19 September
2024
Distribution Finance Capital
Holdings plc
("DF Capital" or the
"Company" together with its subsidiaries the
"Group")
Results for the six months
ended 30 June 2024
Delivering significant
growth in profitability
Distribution Finance Capital
Holdings plc, the specialist bank providing working capital
solutions to dealers and manufacturers across the UK, today
announces its results for the six months ended 30 June
2024.
• Delivered £9.2m
profit before tax up 187% on comparable period and double FY23
outturn (H1: 2023: £3.2m, FY23: £4.6m).
• Record new lending up 17% to £710m (H1 2023: £607m);
supported by £1.1bn of facilities (H1 2023: £926m) and 1,250
dealers (H1 2023: 1,152).
•
Loan book reached £603m, up 16% (H1 2023:
£519m)
•
Net interest margin (NIM) holding strong at 7.8%
(H1 2023: 7.5%), well ahead of 6% target.
• £1.7m recovery on impaired RoyaleLife balance recognised in
H1 2024, with an additional £3m potential upside yet to be
recognised and anticipated in FY25.
• Strong arrears management resulted in low cost of risk
(adjusted for RoyaleLife) at 0.61% (H1 2023: 0.41%), demonstrated
by arrears levels (1 day+ past due) remaining at 0.5% of loan
book
• Continued cost efficiency, despite inflationary pressures,
improved cost-to-income ratio to 58.8% (H1 2023: 61.5%).
• Double-digit post-tax return on equity of 10.3% achieved (H1
2023: 9.1%), demonstrating accelerating momentum to mid-to-high
teens returns target.
•
Retail deposits total £579m (H1 2023: £498m) from
over 14,600 accounts.
• Tangible net assets grew to £107m (H1 2023: £98m), with TNAV
per share up 4.9p to 59.6p (H1 2023: 54.7p).
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
6-month
|
6-month
|
12-month
|
|
|
|
|
|
|
Financial
Highlights
|
|
|
|
|
Gross
revenues (£m)
|
37.9
|
27.3
|
60.4
|
|
Profit
before taxation (£m)
|
9.2
|
3.2
|
4.6
|
|
Profit
after taxation (£m)
|
6.7
|
2.3
|
3.2
|
|
Loan book
principal (£m)
|
603
|
519
|
581
|
|
Net
assets (£m)
|
107.6
|
98.8
|
100.4
|
|
Customer
deposits (£m)
|
579.0
|
498.4
|
574.6
|
|
Regulatory capital (£m)
|
100.0
|
80.2
|
89.5
|
|
Common
Equity Tier 1 capital ratio
|
23.2%
|
22.7%
|
22.8%
|
|
Regulatory capital (as a % of RWA)
|
25.9%
|
22.7%
|
25.8%
|
|
Gross
yield
|
12.1%
|
10.6%
|
11.1%
|
|
Net
interest margin
|
7.8%
|
7.5%
|
7.6%
|
|
Average
cost of retail deposits
|
5.1%
|
3.7%
|
4.3%
|
|
Cost of
risk
|
0.04%
|
1.55%
|
2.28%
|
|
Impairment loss coverage on loans to customers
|
0.83%
|
1.38%
|
2.50%
|
|
Cost
income ratio
|
59%
|
61%
|
58%
|
|
Basic
earnings per share (pence)
|
3.8
|
1.0
|
1.8
|
|
Tangible
net asset value per share (pence)
|
59.6
|
54.7
|
55.6
|
|
|
|
|
|
|
Key Performance
Indicators
|
|
|
|
|
Loans
advanced to customers (£m)
|
710
|
607
|
1,200
|
|
Number of
dealer customers
|
1,250
|
1,152
|
1,182
|
|
Number of
manufacturer partners
|
90
|
86
|
89
|
|
Total
credit available to dealers (£m)
|
1,088
|
926
|
1,030
|
Post period end highlights and outlook
•
Loan book seeing normalised seasonality over
summer months in line with expectations
•
Launched maiden business saving
account
•
British Business Bank ENABLE Guarantee extended
to £350m; headroom of £10m in Tier 2 capital facility.
•
Potential aggregate capital capacity to grow loan
book to at least £850m, without the requirement for additional
dilutive Tier 1 equity raise. Capacity to support loan book growth
beyond £850m at £100m per annum through organic capital growth from
retained earnings.
• Significant progress in organic build of hire purchase
capability to support existing dealers and manufacturers with sales
aid financing, expected to launch H1 2025; will result in
significant expansion of market opportunity.
• FY24 year-end loan book expected to be in the range of
£650-700m in line with Board expectations.
Carl D'Ammassa, Chief Executive,
commented: "The Group has enjoyed
another period of growth which has unlocked significant
improvements in profitability. We continue to scale the bank
efficiently in our core inventory finance lending space, whilst
also making investments to bring to life our stated ambitions to
become a multi-product lender. This hire purchase product will
significantly expand our addressable market opportunity multiple
times whilst also further deepening our relationship with our
existing manufacturer and dealer base. We expect to launch this
product for end-users in H1 2025, with consumer lending being
subject to regulatory approval.
These results are a credit to the
entire DF Capital team, and we remain optimistic about our full
year performance, despite the on-going macro-economic outlook
driven by higher interest rates."
For further information
contact:
|
Distribution Finance Capital Holdings plc
|
|
|
Carl D'Ammassa - Chief Executive
Officer
|
+44 (0) 161 413 3391
|
|
Kam Bansil - Head of Investor
Relations
|
+44 (0) 7779 229508
|
|
http://www.dfcapital-investors.com
|
|
|
Panmure Liberum Limited (Nomad and Joint
Broker)
|
+44 (0) 203 100 2000
|
|
Chris Clarke
William King
Anake Singh
|
|
Chief Executive's
Statement
Continuing to build scale
and enhance investor returns
We are delighted to report another
period of strong profitability and continued momentum, delivering
pre-tax profit of £9.2m for the first half of the year including
£1.7m recovery on a previously impaired loan, which is ahead of
expectations and up 187% on the same period last year (H1 2023:
£3.2m). We've continued to scale the bank whilst increasing
returns and have carefully managed growth despite the challenges of
the macro-economic and higher interest rate environment.
During the period, we originated
record levels of new loans, increasing the loan book to £603m (30
June 2023: £519m; 31 December 2023 £581m), whilst delivering net
interest margin of 7.8% (H1 2023: 7.5%) significantly above our 6%
target. Accordingly, earnings per share in the period increased to
3.8p (H1 2023: 1.0p) and the Group's tangible net asset value per
share reached 59.6p, up 4 pence per share since year end (30 June
2023: 54.7p; 31 December 2023: 55.6p).
The strength of financial
performance and our expectations for the balance of the year
reiterate the Board's belief that the Group's strategy is
effective, that our products and services resonate with customers
and accordingly we can continue to profitably scale the bank,
moving at pace on our journey to deliver a mid-to-high teens return
on capital over the medium term.
Growing our market share
with record loan origination
The Group has continued to see
strong momentum originating new loans of £710m during the six-month
period to 30 June 2024, up 17% on the equivalent period in 2023 (H1
2023: £607m). We have increased our market share across a number of
sectors and now support 90 manufacturer partners (30 June 2023: 86;
31 December 2023: 89) and 1,250 dealers (30 June 2023: 1,152; 31
December 2023: 1,182) having added 165 new dealers in the period.
Aggregate dealer loan facilities at the end of the period totalled
£1,088m, up 17% on the prior year (30 June 2023: £926m) and up 6%
on the end of FY23 (31 December 2023: £1,030m).
The Group's loan book ended the
period at £603m up 16% on the equivalent period in the prior year
(30 June 2023: £519m) and in line with seasonal expectations.
New loan origination has undoubtedly been strong throughout the
period, however the Group has seen a normalisation of the
seasonality in loan repayments (i.e. an acceleration of dealer
sales during the period from March to September), a first since the
onset of the global pandemic. It is somewhat reassuring to finally
see this normalisation unfold, enabling us to better forecast
seasonal factors that impact the demand for our lending products in
certain sectors at particular points of the year. The Group's loan
book closed August 2024 broadly flat at £593m, in line with
seasonal expectations for the summer months of low manufacturer
product and heightened dealer sales.
Average stock days, which measures
the average age of loans outstanding, remains well within sector
tolerances, extending marginally on a portfolio basis to 149 days
at the period end (31 December 2023: 148 days; 30 June 2023: 131
days).
Portfolio By Sector
The following table analyses the
portfolio at the reporting date by principal
outstanding:
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
£million
|
%
|
£million
|
%
|
£million
|
%
|
|
|
|
|
|
|
|
|
|
Leisure:
|
|
|
|
|
|
|
|
Lodges
and holiday homes
|
117.8
|
19.5%
|
157.1
|
30.3%
|
147.8
|
25.5%
|
|
Motorhomes and caravans
|
163.4
|
27.1%
|
97.1
|
18.7
%
|
131.0
|
22.6%
|
|
Marine
|
62.8
|
10.4%
|
48.1
|
9.3%
|
55.5
|
9.6%
|
|
Motorsport
|
33.6
|
5.6%
|
28.8
|
5.5%
|
27.2
|
4.7%
|
|
Automotive
|
21.6
|
3.6%
|
4.1
|
0.8%
|
8.3
|
1.4%
|
|
|
399.2
|
66.2%
|
335.2
|
64.5%
|
369.8
|
63.7%
|
|
Commercial:
|
|
|
|
|
|
|
|
Transport
|
104.3
|
17.3%
|
112.1
|
21.6%
|
130.3
|
22.4%
|
|
Industrial equipment
|
32.8
|
5.4%
|
31.5
|
6.1%
|
35.7
|
6.1%
|
|
Agricultural equipment
|
26.2
|
4.4%
|
25.6
|
4.9%
|
26.7
|
4.6%
|
|
Other
serialised assets
|
3.5
|
0.6%
|
-
|
0.0%
|
-
|
0.0%
|
|
|
166.8
|
27.7%
|
169.2
|
32.6%
|
192.7
|
33.2%
|
|
|
|
|
|
|
|
|
|
Wholesale and receivables
funding
|
36.6
|
6.1%
|
14.9
|
2.9%
|
18.2
|
3.1%
|
|
|
|
|
|
|
|
|
|
Total loan book
principal1
|
602.6
|
100%
|
519.3
|
100%
|
580.7
|
100%
|
1 Principal balance
outstanding at the reporting date for loans and advances to
customers.
Motorhome and caravan new loan
origination has been strong during the period, leading to a 25%
growth in the loan book in this sector, predominantly from existing
dealers, as at 30 June 2024 compared to 31 December 2023. Whilst
this is positive, the pace of loan book growth in this sector has
been somewhat slowed by strong dealer sales and the associated loan
repayments given we are repaid in full once an individual asset is
sold. The automotive sector has also grown strongly in this period
by over 150% from a relatively low base at the end of 2023, driven
entirely by increased dealers and facility utilisation. Our
revolving inventory finance facility, "Flex", has proven popular
with automotive dealers with faster moving asset sales
cycles.
Lending in the lodges and holiday
home sector reduced as expected, as dealers and park operators held
less stock as these large volume, discretionary purchases have been
impacted by higher interest rates. Park operators have seen
continued demand for holiday rental units and some dealers have
utilised our rental lending product, to allow them to generate
income from unsold units, whilst also making capital repayments
against our loans. The fallout from RoyaleLife's failure last year
continues to have some structural impact across the market with a
number of new operators of RoyaleLife's former parks continuing in
their efforts to stabilise operations, which has seen subdued
demand for new units from these parks.
Across the transport sector,
demand from end-users has been muted. This has driven competitive
tension across manufacturers and a higher degree of product
discounting. Dealers in this market have been carefully managing
their inventory levels to better match demand, a trend that has
continued over the summer months, but expected to improve during
September in line with the vehicle registration plate
change.
Whilst very early in its
evolution, we have enhanced our product offering to fund serialised
faster moving higher volume assets. We expect this to be an area of
significant growth for us as we look beyond 2024, supporting
manufacturers, distributors and dealers in the renewables,
technology and telecoms markets as an example.
Our wholesale and receivables
funding activities have continued, growing from £18.2m at 31
December 2023 to £36.6m at 30 June 2024. Working with
partners (i.e. lending to lenders) allows us to build market
intelligence on the dynamics of lending products that we have
future ambitions to launch ourselves. Additionally, we provided
short term receivables financing and invoice discounting to
existing dealers, manufacturers and distributors. We achieve
strong risk adjusted returns from these product sets, but do not
expect lending in these segments to exceed more than 10-15% of the
Group's entire loan book.
Summarised Statement of Comprehensive
Income
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
6-month
|
6-month
|
12-month
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Gross
revenues1
|
37,889
|
27,259
|
60,350
|
|
Interest
expense
|
(15,383)
|
(9,126)
|
(22,336)
|
|
Net
income2
|
22,506
|
18,133
|
38,014
|
|
|
|
|
|
|
Operating
expenses
|
(13,226)
|
(11,148)
|
(21,843)
|
|
Impairment charges
|
(106)
|
(3,786)
|
(11,598)
|
|
Profit before
taxation
|
9,174
|
3,199
|
4,573
|
|
|
|
|
|
|
Taxation
|
(2,443)
|
(938)
|
(1,418)
|
|
|
|
|
|
|
Profit after
taxation
|
6,731
|
2,261
|
3,155
|
|
|
|
|
|
|
Other
comprehensive income/(loss)
|
74
|
(53)
|
183
|
|
|
|
|
|
|
Total comprehensive income
for the period
|
6,805
|
2,208
|
3,338
|
|
|
|
|
|
|
Basic earnings per
share
|
3.8p
|
1.0p
|
1.8p
|
1 Sum of interest and similar
income, fee income less fee expenses, net gains/(losses) from
derivatives measured at fair value through profit or loss and other
operating income
2 Gross revenues less
interest and similar expenses
Summarised Statement of Financial Position
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Cash and
balances at central banks
|
86,036
|
46,642
|
89,552
|
|
Loans and
advances to banks
|
3,496
|
5,067
|
3,475
|
|
Investment securities
|
6,175
|
24,528
|
14,839
|
|
Loans and
advances to customers
|
596,771
|
513,787
|
568,044
|
|
Taxation
asset
|
5,265
|
7,574
|
7,166
|
|
Other
assets
|
8,462
|
5,639
|
8,862
|
|
Total
assets
|
706,205
|
603,237
|
691,938
|
|
|
|
|
|
|
Customer
deposits
|
579,012
|
498,357
|
574,622
|
|
Financial
liabilities
|
1,127
|
1,317
|
1,255
|
|
Subordinated liabilities
|
10,225
|
-
|
10,221
|
|
Taxation
liabilities
|
670
|
-
|
73
|
|
Other
liabilities
|
7,598
|
4,723
|
5,353
|
|
Total
liabilities
|
598,632
|
504,397
|
591,524
|
|
|
|
|
|
|
Total
equity
|
107,573
|
98,840
|
100,414
|
|
|
|
|
|
|
Tangible net asset value per
share (pence)
|
59.6
|
54.7
|
55.6
|
Ongoing strong Net Interest
Margin
We have continued to see the
positive impact of UK base rate movements on the Group's Net
Interest Margin ("NIM"), which is gross yield less interest
expense. This increased during the period to 7.8% (H1 2023: 7.5%),
being well ahead of our NIM target of 6%.
Gross yield increased by 14% to
12.1% (H1 2023: 10.6%), as the increasing base rate has been priced
into newly originated loans. This coupled with a higher average
loan book through the period saw gross revenues, which
predominantly comprise interest and similar income, increase by 39%
to £37.9m (H1 2023: £27.3m).
In line with the base rate
increases over the life of the deposit book, the average cost of
retail deposits increased during the period to 5.1% (H1 2023:
3.7%). As the Group's deposit book is predominantly an array of
fixed rate tenors, it takes time for increasing deposit rates to
fully flow through to the deposit book as a whole, only impacting
as older maturing deposits are replaced by newer deposits at higher
rates. Accordingly, the loan book has repriced more quickly than
the deposit book given its shorter average tenor, which has driven
much of the favourable NIM expansion. We expect ongoing
favourability in NIM in the near-term, however it is less likely to
be as significant over the medium term; unwinding as the base rate
reduces and moving more towards our 6% target over time.
Continuing to deliver
operational efficiencies
As we continue to scale the bank,
we unlock latent operational leverage. During the period, we have
delivered a reduction in the cost to income ratio to 59% (H1 2023:
61%). Whilst our platform is already highly digitised, we continue
to recognise the importance of further automation and the need for
us to leverage technology further to provide continuous
enhancements to our service proposition as a competitive
differentiator. These investments in robotic process automation and
character-recognition technologies, as well as deploying new market
leading technology solutions have enabled us to provide new
products to our customers. The people resource we require over the
near term to scale our existing lending and retail deposit
propositions are substantively embedded in the business already,
allowing us to unlock further operational leverage on the existing
loan book as we continue to grow our lending. We have commenced the
organic build of and investment in a hire purchase lending
capability, which will continue through the balance of this year,
with the launch of associated new lending products expected during
2025.
Operating expenses in the period
reached £13.2m, being an increase of 19% (H1 2023: £11.1m) however
total operating income increased by 24% over the same period being
£22.5m in H1 2024 (H1 2023: £18.1m), thus demonstrating the
positive widening of the gap between our costs and our
income.
Strong credit
performance
Despite the challenging
macro-economic and higher interest rate environment, the Group's
overdue accounts have continued to perform well and ahead of
expectations through the period. 20 dealers (H1 2023: 29),
including 10 cases in legal recovery, had arrears at least one day
past due, representing c1.6% (H1 2023: c 2.5%) of the Group's
dealer base. The Group's total arrears balance represented c0.5%
(H1 2023: 2.5%) of its entire loan book. This very low level
of arrears, which is better than expectations, has continued over
the summer months, with total arrears remaining constant at c0.5%
of the Group's entire loan book and 23 dealers in arrears or in
legal recovery at the end of August 2024.
This strong credit performance
continues to reflect the high quality of our dealer base and our
capability to remediate defaults through product redistribution via
our customer network or the sale of our secured assets to other
parties.
The following tables analyse the
Group's arrears balance (principal, fees and interest) and total
principal outstanding on the respective loan receivable of the
lending portfolio at the respective reporting dates.
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Arrears -
principal repayment, fees and interest:
|
|
|
|
|
1 - 30
days past due
|
427
|
475
|
696
|
|
31 - 60
days past due
|
572
|
1,226
|
265
|
|
61 - 90
days past due
|
474
|
219
|
946
|
|
91 + days
past due
|
1,519
|
11,155
|
12,102
|
|
|
2,992
|
13,075
|
14,009
|
|
Total % of loan
book
|
0.5%
|
2.5%
|
2.4%
|
|
|
|
|
|
|
Associated principal balance:
|
|
|
|
|
1 - 30
days past due
|
2,587
|
1,400
|
1,253
|
|
31 - 60
days past due
|
1,200
|
1,385
|
717
|
|
61 - 90
days past due
|
439
|
-
|
1,900
|
|
91 + days
past due
|
2,294
|
13,006
|
12,821
|
|
|
6,520
|
15,791
|
16,691
|
|
Total % of loan
book
|
1.1%
|
3.0%
|
2.9%
|
Net impairment losses for the six
months ended 30 June 2024 which included a £1.7m recovery on a
previously impaired loan, were £0.1m (H1 2023: £3.8m), representing
a cost of risk for the six months ended 30 June 2024 of 0.04% (H1
2023: 1.55%).
As at 31 December 2023 an almost
full provision of c£10m had been made in respect of RoyaleLife and
associated companies ("RoyaleLife") equivalent to the customers
entire outstanding unrecoverable balance at that time. Since
year-end we have proactively looked to make the fullest recovery
possible and have recovered assets and cash of £1.7m, with this
write back reducing impairment losses in the period
accordingly. Excluding this RoyaleLife recovery, the cost of
risk would have been 0.61% for the period (H1 2023: 0.41% excluding
Royale Life impairments made in this period), well below our
through-the-cycle expectations of 1%. Additionally, in relation to
RoyaleLife, the Group has agreed a further £3m settlement under
personal guarantees with a related party of the guarantor. This
settlement is subject to the sale of property and proceeds are
anticipated to be received in the financial year ending 31 December
2025.
Security Position
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
%
|
%
|
%
|
|
|
|
|
|
|
Loan to
wholesale value1
|
83%
|
88%
|
85%
|
1 Wholesale price is the
invoice value paid by the dealer to the
manufacturer
In our core inventory finance
product, the Group's lending relative to its security position
remains strong with a Loan to Wholesale Value ('LTV') of 83% (30
June 2023: 88% and 31 December 2023: 85%). This reduction in LTV is
predominantly due to a slowdown in stock turn with an increase in
the associated monthly capital repayments. We do not advance funds
measured against retail prices, which typically represent a mark-up
of approximately 20% on the wholesale invoice price.
Award winning deposit
raising capability
We continue to operate an
effective and well-diversified deposit raising capability that
resonates with our customers. At 30 June 2024 our already
strong customer satisfaction score, as measured by feefo, increased
to 4.8 (30 June 2023: 4.7; 31 December 2023: 4.7). We also
received feefo's Platinum Trusted Service Award in January
2024.
£233m of deposits were raised or
retained on maturity during the period (H1 2023: £168m), at an
average interest rate of 5.2% (H1 2023: 4.4%). We continue to focus
on existing customer retention, with c.60% of maturing deposits
retained through loyalty products and a seamless online product
change process. As at 30 June 2024, we had retail deposits
totalling £579m (30 June 2023: £498m; 31 December 2022: £575m) from
over 14,600 accounts.
We have now also launched our
first business savings account. Alongside our existing retail
deposit capability this product diversification increases options
as to how we fund our lending activities across a wider depositor
base and price point.
Well capitalised balance
sheet supporting growth ambitions
The Group remains well-capitalised
to support its near-term growth ambitions. As at 30 June 2023 the
Group's equity stood at £107.6m (30 June 2023: £98.8m; 31 December
2023: £100.4m).
This level of equity capital,
alongside the use of capital efficient instruments available to the
Group as well as on-going retained earnings, enables us to reach a
loan book of c£850m in the near-term. At this level, profits
generated are expected to continue to support further annualised
organic loan book growth in the range of £80-100m per annum without
the need for additional dilutive tier 1 equity capital.
The strong profitability and
increased utilisation of the ENABLE Guarantee with the British
Business Bank has led to a positive increase in the CET1 ratio in
the period to 23.2% (30 June 2023: 22.7%; 31 December 2023: 22.8%),
sitting well above our regulatory minimum. Regulatory capital
which is the Common Equity Tier 1 capital together with Tier 2
capital increased to £100.0m (30 June 2023: £80.2m; 31 December
2023 £89.5m) reflecting the drawing of £10m in H2 2023 under the
£20m Tier 2 capital facility with British Business
Investments.
Current
outlook
Whilst the macro-economic
environment continues to show signs of uncertainty, it is pleasing
to see that our products and services remain in strong demand and
our traditional sectors are now performing in line with historical
norms and seasonality in demand. As we look towards the end of the
year, and enter the re-stocking period, we remain confident about
our ability to grow our loan book across the wider spectrum of
businesses we now support in line with expectations.
We are now well progressed with
the organic build of a hire purchase product and expect the
technology and processes to be "launch ready" for the end of the
year, enabling us to work with our dealer and manufacturer partners
in a deeper way by providing loans to their customers and
supporting further sales. We have now applied to the Financial
Conduct Authority for consumer lending permissions, and should our
application be successful, we expect to be able to provide consumer
hire purchase, alongside hire purchase to businesses, in H1
2025.
We are now close to four years
operating as a bank, having received authorisation in September
2020. The progress we have made during that time, not least
achieving sustainable levels of profitability by scaling the firm,
but also the culture that is now core to how we operate, are a
testament to the entire DF Capital community. I'm excited about the
opportunities ahead.
Carl D'Ammassa
Chief Executive Officer
Financial Highlights and Key
Performance Indicators
Notes to the Interim
Financial Report
1. Basis of preparation
1.1 General
information
The
interim condensed consolidated financial statements of Distribution
Finance Capital Holdings plc (the "Company" or "DFCH plc") include
the assets, liabilities and results of its wholly owned
subsidiaries, DF Capital Bank Limited ("the Bank"), DF Capital
Financial Solutions Limited and DF Capital Retail Finance Limited,
which together form the "Group".
DFCH plc is registered and
incorporated in England and Wales under company registration number
11911574. The registered office is St James' Building, 61-95 Oxford
Street, Manchester, M1 6EJ. The Company's ordinary shares are
admitted to trading on AIM, a market operated by the London Stock
Exchange.
The principal activity of the
Company is that of an investment holding company. The principal
activity of the Group is as a specialist personal savings and
commercial lending bank group. The Group provides niche working
capital funding solutions to dealers and manufacturers, enabled by
competitively priced personal savings products.
The interim report is presented in
pounds sterling, which is the currency of the primary economic
environment in which the Group operates, and are rounded to the
nearest thousand pounds, unless stated otherwise.
1.2 Basis of accounting
The condensed consolidated set of
financial statements included in this Interim Financial Report have
been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting' ('IAS 34').
The condensed set of financial
statements included within this Interim Financial Report for the
six months ended 30 June 2024 should be read in conjunction with
the annual audited financial statements of Distribution Finance
Capital Holdings plc for the year ended 31 December
2023.
The annual consolidated financial
statements of Distribution Finance Capital Holdings plc are
prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB") and the UK adopted IFRS.
The condensed consolidated
financial information for the six months ended 30 June 2024 has
been prepared using accounting policies consistent with IFRS. The
interim information does not constitute statutory financial
statements within the meaning of section 434 of the Companies Act
2006. The financial information for the periods ending 30 June 2024
and 30 June 2023 are unaudited but has been reviewed by the
Company's auditor, Deloitte LLP, and their report appears on page
17 of this Interim Financial Report. The comparative figures for
the year ended 31 December 2023 are the Group's statutory accounts
and have been reported on by its auditor and delivered to the
Registrar of Companies. The report of the auditor on those
statutory accounts was unqualified, did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying their report, and did not contain a statement
under Section 498(2) or (3) of the Companies Act 2006.
1.3 Principal accounting
policies
The principal accounting policies
adopted in the preparation of this financial information are set
out below. These policies have been applied consistently to all the
financial periods presented.
1.4 Reclassification
During the period ended 30 June
2024, the Group invested into a low volatility money market fund.
This is a type of investment security which required presentation
under a new financial statement caption. In addition to this fund,
the Group also hold debt securities in the form of UK treasury
bills (and previously government gilts) which represent a
sub-category of investment securities. These balances which were
previously presented as 'debt securities' within the statement of
financial position will now be presented under 'investment
securities' in addition to the balance invested into the money
market fund.
For the period ended 30 June 2024,
the Group has reclassified £4,983,000 from 'debt securities' to
'investment securities' (30 June 2023: £24,528,000; 31 December
2023: £14,839,000). Both debt and investment securities operate
under the same accounting policy, IFRS 9 - financial instruments,
with the policy remaining unchanged.
1.5 Going concern
The financial statements are
prepared on a going concern basis as the Directors are satisfied
that the Group has adequate resources to continue operating for a
period of at least 12 months from the date of approval of the
financial statements.
In making this assessment the
Directors have considered the Group's current available capital and
liquidity resources, the business financial projections and the
outcome of stress testing. 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, the
Directors have adopted the going concern basis in preparing the
Interim Financial statements.
1.6 Critical accounting estimates and
judgements
In accordance with IFRS, the
Directors of the Group are required to make judgements, estimates
and assumptions in certain subjective areas whilst preparing these
financial statements. The application of these accounting policies
may impact the reported amounts of assets, liabilities, income and
expenses and actual results may differ from these
estimates.
Any estimates and underlying
assumptions used within the statutory financial statements are
reviewed on an ongoing basis, with revisions recognised in the
period in which they are adjusted, and any future periods
affected.
Further details can be found in
note 3 of these financial statements on the critical accounting
estimates and judgements used within these financial
statements.
1.7 Foreign currency translation
The financial statements are
expressed in Pounds Sterling, which is the functional and
presentational currency of the Group.
Transactions in foreign currencies
are translated to the Group's functional currency at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
balance sheet 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 statement of income.
1.8 New accounting standards issued but not yet
effective
The Group assesses on an ongoing
basis the impact of new accounting standards which are not yet
effective at the reporting date and the likely impact of the new
accounting standard on the financial statements. At 30 June 2024,
the Group has applied all new IFRS and foresees no additional
standards with a likely material impact to consider at this
time.
2. Summary of significant accounting
policies
The same accounting policies,
presentation and methods of computation are followed in the
condensed consolidated set of financial statements as applied in
the Group's latest annual audited financial statements for the year
ended 31 December 2023, with the addition of the below
policy.
2.1 Non-current assets classified as held for
sale
Whilst assessing whether any
assets should be classified as held for sale, the management of the
Group ensure that the status of the asset satisfies all the
following criteria as set out within IFRS 5:
§ The
carrying amount of the asset will be recovered principally through
a sale transaction rather than through continuing use;
§ The
asset is available for immediate sale in its present condition
subject only to terms that are usual and customary for sales of
such assets;
§ Its
sale must be highly probable and within one year from the date of
classification;
§ Management must be committed to a plan to sell the asset;
and
§ The
asset is being actively marketed for sale at a sales price
reasonable in relation to its fair value.
In the event an asset satisfies
the criteria, prior to reclassification the asset should be valued
in accordance with IFRS
accounting standards applicable to
the asset in question.
At initial recognition the asset
is measured at the lower of carrying amount and fair value less
costs to sell. Any unrealised
gains or losses are recognised in
other comprehensive income. Upon disposal of the assets the
corresponding gain or loss is transferred into the income statement
in the same period as the sale. The assets fair value is reviewed
on an ongoing basis with any further gains or losses recognised
through other comprehensive income.
3. Critical accounting
judgements and key sources of estimation
uncertainty
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
apparent from other sources. Actual results may differ from these
estimates.
The areas involving the most
complex and subjective judgements and areas where assumptions and
estimates are considered to have the most significant effect on the
financial statements are the same as those set out in Note 3 of the
2023 Annual Report and Accounts. A summary and updates regarding
these critical accounting judgements and estimates are set out
below.
Judgements
3.1. Expected credit losses loan impairment
Significant increase in
credit risk for classification in stage 2
Counterparties are classified into
stage 2 where the risk profile of the borrower profile has
significantly increased from inception of the exposure. This
increase in credit risk is signified by either increases in
internal or external credit ratings, the counterparty becoming over
30 days past due, or forbearance measures being applied.
The Group has aligned its
assessment of significant increases in credit risk to its internal
threshold criteria for prompting
customer pricing reviews for
consistency.
Due to the short-term behavioural
term of the current lending portfolio, the Group has not applied a
probationary ("cooling off") period to exposures which are no
longer triggering the stage 2 threshold criteria so these will move
back to stage 1 once the classification criteria is no longer
met.
Definition of
default
The Group aligns its definition of
default to the regulatory definition for default in all periods
presented. The Group applies the regulatory guideline of 90+ days
in arrears and also uses internal and external information, along
with financial and non-financial information, available to the
Group to determine whether a default event has either occurred or
is perceived to have occurred.
Should a default event occur the
Group applies a probationary ("cooling off") period to Stage 3
counterparties before being transferred back to either stage 1 or
2. The probationary period is typically 3 months but is extended up
to 12 months for more severe scenarios. During the probationary
period the counterparty must no longer meet the criteria for Stage
3 inclusion for the entire applicable period.
Estimates
The Group has made the following
estimates in the application of the accounting policies that have a
significant risk of material adjustment to the carrying amount of
assets and liabilities:
3.2. Expected credit losses loan impairment
See the Group's Annual Report for
the year ended 31 December 2023 which outlines the assumptions the
Group includes to best estimate the probability of default ("PD"),
exposure at default ("EAD"); and loss given default ("LGD") inputs
within the impairment model in order to calculate the expected
credit loss ("ECL"). The general design of the impairment model
remains unchanged for the period ended 30 June 2024, however
certain assumptions have been updated to reflect changes in
circumstances.
Probability of Default
("PD")
In the absence of sufficient
internal historical default data, the Group uses an external credit
rating agency to provide credit ratings and corresponding
probability of defaults ("PDs") for the vast majority of the
Group's counterparties. These are "Through-the-Cycle" PDs which
represents a long-run average probability of default, opposed to
Point-in-Time PDs which are shorter term and partially reflect the
current economic outlook. Further, the primary data points which
impact credit ratings and PDs are derived from past events,
therefore, PDs are inherently a lagging indicator of expected
default activity over the following 12-month period and
longer.
Consequently, the Group utilises
external macro-economic forecast data sourced from an external
economics research company to adjust PDs from Through-the-Cycle to
Point-in-Time, and further consider how default activity may evolve
in the future. Following this exercise, as at 30 June 2024 the
Group has applied a 34% scalar increase to its PDs (30 June 2023
40%; 31 December 2023 34%).
A 100% deterioration in PDs
(excluding stage 3 exposures, which are already in default) would
result in an additional impairment charge of £2,429,000 at 30 June
2024 (30 June 2023: £1,643,000; 31 December 2023:
£1,901,000).
Loss Given Default
("LGD")
The Group reviewed its LGD
modelling assumptions as at 30 June 2024 by comparing actual loss
given default values against modelled LGD. The Group concluded its
current LGD modelling was closely aligned to recent historical
actuals.
A 10% reduction in the expected
discounted cashflows from the collateral held by the Group would
result in an additional impairment charge of £1,296,000 at 30 June
2024 (30 June 2023: £2,356,000; 31 December 2023:
£967,000).
Forward looking
macro-economic scenarios
The Group considers four economic
stress scenarios within its impairment modelling whereby the Group
stresses PD and LGD inputs in accordance with expected
macro-economic outlooks. This provides an ECL impairment allowance
for each scenario which is multiplied by the likelihood of
occurrence over the next 12-month period from the balance sheet
date to give a probability weighted ECL.
|
Scenario
|
Probability Weighting
(%)
|
ECL Impairment
(£'000)
|
ECL
Coverage1
(%)
|
|
|
|
|
|
|
30 June 2024
(Unaudited)
|
|
|
|
|
Upside
|
20%
|
6,332
|
1.04%
|
|
Base
|
50%
|
7,118
|
1.17%
|
|
Downside
|
20%
|
8,722
|
1.44%
|
|
Severe
downside
|
10%
|
14,110
|
2.33%
|
|
Weighted
total
|
100%
|
7,980
|
1.32%
|
|
|
|
|
|
|
30 June 2023
(Unaudited)
|
|
|
|
|
Upside
|
15%
|
5,537
|
1.05%
|
|
Base
|
55%
|
6,286
|
1.19%
|
|
Downside
|
25%
|
9,026
|
1.71%
|
|
Severe
downside
|
5%
|
12,778
|
2.42%
|
|
Weighted
total
|
100%
|
7,198
|
1.38%
|
|
|
|
|
|
|
31 December 2023
(Audited)
|
|
|
|
|
Upside
|
20%
|
13,181
|
2.22%
|
|
Base
|
50%
|
13,816
|
2.33%
|
|
Downside
|
20%
|
15,243
|
2.57%
|
|
Severe
downside
|
10%
|
20,037
|
3.38%
|
|
Weighted
total
|
100%
|
14,596
|
2.50%
|
1 ECL Coverage is calculated
by dividing the ECL impairment by the Exposure At Default (EAD).
EAD is typically higher than the gross loan receivable
balance.
In the
event one of the above scenarios occurs and applied a 100%
probability weighting the impact on the impairment allowances would
be as follows:
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
Scenario
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Upside
|
(1,648)
|
(1,661)
|
(1,415)
|
|
Base
|
(862)
|
(912)
|
(780)
|
|
Downside
|
742
|
1,828
|
647
|
|
Severe
downside
|
6,130
|
5,580
|
5,441
|
3.3. Deferred taxation asset
The Group recognises a deferred
taxation asset at 30 June 2024 based on the latest approved
financial forecasts through to December 2027 with the deferred
taxation asset being fully utilised during this period.
The forecast is inherently
sensitive to the assumptions and estimates which underpin it,
including macro-economic conditions (such as interest rates,
inflation and future tax rates), and is dependent on the Group's
ability to successfully execute its strategy. As such, the expected
utilisation of the deferred tax asset may vary
significantly.
The following sensitivities have
been modelled to demonstrate the impact of changes in assumptions
on the recoverability of deferred tax assets within the
Bank:
§ A
reduction in the base forecast loan book by 20% each
year.
§ A
reduction in the net interest margin in the base forecast by a
factor of 10% each year.
§ An
increase in forecast costs of risk by a factor of 50% each
year.
§ A 20%
increase above forecast of staff costs and other operating expenses
each year.
In each of the individual
sensitivities performed above, the reduction in profitability means
the timing of full recovery of the deferred tax asset is delayed,
but in all cases it is expected to be fully utilised within 5 years
and, therefore, the Board is satisfied that these sensitivities do
not impact the level of deferred tax asset to be recognised at 30
June 2024.
In the six-month period ended 30
June 2024, the Group has performed favourably in accordance with
the forecasts used to estimate the deferred taxation asset. The
Group has updated its forecasts for actual performance in the
elapsed period to ensure the deferred taxation asset recognition is
still valid.
4. Operating
segments
It is the Directors' view that the
Group's products and the markets to which they are offered are so
similar in nature that they are reported as one class of business.
All customers are currently UK-based only. As a result, it is
considered that the chief operating decision maker uses only one
segment to control resources and assess the performance of the
entity, while deciding the strategic direction of the
Group.
5. Interest and similar
income
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023
(Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At
amortised cost (using effective interest rate method):
|
|
|
|
|
On loans
and advances to customers
|
35,101
|
25,070
|
55,203
|
|
On loans
and advances to banks
|
2,341
|
1,213
|
4,246
|
|
On money
market fund
|
6
|
-
|
-
|
|
|
37,448
|
26,283
|
59,449
|
|
|
|
|
|
|
At
FVOCI:
|
|
|
|
|
On debt
securities
|
209
|
259
|
521
|
|
Total interest and similar
income
|
37,657
|
26,542
|
59,970
|
6. Interest and
similar expenses
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023 (Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At
amortised cost (using effective interest rate method):
|
|
|
|
|
On
customer deposits
|
14,341
|
8,741
|
21,799
|
|
On
subordinated liabilities
|
633
|
-
|
269
|
|
|
14,974
|
8,741
|
22,068
|
|
|
|
|
|
|
At
FVTPL:
|
|
|
|
|
Net
interest expense on financial instruments hedging
liabilities
|
409
|
385
|
268
|
|
Total interest and similar
expenses
|
15,383
|
9,126
|
22,336
|
|
7. Fee
Income
|
|
|
|
|
|
|
|
|
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023
(Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Facility-related fees
|
621
|
819
|
1,393
|
|
Other fee
Income
|
74
|
-
|
-
|
|
Total fee
income
|
695
|
819
|
1,393
|
|
8. Fee Expense
|
|
|
|
|
|
|
|
|
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023
(Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Enable
guarantee charges
|
469
|
176
|
648
|
|
Financial
guarantee charges
|
196
|
-
|
19
|
|
Undrawn
commitment facility fees
|
10
|
-
|
8
|
|
Non-incremental direct costs
|
13
|
4
|
44
|
|
Total fee
expense
|
688
|
180
|
719
|
9. Net gains/(losses) from
derivatives and other financial instruments at fair value through
profit or loss
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023
(Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Net
gains/(losses) on:
|
|
|
|
|
Interest
rate swaps
|
198
|
72
|
(303)
|
|
Foreign
currency swaps
|
27
|
-
|
-
|
|
Total net gains/(losses)
from derivatives and other financial instruments at
FVTPL
|
225
|
72
|
(303)
|
10. Staff
costs
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023
(Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Wages and
salaries
|
5,993
|
5,672
|
10,437
|
|
Share-based payments
|
493
|
393
|
905
|
|
Contractor costs
|
53
|
16
|
22
|
|
Social
security costs
|
868
|
757
|
1,314
|
|
Pension
costs arising on defined contribution schemes
|
416
|
317
|
753
|
|
Total staff
costs
|
7,823
|
7,155
|
13,431
|
Contractor costs are recognised
within personnel costs where the work performed would otherwise
have been performed by employees. Contractor costs arising from the
performance of other services is included within other operating
expenses.
11. Other operating
expenses
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023
(Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Finance
costs
|
52
|
17
|
76
|
|
Depreciation
|
295
|
230
|
498
|
|
Amortisation of intangible assets
|
152
|
201
|
376
|
|
Professional services expenses
|
1,498
|
1,006
|
2,189
|
|
Audit and
accountancy fees
|
264
|
240
|
418
|
|
IT-related expenses
|
1,710
|
1,236
|
2,506
|
|
Other
operating expenses
|
1,403
|
1,063
|
2,349
|
|
Unrealised currency revaluation
|
29
|
-
|
-
|
|
Total other operating
expenses
|
5,403
|
3,993
|
8,412
|
12.
Provisions
Analysis for movements in other
provisions:
|
|
Leasehold
dilapidations
|
|
|
£'000
|
|
|
|
|
6 months ended 30 June 2024
(Unaudited)
|
|
|
At start
of period
|
67
|
|
Additions
|
-
|
|
Utilisation of provision
|
-
|
|
Unused
amounts reversed
|
-
|
|
Unwinding
of discount
|
3
|
|
Lease
modification
|
-
|
|
At end of
period
|
70
|
|
|
|
|
6 months ended 30 June 2023
(Unaudited)
|
|
|
At start
of period
|
77
|
|
Additions
|
25
|
|
Utilisation of provision
|
-
|
|
Unused
amounts reversed
|
(10)
|
|
Unwinding
of discount
|
2
|
|
Lease
modification
|
(30)
|
|
At end of
period
|
64
|
|
|
|
|
Year ended 31 December 2023
(Audited)
|
|
|
At start
of period
|
77
|
|
Additions
|
25
|
|
Utilisation of provision
|
-
|
|
Unused
amounts reversed
|
(10)
|
|
Unwinding
of discount
|
5
|
|
Lease
modification
|
(30)
|
|
At end of
period
|
67
|
13. Net impairment loss on financial assets
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023
(Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Movement
in impairment allowance in the period
|
(6,769)
|
3,673
|
11,034
|
|
Write-offs
|
8,620
|
113
|
564
|
|
Write-back of amounts written-off
|
(1,745)
|
-
|
-
|
|
Total net impairment losses
on financial assets
|
106
|
3,786
|
11,598
|
See note
15 on further analysis of the movement in impairment allowances on
loans and advances to customers.
14. Taxation
Analysis of tax charge recognised
in the period:
|
|
6 months ended
30 June 2024
(Unaudited)
|
6 months ended
30 June 2023
(Unaudited)
|
Year ended
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Current
taxation charge:
|
|
|
|
|
UK
corporation tax on profit for the current period
|
2,443
|
938
|
73
|
|
Adjustments in respect of prior years
|
-
|
-
|
-
|
|
Total current taxation
charge
|
2,443
|
938
|
73
|
|
|
|
|
|
|
Deferred
taxation charge:
|
|
|
|
|
Current
period
|
-
|
-
|
1,345
|
|
Adjustments in respect of prior years
|
-
|
-
|
-
|
|
Total deferred taxation
charge
|
-
|
-
|
1,345
|
|
|
|
|
|
|
Total taxation
charge
|
2,443
|
938
|
1,418
|
Current tax on profits reflects UK
corporation tax levied at a rate of 25% for the period ended 30
June 2024 (30 June 2023: 23.5%; 31 December 2023: 23.5%). The
Company is not subject to the banking surcharge levied at a rate of
3% on the profits of banking companies chargeable to corporation
tax after an allowance of £100 million per annum.
Expenses that are not deductible
in determining taxable profits/losses include impairment losses,
amortisation of intangible assets, depreciation of fixed assets,
client and staff entertainment costs, and professional fees which
are capital in nature.
A deferred tax asset is only
recognised to the extent the Group finds it probable that the prior
taxable losses can be utilised against future taxable
profits.
15. Loans and advances to customers
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Loan book
principal
|
602,560
|
519,348
|
580,525
|
|
Accrued
interest and fees
|
4,099
|
3,135
|
3,602
|
|
Gross carrying
amount
|
606,659
|
522,483
|
584,127
|
|
|
|
|
|
|
less:
impairment allowance
|
(7,980)
|
(7,198)
|
(14,596)
|
|
less:
effective interest rate adjustment
|
(1,908)
|
(1,498)
|
(1,487)
|
|
Total loans and advances to
customers
|
596,771
|
513,787
|
568,044
|
Refer to note 13 for further
details on the impairment losses recognised in the
periods.
Ageing analysis of gross loan
receivables:
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
Not in
default:
|
|
|
|
|
Not yet
past due
|
598,697
|
505,480
|
566,503
|
|
Past due:
1 - 30 days
|
270
|
268
|
467
|
|
Past due:
31 - 60 days
|
144
|
78
|
35
|
|
Past due:
61 - 90 days
|
55
|
|
|
|
Past due:
90+ days
|
-
|
|
|
|
|
599,166
|
505,826
|
567,005
|
|
Defaulted:
|
|
|
|
|
Not yet
past due and past due 1 - 90 days
|
5,974
|
5,502
|
5,020
|
|
Past due
90+ days
|
1,519
|
11,155
|
12,102
|
|
|
7,493
|
16,657
|
17,122
|
|
|
|
|
|
|
Total gross carrying
amount
|
606,659
|
522,483
|
584,127
|
Analysis of gross loan receivables
in accordance with impairment losses:
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
As at 1 January 2024
(Audited)
|
545,952
|
21,052
|
17,123
|
584,127
|
|
|
|
|
|
|
|
Transfer
to Stage 1
|
16,689
|
(16,612)
|
(77)
|
-
|
|
Transfer
to Stage 2
|
(41,655)
|
41,655
|
-
|
-
|
|
Transfer
to Stage 3
|
(5,530)
|
(3,995)
|
9,525
|
-
|
|
Net
lending/(repayment)
|
64,355
|
(22,746)
|
(10,911)
|
30,698
|
|
Write-offs
|
-
|
-
|
(8,166)
|
(8,166)
|
|
Total movement in
receivables
|
33,859
|
(1,698)
|
(9,629)
|
22,532
|
|
|
|
|
|
|
|
As at 30 June 2024
(Unaudited)
|
579,811
|
19,354
|
7,494
|
606,659
|
|
Impairment allowance
coverage at 30 June 2024
|
0.53%
|
1.02%
|
62.52%
|
1.32%
|
|
|
|
|
|
|
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
As at 1 January 2023
(Audited)
|
410,756
|
13,323
|
17,205
|
441,284
|
|
|
|
|
|
|
|
Transfer
to Stage 1
|
23,053
|
(23,053)
|
-
|
-
|
|
Transfer
to Stage 2
|
(43,568)
|
43,913
|
(345)
|
-
|
|
Transfer
to Stage 3
|
(1,286)
|
(901)
|
2,187
|
-
|
|
Net
lending/(repayment)
|
98,391
|
(14,802)
|
(2,358)
|
81,231
|
|
Write-offs
|
-
|
-
|
(32)
|
(32)
|
|
Total movement in
receivables
|
76,590
|
5,157
|
(548)
|
81,199
|
|
|
|
|
|
|
|
As at 30 June 2023
(Unaudited)
|
487,346
|
18,480
|
16,657
|
522,483
|
|
Impairment allowance
coverage at 30 June 2023
|
0.48%
|
1.12%
|
27.87%
|
1.38%
|
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
As at 1 January 2023
(Audited)
|
410,756
|
13,323
|
17,205
|
441,284
|
|
|
|
|
|
|
|
Transfer
to Stage 1
|
42,913
|
(42,913)
|
|
-
|
|
Transfer
to Stage 2
|
(88,983)
|
89,328
|
(345)
|
-
|
|
Transfer
to Stage 3
|
(2,617)
|
(3,728)
|
6,345
|
-
|
|
Net
lending/(repayment)
|
183,883
|
(34,958)
|
(5,727)
|
143,198
|
|
Write-offs
|
-
|
-
|
(355)
|
(355)
|
|
Total movement in
receivables
|
135,196
|
7,729
|
(82)
|
142,843
|
|
|
|
|
|
|
|
As at 31 December 2023
(Audited)
|
545,952
|
21,052
|
17,123
|
584,127
|
|
Impairment allowance
coverage at 31 December 2023
|
46.00%
|
0.76%
|
69.58%
|
2.50%
|
Analysis
of impairment losses on loans and advances to customers:
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
As at 1 January 2024
(Audited)
|
2,522
|
160
|
11,914
|
14,596
|
|
|
|
|
|
|
|
Transfer
to Stage 1
|
147
|
(145)
|
(2)
|
-
|
|
Transfer
to Stage 2
|
(231)
|
231
|
-
|
-
|
|
Transfer
to Stage 3
|
(46)
|
(30)
|
76
|
-
|
|
Remeasurement of impairment allowance
|
(71)
|
206
|
1,038
|
1,173
|
|
Net
lending/(repayment)
|
777
|
(225)
|
251
|
803
|
|
Write-offs
|
-
|
-
|
(8,592)
|
(8,592)
|
|
Total movement in impairment
allowance
|
576
|
37
|
(7,229)
|
(6,616)
|
|
As at 30 June 2024
(Unaudited)
|
3,098
|
197
|
4,685
|
7,980
|
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
As at 1 January 2023
(Audited)
|
1,943
|
84
|
1,693
|
3,720
|
|
|
|
|
|
|
|
Transfer
to Stage 1
|
108
|
(108)
|
-
|
-
|
|
Transfer
to Stage 2
|
(195)
|
337
|
(142)
|
-
|
|
Transfer
to Stage 3
|
(8)
|
(148)
|
156
|
-
|
|
Remeasurement of impairment allowance
|
(679)
|
126
|
3,139
|
2,586
|
|
Net
lending/(repayment)
|
1,180
|
(84)
|
(172)
|
924
|
|
Write-offs
|
-
|
-
|
(32)
|
(32)
|
|
Total movement in impairment
allowance
|
406
|
123
|
2,949
|
3,478
|
|
As at 30 June 2023
(Unaudited)
|
2,349
|
207
|
4,642
|
7,198
|
|
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
As at 1 January 2023
(Audited)
|
1,943
|
84
|
1,693
|
3,720
|
|
|
|
|
|
|
|
Transfer
to Stage 1
|
365
|
(365)
|
|
-
|
|
Transfer
to Stage 2
|
(464)
|
606
|
(142)
|
-
|
|
Transfer
to Stage 3
|
(16)
|
(174)
|
190
|
-
|
|
Remeasurement of impairment allowance
|
(1,668)
|
266
|
10,870
|
9,468
|
|
Net
lending/(repayment)
|
2,362
|
(257)
|
(342)
|
1,763
|
|
Write-offs
|
-
|
-
|
(355)
|
(355)
|
|
Total movement in impairment
allowance
|
579
|
76
|
10,221
|
10,876
|
|
|
|
|
|
|
|
As at 31 December 2023
(Audited)
|
2,522
|
160
|
11,914
|
14,596
|
16. Trade and other receivables
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Trade
receivables
|
3,148
|
1,276
|
3,965
|
|
Impairment allowance
|
(106)
|
(296)
|
(259)
|
|
|
3,042
|
980
|
3,706
|
|
|
|
|
|
|
Other
debtors
|
403
|
352
|
452
|
|
Accrued
income
|
-
|
(89)
|
-
|
|
Prepayments
|
1,681
|
1,097
|
1,177
|
|
|
2,084
|
1,360
|
1,629
|
|
|
|
|
|
|
Total trade and other
receivables
|
5,126
|
2,340
|
5,335
|
All trade receivables are due
within one year and typically due for payment within 30 days of
invoice.
The trade receivable balances are
assessed for expected credit losses (ECL) under the 'simplified
approach', which requires the Group to assess all balances for
lifetime ECLs and is not required to assess significant increases
in credit risk.
Ageing analysis of trade
receivables:
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Not in
default:
|
|
|
|
|
Not yet
past due
|
2,545
|
941
|
3,513
|
|
Past due:
1 - 30 days
|
504
|
9
|
21
|
|
Past due:
31 - 60 days
|
51
|
41
|
176
|
|
Past due:
61 - 90 days
|
29
|
-
|
12
|
|
Past due:
90+ days
|
-
|
-
|
1
|
|
|
3,129
|
991
|
3,723
|
|
Defaulted:
|
|
|
|
|
Not yet
past due and past due 1 - 90 days
|
9
|
255
|
65
|
|
Past due
90+ days
|
10
|
30
|
177
|
|
|
19
|
285
|
242
|
|
|
|
|
|
|
Total trade
receivables
|
3,148
|
1,276
|
3,965
|
Analysis of movement of impairment
losses on trade receivables:
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At 1
January
|
259
|
101
|
101
|
|
Amounts
written off
|
(206)
|
(1)
|
(8)
|
|
Amounts
recovered
|
-
|
-
|
-
|
|
Change in
impairment allowance due to new trade and other receivables
originated net of those derecognised due to settlement
|
53
|
196
|
166
|
|
At period
end
|
106
|
296
|
259
|
17. Current
taxation asset
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At 1
January
|
55
|
55
|
55
|
|
Repayments
|
(55)
|
-
|
-
|
|
At period
end
|
-
|
55
|
55
|
18. Current
taxation liability
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At 1
January
|
(73)
|
-
|
-
|
|
Charge to
profit and loss account
|
(597)
|
-
|
(73)
|
|
Repayments
|
-
|
-
|
-
|
|
At period
end
|
(670)
|
-
|
(73)
|
19. Deferred
taxation asset
The table
below shows the movement in net deferred tax assets:
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At 1
January
|
7,111
|
8,457
|
8,457
|
|
Charge to
profit and loss account
|
-
|
-
|
(1,346)
|
|
Utilisation of deferred taxation asset
|
(1,846)
|
(938)
|
-
|
|
At period
end
|
5,265
|
7,519
|
7,111
|
The Group has an unrecognised
deferred tax asset value of £0.7m (30 June 2023: £0.8m, 31 December
2023: £0.7m) which is not expected to be utilised for the
foreseeable future.
On 1 April 2023, the UK
corporation tax rate increased from 19% to 25%, and the Banking
Surcharge rate reduced from 8% to 3%, with an increase in the
Banking Surcharge Allowance from £25m to £100m. The Group has used
these tax rates to calculate the deferred tax balances.
20. Right-of-use
assets
|
|
Buildings
|
|
|
£'000
|
|
|
|
|
Cost:
|
|
|
31 December 2022
(Audited)
|
1,153
|
|
Additions
|
385
|
|
Disposals
and write offs
|
-
|
|
Lease
modifications
|
567
|
|
As at 30 June 2023
(Unaudited)
|
2,105
|
|
Additions
|
22
|
|
Disposals
and write offs
|
-
|
|
As at 31 December 2023
(Audited)
|
2,127
|
|
Additions
|
3
|
|
Disposals
and write offs
|
-
|
|
As at 30 June 2024
(Unaudited)
|
2,130
|
|
|
|
|
Accumulated depreciation:
|
|
|
31 December 2022
(Audited)
|
720
|
|
Charge
for the period
|
86
|
|
Disposals
and write offs
|
-
|
|
As at 30 June 2023
(Unaudited)
|
806
|
|
Charge
for the period
|
94
|
|
Disposals
and write offs
|
-
|
|
As at 31 December 2023
(Audited)
|
900
|
|
Charge
for the period
|
89
|
|
Disposals
and write offs
|
-
|
|
As at 30 June 2024
(Unaudited)
|
989
|
|
|
|
|
Carrying
amount:
|
|
|
At 30
June 2023 (Unaudited)
|
1,299
|
|
At 31
December 2023 (Audited)
|
1,227
|
|
At 30 June 2024
(Unaudited)
|
1,141
|
21. Notes to the
cash flow statement
Cash and
cash equivalents:
For the purpose of the statement
of cash flows, cash and cash equivalents comprise cash on demand
and overnight deposits classified as cash and balances at central
banks (unless restricted) and balances within loans and advances to
banks. The following balances have been identified as being cash
and cash equivalents:
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Cash and
balances at central banks
|
86,036
|
46,642
|
89,552
|
|
Loans and
advances to banks
|
1,487
|
1,676
|
1,315
|
|
Money
market fund
|
1,192
|
-
|
-
|
|
Total cash and cash
equivalents
|
88,715
|
48,318
|
90,867
|
Adjustments for non-cash items and other adjustments included
in the income statement:
|
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment
|
|
206
|
144
|
318
|
|
Depreciation of right-of-use assets
|
|
89
|
86
|
180
|
|
Amortisation of intangible assets
|
|
152
|
201
|
376
|
|
Share-based payments
|
|
493
|
393
|
905
|
|
Impairment allowances on receivables
|
|
106
|
3,786
|
11,598
|
|
Movement
in other provisions
|
|
-
|
(13)
|
(15)
|
|
Interest
income on money market funds
|
|
(3)
|
-
|
-
|
|
Interest
income on debt securities
|
|
(209)
|
(259)
|
(521)
|
|
Finance
costs
|
|
52
|
17
|
76
|
|
Unwind of
discount
|
|
3
|
2
|
5
|
|
Interest
on subordinated liabilities
|
|
633
|
-
|
269
|
|
Amortisation of subordinated liabilities acquisition
costs
|
|
5
|
-
|
3
|
|
Interest
in suspense
|
|
421
|
(183)
|
(194)
|
|
Total non-cash items and
other adjustments
|
|
1,948
|
4,174
|
13,000
|
Net
change in operating assets:
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Increase
in loans and advances to customers
|
(29,060)
|
(65,095)
|
(141,648)
|
|
Derivative financial instruments
|
327
|
57
|
(480)
|
|
Increase/(decrease) in other assets
|
40
|
(20,043)
|
(7,328)
|
|
Increase in operating
assets
|
(28,693)
|
(85,081)
|
(149,456)
|
Net
change in operating liabilities:
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Increase
in customer deposits
|
4,390
|
18,622
|
94,886
|
|
Derivative financial instruments
|
(500)
|
1,367
|
522
|
|
Fair
value adjustments for portfolio hedged risk
|
(242)
|
(1,495)
|
508
|
|
Increase/(decrease) in other liabilities
|
2,830
|
(1,213)
|
(1,745)
|
|
Increase in operating
liabilities
|
6,478
|
17,281
|
94,171
|
22. Equity
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
|
No.
|
No.
|
No.
|
£'000
|
£'000
|
£'000
|
|
Authorised:
|
|
|
|
|
|
|
|
Ordinary
shares of
1p
each
|
179,369,199
|
179,369,199
|
179,369,199
|
1,793
|
1,793
|
1,793
|
|
|
|
|
|
|
|
|
|
Allotted, issued and fully
paid: Ordinary shares of 1p
each
|
179,369,199
|
179,369,199
|
179,369,199
|
1,793
|
1,793
|
1,793
|
Analysis of the movements in share
capital:
|
|
Date
|
No. of
shares
|
Issue
Price
|
Share
Capital
|
Share
Premium
|
Merger
Relief
|
Total
|
|
|
|
#
|
£
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2023
(Audited)
|
|
179,369,199
|
|
1,793
|
39,273
|
94,911
|
135,977
|
|
|
|
|
|
|
|
|
|
|
Share
premium account cancellation
|
29-Jun-23
|
-
|
-
|
-
|
(39,273)
|
-
|
(39,273)
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2023
(Unaudited)
|
|
179,369,199
|
|
1,793
|
-
|
94,911
|
96,704
|
|
|
|
|
|
|
|
|
|
|
No
transactions within the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December
2023
(Audited)
|
179,369,199
|
|
1,793
|
-
|
94,911
|
96,704
|
|
|
|
|
|
|
|
|
|
|
No
transactions within the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2023
(Unaudited)
|
|
179,369,199
|
|
1,793
|
-
|
94,911
|
96,704
|
Own shares:
Own shares represent 2,677,859 (30
June 2023: 2,963,283; 31 December 2023: 2,926,617)
ordinary shares held by the Group's Employee
Benefits Trust to meet obligations under the Company's share and
share option plans. The shares are stated at cost and their market
value at 30 June 2024 was £780,463 (30 June 2023: £1,022,333; 31
December 2023: £658,489).
23. Customer deposits
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Retail
deposits
|
579,012
|
498,357
|
574,622
|
|
Total customer
deposits
|
579,012
|
498,357
|
574,622
|
|
|
|
|
|
|
Maturity
analysis:
|
|
|
|
|
Amounts
repayable within one year
|
476,466
|
435,159
|
512,168
|
|
Amounts
repayable after one year
|
102,546
|
63,198
|
62,454
|
|
|
|
|
|
24. Financial liabilities
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Lease
liabilities
|
1,127
|
1,267
|
1,205
|
|
Preference shares
|
-
|
50
|
50
|
|
Total financial
liabilities
|
1,127
|
1,317
|
1,255
|
25. Lease liabilities
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Current
|
154
|
128
|
148
|
|
Non-current
|
973
|
1,139
|
1,057
|
|
Total lease
liabilities
|
1,127
|
1,267
|
1,205
|
|
|
|
|
|
|
Maturity
analysis:
|
|
|
|
|
Year
1
|
252
|
253
|
253
|
|
Year
2
|
252
|
252
|
252
|
|
Year
3
|
252
|
252
|
252
|
|
Year
4
|
253
|
252
|
253
|
|
Year
5
|
252
|
253
|
252
|
|
Onwards
|
231
|
482
|
360
|
|
Total lease
payments
|
1,492
|
1,744
|
1,622
|
|
|
|
|
|
|
Finance
charges
|
(365)
|
(477)
|
(417)
|
|
Total lease
liabilities
|
1,127
|
1,267
|
1,205
|
Movements in lease liabilities in
the period:
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
At 1
January
|
1,205
|
395
|
395
|
|
Additions
|
-
|
365
|
365
|
|
Finance
costs
|
52
|
17
|
76
|
|
Lease
payments
|
(130)
|
(106)
|
(227)
|
|
Lease
modification
|
-
|
596
|
596
|
|
At period
end
|
1,127
|
1,267
|
1,205
|
|
26. Subordinated liabilities
|
|
|
|
|
|
|
|
|
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Tier 2
notes
|
10,000
|
-
|
10,000
|
|
Accrued
interest
|
269
|
-
|
269
|
|
Deferred
acquisition costs
|
(44)
|
-
|
(48)
|
|
Total subordinated
liabilities
|
10,225
|
-
|
10,221
|
In September 2023 the Group
entered into a non-dilutive Tier 2 capital facility from British
Business Investments, with an initial £5m drawdown on inception and
a further £5m drawdown in October 2023. The contractual term dates
for the notes are 5 years from the respective drawdown date. The
Group is required to pay bi-annual coupons with a full principal
repayment due on the maturity date.
Refer to note 29 for the maturity
profile of the subordinated liabilities
27. Investment securities
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Investments not measured at fair value:
|
|
|
Money
market fund
|
1,192
|
-
|
-
|
|
|
|
|
|
|
Debt
securities measured at FVOCI:
|
|
|
|
|
Treasury
bills
|
4,983
|
-
|
-
|
|
UK
government gilts
|
-
|
24,528
|
14,839
|
|
Total investment
securities
|
6,175
|
24,528
|
14,839
|
|
|
|
|
|
|
Analysis
of debt securities movements during the period:
|
|
|
|
At 1
January
|
14,839
|
22,964
|
22,964
|
|
Purchased
debt securities
|
4,936
|
14,554
|
14,554
|
|
Proceeds
from sold or maturing securities
|
(15,000)
|
(13,000)
|
(23,000)
|
|
Coupons
received
|
(75)
|
(196)
|
(383)
|
|
Interest
income
|
209
|
259
|
521
|
|
Unrealised Gains
|
74
|
(53)
|
183
|
|
At period
end
|
4,983
|
24,528
|
14,839
|
|
|
|
|
|
|
Maturity
profile of debt securities:
|
|
|
|
|
Within 12
months
|
-
|
24,528
|
14,839
|
|
Over 12
months
|
4,983
|
-
|
-
|
In May 2024 the Group entered into
a cross-currency swap to support lending denominated in non-GBP
currencies. Surplus funds from the swap were invested into a low
volatility money market fund to earn a return whilst retaining same
day liquidity. The fund invests in a range of cash holding and
short dated securities which are held to maturity. This materially
removes exposure to market movements, meaning the fund consistently
trades at par value.
The fund is a type of investment
security which required presentation under a new financial
statement caption. In addition to this fund, the Group also hold
debt securities in the form of UK treasury bills (and previously
government gilts) which represent a sub-category of investment
securities. For the period ended 30 June 2024, the Group has
reclassified £4,983,000 from 'debt securities' to 'investment
securities' (30 June 2023: £24,528,000; 31 December 2023:
£14,839,000).
28. Hedge accounting
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
Hedged
liabilities:
|
|
|
|
|
Current
hedge relationships
|
199
|
(1,593)
|
407
|
|
Swap
inception adjustment
|
(17)
|
14
|
17
|
|
Fair value adjustments on
hedged liabilities
|
182
|
(1,579)
|
424
|
As at the period ended 30 June
2024, the Group presently only hedges liabilities in the form of
its customer deposits and subordinated liabilities. The Group does
not hedge its loans and advances to customers given these assets
are expected to reprice within a short time frame.
At present, the Group expects its
hedging relationships to be highly effective as the Group only
hedges liabilities for which the fair value movements between
the hedged item and hedging instrument are expected to be highly
correlated.
Further, the Group does not
anticipate having to rebalance the hedging relationship once
entered into due to the contractual terms of the hedged liabilities
meaning that the contractual cash flows are highly predictable,
with any deviation likely to be negligible. In the period ended 30
June 2024, there has been no cancelled or de-designated hedge
relationships due to failed hedge accounting
relationships.
29. Financial instruments
Analysis of financial instruments by valuation
model
The Group measures fair values
using the following hierarchy of methods:
· Level
1 - Quoted market price in an active market for an identical
instrument
· Level
2 - Valuation techniques based on observable inputs. This category
includes instruments valued using quoted market prices in active
markets for similar instruments, quoted prices for similar
instruments that are considered less than active, or other
valuation techniques where all significant inputs are directly or
indirectly observable from market data
· Level
3 - Inputs for the assets or liabilities that are not based on
observable market data (unobservable inputs).
Financial assets and liabilities
that are not measured at fair value:
|
|
Carrying
amount
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
|
30 June 2024
(Unaudited)
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Financial
assets not measured at fair value:
|
|
|
|
|
|
Cash and
balances at central banks
|
86,036
|
86,036
|
86,036
|
-
|
-
|
|
Loans and
advances to banks
|
3,496
|
3,496
|
3,496
|
-
|
-
|
|
Investment securities
|
1,192
|
1,192
|
1,192
|
-
|
-
|
|
Loans and
advances to customers
|
596,771
|
596,771
|
-
|
-
|
596,771
|
|
Trade
receivables
|
3,042
|
3,042
|
-
|
-
|
3,042
|
|
Other
receivables
|
403
|
403
|
-
|
-
|
403
|
|
|
690,940
|
690,940
|
90,724
|
-
|
600,216
|
|
|
|
|
|
|
|
|
Financial
liabilities not measured at fair value:
|
|
|
|
|
|
Customer
deposits
|
579,012
|
579,500
|
-
|
-
|
579,500
|
|
Amounts
due to banks
|
180
|
180
|
180
|
-
|
-
|
|
Other
financial liabilities
|
1,127
|
1,127
|
-
|
-
|
1,127
|
|
Subordinated liabilities
|
10,225
|
10,497
|
-
|
10,497
|
-
|
|
Trade
payables
|
97
|
97
|
-
|
-
|
97
|
|
Other
payables
|
4,317
|
4,317
|
-
|
-
|
4,317
|
|
|
594,958
|
595,718
|
180
|
10,497
|
585,041
|
|
|
|
|
|
|
|
|
|
| |
|
|
Carrying
amount
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
|
|
30 June 2023
(Unaudited)
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
Financial
assets not measured at fair value:
|
|
|
|
|
|
|
Cash and
balances at central banks
|
46,642
|
46,642
|
46,642
|
-
|
-
|
|
Loans and
advances to banks
|
5,067
|
5,067
|
5,067
|
-
|
-
|
|
Loans and
advances to customers
|
513,787
|
513,787
|
-
|
-
|
513,787
|
|
Trade
receivables
|
980
|
980
|
-
|
-
|
980
|
|
Other
receivables
|
352
|
352
|
-
|
-
|
352
|
|
|
566,828
|
566,828
|
51,709
|
-
|
515,119
|
|
|
|
|
|
|
|
|
|
Financial
liabilities not measured at fair value:
|
|
|
|
|
|
|
Customer
deposits
|
498,357
|
494,379
|
-
|
-
|
494,379
|
|
Other
financial liabilities
|
1,267
|
1,267
|
-
|
-
|
1,267
|
|
Trade
payables
|
469
|
469
|
-
|
-
|
469
|
|
Other
payables
|
2,106
|
2,106
|
-
|
-
|
2,106
|
|
Preference shares
|
50
|
50
|
-
|
-
|
50
|
|
|
502,249
|
498,271
|
-
|
-
|
498,271
|
|
|
|
|
|
|
|
|
| |
|
|
Carrying
amount
|
Fair value
|
Level 1
|
Level 2
|
Level 3
|
|
31 December 2023
(Audited)
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Financial
assets not measured at fair value:
|
|
|
|
|
|
Cash and
balances at central banks
|
89,552
|
89,552
|
89,552
|
-
|
-
|
|
Loans and
advances to banks
|
3,475
|
3,475
|
3,475
|
-
|
-
|
|
Loans and
advances to customers
|
568,044
|
568,044
|
-
|
-
|
568,044
|
|
Trade
receivables
|
3,706
|
3,706
|
-
|
-
|
3,706
|
|
Other
receivables
|
452
|
452
|
-
|
-
|
452
|
|
|
665,229
|
665,229
|
93,027
|
-
|
572,202
|
|
|
|
|
|
|
|
|
Financial
liabilities not measured at fair value:
|
|
|
|
|
|
Customer
deposits
|
574,622
|
574,177
|
-
|
-
|
574,177
|
|
Other
financial liabilities
|
1,205
|
1,205
|
-
|
-
|
1,205
|
|
Subordinated liabilities
|
10,221
|
10,742
|
-
|
10,742
|
-
|
|
Trade
payables
|
528
|
528
|
-
|
-
|
528
|
|
Other
payables
|
1,148
|
1,148
|
-
|
-
|
1,148
|
|
Preference shares
|
50
|
50
|
-
|
-
|
50
|
|
|
587,774
|
587,850
|
-
|
10,742
|
577,108
|
Fair values for level 3 assets
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 are approximate to their
fair values.
Cash and balances at
central banks
This represents cash held at
central banks where fair value is considered to be equal to
carrying value.
Loans and advances to
banks
This
mainly represents the Group's working capital current accounts with
other banks with an original maturity of less than three months.
Fair value is not considered to be materially different to carrying
value.
Investment securities
The
investment securities carried at amortised cost represent the
Groups investment in a money market fund. Due to the short-term
nature of the underlying investments which are held to maturity,
the fund has never deviated from par value. The carrying value is
therefore considered to be approximately equal to the fair
value.
Loans and advances to
customers
Due to the short-term nature of
loans and advances to customers, their carrying value is considered
to be approximately equal to their fair value. These items are
short term in nature such that the impact of the choice of discount
rate would not make a material difference to the
calculations.
Customer
deposits
The fair value of fixed rate
retail deposits has been estimated by discounting future cash flows
at current market rates of interest. Retail deposits at variable
rates and deposits payable on demand are considered to be at
current market rates and as such fair value is estimated to be
equal to carrying value.
Subordinated
liabilities
The fair value of the subordinated
liabilities is estimated by discounting the expected cashflows
using an interest rate for
similar liabilities with the same
remaining maturity rate and credit profile.
Trade and other
receivables, other borrowings and other
liabilities
These represent short-term
receivables and payables and as such their carrying value is
considered to be equal to their fair value.
Financial assets and liabilities
included in the statement of financial position that are measured
at fair value:
|
|
Carrying
Amount
|
Principal
Amount
|
Level 1
|
Level 2
|
Level 3
|
|
30 June 2024
(Unaudited)
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Financial
assets measured at fair value:
|
|
|
|
|
|
Debt
securities
|
4,983
|
5,000
|
4,983
|
-
|
-
|
|
Derivative assets
|
210
|
10,000
|
-
|
210
|
-
|
|
|
5,193
|
15,000
|
4,983
|
210
|
-
|
|
|
|
|
|
|
|
|
Financial
liabilities measured at fair value:
|
|
|
|
|
|
Derivative liabilities
|
65
|
10,000
|
-
|
65
|
-
|
|
|
65
|
10,000
|
-
|
65
|
-
|
|
|
Carrying
Amount
|
Principal
Amount
|
Level 1
|
Level 2
|
Level 3
|
|
30 June 2023
(Unaudited)
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Financial
assets measured at fair value:
|
|
|
|
|
|
Debt
securities
|
24,528
|
25,000
|
24,528
|
-
|
-
|
|
|
24,528
|
25,000
|
24,528
|
-
|
-
|
|
|
|
|
|
|
|
|
Financial
liabilities measured at fair value:
|
|
|
|
|
|
Derivative liabilities
|
1,409
|
165,000
|
-
|
1,409
|
-
|
|
|
1,409
|
165,000
|
-
|
1,409
|
-
|
|
|
Carrying
Amount
|
Principal
Amount
|
Level 1
|
Level 2
|
Level 3
|
|
31 December 2023
(Audited)
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Financial
assets measured at fair value:
|
|
|
|
|
|
Debt
securities
|
14,839
|
15,000
|
14,839
|
-
|
-
|
|
Derivative assets
|
537
|
45,000
|
-
|
57
|
-
|
|
|
15,376
|
60,000
|
14,839
|
57
|
-
|
|
|
|
|
|
|
|
|
Financial
liabilities measured at fair value:
|
|
|
|
|
|
Derivative liabilities
|
565
|
100,000
|
-
|
565
|
-
|
|
|
565
|
100,000
|
-
|
565
|
-
|
Debt
securities
The debt securities carried at
fair value by the Company are treasury bills and government gilts.
Treasury bills and government gilts are traded in active markets
and fair values are based on quoted market prices.
There were no transfers between
levels during the periods, all debt securities have been measured
at level 1 from acquisition.
Derivatives
Derivative instruments fair values
are provided by a third party and are based on the market values of
similar financial
instruments. The fair value of
investment securities held at FVTPL is measured using a discounted
cash flow model.
Capital management
The Group manages its capital to
ensure that it will be able to continue as a going concern while
providing an adequate return to shareholders.
Refer to the audited financial
statement of the Group for the year ended 31 December 2023 for
further details of the Group's approach to capital
management.
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 has overall
responsibility for the determination of the Group's risk management
objectives and policies. The overall objective of the Board 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
· Interest rate risk
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 to customers. The Group considers
all elements of credit risk exposure such as counterparty default
risk, geographical risk and sector risk for risk management
purposes.
Refer to the audited financial
statement of the Group for the year ended 31 December 2023 for
further details of the Group's approach to credit risk management
and impairment provisioning.
Collateral held as security:
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Fully
collateralised - loan-to-value* ratio:
|
|
|
|
|
Less than
50%
|
14,123
|
4,972
|
14,261
|
|
51% to
70%
|
63,736
|
56,006
|
56,482
|
|
71% to
80%
|
113,066
|
61,764
|
93,582
|
|
81% to
90%
|
109,306
|
80,598
|
108,833
|
|
91% to
100%
|
274,914
|
301,148
|
291,266
|
|
Total collateralised
lending
|
575,145
|
504,488
|
564,424
|
|
|
|
|
|
|
Partially collateralised
lending
|
-
|
-
|
-
|
|
|
|
|
|
|
Unsecured
lending
|
31,514
|
17,995
|
19,703
|
* Calculated using wholesale
collateral values. Wholesale collateral values represent the
invoice total (including applicable VAT) from the invoice received
from the supplier of the product. The wholesale amount is less than
the recommended retail price (RRP) of the product.
The Group's lending activities are asset
based so it expects that the majority of its exposure is secured by
the collateral value of the asset that has been funded under the
loan agreement. The Group has title to the
collateral which is funded under loan agreements. The collateral
includes boats, motorcycles, recreational vehicles, caravans, light
commercial vehicles, industrial and agricultural equipment. The
collateral has low depreciation and is not subject to rapid
technological changes or redundancy. There has been no change in
the Group's assessment of collateral and its underlying value in
the reporting period.
The assets are generally in the
counterparty's possession, but this is controlled and managed by
the asset audit process. The audit process checks on a
periodic basis that the asset is in the counterparty's possession
and has not been sold out of trust or is otherwise not in the
counterparty's control. The frequency of the audits is initially
determined by the risk rating assessed at the time that the
borrowing facility is first approved and is assessed on an ongoing
basis.
Additional security may also be
taken to further secure the counterparty's obligations and further
mitigate risk. Further to this, in many cases, the
Group is often granted,
by the counterparty, an option to sell-back the underlying
collateral.
Based on the Group's current principal products, the counterparty repays
its obligation under a loan agreement with the Group at or before
the point that it sells the asset. If the asset is not sold and the
loan agreement reaches maturity, the counterparty is required to
pay the amount due under the loan agreement plus any other amounts
due. In the event that the counterparty does not pay on the due
date, the Group's customer management process will maintain
frequent contact with the counterparty to establish the reason for
the delay and agree a timescale for payment. Senior Management will
review actions on a regular basis to ensure that the Group's
position is not being prejudiced by delays.
In the event the Group determines that payment will not be made
voluntarily, it will enforce the terms of its loan agreement and
recover the asset, initiating legal proceedings for delivery, if
necessary. If there is a shortfall between the net sales proceeds
from the sale of the asset and the counterparty's obligations under
the loan agreement, the shortfall is payable by the counterparty on
demand.
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.
The Group's gross receivable balance for loans and advances to
customers is split by industry as follows:
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
£'000
|
%
|
£'000
|
%
|
£'000
|
%
|
|
Leisure:
|
|
|
|
|
|
|
|
Lodges
and holiday homes
|
118,549
|
19.5%
|
158,586
|
30.4%
|
148,441
|
25.4%
|
|
Motorhomes and caravans
|
164,020
|
27.0%
|
97,414
|
18.6%
|
131,478
|
22.5%
|
|
Marine
|
63,403
|
10.5%
|
48,420
|
9.3%
|
55,981
|
9.6%
|
|
Motorsport
|
33,813
|
5.6%
|
28,965
|
5.5%
|
27,458
|
4.7%
|
|
Automotive
|
21,803
|
3.6%
|
4,107
|
0.8%
|
8,366
|
1.4%
|
|
|
401,588
|
66.2%
|
337,492
|
64.6%
|
371,724
|
63.6%
|
|
Commercial:
|
|
|
|
|
|
|
|
Transport
|
104,854
|
17.3%
|
112,605
|
21.6%
|
130,982
|
22.4%
|
|
Industrial equipment
|
32,986
|
5.4%
|
31,644
|
6.1%
|
35,926
|
6.2%
|
|
Agricultural equipment
|
26,488
|
4.4%
|
25,835
|
4.9%
|
26,995
|
4.6%
|
|
Other
serialised assets
|
3,575
|
0.6%
|
-
|
0.0%
|
-
|
0.0%
|
|
|
167,903
|
27.7%
|
170,084
|
32.6%
|
193,903
|
33.2%
|
|
Wholesale and receivables
funding
|
37,168
|
6.1%
|
14,907
|
2.8%
|
18,500
|
3.2%
|
|
|
|
|
|
|
|
|
|
Total gross
receivables
|
606,659
|
100%
|
522,483
|
100%
|
584,127
|
100%
|
Credit
quality of borrowers:
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.
Refer to the audited financial statements of the Group for the year
ended 31 December 2023 for description of the meanings of Stages 1,
2 and 3.
|
30 June 2024
(Unaudited)
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
|
|
|
|
|
|
|
|
|
|
|
Gross
carrying
amount:
|
|
|
|
|
|
|
|
|
|
Above
average (Risk rating 1-2)
|
441,583
|
73%
|
-
|
0%
|
251
|
0%
|
441,834
|
73%
|
|
Average
(Risk
rating 3-5)
|
118,170
|
20%
|
15,912
|
3%
|
-
|
0%
|
134,082
|
22%
|
|
Below
average (Risk rating 6+)
|
20,058
|
3%
|
3,442
|
1%
|
7,243
|
1%
|
30,743
|
5%
|
|
Total gross carrying
amount
|
579,811
|
96%
|
19,354
|
3%
|
7,494
|
1%
|
606,659
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowance:
|
|
|
|
|
|
|
|
|
|
Above
average (Risk rating 1-2)
|
(1,544)
|
0.3%
|
-
|
0.0%
|
(47)
|
18.7%
|
(1,591)
|
0.4%
|
|
Average
(Risk
rating 3-5)
|
(1,346)
|
1.1%
|
(131)
|
0.8%
|
-
|
0.0%
|
(1,477)
|
1.1%
|
|
Below
average (Risk rating 6+)
|
(208)
|
1.0%
|
(66)
|
1.9%
|
(4,638)
|
64.0%
|
(4,912)
|
16.0%
|
|
Total impairment
allowance
|
(3,098)
|
0.5%
|
(197)
|
1.0%
|
(4,685)
|
62.5%
|
(7,980)
|
1.3%
|
|
30 June 2023
(Unaudited)
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
|
|
|
|
|
|
|
|
|
|
|
Gross
carrying
amount:
|
|
|
|
|
|
|
|
|
Above
average (Risk rating 1-2)
|
366,504
|
70%
|
678
|
0%
|
-
|
0%
|
367,182
|
70%
|
|
Average
(Risk
rating 3-5)
|
90,005
|
17%
|
15,102
|
3%
|
37
|
0%
|
105,144
|
20%
|
|
Below
average (Risk rating 6+)
|
30,837
|
6%
|
2,700
|
1%
|
16,620
|
3%
|
50,157
|
10%
|
|
Total gross carrying
amount
|
487,346
|
93%
|
18,480
|
4%
|
16,657
|
3%
|
522,483
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowance:
|
|
|
|
|
|
|
|
|
Above
average (Risk rating 1-2)
|
(944)
|
0.3%
|
(1)
|
0.2%
|
-
|
0.0%
|
(945)
|
0.3%
|
|
Average
(Risk
rating 3-5)
|
(1,101)
|
1.2%
|
(171)
|
1.1%
|
(1)
|
4.0%
|
(1,273)
|
1.2%
|
|
Below
average (Risk rating 6+)
|
(304)
|
1.0%
|
(35)
|
1.3%
|
(4,641)
|
27.9%
|
(4,980)
|
9.9%
|
|
Total impairment
allowance
|
(2,349)
|
0.5%
|
(207)
|
1.1%
|
(4,642)
|
27.9%
|
(7,198)
|
1.4%
|
|
31 December 2023
(Audited)
|
Stage 1
|
Stage 2
|
Stage 3
|
Total
|
|
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
£'000
|
Portfolio
%
|
|
|
|
|
|
|
|
|
|
|
|
Gross
carrying
amount:
|
|
|
|
|
|
|
|
|
Above
average (Risk rating 1-2)
|
432,493
|
74%
|
-
|
0%
|
763
|
0%
|
433,256
|
74%
|
|
Average
(Risk
rating 3-5)
|
93,568
|
16%
|
17,729
|
3%
|
1,850
|
0%
|
113,147
|
19%
|
|
Below
average (Risk rating 6+)
|
19,891
|
3%
|
3,323
|
1%
|
14,510
|
2%
|
37,724
|
6%
|
|
Total gross carrying
amount
|
545,952
|
93%
|
21,052
|
4%
|
17,123
|
3%
|
584,127
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
£'000
|
ECL coverage
%
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowance:
|
|
|
|
|
|
|
|
|
Above
average (Risk rating 1-2)
|
(1,483)
|
0.3%
|
-
|
0.0%
|
(526)
|
68.9%
|
(2,009)
|
0.5%
|
|
Average
(Risk
rating 3-5)
|
(860)
|
0.9%
|
(150)
|
0.8%
|
(315)
|
17.0%
|
(1,325)
|
1.2%
|
|
Below
average (Risk rating 6+)
|
(179)
|
0.9%
|
(10)
|
0.3%
|
(11,073)
|
76.3%
|
(11,262)
|
29.9%
|
|
Total impairment
allowance
|
(2,522)
|
0.5%
|
(160)
|
0.8%
|
(11,914)
|
69.6%
|
(14,596)
|
2.5%
|
See note 15 for analysis of the
movements in gross loan receivables and impairment allowances in
terms of IFRS 9 staging.
Analysis of credit quality of
trade receivables:
|
|
30 June 2023
(Unaudited)
|
30 June 2022
(Unaudited)
|
31 December 2022
(Audited)
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Status at
balance sheet date:
|
|
|
|
|
Not past
due, nor defaulted
|
2,545
|
941
|
3,513
|
|
Past due
but not in default
|
584
|
50
|
210
|
|
Defaulted
|
19
|
285
|
242
|
|
Total gross carrying
amount
|
3,148
|
1,276
|
3,965
|
|
|
|
|
|
|
Impairment allowance
|
(106)
|
(296)
|
(259)
|
|
Carrying
amount
|
3,042
|
980
|
3,706
|
See note 16 for analysis of the
movements in gross trade receivables and impairment allowances in
terms of IFRS 9 staging.
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 finance operations and can be affected by
a range of Group-specific and market-wide events.
Refer to the audited financial
statement of the Group for the year ended 31 December 2023 for
further details of the Group's approach to liquidity risk
management.
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 Group's income or the value of its
assets.
The principal market risk to which
the Group is exposed is interest rate risk.
The Group's treasury function is
responsible for managing the Group's exposure to all aspects of
market risk within the operational limits set out in the Group's
treasury policies, with the overall objective of managing market
risk in line with the Group's risk appetite. The Asset and
Liability Committee approves the Group's treasury policies and
receives regular reports on all aspects of market risk exposure,
including interest rate risk.
Refer to the audited financial
statement of the Group for the year ended 31 December 2023 for
further details of the Group's approach to market risk
management.
30. Earnings per share
|
|
30 June 2024
(Unaudited)
|
30 June 2023
(Unaudited)
|
31 December 2023
(Audited)
|
|
Earnings attributable to
ordinary shareholders
|
£'000
|
£'000
|
£'000
|
|
Profit
after tax attributable to the shareholders
|
6,731
|
2,261
|
3,155
|
|
|
|
|
|
|
Weighted average number of
shares, thousands
|
|
|
|
|
Basic
|
179,369
|
179,369
|
179,369
|
|
Dilutive
impact of share-based payment schemes
|
8,606
|
-
|
8,125
|
|
Diluted
|
187,975
|
179,369
|
187,494
|
|
Earnings per share, pence
per share
|
|
|
|
|
Basic
|
3.8
|
1.0
|
1.8
|
|
Diluted
|
3.6
|
1.0
|
1.7
|
31. Related party disclosures
During the six months period ended
30 June 2024, related party transactions have had no material
effect on the financial position or performance of the Group. The
related party transactions remain similar in nature to those
disclosed in the audited financial statements of the Group for the
year ended 31 December 2023.
32. Subsequent events
In July 2024 the ENABLE Guarantee
with the British Business Bank was upsized from £250m to
£350m.
There have been no other
significant events between 30 June 2024 and the date of approval of
the Interim Financial Report that require a change or additional
disclosure in the condensed consolidated interim financial
statements.