TIDMPCF
RNS Number : 7383O
PCF Group PLC
03 June 2020
3 June 2020
PCF Group plc
("PCF", the "Company" or the "Group")
Interim Results
Six-months to 31 March 2020
Operational resilience in challenging times
PCF Group plc, the AIM-listed specialist bank, today announces
its interim results for the six-months ended 31 March 2020. The
Board is pleased to report a strong trading performance in the
first half of the year as a whole. However, this is overshadowed in
the final weeks by the Covid-19 crisis and its potential financial
implications. Our focus and priority at this challenging time is to
support and protect our employees, customers and the long-term
value of the business for all stakeholders.
Business Highlights:
-- Total new business originations up 26% to GBP153 million
(2019: GBP121 million) comprising new business origination for both
own portfolio and that placed for broker commission income
-- Portfolio growth of 18% to GBP401 million (Sept 2019: GBP339 million)
-- Focus remains on the prime end of the credit spectrum, with
80% (2019: 76%) of originations in our top four credit grades
-- Retail deposits total GBP340 million (Sept 2019: GBP267
million) with over 7,800 customers (Sept 2019: 6,250)
-- Business continuity plans have proved resilient and PCF
remains open for business to support consumers and SMEs
-- As with all banks, the crisis caused an immediate decrease in
demand for our products and our lending volumes reduced by 52%
against target, in April and May 2020 with the business finance
division being most affected
-- Customer forbearance has been granted totalling GBP138
million as at 29 May 2020, representing 34% of our lending book by
value
-- Market guidance will be withheld until there is greater economic certainty
Financial Highlights:
-- Operating income up 26% to GBP12.7 million (2019: GBP10.1 million)
-- Cost of risk of 1.7% (2019: 0.9%) including an incremental
charge of GBP1.6 million in relation to the potential impact of the
Covid-19 crisis
-- Statutory profit before tax down 21% to GBP2.6 million (2019:
GBP3.3 million) due solely to the impairment charge
-- Earnings per share of 0.8p (2019: 1.2p)
-- Net Interest Margin ('NIM') reduced to 6.8% (2019: 8.0%) with
continued active management of lending quality
-- Lower cost to income ratio of 52.4% (2019: 54.3%), reflecting
benefits of operational gearing
-- After-tax return on equity decreased to 6.8% (2019: 11.4%)
-- Total Capital Ratio of 17.0% (Sept 2019: 18.0%)
-- Liquidity Coverage Ratio of 1,181% (Sept 2019: 553%)
-- GBP69 million (Sept 2019: GBP63 million) of unearned finance
charges to contribute to earnings in future years
Scott Maybury, CEO, commented:
"As one might expect for a financial period affected by
Covid-19, there is a nuanced picture in this set of results. What I
can say with certainty, however, is that the strengths of our
business model are clear to see in both normal market conditions
and a more challenging environment.
"The rationale for PCF gaining a banking licence was that the
Group would be able to write greater volumes of business to
borrowers with better credit quality and have a more secure source
of funding through retail savings deposits. This allows for both
stronger growth during normal trading and a business less exposed
to external shocks when they arrive.
"Notwithstanding the seriousness of the current situation, I
would like to emphasise that PCF is well equipped for the
challenges ahead. We were able to implement our Business Continuity
Plan both quickly and effectively. In addition, our leadership team
and many of our employees have experience of three previous
recessions and are determined to bring PCF through in a strong
position.
"Albeit at lower levels, we are continuing to write new loans to
support consumers and businesses across the UK and will continue to
be 'open for business'. In addition, we are working productively
with borrowers who are facing financial difficulties to help find
solutions for them, and we are confident that this ongoing,
committed customer service will help PCF prosper as the economic
picture improves.
"Finally, I would like to thank the PCF team who have adapted
impressively well to the challenging circumstances."
S
For further information, please contact:
PCF Group plc Tel: +44 (0) 20 7222
Scott Maybury, Chief Executive Officer 2426
Robert Murray, Managing Director
David Bull, Finance Director
Tavistock Communications Tel: +44 (0) 20 7920
Simon Hudson / Edward Lee / Tim Pearson 3150
Panmure Gordon (Nominated Advisor and Tel: +44 (0) 20 7886
Joint Broker) 2500
Atholl Tweedie / Joanna Langley - Corporate
Finance
Charles Leigh-Pemberton - Corporate Broking
Shore Capital (Joint Broker) Tel: +44 (0) 20 7408
Henry Willcocks - Corporate Broking 4080
There will be a dial in facility available for an analyst and
investor call today, Wednesday 3 June at 1030h (BST). The
presentation will be available on the investor section of the PCF
Bank website at the same time.
https://pcf.bank/investors/ The details for the call are:
United Kingdom Toll-Free: 08003589473
United Kingdom Toll: +44 333 3000804
Pin: 49950916#
About PCF Group plc www.pcf.bank
Established in 1994, PCF Group plc is the AIM-quoted parent of
the specialist bank, PCF Bank Limited. Since commencing operations
as a bank in 2017, the Group has increased its lending portfolio
significantly from GBP146 million to GBP401 million. The Group will
retain its focus on portfolio quality and has the capability to
lend increasingly to prime segments of its existing finance
markets. The Group has also recently diversified its lending
products and asset classes through acquisition and by setting up
new organic operations.
PCF Bank currently offers retail savings products for
individuals and then deploys those funds through its four lending
divisions:
-- Business Finance which provides finance for vehicles, plant and equipment to SMEs;
-- Consumer Finance which provides finance for motor vehicles to consumers;
-- Azule Limited which provides finance to the broadcast and media industry; and
-- Bridging Property Finance which provides loans to companies
and sole traders investing in residential and commercial
property.
The Group has a track record of strong financial performance and
an efficient and scalable business model, with significant room to
grow. Utilising its technologically advanced platform, the Bank
provides both depositors and borrowers with a high level of service
and a straightforward, simple range of products tailored to suit
their needs.
Recently recorded video profiles of PCF's Bridging Finance,
Azule Broadcast Equipment Finance, and Savings divisions are
available at the Company's profile page on the London Stock
Exchange website:
https://profile.lsegissuerservices.com/PCFGroup/overview .
Chairman's Statement
for the six months ended 31 March 2020
I am pleased to report a strong trading performance in the first
half of the current financial year, although it was affected in its
final weeks by the Covid-19 crisis. As highlighted in our trading
update of 8 April 2020, the crisis took hold too late in this
reporting period to have a significant impact on new business
performance, but it has had a material effect on the outlook for
the remainder of this financial year and, in particular, loan loss
provisioning as at 31 March 2020. Impairment provisioning under
IFRS9 includes an element of unrealised loss against potential
future defaults based on portfolio behaviours and the economic
outlook as at 31 March 2020.
Profitability and Covid-19 effect
Statutory profit before tax for the six months ended 31 March
2020 was GBP2.6 million (2019: GBP3.3 million), a fall of 21%. The
results include an incremental impairment charge of GBP1.6 million
in the period for our expectation of the effect Covid-19 will have
on the collectability of our portfolio. On an annualised basis this
represents an 80 basis points increase in the relative cost of
risk. The impairment charge, together with the judgements used to
assess the effects of Covid-19, are further detailed in the Notes
to the Accounts.
Covid-19 related impairment aside, the underlying profit before
tax increased by 27% from GBP3.3 million to GBP4.2 million. This is
a satisfactory performance which was tracking towards our previous
market expectation. It also reflects the underlying quality of the
portfolio and a lending policy which has increasingly focussed on
the prime segments of the credit spectrum.
As a result of the increased impairment charge, earnings per
share fell to 0.8p (2019:1.2p) and return on equity reduced from
11.4% to 6.8%.
The net interest margin ('NIM') in the period was 6.8% (2019:
8.0%) as we actively manage the move up the credit quality
spectrum. This decrease in NIM was offset by operational gearing
through continued growth of our portfolio. We have seen the
cost-to-income ratio in the period fall to 52.4% (2019: 54.3%).
This operational efficiency is supported by the continued
investment in technology and infrastructure to build scalable,
customer-facing systems to support our business model.
The Group's total funding cost fell to 2.1% (2019: 2.4%) as we
continue to improve the efficiency of the Bank's treasury model and
replace higher cost wholesale funding with cheaper retail deposits.
The lending portfolio is now, in the main, funded by retail
deposits of GBP340 million (Sept 2019: GBP267 million) and the
support of over 7,800 (Sept 2019: 6,250) savings customers.
Our staff are currently working remotely. They have adapted well
to this new environment and continue to offer unwavering support to
customers and remain open across all business lines for new
lending. Our existing customers have required our assistance, with
forbearance granted to GBP138 million of balances at 29 May 2020,
with the majority of requests falling after the period end. The
prevalence of requests is greater in business finance where many
SMEs have felt the full force of the UK lockdown.
Business lines, current trading and the portfolio
New business originations increased by 26% in the period to
GBP153 million (2019: GBP121 million). Prior to any Covid-19
related events, the business had operated in line with the Board's
expectations and we were making excellent progress towards our
ambitious targets for portfolio growth and increased profitability.
The crisis caused an immediate decrease in demand for our products
and our lending volumes reduced by 52% against target in April and
May 2020, with the business finance division being most affected.
In particular, the segment of SME lending in which our subsidiary
Azule operates, finance for broadcast and media equipment, has seen
the sharpest decline.
New business volumes were strong across all business lines. The
largest contributor was the business finance division where lending
to SMEs increased by 16% to GBP66 million (2019: GBP56 million).
The consumer finance division also showed strong progress with an
increase of 48% to GBP43 million (2019: GBP29 million). At this
time last year, our bridging property finance operation had only
just commenced trading. Originations for this division in the
period totalled GBP18 million (2019: GBP2 million), exceptional
progress from a start-up position. Finally, Azule, our specialist
broadcast and media equipment finance division, originated GBP26
million of business (2019: GBP33 million), of which GBP11 million
was for our own portfolio, the remainder being placed with other
funders.
While the current demand for lending is uncertain, the markets
in which we operate have continued to grow over the past year and
we expect the opportunity to remain for volume growth once the
economy begins to show signs of a recovery. The business asset
finance market increased 7% in 2019 and the consumer motor finance
market for used vehicles showed similar growth of 6%. Despite
competitive pressures we have continued to grow market share and
presence in all our markets. While the appetite for SMEs to
recommence borrowing is currently unknown, consumer motor finance
has proved more resilient. This experience supports market
commentary that, post-crisis, a change in travel preferences will
lead to a bounce in vehicle sales through the recovery phase. As a
predominantly used car lender, we should be well placed to take
advantage of that trend. Our bridging property finance division is
also showing strong activity as non-bank lenders have withdrawn
from that market due to liquidity issues.
The portfolio has grown by 18% in the period to GBP401 million
(Sept 2019: GBP339 million). The quality of the portfolio is being
actively managed and in the period 80% (2019: 76%) of new business
originations were in our prime credit grades. A focus on prime
quality in recent years has resulted in the overall portfolio now
containing 74% prime customers up from 68% at the interim stage
last year. We expect this to continue. The continual increase in
portfolio quality is borne out by the impairment charge which,
ignoring the additional charge as a result of Covid-19, would have
reduced in the period from 0.9% to 0.8%. The incremental impairment
charge of GBP1.6 million for Covid-19 increased Expected Credit
Loss provisions held on the balance sheet at 31 March 2020 to 2.8%
(Sept 2019: 2.2%), an increase of 27%. The collection environment
is likely to be extremely challenging in the coming months, but we
have highly experienced management and staff who steered the
business through previous downturns.
The Group's lending policy as a collateral-backed lender to
prime customers provides resilience in times of economic stress. We
have increased our prime quality origination targets in business
finance and consumer motor finance from 75% to 90% in the light of
the crisis. This is a prudent measure but is likely to result in
downward pressure on lending margins in those divisions and we
expect our NIM to fall further in the short-term.
The portfolio is reported net of unearned finance charges of
GBP69 million (Sept 2019: GBP63 million). This unearned finance
income will be attributed to future accounting periods and will
help to support future earnings performance against the short-term
effects of a business slow down, such as the one we are
experiencing at the current time.
Liquidity and capital management
The Group has a Liquidity Coverage Ratio of 1,181% (Sept 2019:
553%) which is well in excess of the minimum requirement of 100%.
With access to both the retail deposit market and the Treasury's
new Term Funding Scheme for SMEs, the Group retains a strong
liquidity position. The Group has a Total Capital Ratio of 17.0%
(Sept 2019: 18.0%). This exceeds our regulatory requirement and,
with the UK lockdown resulting in a contraction of new lending
volumes and bridging property finance offering capital efficiency,
we expect only a modest increase in risk weighted assets in the
near future. Alongside the available headroom on our Tier 2 capital
facility, this will maintain a comfortable surplus capital
position.
Outlook
Our current strategic focus is to safeguard our staff,
portfolio, capital and liquidity. The UK economy is experiencing
great uncertainty and, since the end of our reporting period, the
current economic forecasts show a steep fall in economic activity,
alongside high levels of unemployment and business failure. In the
second half of our financial year, IFRS 9 impairment modelling will
continue to adjust as the economic outlook becomes clearer. We will
continue to evaluate the impact on our lending portfolio as this
economic data emerges and update the market accordingly. It is
difficult to estimate at this time how damaging the effects of this
pandemic will be to our performance, but we will remain disciplined
in our risk appetite and continue to limit the operational impact.
Market guidance will return once there is greater clarity.
We entered this crisis in a strong position, made even stronger
by the experienced PCF team. We have a diversified balance sheet in
terms of both lending and funding which is based on a prudent
business model. In the short-term we will focus on supporting staff
and customers but, once this crisis passes, we will refocus our
strategic objectives and reset our targets for growth. The
objective is to emerge from this period of disruption in the best
possible financial position and to take advantage of the
opportunities that may present themselves in the form of fewer
market participants, further portfolio diversification and sector
consolidation.
The business has demonstrated strong operational resilience
during this period, successfully servicing customers with empathy
and professionalism. This efficiency and flexibility are strong
endorsements of the culture and values of PCF, and I am hugely
grateful to our staff for their determination and dedication during
this very disruptive period. At the current time we are well
positioned to navigate the crisis.
Tim Franklin
Chairman
CONSOLIDATED INCOME STATEMENT
for the six months ended 31 March 2020
Six months ended Six months ended Twelve months ended
31 March 31 March 30 September
2020 2019 2019
unaudited unaudited audited
Note GBP'000 GBP'000 GBP'000
Interest revenue calculated using the effective
interest method 7 20,364 16,248 34,499
Interest and similar expense calculated using the
effective interest method 8 (7,717) (6,230) (12,884)
----------------- ----------------- --------------------
Net interest income 12,647 10,018 21,615
Fees and commission income 890 605 1,815
Fees and commission expense (813) (501) (1,154)
----------------- ----------------- --------------------
Net fees and commission income 77 104 661
----------------- ----------------- --------------------
Net loss on financial instruments mandatorily at
fair value through profit or loss (25) - (63)
----------------- ----------------- --------------------
Net operating income 12,699 10,122 22,213
----------------- ----------------- --------------------
Personnel expenses (4,331) (3,800) (7,640)
Depreciation of office equipment, fixtures,
fittings and motor vehicles (122) (67) (137)
Amortisation of intangible assets (268) (196) (416)
Other operating expenses (2,280) (1,644) (3,827)
Impairment losses on financial assets 9 (3,146) (1,164) (2,175)
Total operating expenses (10,147) (6,871) (14,195)
----------------- ----------------- --------------------
Profit before tax 2,552 3,251 8,018
Income tax charge 10 (509) (658) (1,624)
----------------- ----------------- --------------------
Profit after tax 2,043 2,593 6,394
Earnings per 5p ordinary share - basic and diluted 17 0.8p 1.2p 2.7p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 March 2020
Six months ended Six months ended Twelve months ended
31 March 31 March 30 September
2020 2019 2019
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Profit after tax 2,043 2,593 6,394
Other comprehensive income that will be reclassified to
the income statement
Fair value loss on FVOCI financial instruments (460) (87) (10)
Deferred tax income - - 2
----------------- ----------------- --------------------
Total items that will be reclassified to the income
statement (460) (87) (8)
----------------- ----------------- --------------------
Total comprehensive income, net of tax 1,583 2,506 6,386
----------------- ----------------- --------------------
CONSOLIDATED BALANCE SHEET
at 31 March 2020
31 March 31 March 30 September
2020 2019 2019
Notes unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Assets
Cash and balances at central banks 12,246 2,882 7,371
Debt instruments at FVOCI 14 20,128 27,491 19,638
Loans and advances to customers 11 400,856 275,710 338,503
Office equipment, fixtures, fittings and motor
vehicles
vehicles 3,168 292 579
Deferred tax assets 1,138 1,287 1,105
Other assets 3,258 5,856 4,932
Goodwill and other intangible assets 5,968 5,437 5,941
----------- ----------- -------------
Total assets 446,762 318,955 378,069
Liabilities
Due to banks 30,483 52,028 44,412
Due to customers 339,853 203,754 267,070
Subordinated debt 15 5,000 - -
Derivative financial instruments 56 - 63
Current tax liabilities 242 528 1,521
Other liabilities 10,869 7,065 6,248
----------- ----------- -------------
Total liabilities 386,503 263,375 319,314
Equity
Issued capital 16 12,510 12,510 12,510
Share premium 16 17,619 17,653 17,619
Other reserves (453) (72) 7
Own shares (355) (355) (355)
Retained earnings 30,938 25,844 28,974
----------- ----------- -------------
Total 60,259 55,580 58,755
----------- ----------- -------------
Total equity and liabilities 446,762 318,955 378,069
----------- ----------- -------------
Signed, Scott Maybury Signed, David Bull
Chief Executive Finance Director
3 June 2020 3 June 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March 2020
Attributable to equity holders of the Group
------------------------------------------------------------
Non-distributable Distributable
---------------------------- ------------------------------
Issued Share Own Other Retained Total
Capital premium shares Reserves Earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- --------- --------- --------
Group
Balance at 1 October 2019 12,510 17,619 (355) 7 28,974 58,755
Profit for the period - - - - 2,043 2,043
Issuance of new shares - - - - - -
Fair value loss on FVOCI
financial instruments - - - (460) - (460)
Share-based payments - - - - (79) (79)
Cash dividends - - - - - -
------- ------- ------ ------ ------- -------
Balance at 31 March 2020 12,510 17,619 (355) (453) 30,938 60,259
------- ------- ------ ------ ------- -------
Attributable to equity holders of the Group
------------------------------------------------------------
Non-distributable Distributable
---------------------------- ------------------------------
Issued Share Own Other Retained Total
Capital premium shares Reserves Earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- --------- --------- --------
Group
Balance at 1 October 2018 10,611 8,527 (355) 15 23,753 42,551
Impact on transition to IFRS 9 - - - - (502) (502)
------- ------- ------ ----- ------- -------
Restated balance at 1 October 10,611 8,527 (355) 15 23,251 42,049
Profit for the period - - - - 2,593 2,593
Issuance of new shares 1,898 9,087 - - - 10,985
Fair value loss on FVOCI
financial instruments - - - (87) - (87)
Share-based payments - - - - 40 40
Cash dividends - - - - - -
------- ------- ------ ----- ------- -------
Balance at 31 March 2019 12,509 17,614 (355) (72) 25,884 55,580
------- ------- ------ ----- ------- -------
Attributable to equity holders of the Group
------------------------------------------------------------
Non-distributable Distributable
---------------------------- ------------------------------
Issued Share Own Other Retained Total
Capital premium shares Reserves Earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- --------- --------- --------
Group
Balance at 1 October 2018 10,611 8,527 (355) 15 23,753 42,551
Impact on transition to IFRS 9 - - - - (502) (502)
------- ------- ------ ---- ------- -------
Restated balance at 1 October 10,611 8,527 (355) 15 23,251 42,049
Profit for the year - - - - 6,394 6,394
Issuance of new shares 1,899 9,092 - - - 10,991
Fair value loss on FVOCI
financial instruments - - - (8) - (8)
Share-based payments - - - - 79 79
Cash dividends - - - - (750) (750)
------- ------- ------ ---- ------- -------
Balance at 30 September 2019 12,510 17,619 (355) 7 28,974 58,755
------- ------- ------ ---- ------- -------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 March 2020
31 March 31 March 30 September
2020 2019 2019
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Operating activities
Profit before tax 2,552 3,251 8,018
Other non-cash items included in profit / (loss) before tax
Depreciation of property, plant and equipment 122 67 137
Amortisation of other intangible assets 268 196 416
Net change in FVOCI financial instruments (460) (87) (8)
Share-based payments (79) - 79
Impairment losses on financial assets 3,146 1,164 2,175
Income tax (paid) / due (1,788) (650) (633)
Adjustment for change in operating assets
Net change in loans and advances (65,499) (42,383) (106,348)
Net change in other assets 1,641 (3,366) (2,231)
Change in operating liabilities
Net change in derivative financial instruments (7) - 63
Net change in amounts due to customers 72,783 12,615 75,931
Net change in other liabilities 4,621 (196) (1,492)
----------- ----------- -------------
Net cash flows from / (used in) operating activities 17,300 (29,389) (23,893)
----------- ----------- -------------
Investing activities
Cash paid for investment in subsidiary - (2,283) (2,283)
Proceeds from financial instruments - 12,411 -
Net sale of debt instruments at FVOCI (490) - 20,264
Purchase of office equipment, fixtures, fittings and motor vehicles (2,711) (27) (384)
Purchase of intangible assets (295) (148) (900)
----------- ----------- -------------
Net cash flows from / (used in) investing activities (3,496) 9,953 16,697
----------- ----------- -------------
Financing activities
Proceeds from share issue during the period - 10,275 10,991
Proceeds from subordinated debt loans 5,000
Net proceeds from borrowings (13,929) (9,295) (17,012)
Dividends paid to equity holders - - (750)
----------- ----------- -------------
Net cash flows from / (used in) financing activities (8,929) 980 (6,771)
----------- ----------- -------------
Net increase / (decrease) in cash and cash equivalents 4,875 (18,456) (13,967)
Cash and cash equivalents brought forward 7,371 21,338 21,338
----------- ----------- -------------
Cash and cash equivalents carried forward 12,246 2,882 7,371
----------- ----------- -------------
NOTES TO THE INTERIM REPORT
1. Basis of preparation
The interim results are unaudited and do not constitute
statutory accounts as defined by section 434 of the Companies Act
2006. The Group balance sheet comparative figures for the year
ended 30 September 2019 are based on the statutory accounts of the
Group for that year and have been reported on by the Group's
auditor and delivered to the Registrar of Companies. The
comparative figures for the Group income statement and statement of
other comprehensive income are based on the unaudited interim
report for the six months ended 31 March 2019. The report of the
auditors was unqualified and did not contain a statement under
section 498 of the Companies Act 2006.
2. Statement of compliance
These interim consolidated financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting',
as adopted by the European Union.
The interim results have been prepared based on the accounting
policies set out in the Annual Report and Financial Statements for
the year ended 30 September 2019, except for the adoption of new
standards effective as of 1 October 2019.
3. New standards, interpretations and amendments adopted by the Group
The Group applies, for the first time, IFRS 16 'Leases'. As
required by IAS 34, the nature and effect of these changes are
disclosed below.
Several other amendments and interpretations apply for the first
time in 2020, but do not have an impact on the interim consolidated
financial statements of the Group. All other accounting policies
are unchanged from the last annual financial statements.
4. Changes in accounting policies and disclosures
The accounting policies applied by the Group differ from those
in the 2019 Annual Report due to new standards and interpretations
becoming effective. The following amendments to standards have been
illustrated as they were applied for the first time in the 2020
interim financial period, resulting in consequential changes to the
accounting policies and other note disclosures, where
applicable.
-- IFRS 16 'Leases' (see below)
4.1 IFRS 16 'Leases'
On 1 October 2019, the Group adopted the requirements of IFRS
16. The new standard replaces IAS 17 'Leases' and related
interpretations. The standard applies to all leasing arrangements
and sets out the principles for the recognition, measurement,
presentation and disclosure of leases for both lessor and lessee
accounting.
The Group has adopted IFRS 16 using the modified retrospective
approach, with practical expedients. As such, the standard is
applied with effect from 1 October 2019, with the cumulative effect
recognised as an adjustment to the opening balance of retained
earnings. Comparative information for 2019 is not restated.
The key changes and impacts are outlined below.
(i) Definition of a lease
Under IFRS 16, a contract is, or contains, a lease, if the
contract conveys a right to control the use of an identified asset
for a period of time in exchange for consideration.
Transition
On transition to IFRS 16, the Group elected to apply the
practical expedient set out in IFRS 16, which states that an entity
is not required to reassess whether a contract is, or contains, a
lease at the date of initial application. As such, the Group only
applies the new requirements of IFRS 16 to contracts previously
identified as leases under IAS 17 and to contracts entered into or
changed on or after 1 October 2019 that meet the definition of a
lease under IFRS 16. Contracts that were not previously identified
as leases under IAS 17 were not reassessed.
(ii) Lessor accounting
Lessor accounting under IFRS 16 is largely unchanged from IAS
17. Lessors continue to classify leases as either operating or
finance leases using similar principles as set out in IAS 17.
Transition
On adoption of IFRS 16, the accounting policies applied by the
Group for leases in which it acts as a lessor are unchanged and
there are no other impacts.
(iii) Lessee accounting
Previously under IAS 17, the Group classified each of its leases
at inception date as either a finance lease or an operating lease.
A lease was classified as a finance lease if it transferred
substantially all of the risks and rewards of ownership of the
leased asset to the Group; otherwise it was classified as an
operating lease. Finance leases were capitalised at the
commencement of the lease at the fair value of the leased asset or,
if lower, at the present value of the minimum lease payments. Lease
payments were apportioned between finance charges and a reduction
of the lease liability. In an operating lease, the leased asset was
not capitalised and the lease payments were charged to
administrative expenses in the income statement on a straight-line
basis over the lease term. Any prepaid or accrued lease payments
were recognised in other assets or other liabilities
respectively.
Upon adoption of IFRS 16, the Group introduced a single lessee
accounting model for all leases, except for short-term leases and
leases of low value items. All leases are now recognised on-balance
sheet whereby a right-of-use asset is recognised to represent the
right to use the underlying asset and a lease liability is
recognised to represent the obligation to make lease payments.
New accounting policies
A summary of the new accounting policies applied by the Group
upon adoption of IFRS 16 for leases in which it acts as a lessee is
as follows.
Right-of-use assets
The Group recognises a right-of-use asset at the lease
commencement date. The right-of-use asset is measured at cost, less
any accumulated depreciation and impairment losses, and is adjusted
for any remeasurement of the lease liability. The cost of the
right-of-use asset includes the amount of the lease liability
recognised, initial direct costs incurred, and lease payments made
at or before the commencement date less any lease incentives
received.
The Group presents right-of-use assets in office equipment,
fixtures, fittings and motor vehicles in the balance sheet,
classified in the right-of-use leasehold property category.
Right-of-use assets are depreciated on a straight-line basis
over the shorter of the estimated useful life and the lease term.
Right-of-use assets are subject to impairment. Depreciation and
impairment losses are charged to administrative expenses in the
income statement.
Lease liabilities
At the lease commencement date, the Group recognises a lease
liability measured at the present value of the lease payments to be
made over the lease term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a
rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating a lease, if the lease term
reflects the Group exercising the option to terminate. The variable
lease payments that do not depend on an index or a rate are
recognised as an administrative expense in the income statement in
the period in which the event or condition that triggers the
payment occurs.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date,
unless the interest rate implicit in the lease is readily
determinable. After the commencement date, the lease liability is
increased to reflect the accretion of interest and reduced for the
lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in
the lease term, a change in the in-substance fixed lease payments,
or a change in the assessment to purchase the underlying asset.
Lease liabilities are presented as a line item in the balance
sheet.
Short-term leases and leases of low value assets
The Group applies the recognition exemption to any short-term
leases (i.e. those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase
option). The Group also applies the recognition exemption to leases
that are considered of low value. Lease payments under such
contracts continue to be charged to administrative expenses in the
income statement on a straight-line basis over the lease term.
Lease term
The Group determines the lease term as the non-cancellable term
of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease if it is
reasonably certain not to be exercised.
Transition
Leases previously classified as finance leases
At the date of transition, 1 October 2019, the Group had no
lease contracts that had previously been classified as finance
leases in which it acts as the lessee.
Leases previously classified as operating leases
At the date of transition, 1 October 2019, the Group had a
number of lease contracts for properties that had previously been
classified as operating leases in which it acts as the lessee and a
franking machine. For such leases, upon transition the Group
recognised right-of-use assets and lease liabilities, except for
short-term leases (see practical expedients below). Lease
liabilities were recognised at the present value of the remaining
lease payments discounted using the incremental borrowing rate at
the date of initial application. Right-of-use assets were
recognised at an amount equal to the lease liability, adjusted for
any related prepaid and accrued lease payments previously
recognised.
The Group elected to apply the following practical expedients
set out in IFRS 16, whereby it
-- used a single discount rate for portfolios of leases with
reasonably similar characteristics;
-- relied on its previous assessment of whether leases were
onerous immediately before the date of initial application;
-- applied the short-term lease exemption to leases with a
remaining lease term of less than 12 months at the date of initial
application;
-- excluded initial direct costs from the measurement of the
right-of-use asset at the date of initial application; and
-- used hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
Impacts on transition
The effects of adopting IFRS 16 as at 1 October 2019 were as
follows.
-- Right-of-use assets of GBP2.3 million were recognised and are
presented in a new right-of-use leasehold property category within
property, plant and equipment in the balance sheet.
-- Lease liabilities of GBP2.2 million were recognised and are
presented as a new line item in the balance sheet.
-- Prepayments of GBPnil and accruals of GBP0.3 million
(included within other assets and other liabilities respectively)
related to contracts previously classified as operating leases were
derecognised.
-- The net effect of these adjustments had no impact on opening retained earnings.
Impacts for the period
The table below sets out the carrying amounts of the Group's
right-of-use assets and lease liabilities and the movements during
the six months ended 31 March 2020.
Six months ended Right-of-Use Leasehold
Assets
31 March 2020 GBP'000 Lease Liabilities
(Unaudited) GBP'000
As at 1 October 2019 2,300 2,200
Additions - -
Depreciation expense (300) -
Interest expense - -
Payments - (300)
As at 31 March 2020 2,000 1,900
The below table sets out the amounts recognised in the income
statement.
Six months ended Administrative Interest
expenses expenses
31 March 2020 GBP'000 GBP'000 Total
(Unaudited) GBP'000
Depreciation expense of right-of-use
assets 300 - 300
Interest expense on lease liabilities - - -
Rental expense on short-term - - -
leases
Total recognised in the income
statement 300 0.0 300
The right-of-use assets is shown in 'Office equipment, fixtures,
fittings and motor vehicles' on the balance sheet and lease
liabilities are included within 'Other liabilities'.
5. Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the directors to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the
financial statements, are as follows.
5.1 Effective interest rate (estimate)
Under both IFRS 9 and IAS 39, interest income is recorded using
the effective interest rate method. Management must use judgement
to estimate the expected life of each instrument and hence the
expected cash flows relating to it. Management reviews the expected
lives on a segmental basis, whereby products of a similar nature
are grouped into cohorts that exhibit homogenous behavioural
attributes. The key assumptions applied by management in the
effective interest rate methodology is the behavioural life of the
assets. The expected life behaviours are subjected to changes in
internal and external factors and may result in adjustments to the
carrying amount of loans which must be recognised in the income
statement. The effective interest rate behavioural models are based
on market trends and experience.
5.2 Impairment losses on financial assets (judgement and
estimate)
The measurement of impairment losses both under IFRS 9 and IAS
39 across all categories of financial assets in scope requires
judgement, in particular the estimation of the amount and timing of
future cash flows and collateral values when determining impairment
losses and the assessment of a significant increase in credit risk.
These estimates are driven by a number of factors, changes in which
can result in different levels of allowances.
Covid-19
Due to the macro-economic downturn caused by the Covid-19
pandemic, the Group's Expected Credit Loss ('ECL') method below,
was further enhanced by separating forborne exposures and adversely
affected industrial sectors and providing a Post Model Adjustment
('PMA') to increase the ECL based on a harsher economic outlook, as
detailed below.
The actions taken by the UK government and central bank provide
an indication of the potential severity of the downturn and
post-recovery environment, which, from a commercial, regulatory and
risk perspective could be significantly different to past crises
and persist for a prolonged period. An immediate financial impact
of the outbreak is an increase in ECL, driven by a change in the
economic scenarios used to calculate ECL. The outbreak has led to a
weakening in GDP, used car prices and the sharp predicted rise in
unemployment rates, all of which are key inputs used for
calculating ECL, and the probability of a more adverse economic
scenario for at least the short-term is substantially higher than
at 30 September 2019. The impact of the outbreak on the long-term
prospects of businesses, particularly those customers in the Azule
division, and individuals is uncertain and may lead to significant
ECL charges on specific exposures, which may not be fully captured
by ECL modelling techniques. Where not captured, reduced recovery
rates and sectors in the Azule division have been added to the PMA.
Forborne loans do not routinely move to stage 2, however, it is
acknowledged there is an increase in credit risk and a PMA has been
put in place. These adjustments are continually under review as
more information on the effects of Covid-19 come to light.
The Group's ECL calculations are outputs of complex models with
a number of underlying assumptions regarding the choice of variable
inputs and their interdependencies. Elements of the ECL models that
are considered accounting judgements and estimates include:
-- The Group's internal credit grading model, which assigns
Probability of Default ('PD') to the individual grades
-- The Group's criteria for assessing if there has been a
significant increase in credit risk and so
allowances for financial assets should be measured on a Lifetime
Expected Credit Loss ('LTECL') basis and the qualitative
assessment
-- The segmentation of financial assets when their ECL is assessed on a collective basis
-- Development of ECL models, including the various formulas and the choice of inputs
-- Determination of associations between macroeconomic scenarios and economic inputs,
such as unemployment levels and collateral values, and the
effect on PDs, Exposure At Default ('EAD') and Loss Given Default
('LGD'); and
-- Selection of forward-looking macroeconomic scenarios and
their probability weightings to derive the economic inputs into the
ECL models
It has been the Group's policy to review its models regularly in
the context of actual loss experience and to adjust when
necessary.
5.3 Impairment testing of investment in subsidiaries
(judgement)
The Group assesses, at each reporting date, whether there is an
indication that goodwill acquired through acquisitions may be
impaired. If any indication exists, or when annual impairment
testing for an asset is required, the Group estimates the asset's
recoverable amount. In light of the impact of Covid-19 on the
Group's investments the Board will perform semi-annual assessment
of goodwill for impairment as described below.
The review of goodwill for impairment reflects the Board's best
estimate of future cash flows of the Group's cash generating units
('CGU') and the rates used to discount these cash flows. Both these
variables are subject to judgement and estimation uncertainty as
follows.
-- the future cash flows of the CGUs are sensitive to projected
cash flows based on the forecasts and assumptions regarding the
projected periods and the long-term pattern of sustainable cash
flows thereafter; and
-- the rates used to discount future expected cash flows can
have a significant effect on their valuations and are based on the
price-to-book ratio method which incorporates inputs reflecting
several variables.
An impairment is recognised if impairment testing finds that the
carrying amount of a CGU exceeds its recoverable amount. The
recoverable amount of the CGU is calculated based on its
value-in-use, determined by discounting the future cash flows
(pre-tax profits) to be generated from its continuing use. Forecast
cash flows are reduced by any earnings retained to support the
growth in the underlying CGU's loan books through higher regulatory
capital requirements. Forecasted post-tax profits are based on
expectations of future outcomes considering past experience and
adjusted for anticipated revenue growth.
The key assumptions used in the calculation of value-in-use are
as follows.
Discount rate
The pre-tax discount rate is an estimate of the return that
investors would require if they were to choose an investment that
would generate cash flows of amount, timing and risk profile
equivalent to those that the entity expects to derive from the
asset. The Group calculates discount rates using the price-to-book
ratio method which incorporates target return on equity, growth
rate and price-to-book ratio. The discount rate for each CGU is
adjusted to reflect the risks inherent to the individual CGU.
Discount rates used were as follows.
PCF Credit Limited 13.98%
Azule Limited 13.98%
Cash flow period
PCF Credit Limited Five years of cash flows (pre-tax profits)
are included in the discounted cash flow model based on the Bank's
business plan.
Azule Limited Five years of cash flows (pre-tax profits) are
included in the discounted cash flow model based on the Bank's
business plan.
Terminal value growth rate
A terminal value growth rate is applied in perpetuity to
extrapolate cash flows beyond the cash flow period. The terminal
value growth rate of 4.0% (reduced from 5%) per annum is estimated
by the Board.
6. Segment Information
The Group operates in the principal areas of consumer finance
for motor vehicles, business finance for vehicles, plant and
equipment, specialist funding in the broadcast and media industry
and bridging property finance.
For management purposes, the Group has been organised into four
operating segments based on products and services.
-- Consumer Finance
Consumer hire purchase, personal loan and conditional sale
finance for motor vehicles
-- Business Finance
Business hire purchase and lease finance for vehicles, plant and
equipment.
-- Azule Finance
Specialist funding and leasing services direct to individuals
and businesses in the broadcast and media industry.
-- Bridging Finance
Bridging property finance for residential, semi-commercial and
commercial properties.
The Group's Executive Committee monitors the operating results
of its business units separately for the purpose of making
decisions about resource allocation and performance assessment.
Segment performance is evaluated based on operating profits or
losses and is measured consistently with operating profits or
losses in the consolidated financial statements. However, income
taxes are managed on a Group basis and are not allocated to
operating segments.
No revenue from transactions with a single external customer or
counterparty amounted to 10% or
more of the Group's total revenue for the six month periods
ended 31 March 2020 and 31 March 2019.
Segment assets include cash and balances at central banks, loans
and advances to customers,
financial instruments and tax assets. Segment liabilities
comprise of amounts due to banks, amounts due to customers,
derivative financial instruments and tax liabilities, but exclude
certain borrowings that are for general corporate purposes.
The following table presents income and expense and certain
asset and liability information for the Group's operating
segments.
Segment Information
Consumer Business Azule Bridging Total
finance finance finance finance segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 31 March
2020
Interest and similar revenue
calculated using the effective
interest method 8,297 10,231 905 931 20,364
Interest and similar expense
calculated using the effective
interest method (3,089) (4,119) (304) (205) (7,717)
Net interest income 5,208 6,112 601 726 12,647
Fee and commission income 106 231 553 - 890
Fee and commission expense (481) (323) (9) - (813)
Net fees and commission
income / (expense) (375) (92) 544 - 77
Net loss on financial instruments
mandatorily at fair value
through profit or loss (15) (10) - - (25)
Net operating income 4,818 6,010 1,145 726 12,699
Personnel expense (1,489) (1,880) (700) (262) (4,331)
Depreciation of office
equipment, fixtures, fittings
and motor vehicles (44) (52) (20) (6) (122)
Amortisation of intangible
assets (116) (135) - (17) (268)
Other operating expenses (936) (949) (154) (241) (2,280)
Impairment loss on financial
instruments (956) (1,981) (201) (8) (3,146)
Total operating expenses (3,541) (4,997) (1,075) (534) (10,147)
Segment profit before tax 1,277 1,013 70 192 2,552
Income tax charge (255) (203) (14) (37) (509)
Profit for the period 1,022 810 56 155 2,043
Assets
Additions to office equipment,
fixtures, fittings and
motor vehicles 1,039 1,484 - 188 2,711
Additions to other intangibles
assets 113 161 - 21 295
Loans and advances to customers 147,326 210,328 16,539 26,663 400,856
Total assets 164,358 234,644 18,014 29,746 446,762
Total liabilities 142,085 202,845 15,859 25,714 386,503
Segment Information
Consumer Business Azule Bridging Total
finance finance finance finance segments
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 31 March
2019
Interest and similar revenue
calculated using the effective
interest method 7,505 7,958 771 14 16,248
Interest and similar expense
calculated using the effective
interest method (2,766) (3,223) (238) (3) (6,230)
Net interest income 4,739 4,735 533 11 10,018
Fee and commission income 51 119 435 - 605
Fee and commission expense (236) (257) (8) - (501)
Net fees and commission
income / (expense) (185) (138) 427 - 104
Net loss on financial instruments
mandatorily at fair value
through profit or loss - - - - -
Net operating income 4,554 4,597 960 11 10,122
Personnel expense (1,553) (1,507) (525) (215) (3,800)
Depreciation of office
equipment, fixtures, fittings
and motor vehicles (18) (27) (22) - (67)
Amortisation of intangible
assets (81) (113) - (2) (196)
Other operating expenses (726) (714) (112) (92) (1,644)
Impairment loss on financial
instruments (602) (530) (18) (14) (1,164)
Total operating expenses (2,980) (2,891) (677) (323) (6,871)
Segment profit / (loss)
before tax 1,574 1,706 283 (312) 3,251
Income tax charge (308) (356) (53) 59 (658)
Profit for the period 1,266 1,350 230 (253) 2,593
Assets
Additions to office equipment,
fixtures, fittings and
motor vehicles 11 16 - - 27
Additions to other intangibles
assets 61 86 - 1 148
Loans and advances to customers 105,763 147,667 19,725 2,555 275,710
Total assets 122,312 171,178 22,495 2,970 318,955
Total liabilities 104,344 146,030 10,468 2,533 263,375
7. Interest and similar revenue calculated using the effective interest method
31 March 31 March 31 March
2020 2019 2018
unaudited unaudited unaudited
GBP'000 GBP'000 GBP'000
----------- ----------- -----------
Cash and short-term funds 42 45 67
Loans and advances to customers 20,195 15,897 33,954
Financial instruments - FVOCI 127 306 478
Total interest and similar income 20,364 16,248 34,499
----------- ----------- -----------
8. Interest and similar expense calculated using the effective interest method
31 March 31 March 31 March
2020 2019 2018
unaudited unaudited unaudited
GBP'000 GBP'000 GBP'000
----------- ----------- -----------
Due to banks 576 610 836
Due to customers 7,141 5,620 12,048
Total interest and similar expense 7,717 6,230 12,884
----------- ----------- -----------
9. Impairment losses on financial assets
Impairment losses on financial assets relates to impairment
losses on loans and advances to customers. The charge during the
six month periods / year were as follows.
Consumer finance Business Azule Bridging Total
finance finance finance
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 March 2020 -
Unaudited
Impairment charge
for the six months
on loans and advances
to customers 956 1,981 201 8 3,146
----------------- --------- --------- --------- --------
30 September 2019
- Audited
Impairment charge
for the year on
loans and advances
to customers 778 1,345 46 6 2,175
----------------- --------- --------- --------- --------
31 March 2019 -
Unaudited
Impairment charge
for the six months
on loans and advances
to customers 602 530 18 14 1,164
----------------- --------- --------- --------- --------
10. Income tax
The income tax rate is 20%, representing the best estimate of
the annual effective tax rate applied to operating profit before
tax for the six months period.
11. Loans and advances to customers
31 March 31 March 30 September
2020 2019 2018
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
-----------
Consumer lending - gross 151,200 108,450 131,902
Business lending - gross 217,662 150,965 191,460
Azule lending - gross 16,854 19,923 9,834
Bridging lending - gross 26,676 2,569 12,954
346,150
----------- ----------- -------------
412,392 281,907 346,150
Allowance for impairment losses (11,536) (6,197) (7,647)
----------- ----------- -------------
400,856 275,710 338,503
----------- ----------- -------------
A reconciliation of the allowance for impairment losses for
loans and advances, by class, is as follows:
Consumer Business Azule finance Bridging Total
finance finance finance
Audited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2018 2,286 2,084 - - 4,370
Adoption of IFRS
9 91 513 - - 604
--------- --------- -------------- --------- --------
2,377 2,597 - - 4,974
Charge for the year
(note 9) 778 1,345 46 6 2,175
(Recoveries) / write-offs (107) 529 76 - 498
--------- --------- -------------- --------- --------
As 30 September 2019 3,048 4,471 122 6 7,647
--------- --------- -------------- --------- --------
Made up of
Individual impairment 724 1,163 - - 1,887
Collective impairment 2,324 3,308 122 6 5,760
--------- --------- -------------- --------- --------
Total impairment 3,048 4,471 122 6 7,647
--------- --------- -------------- --------- --------
Consumer Business Azule finance Bridging
finance finance finance Total
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2019 3,048 4,471 122 6 7,647
Charge for the period
(note 9) 956 1,981 201 8 3,146
(Recoveries) / write-offs 109 542 92 - 743
--------- --------- -------------- --------- -------------
As 31 March 2020 4,113 6,994 415 14 11,536
--------- --------- -------------- --------- -------------
Made up of
Individual impairment 1,136 1,563 360 14 3,073
Collective impairment 2,977 5,431 55 - 8,463
--------- --------- -------------- --------- -------------
Total impairment 4,113 6,994 415 14 11,536
--------- --------- -------------- --------- -------------
Total impairment as at 31 March 2020 reflects Expected Credit
Losses calculated in accordance with IFRS 9. Loans and advances at
company level relate to subsidiary undertakings and are eliminated
at Group level. These balances arose mainly from daily operations,
payments on behalf of and subordinated loans to subsidiary
undertakings. Loans and advances to subsidiary undertakings are
unsecured, interest-free and repayable on demand. Due from Group
companies is entirely allocated to Stage 1 and based on materiality
considerations and no provision has been recorded.
12. Investment in subsidiary undertakings
Company
The consolidated financial statements include the financial
statements of the Company and its subsidiary
undertakings. The Company does not have any joint ventures or
associates. Significant subsidiaries of the Company were as
follows.
Percentage Percentage Percentage
of of of
equity equity equity
interest interest interest
31 March 31 March 30 September
Name of company Incorporated Nature of business 2020 2019 2019
Banking, hire
purchase, leasing
PCF Bank Limited UK & bridging 100 100 100
Leasing & hire
PCF Credit Limited UK purchase 100* 100* 100*
PCF Equipment Leasing & hire
Leasing Limited UK purchase - 100* 100*
PCF Financial Leasing & hire
Leasing Limited UK purchase - 100* 100*
Leasing & hire
Azule Limited UK purchase 100* 100* 100*
Azule Finance Leasing & hire
Limited IE purchase 100* 100* 100*
Azule Finance Leasing & hire
GMBH DE purchase 100* 100* 100*
*Held by a subsidiary of the Company
PCF Equipment Leasing Limited and PCF Financial Leasing Limited
were dissolved on 26 November 2019.
The registered office of all subsidiaries incorporated in the
United Kingdom is Pinners Hall, 105-108 Old Broad Street, London
EC2N 1ER.
The registered office of Azule Finance Limited is Suite 104, 4/5
Burton Hall Road, Sandyford. Dublin 18.
The registered office of Azule Finance GMBH is Domgarten 12,
47877 Willich, Germany.
All companies have an accounting reference date of 30
September.
Azule Limited, which owns 100% of Azule Finance Limited and
Azule Finance GMBH was acquired by PCF Bank Limited on 5 November
2018.
13. Goodwill and other intangibles assets
Goodwill relates partly to the Group's Consumer Finance Division
which arises from the acquisition of a subsidiary company, TMV
Finance Limited ('TMV'), in November 2000, and the remainder for
the acquisition of Azule Limited on 5 November 2018.
Subsequently, a corporate reorganisation resulted in the assets
and business model of TMV being transferred to its related
companies in the Group, PCF Credit and PCF Bank. Most new business
in respect of the Azule franchise, is written in PCF Bank.
The rationale for the TMV acquisition was to increase market
share and adopt the business model for new business generation
which involved contractual relationships with broker introductory
sources. As the business model was new to the Group at the time of
acquisition and has continued to be the primary source of new
business for the Group, the directors believe that the underlying
net assets from PCF Credit and PCF Bank are sufficient to cover the
carrying amount against its recoverable amount, and there is no
indication of impairment.
The rationale for the Azule acquisition was to diversify and it
offers revenue synergies in a niche class of business-critical
assets with strong collateral characteristics and lending to prime
credit grade customers. The directors believe that the underlying
net assets from Azule's business are enough to cover the carrying
amount against its recoverable amount, and there is no indication
of impairment.
In performing the semi-annual impairment test, the Group
assesses the economic performance of each acquisition, the future
of the business acquired and its useful economic life. The
assessment ensures that growth and profitability are at least the
same value as the amount that was paid 'over and above' the fair
value of the assets and liabilities acquired. To assess this, the
Board approved forecast (adjusted by the Board's current view of
the impact of Covid-19 on the group) has been used and discounted
back to present value.
Both the CGU's acquired are expected to continue to perform, but
forecasting is only over the next 5 years. There is, therefore,
requirement to capture expected growth and cashflows beyond these
dates. To complete this there is a terminal valuation that is
required to be performed to assess whether to see if goodwill has
been impaired or not. Terminal value often comprises a large
percentage of the total assessed value.
TMV CGU
The recoverable amount of the TMV CGU of GBP314million as at 31
March 2020 has been determined based on a value-in-use calculation
using cash flow projections from financial budgets approved by the
Board covering a five year period, and a terminal valuation based
on the previous year's adjusted forecast. The projected cash flows
have been updated to reflect the business over this period which is
aligned to future expected growth in its products and services. The
pre-tax discount rate applied to cash flow projections is 13.98%
per annum over a five year period and, for the period beyond,
terminal growth rate of 4.0% is used, being the expected long-term
average growth rate for the Group. It was concluded that the fair
value less costs of disposal exceeded the value-in-use. In
conclusion, there is no obvious impairment loss existing at balance
sheet date and the current goodwill remains appropriate for the
carrying value for the TMV acquisition.
Azule CGU
The recoverable amount of the Azule CGU of GBP10million as at 31
March 2020 has been determined based on a value-in-use calculation
using cash flow projections from financial budgets approved by the
Board covering a five year period, and a terminal valuation based
on the previous year's adjusted forecast. The projected cash flows
have been updated to reflect the business over this period, which
is aligned to future expected growth in its products and services.
The pre-tax discount rate applied to cash flow projections is
13.98% per annum over a five year period and, for the period
beyond, terminal growth rate of 4.0% per annum is used, being the
expected long-term average growth rate for the Group. It was
concluded that the fair value less costs of disposal exceeded the
value-in-use. In conclusion, there is no obvious impairment loss
existing at balance sheet date and the current goodwill remains
appropriate.
Key assumptions used in value-in-use calculations and
sensitivity to changes in assumptions
The calculation of value-in-use for both TMV and Azule is most
sensitive to the following assumptions.
-- Terminal value
-- Terminal growth rate
-- Discount rates
-- Free cash flow for the last forecasted year
Terminal value (using the perpetuity method) - Discounting is
necessary because the time value of money creates a discrepancy
between the current and future values of a given sum of money. In
business valuation, free cash flow or dividends can be forecast for
a discrete period of time, but the performance of ongoing concerns
becomes more challenging to estimate as the projections stretch
further into the future. Moreover, it is difficult to determine the
precise time when a company may cease operations.
To overcome these limitations, investors can assume that cash
flows will grow at a stable rate forever, starting at some point in
the future. This represents the terminal value.
Terminal value is calculated by dividing the last cash flow
forecast by the difference between the discount rate and terminal
growth rate. The terminal value calculation estimates the value of
the company after the forecast period.
Terminal growth rate - The terminal growth rate is the constant
rate at which a company is expected to continue to grow. This
growth rate starts at the end of the last forecasted cash flow
period in a discounted cash flow model and goes into
perpetuity.
Discounted rates - Discount rates represent the current market
assessment of the risks specific to each CGU, taking into
consideration the time value of money and individual risks of the
underlying assets that have not been incorporated in the cash flow
estimates. The discount rate calculation is based on the specific
circumstances of the Group and its operating segments and is
derived from its Weighted Average Cost of Capital ('WACC').
Growth rate estimates - Both the businesses acquired are
expected to grow over the next five years taking into consideration
a reduction in growth due to Covid-19 in the shorter term.
Six month Six month Year
period ended period ended ended
31 March 31 March 30 September
2020 2019 2019
Group GBP'000 GBP'000 GBP'000
TMV Finance Limited acquisition 397 397 397
Azule Limited acquisition 2,500 2,500 2,500
-------------- -------------- -------------
2,897 2,897 2,897
-------------- -------------- -------------
Six month Six month Year
period ended period ended ended
31 March 31 March 30 September
2020 2019 2019
Group GBP'000 GBP'000 GBP'000
Cost and net book value
Opening balance 2,897 397 397
Additions during the year - 2,500 2,500
-------------- -------------- -------------
Closing balance 2,897 2,897 2,897
-------------- -------------- -------------
Other intangible assets
The Group's other intangible assets consist solely of computer
software and capitalised expenses incurred in the project of
applying to become a bank.
Six month Six month Year
period period ended 30
ended ended
31 March 31 March September
2020 2019 2019
Group GBP'000 GBP'000 GBP'000
Cost
Opening balance 6,149 5,249 5,249
Additions during the period 295 148 900
---------- ---------- ------------
Closing balance 6,444 5,397 6,149
---------- ---------- ------------
Accumulated depreciation
Opening balance 3,105 2,689 2,689
Amortisation during the period 268 196 416
Closing balance 3,373 2,885 3,105
---------- ---------- ------------
Net book value 3,071 2,512 3,044
---------- ---------- ------------
Six month Six month Year
period ended period ended ended
31 March 31 March 30 September
2020 2019 2019
Group GBP'000 GBP'000 GBP'000
Net book value of combined
goodwill and other intangible
assets 5,968 5,437 5,941
-------------- -------------- -------------
14. Financial instruments
The Group invests in highly liquid financial instruments to
support its liquid asset buffer and raises
wholesale funding by issuing financial instruments. The Group
also uses derivative financial instruments
to manage the risks arising from its operations. The risks
associated with financial instruments represents
a significant component of the total risks faced by the Group
and are analysed in more detail below.
Details of the significant accounting policies and methods
adopted, including the criteria for recognition,
the basis of measurement and the basis on which income and
expenses are recognised, in respect of
each class of financial asset, financial liability and equity
instrument are disclosed in note 5.
14.1 Valuation techniques
Debt instruments at FVOCI
Covered bond debt securities are financial instruments issued by
banks or building societies and collateralised against a pool of
assets that, in case of failure of the issuer, can cover claims at
any point in time. They are subject to specific legislation to
protect bondholders. These instruments are generally highly liquid
and traded in active markets, resulting in a Level 1
classification. When active market prices are not available, the
Group uses discounted cash flow models with observable market
inputs of similar instruments and bond prices to estimate future
index levels and extrapolating yields outside the range of active
market trading, in which instances the Group classifies those
securities as Level 2.
Derivative financial instruments
Fair values of derivatives are obtained from quoted market
prices in active markets and, where these are not available, from
valuation techniques including discounted cash flows.
14.2 Valuation principles
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at
the measurement date under current
market conditions (i.e. an exit price), regardless of whether
that price is directly observable or estimated
using a valuation technique.
In order to show how fair values have been derived, financial
instruments are classified based on a hierarchy of valuation
techniques, as explained in note 14.4.
14.3 Valuation governance
The Group's fair value methodology and the governance over its
models includes a number of controls
and other procedures to ensure appropriate safeguards are in
place to ensure its quality and adequacy.
All new product initiatives, including their valuation
methodologies, are subject to approvals by various
functions of the Group, Company and the Bank, including the Risk
and Finance functions. The responsibility of ongoing measurement
resides with the business and product line divisions.
Once submitted, fair value estimates are also reviewed and
challenged by the Risk and Finance
functions. The independent price verification process for
financial reporting is ultimately the responsibility of the
independent price verification team within the Treasury function,
which reports to the Finance Director.
14.4 Assets and liabilities by classification, measurement and fair value hierarchy
The following table summarises the classification of the
carrying amounts of the Group's financial assets and
liabilities.
Amortised
cost FVTPL FVOCI Total
Group GBP'000 GBP'000 GBP'000 GBP'000
31 March 2020 - unaudited
Cash and balances at central
banks 12,246 - - 12,246
Loans and advances to customers 400,856 - - 400,856
Debt instruments at FVOCI - - 20,128 20,128
Total financial assets 413,102 - 20,128 433,230
Office equipment, fixtures,
fittings and motor vehicles 3,168
Other assets 3,258
Deferred tax assets 1,138
Goodwill and other intangible
assets 5,968
Total assets 446,762
--------
Due to banks 30,483 - - 30,483
Due to customers 339,853 - - 339,853
Subordinated debt 5,000 - - 5,000
Derivative financial instruments - 56 - 56
Total financial liabilities 375,336 56 - 375,392
Current tax liabilities 242
Other liabilities 10,869
--------
Total liabilities 386,503
--------
Amortised
cost FVTPL FVOCI Total
Group GBP'000 GBP'000 GBP'000 GBP'000
31 March 2019 - unaudited
Cash and balances at central
banks 2,882 - - 2,882
Loans and advances to customers 275,710 - - 275,710
Debt instruments at FVOCI - - 27,491 27,491
Total financial assets 278,592 - 27,491 306,083
Office equipment, fixtures,
fittings and motor vehicles 292
Other assets 5,856
Deferred tax assets 1,287
Goodwill and other intangible
assets 5,437
Total assets 318,955
--------
Due to banks 52,028 - - 52,028
Due to customers 203,754 - - 203,754
Subordinated debt - - - -
Derivative financial instruments - - - -
Total financial liabilities 255,782 - - 255,782
Current tax liabilities 528
Other liabilities 7,065
--------
Total liabilities 263,375
--------
Amortised
cost FVTPL FVOCI Total
Group GBP'000 GBP'000 GBP'000 GBP'000
30 September 2019
Cash and balances at central
banks 7,371 - - 7,371
Loans and advances to customers 338,503 - - 338,503
Debt instruments at FVOCI - - 19,638 19,638
Total financial assets 345,874 - 19,638 365,512
Office equipment, fixtures,
fittings and motor vehicles 579
Other assets 4,932
Deferred tax assets 1,105
Goodwill and other intangible
assets 5,941
Total assets 378,069
--------
Due to banks 44,412 - - 44,412
Due to customers 267,070 - - 267,070
Derivative financial instruments - 63 - 63
Total financial liabilities 311,482 63 - 311,545
Current tax liabilities 1,521
Other liabilities 6,248
--------
Total liabilities 319,314
--------
The Group holds certain financial assets at fair value grouped
into Levels 1 to 3 of the fair value hierarchy, as explained
below.
Level 1 - The most reliable fair values of financial instruments
are quoted market prices in an actively traded market. The Group's
Level 1 portfolio mainly comprises gilts, fixed rate bonds and
floating rate notes for which traded prices are readily
available.
Level 2 - These are valuation techniques for which all
significant inputs are taken from observable market data. These
include valuation models used to calculate the present value of
expected future cash flows and may be employed when no active
market exists, and quoted prices are available for similar
instruments in active markets.
Level 3 - These are valuation techniques for which one or more
significant inputs are not based on observable market data.
Valuation techniques include net present value by way of discounted
cash flow models. Assumptions and market observable inputs used in
valuation techniques include risk-free and benchmark interest
rates, similar market products, foreign currency exchange rates and
equity index prices. Critical judgement is applied by management in
utilising unobservable inputs including expected price volatilities
and prepayment rates, based on industry practice or historical
observation. The objective of valuation techniques is to arrive at
a fair value determination that reflects the price of the financial
instrument at the reporting date that would have been determined by
market participants acting at arm's length.
The following table shows an analysis of financial instruments
recorded at amortised cost by level of the fair value
hierarchy.
Carrying Fair
Level Level Level value value
1 2 3
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial instruments held
at amortised cost at 31 March
2020
Cash and balances at central
banks 12,246 - - 12,246 12,246
Loans and advances to customers - - 400,856 400,856 451,764
-------- -------- -------- --------- --------
12,246 - 400,856 413,102 464,010
-------- -------- -------- --------- --------
Due to banks 30,483 - - 30,483 30,483
Due to customers - - 339,853 339,853 339,853
Subordinated debt 5,000 - - 5,000 5,000
-------- -------- -------- --------- --------
35,483 - 339,853 375,336 375,336
-------- -------- -------- --------- --------
Carrying Fair
Level Level Level value value
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial instruments held
at amortised cost at 31 March
2019
Cash and balances at central
banks 2,882 - - 2,882 2,882
Loans and advances to customers - - 275,710 275,710 319,094
-------- -------- -------- --------- --------
2,882 - 275,710 278,592 321,976
-------- -------- -------- --------- --------
Due to banks 52,028 - - 52,028 52,028
Due to customers - 203,754 - 203,754 203,754
-------- -------- -------- --------- --------
52,028 203,754 - 255,782 255,782
-------- -------- -------- --------- --------
Carrying Fair
Level Level Level value value
1 2 3
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial instruments held
at amortised cost at 30 September
2019
Cash and balances at central
banks 7,371 - - 7,371 7,371
Loans and advances to customers - - 338,503 338,503 376,343
-------- -------- -------- --------- --------
7,371 - 338,503 345,874 383,714
-------- -------- -------- --------- --------
Due to banks 44,412 - - 44,412 44,412
Due to customers - - 267,070 267,070 267,070
-------- -------- -------- --------- --------
44,412 - 267,070 311,482 311,482
-------- -------- -------- --------- --------
The following table shows an analysis of financial instruments
recorded at FVOCI by level of the fair value hierarchy:
Fair
Level Level Level value
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Financial instruments at fair value
though other comprehensive income
(FVOCI) at 31 March 2020
Covered bonds 20,128 - - 20,128
-------- -------- -------- --------
Fair
Level Level Level value
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Financial instruments at fair value
though other comprehensive income
(FVOCI) at 31 March 2019
Covered bonds 27,491 - - 27,491
-------- -------- -------- --------
Fair
Level Level Level value
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Financial instruments at fair value
though other comprehensive income
(FVOCI) at 30 September 2019
Covered bonds 19,638 - - 19,638
--------- ------------ ------------ ------------
Notional Notional Notional Carrying
Level 1 Level 2 Level 3 value Fair value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Derivative financial instruments
31 March 2020
Financial assets - 5,000 - - -
Financial liabilities - 5,000 - (56) (56)
31 March 2019
Financial assets - - - - -
Financial liabilities - - - - -
30 September 2019
Financial assets - 10,000 - - -
Financial liabilities - 10,000 - (63) (63)
14.5 Impairment allowance for loans and advances to customers
The table below shows the credit quality and the maximum
exposure to credit risk based on the Bank's internal credit rating
system and year-end stage classification. The amounts presented are
gross of impairment allowances.
At 31 March 2020
Gross carrying amounts Stage 1 Stage 2 Stage 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Performing
High grade 136,728 5,116 - 141,844
Standard grade 176,366 23,727 401 200,494
Sub-standard grade 39,410 5,792 78 45,280
Non-performing
Individually impaired - - 797 797
Collectively impaired 1,558 4,185 18,234 23,977
--------- --------- --------- ---------
Total 354,062 38,820 19,510 412,392
--------- --------- --------- ---------
At 31 March 2019
Gross carrying amounts Stage 1 Stage 2 Stage 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Performing
High grade 64,914 - - 64,914
Standard grade 157,265 12,670 60 169,995
Sub-standard grade 31,830 2,890 - 34,720
Non-performing
Individually impaired - - 965 965
Collectively impaired - 1,566 9,747 11,313
--------- --------- --------- ---------
Total 254,009 17,126 10,772 281,907
--------- --------- --------- ---------
At 30 September 2019
Gross carrying amounts Stage 1 Stage 2 Stage 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------- --------- --------------
Performing
High grade 90,161 - 286 90,447
Standard grade 179,162 15,603 214 194,979
Sub-standard grade 37,430 4,190 29 41,649
Non-performing
Individually impaired - - 4,945 4,945
Collectively impaired 541 2,632 10,957 14,130
-------------- ------------- --------- --------------
Total 307,294 22,425 16,431 346,150
-------------- ------------- --------- --------------
An analysis of changes in the gross carrying amount and the
corresponding ECLs is, as follows:
Gross carrying amounts Stage 1 Stage Stage Total
(GBP) GBP'000 2 3 GBP'000
GBP'000 GBP'000
------------ --------- --------- ----------
At 1 October 2019 307,294 22,425 16,431 346,150
New assets originated
or purchased 138,923 - - 138,923
Assets de-recognised
or matured (68,025) (2,242) (798) (71,065)
Transfers to Stage 1 1,615 (1,615) - -
Transfers to Stage 2 (23,857) 23,857 - -
Transfers to Stage 3 (1,885) (3,579) 5,464 -
Amounts written off (3) (26) (1,587) (1,616)
------------ --------- --------- ----------
At 31 March 2020 354,062 38,820 19,510 412,392
------------ --------- --------- ----------
ECL allowance (GBP) Stage 1 Stage Stage Total
GBP'000 2 3 GBP'000
GBP'000 GBP'000
--------- --------- --------- ---------
At 1 October 2019 1,576 1,458 4,613 7,647
New assets originated
or purchased 763 - - 763
Assets de-recognised
or matured 1,911 803 1,569 4,283
Transfers to Stage 1 19 (19) - -
Transfers to Stage 2 (1,360) 1,360 - -
Transfers to Stage 3 (509) (1,067) 1,576 -
ECL transfers - - - -
Amounts written off (82) (13) (1,062) (1,157)
--------- --------- --------- ---------
At 31 March 2020 2,318 2,522 6,696 11,536
--------- --------- --------- ---------
Gross carrying amounts Stage 1 Stage 2 Stage 3 Total
(GBP) GBP'000 GBP'000 GBP'000 GBP'000
------------- --------- --------- ----------
At 1 October 2018 195,580 18,550 10,183 224,313
New assets originated
or purchased 238,564 105 45 238,714
Assets de-recognised
or matured (106,857) (7,814) (640) (115,311)
Transfers to Stage 1 2,294 (2,294) - -
Transfers to Stage 2 (16,706) 16,706 - -
Transfers to Stage 3 (5,581) (2,829) 8,410 -
Amounts written off - - (1,566) (1,566)
------------- --------- --------- ----------
At 30 September 2019 307,294 22,424 16,432 346,150
------------- --------- --------- ----------
ECL allowance (GBP) Stage 1 Stage 2 Stage 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
At 1 October 2018 757 765 3,452 4,974
New assets originated
or purchased 1,223 7 13 1,243
Assets de-recognised
or matured (339) (72) (281) (692)
Transfers to Stage 1 136 (136) - -
Transfers to Stage 2 (64) 64 - -
Transfers to Stage 3 (25) (221) 246 -
ECL transfers (112) 1,051 2,749 3,688
Amounts written off - - (1,566) (1,566)
--------- --------- --------- ---------
At 30 September 2019 1,576 1,458 4,613 7,647
--------- --------- --------- ---------
15. Subordinated debt
The Group has a GBP15m Tier 2 capital facility , with the
ability to access this in tranches as required to support growth.
At 31 March 2020, GBP5million had been drawn down at an 8% fixed
interest rate.
31 March 31 March 30 September
2020 2019 2019
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Brought forward - - -
Drawn down 2029 2,500 - -
Drawn down 2030 2,500 - -
Carried forward 5,000 - -
----------- --------------- -------------
The subordinated liabilities are repayable at the dates stated
or earlier, in full, at the option of the Group with the prior
consent of the PRA. The interest expense for the six months period
to 31 March 2020 was GBP105,205.
The rights of repayment of the holders of these liabilities are
subordinated to the claims of all depositors and all creditors.
16. Issued capital and reserves
31 March 31 March 30 September
Share capital 2020 2019 2019
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Ordinary shares issued and fully paid
Brought forward 12,510 10,611 10,611
Issuance of new shares during the period - 1,899 1,899
Carried forward 12,510 12,510 12,510
----------- ----------- -------------
Share premium 31 March 31 March 30 September
2020 2019 2019
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Brought forward 17,619 8,527 8,527
Issuance of new shares during the period - 9,126 9,092
Carried forward 17,619 17,653 17,619
----------- ----------- -------------
Change
in share Change
No. of Issue capital in share
Date of Issue shares Price at 5p premium
per share GBP'000
GBP'000
------------------ -------------------------- ------------- --------- ----------- -----------
Shares issued as part
of the consideration
30 October on acquisition of
2018 Azule Limited 1,923,076 39.00p 96 654
------------------ -------------------------- ------------- --------- ----------- -----------
Shares issued to support
11 March 2019 increased lending 35,833,333 30.00p 1,792 8,958
------------------ -------------------------- ------------- --------- ----------- -----------
Fees relating to share
11 March 2019 issue (556)
------------------ -------------------------- ------------- --------- ----------- -----------
Shares issued pursuant
to Employee Share
Scheme - Exercise
29 March 2019 of Options 195,000 21.17p 10 31
------------------ -------------------------- ------------- --------- ----------- -----------
12 April 2019 Dividend reinvestment 15,703 34.5p 1 5
------------------ -------------------------- ------------- --------- ----------- -----------
1,899 9,092
----------- -----------
17. Earnings per Share
Basic earnings per share ('EPS') is calculated by dividing the
net profit for the period attributable to ordinary equity holders
of the Company by the weighted average number of ordinary shares
outstanding during the period.
The following table shows the income and share data used in the
basic and diluted EPS calculations.
31 31 30 September
March March
2020 2019 2019
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
----------- ----------- -------------
Net Company profit attributable to
ordinary shareholders adjusted for
the effect of dilution 2,043 2,593 6,394
----------- ----------- -------------
30 September
31 March 31 March
2020 2018 2019
'000 units '000 units '000 units
Share-based payments
----------- ----------- -------------
Basic and diluted weighted average
number of shares 250,197 217,921 234,107
----------- ----------- -------------
Basic and diluted earnings per 5p ordinary share 0.8p 1.2p
2.7p
18. Related Parties
30 September 2019 - audited
Non-executive directors held a total of GBP186,756 in savings
accounts in the Bank at 30 September 2019.
The Group had a borrowing arrangement from Bermuda Commercial
Bank amounting to GBP83 million which was repaid in full during
2019. Such arrangement was at arm's length and the total interest
expense recorded during the year was GBP214,342.
31 March 2020 - unaudited
Non-executive directors held a total of GBP126,507 in savings
accounts in the Bank at 31 March 2020.
19. Events after the balance sheet date
30 September 2019 - audited
Subsequent to the year-end, the Group made a payment of
GBP750,000 in respect of Azule's contingent consideration which is
a non-adjusting event.
31 March 2020 - unaudited
There have been no material post-balance sheet events.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAKKAEDAEEFA
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