STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ANNUAL REPORT & ACCOUNTS
2023
2022 Annual Report and Accounts | 3
Company
Information
For the year ended
31 December 2023
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)
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 UK 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
2023 Highlights
Company Overview
Chair’s Statement
CEO’s Review
Oxygen Review
Satago Review
Playstack 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
18
20
23
24
26
28
30
33
36
41
42
43
44
45
47
48
49
50
2023 Annual Report and Accounts | 1
2023 Highlights
REVENUE FROM CONTINUING OPERATIONS
£18.1m
REVENUE GROWTH FROM CONTINUING
OPERATIONS
31%
SALE OF VERTUS PROCEEDS
£3.2m
OVERSUBSCRIBED EQUITY RAISE
£7.6m
ADJUSTED EBITDA IMPROVEMENT
£2.3m
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, Birmingham,
Europe and the USA, our companies
Oxygen Finance Limited (“Oxygen”)
and Satago Finance Solutions
Limited (“Satago”) 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
2023 Annual Report and Accounts | 3
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
Chair’s Statement
Steve Baldwin,
Chair
“This continued upward
trajectory is remarkable
given the challenges of
operating amid ongoing
global instability and is
a clear demonstration
that TruFin possesses
the resilience to prosper,
despite the global
headwinds.”
4 |
I am pleased to present TruFin’s
Annual Report and Accounts for
2023. I am equally pleased to report
that the past 12 months have seen all
of our businesses continue to deliver
strong performances in the face of
persisting macroeconomic challenges.
Though the inflationary pressures that have
marked the post-pandemic era are easing,
monetary policy remains tight and central banks’
next moves are hard to predict. Geopolitical
uncertainty on multiple fronts, from the conflicts
in Ukraine and Gaza to the upcoming US and
UK elections, continues to build and impact the
financial and economic outlook. We are not out of
the woods yet.
Despite this, TruFin delivered on its objectives
during 2023 and is well positioned for the year
ahead. During the year the Group realised £3.2m
from the sale of Vertus, whilst all three remaining
investments posted double digit revenue growth.
As a result, Group revenues were up by almost a
third on the previous year. Such achievements are
testament to the skill and resilience of our people
and the strength of their visions.
In a year of considerable progress, two key
milestones at the Group level stand out. In
June the management completed a heavily
oversubscribed fundraising, strengthening
the Group balance sheet and allowing further
investment into Playstack’s growing portfolio
of game releases. The disposal of Vertus in
October was also a significant moment in TruFin’s
strategic development, enabling management to
focus on maximising-value in its three remaining
businesses.
In addition, there has been a determined focus
on growing recurring revenues – software and
licensing fee sales and game royalties – across
the board. Looking ahead, this augurs well for
predictability of future income, Group profitability,
and shareholder value alike.
It is especially pleasing to note that Playstack
achieved its major goal for the year of achieving
EBITDA profitability for the first time. It looks
set for more of the same in 2024 thanks to
its recent run of critically acclaimed game
releases. It is also gratifying that Satago
and Oxygen both performed in line with
expectations, continuing their operational and
financial progress.
Such consistent positive momentum speaks to
the success of the Group’s strategy and marks
a maturing of the business. Notably, the Group
beat market expectations by significantly
reducing EBITDA loss in 2023. We enter
2024 financially strong and on a clear path
to future profitability. This continued upward
trajectory is remarkable given the challenges of
operating amid ongoing global instability and
is a clear demonstration that TruFin possesses
the resilience to prosper, despite the global
headwinds.
It remains only for me to thank all our staff for
their commitment and hard work, as well as our
shareholders for their continued support.
Steve Baldwin
Chair
25 March 2024
Highlights for 2023 include:
Satago deepening their partnership
with Lloyds Bank and successfully
starting the migration of existing
customers onto the Satago platform
Oxygen delivering another year
of new client wins and EBITDA
growth, and successfully closing
and integrating the acquisition of
bidstats.uk
Playstack securing the publishing
rights to Mortal Shell 2 and 3 and
building a diversified pipeline of
games for release in the coming
years
Vertus sale to Enable Partners
Holdings Limited for a cash
consideration of £3.2m
TruFin raising £7.6m via an
oversubscribed placing and
open offer to existing and new
shareholders
2023 Annual Report and Accounts | 5
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
CEO’s Review
James van den Bergh,
Chief Executive Officer
“If 2023 was the year
of double-digit growth
across the Group, 2024
is set to be the year of
both further growth and
improving profitability.”
6 |
TruFin made significant progress in
2023.
Undeterred by the unfavourable
macroeconomic and corporate climate,
our market-leading businesses have
once again prospered, all recording
double digit growth and laying the
foundations for meaningful growth in
the years ahead.
As ever, Group support has been key to ensuring the
ongoing success of TruFin’s subsidiaries, particularly
in such a challenging environment. The £7.6m
fundraising in June 2023 and the £3.2m sale of
Vertus in October 2023 have enabled the Group to
continue to invest in its three remaining businesses
and solidify their market positions.
Moreover, the Vertus deal marks another step in
executing the Group’s strategy – to focus our assets
on recurring and predictable sources of income in
order to deliver significant value to our shareholders.
2023 Group performance
Mirroring the strong performance of our subsidiaries,
Group revenue increased 31% year-on-year to £18.1m.
Of this, 92% was from recurring software sales and
licensing fees evidencing the continued success
of TruFin’s strategic pivot towards predictable and
repeatable revenue sources.
Key growth drivers during the period included 71%
growth in revenues in Satago which more than
doubled its paid subscribers (to 967) and deepened
its ties with major partner Lloyds Bank as it began
successfully migrating the Bank’s existing customers
onto its platform. Meanwhile Oxygen’s core Early
Payment business grew by 26% year-on-year,
generating 65% of the subsidiary’s total revenue.
Playstack’s revenues grew 27% on the back of an
ever increasingly diversified portfolio of games. With
three critically acclaimed releases during the year
and a significant increase in its revenue-generating
back catalogue – anticipated to contribute a
meaningful proportion of 2024 revenues – Playstack
is in an enviable position.
Meanwhile Playstack, fresh from achieving its
2023 aim of EBITDA profitability, is close to
concluding several major platform deals and will
continue to focus relentlessly on its core strengths
of sourcing and publishing video games. Its first
release in 2024, the poker game Balatro, achieved
profitability within an hour, earning it the accolade
of Playstack’s fastest selling game.
Each of these achievements is underpinned by our
ongoing investment in building lasting relationships
with our customers and partners and delivering
services tailored to their needs. Each one takes
us ever closer to our ultimate goal of rewarding
shareholders with significant value-creating
transactions.
On behalf of the Board, our staff, partners and
stakeholders I would like to extend my thanks to our
shareholders for continuing to stand behind TruFin,
despite the headwinds we collectively face. We are
buoyed by the progress made in 2023 and looking
forward to compounding these gains by pursuing
our objectives with optimism and determination in
2024.
James van den Bergh
Chief Executive Officer
25 March 2024
At year end the Group had a cash balance of
£10.1m (including cash of £4.1m in Satago which is
not 100% owned). As such, unrestricted cash is no
less than £6.0m and the Group is fully funded to
profitability.
Current trading and prospects
TruFin has had a strong start to the year with Group
revenues for January and February expected to be
not less than £5.8m; a 271% increase over the same
period in 2023. Playstack’s latest game launch,
Balatro, has contributed to much of this growth. It
is important to note that this pace of growth is not
expected to continue throughout the year.
As always, growth, profitability and value
crystallisation remain integral to TruFin’s purpose
and vision. Following the strong start in 2024, the
Group’s vision is even more tangible.
Outlook
If 2023 was the year of double-digit growth across
the Group, 2024 is set to be the year of both further
growth and improving profitability.
Whilst mindful of the unsettled global political
and economic picture, TruFin’s steady yet
ambitious stewardship of its subsidiaries in pursuit
of shareholder value will continue. Targeted
investment in all three businesses during the last 12
months is expected to produce scaled revenues and
accelerate profitability. Ultimately this will result in
significant shareholder returns.
As we enter 2024 our businesses are well-
positioned for the years ahead, with two of
the three now EBITDA profitable and the third
poised to follow. Oxygen is set to consolidate its
market dominance having invested heavily in its
platform and people in 2023 as well as acquiring
and successfully integrating bidstats.uk. With
significant interest in its digitised proposition from
both UK and overseas banks, Satago is ready to
replicate the success of its flagship relationship
with Lloyds Bank as well as capitalise further on
its high-performing Lending-as-a-Service and
Embedded Finance subscription services.
2023 Annual Report and Accounts | 7
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
Oxygen review
“2023 has been
another year
of substantial
progress, with
revenue exceeding
£6m, up 16% on the
prior year. The
year was rounded
off with the acquisition
and integration of bidstats.uk,
which will support Oxygen’s
development as an information
services provider.”
Ben Jackson, CEO
REVENUE GROWTH
16%
(EARLY PAYMENT REVENUE GROWTH 26%)
EBITDA GROWTH TO £1.3M
+11%
NEW SIGNED SPEND HIT A RECORD
£385M
+16%
FREEPAY SUPPLIERS
15,300
8 |8 |
2023 performance
Current trading and prospects
Indications from initial trading in 2024 are strong
with double digit growth for recurring revenue
streams continuing. Encouragingly, during 2023 circa
£1.5bn was issued for tender with early payment (EP)
terms included by our clients, an increase of 35%
on the previous year which bodes well for supplier
participation in 2024. EP revenue in January was up
40% on 2023 YoY.
Continued economic volatility and higher interest
rates make Oxygen’s EP solution increasingly
attractive. Similarly, business development
opportunities made available through the 60,000
monthly visitors to bidstats.uk will support SaaS
growth in 2023.
Interest from new early payment clients is strong, with
more opportunities in the pipeline than ever before.
“Continued economic volatility
and higher interest rates
make Oxygen’s EP solution
increasingly attractive.”
Oxygen delivered revenues of £6.2m, up 16%
(2022: £5.3m), with the increase driven by strong
performance across all principal revenue streams.
Such is Oxygen’s confidence in the future, a £1.2m
investment was made during the year, and staff
numbers increased by 15 to 72 to accelerate revenues
in 2024 on beyond. In addition Oxygen was able to
acquire and integrate bidstats.uk and make a dividend
payment to the Group of £0.5m, twice Oxygen’s
maiden dividend of £0.25m in 2022.
New business continued to progress well, with
Oxygen still dominating the local government market.
Combined trade-spending by Oxygen’s Early Payment
Programme clients increased by £2.8bn, to a record
of £26.8bn. Oxygen’s SaaS product portfolio also
expanded, with new products creating incremental
revenue. Over 50% of Oxygen’s local authority Early
Payment Programme clients also committed to at
least one Oxygen SaaS subscription, up from 27% in
2022.
The average Early Payment Programme client tenure,
a measure of customer loyalty and Oxygen’s success
in renewing contracts, reached 7.1 years at the end of
2023 (2022: 6.6 years), adding additional resilience to
Oxygen’s recurring revenue streams.
Early Payment Programme clients committed £1.3bn
in spending to more than 4,900 suppliers during 2023
(2022: £1.1bn). New spend added during the year hit
a record £385m (2022: £330m), 16% higher than the
prior year.
Oxygen’s position as a financial technology company
delivering social value strengthened significantly.
Throughout 2023 more than 15,000 small businesses
within Oxygen clients’ local communities received
over £0.6bn in early payments – at no cost to the
supplier. Oxygen made its Carbon Reporting tool
freely available to the public sector to support the
reduction of Scope 3 emissions and the consequential
carbon impact.
2023 Annual Report and Accounts | 9
2023 Annual Report and Accounts | 9
REVENUE GROWTH
EBITDA GROWTH TO £1.2M
NEW SIGNED SPEND HIT A RECORD
FREEPAY SUPPLIERS
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
Satago review
“Satago’s partners
and pipeline are
testament to the
exciting future
ahead.”
Sinead McHale,
CEO
REVENUE GROWTH
+70%
SIGNIFICANT MILESTONES HIT
DURING THE YEAR. NOTABLY,
LLOYDS BANK BEGAN MIGRATING
EXISTING FACTORING CLIENTS
ONTO SATAGO’S PROPRIETARY
PLATFORM IN H2 2023
PAYING SUBSCRIBER GROWTH
>100%
SATAGO FACILITATED EARLY
PAYMENT OF MORE THAN 820,000
INVOICES ACROSS 20 DIFFERENT
CURRENCIES DURING THE YEAR –
REPRESENTING >£1BN OF FASTER
PAYMENTS INTO THE ECONOMY
10 |
10 |
REVENUE GROWTH
2023 Performance
Current trading and prospects
Early 2024 has focused on product delivery for the
Bank and the next phase of client wins. Meanwhile,
the deep strategic relationship with Sage, the global
leader in accounting software, will allow Satago to
extend its core offerings of credit control and risk
insights to SMEs globally.
Satago has a growing pipeline of LaaS and
Embedded Finance customers in the UK and Europe
with a number of significant partnerships expected
to launch throughout the year.
“Significant subscriber growth is
expected to continue in 2024 and
beyond.”
During 2023, revenue increased more than 70% to
£3.8m (2022: £2.2m).
2023 was a year of consolidation and growth for
Satago. Importantly, Lloyds Bank began migrating
existing factoring clients onto Satago’s proprietary
platform in H2 2023. Following this successful test
phase, a material portion of existing Bank clients
are expected to migrate during 2024.
The next phase of the Satago platform was also
successfully delivered during 2023, allowing the
onboarding of the first ‘new to Bank’ customer.
Delivering Lending as a Service (“LaaS”) and
Embedded Finance solutions for existing clients
remains Satago’s top priority. Looking ahead, the
hard work carried out over the last five years has
ensured the platform is ready to be leveraged by
other partners – giving 10s of thousands of SMEs
access to all the benefits of the Satago platform in
the coming years. Satago’s partners and pipeline
are testament to the exciting future ahead.
Satago’s subscription packages performed strongly
in 2023, with the number of paying subscribers
more than doubling to 967 (2022: 430). Significant
subscriber growth is expected to continue in
2024 and beyond. The platform’s credit control
and risk insights tools in particular are proving
transformational to customers.
2023 Annual Report and Accounts | 11
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
Playstack
review
“2024 will build on
the foundations
set in 2023, with
front-line titles
scheduled to
ship each quarter,
renewed contracts
for our Magic Fuel
Games subsidiary, and
profitability throughout the
year.”
Harvey Elliott, CEO
INSTALLS OF PLAYSTACK
GAMES DURING 2023
+5 MILLION
INCREASINGLY DIVERSIFIED
PORTFOLIO
TITLES ANALYSED BY
MAGNITUDE IN 2023
+11,000
12 |
12 |
2023 performance
Current trading and prospects
During the year, Playstack focused on scaling into
a profitable and sustainable business, achieving
full-year EBITDA profitability aided in part by an
increasingly strong portfolio of games that reduced
dependencies on the success of a single title. In
2023, over 85% of Playstack revenue was derived
from six front-line titles; compared to four games in
2022 and one game in 2021.
The future line-up of games continues to be
extremely strong, largely due to the effectiveness of
‘Magnitude’, Playstack’s proprietary sourcing toolset
which assessed over 11,000 games during the year (up
275% compared to 2023) and continues to discover
more than 80% of Playstack’s pipeline – with multiple
games now secured for 2024 and 2025 as a result of
the technology.
Playstack’s game studio subsidiary, Magic Fuel
Games Inc, successfully launched Cityscapes: Sim
Builder as an exclusive release on Apple Arcade. The
game was subsequently nominated for Best Game on
Apple Arcade in 2023, and frequently features in the
top-20 games on the service.
Playstack launched two further titles during 2023:
AK‑Xolotl and The Last Faith, and two expansion packs
for The Case of the Golden Idol, reinforcing Playstack’s
focus on broadening its portfolio of franchises and
increasing long-term performance potential through
reinvesting in successful games after release. During
the year Playstack secured two new technology
partner contracts, each bringing an additional revenue
stream to the business over multiple years and
providing long-term predictability.
Playstack’s publishing portfolio is the centre of its
2024 strategy, with regular planned updates to existing
games and a minimum of five new games for release
across the year, including two games to be released in
partnership with platforms. The first new release of 2024,
Balatro, quickly exceeded all expectations, reaching
game profitably in one hour and surpassing one million
units sold within a month. With the 2024 line-up already
secured, the game discovery focus has turned to 2025
and 2026 to ensure an increasingly strong pipeline of
titles for the years ahead.
Back-book games remain a key component of future
revenue modelling, with a minimum of 40% of 2024
revenues forecast to be derived from games introduced to
market in 2022 and 2023.
Playstack continues to assert its position as a leader in the
games industry, and is navigating well-publicised industry
challenges through carefully curated and selected games,
a focus on cost management, and sustainable profitability.
“The first new release of 2024,
Balatro, quickly exceeded all
expectations, reaching game
profitably in one hour and
surpassing one million units sold
within a month.”
2023 Annual Report and Accounts | 13
2023 Annual Report and Accounts | 13
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
CFO’s Review
James Hussey,
Chief Financial Officer
“2023 has been a good year,
recording strong financial
performance, with overall top line
growth for continuing operations
of 31% (£4.3m), a 10% reduction
in LBT and an oversubscribed
fundraise providing additional
cash of £7.1m (net)”
14 |
2023
£’000
2022
£’000
YoY
Change
Gross revenue*
Net revenue*
Net revenue %*
Loss before tax*
18,131
13,860
13,104
9,653
72%
70%
(7,339)
(8,182)
Adjusted loss before tax*+
(6,573)
(8,182)
Loss after tax*
(6,377)
(6,915)
Loss after tax including
discontinued operations
(7,340)
(6,806)
Earnings per share (p)
(6.5)
(7.3)
Adjusted earnings per
share (p) ~
Cash
(4.6)
(7.4)
10,140
10,273
31%
36%
2%
10%
20%
8%
(8%)
11%
38%
(1%)
*Figures are from continuing activities with comparatives restated
accordingly based on information drawn from prior period financial
statements
+Adjusted for share-based payment charges incurred during the
year
~ Adjusted for share-based payments charges and discontinued
operations
18,131
13,860
13,104
9,653
72%
70%
Gross revenue £’000
2023
2022
Net revenue £’000
2023
2022
Net revenue %
2023
2022
Loss before tax £’000
2023
(7,339)
2022
(8,182)
Adjusted Loss before tax £’000
2023
(6,573)
2022
(8,182)
Loss after tax £’000
2023
(6,377)
2022
(6,915)
Loss after tax including discontinued operations £’000
Revenue 2023 by category
2023
(7,340)
2022
(6,806)
Earnings per share (p)
2023
(6.5)
2022
(7.3)
Adjusted Earnings per share (p)
2023
(4.6)
2022
(7.3)
Cash £’000
2023
2022
Revenue
Interest Income
Fee Income
Publishing Income
10,140
10,273
EBITDA
EBITDA
Loss before tax*
Depreciation and
amortisation*
Interest expense*
EBITDA*
2023
£’000
2022
£’000
YoY
Change
(7,339)
(8,182)
10%
(3,000)
(2,418)
(24%)
(102)
(12)
(508%)
(4,237)
(5,752)
26%
2023
£’000 % of rev
2022
£’000 % of rev
Interest income*
Fee income*
Publishing income*
Gross revenue*
1,470
9,348
7,313
18,131
8%
52%
40%
405
7,138
6,317
13,860
3%
52%
45%
*Figures are from continuing activities with comparatives restated
accordingly based on information drawn from prior period financial
statements
Revenue 2023 v 2022
Interest income
360
2023
2022
Fee income
2023
2022
Publishing income
2023
2022
1,470
9,348
7,183
7,313
6,317
Share based payments
(766)
–
(100%)
Adjusted EBITDA*
(3,471)
(5,752)
39%
*Figures are from continuing activities with comparatives restated
accordingly based on information drawn from prior period financial
statements
EBITDA from continuing activities improved by 26%
to a loss of £4.2m (2022: loss of £5.8m). Adjusted
EBITDA improved by 39% to a loss of £3.5m (2022:
loss of £5.8m).
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
Adjusted loss before tax from continuing operations
improved by 20% to a loss of £6.6m (2022: loss
of £8.2m). The 36% net revenue rise was partially
offset by an increase in other operating expenses
of £1.3m to £5.9m (2022: £4.6m), and depreciation
and amortisation (excluding Client Contract Assets
amortisation) increasing by £0.4m to £1.9m (2022:
£1.5m).
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.
2023 Annual Report and Accounts | 15
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT STRATEGIC REPORT
CFO’s Review continued
Weighted average number of ordinary shares has
been adjusted to reflect the share issues that took
place in July 2023 (see Financial Statements Note 15)
and April 2022.
Management has been granted 9,551,342 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 since the Group is loss-making.
Weighted average number
of ordinary shares (#)
Loss after tax attributable to
the owners of TruFin plc (£’000)
EPS (p)
Adjusted for Share-based payments
Loss/(profit) from discontinued
operations
Adjusted Loss after tax from con-
tinuing operations attributable to
the owners of TruFin plc
Adjusted EPS (p)
2023
2022
99,770,355
90,485,862
(6,472)
(6,637)
(6.5)
766
1,160
(7.3)
–
(40)
(4,546)
(6,667)
(4.6)
(7.4)
Cashflow
Cash used in operating activities in the year was
£8.1m. This was primarily made up of:
• Cash outflows from Loans and Advances of £4.5m
•
Loss for the year adjusted for non-cash items of
£4.0m
Cash used in investing activities was primarily
additions to intangible and fixed assets of £5.5m, and
£1.2m for the remaining payments for the acquisition
of Magic Fuel Games Inc by Playstack.
This was partially offset by the sale of Vertus during
the year for £3.1m
Cash generated from financing activities in the year
was £12.5m. This was made up of:
•
£7.1m share issue in July 23 (net of fees)
• Net borrowings of £5.4m
16 |
CORPORATE GOVERNANCE
2023 Annual Report and Accounts | 17
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 and Plus500 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 chair of
FRP Advisory plc. She is also a non-executive director, senior
independent director and chair of the remuneration committee
of AIM-listed Alpha Financial Management Consulting, and
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 currently provides risk oversight to a number of Jersey
domiciled funds and his ongoing non-executive roles include
directorships at Signal Credit GP Limited, Signal Alpha II CP
Limited, CloverTree Opportunities Fund Limited and Eisler
Capital (Jersey) Ltd. Prior to this, Paul was at Brevan Howard
where he had a number of risk and governance responsibilities
and was a member of the manager’s investment committee.
Paul has a PhD in Economics from Imperial College London.
18 |
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
healthtech 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.
2023 Annual Report and Accounts | 19
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Corporate Governance Statement
The Directors acknowledge the importance of high standards
of corporate governance in 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 (“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 10 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.
In November 2023, the QCA published an updated version of
its Code (the “2023 Code”), that will apply to financial years
beginning on or after 1 April 2024. Disclosures in respect
of the 2023 Code are expected in 2025. In order to ensure
compliance with these disclosures, TruFin plans to undertake a
gap analysis between its current governance practices and the
revised expectations of the 2023 Code.
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 by 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.
In the interests of balance and good governance, the Board
maintains a mix of independent and non-independent directors.
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
20 |
corporate governance environment and independent
oversight.
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
an appropriate balance 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 30 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 2023, 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 June 2023.
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
2023 and the number of meetings attended by each Director.
The effectiveness of the Board is the responsibility of the
Independent Non-Executive Chair. Board performance is
reviewed on an annual basis and the findings are presented
to the Nomination Committee and Board. In line with the
QCA Code, an external performance review of the Board is
conducted from time to time. For TruFin, this takes place every
three years, with the next scheduled for Q1 2025. For further
details on the 2023 Board effectiveness review, please see the
report of the Nomination Committee on pages 24–25.
The result of these evaluations determined that the
composition and size of the Board and its Committees continue
to be 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 23–27.
Board and committee attendance record
Board
Meetings
attended
9 / 9
9 / 9
9 / 9
9 / 9
7 / 9
James van den Bergh
Steve Baldwin
Penny Judd
Paul Dentskevich
Anders Wilhelmsen
Committee Membership
Nomination
Committee
Audit
Committee
Remuneration
Committee
1 / 1
1 / 1
1 / 1
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
2023 Annual Report and Accounts | 21
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,
operates an Anti-Bribery & Corruption Policy and adopts
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 CEOs 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 £7.6m capital raise in July
2023. 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 2023 AGM
were responded to personally.
The appointment of Anders Wilhelmsen, as non-executive
director in 2022, 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 continues to bring the voice of
shareholders into board discussions which has been valuable in
making strategic decisions for the Group.
2024 Annual General Meeting
The Company anticipates holding its Annual General Meeting in June 2024.
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 AGM will be
held in London, the exact location to be confirmed.
22 |
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
2023.
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:
•
•
•
•
•
the calculation and valuation of Goodwill recognised in
the Group financial statements
revenue recognition
the fair value of the share options granted during the
year
capitalised development costs and their useful lives
appropriateness of going concern assumptions
Penny Judd
Chair of the Audit Committee
2023 Annual Report and Accounts | 23
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Nomination Committee Report
Steve Baldwin
Chair of the Nomination Committee
24 |
I am pleased to present my report as Chair of the
Nomination Committee (the “Committee”) for the year
ended 31 December 2023.
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
Board effectiveness review
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
This year’s Board effectiveness review was completed
internally by the Company Secretary with input from
the Chair. The review required each of the Directors to
submit responses to a structured questionnaire, which
covered the performance of the Board, the Director’s
individual performance, and how the Board and the Board
Committees operate. Additionally, the Chair completed one
to one performance reviews with each of the Directors.
Responses from the questionnaire were collated and
analysed, compared with results from the previous year,
and discussed at a Board meeting. A small number of
areas for improvement were highlighted by the review and
remedial actions are underway.
The review 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. The Board is regarded as able,
collaborative and well-run, with an open and supportive
culture, and supported by an engaged and effective Chair.
Succession planning
The Committee supports the CEO in considering
succession planning for the Company and the senior
executives of the Group. During the year, the Committee
reviewed and discussed the Group’s succession plans in
detail at a Board meeting.
Of note, was the decision to appoint a non-executive
director to the Playstack board and the Committee will
remain committed to this search until a suitable candidate
is found.
The Committee will continue to ensure that the Group
has the right skills and expertise in place to achieve its
strategic objectives.
2023 Annual Report and Accounts | 25
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 2023. 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.
26 |
Directors’ remuneration
Executive
Salary1
£’000
Bonus2
£’000
Pension3
Benefits4
2023 Total
2022 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
60
–
1 Full base salary during the relevant financial year
2 Cash value of the bonus in respect of the year ended 31 December 2022
3 The value of the Company’s contribution to the individual’s pension scheme
4 Benefits consist of private healthcare
Long-term incentives
Having consulted with our largest shareholders, the Committee
believes it is important that more meaningful long-term
incentivisation is in place for employees of the Company.
Having motivational levels of long term incentivisation, aligned
to positive shareholder outcomes, is critical to drive success
and the delivery of the Group’s multi-year strategic plan.
During the year, TruFin adopted a Long-Term Incentive Plan (the
“LTIP”) to appropriately incentivise key individuals over the long
term, driving retention and performance.
The LTIP operates as a four-year programme of awards, with
awards vesting in four tranches from 31 December 2023 and
each anniversary of that date until 31 December 2026. In
July 2023, TruFin awarded the first three tranches of awards
under the LTIP. These were in the form of options over a total
of 3,116,667 ordinary shares to the CEO and other senior
employees.
Save for the first tranche of these options that vested on 31
December 2023, vesting of the options granted to the CEO and
CFO are subject to performance criteria set by the Committee,
based on a share price performance metric. In addition to
this metric, options granted to the Group CEOs are subject to
subsidiary company financial performance metrics. The fourth
tranche of options is due to be granted in early 2024, subject to
the same performance metrics.
The total four-year programme of awards comprising the four
tranches are intended to be up to 4,175,000 ordinary shares,
representing 4% of TruFin’s issued share capital. Following
this, there will be total options outstanding over a total of
10,609,675 ordinary shares in the Company, representing 10%
of TruFin’s current issued share capital.
These awards are intended to align the incentives of the
CEO, CFO and other senior employees with the Company’s
performance and outcomes for shareholders over the long
term and to provide effective and attractive levels of
reward to retain individuals who are key to the future
success of the Company, based on delivering strong
performance in a fair and proportionate manner.
Further details of this LTIP and other 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. This was last
performed in 2022 where external analysis determined
that the CEO’s total remuneration fell within the market
benchmark. Employees who have significant changes
to their role or are paid outside of market benchmarks,
will receive adjustments to their basic salary.
Looking ahead
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
2023 Annual Report and Accounts | 27
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 2023.
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 2023 (2022: £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
The Directors’ interests in the shares of TruFin plc, all of
which were beneficial interests, at 31 December 2023 are as
follows:
Number of Shares
2023
2022
J van den Bergh
165,982
165,982
P Dentskevich
P Judd
45,000
24,723
45,000
24,723
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 2023:
% of
issued
share
capital
Number
of Shares
Watrium AS
24,129,245
22.80%
Gresham House Asset Management
19,420,100
18.35%
Lombard Odier Investment Managers
11,734,224
11.09%
Premier Miton Investors
8,939,759
8.45%
Credit Suisse Private Banking
4,110,548
3.88%
GPIM
M&G Investments
4,027,279
3.81%
3,695,364
3.49%
JO Hambro Capital Management
3,550,000
3.35%
Events after the reporting date
No reportable events after the reporting date.
28 |
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
25 March 2024
2023 Annual Report and Accounts | 29
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
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.
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.
30 |
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
Cyber 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 is dependent on 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 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.
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 regular scheduled
testing such that should an event occur, the
disruption to the Group can be managed and
impact minimised as far as possible.
Inflation
and Interest
Rate 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.
2023 Annual Report and Accounts | 31
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Compliance and Risk Report continued
Risk
Potential Impact
Mitigation
Staff
Shortage
Risk
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.
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.
We will continue to monitor the impacts and associated
risks arising from the regulatory landscape and global
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.
32 |
Environmental Social and Governance (“ESG”)
and Sustainability Report
We believe that high standards of ESG and sustainability
within both the Company and its subsidiaries (the “Group”)
are not only good in themselves but also make sound
business sense and have the potential to protect and
enhance shareholder returns.
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.
In November 2023, the QCA published an updated version of
its Code (the “2023 Code”), that will apply to financial years
beginning on or after 1 April 2024. Disclosures in respect
of the 2023 Code are expected in 2025. In order to ensure
compliance with these disclosures, TruFin plans to undertake
a gap analysis between its current governance practices and
the revised expectations of the 2023 Code.
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.
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 early-stage companies and
quantitative data is not readily available. Below we highlight
some examples.
Oxygen
Oxygen’s purpose is to deliver economic and social benefits
to its clients. Oxygen’s role as a facilitator promotes
public sector procurement practices that drive societal,
environmental, and efficiency benefits up and down the
supply chain. Oxygen achieves this via its digitally driven
products: Early Payment and FreePay, Oxygen Insights
including Insights Carbon, and bidstats.uk.
2023 Annual Report and Accounts | 33
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT CORPORATE GOVERNANCE
Environmental Social and Governance (“ESG”)
and Sustainability Report continued
For example, FreePay aligns perfectly with the public sector’s
commitment to social responsibility. FreePay enables public
organisations to inject liquidity into small and micro firms,
fostering economic growth. This enables buyers to support
local economies, transform supplier experiences and
contribute positively to their part of the public sector.
The benefits extend beyond financial gains. FreePay enhances
relationships between buyers and suppliers, promotes
transparency in purchase-to-pay practices and ensures timely
payments. As councils and public bodies embrace FreePay,
they not only improve their own efficiency, but also empower
the businesses that form the backbone of their supply chains.
In 2023, Oxygen saw four additional clients implement
FreePay, which lead to the early payment of 254,000 invoices.
Rolled out over the last year, Insights Carbon has provided
public bodies with free, real-time insights into the carbon
footprint associated with their third-party spending. This
vital tool is helping Oxygen’s clients be at the forefront of
addressing the climate emergency.
Public sector organisations can now track spend per category
and estimate emissions, to make informed decisions that align
with their net-zero commitments. As of today, 60 public bodies
are using Insights Carbon as a touchstone of their net-zero
strategy.
In November, Oxygen made a significant acquisition designed
to further facilitate efficient public sector procurement
between buyers and suppliers. bidstats.uk collects,
aggregates, and organises tender information from over 3,000
data sources, creating a one stop shop for suppliers looking
for new public sector contracts. bidstats.uk boosts supplier
participation and drive efficiencies, whilst also alerting smaller
firms who may otherwise be unaware of upcoming public
tenders.
Oxygen is currently working to align its ESG efforts with the
United Nation’s Sustainable Development Goals (“UN SDGs”).
These UN SDGs are designed to drive global progress towards
a more environmentally and socially responsible world by
2030.
Satago
Satago facilitates best-in-class invoice finance solutions
through advanced technology and innovative use of data to help
SMEs in the community. Satago’s solutions solve problems by
removing traditional challenges experienced by lenders and
SMEs. Satago believes that all SMEs should have access to
financing capabilities to help them achieve success.
With its value created through collaboration and partnerships,
Satago believes that ethical procurement is the heart of its
value chain. Specifically, Satago pays attention to the carbon
impacts of its suppliers and the labour practices of its end-
users and, guided by the principles of ESG, aims to proactively
eliminate unethical practices throughout its supply chain.
Further, Satago endeavours to work with suppliers who have
publicly made – and demonstrate – their commitment to the
environment.
Playstack
Playstack is a leading games publisher that employs a diverse
team of people globally.
During the year, Playstack continued to support SpecialEffect, a
charity which supports people with physical disablilties through
the innovative use of technology. SpecialEffect will remain
Playstack’s primary chosen charity for 2024.
In addition to this, Playstack continues to participate in
other charitable initiatives. Of note is Humble Bundle, where
Playstack games are included in a bundle for players, with the
majority of proceeds going to charity.
For 2024, Playstack will remain focussed on sustainability,
choosing locally sourced suppliers for food and beverages in
recyclable or reusable packaging, and carbon offsetting for all
international travellers. Playstack has also decided to look into
what it would take to meet the highest standards of social and
environmental performance, transparency and accountability,
and become B Corp Certified.
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 Group business
model.
Getting it right for our employees, customers,
communities, environment, and shareholders is
the cornerstone of our efforts.
We believe that prioritising 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.
34 |
In 2024, 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
Annual reporting on ESG and sustainability via our Annual
Report and Accounts.
FINANCIAL STATEMENTS
2023 Annual Report and Accounts | 35
2022 Annual Report and Accounts | 35
CORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT Report of the Independent Auditor to the Shareholders of TruFin plc
For the year ended 31 December 2023
Opinion
We have audited the financial statements of TruFin plc (the “parent company”) and its subsidiaries (the “group”) for the year ended
31 December 2023, which comprise:
•
•
•
•
•
the group and parent company statements of comprehensive income for the year then ended;
the group and parent company statements of financial position as at 31 December 2023;
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 their preparation 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 2023 and of the group’s
and parent company’s loss for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
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 and the parent company 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 as applied to listed entities, 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 group’s and parent
company’s ability to continue to adopt the going concern basis of accounting included:
•
•
•
•
•
•
•
Obtaining and reviewing the management’s assessment of going concern;
Checking the mathematical accuracy of the model, and agreeing opening positions used;
Challenging budgets used by management in their going concern assessment by assessing management’s ability to forecast
accurately which includes comparing the prior year budgets with actual figures and comparing the first month of the 2024
budget to actual results;
Challenging the reasonableness for these forecasts whether these are consistent with our understanding of the business
obtained during the audit;
Reviewing the downside scenario and challenging management on the assumptions applied;
Reviewing mitigating actions that could be taken by management to conserve cash; and
Assessing the completeness and accuracy of the disclosures made 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’s and 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.
36 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
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 financial statements as a whole to be £500,000
(2022: £650,000), based on approximately 1% of Total Assets (2022: 1% of Total Assets). Materiality for the parent company financial
statements as a whole was set at £350,000 (2022: £350,000) based on up to 0.5% of Total Assets (2022: 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. This is set at £350,000
(2022: £390,000) for the group and £245,000 (2022: £210,000) for the parent 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 Audit Committee to report to it all identified errors in excess of £25,000 (2022: £33,000). 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 Limited (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 lead 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 specified audit procedures for material
balances for non-UK components and performing analytical procedures on non-significant entities to the group, gave us appropriate
and sufficient audit evidence to support our opinion on the group financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, 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 on these matters.
2023 Annual Report and Accounts | 37
Report of the Independent Auditor to the Shareholders of Trufin plc continued
For the year ended 31 December 2023
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. For the year ended
31 December 2023, the group recorded total gross revenue from continuing operations of
£18,131k (2022: £13,860k).
Interest income is earned on loans and advances to customers by Satago and accounts for 8% of
total revenue. Fee income is earned on payment services and subscription fees provided by
Oxygen and Satago which accounts for 52% of total revenue. Publishing income is earned by the
companies in the Playstack group and accounts for 40% of total revenue.
Revenue is material and is an important determinant of the group’s profitability, which has a
consequent impact on its share price performance. This may create an incentive for management
to manipulate results and this is therefore considered to be a fraud risk.
How the scope of our audit
addressed the key audit matter
• We confirmed our understanding of the processes and controls relevant to each revenue
streams. We also assessed the design and implementation of key controls over revenue
recognition.
• 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 performed analytical review for each revenue streams 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 by agreeing to supporting documents and
vouching to cash receipts. For interest income, we have recalculated the interest earned
based on the underlying interest rate per the agreements.
• We reviewed and tested the basis for accrued and deferred income.
• We reviewed aged receivables profile and credit notes issued post year end.
• We tested the cut off of revenue by agreeing a sample of items around the year end to
supporting evidence such as invoices and agreements, ensuring revenue is recognised in the
correct accounting period.
Carrying value of goodwill and other intangible assets (Note 11)
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 licences and similar assets.
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. The process of measuring and recognising
impairment of assets, including goodwill, is complex and highly judgemental.
• We obtained an understanding of the process and key controls relating to the impairment
assessment.
• 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 as to whether goodwill and/or other intangible assets were impaired.
• We challenged and reviewed management’s impairment and fair value models as appropriate
and their key estimates, including the discount rate and revenue growth. We reviewed the
appropriateness and consistency of the process for making such estimates.
• We involved our valuations specialist to assist us with reviewing and challenging the discount
rate used by management.
38 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
• We performed sensitivity analysis on the key assumptions to the impairment models to
understand the impact that reasonably possible changes to these key inputs would have on
the overall carrying amount of goodwill and other intangible assets.
• We reviewed the completeness and accuracy of the disclosures included in the financial
statements.
Accounting and disclosure requirements for the disposal of Vertus (Note 10)
Key audit matter
On 4 October 2023, the group disposed its equity interest in Vertus. There is a risk of error in the
appropriate accounting for the significant transaction involving a loss on disposal of the
subsidiary and the relevant presentation and disclosure as a discontinued operation.
The risks relates to the measurement of the carrying amount of the net assets when calculating
the resulting loss at the disposal date.
This is a new risk in the current year.
How the scope of our audit
addressed the key audit matter
• We inspected and reviewed the documents pertaining to the completion of the sale
transaction, including the signed sale and purchase agreement (SPA) and board approvals.
• We performed audit procedures on the loss on disposal calculation, which included agreeing
the consideration to the SPA and receipt to the bank statements.
• We performed audit procedures on the pre-disposal profit and loss transactions and cash
flows, and of the financial position as at the disposal date.
• We performed audit procedures to assess the completeness and accuracy of any potential
continuing obligations on the group after the disposal date, which included reviewing the
SPA for contractual liabilities and performing cut off procedures.
• We assessed the technical accounting treatment of the disposal transaction and the
adequacy of the related disclosures for the discontinued operation.
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 29, 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
2023 Annual Report and Accounts | 39
Report of the Independent Auditor to the Shareholders of Trufin plc continued
For the year ended 31 December 2023
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.
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 group 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 UK LLP
Statutory Auditor
London
25 March 2024
40 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
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 (loss)/profit from associates
Loss before tax
Taxation
Loss from continuing operations
(Loss)/profit from discontinued operations
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 the owners of:
TruFin plc
Non-controlling interests
Total comprehensive loss for the year attributable to the owners of:
TruFin plc
Non-controlling interests
Total comprehensive (loss)/profit for the year attributable to Owners of TruFin plc from
Continuing operations
Discontinued operations
Earnings per Share
Basic and diluted EPS
Basic and diluted EPS from continuing operations
Notes
3
3
3
3
5
7
2, 9
10
Notes
22
2023
£’000
1,470
9,348
7,313
18,131
(5,027)
13,104
(12,558)
(5,850)
(1,922)
(109)
(4)
(7,339)
962
(6,377)
(963)
(7,340)
2022
£’000
405
7,138
6,317
13,860
(4,207)
9,653
(11,641)
(4,616)
(1,529)
(50)
1
(8,182)
1,267
(6,915)
109
(6,806)
126
126
(65)
(65)
(7,214)
(6,871)
(6,472)
(868)
(7,340)
(6,350)
(864)
(7,214)
(5,190)
(1,160)
(6,350)
2023
pence
(6.5)
(5.3)
(6,637)
(169)
(6,806)
(6,704)
(167)
(6,871)
(6,744)
40
(6,704)
2022
pence
(7.3)
(7.4)
2023 Annual Report and Accounts | 41
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Company Statement of Comprehensive Income
For the year ended 31 December 2023
Revenue
Staff costs
Other operating expenses
Depreciation & amortisation
Loss before tax
Taxation
Loss and total comprehensive income for the year
Notes
3
5
9
2023
£’000
1,765
(2,106)
(633)
(2)
(976)
–
(976)
2022
£’000
2,293
(1,673)
(660)
(2)
(42)
–
(42)
42 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
As at 31 December 2023
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
2023
£’000
2022
£’000
11
12
9
14
14
15
15
16
20
17
17
18
25,417
24,411
275
250
–
25,942
10,140
7,234
–
2,385
4,975
24,734
50,676
96,311
(31,017)
59
(29,798)
35,555
2,385
37,940
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
1,047
1,047
16,764
16,764
6,157
5,532
11,689
12,736
50,676
1,783
6,841
8,624
25,388
65,492
The notes on pages 50 to 89 are an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 25 March 2024. They were signed on
its behalf by:
James van den Bergh
Chief Executive Officer
2023 Annual Report and Accounts | 43
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Company Statement of Financial Position
As at 31 December 2023
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
Notes
2023
£’000
2022
£’000
13
15
16
18
2
30,189
59,089
89,280
4,723
161
4,884
94,164
4
30,189
54,835
85,028
2,260
138
2,398
87,426
96,311
(6,679)
3,798
85,706
(6,042)
6,828
93,430
86,492
734
734
734
934
934
934
94,164
87,426
The notes on pages 50 to 89 are an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 25 March 2024. They were signed on
its behalf by:
James van den Bergh
Chief Executive Officer
44 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share
capital
£’000
85,706
Retained
earnings
£’000
(24,884)
Foreign
exchange
reserve
£’000
Other
reserves
£’000
Non-
controlling
interest
£’000
Total
£’000
(63)
(26,531)
34,228
5,876
Total
equity
£’000
40,104
Balance at 1 January 2023
Loss for the year from continuing
operations
Other comprehensive income for the year
Loss from discontinued operations
Total comprehensive loss for the year
Issuance of shares
Share based payment
Disposal of subsidiary
Purchase of subsidiary shares
–
–
–
–
10,605
–
–
–
(5,312) – –
–
122
–
(1,160)
(6,472)
(427)
766
–
–
– –
122
–
(3,030)
– –
– –
– (237)
(5,312)
122
(1,160)
(1,065)
(6,377)
4
197
126
(963)
–
(6,350)
(864)
(7,214)
7,148
766
–
(237)
–
–
(2,620)
(7)
7,148
766
(2,620)
(244)
Balance at 31 December 2023
96,311
(31,017)
59
(29,798)
35,555
2,385
37,940
Balance at 1 January 2022
73,548
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Issuance of shares
Issuance of shares by subsidiary
–
–
–
12,158
–
(17,731)
(6,637)
–
(6,637)
(496)
(20)
4
–
(67)
(67)
–
–
(24,393)
31,428
1,023
32,451
–
–
–
(2,138)
–
(6,637)
(67)
(6,704)
9,524
(20)
(169)
2
(167)
–
5,020
5,876
(6,806)
(65)
(6,871)
9,524
5,000
40,104
Balance at 31 December 2022
85,706
(24,884)
(63)
(26,531)
34,228
The notes on pages 50 to 89 are an integral part of these financial statements.
2023 Annual Report and Accounts | 45
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity continued
For the year ended 31 December 2023
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 2023 it was a debit
balance of £33,358,000 (2022: £33,358,000).
The share revaluation reserve arose from the share cancellation that took place in February 2018. As at 31 December 2023 its balance
was £8,966,000 (2022: £8,966,000).
Shares issued at a discount arose from the share issuances that took place in April 2022 and July 2023. As at 31 December 2023 its
balance was £5,168,000 (2021: £2,138,000). See Note 16 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 and Satago z.o.o.
46 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
For the year ended 31 December 2023
Share capital
£’000
Retained
earnings Other reserves
£’000
£’000
Total equity
£’000
Balance at 1 January 2023
Total comprehensive loss for the year
Issuance of shares
85,706
(6,042)
6,828
86,492
–
10,605
(976)
(427)
766
–
(3,030)
–
(976)
7,148
766
Share based payment –
Balance at 31 December 2023
96,311
(6,679)
3,798
93,430
Balance at 1 January 2022
Total comprehensive loss for the year
Issuance of shares
Balance at 31 December 2022
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
The notes on pages 50 to 89 are an integral part of these financial statements.
2023 Annual Report and Accounts | 47
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Cash flows from operating activities
Loss before tax
Continuing operations
Discontinued operations
Adjustments for
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share based payments
Finance costs
Share of loss/(profit) from associate
Loss on disposal of subsidiary
Underlying trading profit from discontinued operations
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
Interest and finance costs
Net cash used in operating activities from continuing operations
Cash flows from investing activities:
Additions to intangible assets
Additions to property, plant and equipment
Acquisition of subsidiaries
Disposal of subsidiary
Cash on acquisition of subsidiary
Cash in subsidiary on disposal
Net cash used in investing activities from continuing operations
Cash flows from financing activities:
Issue of ordinary share capital
Issue of ordinary share capital of subsidiary
Net borrowings
Lease payments
Notes
2023
£’000
2022
£’000
(7,339)
(963)
107
2,893
766
569
4
1,358
(396)
(3,001)
(4,491)
(1,398)
390
–
(8,182)
162
104
2,314
–
175
(1)
–
(162)
(5,590)
(2,181)
(32)
(88)
(67)
(5,499)
(2,368)
768
(416)
668
(162)
(8,148)
(7,452)
(5,452)
(42)
(1,421)
3,147
–
(938)
(4,706)
7,148
–
5,393
(81)
(3,085)
(107)
(1,217)
–
19
–
(4,390)
9,524
5,000
(55)
(28)
17
Net cash generated from financing activities from continuing operations
12,460
14,441
Net (decrease)/increase in cash and cash equivalents from continuing operations
Net cash from discontinued operations
Cash and cash equivalents at beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of the year
The notes on pages 50 to 89 are an integral part of these financial statements
48 |
(394)
199
10,273
62
10,140
2,599
56
7,608
10
10,273
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Company Statement of Cash Flows
For the year ended 31 December 2023
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
(Increase)/decrease in trade and other receivables
Decrease in trade and other payables
Interest received
Net cash used in operating activities
Cash flows from investing activities
Intragroup loans cash advanced
Intragroup loans cash received
Additions to property, plant and equipment
Net cash generated used in 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 50 to 89 are an integral part of these financial statements.
2023
£’000
2022
£’000
(976)
(42)
2
(1,657)
766
2
(2,166)
–
(1,865)
(2,206)
(22)
(200)
(222)
117
6
(94)
(88)
–
(1,970)
(2,294)
(6,156)
3,442
–
(5,750)
–
(6)
(2,714)
(5,756)
7,147
7,147
2,463
2,260
4,723
9,524
9,524
1,474
786
2,260
2023 Annual Report and Accounts | 49
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
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 51-52.
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 51-52, 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.
50 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
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”)
UK
Satago SPV 1 Limited (“Satago SPV 1”)
UK
Satago SPV 2 Limited (“Satago SPV 2”)
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, BPL and OFAI)
(“Oxygen”)
UK
Oxygen Finance Limited (“OFL”)
UK
Birmingham Procurement Limited (“BPL”)
UK
Oxygen Finance Americas, Inc (“OFAI”)
USA
TruFin Software Limited (“TSL”)
UK
AltLending UK Limited (“AltLending”)
UK
Playstack Limited (“Playstack”)***
UK
Bandana Media Limited (“Bandana”)***
UK
PlayIgnite Ltd (“PlayIgnite”)***
UK
Playstack z.o.o (“PS Poland”)***
Poland
Playstack OY (“PS Finland”)***
Finland
1st Floor Enterprise House,
115 Edmund Street,
Birmingham, United
Kingdom, B3 2HJ
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
56a Poland Street,
London, United Kingdom,
W1F 7NN
56a Poland Street,
London, United Kingdom,
W1F 7NN
56a Poland Street,
London, United Kingdom,
W1F 7NN
Kamienna 21, 31-403
Krakow, Poland
Mikonkatu 17 B, 00100
Helsinki, Finland
Holding Company
85% of ordinary shares**
Provision of early
payment services
85% of ordinary shares**
Not trading
85% of ordinary shares**
Provision of early
payment services
85% of ordinary shares**
Provision of technology
services
100% of ordinary shares
Provision of short term
finance
100% of ordinary shares
Publishing of computer
games
100% of ordinary shares
Publishing of computer
games
72% of ordinary shares
Business and domestic
software developer
Publishing activities in
the field of computer
games
Publishing activities in
the field of computer
games
100% of ordinary shares
100% of ordinary shares
75% of ordinary shares
2023 Annual Report and Accounts | 51
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
Entities
Country of
incorporation
Registered address
Nature of the business
% voting rights
and shares held
Playstack AB (“PS Sweden”)***
Sweden
Playstack Inc (“Playstack USA”)***
USA
PlayIgnite Inc (“PlayIgnite USA”)***
USA
Magic Fuel Inc (“Magic Fuel”)
USA
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
Developing, publishing
and selling electronic
games
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 20 for the Group’s effective economic ownership of the Satago Group.
** Nominal ownership of these companies is 85% 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 two associate companies incorporated in the UK which have been accounted for using the equity method. These are:
• A 27% interest in Storm Chaser Games Limited (“Storm Chaser Games”)
• A 49% interest in Snackbox Games Ltd
The Playstack Group included one associate company incorporated in the UK which was dissolved in the year
• A 42% interest in Military Games International Limited (dissolved on 18 April 2023)
The Playstack Group disposed of its 49% interest in PlayFinder Games Ltd, an associate company incorporated in the UK
On 4 October 2023, the Group disposed of its 54% ownership of Vertus Capital Limited and Vertus SPV Limited (together “Vertus”).
The results for Vertus up to its disposal have been included within Discontinued operations, with comparatives restated accordingly.
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 directors have prepared and reviewed detailed financial forecasts of the Group and, in particular, considered the cash flow
requirements for the period from the date of approval of these financial statements to the end of June 2025. These forecasts sit
within the Group’s latest estimate and within the longer-term financial plan, both of which have been updated on a regular basis. The
directors are also mindful of the impact that the other risks and uncertainties set out on page 31 may have on these estimates and
have considered several scenarios based on revenue, cost and funding sensitivities. 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.
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.
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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, implementation fees, consultancy fees and subscription fees.
Payment services provided by Oxygen comprises the following elements:
Early Payment Programme Services (“EPPS”) contracts
Oxygen’s EPPS generate rebates (ie 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.
Playstack earns revenue where one or more people are billed directly to a client for the provision of services.
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.
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.
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FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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 and Platform revenue
Console revenue is earned on the sale of video games for consoles. It is recognised when the game is sold. Platform revenue is earned
through partnership directly with hardware platform holders in return for exclusive access to one or more games on their service.
Revenue is recognised either on the completion of agreed milestones, across the term of the agreement for live-managed games, or a
combination of the two.
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.
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.
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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.
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
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FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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.
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.
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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.
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 19 for further details about how the Group assesses increases in significant credit risk.
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FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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 19 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
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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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
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.
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.
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FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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. Where there are uncertain tax positions, the Group assesses whether it is probable that the position adopted in
tax filings will be accepted by the relevant tax authority, with the results of this assessment determining the accounting that follows.
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 no 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.
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.
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FINANCIAL STATEMENTS
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.
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 and accounted for in accordance with
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 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.
2023 Annual Report and Accounts | 61
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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
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 11.
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 Oxygen Finance 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.
•
•
62 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
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 19 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 11.
Impairment of investment in subsidiary
The Company’s investment in its subsidiary is assessed annually to determine if there is any indication of impairment. This requires an
estimation of the value in use of this subsidiary. 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 11.
2023 Annual Report and Accounts | 63
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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
2023
£’000
1,470
1,470
4,346
1,135
2,131
1,736
9,348
117
109
7,087
–
7,313
18,131
2022
£’000
405
405
3,335
552
1,644
1,607
7,138
342
453
5,521
1
6,317
13,860
The above figures are from continuing activities with comparatives restated accordingly based on information drawn from prior
financial statements.
Company
Intercompany interest income
Intercompany fee income
Other interest income
Gross revenue
2023
£’000
1,540
108
117
2022
£’000
2,166
118
9
1,765
2,293
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.
64 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
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 2023 £’000 £’000 £’000
Gross revenue 3,788 6,188 8,038
Cost of sales (718) (1,078) (3,231)
Net revenue 3,070 5,110 4,807
Adjusted loss before tax* (4,134) (348) (188)
Loss before tax (4,134) (348) (188)
Taxation 433 554 (25)
Other
£’000
117
–
117
(1,903)
(2,669)
–
Total
£’000
18,131
(5,027)
13,104
(6,573)
(7,339)
962
Loss for the year from continuing operations (3,701) 206 (213)
(2,669)
(6,377)
Loss for the year from discontinued operations (963) – –
–
(Loss)/profit for the year (4,664) 206 (213)
(2,669)
Total assets 13,797 8,121 23,463
Total liabilities (8,228) (1,988) (1,786)
Net assets 5,569 6,133 21,677
* adjusted loss before tax excludes share-based payment expense
Short term Payment
finance services Publishing
Year ended 31 December 2022 £’000 £’000 £’000
Gross revenue 2,210 5,311 6,330
Cost of sales (285) (889) (3,033)
Net revenue 1,925 4,422 3,297
Adjusted loss before tax* (4,041) (220) (1,569)
Loss before tax (4,041) (220) (1,569)
Taxation 271 395 601
5,295
(734)
4,561
Other
£’000
9
–
9
(2,352)
(2,352)
–
(963)
(7,340)
50,676
(12,736)
37,940
Total
£’000
13,860
(4,207)
9,653
(8,182)
(8,182)
1,267
Loss for the year from continuing operations (3,770) 175 (968)
(2,352)
(6,915)
Profit for the year from discontinued operations 109 – –
–
109
(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
2,627
(938)
1,689
65,492
(25,388)
40,104
* adjusted loss before tax excludes share-based payment expense
The above figures are from continuing activities with comparatives restated accordingly based on information drawn from prior
financial statements.
The majority of the Group’s activities (98% of revenues) are within the UK, with 2% earned in USA and 0% in Europe.
2023 Annual Report and Accounts | 65
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
5.
Staff costs
Analysis of staff costs:
2023 2022
£’000 £’000
Wages and salaries 9,188 9,506
Consulting costs 1,059 379
Social security costs 1,104 1,338
Pension costs arising on defined contribution schemes 441 418
Share based payment 766 –
12,558 11,641
2023
£’000
1, 223
–
82
35
766
2,106
2022
£’000
1,384
–
251
38
–
1,673
Group
Company
Consulting costs are recognised within staff costs where the work performed would otherwise have been performed by employees.
Consulting costs arising from the performance of other services are included within other operating expenses.
Average monthly number of persons (including Executive Directors) employed:
Management
Finance
Sales & marketing
Operations
Technology
2023
Number
2022
Number
16
11
42
57
65
191
16
9
28
76
43
172
The figures in this note are from continuing activities with comparatives restated accordingly based on information drawn from prior
period financial statements.
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 van den Bergh 256 220 9
256 220 9
Non-executive
Directors:
S Baldwin 100 – –
P Judd 70 – –
P Dentskevich 60 – –
A Wilhelmsen – – –
230 – –
66 |
2023
Number
2022
Number
1
–
2023
Total
£’000
485
485
100
70
60
–
230
2022
Total
£’000
485
485
100
70
60
–
230
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
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:
Service Criteria Award
TruFin Share Price Award
Subsidiary Performance Award
Total
2023
£’000
552
151
63
766
2022
£’000
–
–
–
–
Awards granted in 2023
Service Criteria Award
On 27 July 2023, options to acquire 1,350,000 shares were granted to the senior management team and employees of the Group. The
award is structured as a nil cost option. The vesting of this award is subject to the holder being in continued employment until the
vesting dates of this award. The award has been granted in 3 tranches; the first tranche vested on 31 December 2023, the second and
third will vest on 31 December 2024 and 31 December 2025 respectively. Awards granted to the Group CEO are subject to an
additional 1 year holding period. A Black-Scholes model was used to determine the fair value of these options. The model used an
expected volatility of 50% and risk free rate of 5%.
TruFin Share Price Award
On 27 July 2023, options to acquire 1,229,167 shares were granted to the senior management team and employees of the Group. The
award is structured as a nil cost option. The vesting of this award is subject to the holder being in continued employment until the
vesting dates of this award, and the Company’s share price satisfying share price targets in relation to the other companies listed on
AIM . The award has been granted in 2 tranches; the first tranche will vest on 31 December 2024 and the second on 31 December
2025. Awards granted to the Group CEO are subject to an additional 1 year holding period. A Monte Carlo simulation was used to
determine the fair value of these options. The model used an expected volatility of 50% and a risk free rate of 5%.
Subsidiary Performance Award
On 27 July 2023, options to acquire 537,500 shares were granted to employees of the Group. The award is structured as a nil cost
option. The vesting of this award is subject to the holder being in continued employment until the vesting dates of this award, and
subsidiary companies achieving certain financial metrics over the vesting periods. The award has been granted in 2 tranches; the first
tranche will vest on 31 December 2024 and the second will vest on 31 December 2025. At 31 December 2023, 75% of the award is
expected to vest based on the latest performance metrics.
Awards granted before 2023
Performance Share Plan and Joint Share Ownership Plan Founder Award (“Founder Award”)
All the Founder Awards held by the Group CEO have vested. 1,566,255 shares subject to the Joint Share Ownership Plan are fully
owned by the EBT. The Group CEO’s nil cost options in respect of the same number of shares under the Performance Share Plan have
also fully vested.
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.
2023 Annual Report and Accounts | 67
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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 has since
been adjusted to £0.71, and the share price milestones were adjusted to reflect the demerger, and returns of value in 2019.
The modification did not result in a change in the valuation of the award and was recognised over the remainder of the original
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 2023 –
Granted during the year –
Exercised during the year –
Outstanding at 31 December 2023 –
–
–
–
–
4,868,420
–
–
4,868,420
Exercisable at 31 December 2023
1,566,255
–
* The JSOP Founder Awards and PSP Founder Awards will together deliver, in aggregate, a maximum of 3,407,895 TruFin shares.
Service
TruFin Share
Type of instrument granted Criteria Award (#) Price Award (#)
Outstanding at 1 January 2023 –
Granted during the year 1,350,000
Exercised during the year –
Cancelled during the year –
–
1,229,167
–
–
Subsidiary
Performance
Award (#)
–
537,500
–
–
Outstanding at 31 December 2023 700,000
1,229,167
537,500
Exercisable at 31 December 2023 650,000
–
–
No options expired during the year.
The weighted average remaining contractual life for the share options outstanding as at 31 December 2023 was 5.61 years
(2022: 5.21 years).
68 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
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
2023
£’000
2022
£’000
54
109
(11)
21
173
4
50
–
–
54
At 31 December 2023, the Group had an impairment balance of £173,000 which was allocated against loans and advances.
At 31 December 2022, all of the impairment balance was allocated against loans and advances.
The net impairment charge on financial assets during the year ended 31 December 2023 all related to loans and advances.
The net impairment charge on financial assets during the year ended 31 December 2022 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
2023
£’000
107
2,893
12,558
2022
£’000
104
2,314
11,641
The figures in this note are from continuing activities with comparatives restated accordingly based on information drawn from prior
period financial statements.
Fees payable to the Group’s auditor (Crowe UK 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
Taxation
9.
Analysis of tax charge recognised in the period
Current tax credit
Deferred tax credit
Total tax credit
2023
£’000
2022
£’000
82
95
177
14
14
2023
£’000
(712)
(250)
(962)
82
98
180
14
14
2022
£’000
(1,267)
–
(1,267)
The figures in this note are from continuing activities with comparatives restated accordingly based on information drawn from prior
period financial statements.
2023 Annual Report and Accounts | 69
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
Reconciliation of loss before tax to total tax credit recognised
Group
Loss before tax from continuing operations
Loss before tax multiplied by the standard rate of corporation tax in the UK of 23.52% (2022: 19%)
Tax effect of:
Expenses not deductible
Depreciation in excess of capital allowances
Capital allowances
Other short term timing differences
R&D tax credit
Impact of different foreign tax rates
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 23.52% (2022: 19%)
Tax effect of:
Expenses not deductible
Other short term timing differences
Brought forward losses utilised
Deferred tax not recognised
Total tax charge
2023
£’000
(7,339)
(1,726)
176
395
(373)
1
(743)
(7)
1,315
(962)
2023
£’000
(984)
(231)
198
1
–
32
–
2022
£’000
(8,182)
(1,553)
4
253
(318)
1
(1,274)
–
1,619
(1,267)
2022
£’000
(42)
(8)
24
(1)
(15)
–
–
The deferred tax assets and liabilities at 31 December 2023 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.
Research and Development (R&D)
The Group uses external professional advisers to support with R&D tax submissions. The impact of such transactions can be uncertain
until agreed with the relevant tax authorities.
Deferred tax asset
Group
Balance at start of the year
Credit to the statement of comprehensive income
On disposal of subsidiary
Credit from discontinued operations
Balance at end of the year
Comprised of: Losses
Total deferred tax asset
2023
£’000
2022
£’000
250
250
(250)
–
250
250
250
250
–
–
(53)
250
250
250
A deferred tax asset from losses in Oxygen Finance Limited has been recognised. Unutilised tax losses in the remainder of the Group
as at the reporting date were £88,928,000 (2022: £83,102,000).
70 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
10. Discontinued operations
On 4 October 2023, the Group disposed of its 54% holding in Vertus and is reported in the current period as a discontinued operation.
Financial information relating to the disposal of the subsidiary and discontinued operations for the period to the date of disposal is set
out below.
Details of the sale of the subsidiary
Cash consideration
Group’s share of net assets sold
Related goodwill and separately identifiable assets at date of disposal
Costs of disposal
Loss on disposal
Results from discontinued operations
Revenue
Expenses
Profit before tax
Taxation
Profit after tax
Other items included within discontinued operations
Loss on disposal of Vertus (net of tax)
Amortisation of separately identifiable intangible asset
Intragroup charges
(Loss)/profit from discontinued operations
Cash flows from discontinued operations
Profit before tax from discontinued operations
Working capital adjustments
Cash flows from operating activities
Cash flows used in investing activities
Cash flows from financing activities
Net increase in cash from discontinued operations
The carrying amount of assets and liabilities as at the date of sale were:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net Assets
2023
£’000
2,385
(1,935)
450
(23)
427
(1,359)
(38)
7
(963)
2023
£’000
450
(1,901)
(1,451)
–
1,650
199
£’000
3,167
(3,055)
(1,451)
(20)
(1,359)
2022
£’000
2,259
(2,056)
203
(53)
150
–
(51)
10
109
2022
£’000
203
(5,492)
(5,289)
(80)
5,425
56
£’000
23,612
996
(18,651)
(283)
5,674
2023 Annual Report and Accounts | 71
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
Intangible assets
11.
Software Separately
licences and identifiable
Client similar intangible
contracts assets assets
Group £’000 £’000 £’000
Cost
At 1 January 2023 6,399 4,773 3,237
Additions 852 4,148 333
On disposal of subsidiary – (74) (255)
Disposals (182) – –
Exchange differences (3) 5 –
Goodwill
£’000
16,569
119
(1,408)
–
–
Total
£’000
30,978
5,452
(1,737)
(182)
2
At 31 December 2023 7,066 8,852 3,315
15,280
34,513
Amortisation
At 1 January 2023 (2,496) (2,082) (1,581)
Charge (1,078) (1,334) (519)
On disposal of subsidiary – 12 213
Disposals 182 – –
Exchange differences – (5) –
At 31 December 2023 (3,392) (3,409) (1,887)
Accumulated impairment losses
At 1 January 2023 (408) – –
At 31 December 2023 (408) – –
Net book value
At 31 December 2023 3,266 5,443 1,428
At 31 December 2022 3,495 2,691 1,656
–
–
–
–
–
–
–
–
15,280
16,569
(6,159)
(2,931)
225
182
(5)
(8,688)
(408)
(408)
25,417
24,411
72 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Software Separately
licences 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
15,746
–
823
–
–
Total
£’000
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
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 five 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 2023 and there was no impairment in relation to underperforming
contracts.
Software, licences 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 three to five 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 2023 and concluded no impairment was required.
The ‘Software, licences and similar assets’ net book value balance related to internally generated intangible assets at 31 December
2023 was £5,443,000 (2022: £2,691,000 ). This consists of cost of £8,852,000 (2022: £4,773,000) and accumulated amortisation of
£3,409,000 (2022: £2,082,000 ). During the year there were additions of £4,148,000 (2022: £2,254,000) and amortisation of
£1,334,000 (2022: £977,000).
Goodwill and “Separately identifiable intangible assets” arise from acquisitions made by the Group.
2023 Annual Report and Accounts | 73
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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 were amortised over five years resulting in
an amortisation charge of £162,000 (2022: £277,000) during the year. Net Book value of these assets at 31 December 2023 was £nil
(2022: £162,000). Goodwill related to this transaction excluding these assets at 31 December 2023 was £1,372,000 (2022: £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.
In 2021, the Group increased its ownership of Vertus Capital to 54%.
Goodwill of £1,664,000 arose from these transactions and has been included within the short term finance segment of the business.
Following the acquisition separately identifiable intangible assets of £255,000 primarily related to the value of existing third party
relationships on acquisition were identified. These were being amortised over five years and the amortisation charge for the year prior
to the disposal of Vertus was £38,000 (2022: £51,000). Details of the disposal of Vertus are included in Note 10.
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 five years resulting in an amortisation charge for the year of £319,000 (2022: £181,000) during the
year. Goodwill related to this transaction excluding these assets at 31 December 2023 was £823,000 (2022: £823,000).
bidstats.uk
In November 2023, Oxygen Finance Limited acquired the business of bidstats.uk at a cost of £451,000. Separately identifiable assets
of £332,000 have been identified relating to the value of the customer relationships and the technology. These are to be amortised
over five years commencing 1 January 2024. Goodwill of £119,000 has arisen on the acquisition and this will be reviewed annually for
impairment. As at 31 December 2023, the net book value of the bidstats.uk assets was £451,000.
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
2028, 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.
Playstack was valued using the discounted cash flow methodology. The net earnings of Playstack were forecasted to 2026, a discount
rate of 10% 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 CGU and therefore the goodwill is not deemed to be impaired.
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 2026, a discount rate of 10% 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.
74 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
The impairment review of Playstack is most sensitive to a change in the planned revenue growth and discount rate. A 70% reduction
in this growth rate or an increase in the discount rate to 25% 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.
12.
Property, plant and equipment
Group
Cost
At 1 January 2023
Additions
On disposal of subsidiary
Exchange differences
At 31 December 2023
Depreciation
At 1 January 2023
Charge
On disposal of subsidiary
Exchange differences
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022
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
Fixtures &
fittings
£’000
Computer
equipment
£’000
Right-of-Use
Asset
£’000
Total
£’000
139
21
–
2
162
(60)
(32)
–
(1)
(93)
69
79
96
21
(13)
(1)
103
(61)
(20)
6
1
(74)
29
34
276
–
–
–
276
(44)
(55)
–
–
511
42
(13)
1
541
(165)
(107)
6
–
(99)
(266)
177
232
Fixtures &
fittings
£’000
Computer
equipment
£’000
Right-of-Use
Asset
£’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
275
345
Total
£’000
560
389
(438)
511
(495)
(108)
438
(166)
345
65
2023 Annual Report and Accounts | 75
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
13.
Company
Investment in subsidiaries
Balance at 1 January 2023 and 31 December 2023
Balance at 1 January 2022 and 31 December 2022
14.
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
Impaired
£’000
30,189
30,189
2022
£’000
24,215
(54)
24,161
2022
£’000
23,875
129
77
41
39
–
2023
£’000
7,407
(173)
7,234
2023
£’000
7,082
6
22
14
105
5
7,234
24,161
76 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
15.
Trade and other receivables
Trade and other receivables
Prepayments
Accrued Income
VAT
Other debtors
Amounts due from Group Undertakings
Group
Company
2023
£’000
2,385
606
685
–
3,684
–
7,360
2022
£’000
2,149
455
890
–
2,554
–
6,048
2023
£’000
2022
£’000
–
35
–
15
–
111
161
–
44
–
11
–
83
138
Trade receivables above are stated net of a loss allowance of £nil (2022: £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
16.
Share capital
Group and Company
105,836,687 shares at £0.91 per share
Group
Company
2023
£’000
1,621
220
146
193
205
2022
£’000
1,960
117
6
9
57
2,385
2,149
2023
£’000
2022
£’000
–
–
–
–
–
–
–
–
–
–
–
–
Share Capital
£’000
96,311
Total
£’000
96,311
On 10 July 2023, the Company issued 11,653,744 ordinary shares through a Placing and an Open Offer. These were issued at £0.65 per
share, raising gross proceeds of £7,575,000. This was a discount to par value of £3,030,000, 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 2023.
2023 Annual Report and Accounts | 77
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
17.
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.
Group
Balance at 1 January 2023
Funding drawdown
Interest expense
Origination fees paid
Repayments
Interest paid
Disposal of subsidiary
Exchange differences
Balance at 31 December 2023
Group
Balance at 1 January 2022
Funding drawdown
Interest expense
Fee amortisation
Repayments
Interest paid
Exchange differences
Balance at 31 December 2022
2023
£’000
6,157
1,047
7,204
2022
£’000
1,783
16,764
18,547
£’000
18,547
7,619
557
(56)
(2,170)
(416)
(16,874)
(3)
7,204
£’000
12,985
8,707
852
110
(3,337)
(777)
7
18,547
The primary borrowings of the Group are comprised of the following:
•
A revolving credit facility under which one month notice is given by either the lender or borrower. 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.
78 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
18.
Trade and other payables
Trade payables
Accruals and deferred income
Other payables
Corporation tax
Other taxation and social security
VAT
Group
Company
2023
£’000
877
3,626
416
8
506
99
2022
£’000
529
3,867
1,636
–
603
206
5,532
6,841
2023
£’000
19
520
7
–
188
–
734
2022
£’000
28
622
–
–
284
–
934
Financial instruments
19.
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 17 and equity of the Group (comprising issued capital,
reserves, retained earnings and non-controlling interests as disclosed in Note 16 and Note 20).
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.
2023 Annual Report and Accounts | 79
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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 2023
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
7,234
2,385
4,369
10,140
7,234
2,385
4,369
10,140
24,128
24,128
7,204
4,889
7,204
4,889
12,093
12,093
–
–
–
10,140
10,140
–
–
–
–
–
–
–
–
–
–
–
7,234
2,385
4,369
–
13,988
7,204
4,889
12,093
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
–
29,574
18,547
6,392
24,939
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 2022
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
31 December 2023
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
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
59,089
59,089
126
4,723
126
4,723
63,938
63,938
734
734
734
734
–
–
4,723
4,723
–
–
–
–
–
–
–
–
59,089
126
–
59,215
734
734
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
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
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
2023 Annual Report and Accounts | 81
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
Further details regarding these policies are set out below.
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 ECL 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
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, reoccur 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.
2023 Annual Report and Accounts | 83
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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
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
2023
£’000
10,140
7,234
–
6,754
24,128
2022
£’000
10,273
24,161
2023
£’000
4,723
–
2022
£’000
2,260
–
–
59,089
54,835
5,593
126
138
40,027
63,938
57,233
Group
Company
2023
£’000
2022
£’000
2023
£’000
2022
£’000
654
1,174
554
3,434
651
6,467
800
271
500
701
–
2,272
–
940
–
21,943
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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
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 2023
Transfer to stage 1
Transfer to stage 2
Transfer to stage 3
Disposal of subsidiary
Net Loans originated
As at 31 December 2023
2022
Total
£’000
11,035
10,615
2,565
24,215
(54)
24,161
Stage 1
£’000
Stage 2
£’000
Stage 3
£’000
940
6,333
–
7,273
(173)
7,100
Stage 1
£’000
22,692
–
–
(30)
–
–
–
–
–
–
Stage 2
£’000
1,481
–
–
–
(19,937)
(1,481)
4,548
7,273
–
–
–
134
–
134
–
134
Stage 3
£’000
43
–
–
30
–
61
134
2023
Total
£’000
940
6,467
–
7,407
(173)
7,234
Total
£’000
24,216
–
–
–
(21,418)
4,609
7,407
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 (2022: £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 2023 (2022: £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.
2023 Annual Report and Accounts | 85
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
Maturity analysis for financial assets and financial liabilities
The following maturity analysis is based on expected gross cash flows.
As at 31 December 2023
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
10,140
6,754
7,234
24,128
4,889
7,204
12,093
10,140
2,490
6,321
18,951
1,574
64
1,638
–
585
36
621
2,260
38
2,298
–
2,006
(63)
1,943
819
1,077
1,896
–
1,673
940
2,613
236
6,025
6,261
–
–
–
–
–
–
–
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
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
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.
86 |
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
20. 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 had a 72% (2022: 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
2023
£’000
–
(5,464)
(3,955)
(1,509)
2022
£’000
1
(5,465)
(3,955)
(1,509)
Bandana
2023
£’000
2022
£’000
–
–
–
–
–
2023
£’000
–
–
2023
£’000
(1,509)
–
–
(251)
(251)
(182)
(69)
2022
£’000
–
–
2022
£’000
(1,440)
(69)
Bandana
Bandana
(1,509)
(1,509)
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
2023
£’000
9,705
587
(3,606)
2,631
4,055
2022
£’000
10,397
617
(927)
5,061
5,026
2023 Annual Report and Accounts | 87
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2023
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 investing activities
Net cash generated from financing activities
Net (decrease)/increase 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
2023
£’000
2,523
(5,923)
(3,400)
(2,429)
(971)
2023
£’000
(4,507)
(275)
2,558
(2,224)
2023
£’000
5,026
(971)
–
–
4,055
Leases
21.
The carrying amounts of the right-of-use assets recognised and the movements during the period are shown in Note 12.
The lease liability and movement during the period were:
Group
Lease liability recognised at 1 January 2023
Interest
Payments
Balance at 31 December 2023
Group
Lease liability recognised at 1 January 2022
Lease recognised in year
Interest
Payments
Balance at 31 December 2022
88 |
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
£’000
285
13
(82)
216
£’000
25
276
12
(28)
285
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
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
Loss after tax from continued operations
(Loss)/profit from discontinued operations
Share-based payments
Adjusted1 loss after tax attributable to the owners of TruFin plc
Earnings per share*
Basic and diluted
Basic and diluted from continuing operations
Adjusted1
* All Earnings per share figures are undiluted and diluted.
2023
2022
105,836,687
94,182,943
99,770,355
90,485,862
£’000
(6,472)
(6,472)
(5,312)
(1,160)
766
(4,546)
£’000
(6,637)
(6,637)
(6,677)
40
–
(6,677)
Pence
Pence
(6.5)
(5.3)
(4.6)
(7.3)
(7.4)
(7.4)
Adjusted1
EPS excludes share-based payment expense and loss from discontinued operations from loss after tax
Comparative figures have been restated to adjust for discontinued operations
Management has been granted 9,551,342 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.
23. Related party disclosures
Key management personnel disclosures are provided in Notes 5 and 6.
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 £940,000 (2022: £525,000).
24. Events after the Reporting Date
In March 2024, Playstack disposed of its augmented reality and gamification AdTech platform “Interact” to VCI Global Limited for
$2,000,000 (£1,574,000).
2023 Annual Report and Accounts | 89
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