The directors present the strategic report for the year ended 31 March 2023.
Amplifi Holding Ltd, via its wholly owned subsidiary Amplifi Capital (U.K.) Limited ("Amplifi”), operates a consumer lending platform which currently offers unsecured personal loans to near prime consumers who find it difficult to access credit from traditional high street banks. Amplifi provides loans direct from its own resources under the REEVO brand as well as providing platform broking services to two of the largest credit unions in the United Kingdom. The platform seeks to build a leading position in consumer finance, currently offering personal loans with a credit card operation being developed. The principal activities of the Group include credit analysis, data analytics, technology and broking services as well as customer service operations.
The business environment improved during 2022-23 with the previous disruption caused by COVID-19 largely extinguished. The Ukraine war and resultant macro-economic turmoil followed by increasing interest rates and high inflation are all having an effect on the business. We are carefully monitoring performance outcomes and improving our Risk models following a reduction in disruptions and restrictions related to COVID-19.
Despite significant headwinds faced by the Group over the past 12 months impacting our customers and the markets we operate in; we delivered an excellent performance during the year. The results for the year are set out in the Group’s Statement of Comprehensive Income. The Group profit before taxation amounted to £5,599,006 (2022: £1,837,159). No dividend is proposed (2022: £nil).
Risk management is now overseen by Amplifi’s Risk Committee. The Risk Committee has been recently enlarged and is currently meeting on a monthly basis. It now comprises the Amplifi executive Board members, other key executives as well as representation from the parent company Board. The Risk Committee is responsible for the monitoring and controls of compliance with legal and regulatory requirements. These requirements include those of the Financial Conduct Authority (FCA) (which include financial crime, conduct risk and treating customers fairly) and the Information Commissioner's Office (ICO) (Data Protection Act 2018 requirements).
There are a number of potential risks and uncertainties which could have a material impact on the Group’s long-term performance:
Regulatory Risk - The Group defines this as the risk of failure to comply with regulatory requirements applying to business arrangements and activities.
Amplifi Capital (UK) Limited is regulated by the Financial Conduct Authority (ref: 718749) by virtue of its consumer credit origination & servicing operations. It is specifically authorised for credit broking and debt administration and trades under the names of REEVO, REEVO MONEY and MY COMMUNITY FINANCE as well as its own name, AMPLIFI.
Failure to comply with relevant regulations could result in regulatory censure leading to suspension or termination of the Group’s ability to conduct business and could lead to financial loss. The long on-going success of the business is supported by embracing the regulatory requirements, maintaining a positive and open relationship with the FCA and helping to strengthen the Group’s governance, conduct and accountability.
In June 2022, the Financial Conduct Authority (FCA) published final rules and guidance on New Consumer Duty rules comprising:
A new Consumer Principle that requires firms to act to deliver good outcomes for retail customers.
Cross-cutting rules providing greater clarity on FCA expectations under the new Principle and helping firms interpret the four outcomes (see below).
Rules relating to the four outcomes they want to see under the Consumer Duty. These represent key elements of the firm-consumer relationship which are instrumental in helping to drive good outcomes for customers.
These outcomes relate to:
Products and services
Price and value
Consumer understanding
Consumer support
The new rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met.
These rules came into force on 31 July 2023 and the Group has undertaken a major review, both internally and externally, of all its policies and procedures during the period since the rules were published to get ready for implementation.
Strategic Risk - The Group defines this as the risk that the Group does not devise and implement a business strategy that meets the objectives of its shareholders and other stakeholders.
The Group’s strategy is primarily based on the future provision of credit products to consumers, primarily in the near-Prime categories. Changes in economic conditions could impact the ability of the Group to maintain and grow market demand as per its strategic plans. Also, competitors may develop new products which may disrupt the Group’s market share.
The Group continually re-evaluates strategy based on periodic evaluation of consumer needs, market demand and the approach to strategy execution. The Group has a Board approved product governance process which considers any key risks and necessary mitigations in respect of new products and requires periodic consideration of the risk profile of existing products.
Reputational Risk - The Group defines this as the risk of a fall in market share and customer demand due to reputational reasons.
In particular, as part of this strategy, Amplifi strives to maintain a high standard in customer service. Amplifi continually determines the needs and priorities of customers and considers both existing and potential new customers in its decision making. The Group regularly gathers feedback from customers and feeds back to our customer service and operations staff, allowing the business to better understand consumer needs and demands and strengthen our training programs.
The Group holds a 4.8 Trustpilot rating across all customers with its established My Community Finance customer base and is seeking to achieve a similar standard as the Reevo own loan book grows.
Credit Risk - The Group defines this as the risk of financial losses as a result of the non-recoverability of monies owed to it.
The Group’s core credit risk exposure arises from its outstanding loan book receivables from customers. Credit risk on the loan book is primarily managed by the Group’s lending decision systems and credit scoring analysis. These rules and the lending strategies from which they are derived are continually re-evaluated. To the extent that there is no objective evidence that loss has been incurred, the financial losses have been provided for during the financial year as considered necessary.
Liquidity Risk - The Group defines this as the risk of failing to meet financial obligations as they fall due. The risk arises from unexpected (in terms of size and timing) cash outflows or expected inflows which fail to materialize. The Group performs prudent liquidity management to ensure it maintains sufficient cash reserves to facilitate its needs.
It is within the Group’s operations to monitor the liquidity position on a regular basis and forecasting is used to manage the stability of the projected liquidity changes to ensure it has sufficient cash to meet its projected requirements.
Market Risk - The Group defines this as the risk of financial losses from changes in market factors such as foreign exchange rates and interest rate changes. The Group has little exposure to foreign currency movement as its operations are solely based in the United Kingdom. The Group’s primary market risk exposure is to changes in interest rates. The Group continually evaluates the need to formulate a mitigation strategy and implement hedging strategies from time to time.
Operational Risk - The Group defines this as the risk of losses from inadequate or failed processes, systems, people, or from external events. The Group manages this risk by independent overview from the various levels of management, including both the subsidiary and holding company independent directors. In particular we have in place real-time system monitoring to detect performance and security issues and have greatly expanded our team of dedicated and suitably skilled Information Technology and Information Security teams as well as strengthening associated processes throughout the Group.
Capital Management - The Group considers its capital to comprise ordinary share capital as well as its accumulated reserves. The objective of the directors of both the Company, and its subsidiary, Amplifi Capital (UK) Limited, when managing capital is to safeguard the Group’s ability to continue as a going concern in order to provide long-term returns for the shareholders. The Group is not currently subject to any specific externally imposed capital requirements.
The results of the Group for the year show an increase in revenue of 82% to £21.81m (2022: £11.99m), and a profit taken to equity of £4.72m (2022: £1.88m). The Group continued to build its balance sheet during the financial year with net assets increasing by 175% to £7.42m (2022: £2.70m).
During the year, the subsidiary company drew further amounts under its secured loan facility with a resultant increase in borrowing of £14.425m, resulting in a liability as at 31 March 2023 of £30.025m (2022: £15.6m).
Following the year-end this facility and liability was repaid in full and replaced with a new secured facility of up to £50m of which £44m has been drawn to the date of this report.
Amplifi continues to make significant investments in its technology, risk management, customer service and compliance functions as well as providing capital to the credit union sector.
In particular, the Group work force has grown considerably in the year to 31 March 2023. Amplifi understands that attracting, motivating and retaining talent at all levels is vital to the continuing success and growth of the business. The Company invests in its employees through various benefits, health and wellbeing initiatives as well as providing opportunities for advancement and development of their skills.
The Group uses key performance indicators to ensure it has the ability to grow the business successfully in the long term. The performance of the main indicators in this reporting period were:
Profit before tax £5.6m (2022: £1.8m)
Total assets £42.8m (2022: £21.5m)
Net current assets £12.5m (2022: £1.9m)
Net assets £7.4m (2022: £2.7m)
Own loan book £6.5m (2022: £0.38m)
Bad debts provision £0.2m (3.4%) (2022: £5k (1.3%))
Our business is focused on the consumer sector. Our services and products suit the UK’s current economic conditions. We enable customers to sensibly structure their personal gearing and our products are attractive in a rising interest rate and inflationary economy. Affordable fixed-rate finance geared in this way enables consumers to better structure their personal borrowing which is often dominated by higher rate credit card lending.
The Group aims to continue to trade profitably and as the Group utilises its new funding lines it will gradually increase its broking and lending activity.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2023 and of the group's profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As part of our planning process:
We enquired of management the systems and controls the group and company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The group and company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the group and company. We determined that the following were most relevant: FRS 102, Companies Act 2006 and FCA regulations.
We considered the incentives and opportunities that exist in the group and company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the group and company, together with the discussions held with the group and company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to deferred remuneration due in more than one year, recoverability of other debtors and investments held.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations.
Performing a proof in total of revenue for evidence of management bias.
Obtaining third-party confirmation of material bank and loan balances.
Documenting and verifying all significant related party and consolidated balances and transactions.
Reviewing documentation such as the group and company’s board minutes, for discussions of irregularities including fraud.
Testing all material consolidation adjustments.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £88,505 (2022 - £14,560 profit).
Amplifi Holding Ltd ("the company") is a private company limited by shares incorporated in England and Wales. The registered office is 30 Churchill Place, London, E14 5RE, England.
The group consists of Amplifi Holding Ltd and its subsidiary.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.
The consolidated group financial statements consist of the financial statements of the parent company Amplifi Holding Ltd together with its subsidiary (ie an entity that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).
All financial statements are made up to 31 March 2023. Where necessary, adjustments are made to the financial statements of its subsidiary to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Group
The group has been profitable during the year and to present date. During the year, the subsidiary company was able to draw down on a loan facility provided by a shareholder of the parent company. Following the year-end, a new facility has been entered into with a third party for amounts up to £50,000,000, of which £44,000,000 has been drawn down to date. The directors believe this provides sufficient cash resources and enables the group to continue trading profitably in the future.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Company
The company operates as a holding company. The directors believe the company has sufficient cash resources to enable it to continue for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business.
Turnover is income in respect to sourced loans, paid to the group as a percentage of the originated loan as an introduction fee. Turnover is recognised according to the period in which the loan was made.
Service fees includes underwriting placement fees being commission on investments in deferred shares made by the group and a company under common control.
Interest and fee income on trade receivables is calculated on a straight-line method and this is not materially different from the effective interest method. Default fees and any interest are charged to customers when they fail to make a repayment within the agreed terms and such fees and interest are recognised as revenue when these amounts are expected to be recovered.
Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is five years.
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The intangible assets under development relate to a credit card platform in development but not yet in use.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Investments in deferred shares are initially measured at cost and are assessed for impairment at each reporting date, and any impairment losses or reversals of impairment losses are recognised immediately in the profit and loss account.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Cash and cash equivalents include cash in hand and current balances with banks and similar institutions.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
The group classifies its financial assets into the following categories: cash and cash equivalents and trade and other receivables. The classification is determined by management upon recognition, and is based on the purpose for which the financial assets were acquired.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including trade and other payables, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Government grants
Government grants, which include amounts received from the Bounce Back Loan Scheme that cover interest and fees payable to the lender, are recognised at the fair value of the grant received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. The income is recognised in other income on a systematic basis over the period in which the associated costs are incurred, using the accrual model.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Deferred remuneration due in more than year
Included within other creditors due in more than one year is deferred remuneration payable to key management personnel and staff. The amount has been deferred as it is due for payment in June 2024 on the basis that the individual is still employed by the group. The directors have made a judgement that it is probable the employees entitled to this remuneration will be employed by the group in June 2024 therefore the full amount should be provided for.
Recoverability of other debtors
At the year end the group was owed £4,496,102 (2022: £1,354,584) included in other debtors due from a company under common control. The directors assess the recoverability of these debts based on the actual and forecast financial results of the company under common control. At the year end the directors consider the amounts included in other debtors to be recoverable.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The group holds £25,417,700 of deferred shares at the year-end date (2022: £17,342,700) with a coupon rate ranging from 13.5% to 18%.
Following the year-end, the group have acquired £11,355,000 deferred share investments.
Details of the company's subsidiaries at 31 March 2023 are as follows:
The group also has significant holdings in undertakings which are not consolidated.
The investments in the below significant undertakings do not give the group control over voting rights. Furthermore, this assists the undertakings to facilitate their activities, which in turn assists the group with its operations.
The direct shareholdings noted below relate to the deferred share class of the significant undertakings and the group has two voting shares for each entity:
The above financial results and shareholding percentages are for the year ended 30 September 2022 for both entities.
Included in other debtors is an amount of £4,496,102 (2022: £1,354,584) owed from a company under common control.
Following the year-end, other borrowings of £115,000 due in less than one year have been extended to 30 September 2024.
Following the year-end, other borrowings of £500,000 due in less than one year have been extended to 14 August 2026.
During the year, there was a fixed and floating charge and negative pledge over the assets of the group in favour of a shareholder of the company. Following the year-end, those charges were released and a charge registered in favour of agent and trustee on behalf of a lender to the subsidiary undertaking, containing a fixed charge, floating charge and negative pledge.
Other creditors relates to facilities A & B amounting to £47,916,614 of which £30,025,001 (2022: £15,613,118) had been drawn down as at the year-end. The base interest rate on Facility A was 10% per annum plus an additional interest rate of 7% per annum, whilst the base interest rate on Facility B was 15% per annum. Following the year-end, £1,500,000 was drawn down on the loan facility in operation at the year-end. The facilities were available to invest in deferred shares in credit unions.
Following the year-end, a new loan facility of up to £50,000,000 has been entered into, which comprises a £30,000,000 fixed rate facility at 14.5% and a £20,000,000 accordion facility at a variable rate of 10.5% + SONIA. £44,000,000 has been drawn down on this facility to date, which has been partly used to repay the facilities mentioned above. The facility is available to invest in deferred shares in credit unions.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Group
During the year, the group incurred software costs of £4,758,000 (2022: £3,683,045), recruitment fees and recharged staff expenses of £87,628 (2022: £103,396) which were paid to a company under common control.
At the year-end, there was an accrual of £450,000 (2022: £558,000) for software costs owed to a company under common control.
At the year-end, the group was owed £4,496,102 (2022: £1,354,584) from a company under common control, which is included in other debtors. The group received interest of £319,624 (2022: £19,084) during the year on the amounts owed by this entity at an interest rate of 10% per annum.
As described in the fixed asset investments and significant undertakings notes above, the group holds deferred share investments in Brent Shrine Credit Union Limited (t/a My Community Bank) and North Edinburgh and Castle Credit Union Limited (t/a Castle Community Bank) with 81% and 75% direct ownership of the deferred shares in issue at the year-end, respectively. The group held £25,417,700 of deferred shares in the credit unions at the year-end (2022: £17,342,700) with coupon rate ranging from 13.5% to 18%. During the year, the group received deferred share interest receivable of £3,434,500 (2022: £2,144,752) and underwriting fees of £478,750 (2022: £545,750) on the deferred share investments held. Furthermore, the group received upfront and base brokerage fee income of £19,935,305 (2022: £11,288,244) and enhanced fee income of £529,883 (2022: £nil) from the credit unions in accordance with the service agreements.
During the year, the group paid gross salary of £67,837 and £nil consultancy fees (2022: £31,417 gross salary and £48,000 consultancy fee) to a shareholder and spouse of one of the directors.
Included in trade creditors is an amount of £39 (2022: £nil) owed to a director.
Company
At the year-end, the company was owed £817,214 (2022: £639,855) from a company under common control, which is included in other debtors. The company received interest of £59,758 (2022: £16,119) during the year on the amounts owed by the company under common control at an interest rate of 10% per annum.
The company holds deferred share investments in Brent Shrine Credit Union Limited (t/a My Community Bank) and North Edinburgh and Castle Credit Union Limited (t/a Castle Community Bank). The company held £1,050,000 (2022: £1,050,000) of deferred shares at the year-end with coupon rate ranging from 13.5% to 15%. During the year, the company received deferred share interest receivable of £150,975 (2022: £150,902) on the deferred share investments held.
Following the year end, the group has entered into a commercial sales agreement with a third party whereby the group sold its then loan book portfolio (£6,355,465 of the trade receivables balance). The group continues to sell loans it originates to the third party and retains responsibility to administer the resultant loan book in a servicing capacity. Consideration receivable in respect of a sale of loan comprises the principal and accrued interest. Servicing fees are charged periodically, and the group will have a participation interest in the success of the loan book.
At the year-end, the immediate parent company is CL MC Finance UK SARL, an entity incorporated in Luxembourg whose registered office is 5 Rue de Strasbourg, L-2561, Luxembourg, Grand Duchy of Luxembourg. The ultimate parent is CL V Ventures Offshore LLC, a limited liability company registered in Delaware, USA.
The results of Amplifi Holding Ltd are not disclosed in the consolidated financial statements of CL V Ventures Offshore LLC.