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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gli Finance Limited | LSE:GLIF | London | Ordinary Share | GB00B0CL3P62 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.62 | 2.60 | 3.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMGLIF
RNS Number : 6293R
GLI Finance Limited
25 September 2017
GLI Finance Limited
("the Group" or "GLI")
Unaudited Interim Results for the Six month period ended 30 June 2017
Group Operational and Financial Highlights
Operational
-- Continued simplification of the Group structure into two business units, Sancus BMS and FinTech Ventures:
o Sancus BMS comprises the Group's property backed and SME lending business.
o FinTech Ventures comprises the Group's investments in eleven SME focused lending platforms.
-- This structure provides clarity, and enables the management team to focus on growing Sancus BMS and maximise the value of the FinTech Venture investments.
Financial
-- Proforma* Group revenue grown 11% to GBP5.6m (2016: GBP5.1m). On a statutory basis Group revenue was 4% down.
-- Proforma Group net operating loss reduced by 83% to GBP0.5m (2016: GBP2.9m loss) reflecting reduced interest costs and achieved administrative savings. On a statutory basis Group net operating loss was GBP0.5m (2016: GBP1.7m loss).
-- Further write downs in FinTech Ventures investments of GBP12.6m following detailed review, plus a GBP1m FX movement.
-- Sale of the Group's equity holding in the SQN Secured Income Fund ("SSIF")** for GBP22.7m and repayment of the Syndicated loan of GBP11.9m.
-- In line with the Group's stated policy of paying dividends out of net cash generation, no dividend will be declared for the period.
Sancus BMS
-- Funding Knight obtained full FCA authorisation after the end of the period and has been transferred into Sancus BMS.
-- Strong performance of managed loan book with growth of 46% over the last twelve months to GBP184.0m, with default rate at less than 0.5%.
-- Sancus BMS proforma revenue up 10% from June 2016 with the expansion into the UK and Irish markets to drive further growth.
-- Fall in statutory operating profits due to changes in the reporting structure from prior period which included the earnings from SSIF and the BMS Sarls which are no longer consolidated**.
-- Management focus on growing the Sancus BMS business.
FinTech Ventures
-- Thorough review of investments leading to write downs of GBP12.6m.
-- FinTech Ventures investment reduced to GBP28.9m from GBP36.1m at December 2016 due to write downs in two platforms and concerns over the collectability of some platform loans.
-- NAV per share for FinTech Ventures 10.04p (December 2016:13.38p).
-- Of the 11 platforms in FinTech Ventures, five are expected to reach break-even on a monthly basis by end of 2017.
-- Management focus on maximising value for shareholders and monitoring the progress being made by platforms in meeting their strategic objectives.
Andy Whelan, CEO said
The first six months of this year have seen a continuation of the work I started on my appointment in December 2015. The business has been greatly simplified, tough decisions made, and we consider the investments in our FinTech portfolio now offer potential for capital gain from the values at which they are currently being held. With most of the restructuring now complete the management team's focus is on executing the plan to grow Sancus BMS, and to maximise the value of the FinTech Investments.
In line with the Group's dividend policy we will not be declaring a dividend for this period. The Board are aware of the importance of paying a sustainable and growing dividend and look forward to being in a position to resume the payment of dividends when the Group's cash-generation permits.
I am confident in the prospects for the Sancus BMS businesses - these are good businesses, well run, with strong potential. Our recent expansion of the product offering in Ireland and the UK will lead to further growth. Additional funding lines will further enhance growth. The write down in the FinTech Ventures portfolio relates to two loans where collectability is considered a potential issue and the investment in two underperforming platforms. In all cases, we believe we have taken a prudent view. The investments in the platforms which form the FinTech Ventures portfolio are being actively managed to maximise value for shareholders.
As always, I am grateful to my colleagues for their support and hard work through what has been a turbulent 18 months, and to shareholders for their patience. The business is increasingly fit for growth and I look forward to the future with ever increasing confidence.
*June 2016 proforma is included to provide a like for like comparison. This proforma excludes net earnings of GBP1.1m from entities which are no longer consolidated in the June 2017 figures (SSIF, BMS Sarl, Raiseworks and Finpoint) but includes net losses of GBP0.1m from Sancus Gibraltar and Funding Knight combined which were not previously consolidated in 30 June 2016.
**On the 27 April 2017 The SME Loan Fund ("SMEF") was renamed to The SQN Secured Income Fund ("SSIF").
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CHAIRMAN'S STATEMENT
For the period ended 30 June 2017
Overview
I am pleased to present the results of GLI Finance Limited ("GLI" or the "Group") for the six-months ended 30 June 2017.
As our CEO sets out in his review, the structure of the Group has been simplified and now has two business units being Sancus BMS, a business focused on property-backed lending and other lending to SMEs, and FinTech Ventures, a portfolio of minority investments in lending platforms. Each have their own distinct opportunities and challenges.
Sancus BMS Group continues to deliver strong growth, particularly in loan advances. Revenue and profitability have also increased but margins are lower due to the impact of the launch of the Sancus Loan Notes ("SLNs") and the increased costs primarily from the expansion in the UK and Ireland. We expect margins to improve in the second half and beyond. The carrying value of the FinTech Ventures portfolio has unfortunately been adversely impacted by some material write downs on some of the legacy loans and investments.
Outlook
We expect the economies in which we operate to remain supportive of our businesses for the foreseeable future. The alternative finance sector continues to develop rapidly and we believe we are well positioned to benefit from this trend across both parts of our business.
Sancus BMS Group continues to grow and we have a solid profitable business with a strong pipeline and some exciting growth plans. With regard to the FinTech Ventures portfolio, several of our platforms are performing strongly and we remain confident of achieving a good return on our investment as transactions materialise in due course. Across the eleven platforms we are invested in, five of them are expected to reach break-even on a month to month basis by the end of 2017.
Shareholders
I would like to express my appreciation to all our shareholders who have kept confidence with the Group through what has been a difficult period, particularly in light of the significant decline in the share price. We believe that the share price is trading well below the value inherent within the business and we look forward to the share price reflecting this in future. In line with the new dividend policy, it is not proposed to declare a dividend for the first six months of 2017.
Patrick Firth
Chairman
Date: 25 September 2017
CHIEF EXECUTIVE OFFICER'S REVIEW
For the period ended 30 June 2017
Overview
The strategic review conducted last year and subsequent restructuring of the Group into two business units - Sancus BMS and FinTech Ventures - has put GLI Finance into a strong position to benefit from the continued growth of the alternative finance sector.
The core units within Sancus BMS continue to grow strongly with loan advances increasing 46% year on year. On a like for like basis, year on year revenue within the Sancus BMS Group has increased by 10%. The percentage revenue growth is not proportional to the loan advances due to the introduction of the SLNs, the irregular nature of loan earn outs and the BMS administration fee being fixed.
The SLNs comprise a planned series of Special Purpose Vehicles ("SPVs") designed as securitisation vehicles to help offset capital constraints and enable additional co-funder participation in loan opportunities, whilst being attractive to new clients that wanted to invest in an independently managed (by Amberton Asset Management) listed product rather than via direct participation. The initial SLNs included direct Sancus BMS investment and create a lag on the revenue being earned by Sancus on this capital. The return from the SLNs is therefore expected to increase in the second half and future SPVs are not expected to require the same level of capital outlay. Sancus BMS earn outs are loan specific and whilst expected to increase overall, higher earn out fees were obtained in the first six months of 2016, compared to 2017.
Our strong underwriting criteria and procedures continue to deliver very impressive default rates with losses being maintained at less than 0.5% across the Sancus BMS portfolio. Funding Knight transferred into Sancus BMS from FinTech Ventures during the period as it is 100% owned by the Group. With the full FCA authorisation having been obtained in July 2017, Funding Knight and Sancus Finance are increasingly being managed as one business and we are making good progress on the repositioning of Sancus Finance and Funding Knight. Management remain very focused on the performance of these entities and expect the changes already implemented to deliver improved results over the coming period.
The majority of the platforms within our FinTech Ventures portfolio continue to grow strongly and their aggregate loan book has increased year on year by an impressive 84%. Five out of the eleven platforms are expected to reach break-even on a month to month basis by the end of 2017 and several have secured further institutional funding. We continue to improve the level of monitoring and influence over the platforms in which we hold investments in order to protect our interests and ensure we are well positioned for the expected upside in due course. During the first half of the year we have had to take a write down of GBP0.8m on one of our legacy loans and provide GBP2.8m against a platform loan. This has primarily arisen as a result of concerns regarding the recoverability of these loans. In addition we have made two equity write downs. One of our platforms is in the process of looking to raise further equity capital. Based on the latest position regarding this equity raise, we believe it is prudent to reduce our holding value of this investment by GBP6.1m. The second equity write down of GBP2.5m relates to a platform which is currently performing below the forecasts previously used to value the business.
The movement in FX rates since 31 December 2016 has resulted in a GBP1.0m reduction in the fair value of our investments, primarily arising from the devaluation of USD versus GBP. Further investments, in the form of convertible loan notes, have been made into Open Energy Group and UK Bond Network during the period, to continue to support their growth plans.
Long-term strategy and business objectives
As highlighted in the table overleaf, we have made excellent progress in delivering against the objectives we agreed as a Board towards the end of last year.
Sancus BMS continues to grow strongly and I'm delighted that our strong underwriting criteria continues to deliver exceptionally low loss rates. The coordination across the executive and senior management team, complemented with strong new business development expertise is delivering a healthy flow and pipeline of lending opportunities. Our good reputation in the markets in which we operate is also enabling us to lower our cost of funding, through the extension of our successful loan note program and we are confident of securing more institutional funding, beyond our traditional co-funder network, in the near future.
The write down in certain fair values within the FinTech Ventures portfolio during the last six months has been very disappointing for all concerned. We continue to enhance the level of monitoring and governance of our FinTech companies and several exciting opportunities are emerging within the portfolio which I look forward to updating you on in due course.
2017 Objectives and Progress
Goals Strategy Objectives for Progress
2017
-------------------------- ------------------------------ --------------------------- -----------------------------
Geographic expansion We continue to Expand the Sancus We are in the process
consider the opportunities secured loan product of launching secured
for growth afforded to the UK and Ireland lending in UK.
by other jurisdictions and review future Launch of secured
opportunities such lending in Ireland
as the Cayman Islands. expected in 2018.
Ireland is considered
to be an attractive
market that is
under-served by
traditional lenders.
We plan to expand
through BMS and
Sancus secured
property-backed
loans.
-------------------------- ------------------------------ --------------------------- -----------------------------
Profitably expand Funding for the Sancus plans to First 2 SLNs fully
the funding base balance sheets launch further deployed.
and loan funds SLNs.
is critical to SLN3 has been designed
growth. BMS Finance is and book building
We seek funding targeting an expansion has commenced -
from institutional, of its two funds. improved terms
corporate and high in SLN3 given loan
net worth individuals. Relationships with note concept has
We apply funding existing funders been proven as
to businesses where will be nurtured. demonstrated by
returns for risk investor appetite.
are optimised. Long term financing
line for Sancus BMS is planning
BMS is being explored. to extend both
its UK and Irish
funds in H2 2017.
Co-funder base
has grown to over
110 relationships
with GBP118.0m
deployed.
Several positive
discussions ongoing
with interested
lending parties.
-------------------------- ------------------------------ --------------------------- -----------------------------
One FinTech brand, Sancus BMS will Optimise the operation Website enhanced
solutions orientated operate under the of the "Sancus.com" to improve presentation
client proposition, "Sancus" brand website, including of our full package
online, direct as one integrated all entities' products, of lending solutions.
and intermediary-led business, maximising with enhanced borrower
origination its reach in the and funder online Proprietary loan
market and providing experience and management solution
multi product solutions functionality. rolled out across
to its funders Implement common most of the Group.
and borrowers. "solution-based"
sales message across Recruited Sales
origination teams. Director and team
Build team work to accelerate business
to ensure cross-selling development activity.
opportunities are
maximised. Regular sales meetings
held to facilitate
Additional resources cross selling.
to be applied to
loan origination.
-------------------------- ------------------------------ --------------------------- -----------------------------
Ensure all operating 'Work hard on it, Ensure Sancus Finance Sancus Finance
entities are profitable give it an opportunity, is profitable on and Funding Knight
if it doesn't work, a monthly basis are increasingly
restructure it, by December 2017. being managed as
sell it or close Product enhancements, one business. Good
it. Don't procrastinate.' improved sales progress is being
capabilities and made, and we have
a better online invested in business
presence are planned. development resources
to drive revenue.
-------------------------- ------------------------------ --------------------------- -----------------------------
Quality risk management Safeguarding the Credit processes Credit process
and compliance balance sheet and and procedures has been further
to capture value our reputation will continue to enhanced during
with funders is be monitored and H1 2017 by linking
critical. Regular improved as required. operational procedures
reviews of policy to the Loan Management
effectiveness, System.
adjustments to
controls, transparent
reporting and a
culture in which
open challenge
is encouraged are
core to the strategy.
-------------------------- ------------------------------ --------------------------- -----------------------------
Continue to beat Ensure continued Credit processes Credit process
our 2% loan default quality of staff, and procedures has been enhanced
target adapt policies will continue to during H1 2017.
and procedures be monitored and Loss rates maintained
as required, monitor improved as required. at less than 0.5%
loan books and with strong focus
take early action across the Group.
on any problems,
govern with Credit No losses incurred
Committees. within the Sancus
(Offshore) secured
lending business.
-------------------------- ------------------------------ --------------------------- -----------------------------
Support and guide Provide direct The Group is unlikely Increased monitoring
the development financial support to make any significant and governance
of key platforms at critical times, additional platform of FinTech Ventures.
introducing potential investments, but Decision taken
investors/funders may provide short to prudently write
and advice through term or limited down holding value
active participation financial support of two portfolio
as a board member at key moments. equity investments
Board participation and make provisions
and ongoing review against two loans
of strategies and acquired as part
financial performance of SSIF transaction.
will continue. GLI have introduced
other investors
who have invested
directly into several
of the platforms.
-------------------------- ------------------------------ --------------------------- -----------------------------
Realise value at The Group is not No sales are planned Several interesting
optimal times a long-term holder for this year, debt and equity
of this portfolio, but the Group will raises under consideration.
and will seek to consider serious
realise value at offers if they One of the unprofitable
optimal times in are forthcoming. platforms is conducting
the growth of each an equity raise,
platform, or where we expect
opportunistically to be diluted and
if capital can we have prudently
be profitably redeployed. written down the
fair value.
-------------------------- ------------------------------ --------------------------- -----------------------------
Value capital allocation The Group will The announced sale Bi-weekly Treasury
and liquidity management continue to review on 8 March 2017 meetings chaired
where capital is of our holding by CEO to agree
best deployed, in SSIF will improve on investments/divestments.
and how it can the liquidity position,
be raised most and surplus capital Ongoing positive
cost-effectively. will be reinvested discussions with
in higher yielding potential interested
lending activities. lending parties.
Strict liquidity
controls will continue
to be applied.
-------------------------- ------------------------------ --------------------------- -----------------------------
Stakeholder communication The nature of the Ongoing stakeholder Comprehensive stakeholder
Group's business roadshows, communications communication programme
will continue to and disclosures alongside interim
develop, and it will be undertaken results.
will continue to
be a priority to
ensure investors
fully appreciate
the potential value
the Group offers.
-------------------------- ------------------------------ --------------------------- -----------------------------
Financial Results for the six months ended 30 June 2017 (Table 1)
GBP'000 Statutory SOCI Proforma adjustments Proforma*
--------------------------- ------------------------------ ---------------------------------- --------------
Group Results Group Results Sancus Gibraltar No longer Group Results
Restated** & Funding consolidated*
Knight*
--------------------------- -------------- -------------- ----------------- --------------- --------------
30 June 30 June 30 June 30 June 30 June
2017 2016 2016 2016 2016
--------------------------- -------------- -------------- ----------------- --------------- --------------
Sancus BMS Interest
on loans and Fee and
other income 4,777 5,106 924 (1,683) 4,347
--------------------------- -------------- -------------- ----------------- --------------- --------------
FinTech Ventures interest
on loans and Fee and
other income 532 63 - - 63
--------------------------- -------------- -------------- ----------------- --------------- --------------
SSIF dividends 303 664 - - 664
--------------------------- -------------- -------------- ----------------- --------------- --------------
Revenue 5,612 5,833 924 (1,683) 5,074
--------------------------- -------------- -------------- ----------------- --------------- --------------
Interest costs (1,204) (2,058) - - (2,058)
--------------------------- -------------- -------------- ----------------- --------------- --------------
Gross profit/(loss) 4,408 3,775 924 (1,683) 3,016
--------------------------- -------------- -------------- ----------------- --------------- --------------
Operating expenses (4,876) (5,442) (1,031) 537 (5,936)
--------------------------- -------------- -------------- ----------------- --------------- --------------
Net operating loss (468) (1,667) (107) (1,146) (2,920)
--------------------------- -------------- -------------- ----------------- --------------- --------------
Fair Value adjustments
and other net losses
including FX (14,635) (7,071) - - (7,071)
--------------------------- -------------- -------------- ----------------- --------------- --------------
Tax (56) - - - -
--------------------------- -------------- -------------- ----------------- --------------- --------------
Loss for the period (15,159) (8,738) (107) (1,146) (9,991)
--------------------------- -------------- -------------- ----------------- --------------- --------------
* June 2016 proforma is included to provide a like for like comparison. This proforma excludes net earnings of GBP1.1m from entities which are no longer consolidated in the June 2017 figures (SSIF, BMS Sarl, Raiseworks and Finpoint) but includes net losses of GBP0.1m from Sancus Gibraltar and Funding Knight combined which were not previously consolidated in 30 June 2016.
**30 June 2016 results restated for the change in accounting policy to adopt the Venture Capital exemption in IAS28 whereby FinTech Ventures is accounted for on a fair value basis as consistent with the 2016 Annual Accounts (see Note 2b for further detail)
Revenue
Total revenue for the period increased by 11% to GBP5.6m (2016 GBP5.1m) on a proforma basis. On a statutory basis revenue was down 4% from GBP5.8m at 30 June 2016 to GBP5.6m at 30 June 2017, primarily due to structural changes within the Group. Excluding the SSIF dividends which in future we will no longer receive following the sale of this asset in March 2017 (refer Note 15), revenue from interest on loans and fee and other income was up 20% on a proforma basis compared to 30 June 2016.
Revenue consists of interest income, fee and other income and dividend income, with a further breakdown provided in the Condensed Consolidated Statement of Comprehensive Income.
The dividend income received in the period of GBP0.3m (30 June 2016 GBP0.7m) related purely to dividends from our holding in SSIF which was sold in March 2017.
The principal driver of revenue growth has been fee income from arrangement and commitment fees arising from the increase in loan origination. However, the increase in fees has been somewhat offset by a reduction in interest income as on balance sheet funds have not grown due to capital constraints and we will see a lag on interest earned on the SLNs.
The combined revenue of Funding Knight and Sancus Finance increased by 69% compared to the six months ended 30 June 2016.
Revenues from interest income from loans and preference shares held in FinTech Ventures increased in the period as additional loans and accrued interest were acquired as part of the sale of our shares in SSIF.
Interest Costs
Interest costs have decreased in the period from GBP2.1m to GBP1.2m as the Syndicated loan of GBP11.9m was repaid in March 2017. Following the repayment of the Syndicated loan, the weighted average interest cost for the period ended 30 June 2017 has reduced to 5.9% (from 7.5% at 31 December 2016). At the period end, interest bearing debt comprised:
-- GBP10m 5-year Bond (7%) matures 30 June 2021, interest paid half yearly; and -- GBP20.7m 2019 ZDPS (5.5%) income entitlement and principal due on expiry 5 December 2019.
To measure business unit performance, finance costs are allocated to Sancus BMS to recognise its use of the Group's debt facilities in its lending activities. FinTech Ventures is treated as being funded by equity. This allocation best matches the risk profile of each business unit with its capital structure, as well as recognising that interest costs are effectively serviced by interest income from Sancus BMS.
Operating Expenses
Total costs for the first half of 2017 were GBP4.9m compared to GBP5.9m on a comparable proforma basis (refer Table 1) including Sancus Gibraltar and Funding Knight.
Savings of GBP1.0m in Head Office Costs have been achieved in the period mainly on administration fees, legal, travel and marketing. However Sancus BMS's operating expenses have increased due to the investment in more business development resources and the expansion of its operations.
FinTech Venture's operating expenses reduced to GBP1.0m at 30 June 2017 from GBP1.6m at 30 June 2016.
Fair Value adjustments and other net losses including FX (Table 2)
In total the fair value adjustments and other net losses for the period produced a loss of GBP14.6m. The breakdown is shown in the table below.
GBP'000 30 June 2017 ---------------------------------- ------------- FinTech Ventures loan provision (2,790) ---------------------------------- ------------- FinTech Ventures loan write down (806) ---------------------------------- ------------- FinTech Ventures equity fair value write down (8,630) ---------------------------------- ------------- FinTech Ventures other (332) ---------------------------------- ------------- Total FinTech Ventures before FX Loss (12,558) ---------------------------------- ------------- FinTech Ventures FX Loss (992) ---------------------------------- ------------- Total FinTech Ventures (13,550) ---------------------------------- ------------- Amberton NAV movement (381) ---------------------------------- ------------- Sancus BMS FX Gain 169 ---------------------------------- ------------- Sancus BMS other gains 80 ---------------------------------- ------------- Total Sancus BMS (132) ---------------------------------- ------------- SSIF realised loss on sale (953) ---------------------------------- ------------- Total Losses on financial assets at FVTPL (14,635) ---------------------------------- -------------
The loan provision and loan write down are related to legacy GLI loans which were previously held within the SSIF portfolio. As part of the sale of GLI's stake in SSIF, these were transferred back to GLI.
The equity write down relates to one of the platforms which is in the process of looking to raise further equity capital. Whilst the process is still underway, based on the current expressions of interest, management believe it is prudent to reduce our holding value of this investment by GBP6.1m. The second equity write down of GBP2.5m relates to one of the platforms whereby they are performing behind forecasts.
Dividend Policy
In line with the Group's announced dividend policy whereby dividends are only paid out of net cash generated in the period there will be no dividend declared for the period. A dividend of 0.625 pence per share was paid in April 2017 in relation to quarter four 2016.
Financial Position (Table 3)
GBP'000 30 June 2017 31 December 2016
(unaudited) (audited)
---------------------------------------- ------------- -----------------
Sancus BMS on Balance Sheet Loan
and loan equivalents 44.2 38.8
---------------------------------------- ------------- -----------------
Shares in SSIF - 23.8
---------------------------------------- ------------- -----------------
Goodwill 25.0 25.0
---------------------------------------- ------------- -----------------
FinTech Ventures' Loan and loan
equivalents 1.1 4.0
---------------------------------------- ------------- -----------------
FinTech Ventures' Investment Portfolio 28.9 36.1
---------------------------------------- ------------- -----------------
Group Cash, trade receivables and
other assets 16.0 14.4
---------------------------------------- ------------- -----------------
Total assets 115.2 142.1
---------------------------------------- ------------- -----------------
Group debt (40.8) (51.2)
---------------------------------------- ------------- -----------------
Group net assets 74.4 90.9
---------------------------------------- ------------- -----------------
The Group's Net assets have decreased in the period by GBP16.5m to GBP74.4m, largely from the fair value adjustments noted in Table 2.
On balance sheet loan and loan equivalents have increased in the period from GBP38.8m to GBP44.2m, with an increase in the BMS Funds and SLNs being the primary driver for the increase.
Group cash, trade receivables and other assets of GBP16.0m consist of GBP6.7m cash, GBP6.4m trade and other receivables with the remaining GBP2.9m relating to fixed assets (GBP0.6m), investment in Amberton Asset Management (GBP0.1m) and other investments at fair value (GBP2.2m). Trade receivables includes GBP2.7m in respect of the sale of GLI's 5% holding in the BMS UK Sarl which occurred on 31 May 2017 and cash received post period end. Other investments include GBP1.6m for the 23% holding in Sancus Isle of Man plus the equity holdings in the UK and Irish BMS Funds. The Group's cash position has decreased by GBP3.0m as cash has been redeployed into on balance sheet loans and loan equivalents.
Shares held in SSIF were sold in the period, raising GBP22.7m in cash which was partly used to repay the Syndicated loan.
The GBP2.9m decrease in the FinTech Ventures loans and loan equivalents to GBP1.1m (31 December 2016: GBP4.0m) is due to the repayment of certain loans and the write down and provision against the loans acquired from the sale of SSIF.
Goodwill has remained at GBP25.0m in the period and a breakdown is provided in Note 7.
FinTech Ventures portfolio is now at GBP28.9m. This relates to equity, preference shares and working capital loans. The movement in the period includes a GBP8.6m write down on fair value adjustments and a GBP1.0m FX loss on the USD exposure of the portfolio with the remaining movement being the net additions and repayments in the period.
The Group's debt position has reduced to GBP40.8m in the period following the repayment of the Syndicated loan with the Group gearing ratio now at 35% (31 December 2016: 36%).
Cashflow
Cash flows used in operating activities for the six months to 30 June 2017 reduced to GBP1.0m compared to GBP13.0m in the period to 30 June 2016 due to an increase in trading profits and a reduction in debt servicing costs. The movement in cash outflow from operating activities in the period increased as cash of GBP7.8m was deployed by the Group into Sancus BMS loans whereas the same period in 2016 saw a reduction of GBP4.3m. During the period we sold our holding in SSIF, raising GBP22.7m resulting in net cash inflow from investing activities of GBP19.1m (30 June 2016: GBP12.7m). Cash used in financing activities in the period was GBP13.2m (30 June 2016: GBP9.0m) including the repayment of the Syndicated loan (GBP11.9m) and the payment of the Q4 2016 GLI dividend (GBP1.3m).
Post Balance Sheet Events
FCA Funding Knight Authorisation
On the 14 July 2017, it was announced that Funding Knight, the specialist peer to peer/marketplace lender has been granted full authorisation from the Financial Conduct Authority (FCA). Funding Knight has been operating under interim permissions since 2014, when the FCA commenced the process of regulating the peer-to-peer industry. This is an important milestone for the business and demonstrates its commitment to maintaining the expected standards of regulatory compliance designed to protect both funders and clients.
Related Party Transactions
Related party transactions are disclosed in Note 14 to the condensed set of financial statements. There have been no material changes in the related party transactions described in the last annual report.
Governance, Risk Management and Operations
Effective governance processes both at platform and holding company level continue to be a priority for the Board. This is critical to ensuring that only well-considered risks are taken, and expected returns emerge as planned. At Group level we have implemented projects to take a more strategic approach to the assessment, reporting and management of investment risk.
Operationally a number of technology projects were completed in the first half of the year, in particular to provide Sancus BMS Group with a proprietary loan management system and enhanced online functionality.
Outlook
I believe that we are well placed now to continue to grow Sancus BMS. With a lot of the hard work and progress having been made over the last 18 months we are well positioned to leverage off our expertise and see benefits from the increased synergies. Within FinTech Ventures we have made the hard decisions of writing down the fair value where we have some concerns. There are positive discussions underway with a number of the platforms but we will need to be patient and will only look to record these potential gains when transactions materialise. I would like to thank our shareholders for their continued support and patience.
Andrew Whelan
Chief Executive Officer
25 September 2017
INDEPENT REVIEW REPORT TO GLI FINANCE LIMITED
We have been engaged by the Company to review the condensed set of Consolidated Financial Statements in the Interim Report for the six months ended 30 June 2017 which comprises the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Shareholders' Equity, the Condensed Consolidated Statement of Cash Flows and related Notes 1 to 17. We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of Consolidated Financial Statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK & Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review 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 company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The Interim Report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of Financial Statements included in this Interim Report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of Financial Statements in the Interim Report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK & Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of Financial Statements in the Interim Report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules of the London Stock Exchange.
Deloitte LLP
Statutory Auditor
Guernsey, Channel Islands
25 September 2017
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
For the period ended 30 June 2017
Notes Period ended Period ended
30 June 2017 30 June 2016
(unaudited) (unaudited)
Restated*
GBP'000 GBP'000
Interest on loans 2,135 3,230
SSIF dividends 303 664
Fee and other income 4 3,174 1,939
------------ ------------------------
Total revenue 5,612 5,833
Interest costs (1,204) (2,058)
------------ ------------------------
Gross profit 4,408 3,775
------------ ------------------------
Operating expenses
Administration and secretarial fees 170 301
Legal and professional fees 506 1,445
Other expenses 5 4,200 3,696
------------ ------------------------
Total operating expenses 4,876 5,442
------------ ------------------------
Net operating loss (468) (1,667)
------------ ------------------------
Losses on financial assets at fair value
through profit and loss
SSIF loss on disposal / fair value adjustment (953) (2,590)
Net loss on de-recognition of SSIF as
a subsidiary - (1,208)
Fintech Ventures fair value adjustment (13,111) (2,642)
Other net losses (571) (631)
------------ ------------------------
Losses on financial assets at fair value
through profit and loss (14,635) (7,071)
------------ ------------------------
Loss before tax (15,103) (8,738)
------------ ------------------------
Income tax expense (56) -
------------ ------------------------
Loss for the period after tax (15,159) (8,738)
============ ========================
Other comprehensive income
Items that may subsequently be reclassified
to profit or loss:
Foreign exchange on consolidation - 169
------------ ------------------------
Total comprehensive loss for the period (15,159) (8,569)
============ ========================
Operating (loss)/profit attributable
to:
Equity holders of the Company (15,024) (9,142)
Non-controlling interest (135) 404
------------ ------------------------
(15,159) (8,738)
============ ========================
Total comprehensive (loss)/income attributable
to:
Equity holders of the Company (15,024) (8,973)
Non-controlling interest (135) 404
------------ ------------------------
(15,159) (8,569)
============ ========================
Basic and Diluted Loss per Ordinary
Share 6 (4.83)p (3.97)p
============ ========================
* Comparatives have been restated for the adoption of the Venture Capital exemption in IAS28 which was first adopted in the Annual Results 2016 which allowed FinTech Ventures investments to be fair valued as opposed to equity accounted. Further details are included in Note 2b.
The accompanying Notes 1 to 17 form an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)
As at 30 June 2017
31 December
30 June 2017 2016
(unaudited) (audited)
ASSETS Notes GBP'000 GBP'000
Non-current assets
Property and equipment 634 618
Goodwill 7 25,033 25,033
Sancus BMS loans 15 25,128 19,216
Investment in Sancus Loan Notes 15 10,642 7,500
------------ -----------
Total Sancus BMS loans and loan equivalents 35,770 26,716
FinTech Investments 15 28,922 36,104
Other investments 15 2,172 874
Joint Venture in Amberton Asset Management 147 527
------------ -----------
Total Non-current assets 92,678 89,872
------------ -----------
Current assets
Investment in SSIF 15 - 23,781
Loans through platforms 15 1,055 4,034
Sancus BMS loans 3,063 3,900
Loan equivalents 5,317 8,205
------------ -----------
Total Sancus BMS loans and loan equivalents 15 8,380 12,105
Trade and other receivables 8 6,393 2,712
Cash and cash equivalents 6,657 9,616
------------ -----------
Total Current assets 22,485 52,248
------------ -----------
Total assets 115,163 142,120
============ ===========
EQUITY
Share premium 9 112,557 111,942
Treasury shares 9 (1,630) (1,734)
Distributable reserve 9 - 34,803
Retained earnings (36,206) (54,268)
------------ -----------
Capital and reserves attributable to
equity holders of the Group 74,721 90,743
------------ -----------
Non-controlling interest (361) 125
Total equity 74,360 90,868
------------ -----------
LIABILITIES
ZDP shares 15 24,072 23,436
Corporate bond 15 9,585 8,500
------------ -----------
Non-current liabilities 10 33,657 31,936
------------ -----------
Current liabilities
Syndicated loan 15 - 11,920
Trade and other payables 15 7,146 7,396
------------ -----------
Total current liabilities 10 7,146 19,316
------------ -----------
Total liabilities 40,803 51,252
------------ -----------
Total equity and liabilities 115,163 142,120
============ ===========
The financial statements were approved by the Board of Directors on 25 September 2017 and were signed on its behalf by:
Director: Patrick Firth Director: John Whittle
The accompanying Notes 1 to 17 form an integral part of these financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
For the period ended 30 June 2017
Share Share Treasury Distributable Foreign Retained Capital and Non-controlling Total
Capital Premium Shares **Reserve Exchange **Earnings/ reserves Interest Equity
Reserve (Losses) attributable
to
equity
holders
of
the Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
31 December
2016 (audited) - 111,942 (1,734) 34,803 -- (54,268) 90,743 125 90,868
Net proceeds
from Ordinary
Shares issued
(Note 9) - 615 - - -- - 615 - 615
Transferred
to management
(Note 9) - - 104 - -- - 104 - 104
Transfer of
distributable
reserves to
retained
earnings
(Note 9) - - - (34,803) -- 34,803 - - -
Acquisition
of
non-controlling
interest in
Sancus Finance - - - - -- - - (351) (351)
Dividends
paid* - - - - -- (1,717) (1,717) - (1,717)
----------------- --------- -------- --------- -------------- --------- ------------ ------------- ---------------- ---------
Transactions
with owners - 615 104 (34,803) -- 33,086 (998) (351) (1,349)
----------------- --------- -------- --------- -------------- --------- ------------ ------------- ---------------- ---------
Total
comprehensive
income/(loss)
for the period - - - - -- (15,024) (15,024) (135) (15,159)
----------------- --------- -------- --------- -------------- --------- ------------ ------------- ---------------- ---------
Balance at
30 June 2017
(unaudited) - 112,557 (1,630) - -- (36,206) 74,721 (361) 74,360
----------------- --------- -------- --------- -------------- --------- ------------ ------------- ---------------- ---------
Balance at
31 December
2015 (audited) - 87,405 - 34,803 (163) (40,412) 81,633 13,792 95,425
Net proceeds
from Ordinary
Shares issued
(Note 9) - 15,108 - - - - 15,108 - 15,108
Dividends
paid - - - - - (2,876) (2,876) - (2,876)
Acquired through
Group restructure 1,900 (1,900) - - -
Acquisition
of
non-controlling
interest in
Sancus Finance - - - - - 416 416 (416) -
Acquisition
of NCI without
change in
control in
SBHL - - - - - (4,096) (4,096) (1,745) (5,841)
Disposal of
non-controlling
interest - - - - - 103 103 (12,694) (12,591)
----------------- --- -------- -------- ------- ------ ----------------------- ----------------------- --------- ----------
Transactions
with owners - 17,008 (1,900) - - (6,453) 8,655 (14,855) (6,200)
----------------- --- -------- -------- ------- ------ ----------------------- ----------------------- --------- ----------
Profit /(loss)
for the period - - - - - (9,142) (9,142) 404 (8,738)
Foreign exchange
on
consolidation - - - - 168 - 168 - 168
----------------- --- -------- -------- ------- ------ ----------------------- ----------------------- --------- ----------
Total
comprehensive
income/(loss)
for the period - - - - 168 (9,142) (8,974) 404 (8,570)
----------------- --- -------- -------- ------- ------ ----------------------- ----------------------- --------- ----------
Balance at
30 June 2016
restated
(unaudited) - 104,413 (1,900) 34,803 5 (56,007) 81,314 (659) 80,655
----------------- --- -------- -------- ------- ------ ----------------------- ----------------------- --------- ----------
* During the period ended 30 June 2017, the Company made one dividend payments, totalling 0.625 pence per Ordinary Share in relation to Q4 2016.
** Distributable Reserves have been combined with retained earnings (losses) in the year to simplify the presentation of reserves (Note 9)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the period ended 30 June 2017
Period ended Period ended
30 June 2017 30 June 2016
(unaudited) (unaudited)
Notes GBP'000 GBP'000
Cash flows used in operating activities 11 (985) (12,988)
(Increase)/decrease on Sancus BMS loans (7,857) 4,274
Net cash movement of BMS Sarl prior to consolidation - (1,903)
------------ ------------
Net Cash flows used in operating activities (8,842) (10,617)
------------ ------------
Cash flows from/(used in) investing activities
Net cash on disposal of subsidiaries - 14,061
Net cash acquired on acquisition of subsidiaries - 4,477
Acquisition of non-controlling interest
and connected entities (713) (1,725)
Purchase of investments in FinTech Ventures (5,531) (4,120)
Decrease/(increase) on loans through platforms 2,848 (158)
Sale of investments in FinTech Ventures - 138
Sale of SSIF investment 22,675 -
Property equipment acquired (158) -
------------ ------------
Net cash inflow from investing activities 19,121 12,673
------------ ------------
Cash flows used in financing activities
Loan drawn down - 711
Repayment of syndicated loan (11,920) (6,980)
Dividends paid (1,318) (2,712)
------------ ------------
Net cash used in financing activities (13,238) (8,981)
------------ ------------
Net decrease in cash and cash equivalents (2,959) (6,925)
Cash and cash equivalents at beginning of
period 9,616 17,415
Effect of foreign exchange rate changes
during the period - 168
Cash and cash equivalents at end of period 6,657 10,658
============ ============
The accompanying Notes 1 to 17 form an integral part of these financial statements.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the period ended 30 June 2017
1. GENERAL INFORMATION
GLI Finance Limited (the "Company"), and together with its subsidiaries, ("the Group") was incorporated, and domiciled in Guernsey, Channel Islands, as a company limited by shares and with limited liability, on 9 June 2005 in accordance with The Companies (Guernsey) Law, 1994 (since superseded by The Companies (Guernsey) Law, 2008). Until 25 March 2015, the Company was an Authorised Closed-ended Investment Scheme and was subject to the Authorised Closed-ended Investment Scheme Rules 2008 issued by the Guernsey Financial Services Commission ("GFSC"). On 25 March 2015, the Company was registered with the GFSC as a Non-Regulated Financial Services Business, at which point the Company's authorised fund status was revoked. The Company's Ordinary Shares were admitted to trading on the AIM market of the London Stock Exchange on 5 August 2005 and its issued zero dividend preference shares were listed and traded on the Standard listing Segment of the main market of the London Stock Exchange with effect from 5 October 2015.
The Company does not have a fixed life and the Articles do not contain any trigger events for a voluntary liquidation of the Company.
The Company is an operating company for the purpose of the AIM rules. The Executive Team is responsible for the management of the Company.
As at 30 June 2017, the Group comprises the Company and its subsidiaries (please refer to Note 12 for full details of the Company's subsidiaries).
Given the changes made as a result of the strategic review, the Company has taken advantage of the exemption conferred by the Companies (Guernsey) Law, 2008, Section 244, not to prepare company only financial statements which is consistent with the 2016 Annual Report.
2. ACCOUNTING POLICIES (a) Basis of preparation
These condensed consolidated financial statements ("financial statements") have been prepared in accordance with International Financial Reporting Standard (IAS) 34 'Interim Financial Reporting', as adopted by the European Union and all applicable requirements of Guernsey Company Law. They do not include all the information and disclosures required in annual financial statements and should be read in conjunction with the Company's annual audited financial statements for the year ended 31 December 2016, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the European Union.
The same accounting policies and methods of computation are followed in these financial statements as in the last annual financial statements for the year ended 31 December 2016.
The Group does not operate in an industry where significant or cyclical variations, as a result of seasonal activity, are experienced during any particular financial period.
These financial statements were authorised for issue by the Company Directors on 25 September 2017.
(b) Principal accounting policies
The same accounting policies and methods of computation are followed in these financial statements as in the last annual financial statements for the year ended 31 December 2016. However, of particular note is that in the prior year the Group elected to apply the exemption available under IAS 28 Investments in Associates and Joint Ventures which states that when an investment in an associate is held by, or is held indirectly through, an entity that is a venture capital organisation, the entity may elect to measure investments in those associates at fair value through profit or loss in accordance with IAS 39 Financial Instruments. Please refer to the 2016 Annual Accounts for further information.
The new accounting policy under IAS 28 has been applied retrospectively to 30 June 2016 in order to comply with IAS 8 Accounting policies, changes in accounting estimates and errors.
Impact on Consolidated Statement of Comprehensive 30 June 2016
Income
(unaudited)
GBP'000
Reversal of share in net losses on associates -
Unrealised losses on associates 295
Net decrease in total comprehensive loss
for the period 295
=============
(c) Going Concern
The Board has assessed the Group's financial position as at 30 June 2017 and the factors that may impact its performance in the forthcoming year. After considering the maturity profile of the debt structure of the Group and projected cash flows, the Directors are of the opinion that it is appropriate to prepare these financial statements on a going concern basis.
(d) Critical accounting estimates and judgements in applying accounting policies
The critical accounting estimates and judgements are as outlined in the Annual Report 2016.
3. SEGMENTAL REPORTING
Operating segments are reported in a manner consistent with the manner in which the Executive Team reports to the Board, which is regarded to be the Chief Operating Decision Maker (CODM) as defined under IFRS 8. The Executive Team is responsible for allocating resources and assessing performance of the Group, as well as making strategic investment decisions, subject to the oversight of the Board of Directors. The Executive Team is responsible for the entire Group and considers it to have two operating segments. There has been one minor change in the period which has been to move Funding Knight from FinTech Ventures to Sancus BMS as this now has an established business model and work has begun to integrate into the Sancus BMS Group.
The segments are as follows:
Sancus BMS
-- Platforms with an established business model (now including Funding Knight, a wholly owned subsidiary)
-- Amberton - fundraising for Sancus BMS -- Investments in the BMS loan funds
FinTech Ventures
-- Eleven platform investments
Group Treasury
-- Group Treasury - Primarily includes cash balances and related expenses to manage the Group's listed holding company
-- SSIF (sold in March 2017, however will be included in prior year comparatives)
The accounting policies of each segment are the same as the accounting policies of the Group, therefore no differences arise between the segment report and the Group statements.
Sancus FinTech Group Treasury 30 June Sancus FinTech Group 30 June
GBP'000 BMS Ventures 2017 BMS Ventures Treasury 2016*
Revenue
Interest on loans 1,604 531 - 2,135 3,221 9 0 3,230
SSIF dividends 303 - - 303 664 - - 664
Fee and other income 3,173 1 - 3,174 1,885 54 0 1,939
------- --------- -------------- -------- -------- --------- --------- -------
Total revenue 5,080 532 - 5,612 5,770 63 0 5,833
Interest costs (1,204) - - (1,204) (2,058) 0 0 (2,058)
------- --------- -------------- -------- -------- --------- --------- -------
Gross profit 3,876 532 - 4,408 3,712 63 0 3,775
------- --------- -------------- -------- -------- --------- --------- -------
Total operating expenses (3,220) (1,019) (637) (4,876) (2,233) (1,574) (1,635) (5,442)
------- --------- -------------- -------- -------- --------- --------- -------
Net operating profit/(loss) 656 (487) (637) (468) 1,479 (1,511) (1,635) (1,667)
======= ========= ============== ======== ======== ========= ========= =======
Losses on financial
assets at fair value
through profit and
loss
SSIF loss on disposal
/ fair value adjustment - - (953) (953) - - (2,590) (2,590)
Net loss on / de-recognition
of SSIF as a subsidiary - - - - - - (1,208) (1,208)
FinTech Ventures fair
value adjustment - (13,111) - (13,111) - (2,642) - (2,642)
Other net gains / (losses) (132) (439) - (571) (2,192) 1,561 - (631)
------- --------- -------------- -------- -------- --------- --------- -------
Losses on financial
assets at fair value
through profit or loss (132) (13,550) (953) (14,635) (2,192) (1,081) (3,798) (7,071)
======= ========= ============== ======== ======== ========= ========= =======
Profit/(loss) before
tax 524 (14,037) (1,590) (15,103) (713) (2,592) (5,433) (8,738)
------- --------- -------------- -------- -------- --------- --------- -------
Income tax expense (56) - - (56) - - - -
------- --------- -------------- -------- -------- --------- --------- -------
Profit/(loss) for the
period after tax 468 (14,037) (1,590) (15,159) (713) (2,592) (5,433) (8,738)
======= ========= ============== ======== ======== ========= ========= =======
Other comprehensive
income
Items that may subsequently
be reclassified to
profit or loss:
Foreign exchange on
consolidation - - - - 169 - - 169
------- --------- -------------- -------- -------- --------- --------- -------
Total comprehensive
income/(loss) for the
year 468 (14,037) (1,590) (15,159) (544) (2,592) (5,433) (8,569)
======= ========= ============== ======== ======== ========= ========= =======
Operating (loss)/profit
attributable to:
Equity holders of the
Company 603 (14,037) (1,590) (15,024) (1,117) (2,592) (5,433) (9,142)
Non-controlling interest (135) - - (135) 404 - - 404
------- --------- -------------- -------- -------- --------- --------- -------
468 (14,037) (1,590) (15,159) (713) (2,592) (5,433) (8,738)
======= ========= ============== ======== ======== ========= ========= =======
Total comprehensive
(loss)/income attributable
to:
Equity holders of the
Company 603 (14,037) (1,590) (15,024) (948) (2,592) (5,433) (8,973)
Non-controlling interest (135) - - (135) 404 - - 404
------- --------- -------------- -------- -------- --------- --------- -------
468 (14,037) (1,590) (15,159) (544) (2,592) (5,433) (8,569)
======= ========= ============== ======== ======== ========= ========= =======
*A proforma table (Table 1) has been included to provide a like for like comparison against the prior period. This proforma excludes earnings from entities which are no longer consolidated in the June 2017 figures (SSIF, BMS Sarl, Raiseworks and Finpoint) but includes Sancus Gibraltar and Funding Knight which were not previously consolidated in 30 June 2016.
GBP'000 Sancus FinTech Group 30 June Sancus FinTech Group 31 December
BMS* Ventures Treasury 2017 BMS Ventures* Treasury 2016
ASSETS
Non-current assets
Property and equipment 627 - 7 634 602 5 11 618
Goodwill 25,033 - - 25,033 25,033 - - 25,033
Sancus BMS Loans 25,128 - - 25,128 19,216 19,216
Investment in Sancus
Loan Notes 10,642 - - 10,642 7,500 - - 7,500
------- --------- --------- -------- ------- ---------- --------- -----------
Total Sancus BMS
loans and loan equivalents 35,770 - - 35,770 26,716 - - 26,716
FinTech Ventures
Investments - 28,922 - 28,922 - 36,104 - 36,104
Other Investments 2,172 - - 2,172 874 - - 874
Joint Venture in
Amberton Asset Management 147 - - 147 527 - - 527
------- ---------- --------- -----------
Total Non-current
assets 63,749 28,922 7 92,678 53,752 36,109 11 89,872
------- --------- --------- -------- ------- ---------- --------- -----------
Current assets
Investment in SSIF - - - - 23,781 - - 23,781
Loans through platforms 92 963 - 1,055 - 4,034 - 4,034
Sancus BMS Loans 3,063 - - 3,063 3,900 - - 3,900
Loan equivalents 5,317 - - 5,317 8,205 - - 8,205
------- --------- --------- -------- ------- ---------- --------- -----------
Total Sancus BMS
loans and loan equivalents 8,380 - - 8,380 12,105 - - 12,105
Trade and other receivables 4,948 1,445 - 6,393 1,854 748 110 2,712
Cash and cash equivalents 2,640 - 4,017 6,657 5,619 480 3,517 9,616
------- --------- --------- -------- ------- ---------- --------- -----------
Total Current assets 16,060 2,408 4,017 22,485 43,359 5,262 3,627 52,248
------- --------- --------- -------- ------- ---------- --------- -----------
Total assets 79,809 31,330 4,024 115,163 97,111 41,371 3,638 142,120
======= ========= ========= ======== ======= ========== ========= ===========
EQUITY
Share premium - - 112,557 112,557 - - 111,942 111,942
Treasury shares - - (1,630) (1,630) - - (1,734) (1,734)
Distributable reserve - - - - - - 34,803 34,803
Retained earnings
allocation to segments - - (74,967) (74,967) - - (88,186) (88,186)
Retained earnings 41,206 31,305 (33,750) 38,761 46,933 41,253 (54,268) 33,918
------- --------- --------- -------- ------- ---------- --------- -----------
Capital and reserves
attributable to equity
holders of the Group 41,206 31,305 2,210 74,721 46,933 41,253 2,557 90,743
------- --------- --------- -------- ------- ---------- --------- -----------
Non-controlling interest (361) - - (361) 125 - - 125
Total equity 40,845 31,305 2,210 74,360 47,058 41,253 2,557 90,868
------- --------- --------- -------- ------- ---------- --------- -----------
LIABILITIES
Non-current liabilities
ZDP shares 24,072 - - 24,072 23,436 - - 23,436
Corporate bond 9,585 - - 9,585 8,500 - - 8,500
------- --------- --------- -------- ------- ---------- --------- -----------
33,657 - - 33,657 31,936 - - 31,936
------- --------- --------- -------- ------- ---------- --------- -----------
Current liabilities
Syndicated loan - - - - 11,920 - - 11,920
Trade and other payables 5,307 25 1,814 7,146 6,197 118 1,081 7,396
------- --------- --------- -------- ------- ---------- --------- -----------
5,307 25 1,814 7,146 18,117 118 1,081 19,316
------- --------- --------- -------- ------- ---------- --------- -----------
Total liabilities 38,964 25 1,814 40,803 50,053 118 1,081 51,252
------- --------- --------- -------- ------- ---------- --------- -----------
Total equity and
liabilities 79,809 31,330 4,024 115,163 97,111 41,371 3,638 142,120
======= ========= ========= ======== ======= ========== ========= ===========
*The net assets of Funding Knight at 31 December 2016 (GBP0.5m) were included
in FinTech Ventures. At 30 June 2017 Funding Knights' net assets of GBP0.2m
are now reported within Sancus BMS.
4. FEE AND OTHER INCOME
30 June 2017 30 June 2016
(unaudited) (unaudited)
GBP'000 GBP'000
Co-Funder fees 449 244
Earn out (exit) fees 864 661
Management fees 728 320
Transaction fees 1,133 700
Sundry income - 14
------------- -------------
3,174 1,939
============= =============
5. OTHER EXPENSES
30 June 2017 30 June 2016
(unaudited) (unaudited)
Other expenses: GBP'000 GBP'000
Audit fees 23 63
Amortisation and depreciation 142 44
Corporate Insurance 40 47
Directors Remuneration 70 109
Employment costs 2,864 2,104
Independent valuation fees 54 28
Investor relations expenses 60 -
Marketing expenses 87 365
NOMAD fees 58 38
Other office and administration costs 508 475
Pension costs 100 44
Registrar fees 27 56
Sundry 167 323
------------ ------------
4,200 3,696
============ ============
6. LOSS PER ORDINARY SHARE
Consolidated loss per Ordinary Share has been calculated by dividing the consolidated operating loss attributable to Ordinary Shareholders of GBP15,024,074 (30 June 2016 restated: loss of GBP9,141,771) by the weighted average number of Ordinary Shares outstanding during the period of 311,143,170 (30 June 2016: 230,065,329). There was no dilutive effect for potential Ordinary Shares during the current or prior periods.
Note 9 describes the warrants in issue which are currently out of the money, and therefore have not been considered to have a dilutive effect on the calculation of Loss per Ordinary Share.
30 June 2017 30 June 2016
(unaudited) (unaudited)
No. of shares 312,065,699 284,762,819
Weighted average no. of shares in issue
throughout the year 311,143,170 230,065,329
Loss per share (4.83)p (3.97)p
7. GOODWILL
30 June 2017 31 December 2016
GBP'000 GBP'000
Brought forward 25,033 14,255
Additions:
- Acquisition of Sancus Finance - 5,547
- Acquisition of Funding Knight - 738
- Acquisition of Sancus Gibraltar - 8,639
Impairment:
- Sancus Finance - (3,408)
- Funding Knight - (738)
------------- -----------------
Carried forward 25,033 25,033
============= =================
Goodwill comprises:
Sancus Jersey 14,255 14,255
Sancus Gibraltar 8,639 8,639
Sancus Finance 2,139 2,139
------- -------
25,033 25,033
======= =======
Impairment tests
The carrying amount of the goodwill arising on the acquisition of certain subsidiaries is assessed by the Board for impairment on an annual basis, in relation to the fair value of such subsidiaries.
The recoverable amount of Sancus Jersey, Sancus Finance and Funding Knight were assessed by the Board as described in the 2016 Annual Report. In the last six months there has been no indication of a material difference of underlying assumptions.
At 31 December 2016 the recoverable amount of Sancus Gibraltar was taken as being the purchase price paid by the Group and no impairment of goodwill was considered necessary given that the company had only recently been acquired and that it continued to be profitable. A full impairment review has therefore been carried out as part of the interim review and the sensitivities are noted below. The resultant valuation indicated that no impairment of goodwill was required.
Goodwill valuation sensitivities
When the discounted cash flow valuation methodology is utilised as the primary goodwill impairment test, the variables which influence the results most significantly are the discount rates applied to the future cash flows and the revenue forecasts.
The table below shows the impact on the Consolidated Statement of Comprehensive Income of stress testing the period end goodwill valuation as follows:
Decrease in revenues by 10%
Increase in discount rates by 3% (discount rates in valuation model ranges between 13.25%-15.25%)
Impairment implied by sensitivity
------------------------------- ----------------------------------
Sensitivity applied Sancus Gibraltar
30 June 2017
------------------------------- ----------------------------------
GBP'000
------------------------------- ----------------------------------
10% pa decrease in revenue -
------------------------------- ----------------------------------
3% increase in discount rates (387)
------------------------------- ----------------------------------
8. TRADE AND OTHER RECEIVABLES
30 June 2017 31 December 2016
(unaudited) (audited)
Current GBP'000 GBP'000
Dividend income receivable - 371
Loan assignment receivable 97 121
Loan interest receivable 1,767 940
Preference share dividends receivable 603 415
Other trade receivables and prepaid
expenses 1,233 865
Cash receivable from sale of BMS UK
Sarl 2,693 -
6,393 2,712
============ ================
During the period, value dated 31 May 2017, GLI sold its 5% holding in the BMS UK Sarl for a total consideration of GBP2.7m for principal and accrued interest. Cash was received on the 4 July 2017 and this was redeployed into Sancus BMS as part of the Sancus Loan Note 2 participation.
9. SHARE CAPITAL, SHARE PREMIUM & DISTRIBUTABLE RESERVE
GLI Finance Limited has the power under its articles of association to issue an unlimited number of Ordinary Shares of no par value.
During the current period and prior year the Company issued the following additional Ordinary Shares:
2017 (unaudited)
--------------- ----------------------------- --------------------------
Date No of shares Share Premium Reason for issue
issued GBP
--------------- ------------- -------------- --------------------------
2016 fourth quarter scrip
21 April 2017 2,767,586 615,239 dividend
--------------- ------------- -------------- --------------------------
2,767,586 615,239
--------------- ------------- -------------- --------------------------
2016 (audited)
------------------- ----------------------------- --------------------------------
Date No of shares Share Premium Reason for issue
issued GBP
------------------- ------------- -------------- --------------------------------
20 January 2016 51,020 18,750 Bonus entitlement
------------------- ------------- -------------- --------------------------------
2015 fourth quarter scrip
22 March 2016 237,230 79,709 dividend
------------------- ------------- -------------- --------------------------------
2016 first quarter scrip
13 June 2016 270,015 84,650 dividend
------------------- ------------- -------------- --------------------------------
30 June 2016 43,408,360 13,500,000 Acquisition of Sancus Gibraltar
------------------- ------------- -------------- --------------------------------
Increased stake in GLIF BMS
30 June 2016 11,093,247 3,450,000 Holdings Limited
------------------- ------------- -------------- --------------------------------
15 August 2016 23,020,560 7,036,374 Placing with Somerston Group
------------------- ------------- -------------- --------------------------------
2016 second quarter scrip
16 September 2016 295,943 83,974 dividend
------------------- ------------- -------------- --------------------------------
BIS Management Seller share
02 December 2016 686,784 213,591 portion
------------------- ------------- -------------- --------------------------------
2016 third quarter scrip
15 December 2016 317,590 69,552 dividend
------------------- ------------- -------------- --------------------------------
79,380,749 24,536,600
------------------- ------------- -------------- --------------------------------
31 December
30 June 2017 2016
Share Capital (unaudited) (audited)
Ordinary Shares - nil par value Shares in issue Shares in issue
Balance at start of period/year 309,298,113 229,917,364
Issued during the period/year 2,767,586 79,380,749
--------------- ---------------
Balance at end of the period/year 312,065,699 309,298,113
=============== ===============
31 December
30 June 2017 2016
Share Premium (unaudited) (audited)
Ordinary Shares - nil par value GBP'000 GBP'000
Balance at start of period/year 111,942 87,405
Issued during the period/year 615 24,537
Balance at end of the period/year 112,557 111,942
============ ===========
Treasury Shares
As at 30 June 2017 a total of 8,632,619 Ordinary Shares, with an aggregate value of GBP1,629,952 were held by a Subsidiary, Sancus BMS Group Limited and eliminated on consolidation. These shares were part consideration for this company's minority shareholding in Sancus Gibraltar purchased by the Group in June 2016.
31 December
30 June 2017 2016
(unaudited) (audited)
GBP'000 GBP'000
Balance at start of the period/year 1,734 -
Acquired through Group restructure in June 2016 - 1,900
GLI shares transferred by SBMGL to key members
of management (104) (166)
Balance at end of period/year 1,630 1,734
============ ===========
Warrants in Issue
On 25 February 2016, Shareholders approved special resolutions authorising the issue of warrants to Golf Investments Limited which confer the warrant holder the right to subscribe for up to 32,000,000 new Ordinary Shares in the capital of the Company at the following subscription prices:
10,000,000 Ordinary Shares at 40 pence per Ordinary Share;
10,000,000 Ordinary Shares at 45 pence per Ordinary Share;
12,000,000 Ordinary Shares at 55 pence per Ordinary Share.
On 16 September 2016, Shareholders approved a special resolution authorising the issue of warrants to Golf Investments Limited which confer the warrant holder the right to subscribe for up to 10,000,000 shares at 37 pence per Ordinary Share, exercisable up to 9 August 2020.
As at 30 June 2017, the above warrants were in issue but not yet exercised. On issue of these warrants, no provision has been made for a fair value adjustment, as following the Board's assessment of the fair value it was not deemed to be materially different to the current carrying value of GBPNil.
Distributable Reserve
As at 30 June 2017, the Distributable Reserve stood at GBPNil, following a transfer of this balance to retained earnings in the period. (31 December 2016, the Distributable Reserve stood at GBP34,802,740).
Whilst UK Legislation only permits companies to pay dividends out of profits for distribution (i.e. realised profits), under the Companies (Guernsey) Law 2008, this operates on a solvency model and therefore does not have any impact on dividend distribution.
10. LIABILITIES
31 December
30 June 2017 2016
(unaudited) (audited)
Non-current liabilities GBP'000 GBP'000
ZDP shares (1) 24,072 23,436
Corporate bond (2) 9,585 8,500
33,657 31,936
============ ===========
31 December
30 June 2017 2016
(unaudited) (audited)
Current liabilities GBP'000 GBP'000
Syndicated Loan (3) - 11,920
Accounts payable 2,765 2,582
Accruals and other payables 1,625 1,624
Dividend payable - 215
Deferred income 205 -
Other staff costs 151 375
Payable to related party* 2,400 2,400
Preference shares - 200
7,146 19,316
============ ===========
31 December
30 June 2017 2016
(unaudited) (audited)
GBP'000 GBP'000
Total liabilities 40,803 51,252
============ ===========
30 June 2017 30 June 2016
(unaudited) (unaudited)
Interest costs on debt facilities GBP'000 GBP'000
ZDP Shares (1) 636 636
Syndicated Loan (3) 225 1,398
Corporate bond (2) 314 -
1,175 2,034
============= ============
*Relates to the amount owing by Sancus BMS Group Limited to Sancus IOM Holdings Limited for its subscription for preference shares, which is due by mutual agreement between these companies, and does not bear interest. Refer to Note 14.
(1) ZDP shares
The ZDP Shares have a maturity date of 5 December 2019 with a final capital entitlement of GBP1.30696 per ZDP Share.
Refer to the Company's Memorandum and Articles of Incorporation for full detail of the rights attached to the ZDP Shares. This document can be accessed via the Company's website www.glifinance.com.
During the period, the interest costs accrued on the ZDPs amounted to GBP0.6m (30 June 2016: GBP0.6m), at an average interest rate of 5.5% (30 June 2016: 5.5%).
In accordance with article 7.5.5 of the Company's Memorandum and Articles of Incorporation, the Company may not incur more than GBP30.0m of long term debt without the prior approval from the ZDP shareholders. The Memorandum and Articles also specify that two debt cover tests must be met in relation to the ZDPs.
At 30 June 2017 the Company was in compliance with these covenants as Cover Test A was 3.31 (minimum of 1.7) and Cover Test B was 4.17 (minimum of 3.25).
At the period end senior debt borrowing capacity amounted to GBP20m after the repayment of the Syndicated Loan (see Note 10.3).
(2) Corporate Bond
On 30 June 2016 GLI Finance issued GBP10m corporate bonds as part of the acquisition of Sancus Gibraltar. As at 30 June 2017 Sancus BMS Group Limited holds GBP0.4m of these (31 December 2016 GBP1.5m), leaving a balance on consolidation of GBP9.6m (31 December 2016 GBP8.5m). The bond maturity date is 30 June 2021 and they bear interest at 7%.
During the period the interest costs to the Group on the bonds amounted GBP0.3m (30 June 2016: GBPNil).
(3) Syndicated Loan Facility
On 15 March 2017, the Syndicated Loan Facility of GBP14.9m was repaid. GBP11.9m was repaid to external parties and GBP3.0m was paid to Sancus BMS Group Limited to settle their participation in the loan.
11. CASH GENERATED FROM OPERATIONS
30 June 2017 30 June 2016
(unaudited) (unaudited)
GBP'000 GBP'000
Loss for the period (15,159) (8,738)
Adjustments for:
Net losses on FinTech Ventures 13,111 2,642
Net losses on fair value of SSIF 953 2,590
Net loss on associate of SSIF - 1,208
Other net losses 571 631
Non-cash capitalisation of loan interest payable - 9
Non-cash item on finance costs on ZDPs 636 636
Amortisation/depreciation of fixed assets 142 21
Other non-cash - 20
Changes in working capital:
Trade and other receivables (989) (2,192)
Trade and other payables (250) (9,815)
Cash outflow from operations (985) (12,988)
============ ======================
12. CONSOLIDATED SUBSIDIARIES
The Directors consider the following entities as wholly and partly owned subsidiaries of the Group and their results and financial positions are included within its consolidated results.
Subsidiary entity Date of Country of Nature of Percentage
incorporation incorporation holding holding
--------------------------- ---------------- ------------------ ---------------- -----------
Sancus BMS Group
Limited (formerly Directly held
Sancus Group Limited) 27 December -
("SBMS") 2013 Guernsey Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
Sancus BMS Holdings
Limited ("SBHL")
(formerly GLIF BMS Indirectly
Holdings Limited 5 November held -
("GBHL")) 2012 United Kingdom Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
Indirectly
BMS Finance AB Limited 24 November held -
("BMS Finance AB") 2006 United Kingdom Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
Directly held
GLI Finance (UK) 21 October -
Limited 2014 United Kingdom Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
Sancus (Jersey) Limited Indirectly
(formerly Sancus held -
Limited) 1 July 2013 Jersey Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
Indirectly
Sancus (Guernsey) held -
Limited 18 June 2014 Guernsey Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
Indirectly
Sancus (Gibraltar) held -
Limited 10 March 2015 Gibraltar Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
Directly held
17 February -
Funding Knight Limited 2011 United Kingdom Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
Sancus Finance Limited Indirectly
(formerly Platform held -
Black) 7 January 2011 United Kingdom Equity Shares 98.2%
--------------------------- ---------------- ------------------ ---------------- -----------
Directly held
FinTech Ventures 9 December -
Limited 2015 Guernsey Equity Shares 100%
--------------------------- ---------------- ------------------ ---------------- -----------
13. FINTECH VENTURES AND OTHER INVESTMENTS
The Directors consider the following entities as associated undertakings of the Group as at 30 June 2017.
Name of Investment: Nature of holding Country of Percentage Measurement
incorporation holding
------------------------ ------------------ --------------- ----------- ------------
FinTech Ventures:
------------------------ ------------------ --------------- ----------- ------------
LiftForward Inc. Directly held United States 18.40% Fair Value
- Equity of America
------------------------ ------------------ --------------- ----------- ------------
Finexkap Directly held France 29.80% Fair Value
- Equity
------------------------ ------------------ --------------- ----------- ------------
Ovamba Solutions Directly held United States 20.48% Fair Value
Inc. - Equity of America
------------------------ ------------------ --------------- ----------- ------------
The Credit Junction Directly held United States 22.26% Fair Value
Holdings - Equity of America
------------------------ ------------------ --------------- ----------- ------------
Funding Options Limited Directly held United Kingdom 28.90% Fair Value
- Equity and
Preference
Shares
------------------------ ------------------ --------------- ----------- ------------
TradeRiver Finance Directly held Guernsey 46.7% Fair Value
Limited - Equity and
Preference
Shares
------------------------ ------------------ --------------- ----------- ------------
TradeRiver USA Inc Directly held United States 30.25% Fair Value
- Equity and of America
Preference
Shares
------------------------ ------------------ --------------- ----------- ------------
Open Energy Group Directly held United States 23.1% Fair Value
Inc - Equity of America
------------------------ ------------------ --------------- ----------- ------------
MytripleA Directly held United Kingdom 15.00% Fair Value
- Equity
------------------------ ------------------ --------------- ----------- ------------
UK Bond Network Limited Directly held United Kingdom 19.24% Fair Value
- Equity
------------------------ ------------------ --------------- ----------- ------------
Finpoint Limited Directly held United Kingdom 21.12% Fair Value
- Equity
------------------------ ------------------ --------------- ----------- ------------
Other Investments:
------------------------ ------------------ --------------- ----------- ------------
BMS Finance (Ireland) Directly held Luxembourg 30.25% Fair Value
Sarl - Equity
------------------------ ------------------ --------------- ----------- ------------
BMS Finance (UK) Directly held Luxembourg 25.25% Fair Value
Sarl - Equity
------------------------ ------------------ --------------- ----------- ------------
No significant restrictions exist on the ability of these associates to transfer funds to the Group in the form of cash dividends, or to repay loans or advances made by the Group.
14. RELATED PARTY TRANSACTIONS
Transaction with the Directors/Executive Team
Non-executive Directors
As at 30 June 2017, the non-executive Directors' annualised fees, excluding all reasonable expenses incurred in the course of their duties which were reimbursed by the Company, were as detailed in the table below:
30 June 2017 31 December 2016
GBP GBP
Patrick Firth (Chairman) 50,000 50,000
Frederick Forni (1) - 37,500
James Carthew (1) - 40,000
John Whittle 42,500 40,000
(1) Resigned on 23 September 2016
There was no increase in the Directors' base fees during the period ended 30 June 2017, but Mr Whittle received an additional GBP2,500 as Chairman of the Audit Committee. Total Directors' fees charged to the Company for the period ended 30 June 2017 were GBP45,628 (30 June 2016: GBP86,380) with GBPNil (31 December 2016: GBPNil) remaining unpaid at the period end.
Executive Team
For the period ended 30 June 2017, the Executive Team members' annual remuneration from the Company, excluding all reasonable expenses incurred in the course of their duties which were reimbursed by the Company, were as detailed in the table below:
30 June 2017 31 December 2016
Executive Executive Bonus
Fixed Salary Bonus Scheme Fixed Salary Scheme
GBP GBP GBP GBP
Andrew Whelan 240,000 - 240,000 -
Russell Harte
(1) 150,000 - 150,000 -
Emma Stubbs (2) 150,000 - 120,000 -
Marc Krombach
(3) - - 130,000 -
Louise Beaumont
(4) - - 85,000 -
(1) Annual salary of GBP150,000. Mr Harte ceased employment on 1 July 2017.
(2) Annual salary of GBP150,000 increased from GBP120,000 with effect from 1 January 2017.
(3) Annual salary of GBP130,000. Mr Krombach ceased employment on 29 April 2016. (4) Annual salary of GBP85,000. Ms Beaumont ceased employment on 27 September 2016.
At the Company's annual general meeting ("AGM") held on 10 May 2017 Shareholders approved terms for a revised long-term incentive scheme, pursuant to which members of the Executive Team will be entitled to receive options to subscribe for new Ordinary Shares in the capital of the Company ("Share Options") at strike prices of 25p, 30p and 35p and will vest on the first, second and third anniversaries of the respective grant (the "New Scheme"). The New Scheme took effect from the date of the AGM and replaces the previous Executive Bonus Scheme. As at the period-end no Share Options were in issue.
Directors' and Persons Discharging Managerial Responsibilities ("PDMR") shareholdings in the Company
As at 30 June 2017, the Directors had the following beneficial interests in the Ordinary Shares of the Company
30 June 2017 31 December 2016
No. of Ordinary % of total No. of Ordinary % of total
Shares Held issued Ordinary Shares Held issued Ordinary
Shares Shares
Patrick Firth (Chairman) 278,669 0.09 271,049 0.09
John Whittle 27,750 0.01 - N/A
Andrew Whelan 6,961,003 2.23 3,800,000 1.23
Emma Stubbs 323,667 0.10 179,610 0.06
During the period, Mr Firth, Mr Whittle, Mr Whelan and Mrs Stubbs received total amounts of GBP1,694, GBPNil, GBP43,506 and GBP2,022 (31 December 2016: GBP3,131, GBPNil, GBP41,394 and GBP790) respectively from the Company by way of dividends on their Ordinary Share holdings in the Company.
See Note 17 for details of the Directors' interests in the Ordinary Shares of the Company between the period end and the date of this report.
As at 30 June 2017, there were no unexercised share options for Ordinary Shares of the Company (31 December 2016 and 30 June 2016: Nil Ordinary Shares).
During the period Mr Whelan received GBP20,567 in relation to the coupon on his holding of GBP592,500 GLI Bonds (30 June 2016: Nil).
Transactions with connected entities
The following significant transactions with connected entities took place during the current period:
30 June 2017 30 June 2016
Balance Amount for Balance Amount for
GBP'000 the year GBP'000 the year
provided provided
GBP'000 GBP'000
-------------------------------------------- --------- ----------- --------- -----------
Platform loans & corresponding
interest
FinTech Ventures Investments 3,260 507 4,043 137
Platform preference shares & corresponding
interest
GLIF and investments in FinTech
Ventures 4,512 277 6,159 68
Payable to related party
Intercompany with Sancus IOM Ltd 2,400 - 2,400 -
-------------------------------------------- --------- ----------- --------- -----------
There is no ultimate controlling party of the Company.
All platform loans bear interest at a commercial rate.
All preference shares bear interest at a commercial rate.
15. FINANCIAL INSTRUMENTS
Fair Value Estimation
The financial assets and liabilities measured at fair value in the Consolidated Statement of Financial Position are grouped into the fair value hierarchy as follows:
31 December 31 December
30 June 2017 30 June 2017 2016 2016
(unaudited) (unaudited) (audited) (audited)
Level 1 Level 3 Level 1 Level 3
Assets GBP GBP GBP GBP
Investment in SSIF - - 23,781 -
FinTech Ventures investments - 28,922 - 36,104
Investments in Sancus
Loan Notes - 10,642 - 7,500
Other investments at
Fair Value - 2,172 - 874
-------------- ------------- ------------ ------------
Total assets at Fair
Value - 41,736 23,781 44,478
============== ============= ============ ============
The classification and valuation methodology remains as noted in the 2016 Annual Report. In relation to the Level 3 valuation methodology for the FinTech Ventures investments the Board assesses the fair value based on either the value at the last capital transaction or valuation techniques, performed internally or by an independent third-party expert. Factors considered in these valuation analyses included discounted cashflows, comparable company and comparable transaction analysis. Key inputs used in the discounted cashflows include costs of equity, illiquidity discount rates, revenue and costs growth rates, interest margins, bad debt expense and tax rates. These are consistent with the inputs described in the 2016 Annual Report and adjusted where necessary. The Board considers all the information presented to it, including indicative bids, internal analysis, and independent valuations, in order to reach, in good faith, their value determination.
The investment in SSIF was sold on the 8 March 2017, raising GBP22.7m in cash.
FinTech Ventures' Investments Equity Loans Total
30 June 2017 GBP GBP GBP
Opening fair value 34,699 1,405 36,104
New investments/loans advanced - 525 525
Transfer on sale of Fund 1,356 3,650 5,006
Reclassification of loan - 419 419
Disposals/loan repayments - (21) (21)
Gains/(losses) recognised in profit
and loss:
- Realised - 128 128
- Unrealised (9,410) (3,829) (13,239)
-------- -------- ---------
Closing fair value 26,645 2,277 28,922
======== ======== =========
Equity Loans Total
31 December 2016 GBP GBP GBP
Opening fair value 34,028 4,778 38,806
New investments/loans advanced 4,601 4,077 8,678
Transfer from Associate to Subsidiary
- Sancus Finance (2,536) - (2,536)
Disposals/loan repayments (500) (912) (1,412)
Gains/(losses) recognised in profit
and loss:
- Realised (500) (1,001) (1,501)
- Unrealised (394) (5,537) (5,931)
-------- -------- --------
Closing fair value 34,699 1,405 36,104
======== ======== ========
Assets at Amortised Cost
31 December
30 June 2017 2016
(unaudited) (audited)
GBP'000 GBP'000
Sancus BMS loans and loan equivalents 33,508 31,321
Loans through platforms 1,055 4,034
Trade and other receivables 6,393 2,712
Cash and cash equivalents 6,657 9,616
Total assets at amortised cost 47,613 47,683
============= ============
The movement in the period included the sale of GLI's 5% holding in the BMS UK Sarl for a total consideration of GBP2.7m which was included within the Sancus BMS Loans and loan equivalents line above as at 31 December 2016. Cash was received on the 4 July 2017 and this was redeployed into Sancus BMS as part of the Sancus Loan Note 2 participation. Loans through the platforms has reduced in the period from net repayments.
Liabilities at Amortised Cost
31 December
30 June 2017 2016
(unaudited) (audited)
GBP'000 GBP'000
ZDP Shares 24,072 23,436
Syndicated Loan - 11,920
Corporate Bond 9,585 8,500
Trade and other payables 7,146 7,396
Total Liabilities at amortised cost 40,803 51,252
============= ============
Refer to Note 10 for further information on liabilities.
16. COMMITMENTS AND CONTINGENCIES
As at 30 June 2017, the Group had the following aggregate unrecognised commitments to loans denominated in Sterling, Euro and US Dollar, due to its Subsidiaries, Associates and other underlying investments:
Aggregate loan commitment by currency 31 December
30 June 2017 2016
(unaudited) (audited)
GBP'000 GBP'000
Sterling 60 1,066
Euro 340 703
US Dollar 2,303 1,297
------------- ------------
2,703 3,066
============= ============
17. POST PERIOD END EVENTS
Directors and PDMR Interests
At the date of these financial statements, the Directors beneficial interests in the Ordinary Shares of the Company were:
No. of Ordinary % of total
Shares Held issued Ordinary
Shares
Patrick Firth (Chairman) 278,669 0.09
John Whittle 104,550 0.03
Andrew Whelan 6,961,003 2.23
Emma Stubbs 323,667 0.10
FCA Funding Knight Authorisation
On the 14 July 2017, it was announced that Funding Knight, the specialist peer to peer/marketplace lender has been granted full authorisation from the Financial Conduct Authority (FCA). Funding Knight has been operating under interim permissions since 2014, when the FCA commenced the process of regulating the peer-to-peer industry. This is an important milestone for the business and demonstrates its commitment to maintaining the expected standards of regulatory compliance designed to protect both funders and clients.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFSRAIIFFID
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