GLI GLI Fina Financ nce e 2017 2017 Annu Annual al Results esults 1
“The year saw a lot of change as I continued the work I started on my appointment in December 2015. Two years into my role I can see real progress. Sancus BMS is the key operating unit within the Group and is starting to deliver on its potential. The businesses that comprise Sancus BMS are good businesses, well run, with the ability to deliver healthy returns. We are delighted to have secured the credit facility from HIT which was announced in January 2018 which will help drive further growth. We have taken some tough decisions on the FinTech Ventures portfolio and made substantial write-downs in the first half of the year. I am delighted that no further net write-down was required at the end of the year. With most of the restructuring that is required now complete we will seek to maximise the value of the portfolio going forward” Andy Whelan, CEO 2
Agenda ▪ What we are ▪ What we have achieved ▪ 2017 Financial Results ▪ Sancus BMS Group ▪ FinTech Ventures ▪ 2018 Outlook 3
Wha hat t we ar e are e 4
What we are GLI is an AIM listed innovative alternative finance business, which owns a niche SME lender, Sancus BMS that operates in 6 jurisdictions - UK, Ireland, Jersey, Guernsey, Gibraltar and the Isle of Man, and a portfolio of emerging FinTech SME-focussed lending platforms that are located on 3 continents. We measure value creation as follows: ▪ For Sancus BMS, based on a forward view of earnings; and ▪ For FinTech Ventures, based on changes in the fair value of the portfolio. 5
Wha hat t we ha e have e ac achie hieved ed 6
Key Events Timeline (1 of 2) ▪ December 2015 - GLI placed with Somerston Group (via Golf Investments Limited) 15,000,000 new ordinary shares at a price of 37 pence per share to raise gross proceeds of £5.55m, taking their holding to 6.52%; ▪ December 2015 - Andrew Whelan appointed as CEO; ▪ February 2016 – Strategic review is launched; ▪ March 2016 – Syndicated loan was restructured and £15m repaid (from a £30m facility at 11% to £14.86m at 8.75%) taking weighted average cost of debt from 8.4% at Dec15 to 7.5% at Dec16; ▪ May 2016 - GLI reclassified its listing from an investment company to a trading company; ▪ June 2016 - EGM passed resolution for acquisitions and simplification of GLI group structure to create Sancus BMS Group; ▪ August 2016 - GLI placed with Somerston Group (via Golf Investments Limited) 23,020,560 new ordinary shares at a price of 31 pence per share to raise gross proceeds of £7.1m, taking their holding to 12.76%; ▪ August 2016 – FinTech Ventures Limited established to hold equity investments in the platform portfolio; ▪ September 2016 - Liberum appointed as Broker and Nomad; ▪ November 2016 – £17.5m Sancus Loan Note 1 (“SLN 1) launched to fund loans originated by Sancus BMS; ▪ February 2017 – The Group acquired another 14% in Sancus IOM to be settled by the transfer of £1m of GLI bonds taking the holding to 21%; ▪ March 2017 – Sale of SSIF Shares raised £22.7m in cash and repayment of syndicated loan £11.9m; ▪ March 2017 - Acquisition of a further 2.1% in Sancus IOM, taking holding to 23.1%; 7
Key Events Timeline (2 of 2) ▪ April 2017 - £13.5m Sancus Loan Note 2 launched; ▪ June 2017 - Acquisition of a further 10% in Sancus Finance, taking new holding to 98.23% and announcing that Sancus Finance is increasingly being run as a combined business with Sancus Funding (formerly Funding Knight); ▪ July 2017 – New appointment of Aaron Le Cornu as COO of GLI; ▪ July 2017 – Sancus Funding (formerly Funding Knight) granted full authorisation from the FCA, rebranding taking place in Q1 2018; ▪ September 2017 - Sancus Loan Note 3 issued with initial raise of £3.7m (currently at £10m) with planned total raise of £15m; ▪ November 2017 – Acquisition of further 6.2% in Sancus IOM, taking holding to 29.3%; ▪ December 2017 - Sancus BMS Group announce £700m funding milestone; ▪ January 2018 – New appointment of Dan Walker as MD of Sancus Finance and Sancus Funding and Group Executive; ▪ January 2018 – A special purpose vehicle established post year end with a £50m lending capacity, backed by a £45m facility with Honeycomb Investment Trust was announced, for asset backed lending for Sancus BMS Group. 8
Group Highlights 2017 2016 Net Operating (Loss)/Profit £’000 £’000 1.0 0.1 - Total Revenue 11,634 12,028 GBP'000 -1.0 -2.0 Net Operating Profit/(Loss) 101 (2,833) -2.8 -3.0 -3.5 -4.0 Loss before tax (15,164) (16,452) 2015 2016 2017 Basic and diluted Loss Per Share (5.01)p (6.49)p Net Operating (Loss)/Profit ▪ Improvement in operating profit to £0.1m from a loss of £2.8m in 2016 reflecting strong revenue growth in Sancus BMS, reduced operational costs and lower interest costs; Adjusting for the sale of the SQN Secured Income Fund shares (“SSIF”), revenue increased 18% to £11.6m; ▪ ▪ Stabilisation of the FinTech Ventures portfolio following the write-downs in the first six months; ▪ Group NAV is £74.8m (2016: £90.7m); ▪ Sale of the Group’s equity holding in SSIF for £22.7m and subsequent repayment of the Group’s syndicated loan of £11.9m; ▪ £50m special purpose lending vehicle established with a £45m facility backed by Honeycomb Investment Trust; ▪ In accordance with the Group’s stated policy of paying dividends out of net cash generation, no dividend will be declared for the period. The Group remains committed to reconvene dividends as soon as practicable; 9
The Business Units Sancus BMS Fintech Ventures Profitable Growth Business Potential for uplift in valuation Includes: Includes: • Sancus BMS Finexkap (29.8%) - FRANCE • • Funding Options (28.90%) - UK Sancus Jersey (100%) • • LiftForward (18.4%) - USA Sancus Gibraltar (100%) • • The Credit Junction (22.24%) - USA Sancus Guernsey (100%) • Platform Interests BMS Finance UK & Ireland (100%) • • Trade River UK (43.9%) - UK Sancus Finance (98.23%) (100% post y/e) • • UK Bond Network (21.11%) - UK Sancus Isle of Man (29.3%) • • Open Energy Group (23.1%) - USA Amberton Asset Management Limited (50%) • • Trade River USA (30.25%) - USA Sancus Funding (ex-Funding Knight) (100%) • MyTripleA (15%) - SPAIN • Finpoint (21.12%) - UK • Ovamba (20.48%) – CAMEROON 10
20 2017 17 Fina Financ ncial ial Res esults ults 11
Results for the year 2017 2017 2016 Movement Movement Consolidated Statement of Comprehensive Income £’000 £’000 £’000 % Sancus BMS interest on loans and fee and other income 10,038 9,007 11% 1,031 FinTech Ventures interest on loans and fee and other income 1,293 628 106% 665 SSIF dividends 303 2,393 (87%) (2,090) Revenue 11,634 12,028 (3%) (394) Interest costs (2,178) (3,774) (42%) 1,596 Other cost of sales (270) (78) (246%) (192) Gross profit 9,186 8,176 12% 1,010 Operating expenses (9,085) (11,009) 17% 1,924 Net operating profit/(loss) 101 (2,833) 104% 2,934 Fair Value, Goodwill and other net losses (13,802) (18,044) 24% 4,242 FX (loss)/gain (1,463) 4,425 (133%) (5,888) Tax (20) (83) 76% 63 Loss for the year (15,184) (16,535) 8% 1,351 ▪ Total revenue for the year reduced by 3% to £11.6m (2016: £12m), however excluding SSIF dividends which were sold in the year, revenue was up 18%; ▪ The principal driver of revenue growth within Sancus BMS has been fee income from arrangement and commitment fees arising from the increase in loan origination. This has somewhat been offset by a reduction in interest income as on balance sheet funds have not grown due to capital constraints and the Sancus Loan Notes; ▪ FinTech Ventures interest income has increased as additional loans and accrued interest were acquired as part of the sale of our shares in SSIF; ▪ Interest costs have reduced due to repayment of Syndicated loan in March 2017. Weighted average interest cost is now 5.9%; ▪ Operating expenses down £2m following savings in employment costs, legal, accounting and administration, marketing and travel. 12
Summary of Consolidated Balance Sheet £ ’ 000 31 December 2017 31 December 2016 Sancus BMS on Balance Sheet Loans and loan equivalents 46,326 38,821 Shares in SSIF - 23,781 Goodwill 25,033 25,033 FinTech Ventures’ Loan and loan equivalents 839 4,034 FinTech Ventures’ Investment Portfolio 29,598 36,104 Group Cash, trade receivables and other assets 10,656 14,347 Total assets 112,452 142,120 Total Liabilities (37,649) (51,252) Group net assets 74,803 90,868 ▪ Sancus BMS Loans and loan equivalents have increased in the year from £38.8m to £46.3m largely due to an increase in BMS Funds and SLNs; ▪ Shares in SSIF were sold in March 2017 raising £22.7m and partly used to repay the syndicated loan; ▪ FinTech Ventures loan and loan equivalents have decreased by £3.2m in the year due to the repayment of certain loans and the write down and provision against the loans acquired from the sale of SSIF; ▪ FinTech Ventures portfolio has reduced from £36.1m to £29.6m, the movement includes a £1.7m FX loss in the year plus the £12.6m write downs made in this first half. Second half valuations have stabilised with a small uplift of £0.3m. The remaining movement is net acquisitions and disposals; ▪ Liabilities have reduced primarily due to the repayment of the syndicated loan in March 2017. 13
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