TIDMZAIM
RNS Number : 4232N
ZAIM Credit Systems PLC
30 September 2021
Not for release or distribution, directly or indirectly, within,
into or in the United States or to or for the account or benefit of
persons in the United States, Australia, Canada, Japan or any other
jurisdiction where such offer or sale would violate the relevant
securities laws of such jurisdiction
For Immediate Release
30 September 2021
Zaim Credit Systems Plc
("Zaim" or the "Group")
Unaudited financial results for six months ended 30 June
2021
Transformational Results Following First Year of Online Business
Model
Zaim Credit Systems plc (the 'Group' or 'Zaim'), the Russian
focused fintech group, is pleased to announce its unaudited
financial results for the six month period ended 30 June 2021. A
copy of the full interim results are available on the Company's
website, www. zaimcreditsystemsplc.com.
Key H1 2021 Highlights
Growth and Profit Simultaneously Delivered
Successful implementation of highly scalable, low-fixed-cost
online-focused strategy, has resulted in:
-- A dramatic increase in the amount of overall loans issued for
the H1 2021 period by 2.78 times to GBP11.45m (total for both
on-line and off-line) (H1 2020: GBP4.12m);
-- Outstanding growth of amount of loans issued online by 13.6
times to GBP9.88m with o nline business now comprising 86% of
overall loans issued;
-- Net H1 profit of GBP229,000 vs. net loss of GBP1,335,000 in
H1 2020 (profit recovery of c.GBP1,564m);
-- Growing Cash Balance of GBP1,167,000 as at 30 June 2021 (an
increase of GBP526,000 vs. 31 December 2020)
-- Staff costs decreased significantly by 25% to GBP724,000 vs. 1H 2020
-- Operating expenses reduced by 10% to GBP948,000 vs. 1H 2020
Zaim's transition to a digital business has delivered a growth
in H1 2021 amounts lent equal to a multiple of 2.78 times volume
seen in the same period of the previous year. At the same time the
overall operational costs have been significantly reduced. This has
led to an improvement in profit in excess of GBP1.5 million
compared to the prior period and management expects further
improvements in cash flow from operating activities in H2 2021.
Zaim CEO, Siro Cicconi commented:
"I am very pleased to report another period of strong and
profitable growth. In the first half of 2021 Zaim continued to
execute its strategy to transition to an online lending model. This
strategy resulted in a significant increase in access to our
products without the need to visit our stores and at the same time
decreasing our fixed costs base. Following one year of the launch
of the new business model, we have proved that the path to
digitalisation was the correct one and through further plans to
increase our digital service and new business offerings we are now
poised to generate substantial value for our shareholders.
In the first half of 2021 our team continued to develop our
services by introducing new payment methods (Apple Pay/Google Pay),
launching a campaign manager to manage advertising communications,
further improving user interface. At the same time, our
initiatives, launched in the second half of 2020 such as target
advertisement, search engine optimization, launch of online
business on a 24/7 schedule, continued to bear fruits.
As a result, the amount of loans issued in the first half of
2021 grew by 2.78 times vs. the first half of 2020 on the back of
an impressive growth of loans issued online by 13.6 times. In the
first half of 2021 86% of loans were issued online vs. only 17% in
the first half of 2020.
An increase in the amount of loans issued was partially offset
by a decrease in the average duration of the loan by 42% as online
loans have fewer duration than offline loans, however, interest
income in the first half of 2021 grew by a healthy 55% vs. the
first half of 2020.
At the same time, staff costs have decreased by 25% and
operating expenses have decreased by 10% due to the online
expansion all resulting in a Net profit for H1 2021 of GBP229k a
cGBP1.5million improvement on the losses declared in the same
period of 2020. Zaim's four consecutive quarters of rapid
year-on-year and quarter-on-quarter growth demonstrate the strength
of our business model. Our management is focused on maximising the
growth and gaining as much market share as possible.
We have recently launched our branded mobile application (Zaim
Mobile App) that became a new sales channel for our company along
with online and offline sales channels. The App allows existing
customers to get loans faster and easier, increasing loyalty of the
clients by improving their customer experience. We expect it to
become a significant growth driver for our business given the rapid
growth of the online customer base.
The successful launch of the Zaim Mobile App is an important
milestone in the path of increasing the Fintech content in our
business model. It creates the opportunity to widen the knowledge
we have of our clients, understand their needs, attitudes and
source information and data that will drive Zaim in the creation of
next generation services.
Our low-fixed-costs highly scalable business model had laid
solid foundation for further growth of our business and I would
like to thank all of our employees, customers, consultants and the
management team for their hard work and dedication. "
Financial highlights
1H 2021 1H 2020
GBP'000 GBP'000
-------- --------
Loans issued during the period 11,447 4,117
-------- --------
Interest income 4,253 2,745
-------- --------
Operating income 1,984 994
-------- --------
Net profit / (loss) 229 (1,335)
-------- --------
Adjusted EBIT(2) for the period 396 (499)
-------- --------
June December
30, 2021 31, 2020
GBP'000 GBP'000
---------- ----------
Gross outstanding loans to customers 32,416 28,298
---------- ----------
Total outstanding loans, measured at
amortised cost 2,414 1,269
---------- ----------
Cash and cash equivalents 1,167 641
---------- ----------
1 Operating margin is calculated as net operating cash flow (net
cash received for the period (including collecting claims) less
loans provided including insurances) divided by total loans
provided including insurances
2 Adjusted EBIT is calculated by taking loss for the year adding
back accrued interest, non-cash share-based payment charges, costs
related to the IPO and one-off restructuring costs which are
non-recurring.
Contact:
Zaim Credit Systems Plc
Simon Retter
Siro Cicconi Tel: +44 (0) 73 9377 9849
Alex Boreyko Tel: +7 925 708 98 16
investors@zaimcreditsystemsplc.com
Investor Relations - Flowcomms
Limited Tel: +44 (0) 7891 677
Sasha Sethi 441
sasha@flowcomms.com
Beaumont Cornish Limited
Roland Cornish / James Tel: +44 (0) 20 7628 3396
Biddle
Optiva Securities Limited
Jeremy King / Vishal Balasingham Tel: +44 (0) 20 3137 1902
Zaim Credit Systems Group
Unaudited Interim Condensed Financial Statements in accordance
with International Financial Reporting Standards
30 June 2021
Zaim redit Systems Group
Interim Condensed Consolidated Statement of profit or loss and
Other Comprehensive Income for the six months ended 30 June
Six months Six months
ended 30 ended 30
June 2021 June 2020
Unaudited Unaudited
Notes GBP'000 GBP'000
------------------------------------------- ----- ---------- ----------
Interest income 6 4,253 2,745
Interest expense 6 (74) (9)
Interest expense - lease 6 (9) (82)
------------------------------------------- ----- ---------- ----------
Net interest income 4,169 2,654
Allowance for ECL/impairment of loans
to customers 4 (2,931) (717)
------------------------------------------- ----- ---------- ----------
Net interest income after allowance
for ECL/impairment of loans to customers 1,238 1,938
Gains less losses from dealing in
foreign currency 30 (96)
Other operating income / loss 7 716 (848)
------------------------------------------- ----- ---------- ----------
Operating income 1,984 994
Charge for share options granted (17) (27)
Staff costs (724) (965)
Operating expenses 8 (948) (1,053)
Restructuring costs 9 - (294)
Profit / Loss before income tax 296 (1 345)
Income tax expense (66) 11
------------------------------------------- ----- ---------- ----------
Net profit / loss 229 (1 335)
Net other comprehensive income that
may be reclassified to profit or loss
Foreign exchange differences arising
on translation into presentation currency 9 (19)
Total comprehensive profit / (loss) 238 (1 353)
------------------------------------------- ----- ---------- ----------
30 September 2021
Zaim redit Systems Group
Interim Condensed Consolidated Statement of financial position
as at
30 June 31 December
2021 2020
Unaudited Audited
Notes GBP'000 GBP'000
-------------------------- ----- ---------- -----------
Assets:
Cash and cash equivalents 1,167 641
Loans to customers 4 2,414 1,269
Property and equipment 6 6
Right-of-use assets 5 129 298
Intangible assets 20 -
Other assets 760 251
-------------------------- ----- ---------- -----------
Total Assets 4,495 2,465
-------------------------- ----- ---------- -----------
Liabilities
Loans received 1,451 736
Lease liabilities 5 158 347
Other liabilities 1,145 824
-------------------------- ----- ---------- -----------
Total liabilities 2,754 1,907
-------------------------- ----- ---------- -----------
Equity
Capital and reserves:
Charter capital 10 4,620 4,370
Shares to be issued Reserve 800 800
Additional capital 10 6,756 6,078
Accumulated deficit (38,033) (38,263)
Merger reserve 1 22.965 22.965
Share options Reserve 235 218
Translation reserve 4,399 4,390
Total equity 1,741 558
----------------------------- -------- --------
Total liabilities and equity 4,495 2,465
----------------------------- -------- --------
30 September 2021
Interim Condensed Statement of changes in shareholders' equity
(Unaudited) for the six months ended 30 June 2021 (unaudited)
Foreign
currency
Charter Shares to Additional translation Share Merger Accumulated Total
capital be issued capital reserve options reserve Deficit Equity
GBP'000 Reserve GBP'000 (FCTR ) Reserve GBP'000 GBP'000 GBP'000
--------------- ------------ ------------ ---------- ------------ ------------ -------- ------------ ---------
Balance as at
1 January
2021 4,370 800 6,078 4,390 218 22,965 (38,263) 558
--------------- ------------ ------------ ---------- ------------ ------------ -------- ------------ ---------
Issue of
ordinary
shares 250 - 678 - - - - 928
Comprehensive
loss for the
period - - - 9 - - 229 238
Share-based
payments - - - - 17 - - 17
--------------- ------------ ------------ ---------- ------------ ------------ -------- ------------ ---------
Balance as at
30 June 2021 4,620 800 6,756 4,399 235 22,965 (38,033) 1,741
--------------- ------------ ------------ ---------- ------------ ------------ -------- ------------ ---------
Interim Condensed Statement of changes in shareholders' equity
(Unaudited) for the six months ended 30 June 2020 (unaudited)
Additional Foreign currency Merger Accumulated Total
Charter capital capital translation reserve (FCTR reserve Deficit Equity
GBP'000 GBP'000 ) GBP'000 GBP'000 GBP'000
--------------------------- --------------- ---------- ------------------------- -------- ------------ ---------
Balance as at 1 January
2020 4,370 6,078 4,458 23,615 (37,331) 1 189
--------------------------- --------------- ---------- ------------------------- -------- ------------ ---------
Comprehensive loss for the
period - - (19) (1,335) (1,353)
Share-based payments - - - - 27 27
--------------------------- --------------- ---------- ------------------------- -------- ------------ ---------
Balance as at 30 June
2020 4,370 6,078 4,439 23,615 (38,639) (137)
--------------------------- --------------- ---------- ------------------------- -------- ------------ ---------
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June
Six months Six months
ended 30 ended 30
June 2021 June 2020
Unaudited Unaudited
GBP'000 GBP'000
--------------------------------------------------- ---------- ----------
Cash flows from operating activities
Interest received 3, 239 1 721
Interest paid (including lease) (30) (87)
Gains less losses from dealing in foreign currency (1) (13)
Other operating income 763 82
Staff costs (724) (1,050)
Operating expenses (840) (458)
Income tax paid (23) -
Cash flows from operating activities before
changes in operating assets and liabilities 2,384 195
Net (increase)/decrease in operating assets
Loans to customers (3,020) (645)
Other assets (194) (11)
Net decrease in operating liabilities
Other liabilities 132 (66)
--------------------------------------------------- ---------- ----------
Net cash flows from operating activities (698) (527)
--------------------------------------------------- ---------- ----------
Cash flows from investing activities
Other loan issued (227) -
Purchases of property and equipment and intangible
assets (21) -
Net cash flows from investing activities (248) -
--------------------------------------------------- ---------- ----------
Cash flows from financing activities
Lease repayment (130) (496)
Proceeds from loans received 679 275
Repayment of loans received - -
Issue of ordinary shares 1,000 -
Share issue costs (73) -
Net cash flows from financing activities 1,476 (221)
--------------------------------------------------- ---------- ----------
Effect of exchange rate changes on cash and
cash equivalents (4) (24)
--------------------------------------------------- ---------- ----------
Net change in cash and cash equivalents 527 (773)
Cash and cash equivalents at the beginning of
the year 641 1 583
--------------------------------------------------- ---------- ----------
Cash and cash equivalents at the end of the
period 1,167 810
--------------------------------------------------- ---------- ----------
Notes to the Financial information
1. Activities of the Group. General information
The principal activity of Zaim Credit Systems plc ("the
Company") and its subsidiary Zaim-Express, LLC (together "the
Group") is issuance of microloans to individuals (retail
customers). The Company was incorporated as Agana Holdings Plc and
registered in England and Wales on 15 June 2018 as a public limited
company with company registration number 11418575 and LEI,
213800Z4MI9KSZA2VW72 and on 22 July 2019 the Company changed its
name to Zaim Credit Systems Plc.
On 18 September 2019 the Company acquired the entire issued
share capital of Zaim-Express LLC. The Company is now the holding
company of a Russian based financial services company Zaim-Express
LLC (Subsidiary), so main function of the Company is to provide
holding company services and undertake management of the listed
activities on the stock exchange. These business combination in
2019 was stated in consolidated financial statements as reverse
acquisitions under IFRS 3.
The organizational structure of Group:
The share votes of the Company
--------------------------------
The name of Subsidiary Country of registration 30.06.2021 31.12.2020
----------------------- --------------------------- -------------------- ----------
Zaim-Express LLC Russia 100% 100%
The Subsidiary's principle activity is issuance of microloans
online via web-site and the mobile application and through the
network of its branches in Moscow and the Moscow Region. The
Subsidiary was entered in the state register of microfinance
organisations on 29 August 2011, registration number 2110177000440.
The Subsidiary's assets and liabilities are located in the Russian
Federation. The average number of Subsidiary's employees is as
follows:
The average number of Subsidiary's employees Six months, Six months,
2021 2020
------------------------------------------------- ---------------------- -------------------
Total average number of employees 150 252
The average number of parent Company's employees (directors) is
as follows:
The average number of parent Company's employees Six months, Six months,
2021 2020
------------------------------------------------- ----------- -----------
Directors 5 5
As at 30 June 2021, the man participant of the Company is Zaim
Holdings SA (with share of votes 73,23%). The ultimate controlling
party of the Group is an individual - Mr. Siro Donato Cicconi.
Subsidiary has 26 stores as at 30 June 2021 (31 December, 2020:
30 stores), from which it conducts business throughout the Russian
Federation. During first half of the year 2020 there was reduction
of stores due to reduced business activity because of Covid-19
pandemic (as a measure to prevent unprofitable business) and also
because of intentions of the management to develop the new
business-model - which supposes substantial share of online-loans.
The additional costs due to the dismissal of employees (because of
Covid-19 pandemic) and forced collecting activity (which aimed to
collect bad debts in the portfolio as of December 31, 2019) were
stated separately (like non-periodic or one-time operational costs)
in Group Consolidated Statement of profit or loss. During first
half year 2021 management continued to monitor the profitability of
stores, and there is no significant reduction in its number.
The Group's perspective is the continued development of online
strategy and focus on collecting activities.
According to the estimates of the Central Bank of Russia, the
microfinance market in Russia began to recover in the first half of
2021 year. There is a slowdown in the number of players that
leaving the market compared to the second half of 2020 (including
those due to their non-compliance with the new requirements for the
minimum level of equity (capital). More than half of MFOs
demonstrated portfolio growth in the first half of 2021. One of the
reasons the implementation of deferred demand amid recovery in
economic activity. Also, there is a decrease in the share of
overdue debt (NPL90 +). Experts of the National Rating Agency (NRA)
believe that the tightening of requirements for borrowers and a
decrease in loans allowed the sector to avoid the growth of overdue
debt and even demonstrate its decline.
2. Basis of preparation
The condensed consolidated interim financial statements have
been prepared using accounting policies consistent with
International Financial Reporting Standards and in accordance with
International Accounting Standard 34 Interim Financial Reporting.
The condensed interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 December 2020, which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
The condensed consolidated interim financial statements set out
above do not constitute statutory accounts within the meaning of
the Companies Act 2006. They have been prepared on a going concern
basis in accordance with the recognition and measurement criteria
of International Financial Reporting Standards (IFRS) as adopted by
the European Union. Statutory financial statements for the year
ended 31 December 2020 were approved by the Board of Directors on
29 April 2021 and delivered to the Registrar of Companies. The
report of the auditors on those financial statements was
unqualified.
The condensed consolidated interim financial statements of the
Company have not been audited or reviewed by the Company's auditor,
Shipley's LLP.
Going concern
This financial information reflects Group's management's current
assessment of the impact of the Russian business environment on the
operations and the financial position of Group. The future economic
direction of the Russian Federation is largely dependent upon the
effectiveness of measures undertaken by the Russian Federation
Government and other factors, including regulatory and political
developments which are beyond Group's control. Group's management
cannot predict what impact these factors can have on Group's
financial position in future. This financial information was
prepared on a going concern assumption.
The above factors in conjunction with continuing economic and
political changes taking place in the Russian Federation indicate
that a material uncertainty exists that may cast significant doubt
on Group's ability to continue as a going concern. This ability
depends on future events, including achieving the level of the
loans to customers portfolio sufficient to incur costs and earn
profits and the ability and willingness of Group's sole participant
to continue with financial assistance to Group.
The Financial Statements have been prepared on a going concern
basis. In 2020, the Group changed its business model to one of
remote lending via the Internet, which resulted in a significant
decrease in fixed lease and staff costs and a decrease in the share
of lending costs within total expenses. The Group continues to
optimise the network operation, including removal of loss-making
outlets and enhancement of the Internet channel to attract
customers. The Group is actively collecting overdue debts, inter
alia, through legal action.
The Directors consider that the Group has sufficient funds to
undertake its operating activities for a period of at least the
next 12 months including any additional expenditure required in
relation to any adverse impacts from the Covid-19 Pandemic. The
Group has cash reserves which are considered sufficient by the
Directors to fund the Group's desired strategy of increasing the
loan book both online and in the store.
Risks and uncertainties
The Director continuously assesses and monitors the key risks of
the business. The key risks that could affect Group's medium-term
performance and the factors that mitigate those risks have not
substantially changed from those set out in Group's 2019 Financial
Information. The key financial risks are liquidity risk, interest
rate risk.
The economy of the Russian Federation continues to display
certain characteristics of an emerging market. These
characteristics include, in particular, inconvertibility of the
national currency in most countries outside of Russia and
relatively high inflation rates. The current Russian tax, currency
and customs legislation is subject to varying interpretations and
frequent changes. The country's economy depends on movements of oil
and gas prices.
The future economic development of the Russian Federation is
largely dependent upon the effectiveness of economic measures,
financial mechanisms and monetary policies adopted by the
Government, together with tax, regulatory, and political
developments.
Critical accounting estimates
The preparation of condensed consolidated interim financial
information requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the end of the
reporting period. Significant items subject to such estimates are
set out in note 3 of Group's 2020 Financial Information. The nature
and amounts of such estimates have not changed significantly during
the interim period.
Currency
The GBP was chosen as the presentation currency of the
consolidated financial information, as the shareholders of Group
use information prepared in GBP to make decisions and evaluate the
financial results of Group.
For the purpose of presenting the consolidated financial
information, the financial results and balance sheet items of
Subsidiary are translated into the presentation currency of Group
in accordance with the requirements of International Accounting
Standard IAS 21 "Effect of Changes in Foreign Exchange Rates" as
follows:
(a) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
Gains and losses on purchase and sale of foreign currency are
determined as a difference between the selling price and the
carrying amount at the date of the transaction.
(b) Group companies
The results and financial position of all the Group's entities
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
1. assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position;
2. each component of profit or loss is translated at average
exchange rates during the accounting period (unless this average is
not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions); and
3. all resulting exchange differences are recognised in other
comprehensive income
3. Significant accounting policies
The condensed consolidated interim financial information have
been prepared under the historical cost convention as modified by
the revaluation of certain of the subsidiaries' assets and
liabilities to fair value for consolidation purposes.
The same accounting policies, presentation and methods of
computation have been followed in these condensed consolidated
interim financial information as were applied in the preparation of
Group's Financial Information for the year ended 31 December 2020
(see Note 3).
4. Loans to customers
30
June 2021
Unaudited 31 December,
GBP'000 2020
------------------------------------------------ ----------- ------------
Loans to customers 32,416 28,298
Less: allowance for ECL /impairment of loans to
customers (30,003) (27,029)
------------------------------------------------ ----------- ------------
Total loans to customers at amortised cost 2,414 1,269
------------------------------------------------ ----------- ------------
Below is analysis of movements in the ECL allowance during
1H2021 (by type of loans specified in the first table of the Note),
GBP:
Stage 1 Stage 2 Stage 3 Total
-------------------------- ------- ------- ------- -------
GBP'000 GBP'000 GBP'000 GBP'000
ECL allowance as at 31
December 2020 201 589 26,238 27,029
Assets recognized for
the period 1,119 - - 1,119
Assets derecognized or
collected (63) (37) (1,102) (1,202)
Transfers to Stage 2 (252) 252 - -
Transfers to Stage 3 (663) (287) 951 -
Net loss on ECL allowance
charge/(reversal) - 601 2,414 3,014
Translation into GBP 4 14 25 43
ECL allowance as at 30
June 2021 345 1,132 28,525 30,003
-------------------------- ------- ------- ------- -------
Below is analysis of movements in the ECL allowance during
1H2020 (by type of loans specified in the first table of the Note),
GBP:
Stage 1 Stage 2 Stage 3 Total
-------------------------- ------- ------- ------- -------
GBP'000 GBP'000 GBP'000 GBP'000
ECL allowance as at 31
December 2019 128 289 30 875 31 292
Assets recognized for
the period 1 319 - - 1 319
Assets derecognized or
collected (51) (25) (1 126) (1 202)
Transfers to Stage 2 (136) 136 - -
Transfers to Stage 3 (1 150) (196) 1 346 -
Net loss on ECL allowance
charge/(reversal) 122 476 598
Translation into GBP (8 ) (17) (1 857) (1 882)
ECL allowance as at 30
June 2020 103 309 29 714 30 126
-------------------------- ------- ------- ------- -------
The ECL allowance for loans and advances to customers recognised
during the period is impacted by various factors. The table below
describes the main changes:
-- transfers between Stages 1 and 2 and Stage 3 due to
significant increase (or decrease) in credit exposure or impairment
during the period and subsequent increase (or decrease) in the
estimated ECL level: for 12 months or over the entire period;
-- accrual of additional allowances for new financial
instruments recognised during the period, as well as reduction in
allowance as a result of derecognition of financial instruments
during the period;
-- impact on ECL estimation due to changes in model assumptions,
including changes in probability of default, EAD and LGD during the
period resulting from regular updating of the model inputs.
Following is the credit quality analysis of loans to customers
as at 30 June 2021:
Stage 1 Stage 2 Stage 3 Total
--------------------------------------------- -------------- ------------ ---------- --------------
GBP'000 GBP'000 GBP'000 GBP'000
Loans to customers
Minimum credit risk 2,038 - - 2,038
Low credit risk - 156 - 156
Moderate credit risk - 952 - 952
High credit risk - 744 - 744
Default - - 28,525 28, 525
Total loans to customers before allowance 2,038 1,853 28,525 32,416
--------------------------------------------- -------------- ------------ ---------- --------------
ECL allowance (345) (1,132) (28,525) (30,003)
--------------------------------------------- -------------- ------------ ---------- --------------
Total loans to customers after ECL allowance 1,693 721 - 2,414
--------------------------------------------- -------------- ------------ ---------- --------------
Following is the credit quality analysis of loans to customers
as at 31 December 2020:
Group Stage 1 Stage 2 Stage 3 Total
--------------------------------------------- ------- ------- --------- --------
Loans to customers
Minimum credit risk 1,223 - - 1,223
Low credit risk - 177 - 177
Moderate credit risk - 389 - 389
High credit risk - 272 - 272
Defaulted assets - - 26,238 26,238
Total loans to customers before allowance 1,223 838 26,238 28,298
--------------------------------------------- ------- ------- --------- --------
ECL allowance (201) (589) (26,238) (27,029)
--------------------------------------------- ------- ------- --------- --------
Total loans to customers after ECL allowance 1,021 248 - 1,269
--------------------------------------------- ------- ------- --------- --------
The ECL allowance for loans to customers recognized during the
period is impacted by different factors. Information on the
assessment of expected credit losses is disclosed in Note 3 of
Group's Financial Statements for the year 2020.
The Group uses the following approach to measurement of expected
credit losses:
-- portfolio-based measurement: internal ratings are assigned
individually, but the same credit risk parameters (e.g. PD, LGD)
are applied to similar credit risk ratings and homogeneous credit
portfolio segments in the process of ELC estimation.
This approach provides for aggregation of the portfolio into
homogeneous segments on the basis of specific information on
borrowers, such as delinquent loans, historic data on prior period
losses and forward-looking macroeconomic information.
The amounts of loans recognised as "past due" represent the
entire balance of such loans rather than the overdue amounts of
individual payments.
5. Lease
The Group has agreements for lease of premises.
The Group did not apply a simplified approach to recognise lease
modifications allowed due to the COVID-19 pandemic.
During the 2020 there was a significant decrease in the number
of concluded lease agreements due to reduced business activity
because of Covid-19 pandemic (as a measure to prevent unprofitable
business) and also because of intentions of the management to
develop the new business-model - which supposes substantial share
of online-loans. In 1 half year 2020 there was no significant
reduction of stores, although some of it were closed as the result
of monitoring for unprofitableness.
The carrying amount of right-of- use assets and its movements
during the period are presented below:
Group Real Estate Total
-------------------------------------------------- ------------ -------
As at 1 January 2021 298 298
Additions - -
Disposals (15) (15)
Modification of lease terms (36) (36)
Depreciation charge (113) (113)
Effect of translation into presentation currency (5) (5)
-------------------------------------------------- ------------ -------
As at 30 June 2021 129 129
-------------------------------------------------- ------------ -------
Group Real Estate Total
-------------------------------------------------- ------------ --------
As at 1 January 2020 2,549 2,549
Depreciation charge (661) (661)
Modifications and remeasurement (248) (248)
Derecognition (1,003) (1,003)
Effect of translation into presentation currency (339) (339)
-------------------------------------------------- ------------ --------
As at 31 December 2020 298 298
-------------------------------------------------- ------------ --------
The carrying amounts of lease liabilities and their movements
during the period are set out below:
Group
Lease liabilities Real Estate Total
-------------------------------------------------- ------------ -------
As at 1 January 2021 347 347
Additions - -
Disposals (16) (16)
Interest expense on lease liabilities 9 9
Modification of lease terms (37) (37)
Lease payments (140) (140)
Effect of translation into presentation currency (6) (6)
-------------------------------------------------- ------------ -------
As at 30 June 2021 158 158
-------------------------------------------------- ------------ -------
Lease liabilities Real Estate Total
-------------------------------------------------- --------------------------- -----------------------
As at 1 January 2020 2,556 2,556
Interest expense on lease liabilities 92 92
Lease payments (629) (629)
Modifications and remeasurement (248) (248)
Derecognition (1,081) (1,081)
Effect of translation into presentation currency (343) (343)
-------------------------------------------------- --------------------------- -----------------------
As at 31 December 2020 347 347
-------------------------------------------------- --------------------------- -----------------------
6. Interest income and interest expense
Six months Six months
ended 30 ended 30
June 2021 June 2020
Unaudited Unaudited
GBP'000 GBP'000
----------------------- ---------- ----------
Interest income
Loans to customers 4,253 2,745
Total interest income 4,253 2,745
----------------------- ---------- ----------
Interest expense
Loans received (74) (9)
Lease (9) (82)
Total interest expense (84) (91)
Net interest income 4,169 2,654
----------------------- ---------- ----------
7. Other operating income / loss
Other operating income (mainly - commission for
insurance and information services for the payment
system) 717 126
Correction of loan's portfolio as at 31 December,
2019 - (974)
Other operating expenses (1) -
---------------------------------------------------- --- -----
Total other operating income / loss 716 (848)
---------------------------------------------------- --- -----
8. Operating expenses
Periodic Operating expenses
Six months
ended Six months
30 ended 30
June 2021 June 2020
Unaudited Unaudited
GBP'000 GBP'000
----------------------------------- ---------- ----------
Advertising and Marketing 387 73
Deprication of Right-of-use assets 113 562
Communication 86 37
Consulting services 75 128
Banking services 70 36
State Duty 58 -
Postal Servives 48 12
Material expenses 13 17
Rental expenses 13 45
Investors relations 12 71
Security 5 16
Other expenses 68 56
Total periodic operating expenses 948 1,053
------------------------------------ ---------- ----------
9. Restructuring costs (for the six months, ended 30 June,
2020)
There were additional staff costs during IH 2020 due to the
dismissal of employees (because of Covid-19 pandemic and also the
intentions of management to develop the new business-model - which
supposes substantial share of online-loans). Besides this, the
additional costs on personal were caused by the hiring of
additional staff with fixed-term contracts, which were engaged in
organizing the collection of the bad debt portfolio as of 31
December 2019, based on court decisions. These additional costs
were stated separately in Consolidated Statement of profit or loss
and Other Comprehensive Income
Six months
ended Six months
30 ended 30
June 2021 June 2020
Unaudited Unaudited
GBP'000 GBP'000
----------------------------------------------- ------------ ----------------- -----------------------------
Staff costs (one-time), including:
Dismissal of personal
Hiring of additional personal (for collecting - 37
bed debt portfolio) - 12
Total staff costs - 45
------------------------------------------------------------- ---------------- -----------------------------
There were also additional non-periodic operational costs during
IH 2020 due to the forced collecting activity (which aimed to
collect bad debts in the portfolio as of December 31, 2019) - State
Duty and Postal Services, which were stated separately in Group
Consolidated Statement of profit or loss and Other Comprehensive
Income. The main results of this collection work were reflected in
the second half of the year 2020.
Non-Periodic (One-time) Operating expenses
Six months
ended Six months
30 ended 30
June 2021 June 2020
Unaudited Unaudited
GBP'000 GBP'000
---------------------------------- ---------- ----------
State Duty - 208
Postal Services - 37
Total one-time operating expenses - 245
----------------------------------- ---------- ----------
10. Charter and Additional Capital
During 1 half year 2021, Group has completed an equity fundraise
of GBP1,000,000 (gross) through the issue of 25,000,000 ordinary
shares at a price of 4.0 pence per ordinary share.
The Fundraise has been undertaken by way of a placing of new
ordinary shares of GBP0.01 par value in the share capital of the
Group. The Fundraise is to provide additional capital for expansion
of the loan portfolio and the development of new products.
Below is a reconciliation of the movement in the legal parent
Company share capital during 1 H 2021
Share capital
Group Amount,
Issued and fully paid Number GBP
----------------------------------------- ------------ --------- ---------
As at 31 Dec., 2020
Ordinary shares of GBP0.01 each 436,975,000 4,369,750
Issue of ordinary shares in 1H 2021 25,000,000 250,000
As at 30 June 2021 461,975,000 4,619,750
--------------------------------------------------- ------------- ---------
Additional capital (share premium) of the legal parent
Group Amount, GBP
As at 1 January 2021 6,078,128
Premium arising on issue of ordinary shares
in 1H 2021 750,000
Issue costs (72,500)
As at 30 June 2021 6,755,628
---------------------------------------------- ---------
11. Related party transactions
Transactions with parent company
30 June, 2021,
Unaudited 31 Dec.,2020
GBP'000 GBP'000
------------------------------------------ ------------------------------ --------------
Loan issued (balance, Including %%) 279 46
Six months
Six months ended 30 ended 30
June 2021 June 2020
Unaudited Unaudited
GBP'000 GBP'000
---------------------------------------------------- ------------------- ------------
Interest income - 7
30 June, 2021,
Unaudited 31 Dec.,2020
GBP'000 GBP'000
------------------------------------------ ------------------------------ --------------
Loan received (balance, Including %%) 743 736
Six months
Six months ended 30 ended 30
June 2021 June 2020
Unaudited Unaudited
GBP'000 GBP'000
---------------------------------------------------- ------------------- ------------
Interest expense - 45
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END
IR XKLFLFKLZBBE
(END) Dow Jones Newswires
September 30, 2021 01:59 ET (05:59 GMT)
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