TIDMVCAP
RNS Number : 5034W
Vector Capital PLC
18 April 2023
18 April 2023
Vector Capital plc
("Vector Capital", the "Company" or the "Group")
Full year results for the year ended 31 December 2022
Vector Capital plc (AIM: VCAP), a commercial lending group that
offers secured loans primarily to businesses located in the United
Kingdom, is pleased to announce its final results for the year
ended 31 December 2022.
Highlights
-- The Group shows continued growth despite uncertain economic
conditions
-- Loan book growth of 14.9% to GBP53.2m (FY21: GBP46.6m)
-- Revenue growth of 12.4% to GBP5.9m (FY21: 5.3m)
-- Consistent profit before tax of GBP2.8m (FY21: 2.8m)
-- Continued growth in shareholders equity whilst following
a consistent and progressive dividend policy recognising
the importance to shareholders of the dividend as part
of their overall return.
-- Annual growth in Net Asset Value, shown as per share.
Net Assets were GBP25.1m as at 31 December 2022 (GBP24.0m
at 2021 and GBP21.3m at 2020).
-- Proposed final dividend 1.53 pence per share (FY21: 1.51p)
-- Near terms focus of maintaining the quality of the loan
book against the current uncertain market back drop
Agam Jain, CEO of Vector Capital, commented: " I am pleased to
present our 2022 results. The Company performed well during the
year despite the difficult market conditions. We were able to grow
our loan book by 14.9% to GBP53.2 million and the Group's positive
operational performance has been achieved despite the increase in
external borrowing costs on new loans provided by our wholesale
funders and co-lenders. The Group has been able to pass on the
majority of these increases to customers and in some cases reduce
gearing to maintain margins.
We continue to look and explore further options to expand our
loan book, maximise shareholder returns and further establish our
place in the market segment."
Enquiries
Vector Capital plc 020 8191 7615
Robin Stevens (Chairman)
Agam Jain (CEO)
WH Ireland Limited 020 7220 1666
Hugh Morgan, Chris Hardie, Darshan
Patel
IFC Advisory Limited 020 3934 6630
Graham Herring, Florence Chandler,
Zach Cohen
Notes to Editors
Vector Capital Plc provides secured, business-to-business loans
to SMEs based principally in England and Wales. Loans are typically
secured by a first legal charge against real estate. The Group's
customers typically borrow for general working capital purposes,
bridging ahead of refinancing, land development and property
acquisition. The loans provided by the Group are typically for
renewable 12-month terms with fixed interest rates.
CHAIRMAN'S STATEMENT
I am pleased to present our 2022 Annual Report and Accounts,
which reflect the results of the continued growth in Vector's
secured loan book in the UK small and medium-sized enterprises
(SMEs) sector. Vector's customers are generally smaller property
developers who buy properties to develop or refurbish and then
re-sell or refinance.
The Company performed well in the year in difficult market
conditions and was able to grow our loan book by utilising retained
profits, increased wholesale bank facilities now standing at GBP40m
as at 31 December 2022 and finance received from co lending
arrangements. This financing, reflecting effective gearing on our
capital base underpins the Group's strong results for the year,
achieving revenue growth of 12.4% to GBP5.9m, consistent profit
before tax of GBP2.8m, and a 14.9% rise in the value of the loan
book from GBP46.3m to GBP53.2m. Such growth is of course also
attributable to the efforts and abilities of the operational team,
the strength of the underlying loan management systems and the
robust nature of the Vector business model.
The Group's positive operational performance has been achieved
despite the increase in external borrowing costs on new loans
provided by our wholesale funders and co-lenders. The Group has
been able to pass on the majority of these increases to customers
and in some cases reduce gearing to maintain margins.
Despite the Group's own resilience in these challenging economic
and financial conditions, certain borrowers have been adversely
affected by delays in completions, the supply chain, cost issues
and a general softening of values in the residential property
market. As a result, the above results include a provision of
GBP0.2m for doubtful debts which may or may not be required.
Recovery of all debts will continue to be actively pursued.
We have a determined strategy to continue to increase our loan
book within the context of the continuing uncertain and challenging
conditions which exist in the UK, achieved by utilising our own
resources and the external facilities provided by our wholesale
lenders and co lenders. As part of this process, we intend to
further increase the loan gearing we are able to achieve on
borrowed funds by strategically rebalancing our loan book. This is
intended to lower average value advances but is considered a
prudent measure by the Board.
We continue to factor in the implications on the property market
of uncertain valuations, the return of double digit inflation and
higher than normal interest rates and we are fortunate to be able
to draw on our team's considerable experience during these
challenging times.
As a Board we continue to take very seriously our obligations to
act responsibly and ethically in all we do, and to follow the core
principles of corporate governance set out in the Quoted Company
Alliance code. These principles are maintained in all we do as a
public company and we recognise our wider environmental, social and
governance responsibilities to shareholders and other
stakeholders.
Details of our ESG policies and procedures, aimed principally at
responsible lending and encouraging sustainability and avoidance of
waste in all we do, are set out on the Company's website,
www.vectorcapital.co.uk.
The results for the year are only possible by the efforts of
Vector's employees and my fellow Board members, including Gordon
Robinson who I'm delighted joined us with his extensive banking
experience in February 2022, and considerable thanks are due to
them, as well as our business partners and professional
advisers.
We are also indebted to our shareholders, with whom we look
forward to developing a rewarding relationship as market conditions
improve. This relationship is recognised in our proposed final
dividend for the year of 1.53 pence per share, represents an
increase of 0.02 pence or 1.3% over 2021, in-line with our stated
intention to adopt a progressive dividend policy as we acknowledge
the importance to shareholders of the dividend as part of their
overall return.
I am more confident than ever that we have the skills, strategy
and experience to capitalise on the market opportunities that exist
in these uncertain times and thereby continue to prosper thorough
2023.
Robin Stevens
Chairman
17 April 2023
CHIEF EXECUTIVE'S STATEMENT
A strong performance in uncertain times
I am pleased to report a healthy set of results achieved in a
very uncertain market. The economy faced the challenges of
rocketing energy prices due to the Ukraine war, rising costs and
long lead times of building materials, political turmoil and
repeated Bank of England rate rises. Despite this we are proud to
remain one of the select group of AIM quoted companies paying
consistent dividends and showing consistent capital growth.
Our loan book was GBP53.2m at 31 December 2022, up from GBP46.3m
at 31 December 2021. This is a commendable 14.9% year on year
growth. The average monthly loan book for the 12 months period was
GBP52m (2021: GBP40.8m) an increase of 27.4%.
The achieved average interest rate for the year was 11.18% p.a.
(2021: 11.84%) and the average loan to value was 57.12% (2021:
53.52%).
Pre-tax profit for the year was GBP2.8m, similar to that
achieved in 2021 of GBP2.8m. This was achieved despite making a
provision of GBP0.2m for potential doubtful debts, all of which
will be actively pursued.
On the basis of this performance a final dividend for the year
of 1.53p per share is proposed (2021: 1.51p).
Diverse market spread
Our loan book is secured by properties in a diverse spread of
sectors.
Market segmentation at 31 December2022
2022 % 2021 %
-------------------- -------------- -------- --------------------------- --------
Residential GBP30,351,346 56.81% GBP24,580,323 53.07%
Commercial GBP11,643,949 21.79% GBP12,773,180 27.58%
Land & Development GBP4,881,424 9.14% GBP5,429,273 11.72%
Mixed GBP4,707,648 8.81% GBP2,997,977 6.47%
2nd charge GBP1,545,273 2.89% GBP532,023 1.15%
Other GBP300,000 0.56%
-------------------- -------------- -------- --------------------------- --------
GBP53,429,641 100.00% GBP46,312,775 100.00%
-------------------- -------------- -------- --------------------------- --------
Our direction of travel is towards smaller residential loans for
the foreseeable future where we can utilise a higher proportion of
our wholesale debt funding and thereby grow the loan book more
quickly with our existing capital base.
We are also issuing selected loans against second charge where
the equity value in the property is substantial.
Funding
We achieved increases in our wholesale bank funding lines during
the year to GBP40m (up from GBP35m in 2021). Our wholesale bank
providers remain prepared to entertain a further increase in
facilities as and when we require.
Our first drawdown on co-funding from a Swiss investment fund
started in December 2022 and we expect these facilities to be
utilised further during 2023.
Our liquidity remains healthy, and we have good capacity to fund
selected new loan opportunities meeting our criteria.
Our Team
Gordon Robinson was appointed as a Non-Executive Director in
February 2022. Gordon has over 30 years of senior banking
experience and has added valuable sector expertise to the
board.
Apart from this appointment, our head count has remained the
same and the current operational team is well positioned to handle
the projected activity for 2023.
Outlook
Data provided by members of the Association of Short-Term
Lenders, shows that UK bridging completions were just over GBP1.4bn
in Q3, 2022, representing an increase of 15.9% on the June 2022
quarter. This is the latest data at the time of writing. However,
Q4 is likely to show temporary stalling as lenders take stock of
the macro-economic circumstances now prevailing.
Going forward into 2023, we along with other lenders will
continue to exercise caution in our underwriting and stress
testing. This means our focus during Q1 and Q2 of 2023 has been and
will remain more on caution and safety instead of aggressive
growth. Our borrowers will have to deal with higher monthly
payments due to the multiple rate rises and are likely to find it
more challenging to exit via sale or through re-finance with the
high street banks. Once the market has settled, however we would
hope to return to a higher growth trajectory from Q3 onwards.
Agam Jain
Chief Executive Officer
17 April 2023
CONSOLIDATED INCOME STATEMENT
2022 2021
Notes GBP'000 GBP'000
--------------------------------------- ------ -------- --------
CONTINUING OPERATIONS
Revenue 5,928 5,275
Cost of sales (429) (502)
--------------------------------------- ------ -------- --------
GROSS PROFIT 5,499 4,773
Administrative expenses (911) (703)
--------------------------------------- ------ -------- --------
OPERATING PROFIT 4,588 4,070
Finance costs (1,782) (1,245)
Finance income 3 2
PROFIT BEFORE INCOME TAX 5 2,809 2,827
Income tax 6 (534) (538)
PROFIT FOR THE YEAR 2,275 2,289
======================================= ====== ======== ========
Profit attributable to:
Owners of the parent 2,275 2,289
======================================= ====== ======== ========
Earnings per share expressed in pence
per share: 9
Basic 5.03 5.24
Diluted 5.03 5.24
======================================= ====== ======== ========
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE
INCOME
2022 2021
GBP'000 GBP'000
----------------------------------------- -------- --------
PROFIT FOR THE YEAR 2,275 2,289
Other comprehensive income - -
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR 2,275 2,289
========================================== ======== ========
Total comprehensive income attributable
to:
Owners of the parent 2,275 2,289
========================================== ======== ========
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2022 2021
Notes GBP'000 GBP'000
------------------------------- ------ -------- --------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10 1 3
1 3
CURRENT ASSETS
Trade and other receivables 12 53,997 46,565
Cash and cash equivalents 13 688 1,527
54,685 48,092
TOTAL ASSETS 54,686 48,095
=============================== ====== ======== ========
SHAREHOLDERS' EQUITY
Called up share capital 15 226 226
Share premium 20,876 20,876
Group reorganisation reserve 188 188
Retained earnings 3,798 2,659
TOTAL EQUITY 25,088 23,949
------------------------------- ------ -------- --------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 14 25,800 23,858
Tax payable 240 288
26,040 24,146
NON-CURRENT LIABILITIES
Trade and other payables 14 3,558 -
TOTAL LIABILITIES 29,598 24,146
------------------------------- ------ -------- --------
TOTAL EQUITY AND LIABILITIES 54,686 48,095
=============================== ====== ======== ========
The notes form part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
2022 2021
Notes GBP'000 GBP'000
------------------------------- ------ -------- --------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10 1 3
Investments 11 17,000 17,000
17,001 17,003
CURRENT ASSETS
Trade and other receivables 12 8,832 8,467
Cash and cash equivalents 13 117 121
8,949 8,588
TOTAL ASSETS 25,950 25,591
=============================== ====== ======== ========
SHAREHOLDERS' EQUITY
Called up share capital 15 226 226
Share premium 20,876 20,876
Retained earnings 1,700 1,454
TOTAL EQUITY 22,802 22,556
------------------------------- ------ -------- --------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 14 148 3,035
148 3,035
NON-CURRENT LIABILITIES
Trade and other payables 14 3,000 -
TOTAL LIABILITIES 3,148 3,035
------------------------------- ------ -------- --------
TOTAL EQUITY AND LIABILITIES 25,950 25,591
=============================== ====== ======== ========
As permitted by Section 408 of the Companies Act 2006, the
income statement of the Company is not presented as part of these
financial statements. The Company's profit for the financial year
was GBP1,381,301 (2021 - GBP1,275,687).
The financial statements were approved by the Board of Directors
on [date] and were signed on its behalf by:
J Pugsley - Director
The notes form part of these financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called
up share Retained Share Group reorganisation Total
capital earnings premium reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------- ---------- --------- --------------------- --------
Balance at 1 January
2021 210 1,401 19,502 188 21,301
CHANGES IN EQUITY
Issue of share capital 16 - 1,374 - 1,390
Dividends - (1,031) - - (1,031)
Total comprehensive
income - 2,289 - - 2,289
------------------------ ---------- ---------- --------- --------------------- --------
BALANCE AT 31 DECEMBER
2021 226 2,659 20,876 188 23,949
------------------------ ---------- ---------- --------- --------------------- --------
CHANGES IN EQUITY
Dividends - (1,136) - - (1,136)
Total comprehensive
income - 2,275 - - 2,275
------------------------ ---------- ---------- --------- --------------------- --------
BALANCE AT 31 DECEMBER
2022 226 3,798 20,876 188 25,088
======================== ========== ========== ========= ===================== ========
Notes:
-- Share premium relates to the consideration paid for ordinary
share capital in excess of the nominal value of the ordinary
share capital.
-- The group reorganisation reserve relates to adjustments
to the retained earnings of the group upon consolidation
of the financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
Called
up share Retained Total
capital earnings Share premium equity
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------- ---------- -------------- --------
Balance at 1 January
2021 210 1,210 19,502 20,922
CHANGES IN EQUITY
Issue of share capital 16 - 1,374 1,390
Dividends - (1,031) - (1,031)
Total comprehensive
income - 1,275 - 1,275
------------------------- ---------- ---------- -------------- --------
BALANCE AT 31 DECEMBER
2021 226 1,454 20,876 22,556
------------------------- ---------- ---------- -------------- --------
CHANGES IN EQUITY
Dividends - (1,136) - (1,136)
Total comprehensive
income - 1,382 - 1,382
------------------------- ---------- ---------- -------------- --------
BALANCE AT 31 DECEMBER
2022 226 1,700 20,876 22,802
========================= ========== ========== ============== ========
Notes:
-- Share premium relates to the consideration paid for ordinary
share capital in excess of the nominal value of the ordinary
share capital.
CONSOLIDATED STATEMENT OF CASH FLOWS
2022 2021
Notes GBP'000 GBP'000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 1 2,656 247
Interest paid (1,782) (1,195)
Tax paid (581) (455)
---------------------------------------- ------ -------- --------
NET CASH FROM OPERATING ACTIVITIES 293 (1,403)
---------------------------------------- ------ -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received 3 2
---------------------------------------- ------ -------- --------
NET CASH FROM INVESTING ACTIVITIES 3 2
---------------------------------------- ------ -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Amounts introduced by directors 1
Share issue - 16
Share premium - 1,374
Equity dividends paid (1,136) (1,031)
---------------------------------------- ------ -------- --------
NET CASH FROM FINANCING ACTIVITIES (1,135) 359
---------------------------------------- ------ -------- --------
Decrease in cash and cash equivalents (839) (1,042)
Cash and cash equivalents at beginning
of year 2 1,527 2,569
---------------------------------------- ------ -------- --------
CASH AND CASH EQUIVALENTS AT
OF YEAR 2 688 1,527
======================================== ====== ======== ========
COMPANY STATEMENT OF CASH FLOWS
2022 2021
Notes GBP'000 GBP'000
Cash flows from operating activities
Cash generated from operations 1 (559) (727)
Interest paid (150) (150)
---------------------------------------- ------ -------- --------
Net cash from operating activities (709) (877)
---------------------------------------- ------ -------- --------
Cash flows from investing activities
Dividends received 2,200 2,050
---------------------------------------- ------ -------- --------
Net cash from investing activities 2,200 2,050
---------------------------------------- ------ -------- --------
Cash flows from financing activities
Intercompany loans (360) (3,310)
Amount introduced by directors 1 -
Share issue - 16
Share premium - 1,373
Equity dividends paid (1,136) (1,031)
---------------------------------------- ------ -------- --------
Net cash from financing activities (1,495) (2,952)
---------------------------------------- ------ -------- --------
Decrease in cash and cash equivalents (4) (1,779)
Cash and cash equivalents at beginning
of year 2 121 1,899
---------------------------------------- ------ -------- --------
Cash and cash equivalents at end
of year 2 117 121
======================================== ====== ======== ========
NOTES TO THE STATEMENTS OF CASH FLOWS
1. RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS
GROUP
2022 2021
GBP'000 GBP'000
Profit before income tax 2,809 2,827
Depreciation charges 1 1
Finance costs 1,782 1,195
Finance income (3) (2)
------------------------------------------ -------- --------
4,589 4,021
Increase in trade and other receivables (7,432) (9,602)
Increase in trade and other payables 5,499 5,828
Cash generated from operations 2,656 247
========================================== ======== ========
COMPANY
2022 2021
GBP'000 GBP'000
Profit before income tax 1,382 1,275
Depreciation charges 1 1
Finance costs 150 150
Dividend income (2,200) (2,050)
----------------------------------- -------- --------
(667) (624)
(Increase)/decrease in trade and
other receivables (4) 17
Increase/(decrease) in trade and
other payables 112 (120)
Cash absorbed by operations (559) (727)
=================================== ======== ========
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statements of Cash Flows in respect
of cash and cash equivalents are in respect of these Statement of
Financial Position amounts:
GROUP COMPANY
Year ended 31 December
2022
31.12.22 01.01.22 31.12.22 01.01.22
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------- ---------
Cash and cash equivalents 688 1,527 117 121
--------------------------- --------- --------- --------- ---------
Year ended 31 December
2021
31.12.21 01.01.21 31.12.21 01.01.21
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------- ---------
Cash and cash equivalents 1,527 2,569 121 1,899
--------------------------- --------- --------- --------- ---------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. STATUTORY INFORMATION
Vector Capital Plc is a public limited company, registered in
England and Wales. The Company's registered number and registered
office address can be found on the General Information page.
2. ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements of the Group have been
prepared using both the historical cost convention and fair value
measurement basis, on a going concern basis and in accordance with
UK-adopted international accounting standards and the Companies Act
2006 applicable to companies reporting under IFRS, using accounting
policies which are set out below and which have been consistently
applied to all years presented, unless otherwise stated.
The financial statements of the Company have been prepared in
accordance with Financial Reporting Standard 101 "Reduced
Disclosure Framework" ('FRS 101') and the requirements of the
Companies Act 2006. The Company will continue to prepare its
financial statements in accordance with FRS 101 on an ongoing basis
until such time as it notifies shareholders of any change to its
chosen accounting framework.
In accordance with FRS 101, the Company has taken advantage of
the following exemptions:
-- Requirements of IAS 24, 'Related Party Disclosures' to
disclose related party transactions entered into between
two or more members of a group;
-- the requirements of paragraphs 134(d) to 134(f) and 135I
to 135(e) of IAS 36 Impairments of Assets;
-- the requirements of IFRS 7 Financial Instruments: Disclosures
in relation to the significance of financial instruments
along with the nature and extent of risks arising from
those financial instruments;
-- the requirements of paragraphs 10(d), 10(f), 16, 38A,
38B, 38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1 Presentation
of Financial Statements;
-- the requirements of paragraphs 134 to 136 of IAS 1 Presentation
of Financial Statements;
-- the requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors.
New and amended standards adopted by the Group
There are a number of new and revised IFRSs that have been
issued but are not yet effective that the Company has decided not
to adopt early.
The most significant new standards and interpretations adopted
are as follows:
Ref Title Summary Application
date of standards
(periods commencing)
------- --------------------------- ----------------------------- ----------------------
IFRS Conceptual Framework 1 January 2022
3 for Financial Reporting
(Amendments to IFRS
3)
IAS 37 IAS 37 Provisions, Specifying which costs 1 January 2022
Contingent Liabilities an entity includes in
and Contingent Assets determining the cost
(Amendment - Onerous of fulfilling a contract
Contracts - Cost for the purposes of
of Fulfilling a assessing whether the
Contract) contract is onerous.
IAS 16 IAS 16 Property, Prohibits a company 1 January 2022
Plant and Equipment deducting amounts received
(Amendment - Proceeds from selling items produced
before Intended while the company is
Use) preparing assets for
its intended use from
the cost of PPE.
New standards and interpretations not yet adopted
Unless material the Group does not adopt new accounting
standards and interpretations which have been published and that
are not mandatory for 31 December 2022 reporting periods.
No new standards or interpretations issued by the International
Accounting Standards Board ('I'SB') or the IFRS Interpretations
Committee ('IF'IC') as adopted by the UK Endorsement Board have led
to any material changes in the Company's accounting policies or
disclosures during each reporting period.
The most significant new standards and interpretations to be
adopted in the future are as follows:
Ref Title Summary Application
date of standards
(periods commencing)
------- --------------------------- ------------------------------ ----------------------
IAS1 Presentation of Amendments regarding 1 January 2023
Financial Statements the classification of
liabilities
Amendments to defer 1 January 2023
effective date of the
January 2020 amendments
IFRS Insurance contract Internationally consistent 1 January 2023
17 approach to the accounting
for insurance contracts.
IAS 8 Definition of Accounting Defines accounting estimates 1 January 2023
Estimates and clarifies that the
effects of a change
in an input or measurement
technique are changes
in accounting estimates.
IAS 12 Deferred Tax relating Additional criterion 1 January 2023
to Assets and liabilities for the initial recognition
arising from a exemption under IAS
Single Transaction 12.15, whereby the exemption
(Amendments to does not apply to the
IAS 12) initial recognition
of an asset or liability
which at the time of
the transaction, gives
rise to equal taxable
and deductible temporary
differences.
Going concern
The financial statements are prepared on a going concern basis
as the Directors are satisfied that the Group's forecasts and
projections, taking into account potential changes in trading
patterns, indicate that the Group will be able to continue current
operations for the foreseeable future.
The Group's wholesale borrowing facilities totalling GBP40m are
due for renewal in July and October 2022, on a rolling annual
contract, the Group maintain a good working relationship with both
providers and are confident the facilities will be renewed.
The Directors have obtained comfort from its majority
shareholder, Vector Holdings Limited, that Group loans totalling
GBP3m, will not be recalled within 12 months of the year end.
In addition, the Directors have obtained comfort from other
companies within the wider related party Group that they will
provide financial support should the need arise and will not seek
repayment of Group loans within 12 months of the date of approval
of these financial statements. Accordingly, the Directors continue
to adopt the going concern basis in preparing the financial
statements.
Basis of consolidation
Subsidiaries are all entities over which the Group has control.
The subsidiaries consolidated in these Group accounts were acquired
via group re-organisation and as such merger accounting principles
have been applied. The subsidiaries financial figures are included
for their entire financial year rather than from the date the
Company took control of them.
The Company acquired its 100% interest in Vector Asset Finance
Limited ("VAF") and Vector Business Finance Ltd ("VBF") in 2019 by
way of a share for share exchange. This is a business combination
involving entities under common control and the consolidated
financial statements are issued in the name of the Group but they
are a continuance of those of VAF
and VBF. Therefore, the assets and liabilities of VAF and VBF
have been recognised and measured in these consolidated financial
statements at their pre combination carrying values. The retained
earnings and other equity balances recognised in these consolidated
financial statements are the retained earnings and other equity
balances of the Company, VAF and VBF. The equity structure
appearing in these consolidated financial statements (the number
and the type of equity instruments issued) reflect the equity
structure of the Company including equity instruments issued by the
Company to affect the consolidation. The difference between
consideration given and net assets of VAF and VBF at the date of
acquisition is included in a Group reorganisation reserve.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated during the
consolidation process.
The subsidiaries prepare their accounts to 31 December under
FRS101, there are no deviations from the accounting standards
implemented by the company. Where necessary accounting policies of
subsidiaries have been changed to ensure consistency with the
policies adopted by the Group.
Property, plant and equipment
Property, plant and equipment is initially measured at cost and
subsequently measured at cost or valuation, net of depreciation and
any impairment losses. Depreciation is provided at the following
annual rates in order to write off each asset over its estimated
useful life.
Fixtures and fittings - 20% on cost
Computer equipment - 25% on cost
Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantially enacted by the statement of
financial position date.
Employee benefit costs
The Group operates a defined contribution pension scheme.
Contributions payable to the Group's pension scheme are charged to
the income statement in the period to which they relate.
Significant accounting policies
a) Revenue Recognition
Turnover is measured at the fair value of the consideration
received or receivable net of trade discounts. Turnover includes
revenue earned from the rendering of service, namely commercial
lending in the unregulated secured loan market, the policies
adopted are as follows -
- Interest income is recognised using the effective interest
method. The effective interest method calculates the amortised
cost of a financial asset and allocates the interest income
over the relevant period. The effective interest rate
is the rate that discounts estimated future cash payments
or receipts through the expected life of the financial
instrument or, when appropriate, a shorter period to the
net carrying amount of the financial asset. When calculating
the effective interest rate, all contractual terms of
the financial instrument and lifetime expected credit
losses are considered.
- Setup and renewal fees are recognised in accordance with
the stage of completion.
Dividend and interest income
Interest income, other than from commercial loans, is recognised
using the effective interest method and dividend income is
recognised as the company's right to receive payment is
established. Each is then shown separately in the income statement
and other comprehensive income.
b) Investments
Investment in subsidiaries is initially measured at cost and
subsequently each year re-measured at fair value. Gains or losses
arising from changes in fair values of investments are included in
income statement in the period in which they arise.
c) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and time, call
and current balances with banks and similar institutions, which are
readily convertible to known amounts of cash and which are subject
to insignificant risk of changes in value. This definition is also
used for the statement of cash flows.
d) Financial instruments
Financial assets and financial liabilities are recognised when
the company becomes party to the contractual provisions of the
instrument. Financial assets and financial liabilities are
initially measured at fair value.
Transaction costs that are directly attributable (other than
financial assets or liabilities at fair value through the income
statement) are added to or deducted from the fair value as
appropriate, on initial recognition.
e) Financial assets
Financial assets are subsequently classified into the following
specified categories:
- financial assets at fair value through the income statement,
including held for trading;
- fair value through other comprehensive income; or
- amortised cost
The classification depends on the nature and purpose of the
financial asset (i.e. the Company's business model for managing the
financial assets and the contractual terms of the cash flows) and
is determined at the time of initial recognition.
Financial assets are classified as at fair value through other
comprehensive income if they are held within a business model whose
objective is achieved by both collecting contractual cash flows and
selling financial assets, and the contractual terms of the
financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount
outstanding. They are measured at amortised cost if they are held
within a business mode whose objective is to hold financial assets
in order to collect contractual cash flows and the contractual
terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount
outstanding.
Financial assets not held at amortised cost or fair value
through other comprehensive income are held at fair value through
the income statement.
f) Trade receivables
Trade receivables are amounts due from customers in relation to
commercial lending provided as part of the ordinary course of
business. If collection is expected in one year or less (as is the
normal operating cycle of the business), the receivables are
classified as current assets, if not, they are presented as
non-current assets.
Loans made by the Group are initially recognised at cost, being
the fair value of the consideration received or paid associated
with the loan or borrowing. Loans are subsequently measured at
amortised cost using the effective interest method where
appropriate, less any impairment for loans. The loan will be
de-recognised when the Group is no longer eligible for the cash
flows from it.
The credit risk of trade receivables is considered low due to
the legal charges held by the Group. The Directors regularly review
the trade receivables to ensure security held is sufficient to
maintain a low level of risk. Where defaults occur, the company
uses its legal powers to seize assets held as security and
liquidate them in order to recover the debt. Should the security
diminish in value and credit risk is re-assessed as higher the
Directors will make a provision for bad debts which will represent
a charge to the Income statement.
There is no Grouping for credit risk, each trade receivable is
reviewed on its own merit.
g) Financial liabilities
Financial liabilities are contractual obligations to deliver
cash or another financial asset.
All financial liabilities are measured at amortised cost, except
for financial liabilities at fair value through the income
statement. Such liabilities include derivatives, other liabilities
held for trading, and liabilities that an entity designates to be
measured at fair value through profit or loss (see 'fair value
option' below).
All interest-bearing loans and borrowings are classified as
financial liabilities at amortised cost.
h) Fair value option
An entity may, at initial recognition, irrevocably designate a
financial asset or liability that would otherwise have to be
measured at amortised cost or fair value through other
comprehensive income to be measured at fair value through the
income statement if doing so would eliminate or significantly
reduce a measurement or recognition inconsistency (sometimes
referred to as an 'accounting mismatch') or otherwise results in
more relevant information.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an open transaction between free
market participants)
i) De-recognition
De-recognition of financial assets and liabilities is the point
at which an asset or liability is removed from the financial
statement.
Financial assets are de-recognised when the rights to receive
cashflows from the assets have ceased and the Company has
transferred substantially all the risk and rewards of ownership of
the asset.
Financial liabilities are de-recognised when the obligation is
discharged, cancelled or expired.
j) Impairment
Impairment of financial assets is recognised in stages:
Stage-1 - as soon as a financial instrument is originated or
purchased, 12-month expected credit losses are recognised in the
income statement and a loss allowance is established. This serves
as a proxy for the initial expectations of credit losses. For
financial assets, interest revenue is calculated on the gross
carrying amount (i.e. without deduction for expected credit
losses).
Stage-2 - if the credit risk increases significantly and is not
considered low, full lifetime expected credit losses are recognised
in the income statement. The calculation of interest revenue is the
same as for Stage 1.
Stage-3 - if the credit risk of a financial asset increases to
the point that it is considered credit-impaired, interest revenue
is calculated based on the amortised cost (ie the gross carrying
amount less the loss allowance). Financial assets in this stage
will be assessed individually. Lifetime expected credit losses are
recognised on these financial assets.
On an ongoing basis the Company reviews and assesses whether a
financial asset is impaired.
Expected credit losses are calculated based on the Company
review using objective tests of security held, defaults, market
conditions and other reasonable information available to the
Company at the time of review. There is no Grouping for credit
risk, each trade receivable is reviewed on its own merit.
Losses as a result of the review are recognised in the Income
Statement.
k) Borrowing costs
All borrowing costs are recognised in the Income Statement in
the period in which they are incurred.
Critical accounting estimates and judgements
The preparation of financial information requires management 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 assumptions are reviewed by the Directors on an
ongoing basis. Revisions or amendments to the accounting estimates
are recognised in the period in which the estimate is revised and
in any future periods affected.
The Directors consider that loan impairment provision is the
most important to the true reflection of the Company's and the
Group's position.
Loan impairment provisions
The Directors monitor debts carefully, the company operates
tight controls to ensure bad debts are minimised, including the
holding of adequate legal security. Where debts become overdue
management assess the collectability of the debt on a case-by-case
basis, where doubts exist over the recoverability provisions will
be made and charged to the Income statement.
Financial risk management
The Group's risk management is controlled by the board of
Directors. The Board identify, evaluate and mitigates financial
risks across the Group. Financial risks identified and how these
risks could affect the Group's future financial performance are
listed below;
Market risk - interest rate
The Group holds borrowings from banks at variable rates which
are linked to lending provided to customers. The risk is measured
through sensitivity analysis. The risk is managed via monitoring of
base rates when new loans and renewals are issued to maintain a
suitable margin above cost. Since loans are short term the exposure
to higher rates is low.
Credit risk
The Group lends to third parties as included in trade debtors,
there is a risk of default from a borrower. Risk is measured by
review of security held compared to credit provided. the risk is
management by undertaking thorough valuations of security,
obtaining legal charge and stringent onboarding processes. At the
year-end Group trade debtors of GBP53,229,641 (2021: GBP46,262,775)
represented 57% (2021: 54%) of the aggregate security held.
Liquidity risk
The risk the Company cannot meet its financial responsibilities
such as finance and operating expenses. The risk is measured by way
of rolling cash flow forecasts prepared by management, including
undrawn borrowing facilities and cash and cash equivalents. The
risk is controlled by the timing and availability of new finance
for customers.
Capital risk
The Group's objective when managing capital is to safeguard the
Group's ability to continue as a going concern and to be profitable
for its shareholders. The board monitors capital by assessing
liquidity, forecasts and demand for lending on an ongoing
basis.
3. OPERATING SEGMENTS
The entire revenue and results of the Group are from a single
operating segment. The Group therefore does not consider
requirement to disclose segmental information necessary.
4. EMPLOYEES AND DIRECTORS
2022 2021
GBP'000 GBP'000
Wages and salaries 352 320
Social security costs 35 31
Other pension costs 24 24
-------- --------
411 375
======== ========
The average number of employees during
the year was as follows:
2022 2021
No. No.
Administrative 9 8
======== ========
Directors' remuneration 2022 2021
GBP'000 GBP'000
Salaries 197 169
Pension contributions 20 20
-------- --------
217 189
======== ========
The highest paid director, Agam Jain, was paid remuneration of
GBP120,000 (2021: GBP120,000) during the year, as disclosed in the
Report of the Directors.
5. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2022 2021
GBP'000 GBP'000
Brokers' commission 429 502
Depreciation - owned assets 1 1
Auditors' remuneration
Audit of Group 40 35
Non-audit services 3 3
-------- --------
43 38
Bad debts 212 50
======== ========
6. INCOME TAX
Analysis of tax expense
2022 2021
GBP'000 GBP'000
Current tax: Corporation tax 534 538
-------- --------
Total tax expense in consolidated income
statement 534 538
======== ========
Factors affecting the tax expense
The tax assessed for the year is higher than the standard rate
of corporation tax in the UK. The difference is explained
below:
2022 2021
GBP'000 GBP'000
Profit before income tax 2,809 2,827
======== ========
Profit multiplied by the standard rate
of corporation tax in the UK of 19% (2021
- 19%) 534 537
Effects of:
Tax on interest paid to individuals (CT61) - 1
-------- --------
Tax expense 534 538
======== ========
7. DIVIDS
2022 2021
GBP'000 GBP'000
Ordinary shares of GBP0.005 each
Final 683 601
Interim 453 430
-------- --------
1,136 1,031
======== ========
The interim dividend for the year of 1.00 pence per share was
paid on 30 September 2022.
8. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted
average number of shares adjusted to assume the conversion of all
dilutive potential ordinary shares.
Reconciliations are set out below.
2022
Earnings Weighted Per-share
GBP'000 average amount
number of pence
shares
---------------------------------- -------- ---------- ---------
Basic EPS
Earnings attributable to ordinary
shareholders 2,275 45,244,385 5.03
Effect of dilutive securities - - -
-------- ---------- ---------
Diluted EPS
Adjusted earnings 2,275 45,244,385 5.03
======== ========== =========
2021
Earnings Weighted Per-share
GBP'000 average amount
number of pence
shares
---------------------------------- -------- ---------- ---------
Basic EPS
Earnings attributable to ordinary
shareholders 2,289 43,687,987 5.24
Effect of dilutive securities - - -
-------- ---------- ---------
Diluted EPS
Adjusted earnings 2,289 43,687,987 5.24
======== ========== =========
9. PROPERTY, PLANT AND EQUIPMENT
Group
Fixtures Computer Totals
and fittings equipment
GBP'000 GBP'000 GBP'000
COST
At 1 January 2022 and 31 December
2022 1 4 5
-------------- ----------- ---------
DEPRECIATION
At 1 January 2022 - 2 2
Charge for year 1 1 2
-------------- ----------- ---------
At 31 December 2022 1 3 4
-------------- ----------- ---------
NET BOOK VALUE
At 31 December 2022 - 1 1
============== =========== =========
At 31 December 2021 1 2 3
============== =========== =========
Company
Fixtures Computer Totals
and fittings equipment
GBP'000 GBP'000 GBP'000
COST
At 1 January 2022 and 31 December
2022 1 4 5
-------------- ----------- ---------
DEPRECIATION
At 1 January 2022 - 2 2
-------------- ----------- ---------
Charge for year 1 1 2
-------------- ----------- ---------
At 31 December 2022 1 3 4
NET BOOK VALUE
At 31 December 2022 - 1 1
============== =========== =========
At 31 December 2021 1 2 3
============== =========== =========
10. INVESTMENTS
Company
Shares in Group undertakings
GBP'000
COST
At 1 January 2022 and 31 December 2022 17,000
-----------------------------
NET BOOK VALUE
At 31 December 2022 17,000
=============================
At 31 December 2021 17,000
=============================
Shares in Group Undertakings comprises;
Country of incorporation Ownership held Principal activities
Name of entity
2022 2021
Vector Business Finance
Ltd England and Wales 100% 100% Commercial lending
Vector Asset Finance
Ltd England and Wales 100% 100% Commercial lending
11. TRADE AND OTHER RECEIVABLES
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Trade debtors 51,709 46,263
Amounts owed by Group undertakings - - 8,816 8,456
Prepayments and accrued income 768 302 16 11
-------- -------- -------- --------
52,477 46,565 5,832 8,467
======== ======== ======== ========
Non-Current:
Trade debtors 1,520 - - -
-------- -------- -------- --------
53,997 46,565 8,832 8,467
======== ======== ======== ========
Trade receivables are stated after provisions for impairment of
GBP212 (2021; GBP50).
72% of trade receivables were held by third party secure funding
(2021, 68%).
Trade receivables due after more than 1 year is not considered
material and therefore not reflected on the Balance Sheet.
12. CASH AND CASH EQUIVALENTS
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Bank account 688 1,527 117 121
======== ======== ======== ========
13. TRADE AND OTHER PAYABLES
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Current:
Trade creditors 11 3 2 2
Amounts owed to Group undertakings - 3,000 - 3,000
Social security and other
taxes 12 11 12 11
Other creditors 25,544 20,335 1 -
Accruals and deferred income 233 509 133 22
-------- -------- -------- --------
25,800 23,858 148 3,035
======== ======== ======== ========
Group Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Non-Current:
Amounts owed to Group undertakings 3,000 - 3,000 -
creditors 558 - - -
-------- -------- -------- --------
3,558 - 3,000 -
======== ======== ======== ========
Trade and other payables are stated at amortised cost.
Following the renegotiation of the loan from Vector Holdings
Limited on 28 December 2022, it is now classified as being due more
than one year
The following secured debts are included within creditors:
Group Company
GBP'000 GBP'000
Other creditors under 1 year 25,542 -
Other creditors over 1 year 558 -
-------- --------
26,100
======== ========
Other creditors include bank finance which is secured against
the associated loans assigned to it by way of block discounting.
These balances have not been classified as banking facilities as
the discounting facility is available to drawdown against customer
loans issued and have to be secured over the property of the
customer. Neither Vector Asset Finance Limited nor Vector Business
Finance Limited can use these facilities for working capital
requirements.
Vector Holdings Limited has provided a guarantee to Aldermore
Bank and Shawbrook Bank covering all monies and liabilities due
from Vector Asset Finance Limited and Vector Business Finance
Limited.
14. CALLED UP SHARE CAPITAL
Allotted, issued and
fully paid:
Number: Class: Nominal 2022 2021
value: GBP'000 GBP'000
45,244,385 Ordinary GBP0.005 226 226
======== ========
(2021: 45,244,385)
Holders of ordinary shares are entitled to dividends as declared
from time to time and are entitled to on vote per share at general
meetings of the company.
15. ULTIMATE PARENT COMPANY
Vector Holdings Limited is regarded by the Directors as being
the Company's ultimate parent company.
Mr A Jain, Director, is considered the ultimate controlling
party by virtue of his shareholding in Vector Holdings Limited, the
ultimate parent company.
16. RELATED PARTY DISCLOSURES
All figures quoted in GBP'000s
Vector Holdings Ltd - ultimate parent company
- The Group owed GBP3,000 to the parent company (2021;
GBP3,000)
- Interest is payable at a rate of 5% per annum, there
is no requirement to make capital repayments. On 28 December
2022 the company renewed the loan with the parent company,
the rate of interest increased 6.25% per annum to be reflective
of the market rates.
- Dividends totalling GBP853 were paid to the parent company
(2021; GBP809)
- Vector Holdings Ltd has provided a guarantee to Aldermore
Bank and Shawbrook Bank covering all monies and liabilities
due from the Group.
Key Management Personnel
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any
Directors (whether executive or otherwise). Key Management
Personnel are defined as the Directors, executive and
non-executive. The aggregate remuneration for Key Management
Personnel is GBP268 (2021: GBP239).
Jonathan Pugsley - Director
During the year, Allazo Ltd, a company controlled by Jonathan
Pugsley, charged accountancy fees of GBP9 (2021: GBP8) to the
Group.
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END
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April 18, 2023 02:00 ET (06:00 GMT)
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