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0189/00019655/en
Annual Financial Report
The Just Loans Group Plc (JUST/ΤΖ)
JUST
Annual Financial Report
The Just Loans Group Plc announces its annual financial report.This is included in the attachment below.The directors take responsibility for this announcement. Attachment: 1. 2016 Annual Financial Report
Non Regulated
Publication Date: 28/04/2017
Company Registration No. 08062555 (England and Wales)
THE JUST LOANS GROUP PLC
DIRECTORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016
Jeffreys Henry LLP Finsgate
5-7 Cranwood Street London
EC1V 9EE
THE JUST LOANS GROUP PLC
COMPANY INFORMATION Directors Mr Robert Boot Mr John Davies Mr John McLellan Ms Susanne Chishti Sir Eric Peacock Lord Timothy Razzall Secretary Mr Robert Boot Company number 08062555 Registered office 1 Charterhouse Mews
London EC1M 6BB Auditors Jeffreys Henry LLP Finsgate, 5-7 Cranwood Street London EC1V 9EE
Bankers Santander Bank Plc 4th Floor
100 Ludgate Hill London EC4M 7RE Solicitors DWF Solicitors Capital House 85 King William Street London EC4N 7BL John Morse Solicitors St. Helen’s House 156, Helens Road Swansea SA1 4DG
THE JUST LOANS GROUP PLC
CONTENTS
Chairman’s statement 1
Strategic report 2
Directors' report 4
Corporate governance statement 6
Independent auditors' report 8
Consolidated statement of comprehensive income 10
Consolidated statement of financial position 11
Company statement of financial position 12
Consolidated statement of cash flows 13
Company statement of cash flows 14
Consolidated statement of changes in equity 15
Company statement of changes in equity 16
Notes to the financial statements 17
THE JUST LOANS GROUP PLC
1
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2016
I am pleased to present the results of the Group for The Just Loans Group Plc and its subsidiaries (together
the “Group”) for the 12 months ended 31 December 2016.
I am delighted to report that the Group achieved revenue for the year of almost £6.0M compared with just
under £4.5m for the 18 months to 31 December 2015. Adjusting for the length of the period this represents
a 100% increase. The loss on operations reduced substantially from £2.2m to £355k.The Group revenue
continues to grow and is anticipated to double again in the current year whilst administrative costs will remain
virtually static. Our proprietary AILFI LMS system continues to evolve with the addition of new Fintech
systems that become available or are upgraded. This ensures that our system remains one of the most
advanced customer acquisition and management systems in operation thus allowing one touch of Data.
The major disappointment in the year is that we did not have enough funds available to meet the demand for
our loan products. If the funds had been available then we would have been reporting an even greater
increase in income and a much improved trading result. We started the year having signed a new £10m
facility but for a number of reasons beyond our control these funds did not materialise quite as we expected
and by the end of December had only reached £6m. However, this facility has been reorganised and we
have already drawn down £2m in 2017 and a further £2m will be drawn imminently. This facility will then be
completely drawn down but negotiations are at a very advanced stage for the facility to be increased
substantially and available to be drawn at £2m per month certainly for the rest of 2017. In addition at the end
of 2016 we signed a new facility for up to £50m from a company which is raising funds via a quoted Bond
designed for institutional investors. This bond is secured on a basket of loan facilities of our main operating
subsidiary, Just Cash Flow Plc. The processes and procedures of Just Cash Flow were rated by an
independent rating authority for the purpose of the Bond and we are proud that the Bond was awarded an
investment grade A rating. The funds from this new facility have been delayed compared to our expectation
in November / December 2016 but started to become available in February and by the end of March had
reached £1m and are expected to produce a minimum of £2m per month from April onwards. Other
discussions are at various stages of negotiation with potential new funders and we are confident that sufficient
funding will be in place to meet our lending targets for this year.
Due to the lack of availability of funds to service the demand for our products we were unable to reach the
critical mass of loan book required for us to achieve break-even and profit during 2016 resulting in a loss of
£4.8m compared with a loss of £5.9m for the previous period. The new financial period has started well and
given the new funding that is in place and in the latter stages of negotiation we anticipate reaching break-
even and then profit on a month by month basis during the current year. At the end of 2016 we were expecting
to reach critical mass with our loan book early in 2017 and were targeting an equity fund raise and a possible
AIM listing in Q2 of 2017. It is still the intention to do so but the timing has been delayed until end of 2017 or
early 2018.
At the end of 2016 we made an offer to all holders of debentures in our Group companies that they could
exchange up to 50% of the value of their debentures for new shares in the Company subject to a maximum
number of 3,200,000 new shares. We were delighted with the response from our debenture holders and had
to close the offer when it reached the cap of 3.2m. We were very sorry that some debenture holders were
too late with their acceptance of the offer and did not receive the shares that they wanted but hope that there
will be another opportunity at some stage in the future.
2017 promises to be an exciting year for the Group but the success of a company is a result of the effort and
enthusiasm of the management and staff and I would like to thank all members of staff for the tremendous
contribution they have made in bringing the Group to such an exciting point in its development.
Sir Eric Peacock
Chairman
THE JUST LOANS GROUP PLC
2
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
Principal activities and fair review of the business
The principal activity of The Just Loans Group Plc (“the Company”) and its subsidiaries (together “the Group”)
is the provision of loans and equity investments.
The Directors are pleased with the progress made to date. The Group made a loss of £4,858,091 (2015-
£5,936,736) for the year to 31 December 2016 which was in line with expectations given the delay
experienced in receipt of additional funds. All systems are now fully tried and tested though additional and
updated functionality is still being added. The repercussions of the closure of GXG markets severely delayed
the Group in raising the additional funding which is necessary in order to reach the critical mass required for
break-even and profit on a monthly basis. This delay in fundraising meant that customer acquisition was held
back and for a significant number of months there was demand for loans that the Group could not meet. The
Group was admitted to the Cyprus Stock Exchange in September 2015 which allowed additional fundraising
to take place through sale of retail debentures.
Fund Raising
A. Loan Funding
The group has secured institutional funding of £62m to date of which £11m has been drawn. Included
in the £62m, is a new £50m bond raising which has secured a credit rating of investment grade A
but which only commenced drawdown in Q1 2017. The company is also in advanced discussions
regarding a new facility of a minimum of £2m per month commencing in May 2017. The company
will continue to seek limited additional long-term financing via sale of debentures but will concentrate
on further institutional funding. The Directors are confident that the necessary funding will be
available to the group to expand rapidly over the next 12 months.
B. Equity
In January / February 2017 the Company exchanged £4,480,000 of debentures for 3,200,000
ordinary shares at a price of £1.40 per share. An offer of exchange was made to all existing Group
debenture holders but was capped at 3,200,000 shares in order to stay within the limits of the
Prospectus Directive. The shares are quoted on the Cyprus Stock Exchange.
The intention is to apply for an AIM quote later in 2017 or early 2018 when approximately another
10% of the company will be released via a share placing raising a minimum of £5m additional capital
The Directors realise that there has been a major cash burn in building the process and platforms of the
business, but they consider that the Group has adequate resources for ongoing operating expenses due to
the revenues now being generated from its operations. The Group focus will be on ensuring additional
fundraising is in place to ensure the main trading subsidiaries can achieve the necessary growth for the
Group to reach and pass breakeven. Given the substantial demand for the Company’s offerings and the
additional funds referred to above the Company is targeted to achieve critical mass necessary for breakeven
during the middle of 2017.
Principal risks and uncertainties
The principal risk to the Group is that the borrowers will default on their interest or capital repayments. The
Group is a secured lender and all loans are backed by security of a minimum 150% assets of the customer
and/or its shareholder directors. The Group closely monitors the performance of the borrowers and the credit
worthiness of the guarantors but the Group remains subject to the risk of fraud by the borrower. The Group
also faces risks from economic factors, fluctuations in exchange rates and the ability to secure future
investment. Further discussion on risk and sensitivity analysis is discussed within Note 4.
THE JUST LOANS GROUP PLC
4
DIRECTORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2016
The directors present their report and financial statements for the year ended 31 December 2016. Principal activities The principal activity of the company is that of the provision of commercial loans. The company provides revolving credit facilities to small and medium enterprises that struggle to obtain traditional sources of funding for a variety of reasons. Results and dividends
The results for the period are set out on page 10. Future developments As per the Strategic Review Report. Directors The following directors have held office during the period: Mr Robert Boot Mr John Davies Mr John McLellan Sir Eric Peacock Lord Timothy Razzall Ms Susanne Chishti Directors’ interest At the date of this report the directors held the following beneficial interest in the ordinary share capital of the Group: 2016 2015
Robert Boot 2,500,000 500,000
John Davies 14,571,430
2,950,000
Substantial interests As at 31 December 2016 the following had an interest of 2016 -3% or more in the ordinary share capital of the Group:
Ordinary shares
No. Percentage
John Davies 14,571,430
51.67
Eco Quest Plc 3,750,000 15.00
Carly Davies 3,250,000 13.00
Robert Boot 2,500,000 10.00 Financial risk and management of capital The major balances and financial risks to which the Group is exposed to and the controls in place to minimise
those risks are disclosed in Note 4. The principal current assets of the business are cash and the loan book.
Therefore the principal financial instruments employed by the group are cash or cash equivalents and the
Directors ensure that the business maintains surplus cash reserves to minimise liquidity risk.
A description of how the Group manages its capital is also disclosed in Note 4.
The Board considers and reviews these risks on a strategic and day-to-day basis in order to minimise any
potential exposure.
THE JUST LOANS GROUP PLC
6
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2016 The board has sought to comply with a number of the provisions of the UK Corporate Governance Code (“the
Code”) in so far as it considers them to be appropriate to company of their size and nature. They make no
statement of compliance with the Code overall and do not ‘explain’ in detail any aspect of the Code with
which they do not comply.
The Directors have formed an Audit Committee. The Chairman of the committee is John McLellan. The other
members of the Audit Committee are Sir Eric Peacock, the Chairman of the Company, and Lord Razzall.
The Chairman of the Audit Committee has the right to require the attendance of the Finance Director of the
Company at meetings of the committee.
The audit committee operate with the following terms of reference: Audit committee
to monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance, reviewing significant financial reporting judgements contained in them;
to review the Company’s internal financial controls and, unless expressly addressed by a separate board risk committee composed of independent directors, or by the Board itself, to review the Company’s internal control and risk management systems;
to monitor and review the effectiveness of the Company’s internal audit function;
to make recommendations to the Board, for it to put to the shareholders for their approval in general meeting, in relation to the appointment, re-appointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor;
to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements; and
to develop and implement policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm, and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.
As and when the Company employs staff the Audit Committee is to review arrangements by which such staff may raise concerns about possible improprieties in matters of financial reporting or other matters so that a proportionate and independent investigation of such matters can take place, together with the instigation of appropriate follow up action.
The Audit Committee will also consider annually whether there is any need to put in place an internal audit function which, if put in place, is to be monitored and reviewed by the Audit Committee.
Internal controls
The Board is responsible for maintaining a sound system of internal controls to safeguard shareholders’
investment and group assets. The Directors monitor the operation of internal controls. The objective of the
system is to safeguard group assets, ensure proper accounting records are maintained and that the financial
information used within the business and for publication is reliable. Any such system of internal control can
only provide reasonable, but not absolute assurance against material misstatement or loss.
Internal financial control procedures undertaken by the Board include:
Review of biannual financial reports and monitoring performance.
Prior approval of all significant expenditure/loans including all major investment decisions.
Review and debate of treasury policy.
The Board has reviewed the operation and effectiveness of the Group’s system of internal control for the
financial period and the period up to the date of approval of the financial statements.
THE JUST LOANS GROUP PLC
7
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016 UK Corporate Governance Code While the Directors acknowledge the principle of a clear division of responsibilities between the running of the Board of Directors and the executive responsibility for the running of the Company’s business, they consider that the Company’s business can best be advanced by the Board of Directors acting as one body in making investment decisions.
The Board considers that the principle in the Code relating to relations with shareholders should also apply to relations with holders of Debentures. Although the holders of Debentures will not attend general meetings of the Company the Board believes that communication with holders of Debentures on a regular basis is important.
The Directors have considered the provision in the Code for the appointment of one of the independent Non-Executive Directors to be the senior Independent Director. At the current time the Board is not large enough to accommodate such an appointment. The Directors will however, consider the appointment of a senior Independent Director when appropriate.
THE JUST LOANS GROUP PLC
8
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF THE JUST LOANS GROUP PLC
We have audited the financial statements of The Just Loans Group Plc for the year ended 31 December
2016, which comprise the consolidated statement of comprehensive income, consolidated statement of
financial position, company statement of financial position, consolidated statement of cash flows, company
statement of cash flows, consolidated statement of changes in equity, company statement of changes in
equity and the related notes. The financial reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union and as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
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 auditors’ 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.
Respective responsibilities of Directors and auditors
As explained more fully in the Statement of Directors' Responsibilities set out on page 5, the Directors are
responsible for the preparation of the group financial statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates made by the Directors; and the overall presentation
of the financial statements. In addition, we read all the financial and non-financial information in the
Chairman’s Statement, Corporate Governance Statement, Strategic Report and Directors’ Report to
identify material inconsistencies with the audited financial statements and to identify any information that
is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us
in the course of performing the audit. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion on financial statements
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 2016 and of the group’s loss for the year then ended;
- The group financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union; and
- the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
- The financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report and Strategic Report for the financial year for
which the group financial statements are prepared is consistent with the group financial statements.
THE JUST LOANS GROUP PLC
10
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016
The notes on pages 17 to 36 form part of these financial statements.
Year
ended
18 Months ended
31 December 2016
31 December 2015
Notes £ £
Continuing operations
Revenue 5 6,037,550 4,459,702
Cost of sales (2,932,074) (3,222,785)
Gross profit 3,105,476 1,236,917
Administrative expenses (3,460,387) (3,466,741)
Operating Loss 6 (354,911) (2,229,824)
Finance costs
8 (4,302,403) (3,661,280)
Share of losses from investment in associate 13 (244,567) (25,818)
Loss on ordinary activities before taxation (4,901,881) (5,916,922)
R & D tax credit 9 43,790 -
Loss for the period (4,858,091) (5,916,922)
Profit / (Loss) attributable to:
- Owners of the parent
(4,858,091) (5,936,736)
-
- Non-controlling interest 19 - 19,814
(4,858,091) (5,916,922)
Loss per share (expressed in pence per share) 11 (19.43p) (23.75p)
Loss per share based upon previous no of shares 11 (19.43p) (23.75)p
(97.09p) (118.73p)
THE JUST LOANS GROUP PLC
13
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
The notes on pages 17 to 36 form part of these financial statements.
Year ended
18 months ended
31 December 2016
31 December 2015
Notes £ £
Cash flows from operating activities
Cash generated from operations 23 (14,474,817) (12,411,053)
Finance costs paid (4,302,403) (3,661,280) R & d Tax receipt 43,790 -
Net cash generated from operating activities (18,733,430) (16,072,333)
Cash flows from investing activities
Payments to acquire intangible assets - (37,950)
Payments to acquire tangible assets (56,680) -
Net cash generated from investing activities (56,680) (37,950)
Cash flows from financing activities
Proceeds from issue of debenture and other loans 17,489,356 12,908,407
Net cash generated from financing activities 17,489,356 12,908,407
Net (decrease)/increase in cash and cash equivalents
(1,300,754) (3,201,876)
Cash and cash equivalents at the beginning of the period
3,084,036 6,285,912
Cash and cash equivalents at end of period 1,783,282 3,084,036
THE JUST LOANS GROUP PLC
14
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2016
The notes on pages 17 to 36 form part of these financial statements.
Year
Ended
18 Months ended
31 December 2016
31 December 2015
Notes £ £
Cash flows from operating activities
Cash generated from operations 22 (4,511,656) (7,621,387)
Finance costs paid (2,372,820) (2,497,799)
Net cash generated from operating activities (6,884,476) (10,119,186)
Cash flows from investing activities
Payments to acquire investments (7) (53,605)
Net cash generated from financing activities (7) (53,605)
Cash flows from financing activities
Proceeds from issue of debenture loans 7,085,300 8,297,840
Net cash generated from financing activities 7,085,300 8,297,840
Net increase in cash and cash equivalents 200,817 (1,874,951)
Cash and cash equivalents at the beginning of the period
15,791 1,890,742
Cash and cash equivalents at end of period 216,608 15,791
THE JUST LOANS GROUP PLC
15
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2016
Attributable to owners of the parent Non-controlling
interest
Total equity Share
capital Other
reserves Accumulated
losses Total
£ £ £ £ £ £
As at 30 June 2014
50,000 - (3,241,842) (3,191,842) (17,314) (3,209,156)
Payment to non-controlling interest
- - - - (2,500) (2,500)
Other reserves 15,000 - 15,000 - 15,000 Loss for the period
- - (5,936,736) (5,936,736) 19,814 (2,730,706)
As at 31 December 2015
50,000 15,000 (9,178,578) (9,113,578) - (9,113,578)
Other reserves - 60,049 - 60,049 - 60,049 Loss for the year - - (4,858,091) (4,858,091) - (4,858,091)
As at 31 December 2016
50,000 75,049 (14,036,669) (13,911,620) - (13,911,620)
Share capital is the amount subscribed for shares at nominal value. Other reserves represent the expenses recognised for share-based payments. Accumulated losses represent the cumulative loss of the group attributable to equity shareholders.
THE JUST LOANS GROUP PLC
16
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2016
Share capital
Accumulated losses
Total equity
£ £ £ As at 30 June 2014 50,000 (2,865,375) (2,815,375)
Other reserves - 15,000 15,000
Loss for the period - (3,752,210) (3,752,210)
As at 31 December 2015 50,000 (6,602,585) (6,552,585)
Other reserves - 60,049 60,049
Loss for the year - (3,373,630) (3,373,630)
As at 31 December 2016 50,000 (9,916,166) (9,866,166)
Share capital is the amount subscribed for shares at nominal value. Retained losses represent the cumulative loss of the group attributable to equity shareholders. The notes on pages 17 to 36 form part of these financial statements.
THE JUST LOANS GROUP PLC
17
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016
1 General information
The Just Loans Group Plc (“the Company”) and its subsidiaries (together, “the Group”) provide
Revolving Credit Facilities to Small and Medium Enterprises that struggle to obtain traditional sources
of funding for a variety of reasons. The Group is based in the United Kingdom and all entities have been
incorporated in the United Kingdom. The address of the registered office is disclosed on the company
information page at the front of the annual report.
The Company is a public limited company and is listed on the Cyprus Stock Exchange. The Group also
have debentures that are listed on the Cyprus Stock Exchange.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the periods presented unless otherwise
stated.
2.1 Basis of preparation
The consolidated statement of The Just Loans Group Plc have been prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC)
applicable to companies reporting under IFRS. The consolidated financial statements have been
prepared under the historical cost convention.
Preparation of financial statements
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgment in the process of applying
the group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas
where assumptions and estimates are significant to the financial statements are disclosed in Note 3.
Going concern
The financial statements have been prepared on a going concern basis, the validity of which is
dependent on the Group obtaining additional long-term financing.
The group has secured institutional funding of £62m to date of which £11m has been drawn. Included
in the £62m, is a £50m bond raising which has secured a credit rating of A. The Company will continue
to seek additional long-term financing via sale of debentures and further institutional funding. The
Directors believe that the necessary funding will be available to the group to enable them to trade for
the foreseeable
The Company has undertaken to provide continuing financial support to its subsidiaries for the
foreseeable future and in any event for the next 12 months following the date of approval of the financial
statements, so that such subsidiaries can pay their debts as and when they fall due.
The financial statements do not include any adjustments that would results if the necessary long-term
financing was not secured by the Group and if the above support by the Company was withdrawn.
New and amended standards adopted by the Group
There are no IFRSs or IFRIC interpretations that are effective for the first time in this financial period
that would be expected to have a material impact on the Group.
THE JUST LOANS GROUP PLC
18
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
2.1 Basis of preparation (Continued)
Standards, interpretations and amendments to published standards that are not yet effective
The following new standards, amendments to standards and interpretations have been issued, but are
not effective for the financial period beginning 1 January 2016 and have not been early adopted:
The Directors anticipate that the adoption of these standard and the interpretations in future period will
have no material impact on the financial statements of the company. However the adoption of the IFRS
9 may have a material impact as it moves from the incurred loss approach to the expected loss model.
The Group is still to assess the impact of this and will adopt IFRS 9 from 1 January 2018.
Reference Title Summary Application date of standard (Periods commencing on or after)
Amendments to IFRS 1
First-time adoption of International Financial Reports Standards
Amendments resulting from Annual Improvements 2014-2016 Cycle (removing short-term exemptions)
1 January 2018
Amendments to IFRS 2
Share-based payments Amendments to clarify the classification and measurement of share based payment transactions
1 January 2018
Amendment to IFRS 4
Insurance Contracts Amendments regarding the interaction of IFRS 4 and IFRS 9
1 January 2018
IFRS 9 Financial Instruments Requirements on the classification and measurement of financial assets and liabilities and includes an expected credit losses model which replaces the current loss impairment model. Also includes the hedging amendment that was issued in 2013
1 January 2018
Amendments to IFRS 12
Disclosure of interests in other entities
Amendments resulting from Annual Improvements 2014-2016 (Clarifying Scope)
1 January 2017
IFRS 15 Revenue from contracts with customers
Specifies how and when to recognize revenue from contracts as well as requiring more information and relevant disclosures.
1 January 2017
IFRS 16 Leases Original Issue 1 January 2019
Amendments to IAS 7
Statement of Cash Flows Amendments as a result of the disclosure initiative 1 January 2017
Amendments to IAS 12
Income Taxes Amendments regarding the recognition of deferred tax assets for unreleased losses
1 January 2017
Amendments to IAS 28
Investments in Associates and Joint Ventures
Amendments resulting from Annual improvements 2014-2016 cycle (Clarifying certain fair value measurements
1 January 2018
Amendments to IAS 39
Financial Instruments: Recognition and measurement
Amendments to permit entity to elect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of the interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when IFRS 9 is applied and to extend the fair value option to certain contracts that meet the ‘own use’ scope exception
1 January 2018
Amendments to IAS 40
Investment Property Amendments to clarify transfers or property to or from investment property
1 January 2018
THE JUST LOANS GROUP PLC
19
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
2.2 Consolidation
(a) Subsidiaries
The group applies the acquisition method to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests issued by the group. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the acquisition date. The group
recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s
identifiable net assets.
Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages,
the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-
measured to fair value at the acquisition date; any gains or losses arising from such re-measurement
are recognised in profit or loss.
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an
asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its
subsequent settlement is accounted for within equity.
Inter-company transactions, balances and unrealised gains on transactions between group companies
are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by
subsidiaries have been adjusted to conform with the group’s accounting policies.
(b) Changes in ownership interest in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity
transactions – that is, as transactions with the owners in their capacity as owners. The difference
between fair value of any consideration paid and the relevant share acquired of the carrying value of
net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling
interests are also recorded in equity.
(c) Disposal of subsidiaries
When the group ceases to have control any retained interest in the entity is re- measured to its fair value
at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair
value is the initial carrying amount for the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the group had directly disposed
of the related assets or liabilities. This may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the steering
committee that makes strategic decisions.
THE JUST LOANS GROUP PLC
20
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016 2.4 Financial assets and liabilities
The group classifies it financial assets at fair value through profit and loss or as loans and receivables
and classifies its financial liabilities as other financial liabilities. Management determines the
classification of its investments at initial recognition. A financial asset or financial liability is measure
initially at fair value. At inception transaction cost that are directly attributable to its acquisition or issue,
for an item not at fair value through profit or loss, is added to the fair value of the financial asset and
deducted from the fair value of the financial liability.
(a) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They arise when the group provides money, goods or services
directly to a debtor with no intention of trading the receivable. Loans are recognised when the funds
are advanced to customers. Loans and receivables are carried at amortised cost using the effective
interest method (see below).
(b) Other financial liabilities
Other financial liabilities are non-derivative financial liabilities with fixed or determinable payments.
Other financial liabilities are recognised when cash is received from the depositors. Other financial
liabilities are carried at amortised cost using the effective interest method. The fair value of other
liabilities repayable on demand is assumed to be the amount payable on demand at the Statement
of Financial Position date.
Amortised cost measurement
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or
liability is measured at initial recognition, minus principal payments, plus or minus the cumulative
amortisation using the effective interest method of any difference between the initial amount recognised
and maturity amount, minus any reduction for impairment.
Fair value measurement
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction on the measurement date. The fair value
of assets and liabilities in active markets are based on current bid and offer prices respectively. If the
market is not active the group establishes fair value by using appropriate valuation techniques. These
include the use of recent arm’s length transactions, reference to other instruments that are substantially
the same for which market observable prices exist, net present value and discounted cash flow analysis.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or where the group has transferred substantially all of the risks and rewards of ownership. In
transaction in which the group neither retains nor transfers substantially all the risks and rewards of
ownership of a financial asset and it retains control over the asset, the group continues to recognise the
asset to the extent of its continuing involvement, determined by the extent to which it is exposed to
changes in the value of the transferred asset. There have not been any instances where assets have
only been partly derecognised. The group derecognises a financial liability when its contractual
obligation are discharge, cancelled or expire.
THE JUST LOANS GROUP PLC
21
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
2.4 Financial assets and liabilities (continued)
Impairment
The Group assesses at each financial position date whether there is objective evidence that a financial
asset or group of financial assets is impaired. If there is objective experience (such as significant
financial difficulty of obligor, breach of contract, or it becomes probable that debtor will enter bankruptcy),
the asset is tested for impairment. The amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of the estimated future cash flows (excluding future
expected credit losses that have not been incurred) discounted at the financial asset’s original effective
interest rate (that is, the effective interest rate computed at initial recognition).The carrying amount of
the asset is reduced through use of an allowance account. The amount of loss is recognised in the
Statement of Comprehensive Income.
2.5 Revenue
Revenue comprises of interest income, arrangement, management and commission fees on financial
assets. Interest income is recognised using the effective interest method. Arrangement, management
and commission fees are generally recognised on the accruals basis when the service has been
provided.
The effective interest method calculates the amortised cost of a financial asset and allocated the interest
income over the relevant period. The effective interest rate is the rate that discounts estimated future
cash payments or receipts through the expected life of the financial instrument or, when appropriate, a
shorter period to the net carrying amount of the financial asset. When calculating the effective interest
rate, the group takes into account all contractual terms of the financial instrument but does not consider
future credit losses.
2.6 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits
held at call with banks, other short-term highly liquid investments with original maturities of three
months or less and bank overdrafts.
2.7 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
2.8 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is
due within one year or less.
2.9 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred.
Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the income statement over the period
of the borrowings using the effective interest method.
THE JUST LOANS GROUP PLC
22
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
2.9 Borrowings (continued)
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or
all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and
amortised over the period of the facility to which it relates.
Borrowings consist of interest bearing debentures which are quoted.
2.10 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production
of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.11 Income tax expense
Current income tax which is payable on taxable profits is recognised as an expense in the period in
which the profits arise.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects neither accounting nor taxable profit
or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be utilised.
2.12 Share-based compensation
The fair value of equity settled share-based payment awards are calculated at grant date and
recognised over the period in which the employees become unconditionally entitled to the awards (the
vesting period). The amount is recognised as personnel expenses in the profit and loss, with a
corresponding increase in equity. The group adopts a Black-Scholes valuations model in calculation in
calculating the fair value of the share options as adjusted for an attrition rate of member of the scheme
and probability of pay-out reflecting the risk of not meeting the terms of the scheme over the vesting
period. The number of share options expected to vest are reviewed annually.
2.13 Investments in subsidiaries
Investments are held as non-current assets at cost less any provision for impairment. Where the
recoverable amount of the investment is less than the carrying amount, impairment is recognised.
THE JUST LOANS GROUP PLC
23
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
2.14 Leases
Leases in which a significant portion of the risk and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to the income statement on a straight-line basis over the period of the
lease.
3 Critical accounting estimates and judgments
The group makes certain judgements and estimates which affect the reported amount of assets and liabilities. Critical judgements and the assumptions used in calculating estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
3.1 Impairment of loans and advances to customers and other receivables
The group reviews its portfolio of receivables to assess impairment at least on a half-yearly basis. The
basis for evaluating impairment losses is determining whether a loss event has occurred, the criteria
used (but which is not limited to) is:
Delinquency in contractual payments of principal or interest;
Cash flow difficulties experience by the borrower; and
Initiation of liquidation proceedings.
In determining whether an impairment loss should be recognised the Company has made judgements
as to whether a loss event indicates that there is a measurable decrease in the estimated future cash
flows of the respective receivable. Provisions for impairment have been included in the accounts in
accordance with the requirements under IFRS.
No provisions for impairment have been made against the following other receivables as the Directors
believe the Company’s to have a positive future outlook which is not reflected in their results to date:
2016 - £6,075,345 (2015 £3,446,939) loaned to Pure World Energy Limited
2016 - £2,239,186 (2015 £1,380,069) loaned to City Oils Limited
4 Financial risk management
The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair
value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The
group’s overall risk management programme focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the group’s financial performance.
4.1 Financial risk factors
The group’s activities may expose it to a variety of financial risks: foreign exchange risk, and credit risk. The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance. a) Credit risk
The group take on exposure to credit risk, which is this risk that the counterparty will be unable to
pay amounts in full when due. A formal Credit Risk Policy has been agreed by the Board who review
credit risk on a monthly basis. Exposure to credit risk is managed through regular analysis of the
ability of borrowers and potential borrowers to meet interest and capital repayment obligations and
by changing these lending limits when appropriate. Exposure to credit risk is also maintained by
obtaining collateral, the loans to customers include a deed of indemnity and personal guarantees
and the directors therefore believe there is a low risk of customer default.
THE JUST LOANS GROUP PLC
24
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
4.1 Financial risk factors (continued)
The maximum exposure to credit risk for the Group was as follows:
Group Company
Credit risk exposure relating to on-balance sheet assets are as follows:
2016 £
2015 £
2016 £
2015 £
Loans and advances to customers
18,571,453 8,848,188 - -
Other receivables 9,401,561 5,297,866 444,824 412,417
Amounts due from Group undertakings
- - 13,234,685 9,755,734
At 31 December 2016 27,973,014 14,146,054 13,679,509 10,168,151
b) Cash flow and interest rate risk
The Group does not have any borrowings other than its debentures which are at a fixed rate of interest exposing the Group to fair value interest rate risk. The Group does not manage any cash flow interest rate risk.
c) Liquidity risk The Group is careful to ensure that its loans and investments can be realised prior to the due date for the repayment of the debentures. This applies equally to the underlying investments of the companies or projects in which the Group invests.
d) Capital risk
The Group takes great care to protect its capital investments. Significant due diligence is undertaken prior to making any investment. The investment is closely monitored.
e) Market risk
A general economic downturn at a global level, or in one of the world’s leading economies, could impact on the group. In addition, terrorism and other hostilities, as well as disturbances in worldwide financial markets, could have a negative effect on the Group. Regulatory requirements, taxes, tariffs and other trade barriers, price or exchange controls or other governmental policies could also limit the Group's operations. These risks are also applicable to most companies and the risk that Group will be more affected than the majority of companies is assessed as small.
f) Price risk
The Group’s principal activity is provision of loans, the Group does not have a diversified portfolio of services and is therefore at risk.
4.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure appropriate for its growth plans. In order to maintain or adjust the capital structure the Group may issue new shares or alter debt levels.
5 Segment information
The group’s line of business is the provision of loans and equity investments. All of the group’s revenue arises in the UK and all of the Group’s non-current assets are held in the UK. There are no customers who accounts for over 10% of revenue.
THE JUST LOANS GROUP PLC
25
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016 6 Operating loss
2016 2015 £ £ Operating loss is stated after charging: Directors emoluments 461,600 606,145 Directors fees 64,800 97,200 Audit fees (of which £15,000 (2014 - £15,000) relates to the audit of the Parent Company and Consolidated Financial Statements)
155,297 60,750
Operating leases 20,355 30,200
7 Employee benefit expense
Employees and Directors 2016 2015 £ £ Wages and salaries 919,629 1,201,866 Social security costs 102,088 133,329 Directors fees 64,800 97,200
1,086,517 1,432,395
During the period a total remuneration of £141,000 (2015 - £211,500) was received by the highest–paid
Director, who does not hold any share options.
The average monthly number of employees (including directors) during the period was:
2016 2015 Number Number
Directors 6 6 Staff 15 12
21 18
8 Finance income and costs
2016 2015 £ £ Finance costs Finance cost in relation to debentures 2,553,871 3,559,822 Other interest paid 1,748,532 101,458
4,302,403 3,661,280
THE JUST LOANS GROUP PLC
26
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016 9 Taxation
2016 2015 £ £ Total current tax - -
Factors affecting the tax charge for the period Loss on ordinary activities before taxation (4,901,881) (5,916,922)
Loss on ordinary activities before taxation multiplied by standard rate of UK corporation tax of 20% (2015: 20%)
(980,376) (1,183,384)
Non-deductible expenses 43,972 102,526
Group loss relief surrendered 52,349 -
Tax losses carried forward 936,404 1,080,858
Current tax charge for the period - -
The Group has estimated tax losses of £9,735,291 (2015 - £5,053,270) available for carry forward against future trading profits. The deferred tax assets at a rate of 20% (2015 - 20%) at the period-end of £936,404 (2015 - £1,010,654) has not been recognised in the financial statements due to the uncertainty of the recoverability of the amount. The Group has estimated non-trade loan relationship deficits of £5,453,445 (2015 - 3,080,625) available for carry forward against income from non-trade loan relationships. A deferred tax asset on this deficit has not been recognised in the financial statements due to the uncertainty of the recoverability of the amount. The Group received an R&D tax credit in the year of £43,790, in respect of software development.
10 Loss of parent company
As permitted by Section 408 of the Companies Act 2006 the profit and loss account of the parent company is not presented as part of these financial statements. The parent company’s loss for the financial period was £3,373,630 (2015- £3,752,210).
11 Loss per share
Basic earnings per share is calculated by dividing the earnings attributable to shareholders by the
weighted average number of ordinary shares outstanding during the period. Reconciliations are set out
below:
2016 2015 Earnings/(losses) attributable to ordinary shareholders (4,858,091) (£5,936,736) Weighted average number of shares 25,000,000 25,000,000 Basic and diluted earnings/(loss) per share (19.43) (23.75)p
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive potential ordinary shares. Since the Group is loss-
making the diluted loss per share is the same as the basic loss per share. The dilutive potential ordinary
shares relate to share options issued to employees and are disclosed within Note 27.
THE JUST LOANS GROUP PLC
27
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
12 Dividends
Nil dividends were paid or proposed for the year ended 31 December 2016 (2015- £nil).
13 Fixed asset investments
Group Internally
generated development
costs
Investment in associate
Total
£ £ £ Cost Brought forward 37,950 62,824 100,774
At 31 December 2016 37,950 62,824 100,774 Depreciation/amortisation Brought forward - 25,818 25,818 Charge for the period 37,950 37,000 74,950
At 31 December 2016 37,950 62,818 (100,768)
Net book value
At 31 December 2016 - 6 6
Internally generated development cost additions relate to computer software development of the
Group’s lending system. These costs were fully amortised during the year.
Investment in associate additions relate to the fair value of the consideration of the Group’s 26.5% (2015
- 26.5%) equity investment in PWE Holdings Plc. During the year Pure World Energy Limited was
acquired in a share-for-share exchange by PWE Holdings Plc. The Just Loans Group’s investment was
subsequently transferred to PWE Holdings Plc at the same level of shareholding. The investment has
been measured in the Consolidated Financial Statements using the equity method; an investment value
of nil (2015 - £37,000) and a provision of £207,567 have been recognised in the Consolidated
Statement of Financial Position, and the Group’s share of the losses of the associate of £244,567 (2015
- £25,818) have been recognised in the Consolidated Statement of Comprehensive Income. The
following is a summary of the financial position and performance of PWE Holdings for the period ended
31 December 2016:
As at 31 December PWE Holdings Plc
2016
Pure World Energy Ltd
2015 £ £ Current assets 434,311 1,135,216 Non-current assets 4,248,400 1,697,109 Current liabilities 263,538 370,924 Non-current liabilities 6,363,345 3,465,028
Year ended 31 December 2015 £ Revenue 801,269 620,255 Total comprehensive income (922,893) (523,800) Finance income 34 143 Finance cost (499,290) (231,927) Income tax - -
THE JUST LOANS GROUP PLC
28
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
13 Fixed asset investments (continued)
Company Shares in
group undertakings
£ Cost At 1 July 2013 -
Additions 547,500
At 1 July 2014 547,500
Additions 53,605
At 31 December 2015 601,105
Additions 7
At 31 December 2016 601,112
Included within the investments above is £450,000 (2015 - £450,000) non-redeemable preference
shares with discretionary dividends of Just Cash Flow Plc which have been classified as an investment.
Additional notes
The group had the following subsidiaries and associates at 31 December 2016, all of which have been
included in the Group consolidation:
Name Country of incorporation and place of business
Nature of business Proportion of ordinary shares
held by parent and group (%)
Just Cash Flow Plc UK Provision of loans 100.0 Just Finance Loans & Investments Plc UK Provision of loans and
equity investments 100.0
Just Bridging Loans Plc UK Provision of loans 100.0 Just Cash Flow (Agency) Limited UK Centralisation of public
relation costs 100.0
Just Loans Group Operations Limited UK Centralisation of operating costs
100.0
Just Cash Flow (FK) Limited UK Provision of loans 100.0 JCF (FK1) Limited * UK Provision of loans 100.0 JCF (FK2) Limited * JCF (FK3) Limited *
UK UK
Provision of loans Provision of loans
100.0 100.0
Just Bridging Loans (ABL) Limited UK Provisions of loans 100.0 Just ABL 1 Limited UK Provisions of loans 100.0 Just Capital(Europe) Limited UK Provisions of loans 100.0 JBL (SQN) Limited UK Provisions of loans 100.0 JCF (SQN) Limited UK Provisions of loans 100.0 City Fuel Services Limited ** UK Re-cycling of
contaminated fuel 100.0
City Fuel Services (Manchester) Limited **
UK Re-cycling of contaminated fuel
100.0
City Oils Group Limited *** UK Holding company 100.0 Pure World Energy Limited *** UK Energy consultants 26.5
THE JUST LOANS GROUP PLC
29
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
Additional notes (continued)
The group had the following subsidiaries and associates at 31 December 2016, all of which have been
included in the Group consolidation:
Name Country of incorporation and place of business
Nature of business Proportion of ordinary shares
held by parent and group (%)
Just ISAS Limited UK Dormant 100.0 Just Development Finance Limited UK Dormant 100.0 Just ABL 2 Limited UK Dormant 100.0 Wage roller Limited UK Dormant 100.0 JCF (FK4) Limited UK Dormant 100.0 Just Capital Limited UK Dormant 100.0 Just Transact Limited UK Dormant 100.0 Just Business Finance (UK) Limited UK Dormant 100.0
* Shares held by Just Cash Flow (FK) Limited
** Shares held by City Oils Group Limited
*** Shares held by Just Finance Loans & Investments Plc
14 Property, plant and equipment
15 Loans and advances to customers
Group
2016 2015 £ £ Non-current assets Loans and advance to customers 917,900 908,178 Current Loans and advance to customers 17,653,553 7,940,010
18,571,453 8,848,188
Group Plant & Machinery
Fixtures, fittings & equipment
Total
£ £ £ Cost At 1 January 2016 - - - Additions 58,299 8,266 66,565
At 31 December 2016 58,299 8,266 66,565
Accumulated depreciation
At 1 January 2016 - - -
Charge for the year 5,958 3,927 9,885
At 30 September 2016 5,958 3,927 9,885
Carrying amount
At 1 January 2016 - - -
At 31 December 2016 52,341 4,339 56,680
THE JUST LOANS GROUP PLC
30
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
15. Continued
Loans and advances to customers relates to the provision of revolving credit facilities to small and medium enterprises. The total balance of £18,571,453 (2015 - £8,848,188) is shown net of provision for impairment of £181,170 (2015 - £58,634). £7,328,957 of loans advanced to customers is secured against 3rd party funding.
16 Trade and other receivables
Group Company
2016 2015 2016 2015
£ £ £ £
Non-current
Other receivables - 4,822,009 - -
Amounts due from Group undertakings
- - 2,336,083 9,755,734
- 4,822,009 2,336,083 9,755,734
Current
Other receivables 303,265 441,172 423,956 406,717
Prepayments 36,615 34,685 20,868 5,700
Amounts due from Group undertakings
- - 13,155,329 -
339,880 475,857 13,600,153 412,417
339,880 5,297,866 15,936,236 10,168,151
17 Inventory
Group Company
2016 2015 2016 2015
£ £ £ £
Materials 14,828 - - -
14,828 - - -
18 Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents include cash at banks and on hand and deposits with banks. Cash and cash equivalents at the end of the reporting period as shown in the Statement of Cash Flows can be reconciled to the related items in the Statement of Financial Position as follows: Group Company 2016 2015 2016 2015 £ £ £ £
Cash and cash equivalents 1,783,282 3,084,036 216,608 15,791
The carrying amount of cash and cash equivalents approximates to its fair value.
THE JUST LOANS GROUP PLC
31
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
19 Share capital
2016 2015 £ £
Allotted, called up and fully paid 25,000,000 Ordinary shares of £0.002 50,000 - 5,000,000 Ordinary shares of £0.01 each - 50,000
On the 19 October 2016 the company undertook a subdivision of shares of 5 for 1. The nominal value per share adjusted to £0.002 from £0.01.
The ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) right; they do not confer any rights of redemption.
20 Accumulated losses
Group Company £ £ At 30 June 2014 (3,241,842) (2,865,375) Loss for the period (5,936,736) (3,752,210)
At 31 December 2015 (9,178,578) (6,617,585) Loss for the year (4,858,091) (3,373,630)
At 31 December 2016 (14,036,669) (9,991,215)
21 Trade and other payables
Group Company
2016 2015 2016 2015 £ £ £ £ Trade payables 521,497 242,995 89,567 - Accruals and deferred income
143,031 745,331 92,921 528,617
Other payables 585,441 430,193 386,658 100,066
1,249,969 1,418,519 569,146 628,683
Accruals principally comprise amounts outstanding for ongoing expenses and accrued interest on issued debentures. The carrying amount of other payables approximates to its fair value.
THE JUST LOANS GROUP PLC
32
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016 22 Borrowings
Group Company
2016 2015 2016 2015 £ £ £ £ Non-current Debentures and other loans 35,694,647 18,631,681 23,794,249 11,245,494 Current Debentures and other loans 6,794,814 6,368,424 - 5,463,455
42,489,461 25,000,105 23,794,249 16,708,949
All commissions due on debentures have been deferred against the debentures they relate to and have
either been shown as non-current or current borrowings. All non-current borrowings are wholly repayable
within five years. The debentures are secured by first floating charge over all of the assets of the group,
and bear interest as per below. Interest is paid in two half yearly instalments.
All Companies having loans secured by first floating charges over all of the assets of their relevant
company’s.
Repayment date Annual interest 2017 Debentures 31 December 2017 8.25% 2018 Debentures 31 December 2018 8.25% 2019 Debentures 31 December 2018 8.25% 2020 Debentures 31 December 2020 8.75% 2021 Debentures 31 December 2021 8.75%
In December 2016 the Group successfully undertook an exchange of the 2016 Debentures in The Just
Loans Group Plc and Just Cash Flow Plc, both bearing 7.5% annual interest, with 2018 and 2020
Debentures in The Just Loans Group Plc, bearing 8.25% and 8.75% annual interest respectively.
Included within Group debentures and other loans is capitalised commission of £2,327,298 (2015 -
£1,794,282). Included within Company debentures and other loans is capitalised commission of
£1,524,332 (2015 £1,387,249).
THE JUST LOANS GROUP PLC
33
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
23 Cash generated from operations
Group Company
2016 2015 2016 2015 £ £ £ £ Reconciliation to cash generated from operations
Loss before taxation (4,901,881) (5,916,922) (3,373,630) (3,752,210) Adjustments for: - Finance costs 4,302,403 3,661,280 2,372,820 2,497,799 - Other reserves 60,049 15,000 60,049 15,000
- Non-controlling interest arising on business acquisitions
- (2,500) - -
Depreciation 37,950 - - - Amortisation 37,000 - - - Changes in working capital:
-(Increase)/ Decrease in inventory
(14,828) - - -
- (Increase)/ Decrease in loans and trade and other receivable
(13,826,960) (10,965,657) (5,768,085) (6,628,576)
- Increase/(Decrease) in trade and other payables
(168,550) 797,746 2,197,190 246,600
(14,474,817) (12,411,053) (4,511,656) (7,621,387)
24 Control
The Group is controlled by John Davies by virtue of his 51.67% shareholding in the Company.
25 Related party transactions
Group
The Group has loaned funds to Pure World Energy Limited, an associate company. A loan facility
agreement is in place and the group was owed £6,075,345 (2015 - £3,446,939) as at 31 December
2016. The loan is accruing interest at 1% per month (12% per annum). The agreement is dated 30 June
2014. The loan is secured by a fixed and floating charge over all property and assets of the company.
The loan is also secured by personal guarantees of the directors and shareholders of the company.
The Interest charged during the year was £510,205 (2015 - £305,739)
The Group has loaned funds to City Oils Limited, a company of which Robert Boot is a common director.
A loan facility agreement is in place and the group was owed £2,244,186 (2015 - £1,375,069) as at 31
December 2016 (2015 - £nil). The loan is accruing interest at 1% per month (12% per annum). The
agreement is dated 30 June 2014. The loan is secured by a fixed and floating charge over all property
and assets of the company. The loan is also secured by personal guarantees of the directors and
shareholders of the company. The Interest charged during the year was £187,155(2015 - £60,499)
THE JUST LOANS GROUP PLC
34
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
25 Related party transactions (continued)
The Group has loaned funds to Eco Quest Plc, a company of which John Davies and Robert Boot are
common directors. A loan facility agreement is in place and the group was owed £584,995 (2015 -
£445,123) as at 31 December 2016. The loan is accruing interest at 1% per month (12% per annum).
The agreement is dated 30 June 2014.The Interest charged during the year was £33,640(2015 -
£16,775)
The Group has loaned funds to Ko-Su Limited a company of which John Davies is a common director.
A loan facility agreement is in place and the group was owed £351,827 (2015 - £281,629) as at 31
December 2016. The loan is accruing interest at 1% per month (12% per annum). The agreement is
dated 30 June 2014. During the period a provision on the full amount of the loan has been provided for
due to uncertainty of recoverability. The Interest charged during the year was £31,883(2015 -£32,629)
Company
The Company has a loan agreement with Eco Quest Plc, a company of which John Davis and Robert
Boot are directors and shareholders for short term loans up to a maximum of £500,000 at an interest
rate of 1% per month. The balance outstanding as at 31 December 2016 was £225,173 (2015, £219,417)
due from Eco Quest Plc .No provision has been provided due to the liquidity of its holding of 750,000
shares in Just Loans
Just Cash Flow Plc, Just Finance Loans & Investments Plc, Just Bridging Plc, Just Loans Group
Operations Limited and Just Cash Flow (Agency) Limited were formed as subsidiaries of the Group to
take advantage of the business opportunities created by the Group.
The Company made advances to its subsidiaries and as at 31 December 2016 was owed 6,028,539
(2015 - £3,382,093) from Just Cash Flow Plc, £2,336,083 (2015 - £1,591,044) from Just Finance Loans
& Investments Plc, £3,412,187(2015 £1,770,418) from Just Loans Group Operation Limited, £2,793,932
(2015 - £1,327,790) from Just Cash Flow (Agency) Limited, £56,999(2015 - £4,999) from Just Bridging
Loans (ABL) Limited, £249,644 (2015 - £132,354) from JBL (SQN) Limited, £136,819 (2015 - £111,819,)
from JCF (SQN) Limited, £477,210 (2015 -£402,122) from Just Cash Flow (FK) Limited. It owes
£2,256,727 to Just Bridging Loans Plc (2015 it was owed £1,033,095).
The loan to Just Finance Loans & Investments Plc is accruing interest at 12% per annum and is
repayable on demand. The loans provided to other subsidiaries carry no interest and is repayable on
demand. Except for the loan to Just Finance Loans & Investments Plc, the amounts due from
subsidiaries have been classified as current debtors due to the fact the loans are repayable on demand.
The balance as at 31 December 2016 was £2,336,083 (2015 - £1,591,044)
26 Contingent liabilities
The group has no contingent liabilities in respect of legal claims arising from the ordinary course of
business.
27 Capital commitments
There was no capital expenditure contracted for at the end of the reporting period but not yet incurred.
THE JUST LOANS GROUP PLC
35
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016 28 Share–based payment transaction
The measurement requirement of IFRS 2 has been implemented in respect of share options that were
granted after 7 November 2002. The expenses recognised for share based payment made during the
year is £60,049 (2015 -£15,000).
Vesting conditions of the options dictate that employees must remain in the employment of the Group
for the whole period to qualify.
Movement in issued share options during the period
The below schedule illustrates the number and weighted average exercise price (WAEP) of, and
movements in share options during the year. The options outstanding at 31 December 2016 had a
WAEP of 3.5p (2015 -3.5p) and a weighted average contracted life of 4.05 years and their exercise
prices of 3.5p. All share options are settled in form of equity issued.
2016 2015 No. of
options WAEP No. of
options WAEP
Outstanding at the beginning of the period 350,000 - - - Granted during the period 225,000 1,097p 350,000 1,476p Forfeited/cancelled during the period - - - - Exchanged for shares - - - -
Outstanding at the end of the period 575,000 1,097p 350,000 1,476p
Exercisable at the end of the period - - - -
28 Share–based payment transaction (continued)
The inputs into the Black-Scholes model are as follows: 20 September
2016 1 August
2015 Number of options granted 125,000 100,000 Share price at grant date 2.000p 2.000p Bid price discount 10% 10% Exercise price 2.000p 2.000p Option life in years 3.3 3.3 Risk free rate 1.84% 1.84% Expected volatility 60% 60% Expected dividend yield 0% 0% Fair value of options after special 20% discounts £0.691 £0.691
29 Events after the reporting period
On 14 February 2017, the group has successfully achieved a debt for equity swap. The Group issued
3,200,000 new shares to replace debt valued at £4,480,000.
The Group has drawdown a further £2m in March and looking to drawdown the last tranche of its
£10M facility in April 2017. The Institution has expressed a willingness to facilitate another £10m
facility.
THE JUST LOANS GROUP PLC
36
In addition, at the end of 2016, The Group signed an agreement with an institution, who are looking to
raise via a Bond issue, £50Million, designed for institutional investors. This bond is secured on a
basket of loan facilities of Just Cash Flow Plc. The processes and procedures of Just Cash Flow were
rated by an independent rating authority for the purpose of the Bond which was awarded an
investment grade A rating.
To date, the Company has drawdown £899K.