies incorporated in the UK which have been accounted for using the equity method. These are:
• A 49% interest in PlayFinder Games Ltd
• A 49% interest in Snackbox Games Ltd
• A 42% interest in Military Games International Ltd (application to strike off made on 23 January 2023)
• A 27% interest in Storm Chaser Games Limited (“Storm Chaser Games”)
On 22 March 2022, Porge Ltd, a company 100% owned by OFGL was dissolved.
Principal accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been
applied consistently to all the financial periods presented.
The consolidated financial statements have been prepared in accordance with European Union Endorsed International Financial
Reporting Standards (IFRSs) and the IFRS Interpretations Committee (formerly the International Financial Reporting Interpretations
Committee (IFRIC)) interpretations. These statements have been prepared on a going concern basis and under the historical cost
convention except for the treatment of certain financial instruments.
Going concern
The Group’s forecasts and projections, taking into account reasonable possible changes in trading performance, show that the Group
should be able to operate in the foreseeable future. As a consequence, the Directors have a reasonable expectation that the Group
will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors have adopted
the going concern basis in preparing these financial statements.
Revenue recognition
Net revenue
Interest income and expense
Interest income and expense for all financial instruments except for those classified as held for trading or measured or designated as
at Fair Value Through Profit and Loss (“FVTPL”) are recognised in “Net revenue” as “Interest income” and “Interest, fee and publishing
expenses” in the profit or loss account using the effective interest method.
54 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
The Effective Interest Rate (“EIR”) is the rate that exactly discounts estimated future cash flows of the financial instrument through
the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying amount of the financial asset
or financial liability. The future cash flows are estimated taking into account all the contractual terms of the instrument.
The calculation of the EIR includes all fees and points paid or received between parties to the contract that are incremental and
directly attributable to the specific lending arrangement, transaction costs and all other premiums or discounts.
The interest income/expense is calculated by applying the EIR to the gross carrying amount of non-credit impaired financial assets
(that is, to the amortised cost of the financial asset before adjusting for any expected credit loss allowance), or to the amortised cost
of financial liabilities.
For credit-impaired financial assets, as defined in the financial instruments accounting policy, the interest income is calculated by
applying the EIR to the amortised cost of the credit-impaired financial assets, that is, to the gross carrying amount less the allowance
for Expected Credit Losses (“ECLs”).
Fee income
Fee income for the Group is earned from payments services fees provided by Oxygen and subscription fees from Oxygen and Satago.
Payment services provided by Oxygen comprises the following elements:
Early Payment Programme Services (“EPPS”) contracts
Oxygen’s EPPS generate rebates (i.e. discounts on invoice value) for its clients by facilitating the early payment of supplier invoices.
Oxygen’s single performance obligation is to make its intellectual property and software platform available to its clients for the
duration of their contracts.
Oxygen bills its clients monthly for a contractually agreed share of supplier rebates generated by their respective Early Payment
Programmes during the previous month. This revenue is recognised in the month the rebates are generated.
Implementation fees
Oxygen Implementation fees
Implementation fees are charged to some clients in establishing a client’s technological access to the EPPS and in otherwise readying
a client to benefit from the Services. Establishing access to the company’s intellectual property and software platform does not
amount to a distinct service as the client cannot benefit from the initial access except by the company continuing to provide access
for the contract period. Where an implementation fee is charged, it is therefore a component of the aggregate transaction price of the
EPPS. Accordingly, such revenue is initially deferred and then recognised in the statement of comprehensive income over the life of
the related EPPS.
Satago Implementation fees
Implementation fees are in line with contractual agreements and relate to Lending as a Service projects.
Consultancy fees
Oxygen provides stand-alone advisory services to clients. Revenue is accrued as the underlying services are provided to the client.
Subscription fees
Insight services subscription fees
The Insight Services offered by OFL provide focussed public sector procurement data and analytics on a subscription basis. Clients
cover both the private sector, enabling them to improve and develop their engagement with the public sector, and public sector
organisations, enabling them to make more informed procurement decisions. Subscriptions are typically received in advance and
recognised over the length of the contract as access to the database is provided.
Satago subscription fees
These are monthly fees for access to Satago’s platform. Subscriptions are received in advance and recognised during the month the
subscription relates to.
2022 Annual Report and Accounts | 55
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Fee expenses
Fee expenses are directly attributable costs, associated with the Oxygen’s EPPS. The expenses include amortisation arising from
capitalised contract costs incurred directly through activities which generate fee income. Amortisation arising from other intangible
assets is recognised in depreciation and amortisation.
Publishing income
Publishing income for the Group is earned by companies in the Playstack Group and comprises the following elements. Publishing
income is recognised at the fair value of consideration received or receivable for goods and services provided and is shown net of VAT
and any other sales taxes. The fair value takes into account any trade or volume discounts and commission retained.
In App Purchases (IAP) revenue
IAP revenue is earned on the sale of mobile games and features within those games. It is recognised when the game or feature is sold.
Advertising revenue
Advertising revenue is earnings from featuring third party advertising within mobile games. It is recognised when these
advertisements are featured within the games.
Console revenue
Console revenue is earned on the sale of video games for consoles. It is recognised when the game is sold.
Brand revenue
Brand revenue is when a mobile game player signs up to an advertised brand in a mobile game. Revenue is recognised when the brand
has confirmed acquisition of the customer.
Publishing expenses
Publishing expenses are directly attributable costs, associated with the Playstack Group’s publishing income. These costs are
included at their invoiced value and are net of VAT and any other sales tax.
Foreign currencies
The results and financial position of each Group company are expressed in Pounds Sterling, which is the functional currency of the
UK based members of the Group and the presentation currency for the consolidated financial statements.
Transactions in foreign currencies are translated to the Group companies’ functional currency at the foreign exchange rate ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to
the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign exchange
differences arising on translation are recognised in the consolidated statement of comprehensive income.
In preparing the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at the
exchange rate at the reporting date. Income and expense items are translated at the average exchange rates for the year. Exchange
differences arising, are recognised in other comprehensive income and are accumulated in the Foreign exchange reserve equity
section.
Property, plant and equipment
All property, plant and equipment is stated at historical cost (or deemed historical cost) less accumulated depreciation and less any
identified impairment. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its
working condition for its intended use.
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Depreciation is provided on all property, plant and equipment at rates calculated to write each asset down to its estimated residual
value on a straight line basis at the following annual rates:
Leasehold improvements – 5 years
Fixtures and fittings – 3 years
Computer equipment – 3 -5 years
Useful economic lives and estimated residual values are reviewed annually and adjusted as appropriate.
Intangible assets
Identifiable intangible assets are recognised when the Group controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Group and the cost of the asset can be reliably measured.
Intangible assets with finite lives are stated at acquisition or development cost less accumulated amortisation and less any identified
impairment. The amortisation period and method is reviewed at least annually. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or
method, as appropriate and are treated as changes in accounting estimates.
Computer software
Computer software which has been purchased by the Group from third party vendors is measured at initial cost less accumulated
amortisation and less accumulated impairments.
Computer software also comprises internally developed platforms and the costs directly associated with the production of these
identifiable and unique software products controlled by the Group. They are probable of producing future economic benefits. They
primarily include employee costs and directly attributable overheads.
Internally generated intangible assets are only recognised by the Group when the recognition criteria have been met in accordance
with IAS 38: Intangible Assets as follows:
•
•
•
•
•
expenditure can be reliably measured;
the product or process is technically and commercially feasible;
future economic benefits are likely to be received;
intention and ability to complete the development; and
view to either use or sell the asset in the future.
The Group will only recognise an internally-generated asset should it meet all the above criteria. In the event of a development not
meeting the criteria it will be recognised within the statement of profit or loss in the period incurred.
Capitalised costs include all directly attributable costs to the development of the asset. Internally generated assets are measured at
capitalised cost less accumulated amortisation less accumulated impairment losses. The internally generated asset is amortised at
the point the asset is available for use or sale. The asset is amortised on a straight-line basis over the useful economic life with the
remaining useful economic life and residual value being assessed annually.
Any subsequent expenditure on the internally generated asset is only capitalised if the cost increases the future economic benefits of
the related asset. Otherwise all additional expenditure should be recognised through the statement of profit or loss in the period it
occurs.
Contract assets
Contract assets comprise the directly attributable costs incurred at the beginning of an Early Payment Scheme Service contract to
revise a client’s existing payment systems and provide access to the Group’s software and other intellectual property. These
implementation (or “set up”) costs are comprised primarily of employee costs.
Amortisation is charged to the statement of comprehensive income over the estimated useful lives of intangible assets from the date
they are available for use, on a straight-line basis. The amortisation basis adopted for each class of intangible asset reflects the
Group’s consumption of the economic benefit from that asset.
2022 Annual Report and Accounts | 57
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Estimated useful lives
The estimated useful lives of finite intangible assets are as follows:
Computer software – 3 -5 years
Contract assets – Life of underlying contract (typically 5 years)
Goodwill
Goodwill arising on acquisition represents the excess cost of a business combination over the fair values of the Group’s share of the
identifiable assets and liabilities at the date of the acquisition. When part of the consideration transferred by the Group is deferred or
contingent, this is valued at its acquisition date fair value, and is included in the consideration transferred in a business combination.
Changes in the deferred or contingent consideration, which occur in the measurement period, are adjusted retrospectively, with
corresponding adjustments to goodwill.
Goodwill is not amortised but is reviewed at least annually for impairment. For the purpose of impairment testing, goodwill is
allocated to each Cash Generating Unit (“CGU”). Each CGU is consistent with the Group’s primary reporting segment. Any impairment
is recognised immediately through the income statement and is not subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of profit or loss on disposal.
Financial instruments
Initial recognition
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party
to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are
respectively added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs that are directly attributable to the acquisition of financial assets and financial liabilities at FVTPL are
recognised immediately in profit or loss.
Financial assets
Classification and reclassification of financial assets
Recognised financial assets within the scope of IFRS 9 are required to be classified as subsequently measured at amortised cost,
FVTOCI or FVTPL on the basis of both the Group’s business model for managing the financial assets and the contractual cash flow
characteristics of the financial assets.
Financial assets are reclassified if and only if, the business model under which they are held is changed. There has been no such
change in the allocation of assets to business models in the periods under review.
Loans and advances
Loans and advances are held within a business model whose objective is to hold those financial assets in order to collect contractual
cash flows. The contractual terms of the loan agreements give rise on specified dates to cash flows that are solely payments of
principal and interest or fees on the principal amount outstanding.
After initial measurement, loans and advances to customers are subsequently measured at amortised cost using the Effective Interest
Rate method (EIR) less impairment. Amortised cost is calculated by taking into account any fees or costs that are an integral part of
the EIR. The EIR amortisation is included in interest and similar income in the statement of comprehensive income. The losses arising
from impairment are recognised in the statement of comprehensive income and disclosed with any other similar losses within the line
item “Net impairment losses on financial assets”.
Where cash flows are significantly different from the original expectations used to determine EIR, but where this difference does not
arise from a modification of the terms of the financial instrument, the Group revises its estimates of receipts and adjusts the gross
carrying amount of the financial asset to reflect actual and revised estimated contractual cash flows. The Group recalculates the
gross carrying amount of the financial asset as the present value of the estimated future contractual cash flows discounted at the
financial instrument’s original EIR. The adjustment is recognised in statement of comprehensive income as income or expense.
58 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Trade and other receivables
Trade receivables do not contain any significant financing component and accordingly are recognised initially at transaction price,
and subsequently measured at cost less expected credit losses.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less impairment in the Company’s financial statements.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and demand deposits and short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Impairment
The Group (and Company) recognises loss allowances for Expected Credit Losses (“ECLs”) on the following financial instruments that
are not measured at FVTPL:
•
•
•
•
Loans and advances;
Other receivables;
Trade receivables; and
Intercompany receivables
ECLs are measured through loss allowances calculated on the following bases:
ECLs are a probability-weighted estimate of the present value of credit losses. These are measured as the present value of the
difference between the cash flows due to the Group under the contract and the cash flows that the Group expects to receive arising
from the weighting of future economic scenarios, discounted at the asset’s EIR within the current performing book.
The Group measures ECL on an individual basis, or on a collective basis for portfolios of loans that share similar credit risk
characteristics. The loss allowance is measured as the present value of the difference between the contractual cash flows and cash
flows that the Group expects to receive using the asset’s original EIR, regardless of whether it is measured on an individual basis or a
collective basis.
A financial asset that gives rise to credit risk, is referred to (and analysed in the notes to this financial information) as being in
“Stage 1” provided that since initial recognition (or since the previous reporting date) there has not been a significant increase in
credit risk, nor has it has become credit impaired.
For a Stage 1 asset, the loss allowance is the “12-month ECL”, that is, the ECL that results from those default events on the financial
instrument that are possible within 12 months from the reporting date.
A financial asset that gives rise to credit risk is referred to (and analysed in the notes to this financial information) as being in
“Stage 2” if since initial recognition there has been a significant increase in credit risk but it is not credit impaired.
For a Stage 2 asset, the loss allowance is the “lifetime ECL”, that is, the ECL that results from all possible default events over the life
of the financial instrument.
A financial asset that gives rise to credit risk is referred to (and analysed in the notes to this financial information) as being in
“Stage 3” if since initial recognition it has become credit impaired.
For a Stage 3 asset, the loss allowance is the difference between the asset’s gross carrying amount and the present value of
estimated future cash flows discounted at the financial asset’s original EIR. Further, the recognition of interest income is calculated
on the carrying amount net of impairment rather than the gross carrying amount as for stage 1 and stage 2 assets.
If circumstances change sufficiently at subsequent reporting dates, an asset is referred to by its newly appropriate Stage and is
re-analysed in the notes to the financial information.
Where an asset is expected to mature in 12 months or less, the “12 month ECL” and the “lifetime ECL” have the same effective
meaning and accordingly for such assets the calculated loss allowance will be the same whether such an asset is at Stage 1 or
Stage 2. However, the Group monitors significant increase in credit risk for all assets so that it can accurately disclose Stage 1 and
Stage 2 assets at each reporting date.
Lifetime ECLs are recognised for all trade receivables using the simplified approach.
2022 Annual Report and Accounts | 59
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Significant increase in credit risk – policies and procedures for identifying Stage 2 assets
The Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of initial recognition in order to determine whether credit risk has increased
significantly.
See Note 18 for further details about how the Group assesses increases in significant credit risk.
Definition of a default
Critical to the determination of significant increases in credit risk (and to the determination of ECLs) is the definition of default.
Default is a component of the Probability of Default (“PD”), changes in which lead to the identification of a significant increase in
credit risk and PD is then a factor in the measurement of ECLs.
The Group’s definition of default for this purpose is:
•
•
•
•
a counterparty defaults on a payment due under a loan agreement and that payment is more than 90 days overdue, or
within the core invoice finance proposition, where one or more individual finance repayments are beyond 90 days overdue,
management judgement is applied in considering default status of the client.
the collateral that secures, all or in part, the loan agreement has been sold or is otherwise not available for sale and the proceeds
have not been paid to the lending company; or
a counterparty commits an event of default under the terms and conditions of the loan agreement which leads the lending
company to believe that the borrower’s ability to meet its credit obligations to the lending company is in doubt.
The definition of default is similarly critical in the determination of whether an asset is credit-impaired (as explained below).
Credit-impaired financial assets – policies and procedures for identifying Stage 3 assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred. IFRS 9 states that evidence of credit-impairment includes observable data about the following events:
•
•
•
Significant financial difficulty of the borrower;
A breach of contract such as a default (as defined above) or past due event, or
The Group, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a
concession that the Group would not otherwise consider.
The Group assesses whether debt instruments that are financial assets measured at amortised cost or at FVTOCI are credit-impaired
at each reporting date. When assessing whether there is evidence of credit- impairment, the Group takes into account both qualitative
and quantitative indicators relating to both the borrower and to the asset. The information assessed depends on the borrower and the
type of the asset. It may not be possible to identify a single discrete event – instead, the combined effect of several events may have
caused financial assets to become credit-impaired.
See Note 18 for further details about how the Group identifies credit-impaired assets.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for ECL are presented in the statement of financial position as follows:
•
•
•
For financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets;
For loan commitments: as a provision; and
For debt instruments measured at FVTOCI: no loss allowance is recognised in the statement of financial position as the carrying
amount is at fair value. However, the loss allowance is included as part of the revaluation amount in the investment revaluation
reserve.
Modification of financial assets
A modification of a financial asset occurs when the contractual terms governing a financial asset are renegotiated without the
original contract being replaced and derecognised and:
The gross carrying amount of the asset is recalculated and a modification gain or loss is recognised in profit or loss;
Any fees charged are added to the asset and amortised over the new expected life of the asset; and
The asset is individually assessed to determine whether there has been a significant increase in credit risk.
•
•
•
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STRATEGIC REPORT
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when
the rights to receive cash flows from the asset have expired. The Group also derecognises the assets if it has both transferred the
asset and the transfer qualifies for derecognition.
A transfer only qualifies for derecognition if either
•
•
The Group has transferred substantially all the risks and rewards of the asset; or
The Group has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of
the asset.
Write offs
Loans and advances are written off when the Group has no reasonable expectation of recovering the financial asset (either in its
entirety or a portion of it). This is the case when the Group determines that the borrower does not have assets or sources of income
that could generate sufficient cash flows to repay the amounts subject to the write-off. A write-off constitutes a derecognition event.
The Group may apply enforcement activities to financial assets written off. Recoveries resulting from the Group’s enforcement
activities will result in impairment gains.
Financial liabilities
Financial liabilities and equity
Debt and equity instruments that are issued are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangement.
A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange financial assets or financial
liabilities with another entity under conditions that are potentially unfavourable to the Group or a non-derivative contract that will or
may be settled in a variable number of the Group’s own equity instruments, or a derivative contract over own equity that will or may be
settled other than by the exchange of a fixed amount of cash (or another financial asset) for a fixed number of the Group’s own equity
instruments.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Group are recognised as at the proceeds received, net of direct issue costs. Distributions on equity
instruments are recognised directly in equity.
Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.
Financial liabilities at Fair Value through Profit or Loss
Financial liabilities at FVTPL may include financial liabilities held for trading. Financial liabilities are classified as held for trading if
they are acquired for the purpose of selling in the near term.
During the period under review the Group has held no financial liabilities for trading, nor designated any financial liabilities upon
initial recognition as at fair value through profit or loss.
Other financial liabilities
Interest bearing borrowings are measured at amortised cost using the effective interest rate method. Gains and losses are recognised
in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR). Amortised
cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included in “Interest and fee expenses” in the profit and loss account.
Derecognition of financial liabilities
The Group derecognises financial liabilities when and only when, the Group’s obligations are discharged, cancelled or they expire.
2022 Annual Report and Accounts | 61
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Impairment of non-financial assets
The carrying amounts of the entity’s non-financial assets, other than goodwill and deferred tax assets, are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
For the purposes of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of
assets (the CGU).
Contract assets are reviewed for impairment based on the performance of the underlying contract.
Goodwill is tested annually for impairment in accordance with IFRS. The goodwill acquired in a business combination, for the purpose
of impairment testing is allocated to CGU that are expected to benefit from the synergies of the combination. For the purpose of
goodwill impairment testing, if goodwill cannot be allocated to individual CGUs or groups of CGUs on a non-arbitrary basis, the
impairment of goodwill is determined using the recoverable amount of the acquired entity in its entirety, or if the acquired entity has
been integrated then the entire group of entities into which it has been integrated.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment
losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of CGUs are allocated first
to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of other assets in the
unit (or group of units) on a pro rata basis.
An impairment loss is reversed if and only if the reasons for the impairment have ceased to apply. An impairment loss recognised for
goodwill is not reversed.
Impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no
longer exists. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Current and deferred income tax
Income tax on the result for the period comprises current and deferred income tax. Income tax is recognised in the consolidated
statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income for the period, using tax rates enacted or substantively
enacted at the reporting date and any adjustment to tax payable in respect of previous periods.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are
offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Employee benefits – pension costs
A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity
and will have a legal or constructive obligation to pay further amounts. Contributions to defined contribution schemes are charged to
the statement of comprehensive income as they become payable in accordance with the rules of the scheme. Differences between
contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the statement of
financial position.
62 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Merger reserve
Prior to 29 December 2017, the entities within the Group were held by Arrowgrass Master Fund Limited. On 29 December 2017, these
entities were acquired by TruFin plc via TruFin Holdings Limited. The consideration provided to Arrowgrass for the companies
acquired was in exchange for shares of TruFin plc based on the fair value of the underlying companies. Upon consolidation of the
Group, the difference between the book value of the entities and the amount of the consideration paid was accounted through a
merger reserve, in accordance with relevant accounting standards relating to businesses under common control.
Investments in associates
Associates are entities in which the Group has between 20% and 50% of the voting rights, or is otherwise able to exercise significant
influence, but which it does not control or jointly control. Investments in associates are accounted for under the equity method and
are initially recognised at costs, including goodwill. Subsequent changes in the carrying value reflect the post-acquisition changes in
the Group’s share of net assets of the associate. The Group’s share of its associates profits or losses is recognised in the consolidated
income statement. However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, the
Group does not recognise further losses, unless the Group is obliged to make further payments to, or on behalf of the associate.
Segmental reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other components of the same entity) and whose operating
results are regularly reviewed by the Board of Directors in order to make decisions about resources to be allocated to that component
and assess its performance and for which discrete financial information is available.
For the purposes of the financial statements, the Directors consider the Group’s operations to be made up of four operating segments:
the provision of short term finance, payment services, publishing and other operations.
The accounting policies of the reportable segments are consistent with the accounting policies of the Group as a whole.
Further details are provided in Note 4.
Share based payments
Where the Group engages in share-based payment transactions in respect of services received from certain of its employees, these
are accounted for as equity-settled share-based payments in accordance with IFRS 2 ‘Share-based payments’. The equity is in the
form of ordinary shares.
The grant date fair value of a share-based payment transaction is recognised as an employee expense, with a corresponding increase
in equity over the period that the employees become unconditionally entitled to the awards. In the absence of market prices, the fair
value of the equity at the date of the grant is estimated using an appropriate valuation technique.
The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related services and
non-market vesting conditions are expected to be met such that the amount ultimately recognised as an expense is based on the
number of awards that do meet the related service and non-market performance conditions at the vesting date.
For share-based payment awards with market performance conditions the grant date fair value of the award is measured to reflect
such conditions and there is no true-up for differences between expected and actual outcomes.
Refer to Note 6 for the amounts disclosed.
Leases
At the inception of a contract, the Group assesses if the contract contains a lease. A contract contains a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration. Reassessment is only required
when the terms and conditions of the contract are changed.
Right-of-use assets
The Group recognises a right-of-use asset and lease liability at the date which the underlying asset is available for use. Right-of-use
assets are measured at cost which comprises the initial measurement of lease liabilities adjusted for any lease payments made at or
before the commencement date and lease incentives received. Any initial direct costs that would not have been incurred if the lease
had not been obtained are added to the carrying amount of the right-of-use assets.
2022 Annual Report and Accounts | 63
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
These right-of-use assets are subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term.
Right-of-use assets (except for those which meet the definition of an investment property) are presented within “Property, plant and
equipment”.
Right of use assets which meet the definition of property, plant and equipment are presented with and accounted for in accordance
the this policy.
Lease liabilities
The initial measurement of a lease liability is measured at the present value of the lease payments discounted using the interest rate
implicit in the lease, if the rate can be readily determined. If that rate cannot be readily determined, the borrower shall use its
incremental borrowing rate.
Lease liabilities are measured at amortised cost using the effective interest method. Lease liabilities shall be remeasured when:
•
•
•
There is a change in future lease payments arising from changes in an index or rate;
There is a change in the Group’s assessment of whether it will exercise an extension option; or
There is a modification in the scope or the consideration of the lease that was not part of the original term.
Lease liabilities are remeasured with a corresponding adjustment to the right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to zero.
Short term and low value leases
The Group has elected to not recognise right-of-use assets and lease liabilities for short-term leases that have lease terms of 12
months or less and leases of low value leases. Lease payments relating to these leases are expensed to profit or loss on a straight-line
basis over the lease term.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to
them and that the grants will be received.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they
become receivable. These grants are deducted from the expense that the grant is related to.
Critical accounting judgements and key sources of estimation uncertainty
2.
The preparation of financial information in accordance with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apart from other sources. The estimates and underlying assumptions are reviewed on an ongoing
basis. Actual results may differ from these estimates.
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the
directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the
amounts recognised in financial statements.
Critical accounting judgements
•
Early Payment Programme Services set up costs: the Group capitalises the direct costs of implementing Early Payment
Programme Services contracts for clients. These costs are essential to the satisfaction of the Group’s performance obligation
64 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
under that contract and accordingly the Group considers that these costs meet the applicable criteria for recognition as contract
assets.
The amount capitalised is disclosed in Note 10.
•
•
Deferred tax asset: There is inherent uncertainty in forecasting beyond the immediate future and significant judgement is
required to estimate whether future taxable profits are probable in order to utilise the carried forward tax losses. Companies in
the Group have carried forward losses which will be utilised against future taxable profits. However, a deferred tax asset has not
been recognised for these companies, except for Vertus Capital Limited as there is uncertainty surrounding the timing of when
these losses will be used.
Refer to Note 9 for more information on the deferred tax asset.
The accounts of the trustee (the “EBT Trustee”) of the Company’s Employee Benefit Trust (“EBT”) have not been consolidated as it
is the Directors’ opinion that the Company does not have control over the EBT. The EBT is a discretionary trust, which means that
the EBT Trustee has discretion how to act, provided that the action taken by the EBT Trustee is considered by the EBT Trustee to
be in the interest of one of more EBT beneficiaries (being employees and former employees (and certain of their relatives) of the
Company and its subsidiaries.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting period that may have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below:
Expected credit losses
• Where an asset has a maturity of 12 months or less, the “12 month ECL” and the “lifetime ECL” have the same effective meaning
and accordingly for such assets the calculated loss allowance will be the same whether such an asset is at stage 1 or stage 2.
•
•
•
The Probability of Default (“PD”) is an estimate of the likelihood of default over a given time horizon and is a key input to the ECL
calculation. The Group primarily uses credit scores from credit reference agencies to calculate the PD for loans and advances.
The score is a 12-month predictor of credit failure and, in the absence of internally generated loss history, the Group believes that
it provides the best proxy for the credit quality of the loan portfolio.
Exposure At Default (“EAD”) is an estimate of the exposure at a future default date, taking into account expected changes in the
exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise,
expected drawdowns on committed facilities and accrued interest from missed payments.
Loss Given Default (“LGD”) is an estimate of the loss arising on default. It is based on the difference between the contractual cash
flows due and those that the lender would expect to receive, in particular taking into account wholesale collateral values and
certain buy back options.
Note 18 presents the carrying amounts of the Expected Credit Losses in further detail.
Impairment of Intangibles
The Group is required to test, whether intangible and tangible assets have suffered any impairment based on the recoverable amount
of its CGUs, when there are indicators for impairment. Determining whether an impairment has occurred requires an estimation of the
value in use of the CGU to which these assets are allocated. Key sources of estimation uncertainty in the value in use calculation
include the estimation of future cash flows of the CGU affected by expected changes in underlying revenues and direct costs, and
administration costs through the forecast period, the long-term growth rates and a suitable discount rate to apply to the
aforementioned cash flows in order to calculate the net present value. Further information regarding the assumptions used in the
calculations have been provided in Note 10.
Measurement of fair values of level 3 instruments
In estimating the fair value of a financial asset or liability, the Group uses market observable data to the extent that it is available.
Where such level 1 inputs are not available, the Group uses valuation models to estimate the fair value of its financial instruments.
2022 Annual Report and Accounts | 65
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
3.
Gross revenue
Group
Revenue
Interest income
Total interest income
EPPS contracts
Consultancy fees
Implementation fees
Subscription fees
Total fee income
IAP revenue
Advertising revenue
Console revenue
Brand revenue
Total publishing income
Gross revenue
Company
Intercompany interest income
Intercompany fee income
Other interest income
Gross revenue
2022
£’000
2,619
2,619
3,335
597
1,644
1,607
7,183
342
453
5,521
1
6,317
16,119
2022
£’000
2,166
118
9
2021
£’000
1,681
1,681
2,536
436
70
1,288
4,330
428
378
6,285
13
7,104
13,115
2021
£’000
2,008
118
–
2,293
2,126
Segmental reporting
4.
The results of the Group are broken down into segments based on the products and services from which it derives its revenue:
Short term finance
Provision of distribution finance products and invoice discounting. For results during the reporting period, this corresponds to the
results of Satago, Vertus and AltLending.
Payment services
Provision of Early Payment Programme Services. For results during the reporting period, this corresponds to the results of Oxygen.
Publishing
Publishing of video games. For results during the reporting period, this corresponds to the results of the Playstack Group.
Other
Revenue and costs arising from investment activities. For results during the reporting period, this corresponds to the results of TSL,
THL and TruFin plc.
66 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
The results of each segment, prepared using accounting policies consistent with those of the Group as a whole, are as follows:
Short term Payment
finance services Publishing
Year ended 31 December 2022 £’000 £’000 £’000
Gross revenue 4,469 5,311 6,330
Cost of sales (1,153) (889) (3,033)
Net revenue 3,316 4,422 3,297
Adjusted loss before tax* (3,879) (220) (1,569)
Loss before tax (3,879) (220) (1,569)
Taxation 218 395 601
Other
£’000
9
–
9
(2,352)
(2,352)
–
Total
£’000
16,119
(5,075)
11,044
(8,020)
(8,020)
1,214
(Loss)/profit for the year (3,661) 175 (968)
(2,352)
(6,806)
Total assets 34,200 8,258 20,407
Total liabilities (19,747) (1,792) (2,911)
Net assets 14,453 6,466 17,496
* adjusted loss before tax excludes share-based payment expense
Short term Payment
finance services Publishing
Year ended 31 December 2021 £’000 £’000 £’000
Gross revenue 1,878 4,133 7,104
Cost of sales (832) (873) (4,509)
Net revenue 1,046 3,260 2,595
Adjusted loss before tax* (3,877) (548) (1,439)
Loss before tax (3,877) (548) (1,439)
Taxation 367 175 444
2,627
(938)
1,689
Other
£’000
–
–
–
(2,488)
(2,558)
–
Loss for the year (3,510) (373) (995)
(2,558)
Total assets 24,607 8,331 16,774
Total liabilities (13,341) (1,747) (2,184)
Net assets 11,266 6,584 14,590
1,016
(1,005)
11
65,492
(25,388)
40,104
Total
£’000
13,115
(6,214)
6,901
(8,352)
(8,422)
986
(7,436)
50,728
(18,277)
32,451
* adjusted loss before tax excludes share-based payment expense
The majority of the Group’s activities (98% of revenues) are within the UK, with 2% earned in USA and 0% in Europe.
5.
Staff costs
Analysis of staff costs:
Group
Company
2022 2021
£’000 £’000
Wages and salaries 10,365 9,011
Consulting costs 379 395
Social security costs 1,411 1,409
Pension costs arising on defined contribution schemes 454 428
Share based payment – 70
Government grants – (28)
12,609 11,285
2022
£’000
1,384
–
251
38
–
–
1,673
2021
£’000
1,440
19
355
27
70
–
1,911
Consulting costs are recognised within staff costs where the work performed would otherwise have been performed by employees.
Consulting costs arising from the performance of other services are included within other operating expenses.
2022 Annual Report and Accounts | 67
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Average monthly number of persons (including Executive Directors) employed:
Management
Finance
Sales & marketing
Operations
Technology
Directors’ emoluments
The number of directors who received share options during the year was as follows:
Long term incentive schemes
There were no directors who exercised share options during the year.
The directors’ aggregate emoluments in respect of qualifying services were:
Pension
Salary Bonus and Benefits
£’000 £’000 £’000
Executive Directors:
J v d Bergh 256 220 9
256 220 9
Non-executive
Directors:
S Baldwin 100 – –
P Judd 70 – –
P Dentskevich 60 – –
Anders Wilhelmsen – – –
230 – –
2022
Number
2021
Number
17
10
30
78
43
178
16
7
23
36
54
136
2022
Number
2021
Number
–
–
2022
Total
£’000
485
485
100
70
60
–
230
2021
Total
£’000
465
465
100
70
50
–
220
Key management
The Directors consider that key management personnel include the Executive Director of TruFin plc. This individual has the authority
and responsibility for planning, directing and controlling the activities of the Group.
Employee share-based payment transactions
6.
The employment share-based payment charge comprises:
Performance Share Plan and Joint Share Ownership Plan Founder Award
Performance Share Plan Market Value Award
Performance Share Plan 2019 Award
Performance Share Plan 2018 Award
Total
68 |
£’000
2022
2021
£’000
–
–
–
–
–
59
11
–
–
70
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Performance Share Plan and Joint Share Ownership Plan Founder Award (“Found Award”)
The final 25% of Founder Awards held by James van den Bergh vested on 22 February 2022 when the share price was £0.81. As a
result, 395,558 shares subject to the Join Share Ownership Plan became fully owned by EBT and James’ nil cost option under the
Performance Share Plan vested in respect of the same number of shares.
Performance Share Plan Market Value Award (“PSP Market Value Award”)
On 21 February 2018, options to acquire 4,868,420 shares were granted to the senior management team. The vesting of this award is
based on market-based performance conditions. The vesting of these awards is subject to the holder remaining an employee of the
Company and the Company’s share price achieving five distinct milestones - vesting at 20% each milestone. The exercise price of the
awards at the time of grant was £1.90 per share. A Monte Carlo simulation was used to determine the fair value of these options. The
model used an expected volatility of 10% and a risk free rate of 1.3%.
In order to reflect the impact of the demerger, the PSP Market Value Award was split into two:
•
•
Part of the award remained as an option in respect of TruFin shares (“TruFin Market Value Award”)
Part of the award became an award in respect of DFC shares (“DFC market Value Award”)
The TruFin Market Value Award is on the same terms as the original PSP Market Value Award except that:
•
•
•
The exercise price was adjusted to £0.85, and the share price milestones were adjusted to reflect the demerger
The exercise price was further adjusted to £0.80 and the share price milestones were further adjusted, to reflect the return of
value to shareholders in June 2019
The exercise price was further adjusted to £0.71, and the share price milestones were further adjusted to reflect the return of
value to shareholders in December 2019
The modification has not resulted in a change in the valuation of the award and this continues to be recognised over the remainder of
the original vesting period.
Performance Share Plan 2018 Award (“PSP 2018 Award”)
The unvested performance conditions of this award had not been met at the end of the vesting period.
Performance Share Plan 2019 Award (“PSP 2019 Award”)
The performance conditions of this award had not been met at the end of the vesting period.
Details of share based awards during the year:
JSOP Founder
Award*
Type of instrument granted Shares (#)
PSP Founder
Award*
Options (#)
PSP Market
Value
Options (#)
Outstanding at 1 January 2022 395,558
Granted during the year –
Vested during the year (395,558)
Exercised during the year –
1,566,255
–
–
–
4,868,420
–
–
–
Outstanding at 31 December 2022 –
1,566,255
4,868,420
Exercisable at 31 December 2022
1,566,255
–
* The JSOP Founder Awards and PSP Founder Awards will together deliver, in aggregate, a maximum of 3,407,895 TruFin shares.
2022 Annual Report and Accounts | 69
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Type of instrument granted
Outstanding at 1 January 2022
Granted during the year
Vested during the year
Exercised during the year
Cancelled during the year
Outstanding at 31 December 2022
Exercisable at 31 December 2022
No options expired during the year.
PSP 2018
Options (#)
PSP 2019
Options (#)
263,158
–
–
–
–
320,000
–
–
–
–
263,158
320,000
–
–
The weighted average remaining contractual life for the share options outstanding as at 31 December 2022 was 5.21 years
(2021: 6.21 years).
7.
Net impairment loss on financial assets
At 1 January
Charge for impairment loss
Amounts written off in the year
Amounts recovered in the year
At 31 December
2022
£’000
2021
£’000
4
50
–
–
54
10
(10)
8
(4)
4
At 31 December 2022, the Group had an impairment balance of £54,000 which was allocated against loans and advances. At
31 December 2021, all of the impairment balance was allocated against loans and advances.
The net impairment charge on financial assets during the year ended 31 December 2022 all related to loans and advances.
The net impairment charge on financial assets during the year ended 31 December 2021 all related to loans and advances.
Loss before income tax
8.
Loss before income tax is stated after charging:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Staff costs including share based payments charge
Fees payable to the Group’s auditor (Crowe U.K. LLP)
Fees payable for the audit of the company’s annual accounts
Fees payable for the audit of the company’s subsidiaries
Total audit fees
Non audit services
Other assurance services
Total non-audit fees
70 |
2022
£’000
108
2,377
12,609
2022
£’000
82
98
180
14
14
2021
£’000
96
1,571
11,285
2021
£’000
45
84
129
13
13
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Taxation
9.
Analysis of tax charge recognised in the period
Current tax credit
Deferred tax charge/(credit)
Total tax credit
Reconciliation of loss before tax to total tax credit recognised
Group
Loss before tax
Loss before tax multiplied by the standard rate of corporation tax in the UK of 19% (2021: 19%)
Tax effect of:
Expenses not deductible
Depreciation in excess of capital allowances
Capital allowances
Other short term timing differences
R&D tax credit
Deferred tax not recognised
Total tax charge
Company
Loss before tax
Loss before tax multiplied by the standard rate of corporation tax in the UK of 19% (2021: 19%)
Tax effect of:
Expenses not deductible
Other short term timing differences
Brought forward losses utilised
Deferred tax not recognised
Total tax charge
2022
£’000
(1,267)
53
(1,214)
2022
£’000
(8,020)
(1,524)
15
253
(318)
1
(1,274)
1,633
(1,214)
2022
£’000
(42)
(8)
24
(1)
(15)
–
–
2021
£’000
(726)
(260)
(986)
2021
£’000
(8,422)
(1,600)
(223)
395
(187)
(5)
(733)
1,367
(986)
2021
£’000
(409)
(78)
32
–
–
46
–
In the Finance Bill 2022, the UK government announced that legislation would be proposed to increase the main rate of corporation
tax to 25% from 1 April 2023, and this was substantively enacted on 24 May 2022.
The deferred tax assets and liabilities at 31 December 2022 have been based on the rates substantively enacted at the reporting date.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
Deferred tax asset
Group
Balance at start of the year
(Charge)/credit to the statement of comprehensive income
Balance at end of the year
Comprised of:
Losses
Total deferred tax asset
2022
£’000
2021
£’000
303
(53)
250
250
250
43
260
303
303
303
2022 Annual Report and Accounts | 71
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
A deferred tax asset from losses in Vertus Capital Limited has been recognised, and has been used in the year against profits in
Vertus Capital SPV 1 during the year. Unutilised tax losses in the remainder of the Group as at the reporting date were £83,102,000
(2021: £77,124,000).
Intangible assets
10.
Software Separately
licenses and identifiable
Client similar intangible
contracts assets Assets
Group £’000 £’000 £’000
Cost
At 1 January 2022 5,490 2,579 1,642
Additions 905 2,254 –
On Acquisition – 3 1,595
Disposals – (75) –
Exchange differences 4 12 –
Goodwill
£’000
Total
£’000
15,746
–
823
–
–
25,457
3,159
2,421
(75)
16
At 31 December 2022 6,399 4,773 3,237
16,569
30,978
Amortisation
At 1 January 2022 (1,607) (1,181) (1,070)
Charge (889) (977) (511)
Disposals – 75 –
Exchange differences – 1 –
At 31 December 2022 (2,496) (2,082) (1,581)
Accumulated impairment losses
At 1 January 2022 (408) – –
At 31 December 2022 (408) – –
Net book value
At 31 December 2022 3,495 2,691 1,656
At 31 December 2021 3,475 1,398 572
–
–
–
–
–
–
–
16,569
15,746
(3,858)
(2,377)
75
1
(6,159)
(408)
(408)
24,411
21,191
72 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Software Separately
licenses and identifiable
Client similar intangible
contracts assets Assets
Group £’000 £’000 £’000
Cost
At 1 January 2021 4,689 1,834 1,642
Additions 1,056 757 –
Disposals (256) – –
Exchange differences 1 (12) –
Goodwill
£’000
Total
£’000
15,796
(50)
–
–
23,961
1,763
(256)
(11)
At 31 December 2021 5,490 2,579 1,642
15,746
25,457
Amortisation
At 1 January 2021 (956) (814) (742)
Charge (873) (370) (328)
Disposals 222 – –
Exchange differences 3
At 31 December 2021 (1,607) (1,181) (1,070)
Accumulated impairment losses
At 1 January 2021 (408) – –
At 31 December 2021 (408) – –
Net book value
At 31 December 2021 3,475 1,398 572
At 31 December 2020 3,325 1,020 900
–
–
–
–
–
–
15,746
15,796
(2,512)
(1,571)
222
3
(3,858)
(408)
(408)
21,191
21,041
The Company had no intangibles assets at the year end.
Client contracts comprise the directly attributable costs incurred at the beginning of an Early Payment Scheme Service contract to
revise a client’s existing payment systems and provide access to the Group’s software and other intellectual property. These
implementation costs are comprised primarily of employee costs.
The useful economic life for each individual asset is deemed to be the term of the underlying Client Contract (generally 5 years)
which has been deemed appropriate and for impairment review purposes, projected cash flows have been discounted over this period.
The amortisation charge is recognised in fee expenses within the statement of comprehensive income, as these costs are incurred
directly through activities which generate fee income.
The Group performed an impairment review at 31 December 2022 and there was no impairment in relation to underperforming
contracts.
Software, licenses and similar assets comprises separately acquired software, as well as costs directly attributable to internally
developed platforms across the Group. These directly attributable costs are associated with the production of identifiable and unique
software products controlled by the Group and are probable of producing future economic benefits. They primarily include employee
costs and directly attributable overheads.
A useful economic life of 3 to 5 years has been deemed appropriate and for impairment review purposes projected cash flows have
been discounted over this period.
The amortisation charge is recognised in depreciation and amortisation on non-financial assets within the statement of
comprehensive income.
The Group performed an impairment review at 31 December 2022 and concluded no impairment was required.
The ‘Software, licenses and similar assets’ net book value balance related to internally generated intangible assets at 31 December
2022 was £2,691,000 (2021: £1,398,000 ). This consists of cost of £4,773,000 (2021: £2,579,000) and accumulated amortisation of
£2,082,000 (2021: £1,181,000 ). During the year there were additions of £2,254,000 (2021: £757,000) and amortisation of £977,000
(2021: £370,000).
2022 Annual Report and Accounts | 73
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Goodwill and “Separately identifiable intangible assets” arise from acquisitions made by the Group.
Porge (now Insight Services within OFL)
Porge was acquired by OFGL in August 2018 and goodwill of £2,759,000 that arose from this acquisition was included within the
payments services segment of the Group. Following the acquisition, separately identifiable intangible assets of £1,387,000 primarily
relating to the value of the contracts in the business at acquisition were recognised. These are being amortised over 5 years resulting
in an amortisation charge of £277,000 (2021: £277,000) during the year. Net Book value of these assets at 31 December 2022 was
£162,000 (2021: £439,000). Goodwill related to this transaction excluding these assets at 31 December 2022 was £1,372,000 (2021:
£1,372,000).
On 31 August 2020, OFL purchased the Trade and Assets of Porge. The purchase price was set at the Net book value of the assets
acquired at the time of the transaction.
Vertus
In July 2019, the Group converted into ordinary shares its existing convertible loan with Vertus Capital in full satisfaction and
discharge of the loan. This, together with a further cash payment, gave the Group 51% ownership of Vertus Capital and Vertus SPV 1.
Goodwill of £1,714,000 arose from this transaction and has been included within the short term finance segment of the business.
Separately identifiable intangible assets of £255,000 primarily related to the value of existing third party relationships on acquisition
have been identified. These are being amortised over 5 years and the amortisation charge for the year was £51,000 (2021: £51,000).
Net Book value of these assets at 31 December 2022 was £81,000 (2021: £132,000). Goodwill related to this transaction excluding
these assets at 31 December 2022 was £1,408,000 (2021: £1,408,000).
Playstack
In September 2019, the Group converted into ordinary shares its existing convertible loans with Playstack Ltd in full satisfaction and
discharge of the loans. This gave the Group ownership of Playstack Ltd and the other companies within the Playstack Group.
Goodwill of £12,965,000 arose from this transaction and has been included within the publishing segment of the business.
Magic Fuel
On 6 June 2022, the Group acquired a 100% equity interest in Magic Fuel Inc (“Magic Fuel”). Goodwill of £2,417,000 arose from this
transaction and was included within the publishing segment of the business. Following the acquisition , separately identifiable
intangible assets of £1,595,000 relating to the Intellectual Property of the Games in development by Magic Fuel were recognised.
These are being amortised over 5 years resulting in an amortisation charge of £181,000 during the year. Further details of the
acquisition have been included in Note 20. Goodwill related to this transaction excluding these assets at 31 December 2022 was
£823,000 (2021: £nil).
Impairment testing of intangibles
An impairment review of goodwill was carried out at the year end.
The insight services segment of OFL was valued using the discounted cash flow methodology. Its net earnings were forecasted to
2027, a discount rate of 10% was used and terminal growth rate of 2%. This valuation was greater than the amount of CGU and
therefore the goodwill is not deemed to be impaired.
Vertus was valued using the discounted cash flow methodology. The net earnings of Vertus were forecasted to 2027, a discount rate
of 15% was used and terminal growth rate of 3%. The valuation of Vertus was greater than the amount of goodwill and therefore the
goodwill is not deemed to be impaired.
Playstack was valued using the discounted cash flow methodology. The net earnings of Playstack were forecasted to 2027, a discount
rate of 20% was used and terminal growth rate of 3%. Revenue growth was a key assumption and was based on Playstack’s pipeline
of games over the forecast period. This factors in a number of key projects with platforms and streaming partners. In some instances,
revenue projections have been based on amounts outlined in agreed contracts in place with customers, whilst others have been based
on progressive discussions with customers and historic sales for games of a similar nature. The valuation of Playstack was greater
than the amount of goodwill and therefore the goodwill is not deemed to be impaired.
74 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Magic Fuel was valued using the discounted cash flow methodology. It’s net earnings along with revenues earned in the rest of the
group related to this acquisition were forecasted to 2027, a discount rate of 20% was used and a terminal growth rate of 3%. The
valuation of this CGU was greater than the value of goodwill and so was deemed not be impaired.
The impairment review of Playstack is most sensitive to a change in the planned revenue growth. A 48% reduction in this growth rate
could give rise to an impairment charge.
No other reasonable change in the other assumptions set out in this note would result currently in an impairment charge.
11.
Property, plant and equipment
Group
Cost
At 1 January 2022
Additions
Disposals
At 31 December 2022
Depreciation
At 1 January 2022
Charge
Disposals
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
Group
Cost
At 1 January 2021
Additions
Disposals
Exchange differences
At 31 December 2021
Depreciation
At 1 January 2021
Charge
Disposals
At 31 December 2021
Net book value
At 31 December 2021
At 31 December 2020
Fixtures &
fittings
£’000
Computer
equipment
£’000
Right-of-Use
Asset
£’000
Total
£’000
53
86
–
139
(44)
(16)
–
(60)
79
9
78
27
(9)
96
(44)
(26)
9
(62)
34
34
429
276
(429)
276
(407)
(66)
429
(44)
232
22
560
389
(438)
511
(495)
(108)
438
(166)
345
65
Fixtures &
fittings
£’000
Computer
equipment
£’000
Right-of-Use
Asset
£’000
Total
£’000
52
2
–
(1)
53
(36)
(8)
–
(44)
9
16
60
22
(4)
–
78
(26)
(20)
2
(44)
34
34
429
–
–
–
429
(339)
(68)
–
(407)
22
90
541
24
(4)
(1)
560
(401)
(96)
2
(495)
65
140
2022 Annual Report and Accounts | 75
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Computer
equipment
£’000
Right-of-use
asset
£’000
Total
£’000
3
6
–
9
(3)
(2)
(5)
4
–
167
–
(167)
–
(167)
–
167
–
–
–
170
6
(167)
9
(170)
(2)
167
(5)
4
–
Computer
equipment
£’000
Right-of-use
asset
£’000
Total
£’000
3
–
3
(3)
–
(3)
–
–
167
–
167
(167)
–
(167)
–
–
170
–
170
(170)
–
(170)
–
–
£’000
30,189
30,189
Company
Cost
At 1 January 2022
Additions
Disposals
At 31 December 2022
Depreciation
At 1 January 2022
Charge
Disposals
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
Company
Cost
At 1 January 2021
Additions
At 31 December 2021
Depreciation
At 1 January 2021
Charge
At 31 December 2021
Net book value
At 31 December 2021
At 31 December 2020
The Right of use assets in the Group and Company relates to leases for office buildings.
12.
Company
Investment in subsidiaries
Balance at 1 January 2022 and 31 December 2022
Balance at 1 January 2021 and 31 December 2021
76 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
13.
Loans and advances
Group
Total loans and advances
Less: loss allowance
The aging of loans and advances are analysed as follows:
Neither past due nor impaired
Past due: 0–30 days
Past due: 31–60 days
Past due: 61–90 days
Past due: more than 91 days
14.
Trade and other receivables
Trade and other receivables
Prepayments
Accrued Income
VAT
Other debtors
Amounts due from Group Undertakings
2022
£’000
24,215
(54)
2021
£’000
16,137
(4)
24,161
16,133
2022
£’000
23,875
129
77
41
39
2021
£’000
16,062
32
10
28
1
24,161
16,133
Group
Company
2022
£’000
2,149
455
890
–
2,554
–
2021
£’000
2,585
467
385
–
1,988
–
6,048
5,425
2022
£’000
2021
£’000
–
44
–
11
–
83
138
–
52
–
33
5
54
144
Trade receivables above are stated net of a loss allowance of £nil (2021: £nil). All receivables are due within one year.
The aging of trade receivables is analysed as follows:
Not yet due
Past due: 0–30 days
Past due: 31–60 days
Past due: 61–90 days
Past due: more than 91 days
Group
Company
2022
£’000
1,960
117
6
9
57
2,149
2021
£’000
2,182
96
88
13
206
2,585
2022
£’000
2021
£’000
–
–
–
–
–
–
–
–
–
–
–
–
2022 Annual Report and Accounts | 77
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
15.
Share capital
Group and Company
94,182,943 shares at £0.91 per share
Share Capital
£’000
Total
£’000
85,706
85,706
On 12 April 2022, the Company issued 13,360,739 ordinary shares through a Placing and an Open Offer. These were issued at £0.75
per share, raising gross proceeds of £10,021,000. This was a discount to par value of £2,138,000, which has been included in Other
Reserves in the Statement of Changes of Equity.
All ordinary shares carry equal entitlements to any distributions by the Company. No dividends were proposed by the Directors for the
year ended 31 December 2022.
16.
Borrowings
Group
Loans due within one year
Loans due in over one year
Movements in borrowings during the year
The below table identifies the movements in borrowings during the year.
2022
£’000
1,783
16,764
18,547
Group
Balance at 1 January 2022
Funding drawdown
Interest expense
Fee amortisation
Repayments
Interest paid
Exchange differences
Balance at 31 December 2022
Group
Balance at 1 January 2021
Funding drawdown
Interest expense
Origination fees paid
Fee amortisation
Repayments
Interest paid
Loan written off
Exchange differences
Balance at 31 December 2021
78 |
2021
£’000
1,634
11,351
12,985
£’000
12,985
8,707
852
110
(3,337)
(777)
7
18,547
£’000
10,711
5,725
528
(211)
141
(3,371)
(506)
(13)
(19)
12,985
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
The primary borrowings of the Group are comprised of the following:
•
•
•
A 24-month revolving facility agreement with a 12-month term-out period, maturing in September 2024. Interest is payable
monthly with the principal balance rolled over monthly, subject to ongoing compliance with the agreement. This facility is
secured by a debenture over all assets of Vertus Capital.
Unsecured interest bearing facility due in 2028, with interest payable quarterly.
A revolving credit facility under which notice is given by either the lender (3 months) or borrower (6 months). The facility is
secured by a fixed and floating charge over Satago SPV1 and interest is payable monthly.
The Company had no borrowings during the period or at year end.
17.
Trade and other payables
Trade payables
Accruals
Other payables
Corporation tax
Other taxation and social security
VAT
Group
Company
2022
£’000
529
3,867
1,636
–
603
206
2021
£’000
380
3,949
103
9
706
145
6,841
5,292
2022
£’000
28
622
–
–
284
–
934
2021
£’000
5
670
–
–
353
–
1,028
Financial instruments
18.
The Directors have performed an assessment of the risks affecting the Group through its use of financial instruments and believe the
principal risks to be: capital risk; credit risk, and market risk including interest rate risk.
This note describes the Group’s objectives, policies and processes for managing the material risks and the methods used to measure
them. The significant accounting policies regarding financial instruments are disclosed in Note 1.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while providing an
adequate return to shareholders.
The capital structure of the Group consists of borrowings disclosed in Note 16 and equity of the Group (comprising issued capital,
reserves, retained earnings and non-controlling interests as disclosed in Note 15 and Note 19).
The Group is not subject to any externally imposed capital requirements.
Principal financial instruments
The principal financial instruments to which the Group is party and from which financial instrument risk arises, are as follows:
•
•
•
•
•
•
Loans and advances, primarily credit risk and liquidity risk;
Trade receivables, primarily credit risk and liquidity risk;
Investments, primarily fair value or market price risk;
Cash and cash equivalents, which can be a source of credit risk but are primarily liquid assets available to further business
objectives or to settle liabilities as necessary;
Trade and other payables; and
Borrowings which are used as sources of funds and to manage liquidity risk.
2022 Annual Report and Accounts | 79
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Analysis of financial instruments by valuation model
There are no financial assets or liabilities included in the statement of financial position at fair value.
31 December 2022
Financial assets and financial liabilities included in the statement of financial position that are not measured at fair value:
Carrying amount
£’000
Fair value
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
24,161
2,149
3,444
10,273
24,161
2,149
3,444
10,273
40,027
40,027
18,547
6,392
18,547
6,392
24,939
24,939
–
–
–
10,273
10,273
–
–
–
–
–
–
–
–
–
–
–
24,161
2,149
3,444
–
29,754
18,547
6,392
24,939
Carrying amount
£’000
Fair value
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
16,133
2,585
2,373
7,608
16,133
2,585
2,373
7,608
28,699
28,699
12,985
4,672
17,657
12,985
4,672
17,657
–
–
–
7,608
7,608
–
–
–
–
–
–
–
–
–
–
–
16,133
2,585
2,373
–
21,091
12,985
4,672
17,657
Group
Financial assets not measured at fair value
Loans and advances
Trade receivables
Other receivables
Cash and cash equivalents
Financial liabilities not measured at fair value
Borrowings
Trade, other payables and accruals
31 December 2021
Group
Financial assets not measured at fair value
Loans and advances
Trade receivables
Other receivables
Cash and cash equivalents
Financial liabilities not measured at fair value
Borrowings
Trade, other payables and accruals
80 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
31 December 2022
Company
Financial assets not measured at fair value
Carrying amount
£’000
Fair value
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Amounts owed by group undertakings
54,835
54,835
Other receivables
Cash and cash equivalents
Financial liabilities not measured at fair value
Trade, other payables and accruals
31 December 2021
Company
Financial assets not measured at fair value
Amounts owed by group undertakings
Other receivables
Cash and cash equivalents
Financial liabilities not measured at fair value
Trade, other payables and accruals
94
2,260
57,189
934
934
94
2,260
57,189
934
934
–
–
2,260
2,260
–
–
–
–
–
–
–
–
54,835
94
–
54,929
934
934
Carrying amount
£’000
Fair value
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
46,919
46,919
92
786
92
786
47,797
47,797
1,028
1,028
1,028
1,028
–
–
786
786
–
–
–
–
–
–
–
–
46,919
92
–
47,011
1,028
1,028
Fair values for level 3 assets and liabilities were calculated using a discounted cash flow model and the Directors consider that the
carrying amounts of financial assets and liabilities recorded at amortised cost in the financial statements approximate to their fair
values.
Loans and advances
Due to the short-term nature of loans and advances and/or expected credit losses recognised, their carrying value is considered to be
approximately equal to their fair value.
Trade and other receivables, borrowings, trade and other payables, and accruals
These represent short term receivables and payables and as such their carrying value is considered to be equal to their fair value.
Financial risk management
The Group’s activities and the existence of the above financial instruments expose it to a variety of financial risks.
The Board of Directors has overall responsibility for the determination of the Group’s risk management objectives and policies. The
overall objective of the Board of Directors is to set policies that seek to reduce ongoing risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility.
The Group is exposed to the following financial risks:
•
•
Credit risk
Liquidity risk
• Market risk
•
Interest rate risk
Further details regarding these policies are set out below.
2022 Annual Report and Accounts | 81
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Credit risk
Credit risk is the risk that a customer or counterparty will default on its contractual obligations resulting in financial loss to the Group.
One of the Group’s main income generating activities is lending to customers and therefore credit risk is a principal risk. Credit risk
mainly arises from loans and advances. The Group considers all elements of credit risk exposure such as counterparty default risk,
geographical risk and sector risk for risk management purposes.
Credit risk management
The credit committees within the wider Group are responsible for managing the credit risk by:
•
•
•
•
•
•
•
Ensuring that it has appropriate credit risk practices, including an effective system of internal control;
Identifying, assessing and measuring credit risks across the Group from an individual instrument to a portfolio level;
Creating credit policies to protect the Group against the identified risks including the requirements to obtain collateral from
borrowers, to perform robust ongoing credit assessment of borrowers and to continually monitor exposures against internal risk
limits;
Limiting concentrations of exposure by type of asset, counterparty, industry, credit rating, geographical location;
Establishing a robust control framework regarding the authorisation structure for the approval and renewal of credit facilities;
Developing and maintaining the risk grading to categorise exposures according to the degree of risk of default. Risk grades are
subject to regular reviews; and
Developing and maintaining the processes for measuring Expected Credit Loss (ECL) including monitoring of credit risk,
incorporation of forward-looking information and the method used to measure ECL.
Significant increase in credit risk
The Group continuously monitors all assets subject to Expected Credit Loss as to whether there has been a significant increase in
credit risk since initial recognition, either through a significant increase in Probability of Default (“PD”) or in Loss Given Default
(“LGD”).
The following is based on the procedures adopted by the Group:
Granting of credit
The Business Development Team prepare a Risk Summary which sets out the rationale and the pricing for the proposed loan facility
and confirms that it meets the Group’s product risk and pricing policies. The Application will include the proposed counterparty’s
latest financial information and any other relevant information but as a minimum:
•
•
•
•
•
•
•
•
Details of the limit requirement e.g. product, amount, tenor, repayment plan etc.;
Facility purpose or reason for increase;
Counterparty details, background, management, financials and ratios (actuals and forecast);
Key risks and mitigants for the application;
Conditions, covenants & information (and monitoring proposals) and security (including comments on valuation);
Pricing;
Confirmation that the proposed exposure falls within risk appetite; and
Clear indication where the application falls outside of risk appetite.
The Credit Risk Department will analyse the financial information, obtain reports from credit reference agencies, allocate a risk rating
and make a decision on the application. The process may require further dialogue with the Business Development Team to ascertain
additional information or clarification.
Each mandate holder and Committee is authorised to approve loans up to agreed financial limits provided that the risk rating of the
counterparty is within agreed parameters. If the financial limit requested is higher than the credit authority of the first reviewer of the
loan facility request, the application is sent to the next credit authority level with a recommendation.
The Executive Risk Committee reviews all applications that are outside the credit approval mandate of the mandate holder due to the
financial limit requested or if the risk rating is outside of policy but there is a rationale and/or mitigation for considering the loan on an
exceptional basis.
82 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Applications where the counterparty has a high risk rating are sent to the Executive Risk Committee for a decision based on a positive
recommendation from the Credit Risk department. Where a limited company has such a risk rating, the Executive Risk Committee will
consider the following mitigants:
•
•
•
•
Existing counterparty which has met all obligations in time and in accordance with loan agreements,
Counterparty known to Group personnel who can confirm positive experience,
Additional security, either tangible or personal guarantees where there is verifiable evidence of personal net worth,
A commercial rationale for approving the application, although this mitigant will generally be in addition to at least one of the
other mitigants.
Identifying significant increases in credit risk
The Group measures a change in a counterparty’s credit risk mainly on payment, on updated from credit reference agencies and
adverse changes with a counterparty’s debtors. The Group views a significant increase in credit risk as:
•
•
•
•
•
•
A two-notch reduction in the Group’s counterparty’s risk rating since origination, as notified through the credit rating agency;
A counterparty defaults on a payment due under a loan agreement;
Late contractual payments which although cured, re-occur on a regular basis;
Evidence of a reduction in a counterparty’s working capital facilities which has had an adverse effect on its liquidity; or
Evidence of actual or attempted sales out of trust or of double financing of assets funded by the Group.
Deterioration in the underlying business (held as part of the security package) indicated through significant loss of revenue and
higher than average client attrition.
An increase in significant credit risk is identified when any of the above events happen after the date of initial recognition.
Default
Identifying loans and advances in default and credit impaired
The Group’s definition of default for this purpose is:
•
•
•
A counterparty defaults on a payment due under a loan agreement and that payment is overdue on its terms, or
The collateral that secures, all or in part, the loan agreement has been sold or is otherwise not available for sale and the proceeds
have not been paid to the lending company, or
A counterparty commits an event of default under the terms and conditions of the loan agreement which leads the lending
company to believe that the borrower’s ability to meet its credit obligations to the lending company is in doubt.
Exposure at default
Exposure at default (“EAD”) is the expected loan balance at the point of default and, for the purpose of calculating the Expected
Credit Losses (“ECL”), management have assumed this to be the balance at the reporting date.
Expected Credit Losses
The ECL on an individual loan is based on the credit losses expected to arise over the life of the loan, being defined as the difference
between all the contractual cash flows that are due to the Group and the cash flows that it actually expects to receive.
This difference is then discounted at the original effective interest rate on the loan to reflect the disposal period of underlying
collateral.
Regardless of the loan status stage, the aggregated ECL is the value that the Group expects to lose on its current loan book having
assessed each loan individually.
To calculate the ECL on a loan, the Group considers:
1.
2.
Counterparty PD; and
LGD on the asset
whereby: ECL = EAD x PD x LGD
2022 Annual Report and Accounts | 83
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Maximum exposure to credit risk
Cash and cash equivalents
Loans and advances
Amounts owed by group undertakings
Trade and other receivables
Maximum exposure to credit risk
Loans and advances:
Collateral held as security
Fully collateralised
Loan-to-value* ratio:
Less than 50%
50% to 70%
71% to 80%
81% to 90%
91% to 100%
Partially collateralised
Collateral value relating to loans over 100% loan-to-value
Unsecured lending
*
Calculated using wholesale collateral values
Group
Company
2022
£’000
10,273
24,161
–
2021
£’000
7,608
16,133
2022
£’000
2,260
–
2021
£’000
786
–
–
54,835
46,919
5,593
4,958
138
144
40,027
28,699
57,233
47,849
Group
Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
800
271
500
701
–
2,272
2
83
192
142
–
419
–
–
21,943
15,718
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Concentration of credit risk
The Group maintains policies and procedures to manage concentrations of credit at the counterparty level and industry level to
achieve a diversified loan portfolio.
84 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Credit quality
An analysis of the Group’s credit risk exposure for loan and advances per class of financial asset, internal rating and “stage” is
provided in the following tables. A description of the meanings of stages 1, 2 and 3 is given in the accounting policies set out in Note 1.
Risk rating
Above average (risk rating 1-2)
Average (risk rating 3-5)
Below average (risk rating 6+)
Gross carrying amount
Loss allowance
Carrying amount
Gross Carrying Amount
As at 1 January 2022
Transfer to stage 1
Transfer to stage 2
Transfer to stage 3
Net Loans originated
As at 31 December 2022
Stage 1
£’000
11,035
10,615
1,041
22,691
(26)
22,665
Stage 1
£’000
16,136
(43)
(957)
–
8,079
22,691
Stage 2
£’000
Stage 3
£’000
–
–
1,481
1,481
–
1,481
–
–
43
43
(28)
15
Stage 2
£’000
Stage 3
£’000
–
–
957
–
524
1,481
–
43
–
–
–
43
2022
Total
£’000
11,035
10,615
2,565
2021
Total
£’000
5,274
10,863
–
24,215
16,137
(54)
(4)
24,161
16,133
Total
£’000
16,136
–
–
–
8,079
24,215
Trade receivables
Status at reporting date
The Group has assessed the trade and other receivables in accordance with IFRS 9 and determined that, at the balance sheet date,
the lifetime ECL is £nil (2021: £nil).
The contractual amount outstanding on financial assets that were written off during the reporting period and are still subject to
enforcement activity is £nil at 31 December 2022 (2021: £nil).
Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations as they fall due or will have
to do so at an excessive cost. This risk arises from mismatches in the timing of cash flows which is inherent in all banking operations
and can be affected by a range of Group specific and market-wide events.
Liquidity risk management
Group Finance performs treasury management for the Group, with responsibility for the treasury for each business entity being
delegated to the individual subsidiaries. However, in line with the wider Group governance structure, Group Finance performs an
important oversight role in the wider treasury considerations of the Group. The primary mechanism for maintaining this oversight is a
formal requirement that subsidiaries’ Finance teams notify all material Treasury matters to Group Finance.
The main Group responsibilities are to maintain banking relationships, manage and maximise the efficiency of the Group’s working
capital and long-term funding and ensure ongoing compliance with banking arrangements. The Group currently does not have any
offsetting arrangements.
Liquidity stress testing
The Group regularly conducts liquidity stress tests, based on a range of different scenarios to ensure it can meet all of its liabilities as
they fall due.
2022 Annual Report and Accounts | 85
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Maturity analysis for financial assets and financial liabilities
The following maturity analysis is based on expected gross cash flows.
As at 31 December 2022
Financial Assets
Cash and cash equivalents
Trade and other receivables
Loans and advances
Financial Liabilities
Trade payables, other payables and accruals
Borrowings
Carrying
Amount
£’000
Less than
1 month
£’000
1-3 months
£’000
3 months to
1 year
£’000
1-5 years
£’000
>5 years
£’000
10,273
5,593
24,161
40,027
6,392
18,547
24,939
10,273
2,660
2,785
15,718
1,053
128
1,181
–
778
1,020
1,798
3,127
12
3,139
–
1,717
3,616
5,333
2,009
79
2,008
–
438
15,954
16,392
234
12,628
12,862
–
–
1,249
1,249
–
5,700
5,700
Market risk
Market risk is the risk that movements in market factors, such as foreign exchange rates, interest rates, credit spreads, equity prices
and commodity prices will reduce the TruFin Group’s income or the value of its portfolios.
Market risk management
The TruFin Group’s management objective is to manage and control market risk exposures in order to optimise return on risk while
ensuring solvency.
The core market risk management activities are:
•
•
•
The identification of all key market risk and their drivers,
The independent measurement and evaluation of key market risks and their drivers,
The use of results and estimates as the basis for the TruFin Group’s risk/return-oriented management, and
• Monitoring risks and reporting on them.
Interest rate risk management
The TruFin Group is exposed to the risk of loss from fluctuations in the future cash flows or fair values of financial instruments
because of the change in market interest rates.
Interest rate risk
Interest rates on loans and advances are charged at competitive rates given current market condition. Should rates fluctuate, this will
be reviewed and pricing will be adjusted accordingly.
Vertus’s has interest income that is variable in relation to the Bank of England base rate, and interest expense variable to both LIBOR
and the Bank of England base rate.
86 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
19. Non-controlling interests
The summarised financial information below represents financial information for each subsidiary that has non-controlling interest
that are material to the Group. The amounts disclosed for each subsidiary are before intragroup eliminations.
The Group’s ownership share Vertus Capital and Vertus SPV1 at the reporting date was 54% (2021: 54%).
Statement of Financial Position
Vertus Capital
Vertus SPV1
Current assets
Non-current assets
Current liabilities
Equity attributable to owners of the Company
Non-controlling interests
Income Statement
Revenue
Expenses
Profit after tax
Profit after tax attributable to owners of the Company
Profit after tax attributable to the non-controlling interests
2022
£’000
5,559
69
(373)
2,828
2,426
2021
£’000
5,005
5
94
2,747
2,357
2022
£’000
21,718
–
2021
£’000
15,740
–
(21,725)
(15,746)
(3)
(3)
(3)
(3)
Vertus Capital
Vertus SPV1
2022
£’000
743
(593)
150
81
69
2021
£’000
522
(343)
86
46
40
2022
£’000
2,214
(2,214)
–
–
–
2021
£’000
1,380
(1,193)
187
100
87
Cash Flow Statement
Vertus Capital
Vertus SPV1
Net cash used in operating activities
Net cash generated from investing activities
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
2022
£’000
(385)
302
–
(83)
2021
£’000
(520)
224
488
192
2022
£’000
(5,296)
–
5,425
129
2021
£’000
(2,922)
–
2,839
(83)
Non-controlling interest
Vertus Capital
Vertus SPV1
Balance at 1 January
Share of profit for the year
Change in NCI due to share issuance in the year
Balance at 31 December
2022
£’000
2,357
69
–
2021
£’000
2,220
40
97
2,426
2,357
2022
£’000
2021
£’000
(3)
–
–
(3)
(95)
87
5
(3)
2022 Annual Report and Accounts | 87
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
The Group had a 72% (2021: 72%) ownership share of Bandana during the year.
Statement of Financial Position
Current assets
Current liabilities
Equity attributable to owners of the Company
Non-controlling interests
Income Statement
Revenue
Expenses
Loss after tax
Loss after tax attributable to owners of the Company
Loss after tax attributable to the non-controlling interests
Cash Flow Statement
Net cash from operating activities
Net increase in cash and cash equivalents
Non-controlling interest
Balance at 1 January
Share of loss for the year
Balance at 31 December
Bandana
2022
£’000
1
(5,465)
(3,955)
(1,510)
2021
£’000
45
(5,258)
(3,773)
(1,440)
Bandana
2022
£’000
2021
£’000
–
(251)
(251)
(182)
(69)
2022
£’000
–
–
2022
£’000
(1,440)
(69)
–
(981)
(981)
(710)
(271)
2021
£’000
–
–
2021
£’000
(1,169)
(271)
Bandana
Bandana
(1,509)
(1,440)
The Group’s effective ownership share of Satago Financial Solutions Limited (“Satago”) at the reporting date is based on the net
assets of the Satago Group at the reporting date, and the ownership waterfall following Lloyds Banking Group’s £5m investment in
Satago in April 2022.
Statement of Financial Position
Satago
Current assets
Non-current assets
Current liabilities
Equity attributable to owners of the Company
Non-controlling interests
88 |
2022
£’000
10,397
617
(927)
5,061
5,026
2021
£’000
1,748
631
(291)
1,985
103
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Income Statement
Revenue
Expenses
Loss after tax
Loss after tax attributable to owners of the Company
Loss after tax attributable to the non-controlling interests
Cash Flow Statement
Net cash used in operating activities
Net cash (used in)/generated from investing activities
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Non-controlling interest
Balance at 1 January
Share of loss for the year
Arising from change in non-controlling interest
Equity Raise
Balance at 31 December
Satago
Satago
Satago
2021
£’000
198
(3,284)
(3,086)
(2,905)
(181)
2021
£’000
(3,965)
189
2,731
(1,044)
2021
£’000
294
(181)
(10)
–
103
2022
£’000
1,860
(3,926)
(2,001)
1,910
(91)
2022
£’000
(3,035)
(2,498)
7,360
1,827
2022
£’000
103
(91)
14
5,000
5,026
2022 Annual Report and Accounts | 89
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
20. Acquisition of Subsidiaries
Magic Fuel
On 6 June 2022, the Group acquired a 100% equity interest in Magic Fuel Inc (“Magic Fuel”).
Magic Fuel’s financial year end date is 31 December 2022. Its results have been consolidated from the date of acquisition to
31 December 2022, in line with the Group’s financial year end. The profit for the period from acquisition consolidated in the Group’s
accounts was £678,000. Had the acquisition taken place on 1 January 2022, the loss from Magic Fuel consolidated in the Group would
have been £114,000. This amount includes transactions with other Group companies during the year.
Details of the consideration paid, the assets acquired and liabilities assumed, the non-controlling interest recognised and the effects
on the cash flows of the Group, at the acquisition, are as follows:
Net liabilities at acquisition
TruFin share of net liabilities
Goodwill arising on acquisition
Total consideration
Less: fair value of identifiable net liabilities acquired
Separately identifiable intangible assets
Goodwill net of separately identifiable intangible assets
Consideration satisfied by:
Deferred consideration
Cash
£’000
(47)
(47)
2,371
(47)
2,417
1,595
822
1,196
1,175
In accordance with IFRS 3, we have recognised and measured the separately identifiable intangible assets acquired as part of the
transaction. These have been valued at £1,595,000.
Leases
21.
The carrying amounts of the right-of-use assets recognised and the movements during the period are shown in Note 11.
The lease liability and movement during the period were:
Group
Lease liability recognised at 1 January 2022
Lease recognised in year
Interest
Payments
Balance at 31 December 2022
Group
Lease liability recognised at 1 January 2021
Interest
Payments
Balance at 31 December 2021
90 |
£’000
25
276
12
(28)
285
£’000
120
3
(99)
25
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
22. Earnings per share
Earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the year.
The calculation of the basis and adjusted earnings per share is based on the following data:
Number of shares (#)
At year end
Weighted average
Earnings attributable to ordinary shareholders
Loss after tax attributable to the owners of TruFin plc
Adjusted earnings attributable to ordinary shareholders
Loss after tax attributable to the owners of TruFin plc
Adjusted for share-based payment
Adjusted loss after tax attributable to the owners of TruFin plc
Earnings per share*
Basic and Diluted
Adjusted1
2022
2021
94,182,943
80,822,204
90,485,862
80,822,204
£’000
(6,637)
(6,637)
–
(6,637)
£’000
(7,071)
(7,071)
70
(7,001)
Pence
Pence
(7.3)
(7.3)
(8.7)
(8.7)
* All Earnings per share figures are undiluted and diluted.
Adjusted1
EPS excludes share-based payment expense and loss from discontinued operations from loss after tax
Management has been granted 5,451,578 share options in TruFin plc (see Note 6 for details). These could potentially dilute basic EPS
in the future, but were not included in the calculation of diluted EPS as they are antidilutive for the years presented as the Group is
loss making.
2022 Annual Report and Accounts | 91
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
23. Related party disclosures
Transactions with Directors
Transactions with Directors, or entities in which a Director or recent Director is also a Director or partner:
Consultancy services provided by an ex-Director
Key management personnel disclosures are provided in Notes 5 and 6.
2022
£’000
–
2021
£’000
21
During the year, Playstack made loans to Storm Chaser UG, a company based in Germany. Storm Chaser UG is 100% owned by Storm
Chaser Games – an associate company of Playstack (See Note 1). The balance of the loans (including interest) at the reporting date
was £525,000 (2021: £148,000).
24. Events after the Reporting Date
Since the year end, Satago has agreed to extend its agreement with Sage. Initially, Satago services were offered to UK based Sage 50
packages only, but this extension is to now include certain packages in Ireland.
Additionally, Satago signed a statement of work to embed Satago’s invoice finance service into Sage 50 and the solution was
launched during Q1 2023.
92 |
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