Registered number: 11506324
PERENNA GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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PERENNA GROUP LIMITED
COMPANY INFORMATION
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Forvis Mazars LLP (formerly Mazars LLP)
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Chartered Accountants & Statutory Auditor
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PERENNA GROUP LIMITED
CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Consolidated Statement of Profit or Loss and Other Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Company Statement of Cash Flows
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Notes to the Consolidated Financial Statements
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their strategic report in relation to Perenna Group Limited (individually the “Company” and together with its subsidiary company, Perenna Bank PLC, “the Group” or “Perenna”) for the year ended 31 December 2023.
Business Review
Our Purpose
The UK mortgage market is dominated by the high street banks that offer almost exclusively short-term fixed-rate mortgages. Young people can’t borrow what they can afford due to interest rate stress tests and falling home ownership is a major political and societal issue. Older borrowers struggle to get products at all because of lender-imposed age limits. Frequent refinancing is costly, time-consuming, and stressful. Borrowers risk paying a higher rate when they refinance, or risk reversion to a penal variable rate if they cannot refinance, because their circumstances have changed, or their property value has fallen. High levels of inflation and interest rates make this a vulnerable model.
Perenna’s mission is to create a nation of happy homeowners. We provide customer-centric mortgage products to combat these issues and focus on delivering great outcomes for our customers.
Our Strategy
We have created a new kind of lending platform to achieve our mission. We are a lender that funds mortgages with real money investments rather than retail deposits. This is a common model in continental Europe and the United States and enables us to offer flexible long-term fixed-rate mortgages, which do not otherwise exist in the UK. Such products provide significant benefits to various large and underserved borrower groups:
∙The UK is suffering from declining home ownership and first-time buyers face major affordability challenges. Interest rate stress tests on short-term mortgages limit borrowing amounts, preventing some people from buying a property even if they can afford the mortgage payments. A Perenna mortgage allows first-time buyers to affordably borrow more and helps them become homeowners much earlier.
∙Later life borrowers are generally excluded from the mortgage market. Many are high quality borrowers with defined benefit pension plans and equity in their properties. There is a need to access mortgage credit in large amounts with limited suitable products available. A Perenna mortgage has no age limits and allows later life borrowers to access home equity and to finance their retirements.
∙Ordinary borrowers, particularly those on average incomes, do not want to constantly refinance and cannot afford fluctuations in interest rates. A Perenna mortgage provides certainty over monthly mortgage payments which is critical in establishing the foundations of stable household finances and future planning.
In addition, the technology underpinning the UK mortgage market is generally legacy, inflexible, and dated. It can lead to slow decision times and a poor user experience. Perenna is building a scalable digital platform without the legacy constraints of the incumbent lenders. We use the latest technology enabling a low-click customer experience and rapid mortgage decisions.
Finally, Perenna recognises that climate-related risks and opportunities have a material impact on our strategy. We have embedded climate change issues within our overall risk management approach and broader strategy. We recognise that there are challenges for homeowners to decarbonize, and Perenna is launching products and tools to enable and incentivise our customers to live more sustainably.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Our Business Model
Perenna aims to fund its mortgages through the issuance of covered bonds, primarily to real money investors (insurance companies and pension funds), who require long dated investments to match their own long dated liability profile. Covered bonds are bank-issued instruments, secured over a designated pool of assets (in Perenna’s case, the underlying residential mortgages). They are highly rated, liquid, tradeable, and afford preferential capital and liquidity treatment to investors.
Unlike traditional deposit-taking banks in the UK, Perenna does not operate a maturity transformation model under which short-term liabilities fund longer-term assets. Rather, it matches (to the extent possible) assets and liabilities to avoid the refinancing and liquidity risk present in the traditional banking model. Accordingly, Perenna’s long-term fixed rate mortgage products are funded by long-term, fixed rate covered bonds. Should Perenna choose to move into shorter dated mortgage products in the future, these would be funded by covered bonds of a corresponding term.
The interest element of each Perenna mortgage comprises a number of constituent parts including funding costs, origination and servicing costs, operating expenses and Perenna profit.
Perenna is designed to distribute its mortgage products through three distinct channels to maximise its reach: (a) through brokers, networks and clubs; (b) through partner lenders, these are banks, building societies and other non-bank lenders who have the infrastructure but not the funding structure to offer long-term fixed rate mortgages to their customers; and (c) through other platforms on an embedded finance basis, including property portals and house builders.
The subsidiary company, Perenna Bank PLC, has been set up to meet the requirements of underserved borrower segments, we understand that long-term success for all stakeholders is possible only with a mission focused, customer centric business proposition. As we have built up our business model, we have actively engaged with all relevant business participants, including potential borrowers, to ensure that we meet needs consistently, with uncompromisingly high service standards, and always in a fair and transparent manner consistent with the Financial Conduct Authority's ("FCA") Consumer Duty requirements. The board and management teams are completely aligned with this perspective.
To sustain and enhance the business model that delivers our vision, we aim to build strong, collaborative relationships with all our suppliers to enable them to understand the environment in which we operate, and the consumer-focused approach that we take, so that they can most effectively partner with us. In turn, this allows us to best understand, quantify and manage any supply chain risks present in our model and to ensure the appropriate level of business resilience.
Our Product
Perenna’s cornerstone product will help solve these issues. It is a flexible, long-term, fixed for life mortgage. Borrowers will have the option to refinance when it suits them (after a limited early repayment charge ‘ERC’ period), or they can choose to keep their rate for the full term. It protects against future interest rate rises and allows a larger loan amount than is possible with a short-term mortgage, because there is no requirement to ensure affordability at much higher interest rates as the rate will never change. For many, the product will unlock their home ownership dream. There is no age limit for our borrowers. They simply need to be able to afford the monthly payments. Flexible long-term fixed rate mortgages are overwhelmingly the most popular mortgage product in countries where they are offered such as the US and Denmark. Our focus is on a flexible and customer-centric product allowing borrowers to better manage their financial positions. Our mortgages are portable and can be moved to a new property. They will also be transferable and intergenerational, meaning that a property could be transferred with the mortgage attached.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Financial review
The results for the Group shows a net loss for the year ended 31 December 2023 of £13,947k (2022 - £10,646k loss). Total shareholder funds show a surplus of £45,701k (2022 - £14,210k).
The Group raised £45,221k (2022 - £21,000k) of capital through the issuance of ordinary shares. Of this £43,221k (2022 - £21,000k) related to new funds raised by the Company in its Series B funding round.
Excess cash was invested in short, dated UK treasury bills. The amount invested at year end amounted to a nominal value of £32,700 (2022 - £13,000k).
Key performance indicators
The sole activity of the Group is being driven by the subsidiary, the new bank, Perenna Bank PLC. As a new bank the Group has developed a range of metrics to cover all aspects of the bank's operations. These continue to evolve. The relevant key metrics are as follows:
2023 2022
Leverage Ratio 95.96% 91.05%
CET1 Ratio 276.12% 101.66%
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Risk Management
Risk taking is fundamental to the Group’s business and therefore prudent risk management, limitation and mitigation, form an integral part of the Group’s governance structure.
The Group’s risk management strategy is to support the creation of a safe, responsible and sustainable covered bond bank through disciplined risk management, enabling all colleagues to take more effective decisions through better understanding of risk, contributing to good outcomes for all customers and stakeholders.
The strategy involves creating and maintaining a robust risk culture, with effective risk management embedded into decision-making and process design, to ensure that the Group remains responsibly managed and sustainable, which is trusted by its customers. This is achieved through providing an open and transparent environment where well trained, well-informed colleagues take prudent risk, subject to clear policies, appetite boundaries and mandates, in pursuit of the Group’s strategy.
The risk strategy is delivered through the application of the risk management framework.
Risk Management Framework
The risk management framework has been designed to ensure a holistic, consistent and rigorous approach to the management of risk. It covers all types of risks facing the Group, defines the approach to managing and controlling the risks to which we are, or may be, exposed, and this supports us to generate value for shareholders, deliver appropriate outcomes for customers and provide confidence to other stakeholders.
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The risk management framework:
∙Explains how risk appetite is defined.
∙Confirms business plans are consistent with risk appetite.
∙Identifies the principal and emerging risks and how they are managed.
∙Requires the Group’s risk profile to be monitored and reported regularly.
∙Tests the Group’s vulnerabilities to risks under a range of stressed adverse conditions.
∙Allows for robust oversight and assurance.
∙Encourages strong risk culture and behaviours through its linkage with the conduct and culture frameworks.
The risk framework is owned by the Board and overseen by the Board Risk Committee (BRCo). It covers all aspects involved in the management of risk, including governance, reporting and policies. The framework sets out the risk management responsibilities of all Perenna colleagues, within the industry standard three line of governance model. This ensures that risks are appropriately and consistently identified, assessed, managed, monitored and reported within the first line. The first line is the commercial, business and operational functions. Independent oversight and challenge of the Group’s risk management practices is provided by the independent Risk function, led by the Chief Risk Officer (SMF 4), whilst the Internal Audit function assures the effectiveness of the control environment to the BRCo and ultimately to the Board.
Through the application of the risk management framework, the Board establishes our appetite for risk with the aim of supporting profitable business development within acceptable tolerances. Our appetite for different types of risk is embedded across the Group to create a culture of confident risk taking. A full suite of policies translates this appetite into localised risk management activities that the first line operates on a day-to-day basis. The Board and management committees receive regular reporting on the Group’s risk profile and key risk metrics to support decision making
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Principal Risks
The most significant risks, to which Perenna may be exposed, are set out below. This should not be considered as a comprehensive list of all the risks and uncertainties, but rather a summary of those that have the potential to significantly impact the achievement of strategic objectives.
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The risk to earnings and profitability arising from strategic decisions, changes in the external environment, improper implementation of decisions or lack of responsiveness to changes in business conditions.
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Strategic risk may arise from changes in any of the following:
∙Macro-economic environment.
∙Political, legal and regulatory requirements
∙Socio-cultural developments
∙Technological advancements
∙Commercial market movements and competitor activity.
∙Climate-related issues (e.g. increased physical risks and the transition to a low- carbon economy).
Strategic risk is managed through the business planning process and directly overseen by the Executive and the Board. The Executive, and other relevant committees, such as the Asset and Liability Committee (ALCo), the Marketing and Product Committee (M&PCo) and the Credit Committee (CCo) regularly review external environmental conditions and propose adjustments to the business plan as required.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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The risk that Perenna has insufficient capital to support its normal business activities and to meet its regulatory capital requirements in both normal and stressed environments.
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Exposure to capital risk may arise because of a depletion of the Group’s capital resources, an increase in minimum capital requirements, if committed capital cannot be drawn down or the Group is unable to raise the capital required to support growth.
The Group's objective in managing capital is driven by strategic and organisational requirements, considering the regulatory, economic and commercial environment.
The Group aims to maintain a strong capital base to support the risks inherent in the business, and invest in accordance with our strategy, meeting regulatory capital requirements at all times.
The Group operates a capital planning approach that aims to maintain appropriate levels of capital in a range of stressed scenarios. A prudent capital risk appetite has been set by the Board and is reviewed frequently.
Capital risk is overseen by the ALCo, that monitors the capital position against risk appetite metrics and early warning triggers and limits. The ALCo regularly review the forward-looking capital surplus in the context of the Group’s business plans and ensures that management has advance warning of any potential capital challenges.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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The risk that Perenna is unable to meet its liabilities as they fall due, or that it does not have sufficiently stable and diverse sources of funding to support its business activities.
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The Group has comprehensive liquidity policies to ensure that it maintains sufficient liquid assets to be able to meet all its financial obligations and maintain stakeholder confidence.
The Group’s treasury function is responsible for the day-to-day management of the Group’s exposure to all aspects of liquidity risk within the operational limits set out in relevant policies, with the overall objective of managing risk in line with the Group’s liquidity risk appetite.
Compliance with policy limits and risk appetites are monitored daily and overseen by the finance function and second line risk function, who are independent of the treasury function, with the ALCo receiving detailed monthly management information.
Stress testing is a major component of liquidity risk management, and the Group has developed a diverse selection of scenarios covering a range of market-wide and firm specific factors. The Group performs liquidity stress tests to ensure that it maintains adequate liquidity for operational purposes even under stressed conditions.
A comprehensive review of the Group’s liquidity, including stress testing, is conducted at least annually through the ILAAP. The ALCo, Board Risk Committee (BRCo) and the Board are heavily involved in the full Internal Liquidity Adequacy Assessment Process ("ILAAP") life cycle, with all challenges clearly documented. The ILAAP is used to demonstrate the Group’s compliance with the PRA’s Overall Liquidity Adequacy Rule and assess funding and liquidity risk across the actual and budgeted statement of financial position.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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Credit risk is defined as the risk of loss resulting from the failure of customers or counterparties to meet their financial obligations to Perenna.
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The principal source of credit risk will relate to the loans advanced to customers. The Group has a disciplined approach to lending, which is governed by the Responsible Lending Policy, the Mortgage Lending Policy, the Retail Credit Concentration Risk Policy and the Arrears and Repossessions Policy.
The objective of credit risk management is to reduce the potential for loan defaults through the application of credit risk assessment techniques, at loan origination. These techniques include assessments of loan affordability, credit worthiness of applicants and mortgage lending procedures. Beyond these credit risk assessments, the risk of loss is further mitigated by obtaining security to cover the lending position. Residential property is the source of security. All mortgage lending is supported by an appropriate form of valuation.
To reflect potential losses the Group may experience due to defaulting loans, impairment provisions are recognised. Impairment provisions are calculated using a forward looking expected credit loss (ECL) model, in accordance with the requirements of IFRS9 Financial Instruments’.
Once loans have been advanced, credit risk remains continually monitored via the second line risk function and the CCo, at both the loan and portfolio level.
The CCo regularly reviews detailed credit risk management information, including risk appetite metrics and early warning indicators.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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The risk to capital or earnings arising from adverse changes in the value of Perenna’s on and off-balance sheet financial positions due to fluctuations in financial market variables including, but not limited to, interest rates, credit spreads and FX.
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The Group’s treasury function is responsible for the day-to-day management of the Group’s exposure to all aspects of market risk within the operational limits set out in relevant policies, with the overall objective of managing market risk in line with the Group’s market risk appetite.
Wherever possible, the interest rate structure of assets is matched with liabilities to create a natural hedge. Derivative financial instruments are to be used to minimise or eliminate the impact of movements in interest rates. These instruments are planned to be in place when full lending begins.
The ALCo approves the Group’s treasury policies and receives regular reports on all aspects of market risk exposure, including interest rate risk.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Technology & operational risk
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Technology & Operational risk is defined as the risk of loss resulting from inadequate or failed processes or technology, people / human factors, or from external events (such as cyber-incidents).
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The Technology and Operation Risk Policy sets out the requirements for the management of technology and operational risk exposures. The policy is supported by a full suite of technology policies, standards and procedures to direct all technology related activities. The Group has put in place methods for supervising cyber resilience; information security controls and testing; response and recovery testing; and cybersecurity and resilience metrics. A Crisis Management Framework is in place to manage material incidents, including cyber incidents.
The Group has a defined Operational Resilience Policy, has identified its Important Business Services (IBS), their Impact Tolerances (ITols), and continues with its operational resilience self-assessments.
The Group has defined its Outsourcing and Third-party Arrangements Policy and Procedure, including the implementation of a supporting technology solution, to manage its end-to-end supply chain. Management actions include business continuity plans and tests and simulation exercises.
All colleagues receive risk management induction training and training in the delivery of the risk and control self-assessment (RCSA) process. RCSAs are executed on a quarterly basis to ensure all material risks are identified, their significance assessed, and their control environment appropriate. The RCSA process is delivered in partnership with the second line risk function who provide challenge and oversight.
The Enterprise Risk Committee (ERCo) oversees the Group’s technology and operational risks, through monthly risk reporting including risk appetite metrics, risk management information, risk event analyses and deep dive/thematic reviews. The ERCo is supported by the monthly Security Forum, which focusses on more technical IT and cyber risks, controls, issues and actions.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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Model risk is defined as the risk of loss or adverse outcome arising from decisions principally based on the output of models, due to weaknesses of failures in the development, implementation, inputs or use of a model.
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The Model Risk Policy sets out the Group’s requirements for the management of risks that may transpire throughout the lifecycle of a model, i.e., registration, development, governance, validation, implementation, operation and change. The policy requirements aim to ensure that the Group and its customers are protected from unintended consequences arising from model development, inputs or outputs.
A model universe is maintained by the second line risk function to capture details of the models and calculators used across the Group. The relative significance of each model and calculator determines the level of independent oversight and validation applied.
Model Risk is overseen by the Model Risk Working Group and escalated into the relevant Committee, e.g., ALCo, CCo etc.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Conduct & compliance risk
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Conduct & Compliance risk is defined as the risk of loss to Perenna and / or detriment to customers, counterparties or market integrity arising from poor judgement, behaviour or errors in the execution of the business strategy – including negligent conduct and non-compliance with legal or regulatory obligations.
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The Conduct Risk Framework and its associated policies and procedures (including a suite of financial crime policies and procedures) establish the operating environment and the minimum standard the Group expects.
Business areas identify and assess conduct, compliance and financial crime risks and assess the effectiveness of controls that mitigate those risks using the RCSA process. The RCSA process is delivered in partnership with the second line risk function who provide challenge and oversight. All colleagues receive compliance and conduct induction training and training in the delivery of the risk and control self-assessment (RCSA) process.
All products and proposition are designed and delivered in line with the requirements of the Product Governance Policy and the New Product Approval Procedure, which incorporates Consumer Duty considerations from product/proposition concept stage.
New and emerging regulatory driven changes are identified and overseen by a system enabled horizon scanning process.
The Enterprise Risk Committee (ERCo) oversees the Group’s conduct and compliance risks, through monthly risk reporting including risk appetite metrics, risk management information, risk event analyses and deep dive/thematic reviews.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Group’s approach to risk is based on a robust control framework and a strong risk management culture, which are the foundations for the delivery of effective risk management, and guide the way all employees approach their work, behave and make decisions.
Governance is maintained through delegation of authority from the Board to individuals through the management hierarchy. Executives are supported where required by a committee-based structure, which is designed to ensure open challenge and support effective decision-making.
The Group’s risk appetite, principles, policies, procedures, controls and reporting are regularly reviewed and updated where needed to ensure they remain fully in line with regulation, law, corporate governance and industry good practice.
The interaction of the executive and non-executive governance structures relies upon a culture of transparency and openness that is encouraged by both the Board and senior management. Board-level engagement, coupled with the direct involvement of senior management in Group-wide risk issues at the Executive Committee level, ensures that escalated issues are promptly addressed, and remediation plans are initiated where required. Line managers are directly accountable for identifying and managing risks in their individual teams, ensuring that business decisions strike an appropriate balance between risk and reward and are consistent with the Group’s risk appetite.
The Board has an appropriate number of independent non-executive directors with relevant experience, who provide the skills and experience needed to govern and oversee the development of the proposed business model. To fully harness this depth of experience, Perenna has created a governance structure as follows:
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Board
To enable it to provide the appropriate governance and oversight expected of a regulated bank, the Board has established and has regard to advice from several sub-committees and the Executive Committee.
Each of the Board sub-committees deals with specific areas of the Group’s activities, summarised below. Each of these has a chair, clear terms of reference with delegated authorities and meets regularly.
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Board Risk Committee
The Board Risk Committee is responsible for reviewing the Group’s adherence to risk appetite and the attendant control environment established.
Board Audit Committee
The Board Audit Committee is responsible for monitoring the integrity of the Group’s financial statements and the adequacy of the work performed by its external auditors. It will also monitor and ensure the safeguarding of the independence of the internal audit function.
Board Remuneration Committee
The Board Remuneration Committee is responsible for ensuring that the Board and executive committee retain an appropriate structure, size and balance of skills to support the strategic objectives and values of the Group. This covers remuneration structure and policy.
Board Nominations Committee
The Board Nominations Committee is responsible for ensuring that the Board and executive committee retain an appropriate structure, size and balance of skills to support the strategic objectives and values of the Group. This covers appointments and termination, and succession planning.
Executive Committee
The Executive Committee is responsible for overseeing the running and operation of the Group, including the development of the Group’s culture, monitoring business performance against key financial objectives, and ensuring business processes and controls align with the risk appetite approved by the Board. The Executive Committee delegates aspects of its responsibilities to the Assets & Liabilities Committee, Enterprise Risk Committee, Marketing & Product Committee, and the Credit Risk Committee (of which is supported by a Transactional Credit Committee).
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Future developments
Over time, the Group intends to introduce a diverse suite of mortgage products across the interest rate duration and Loan to Value spectrums. We have plans to introduce a green mortgage enabling borrowers to retrofit their properties in order to assist with the transition to net-zero We will also consider other lending products such as buy to let.
Engagement with suppliers, customers and others
The Group, which includes its subsidiary Perenna Bank PLC was set up to meet the requirements of underserved borrower segments, we understand that long term success for all stakeholders is possible only with a mission focused, customer centric business proposition. As we have built up our business model, we have actively engaged with all relevant business participants, including potential borrowers, to ensure that we meet needs consistently, with uncompromisingly high service standards, and always in a fair and transparent manner consistent with the FCA's new Consumer Duty requirements. The board and management teams are completely aligned with this perspective.
In order to create the business model that best fits our vision, we aim to build strong, collaborative relationships with all our suppliers to enable them to understand the environment in which we operate and the consumer-focused approach that we take so that they can most effectively partner with us. In turn, this allows us to best understand, quantify and manage any supply chain risks present in our model and to ensure the appropriate level of business resilience.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Directors' statement of compliance with duty to promote the success of the Group
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The directors are fully aware of their duty under Section 172(1) of the Companies Act 2006 to report on the success of the company for the benefit of its shareholders. In this statement, the directors outline how they have met the "enlightened shareholder value" requirement through stakeholder engagement activities, which help inform Board decisions and ensure the directors are always aware of their stakeholders' interests.
The key stakeholders of the Group include the employees, vendors, customers, regulators, and the shareholders.
Employees
The company actively monitors staff engagement through regular full team meetings, culture sessions and anonymous staff surveys. Regular social events, both virtual and in person, has been particularly important.
Vendors
The Group is reliant on material suppliers for its success and has implemented a robust pre-onboarding vendor due diligence process as well as a robust Outsourcing and Third-Party Management Procedure to ensure ongoing supplier management and monitoring.
Customers
As at the date of this report, the Group had only just begun to conduct customer business. The Group engages with customers through focus groups and broker interactions. It has also monitored interest through use of the affordability calculator on the Group website.
Regulators
The Group has regular engagement with both the PRA and FCA and was granted an unrestricted banking license in August 2023
Shareholders
The Group has several shareholders that have invested in Perenna Group Limited over a number of funding rounds. The largest shareholder is represented on the board of the Group and receives updates as part of their involvement in the board, supported by individual interactions with management. Other shareholders are kept up to date via individual meetings and/or e-mail updates
The Group engages with its suppliers on a regular basis, ensuring that its suppliers' relationships are built on collaboration.
The Board considers it crucial that the Group maintains a reputation for high standards of business conduct. The Board is responsible for setting, monitoring and upholding the culture, values, standards, ethics, brand and reputation of the Group. Management drives the embedding of the desired culture throughout the Group.
The Group regularly considers and evaluates its long-term strategy. The Directors consider the possible long-term consequences of any material proposed course of action, including financial and reputational risks.
The Board has sought to balance the needs of its members with the s.172 matters throughout the year, for example in the policies and practices, to ensure that our obligations to our shareholders, employees, suppliers and others are met.
Our success depends on the collective performance, contributions and expertise of the Group management. We are committed to maintaining a culture of diversity and inclusion in which people from all backgrounds can fully contribute to the growth and success of our business.
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PERENNA GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The Directors are committed to supporting sustainable business practices wherever possible and running our business in a socially responsible way that helps create long-term value.
The Group has multiple members who are able to directly access the Board. The Directors are in regular contact with the members through regular financial reporting and ad-hoc communications. This ensures that the members are kept informed of events and have opportunity to take part in the strategic direction of the business.
This report was approved by the board and signed on its behalf.
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PERENNA GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The loss for the year, after taxation, amounted to £13,946,789 (2022 - loss £10,645,919).
The directors do not recommend payment of a dividend (2022 - £Nil).
The directors who served during the year were:
Principal activities in the course of the year
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Perenna aims to be a mortgage lender that provides long term flexible fixed rate mortgages funded by covered bonds, as well as becoming a wholesale deposit taker focussed on corporates.
During the year it made significant progress to launch its business:
∙Capital of £44.2m was raised via the issuance of ordinary shares, including £41.2m as part of the Series B funding round;
∙In 2022, Perenna was granted authorisation (with restriction) as a deposit taker and mortgage lender. These restrictions were lifted on 1 September 2023 upon which Perenna became a fully authorised dual regulated bank;
∙Perenna launched its first flexible long term fixed rate mortgage products through its broker led distribution channel as part of a pilot phase in Q4 2023, with the first mortgage completing in December 2023. Additional mortgage products were developed for market release in 2024;
∙Progress was made in establishing a warehouse funding line that will act as an interim funding solution before later establishing a covered bond programme;
∙Wholesale deposit products were developed;
∙Further significant investment was made in the technology and platforms; and
∙Perenna has grown to 76 employees.
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PERENNA GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
The assessment of the appropriateness of the going concern basis of accounting for the Group has been subject to thorough consideration by management, the Board Audit Committee and the Board of Directors. The Board has considered the appropriateness of the going concern basis when preparing the financial statements in accordance with the accounting standards.
As part of that assessment the directors have considered the principal risks and uncertainties and whether there are any material uncertainties relating to events or conditions (other than those with a remote probability of occurring) that may cast significant doubt upon the use of the going concern basis of accounting.
In performing this assessment, the directors have considered the strategic, financial, and operational outlooks over the 12 months from the issue date of the financial statements, as well as all available information about the future, the realistically possible outcomes of events and changes in conditions and realistically possible responses and conditions that would be available to the directors.
In particular the directors have considered the financial performance of Perenna Bank plc (the Bank), the sole fully owned subsidiary of Perenna Group Limited (the Company). The going concern assessment of Perenna Bank plc performed on 23 April 2024 concluded that there was no material uncertainty with the Bank’s ability to operate as a going concern over the next 12 months. Since then, the Bank has continued to enact its business plan and the Company has undertaken a number of activities to extend its cash and capital runway, including but not limited to changes in the operating cost model and maintaining a strong focus on cost control. However, due to time shift between the Bank’s going concern assessment in April 2024 and the Company’s going concern assessment in September 2024, the Company has determined that access to further capital is required to fund its ongoing operations and to enact its growth plans whilst meeting its regulatory capital requirements during the next 12 months.
In the light of these developments, the Board has revised their assessment of the Company’s capital requirements under both the base case and downside scenarios and concluded that a minimum of £20m equity is required within the next 12 months for the Company to continue as a going concern and reach a number of significant milestones towards attracting further investment at a later date with a view to becoming capital self-sufficient over time.
The Board acknowledges that funding remains a significant inherent risk for start-up banks. The Bank needs sufficient regulatory capital to meet its business plan and to continue as an authorised institution. Even though the Company has a strong track record of raising equity, having raised a total of £75.5m in paid up share capital, the Board has concluded that the Company remains a going concern but that a material uncertainty exists regarding its ability to raise the necessary capital. Should future equity raises be unsuccessful, the Directors will consider all necessary actions including voluntary liquidation of the Company.
Over time, the Group intends to introduce a diverse suite of mortgage products across the interest rate duration and Loan to Value spectrums. We will also consider other asset classes such as buy to let.
Research and development activities
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No research and development expenditure were expensed during the period. Cost relating to systems implementation was capitalised during the period and will be amortised once systems are used in a production environment.
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PERENNA GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Disclosure of information in the Group Strategic Report
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Information regarding financial risk management and engagement with suppliers, customers and others are not shown in the Directors' Report as this information is presented in the Strategic Report in accordance with section 414c(11) of the Companies Act 2006.
Perenna Group Limited has D&O insurance which indemnifies all the directors of Perenna Bank plc against liability in respect of proceedings brought by third parties, subject to conditions set out in the Companies Act 2006. Such qualifying third-party indemnity provision was put in place prior to the Group becoming Authorised with Restrictions by the PRA and FCA in August 2022 and has been in force since.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditor is aware of that information.
The auditor, Forvis Mazars LLP (formerly Mazars LLP), will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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PERENNA GROUP LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors are responsible for preparing the Group Strategic Report, Directors' Report and the consolidated financial statements, in accordance with applicable law.
Company law requires the directors to prepare consolidated financial statements for each financial year. Under that law they have elected to prepare the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK.
Under company law the directors must not approve the consolidated financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing the consolidated financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgements and estimates that are reasonable and prudent;
∙state whether they have been prepared in accordance with IFRS as adopted by the UK, subject to any material departures disclosed and explained in the financial statements;
∙assess the Group and Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
∙use the going concern basis of accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PERENNA GROUP LIMITED
We have audited the financial statements of Perenna Group Limited (the ‘parent company’) and its subsidiary (the ‘group’) for the year ended 31 December 2023 which comprise the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows, Company Statement of Cash Flows and notes to the financial statements, including material accounting policy information.
The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion, the financial statements:
∙give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2023 and of the group’s loss for the year then ended;
∙have been properly prepared in accordance with UK-adopted international accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
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 group and the parent 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.
Material uncertainty related to going concern
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We draw attention to note 4.2 in the financial statements which indicates that, when assessing the Group’s ability to continue as a going concern, the directors have concluded that a material uncertainty exists in relation to the Group’s capacity to raise the necessary capital to continue its lending activities.
As stated in note 4.2 in the financial statements, these events or conditions, along with the other matters as set forth in this note to the financial statements, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
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PERENNA GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PERENNA GROUP LIMITED (CONTINUED)
The other information comprises the information included in the annual report and financial statements, 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.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the 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.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 21, 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 group’s and 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
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PERENNA GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PERENNA GROUP LIMITED (CONTINUED)
Auditor's responsibilities for the audit of the financial statements
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 the financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the group and the parent company and their industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: financial crime regulations and regulatory and supervisory requirements from the regulatory authorities where the Company’s subsidiary conducts its business, including primarily the PRA and the FCA.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the group and the parent company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the group and the parent company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation and the Companies Act 2006.
In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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PERENNA GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PERENNA GROUP LIMITED (CONTINUED)
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit 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.
Pauline Pélissier (Senior Statutory Auditor)
for and on behalf of Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
30 Old Bailey
London
EC4M 7AU
10 October 2024
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PERENNA GROUP LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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Fair value gains/(losses)
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There was no other comprehensive income for 2023 (2022 - £Nil).
The notes on pages 38 to 77 form part of these financial statements.
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PERENNA GROUP LIMITED
REGISTERED NUMBER: 11506324
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
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Property, plant and equipment
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Prepayments, accrued income and other assets
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Loans and advances to customers
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Fair value through profit & loss (FVTPL) investments
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Cash and cash equivalents
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Trade and other liabilities
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Issued capital and reserves
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PERENNA GROUP LIMITED
REGISTERED NUMBER: 11506324
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board of directors and were signed on its behalf by:
The notes on pages 38 to 77 form part of these financial statements.
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PERENNA GROUP LIMITED
REGISTERED NUMBER: 11506324
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
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Investments in subsidiaries
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Prepayments, accrued income and other assets
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Cash and cash equivalents
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Trade and other liabilities
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Issued capital and reserves
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PERENNA GROUP LIMITED
REGISTERED NUMBER: 11506324
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023
The Company's profit for the year was £1,462,382 (2022 - loss £249,445).
The financial statements were approved and authorised for issue by the board of directors and were signed on its behalf by:
The notes on 38 to 77 form part of these financial statements.
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PERENNA GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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Total attributable to equity holders of parent
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Issue of share capital (note 23)
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Issuance of share warrants (including transaction costs £194,583)
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Share-based payments (note 28)
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Total contributions by and distributions to owners
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PERENNA GROUP LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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Total attributable to equity holders of parent
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Total contributions by and distributions to owners
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PERENNA GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Issue of share capital (note 23)
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Issuance of share warrants
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Share-based payments (note 28)
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Total contributions by and distributions to owners
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PERENNA GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Total contributions by and distributions to owners
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PERENNA GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
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Depreciation of property, plant and equipment
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Amortisation of intangible fixed assets
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Impairment losses on intangible assets
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Share-based payment expense
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Impairment loss on loans and advances to customers
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Movements in working capital:
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(Increase)/decrease in prepayments, accrued income and other assets
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Increase/(decrease) in trade and other payables
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Increase in loans and advances to customers
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Net cash used in operating activities
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Cash flows from investing activities
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Purchases of property, plant and equipment
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Net purchases of FVTPL investments
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Net cash used in investing activities
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PERENNA GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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Cash flows from financing activities
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Issue of ordinary shares at a premium
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Transaction costs for share issuance
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Net cash generated from financing activities
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Net increase/(decrease) in cash and cash equivalents
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Cash and cash equivalents at the beginning of year
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Cash and cash equivalents at the end of the year
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PERENNA GROUP LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
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Profit/(loss) for the year
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Share-based payment expense
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Movements in working capital:
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(Increase)/decrease in prepayments, accrued income and other assets
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Increase in trade and other payables
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Net cash generated from operating activities
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Cash flows from investing activities
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Increase in investments in subsidiaries
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Net cash used in investing activities
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Cash flows from financing activities
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Issue of ordinary shares at a premium
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Net cash generated from financing activities
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Net increase/(decrease) in cash and cash equivalents
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Cash and cash equivalents at the beginning of year
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Cash and cash equivalents at the end of the year
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Perenna Group Limited (the 'Company') is a private company incorporated and domiciled in England and Wales under the Companies Act 2006. The Company's registered office is 20 Eastbourne Terrace, London, W2 6LG. The Company is limited by shares.
The Company owns Perenna Bank plc (the Bank or subsidiary) and consolidates those of the Company and its subsidiary (together referred to as 'the Group').
The principal activity of the Group during the year is that of a mortgage lender. Perenna Bank plc received its full banking licence from the UK banking regulators (the Prudential Regulation Authority and the Financial Conduct Authority) in August 2023. The Group is creating the UK's first covered bond bank and will be funded in the capital markets through both covered bond issuances and forward-flow structures.
Both the consolidated and Company financial statements have been prepared in accordance with UK-adopted International Accounting Standards ('IFRS'). The consolidated financial statements were authorised for issue on 10 October 2024.
The reporting period for the consolidated and company financial statements is the 12 months ended 31 December 2023.
No individual statement of profit or loss or relates notes are presented for the Company, as permitted by Section 408 of the Companies Act 2006.
The financial statements have been prepared on a going concern basis and under the historical cost convention unless otherwise specified within these accounting policies.
The financial statements have been prepared on the historical cost basis except for the following items, which are measured on an alternative basis on each reporting date.
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2.2 Changes in accounting policies
i) New standards, interpretations and amendments effective from 1 January 2023
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The following new and amended Standards and Interpretations effective for the financial year beginning 1 January 2023 have been adopted. The adoption of these standards has not had any material impact on the disclosures or on the amounts reported in these financial statements.
∙IAS 12 Income taxes: Deferred tax related to assets and liabilities arising from a single transaction
∙IAS 12 Income taxes: temporary recognition exception to accounting for deferred taxes arising from the implementation of the international tax reform (Pillar Two Model Rules)
∙IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of accounting estimates
∙IAS 1 Presentation of Financial Statements: Disclosure initiative – accounting policies
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Basis of preparation (continued)
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New standards, interpretations and amendments not yet effective
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Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Adoption would not have had a material impact on the results or the position of the Company for the financial year.
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First time adoption of IFRS
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The policies applied under the entity's previous accounting framework are not materiality different to IFRS and have not impacted on equity or profit or loss.
4.Material accounting policies
The Group financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) prepared to 31 December each year.
The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Statement of Profit or Loss from the effective date of acquisition or up to the effective date of disposal, as appropriate.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
The assessment of the appropriateness of the going concern basis of accounting for the Group has been subject to thorough consideration by management, the Board Audit Committee and the Board of Directors. The Board has considered the appropriateness of the going concern basis when preparing the financial statements in accordance with the accounting standards.
As part of that assessment the directors have considered the principal risks and uncertainties and whether there are any material uncertainties relating to events or conditions (other than those with a remote probability of occurring) that may cast significant doubt upon the use of the going concern basis of accounting.
In performing this assessment, the directors have considered the strategic, financial, and operational outlooks over the 12 months from the issue date of the financial statements, as well as all available information about the future, the realistically possible outcomes of events and changes in conditions and realistically possible responses and conditions that would be available to the directors.
In particular the directors have considered the financial performance of Perenna Bank plc (the Bank), the sole fully owned subsidiary of Perenna Group Limited (the Company). The going concern assessment of Perenna Bank plc performed on 23 April 2024 concluded that there was no material uncertainty with the Bank’s ability to operate as a going concern over the next 12 months. Since then, the Bank has continued to enact its business plan and the Company has undertaken a number of activities to extend its cash and capital runway, including but not limited to changes in the operating cost model and maintaining a strong focus on cost control. However, due to time shift between the Bank’s going concern assessment in April 2024 and the Company’s going concern assessment in September 2024, the Company has determined that access to further capital is required to fund its ongoing operations and to enact its growth plans whilst meeting its regulatory capital requirements during the next 12 months.
In the light of these developments, the Board has revised their assessment of the Company’s capital requirements under both the base case and downside scenarios and concluded that a minimum of £20m equity is required within the next 12 months for the Company to continue as a going concern and reach a number of significant milestones towards attracting further investment at a later date with a view to becoming capital self-sufficient over time.
The Board acknowledges that funding remains a significant inherent risk for start-up banks. The Bank needs sufficient regulatory capital to meet its business plan and to continue as an authorised institution. Even though the Company has a strong track record of raising equity, having raised a total of £75.5m in paid up share capital, the Board has concluded that the Company remains a going concern but that a material uncertainty exists regarding its ability to raise the necessary capital. Should future equity raises be unsuccessful, the Directors will consider all necessary actions including voluntary liquidation of the Company.
The Board of Directors has a reasonable expectation that the Group and Company have the ability to raise the required capital to continue in operation for the foreseeable future, being a period of no less than 12 months from approval of these financial statements. The Group and Company therefore continue to adopt the going concern basis in preparing the consolidated financial statements.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
Interest income is recognised in the Statement of Profit or Loss using the effective interest rate (EIR) method, which allocates interest over the expected life of the mortgage advanced to the customer.
The EIR is the rate that exactly discounts the estimated future cash flows over the expected life of the mortgage to the gross carrying amount of the mortgage advanced.
When calculating the EIR, the future cash flows are estimated by considering all contractual terms of the mortgage, excluding the loss allowance on the mortgage. The EIR calculation includes transaction costs and fees paid or received that are directly attributable to the issue of the mortgage.
The ‘amortised cost’ of a mortgage is the amount at which it was measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and adjusted for any loss allowance.
The EIR of a mortgage is calculated on initial recognition. In calculating interest income, the EIR is applied to the gross carrying amount of the asset (when the asset is not-credit impaired).
For mortgages that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the EIR to the amortised cost of the mortgage. If the mortgage is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
Investment income represents interest earned on UK treasury bills. Interest is accrued on a straight-line basis over the life of the investment.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as a lessee
The Group assesses whether a contract is or contains a lease, at inception of a contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. Funding sources, including working capital funding, will be assessed to calculate an incremental funding rate.
Lease payments included in the measurement of the lease liability comprise:
∙fixed lease payments (including in-substance fixed payments), less any lease incentives;
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
∙a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in note 6.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has used this practical expedient.
All leases are short term operating leases and therefore no right-of-use or lease liability has been accounted for in the current financial period.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Defined contribution schemes
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.
Government grants are presented as a deduction in reporting the related expense.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
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Share-based payment transactions of the Group
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Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
The income 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 ‘profit before tax’ as reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
A provision Is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect of such activities and in certain cases based on specialist independent tax advice.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at each reporting 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 based on tax laws and rates that have been enacted or substantively enacted at the reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised.
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(iii) Current and deferred tax for the year
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Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
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Property, plant and equipment
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Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.
Depreciation is provided on all other items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
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Intangible assets acquired separately
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Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses.
Expenditure on the research phase of projects to develop new customised software for IT is recognised as an expense as incurred. Costs that are directly attributable to a project's development phase are recognised as intangible assets, provided they meet the following recognition requirements:
- the development costs can be measured reliably
- the project is technically and commercially feasible
- the Company intends to and has sufficient resources to complete the project
- the Company has the ability to use or sell the software
- the software will generate probable future economic benefits.
Development costs not meeting these criteria for capitalisation are expensed as incurred.
All finite-lived intangible assets, including capitalised internally developed software, are accounted for using the cost model whereby capitalised costs are amortised on a straight line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing. The following useful lives are applied:
Any capitalised internally developed software that is not yet complete is not amortised but is subject to impairment testing.
Amortisation has been included within 'Administrative expenses'. Subsequent expenditures on the maintenance of computer software are expensed as incurred. When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within 'Other expenses'.
For impairment assessment purposes, assets are grouped at the lowest levels.
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Investments in subsidiaries
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Investments in subsidiaries are stated at cost less any provision for impairment.
Investments are reviewed for indicators of impairment at each reporting date and if indicators, are present, an impairment review is performed. If the carrying amount exceeds the recoverable amount, an impairment loss is recognised in the statement of profit or loss.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
Loan commitments are firm commitments to provide credit under pre-specified terms and conditions. The loan commitments represent.
A loss allowance is recognised on loan commitments. The loss allowance is included within provisions on the Statement of Financial Position.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
Financial assets and liabilities are recognised on the Statement of Financial Position when the Group has become party to the contractual provisions of the instrument. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Loans and advances to customers
Loans and advances to customers are mortgages issued to customers and meet the definition of a financial asset as there is a contractual right to receive cash from the customer. The Company recognises the financial asset when it enters into the mortgage contract with the customer, as this is when the Company becomes party to the contractual obligations of the instrument.
The mortgages are initially measured at fair value plus incremental direct transaction costs. Subsequent to initial recognition an entity must measure its assets at amortised cost, fair value through other comprehensive income (FVTOCI), or fair value through profit or loss (FVTPL). Except for those that are designated at initial recognition as at FVTPL, a financial asset is classified on the basis of the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
The Group's business model is to issue mortgage products to customers and to hold these financial assets in order to collect the contractual cash flows arising over the life of the instrument. The contractual cash flows relating to the mortgage products are also solely payments of principal and interest on the principal outstanding. As a result, the financial asset, being the mortgage product issued, is measured at amortised cost using the EIR method. See note 4.3 relating to Interest Income for further details on how this is calculated.
The financial asset is not designated on initial recognition as at FVTPL because there is no accounting mismatch arising when the financial asset is measured at amortised cost.
Prepayments, accrued income and other assets
Prepayments, accrued income and other assets are stated at their nominal amount (discounted if material) less any impairment losses.
Financial assets at FVTPL
Non-derivative financial assets other than those classified as "financial assets at amortised cost" are classified as "financial assets at FVTPL". Subsequent to initial recognition, financial assets at FVTPL are measured at fair value and gains or losses arising from changes in fair value, dividend income, and interest income are recognised in profit or loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
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Financial instruments (continued)
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Classification and subsequent measurement of financial liabilities
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 its liabilities. Financial liabilities are measured subsequently at amortised cost using the effective interest rate method.
Warrant Liabilities
Warrant liabilities comprise the warrant instruments, which are stated in the statement of financial position at fair value. Subsequent changes in fair value are recognised in “Fair value gains/(losses)” in the statement of profit or loss.
Trade and other payables
Trade and other payables and borrowings are initially recognised at fair value less transaction costs and subsequently measured at amortised cost using the effective interest rate method, with all movements being recognised in the statement of comprehensive income. Cost approximates to fair value.
The Group's financial liabilities include trade and other payables, warranty liabilities and loans and borrowings.
Interest income
Interest income is recognized in the statement of profit and loss for all interest-bearing financial instruments. The effective interest rate is the rate that discounts estimated future cash flows over the expected life of the financial asset or liability to the net carrying amount upon initial recognition.
Borrowings
Borrowings that bear interest are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.
All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income.
Impairment of financial assets
Impairment of financial assets is calculated using a forward-looking expected credit loss (ECL) model. ECLs are an unbiased probability-weighted estimate of credit losses determined by evaluating a range of possible outcomes. A summary of ECL measurement is as follows:
Financial assets that are not credit-impaired at the reporting date: as the present value of cash shortfalls. Cash shortfalls are the difference between the contractual cash flows due and the cash flows that are expected to be received.
Financial assets that are credit-impairment at the reporting date: as the difference between the gross carrying amount and the present value of the estimated future cash flows discounted at the financial asset's original EIR.
Undrawn loan commitments: as the present value of the difference between the contractual cash flows due if the commitment is drawn down and the cash flows that are expected to be received.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
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Financial instruments (continued)
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ECLs are measured in a manner that reflects the time value of money and uses reasonable and supportable information that is available at the reporting date, without undue cost of effort, about past events, current conditions and forecasts of future economic conditions.
ECLs are calculated and a loss allowance recorded for all financial assets not held at FVTPL, i.e. those at amortised cost, and for loan commitments. Assets held at FVTPL and equity instruments are not subject to impairment.
Loss allowances are presented in the statement of financial position as follows:
Financial assets measured at amortised cost: as a deduction from the gross carrying amount of the financial asset.
Loan commitments: as a provision.
The calculation of ECLs is dependent upon the 'stage' the asset is assigned to (Stage 1, 2 or 3). The stage is determined based on changes in credit risk when comparing credit risk at initial recognition to credit risk at the reporting date.
The Group's ECL model has been calibrated using the Group's expected portfolio profile of first-time buyers, home movers, and remortgagers.
Due to the nature of being a start up with little data, the Group is heavily reliant upon expert judgement. In order to mitigate the resulting risk a robust process was used in setting and challenging assumptions. The following high level principles were applied so that assumptions were:
∙Made in isolation of model outputs to ensure independence;
∙Tested against industry data wherever possible;
∙Conservative in nature, particularly where industry data is weak;
∙Plausible; and
∙Consistently applied.
The Group's ECL model uses a combination of initial recognition data (Delphi New Business Mortgage Score), current data (e.g., balance, term remaining, and arrears performance), and external data sources, such as economic scenarios and the house price index (HPI). This data feeds into the three core models used, which are the Probability of Default (PD) model, the Exposure at Default (EAD) model, and the Loss Given Default (LGD) model.
The data and core models produce the primary model outputs being the origination lifetime PD models, current lifetime PD models, lifetime EAD and lifetime LGD. These outputs, in combination with the stage allocation process, feed into the final ECL calculation.
The Group continually monitors its loan book with the ECL calculation being performed monthly and the model itself being reviewed by the Board annually.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
4.Material accounting policies (continued)
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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Functional and presentation currency
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These consolidated financial statements are presented in pound sterling, which is the Group's functional currency. All amounts have been rounded to the nearest pound, unless otherwise indicated.
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Critical accounting judgements and key sources of estimation uncertainty
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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, if the revision affects only that period, or in the period of the revision and future periods of the revision affects both current and future periods.
Critical accounting judgments, estimates and assumptions are as follows;
(i) Useful economic lives of tangible and intangible assets
See accounting policies Note 4.10 & 4.11 and disclosures at Notes 14 & 15
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets.
(ii) Going concern
See accounting policies Note 4.2
Notwithstanding a material uncertainty in relation to the Group’s ability to raise the necessary capital (see going concern assessment), the directors expect that the Group will have adequate resources to continue in business over the going concern assessment period. For this reason, they continue to adopt the going concern basis in preparing these financial statements.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
(iii) Impairment losses on financial assets
See accounting policies at Note 4.14 and disclosures at Note 26
Impairment of financial assets is calculated using a forward-looking ECL model. The calculation and measurement of ECLs requires the use of complex judgements and represents a key source of estimation uncertainty.
(iv) Impairment of subsidiary
See accounting policies Note 4.12
Determining whether the investment in subsidiaries is impaired requires an estimation of the value in use of the cash generating units (CGU). For the Company, the CGU is the subsidiary, Perenna Bank PLC. The value in use calculation requires the Company to estimate the future cash flows expected to arise from the CGU and apply a suitable discount rate in order to calculate the present value.
A third-party valuation of the Group as at 31 December 2023 was obtained as part of the valuation of the warrants issued in the year. Please see note 23 for the key inputs of this estimate. The Directors used this valuation for the estimation of the value in use of the subsidiary because the majority of the group's value is that of the subsidiary. The value in use of the subsidiary was determined to be greater than the carrying value of the investment in subsidiaries. As a result of this assessment, no impairment of the carrying value is considered necessary.
(v) Assessment of control over subsidiary
See accounting policies Note 4.12
The Company owns 100% of the share capital of the subsidiary, Perenna Bank PLC, and has rights to variable returns from its involvement with the subsidiary. As such, the Company is deemed to have control over the subsidiary.
(vi) Fair value of financial instruments
A number of assets and liabilities included in the Group’s financial statements require measurement at, and/or disclosure of, fair value.
The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. The key sources of estimation uncertainty arise when the inputs used in determining the fair value measurements are categorised in the fair value hierarchy as Level 3: Unobservable inputs.
Equity settled share-based payments
In order to calculate the charge for share-based compensation as required by IFRS 2, the Group makes estimates principally relating to the assumptions used in its option-pricing model. These estimates are provided in note 28.
Warrant liabilities
In order to calculate the fair value of warrants issued as required by IAS 32, the Group makes estimates principally relating to the assumptions used in its warrant-pricing model. These estimates are provided in note 23.
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Judgements considered to have the most significant effect on amounts in the financial statements are:
∙Determining the stage the financial asset is allocated to and therefore whether a 12-month or lifetime ECL is recognised in the financial statements. This involves judgements over whether the financial asset has had a significant increase in credit risk since initial recognition or whether the financial asset is in default;
∙Determining whether an adjustment is required if the modelled ECL amount does not adequately reflect the expected outcome.
Underlying assumptions used in estimating ECLs that, depending on a range of factors, could result in a material adjustment in the next financial year are:
∙The forward-looking economic scenarios used;
∙Probability weightings applied to these scenarios; and
∙Model assumptions used, such as the probability of default and loss given details.
Additional details, of the critical judgements and estimates, including sensitivity analysis, are included in the credit risk section of Note 26 - Financial Instruments.
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During the year, the Group obtained the following services from the Company's auditor:
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Fees payable to the Company’s auditor for the audit of the parent company annual financial statements
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Fees payable to the Company’s auditor for other services to the Group:
Fees payable to the Company's auditors for the audit of the consolidated and Parent Company's financial statements
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Total auditor's remuneration
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Employee benefit expenses
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Employee benefit expenses (including directors) comprise:
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Pension costs - defined contribution plan
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Share based payment charge
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
8.Employee benefit expenses (continued)
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The monthly average number of persons, including the directors, employed by the Group during the year was as follows:
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The average number of employees employed by the Company, including executive directors, was:
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The staff costs for the above persons were £Nil (2022 - £Nil).
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Group
Key management personnel compensation
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Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the directors of the Company listed on page 18, and the Financial Controller of the Company.
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Short-term employment benefits
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No amounts in relation to key management personnel were incurred in the Company (2022 - £Nil).
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Income from treasury bills
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Fair value gains/(losses)
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Fair value gains/(losses) on UK treasury bills
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Fair value gain on revaluation of warrants
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Gain on the revaluation of warrants of £1,607,678 relates to warrants to subscribe for new ordinary shares issued by the Company on 31 August 2023. The Company accounted for the issue of these warrants in accordance with IAS 32 and recorded a liability of £2,062,004 at the date of issue. As at 31 December 2023, the fair value of these warrants was assessed to be £454,326 and the reduction in fair value has been recognised through the income statement.
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Group contributions to pension schemes
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No directors exercised share options in the year (2022 - Nil).
Retirement benefits are accruing to 8 directors (2022 - 8) under the Group's money purchase pension scheme.
The highest paid director received a total remuneration of £436,095 (2022 - £304,397), which includes £113,594 (2022 - £99,167) of share options.
No share options have been exercised during 2023 (2022 - £Nil).
The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £28,875 (2022 - £18,083).
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|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
Finance income and expense
|
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Recognised in profit or loss
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
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13.1 Income tax recognised in profit or loss
|
|
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to losses for the year are as follows:
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Tax using the Group's domestic tax rate of 23.5% (2022 - 19%)
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Expenses not deductible for tax purposes, other than goodwill, amortisation and impairment
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Capital allowances for the year
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Short-term timing difference leading to an increase in taxation
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Non-taxable loan relationship credits
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Unrelieved tax losses carried forward
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Fair value gain on revaluation of warrants
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Changes in tax rates and factors affecting the future tax charges
Finance Act 2022 includes legislation to increase the main rate of corporation tax from 19% to 25% from 1 April 2023.
At the reporting date, the Group had £31.9m (2022 - £18.8m) of unused tax losses available for which no deferred tax asset has been recognised.
At the reporting date, the Company had £4.1m (2022 - £3.9m) of unused tax losses available for which no deferred tax asset has been recognised.
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
Property, plant and equipment
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Accumulated depreciation and impairment
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PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Accumulated amortisation and impairment
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Development expenditure represents costs incurred on software development (implementation costs) which are considered to be commercially viable. No research and development costs expenditure was expensed during the period.
Development expenditure is reviewed annually for impairment and the review at 31 December 2023 indicated that no impairment provision was required.
Implementation costs for the material components of the development expenditure are:
Mortgage Origination Platform: £34,200 (2022 - £420,000)
Mortgage Servicing Platform: £184,068 (2022 - £1,137,321)
|
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
Investments in subsidiaries
|
|
Details of the Group's material subsidiaries at the end of the reporting period are as follows:
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Place of incorporation and operation
|
Proportion of ownership interest and voting power held by the Group (%)
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The registered office of Perenna Bank PLC is 20 Eastbourne Terrace, London, W2 6LG.
|
|
The additions during the year are a result of an issue of share capital by the subsidiary, Perenna Bank PLC.
Included within the additions is the issuance of share options amounting to £2,472,062. See note 23.
|
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
Prepayments, accrued income and other assets
|
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Prepayments and accrued income
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Total prepayments, accrued income and other assets
|
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There are no amounts past due that are not impaired.
|
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Receivables from related parties (note 29)
|
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Prepayments and accrued income
|
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|
Total prepayments, accrued income and other assets
|
|
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|
Loans and advances to customers
|
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|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
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Group
Investments are mandatorily held at fair value through profit and loss and include the following classes:
|
|
FVTPL investments financial assets are denominated in the following currencies:
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Amounts recognised in profit or loss and other comprehensive income:
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Fair value (gains)/losses recognised in profit or loss
|
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|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
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Total trade and other payables
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Payables to related parties (note 29)
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Total trade and other payables
|
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|
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 20.23 days.
The fair value of trade and other payables approximates their carrying amounts.
|
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
As at 31 December 2023, loan commitments, which are not recognised in the statement of financial position totalled £2,866.950. A loss allowance of £3,276 is held against these loan commitments, which is recognised in Trade and Other Payables in the statement of financial position.
Additional analysis on the Group's loan commitments and the associated loss allowance is provided in the credit risk section of Note 26.
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|
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Ordinary shares of £0.001 each
|
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|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
23.Share capital (continued)
|
Shares issued in the year
On 28 February 2023, the Company issued 190,476 Ordinary shares with a nominal value of £0.001 for consideration of £15.75 per share raising proceeds of £2,999,970.
On 31 August 2023, the Company issued 63,492 Ordinary shares with a nominal value of £0.001 for consideration of £15.75, upon conversion of loans payable amounting to £1,000,000.
On 9 October 2023, the Company issued 54,559 Ordinary Shares with a nominal value of £0.001 for consideration of £22.36 per share raising proceeds of £1,219,939.
Rights and obligations attached to ordinary shares
All shares rank equally for voting purposes, for any dividend declared, and on a return of capital.
Voting rights: All shares rank equally for voting purposes. On a show of hands each member has one vote and on a poll each member has one vote per share held.
Dividend rights: Each share ranks equally for any dividend declared.
Rights to capital: Each share ranks equally on a return of capital.
Rights of redemption: The shares may be redeemed in accordance with section 692 (1ZA) of The Companies Act 2006.
Warrants issued during the year
As part of the issue of shares that took place on 31 August 2023, the Company issued warrant instruments to some of their existing shareholders. The warrant instrument providers the holder with the option to subscribe for a variable number of ordinary shares for a fixed strike price of £0.001 per share. The exact number of new ordinary shares issued is dependent on a number of factors including the warrant holders existing shareholding and Perenna’s prevailing market value at the next financing round.
The Company has used the Monte-Carlo model to calculate the fair value of each warrant equivalent to £21.21 per warrant.
Warrants are normally considered as part of equity but, in this instance, because they result in a variable number of shares being issued, the warrants are not considered to be equity but instead a liability of the Company at the time of issue.
In accordance with IAS 32, the Company therefore at the date of issue established a liability for these warrants of £2,062.004. At 31 December 2023, the Company revalued the warrants in accordance with fair value accounting principles. This determined the fair value of the warrants as at 31 December 2023 to have reduced to £454,326. The gain on this revaluation amount to £1,607,678 has been recorded as a Fair value gain on revaluation of warrants and the liability reduced by the same value. The warrants are classified in level 3 of the fair value hierarchy.
|
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
23.Share capital (continued)
Share capital
There is a single class of ordinary shares. There are no restrictions on the distribution of dividends and the repayment of capital.
Share premium
The share premium account represents the difference between the price paid for and the nominal value of shares issued, net of the cost of each share issue.
Share option reserve
This reserve relates to the fair value of the options granted which has been charged to profit or loss over the vesting period of the options.
Retained earnings
The retained earnings account represents accumulated post-tax profits net of dividend payments for the Company.
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
At 31 December the Group had future minimum lease payments due under an operating lease for each of the following periods:
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All leases are short term operating leases and therefore no right-of-use or lease liability has been accounted for in the current financial period.
|
|
|
Financial instruments - fair values and risk management
|
|
|
26.1 Accounting classifications and fair values
|
|
|
The Group's principal financial instruments, from which financial risk arises, comprise of the following:
−FVTPL investments
−accrued income and other assets
−cash and cash equivalents
−trade and other payables
−warrant liabilities
Financial risks which includes market, liquidity, credit risk; is monitored through the board approved risk management framework and risk appetite statement. Risk appetite metrics are produced on a regular basis as required and monitored at board level.
The Group does not issue or use financial instruments of a speculative nature.
|
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
26.Financial instruments - fair values and risk management (continued)
|
26.1 Accounting classifications and fair values (continued)
|
|
|
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
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Fair value through profit or loss
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Financial assets measured at fair value
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Financial assets not measured at fair value
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Loans and Advances to Customers
|
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|
|
Accrued income and other assets
|
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|
Cash and cash equivalents
|
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Financial liabilities measured at fair value
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Financial liabilities not measured at fair value
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|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
26.Financial instruments - fair values and risk management (continued)
|
26.1 Accounting classifications and fair values (continued)
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Fair value through profit or loss
|
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Financial assets measured at fair value
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Financial assets not measured at fair value
|
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Loans and Advances to Customers
|
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|
Accrued income and other assets
|
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Cash and cash equivalents
|
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Financial liabilities measured at fair value
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Financial liabilities not measured at fair value
|
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Loans and borrowings (note 21)
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|
26.2 Financial risk management objectives
|
The directors monitor the Group's financial risks and management policies. The directors overall risk management strategy seeks to assist the Group in meeting its financial targets whilst minimising potential adverse effects on financial performance. The Group is exposed to the following financial risks:
−Market risk
−Interest rate risk
−Credit risk
−Liquidity risk
−Capital management
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
26.Financial instruments - fair values and risk management (continued)
The risk to capital or earnings arising from adverse changes in the value of the Group's on and off-balance sheet financial positions due to fluctuations in financial market variables including, but not limited to, interest rates and credit spread.
|
26.4 Interest rate risk management
|
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group invests its excess cash resources in UK Treasury bills and are exposed to the risk of interest rate changes on the fair value of these assets. Bills are kept to maturity.
As at 31 December 2023, the same as for the prior year the Group's only interest bearing assets are short-term T-Bills forming its HQLA portfolio, and cash deposited overnight at third party banks.
A 2.5% increase in interest rates would cause the fair value of the £32.4m HQLA portfolio to reduce by £150k.
|
26.5 Credit risk management
|
Credit risk is the risk of a financial loss to the Group if a customer to a financial asset fails to meet its contractual obligations.
Exposure to capital risk may arise as a result of a depletion of the Group's capital resources, an increase in minimum capital requirements, if committed capital cannot be drawn down or the Group is unable to raise the capital required to support growth.
The Group's objective in managing capital is to maintain appropriate levels of capital to support the Group's strategy and meet regulatory requirements.
The Group operates a capital planning approach that aims to maintain appropriate levels of capital in a range of stressed scenarios. A prudent risk appetite has been set by the Board and reviewed frequently.
Capital risk is overseen by the ALCo, that monitors the capital position against risk appetite metrics and early warning triggers and limits. The ALCo regularly review the forward-looking capital surplus in the context of the Group's business plans and ensures that management has advance warning of any potential capital challenges.
As at 31 December 2023, due to the nature and materiality of financial assets held, changes in the credit loss allowance and not applicable.
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
26.Financial instruments - fair values and risk management (continued)
|
|
26.6 Liquidity risk management
|
|
|
Liquidity and interest risk tables
Liquidity risk is the risk that the Group is unable to meet its financial obligations as they fall due. The Group employs efficient cash management, credit control and a low cost base to minimise liquidity risk therefore ensuring funds are available to meet commitments as they fall due.
The contractual maturities of financial liabilities (none of which are derivative financial liabilities), including estimated interest payments are as follows:
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Financial liabilities measured at fair value
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Financial liabilities not measured at fair value
|
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Loans and borrowings (note 21)
|
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|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
26.Financial instruments - fair values and risk management (continued)
26.7 Fair value measurements
This note provides information about how the Group determines fair values of various financial assets and liabilities.
Fair value of financial assets and liabilities that are measured at fair value on a recurring basis
Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting period using a three level hierarchy based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used).
|
Financial assets/liabilities
|
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|
Valuation technique(s) and key input(s)
|
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The balance represents the fair values of UK Government bonds which are traded in active markets. Prices are obtained directly from an exchange on which the instruments are traded.
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The balance represents the warrant instruments. The fair value has been measured using the Monte Carlo Simulation, see note 23 for key inputs.
|
|
Capital management
The Company monitors its capital, which includes all components of equity. The Company's objectives when maintaining capital are:
- To safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.
- To ensure the Company has the cash available to loan to new customers in order to generate future adequate returns to shareholders.
The Company sets the amount of capital it requires in proportion to risk. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares, or sell assets to reduce debt.
|
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £624,694 (2022 - £424,457). Contributions totalling £147,856 (2022 - £67,050) were payable to the fund at the reporting date and are included in creditors.
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
|
28.1. Employee share option plan of the Company
|
|
Movements in share options during the year
|
|
At 31 December 2023, the Group had the following share-based payment arrangements.
Prior to the year-ended 31 December 2022, Perenna Group Limited engaged with contractors and consultants to provide services in exchange for certain services where remuneration is partly or fully paid in share options. The Group accounts for these share options as an equity-settled share-based payment scheme.
The share options were granted as follows and all options are to be settled through the issue of shares:
Scheme Grant Date Number of options granted Exercise price per share
ESOP1 31 January 2020 27,204 £0.001
ESOP2 30 September 2020 57,742 £0.001
ESOP3 31 July 2022 199,484 £0.001
All ESOP share options were fully vested on the grant date.
The remaining contractual life of the ESOP share options is 10 years.
The ESOP share options can be exercised, unless the Board agree otherwise, on one of the following exit events:
i) The sale of all or a substantial part of the assets of the Company,
ii) The sale of shares leading to the relevant buyer taking control of the Company.
iii) The listing of the shares of the Company.
During 2023 Perenna Group Limited established a share based payment programme in favour of employees and key contractors of Perenna Bank plc as well as Perenna Group Limited.
The share based payment programme was set up as a CSOP programme and consisted of CSOP share options, Non-Tax Advantaged Share Options, and Third Party share options. Under this programme, directors, employees, and contractors are awarded shares in Perenna Group Limited.
A total amount of 369,427 share options were granted on 28 June 2023 with an average exercise price of £4.294 per share. Of this, 4,762 share options vested immediately, with the remaining 363,529 share options vesting at 20% per annum for 4 years and the final vesting is upon a defined event.
All options are to be settled through the issue of shares.
The shares options issued under the CSOP share options and Non-Tax Advantaged Share Options are subject to good and bad leader provisions. An employee is not entitled to keep any unvested options if they do not remain in employment until an exercise event.
An exercise event is the earlier of an exit event and 10 years from the vesting commencement date. The ability to exercise these options is at the discretion of the Board.
The Group accounts for these share options as an equity-settled share-based payment scheme.
|
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
The following reconciles the share options outstanding at the beginning and end of the year:
|
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|
|
Weighted average exercise price
|
|
Weighted average exercise price
|
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|
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Outstanding at the beginning of the year
|
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Outstanding at the end of the year
|
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|
Exercisable at the end of the year
|
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|
|
Of the total number of shares outstanding at 31 December 2023, 289,192 (2022 - 284,430) had vested and Nil (2022 - Nil) were exercisable.
The options outstanding at 31 December 2023 had a weighted average remaining contractual life of 9.75 years (2022 - Nil years) and exercise prices range from £0.001 to £4.34 (2022 - £0.001).
The following information is relevant in the determination of the fair value of shares granted during the year:
2023
Model used to value ordinary shares Black Scholes Merton
Weighted average share price at grant date £17.41
Exercise price £4.35
Expected life (years) 5.13
Expected volatility 50%
Expected dividend yield Nil
Risk free interest rate 5.35%
Fair value at grant date £14.35
The expected volatility assumption is based on the share price volatility for companies of a similar nature in the same industry with a similar risk profile.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
The Group recognised a total expense of £2,472,872 related to equity-settled share-based payment transactions in in the year ended 31 December 2023 (2022 - £937,811).
|
|
PERENNA GROUP LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
Related party transactions
|
Details of key management compensation are included in Note 8: Employee Benefits.
Details of transactions between the Company and its related parties are disclosed below.
|
29.1 Loans to related parties
|
|
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Prepayments, accrued income and other assets
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Perenna Group Limited is the immediate shareholder of Perenna Bank PLC.
The above loan accrues interest and is repayable on demand.
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29.2 Loans from related parties
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The above loans are interest free and repayable on demand.
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In the opinion of the directors there is no ultimate controlling party.
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