Half-year Report

17 September 2024

TruFin plc  
("TruFin" or the "Company" or together with its subsidiaries "TruFin Group" or the "Group")

Interim Results for the six months ended 30 June 2024 (Unaudited)

·    Combined gross revenue for the Group increased 261% to £25.3m (H1 2023: £7.0m)

·    TruFin Group recorded its maiden first half positive EBITDA of £2.9m (H1 2023: £(3.6)m)

·    TruFin Group recorded its maiden first half profit before tax ("PBT") of £0.2m (H1 2023: £(5.3)m)

·    Playstack Ltd ("Playstack") recorded exceptional revenue growth of 710% to £20.2m (H1 2023: £2.5m) thanks to extremely strong performances from two new titles released during the period and strong back catalogue performances

·    Gross revenue at Oxygen Finance Group Limited (together with its subsidiaries) ("Oxygen") increased by 26% to £3.4m (H1 2023: £2.7m), driven by strong growth in its recurring revenue streams. EBITDA grew by 90% to £0.6m (H1 2023: £0.3m) and Oxygen remains on track to achieve its first full year of profit at EBIT level

·    Gross revenue at Satago Financial Solutions Limited ("Satago") decreased 6% to £1.6m (H1 2023: £1.7m). This reflects Lloyds Bank's (the "Bank") decision to terminate its contract with Satago post period-end, as announced on 16 July 2024

Key milestones during the period:

·    Playstack published two hit indie games, Balatro and Abiotic Factor. Both significantly surpassed internal expectations, were met with critical acclaim and have garnered extraordinary interest from players and platforms alike

·    Approximately 50% of Oxygen's Early Payment ("EP") clients purchased two or more products (H1 2023: 41%) and Oxygen serviced more than 20,000 suppliers

·    Satago increased credit control licence sales by 25%

Key milestones post period end:

·    Following an internal review, the Bank decided to no longer prioritise the Satago platform and exercised its right to terminate the contract. The Board of TruFin remain confident in the quality and robustness of the Satago platform and recognise the value created over the last 36 months, resulting in an industry-leading solution

·    Satago continues to progress its maturing pipeline with a number of UK and global opportunities now materialising or accelerating due to increased flexibility following the Lloyds Bank contract termination. In July, Satago announced a contract win with a UK Specialist Lender, to provide invoice financing capabilities via Satago's platform

·    Playstack signed its largest contract to date: a multi-year partnership with a major technology platform based on Playstack's published IP

·    Playstack's Return on Invested Development Capital ("ROIDC") across its entire console portfolio stands at more than 500%, with an Internal Rate of Return ("IRR") of more than 150%. When excluding the returns from Mortal Shell and Balatro the ROIDC is 172%. Playstack has already secured a pipeline of 8 further title releases over the next 18 months and has committed invested capital by year end in excess of £7m. Playstack's profitability means this invested capital is sourced entirely from internally generated funds and the ROIDC from these investments is expected to create a fly-wheel of profitable growth in the future

·    Oxygen was pleased to announce the appointment of Vicki Sloane as its new Chief Executive Officer. Having worked at Oxygen for more than a decade, Vicki is exceptionally well placed to drive the company's future growth

·    As at 31 August Oxygen has returned £0.9m to TruFin in anticipation of declaring a record dividend for 2024

James van den Bergh, Chief Executive Officer commented:

"These are results full of firsts for TruFin: growing revenues by more than 200%; recording profitability and generating cash for a half year for the first time.

Not only has TruFin smashed through these milestones, but it has done so despite investing considerable capital into Playstack's future game launches and continuing to fund Satago's working capital requirements. These metrics highlight the attractive unit economics inherent in TruFin's businesses and the potential for TruFin to generate considerable equity value for shareholders.

The releases of Balatro and Abiotic Factor surpassed all expectations, though it is important to remember that their success builds on the trajectory that Playstack has followed in recent years. With more than nine out of 10 of its published titles repaying invested capital, with an average return on invested capital of more than 500%, Playstack's engine of growth is firing on all cylinders. These numbers highlight the dedication that has gone into developing this successful game origination engine and building a team around it. We now have a bumper pipeline of further game releases which the team is increasingly excited about.

Once again Oxygen has grown its top and bottom lines, with August 2024 being its best month ever. It is on track to double its dividend to TruFin this year - making it the second year in a row this doubling has occurred and emphasising the very attractive position that Oxygen is in. I would like to personally welcome Vicki Sloane to the role of CEO; she has made an excellent start and we look forward to working closely with her as we unlock further shareholder value.

Clearly the termination of Satago's contract with Lloyds Bank was extremely disappointing. There are a number of important lessons we have taken from this experience as Satago focuses on the path to profitability. The Lloyds Banking Group remains a Satago shareholder and we are working together to ensure Satago can maximise its market opportunity.

TruFin remains fully funded to profitability and, having delivered an exceptional financial performance in the first half, the Board looks to the future with confidence."

For further information, please contact:

TruFin plc is the holding company of an operating group comprising three growth-focused technology businesses operating in niche markets: early payment provision, invoice finance and mobile games publishing. The Company was admitted to AIM in February 2018 and trades under the ticker symbol: TRU. More information is available on the Company website: www.TruFin.com.

CHIEF EXECUTIVE'S STATEMENT

For the six months ended 30 June 2024

Playstack

Playstack is a gaming technology business providing publishing and related services to the games industry. Playstack is the Group's entry point into the highly attractive growth market of video game publishing.

Playstack has exceeded expectations and has delivered significant growth in the first half of 2024. During the period Playstack published two new titles, Balatro and Abiotic Factor, with combined sales exceeding 2.7m units and continued growth. The Board expects further progress in H2 due to scheduled releases, including much-anticipated sequel title Rise of the Golden Idol which is due for release in November.

Additionally, through valuable long-term platform and technology partnerships, Playstack has delivered valuable revenue visibility ahead of game launches, derisking development spend.

Playstack has further enhanced its innovative technology that efficiently discovers and monitors games in development, setting it apart from its peers.

After a phenomenal financial performance in the first half, there is growing interest in Playstack from technology platforms looking to secure world class IP, enviable returns on investment and 'hit ratios'. Playstack is set to deliver positive EBITDA and operating cash generation in 2024 and beyond.

In March 2024, TruFin announced that it was due to complete a sale of IP and assets relating to Playstack's augmented reality and gamification AdTech platform "Interact" to VCI Global Ltd. The transaction has not yet completed due to renegotiation of certain items and both parties remain in discussion

Oxygen

Oxygen enjoys a dominant position in its market and its core early payment ("EP") product continues to perform well. Based on strong KPI performance we expect momentum will continue to build into the second half. 

Oxygen's 60 EP clients - up from 57 - had a combined supplier spend of more than £28bn during the period, up 17% from H1 2023.

New supplier spend, a key lead indicator, totalled £300m during H1 2024, a 50% increase on H1 2023. It was generated by a broad range of suppliers across multiple clients, resulting in a record numbers of clients' suppliers participating in Oxygen's EP programmes. On-boarded annual supplier spend exceeded £1.4bn across 5,100 suppliers, up 20% over H1 2023. To benefit from existing supplier flows, Oxygen is targeting new initiatives to further increase supplier participation and acceleration of supplier invoices.

Oxygen's "Freepay" initiative, which delivers remarkable social value to EP clients' local communities by enabling them to pay local micro and small suppliers early, at no cost, more than doubled. By the end of June 2024 more than 25,000 suppliers were participating in this programme (up from 11,000 a year earlier). These local micro and small suppliers have enjoyed early invoice payments totalling £1.3bn, without charge, since this unique programme launched to support clients' small and local suppliers during the COVID pandemic.

Transacted spend attracting an early payment discount reached a record £553m in H1 2024, growing 18% over H1 2023. Similarly, total rebates in H1 2024 were £6.2m, 22% higher than in H1 2023. The record new spend signed in the first half is expected to underpin continued momentum to year end.

Meanwhile Oxygen's Software as a Service ("SaaS") Insights business delivered double digit growth in the first half of 2024. This underlying growth is further enhanced by strong and increasing revenues following the successful integration of the BidStats business acquired at the end of 2023, with the acquisition payback period expected to be less than two years. The acquisition extends the reach of Oxygen's public sector market intelligence data subscriptions to the SME market, providing opportunities to sell premium Insights tools.

Oxygen's dominance in its chosen SaaS and EP markets is complementary; both benefit from Oxygen's unparalleled technology-enabled knowledge and access to procurement data across the public sector. The scale and expected continued growth of Oxygen's client portfolio continue to provide opportunities for Oxygen to expand the improved procurement outcomes it offers to both its public and private clients. Oxygen will continue to take a disciplined approach to investing in its tech and AI capabilities to exploit these opportunities further. 

Satago

Satago offers its customers technically advanced invoice finance and cashflow management systems via its online software platform.

In line with its strategy, Satago is transitioning from predominantly self-funding its balance sheet to a hybrid model incorporating "partner balance sheet financing". This utilises Satago's Lending as a Service ("LaaS") solutions and embedded finance model. Satago's strategic partnership with Sage, to offer embedded finance in several Sage products, remains key to its strategy.

During H1 2024, Satago migrated a small set of the Bank's clients onto the platform. It was our expectation that large scale migration would occur during 2024. However, as previously reported, following an internal review Lloyds Bank terminated its contract with Satago. This was enormously disappointing and unexpected for Satago and TruFin. Discussions regarding the capital structure of Satago, of which the Lloyds Banking Group remains a shareholder following a £5m investment in March 2022, are ongoing between all parties.

Subscription numbers with Satago's largest existing strategic technology partners continue to grow, with active subscriptions increasing 89% to 1,207 over the same period in 2023 (H1 2023: 640). Roll out of a similar offering in the partner's other jurisdictions is expected to occur in H2 2024.

Satago's revenues in the first half of the year were £1.6m (H1 2023: £1.7m). This reflects Lloyds Bank's (the "Bank") decision to terminate its contract with Satago post period-end, as announced on 16 July 2024.

Post period end developments and outlook

Playstack

Following its successful PC and console release in February, Balatro will launch on Apple and Google devices on 26 September including on Apple Arcade, the premium subscription service for Apple devices.

Playstack's next major release in November will be Rise of the Golden Idol on PC and Console, and - in partnership with Netflix - on Apple and Google devices. This reinforces the strong technology platform partnerships that the company has established.

Additionally, Playstack secured several new multi-million-dollar, multi-year partnerships with major technology platforms during the first half that extend the reach and performance of Playstack's existing published IP, underscoring the calibre of high-quality titles in the company's catalogue, and providing secured revenue streams for 2025 and beyond.

Further, Playstack has contracted the publishing rights to six new titles for 2025, with first game Lorn Vale slated for release in Q1 2025.

Playstack's proprietary discovery technology continues to work effectively in helping to source high potential games, including the majority of its 2025 line-up.

Pleasingly H1 2024 saw critical recognition for Playstack, including Balatro winning 'Best Original IP' at the Develop Star awards and GamesIndustry.biz awarding Playstack a 'Best Places to Work' badge, celebrating employer excellence in the games industry. These accolades highlight the value created when the right culture is nurtured.

Oxygen

Oxygen is on course to deliver yet another full year of record revenues across its EP and SaaS revenue streams. 

The value delivered to Oxygen's clients is reflected by their continuing loyalty; all EP clients with contracts falling due during the year have indicated their intention to renew for a further five-year term.  Committed contract term at the end of June 2024 across Oxygen's 60 EP clients was 7.3 years (average time from contract signature to contract end date).  Similarly, the committed contract term for Oxygen's 112 Insights client was 3.7 years. 

More than half of Oxygen's UK local authority clients choose to buy an additional SaaS product.

Three new EP client contracts have been signed during the year with a strong pipeline for additional clients in the second half.

Testament to Oxygen's strengthening financial performance is its improving cash generation. As at 31 August Oxygen has returned £900k to TruFin and anticipates declaring a record dividend for 2024.

Oxygen continually breaks its own operational and financial records. With existing clients onboarding ever more suppliers to Oxygen programmes and new client wins continuing we remain optimistic for the future.

Satago

Satago has always focused on working with partners who really know their clients.

With this in mind, Satago was pleased this summer to sign a contract with a Specialist Lender to offer its clients invoice finance and factoring functionality. This contract leverages the technological capabilities built by Satago over the last 36 months. These same capabilities will be used across the pipeline of customers that Satago is nurturing. This technological advantage is further supported by the partnership with Sage which continues to go from strength to strength, providing a unique route to market through a joint embedded finance and cashflow management proposition.

Lloyds Banking Group remains a Satago shareholder and is working constructively with Satago and TruFin to ensure Satago's market-leading platform can be enjoyed by thousands of SMEs across the UK.

Satago remains focused on delivering exceptional service to its existing partners, winning new clients and building a business with strong recurring revenue.

As at 31 August 2024, the following assets were not less than:

•            £11.0m of cash or cash equivalents

•            £3.3m of assets within the Satago Group's loan book

The TruFin Group has no more than £2.3m in net near-term liabilities.

UNAUDITED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME

UNAUDITED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

The financial statements were approved by the Board of Directors on 16 September 2024 and were signed on its behalf by:

James van den Bergh

Chief Executive Officer

UNAUDITED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY

UNAUDITED CONDENSED INTERIM STATEMENT OF CASH FLOWS

NOTES TO THE UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1.             Accounting policies

Basis of preparation

The annual financial statements of TruFin plc are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS").

The condensed set of financial statements included in this Interim Financial Report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' ('IAS 34'). This condensed set of Financial Statements has been prepared by applying the accounting policies and presentation that were applied in the preparation of the TruFin Group's published Financial Statements for the year ended 31 December 2023.

The condensed set of financial statements included in this Interim Financial Report for the six months ended 30 June 2024 should be read in conjunction with the annual audited financial statements of TruFin plc for the year ended 31 December 2023, which were delivered to the Jersey Financial Services Commission. The audit report for these accounts was unqualified and did not draw attention to any matters by way of emphasis.

Going concern

The Directors are satisfied that the TruFin Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of the report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Group information

The TruFin Group ("the Group") is the consolidation of;

•  TruFin plc,

•  TruFin Holdings Limited,

•  Oxygen Finance Group Limited, Oxygen Finance Limited and Oxygen Finance Americas Inc., Birmingham Procurement Limited, together the ("Oxygen Group"),

•  TruFin Software Limited,

•  Satago Financial Solutions Limited, Satago SPV 1 Limited, Satago SPV 2 Limited, Satago Financial Solutions z.o.o, together ("Satago"),

•  AltLending (UK) Ltd (dissolved 9 July 2024), and

•  Playstack Limited, Bandana Media Ltd, Playignite Ltd, Playstack z.o.o, Playstack OY, Playstack AB, Magic Fuel Games Inc, Playstack Inc and Playignite Inc, together the ("Playstack Group").

Additionally, the Playstack Group also includes one associate company incorporated in the UK which has been accounted for using the equity method.

•  A 26% interest in Stormchaser Games Ltd

The Playstack Group included one associate company incorporated in the UK which was dissolved in the period.

•  A 49% interest in Snackbox Games Ltd (dissolved on 28 May 2024)

The principal activities of the Group are the provision of niche lending, early payment services and mobile game publishing.

The financial statements are presented in Pounds Sterling, which is the currency of the primary economic environment in which the Group operates. Amounts are rounded to the nearest thousand.

Material accounting policies and use of estimates and judgements

The preparation of interim consolidated financial statements in compliance with IAS 34 requires the use of certain critical accounting judgements and key sources of estimation uncertainty. It also requires the exercise of judgement in applying the TruFin Group's accounting policies. There have been no material revisions to the nature and the assumptions used in estimating amounts reported in the annual audited financial statements of TruFin plc for the year ended 31 December 2023.

The accounting policies, presentation and methods of computation in the audited financial statements have been followed in the condensed set of financial statements.

2.             General information

TruFin plc is a public limited company incorporated in Jersey. The shares of the Company are listed on the Alternative Investment Market. The address of the registered office is 26 New Street, St Helier, Jersey, JE2 3RA.

A copy of this Interim Financial Report including Condensed Financial Statements for the period ended 30 June 2024 is available at the Company's registered office and on the Company's investor relations website (www.trufin.com).

3.             Gross revenue

*Early Payment Programme Services

** Please see Chief Executive's statement for more information on the increase in Console revenue.

4.             Segmental reporting

The results of the Group are broken down into segments based on the Group from which it derives its revenue:

Satago:

Provision of invoice discounting and SaaS products. For results during the reporting period, this corresponds to the results of Satago. For the previous reporting period, results in this segment related to discontinued operations corresponded to the results from Vertus Capital Limited and Vertus SPV1 Limited (prior to their disposal from the Group).

Oxygen:

Provision of Early Payment Programme Services. For results during the reporting period, this corresponds to the results of the Oxygen Group.

Playstack:

Publishing of video games. For results during the reporting period, this corresponds to the results of the Playstack Group.

Other:

Revenue and costs arising from investment activities. For results during the reporting period, this corresponds to the results of TruFin Software Limited, TruFin Holdings Limited and TruFin plc.

The results of each segment, prepared using accounting policies consistent with those of the Group as a whole, are as follows:

*adjusted loss before tax excludes share-based payment expense

*adjusted loss before tax excludes share-based payment expense

5.             Staff costs

Analysis of staff costs:

Consulting costs are recognised within staff costs where the work performed would otherwise have been performed by employees. Consulting costs arising from the performance of other services are included within other operating expenses.

Average monthly number of persons (including Executive Directors) employed:

Directors' emoluments

6.             Employee share-based payment transactions

The employment share-based payment charge comprises:

Service Criteria Award

On 27 July 2023, options to acquire 1,350,000 shares were granted to the senior management team and employees of the Group. The award is structured as a nil cost option. The vesting of this award is subject to the holder being in continued employment until the vesting dates of this award. The award has been granted in 3 tranches; the first tranche vested on 31 December 2023, the second and third will vest on 31 December 2024 and 31 December 2025 respectively.

In May 2024, 25,000 options that vested on 31 December 2023 were exercised.

On 11 April 2024, options to acquire 175,500 shares were granted to employees of the Group. The award is structured as a nil cost option. The vesting of this award is subject to the holder being in continued employment until the vesting dates of this award. The awards granted in this tranche will vest on 31 December 2026.

Awards granted to the Group CEO are subject to an additional 1 year holding period. A Black-Scholes model was used to determine the fair value of these options. The model used an expected volatility of 50% and risk free rate of 5%.

TruFin Share Price Award

On 27 July 2023, options to acquire 1,229,167 shares were granted to the senior management team and employees of the Group. The award is structured as a nil cost option. The vesting of this award is subject to the holder being in continued employment until the vesting dates of this award, and the Company's share price satisfying share price targets in relation to the other companies listed on AIM . The award has been granted in 2 tranches; the first tranche will vest on 31 December 2024 and the second on 31 December 2025.

On 11 April 2024, options to acquire 614,584 shares were granted to the senior management team and employees of the Group. The award is structured as a nil cost option. The vesting of this award is subject to the holder being in continued employment until the vesting dates of this award, and the Company's share price satisfying share price targets in relation to the other companies listed on AIM. The awards granted in this tranche will vest on 31 December 2026.

Awards granted to the Group CEO are subject to an additional 1 year holding period. A Monte Carlo simulation was used to determine the fair value of these options. The model used an expected volatility of 50% and a risk free rate of 5%.

Subsidiary Performance Award

On 27 July 2023, options to acquire 537,500 shares were granted to employees of the Group. The award is structured as a nil cost option. The vesting of this award is subject to the holder being in continued employment until the vesting dates of this award, and subsidiary companies achieving certain financial metrics over the vesting periods. The award has been granted in 2 tranches; the first tranche will vest on 31 December 2024 and the second will vest on 31 December 2025.

On 11 April 2024, options to acquire 268,750 shares were granted to employees of the Group. The award is structured as a nil cost option. The vesting of this award is subject to the holder being in continued employment until the vesting dates of this award, and subsidiary companies achieving certain financial metrics over the vesting periods. The awards granted in this tranche will vest on 31 December 2026.

At 30 June 2024, 75% of the award is expected to vest based on the latest performance metrics.

Performance Share Plan and Joint Share Ownership Plan Founder Award ("PSP and JSOP")

All the Founder Awards held by the Group CEO have vested. 1,566,255 shares subject to the Joint Share Ownership Plan are fully owned by the EBT. The Group CEO's nil cost options in respect of the same number of shares under the Performance Share Plan have also fully vested.

Performance Share Plan Market Value Award ("PSP Market Value")

On 21 February 2018, options to acquire 4,868,420 shares were granted to the senior management team. The vesting of this award is based on market-based performance conditions. The vesting of these awards is subject to the holder remaining an employee of the Company and the Company's share price achieving five distinct milestones -vesting at 20% each milestone. The current exercise price of the awards is £0.71 per share.

7.             Loss before income tax

Loss before income tax is stated after charging:

8.             Taxation

Analysis of tax credit/charge recognised in the period/year

Deferred tax asset

A deferred tax asset was recognised in 2023 in respect of Oxygen Finance Limited, as it became profitable.

9.             Intangible assets