TruFin : 2022 Interim Financial Report

INTERIM FINANCIAL REPORT

For the six months ended 30 June 2022

(Unaudited)

CONTENTS

2 Financial Highlights

4 Chief Executive's Statement

7 Independent Auditor's Review Report to TruFin plc

1. Unaudited Condensed Interim Statement of Comprehensive Income
2. Unaudited Condensed Interim Statement of Financial Position
3. Unaudited Condensed Interim Statement of Changes of Equity
4. Unaudited Condensed Interim Statement of Cash Flows
5. Notes to the Unaudited Condensed Interim Consolidated Financial Statements

INTERIM FINANCIAL REPORT 30 JUNE 2022 1

FINANCIAL HIGHLIGHTS

For the six months ended 30 June 2022

Interim Financial Report for the six months ended 30 June 2022 (Unaudited)

• Combined gross revenue for the Group increased 27% to £6.3m (H1 2021: £4.9m)
• Gross revenue at Oxygen Finance Group Limited (together with its subsidiaries) ("Oxygen") increased by 36% to £2.5m (H1 2021: £1.8m), driven by growth across all revenue streams from new and existing clients
• Gross interest income and fee income at Satago Financial Solutions Limited ("Satago") increased by 120% to £0.6m (H1 2021: £0.3m) as Satago focused on Lending-as-a-Service ("LaaS") solutions with Lloyds Bank plc ("Lloyds Bank" or the "Bank")
• Playstack Ltd ("Playstack"), after a strong H1 2021, maintained gross revenue levels with H1 2022 experiencing 4% growth to £2.3m (H1 2021: £2.2m)
• Gross interest income and fee income at Vertus Capital Limited ("Vertus") increased 43% to £0.9m (H1 2021: £0.6m), as a result of the increase in new facilities, overall loan book and rising interest rates
• TruFin Group's loss before tax improved to £4.8m (H1 2021: £5.2m)

	6 months to	6 months to	12 months to
	30 June	30 June	31 December
	2022	2021	2021*
Financials and KPI's (Unaudited)	£'000	£'000	£'000
Gross Revenue	6,281	4,941	13,115
Loss before tax	(4,795)	(5,173)	(8,422)
Loss before tax includes:
share‐based payment charge	-	(70)	(70)
Net Assets	42,419	34,655	32,451
*Audited figures

Post period end developments and outlook

• Oxygen's early payment revenues continued to grow, reflecting the strength of its local authority client base. By August, record numbers of clients' suppliers had joined Oxygen's early payment programmes, driving an all-time high in spend.
  Revenue from Insight Solutions, Oxygen's market intelligence offering, continues to make strides. Oxygen's total number of unique clients at the end of H1 2022 was 128 (H1 2021: 108).
  The return of in-person local government conferences following the lifting of Covid restrictions has further strengthened Oxygen's new business pipeline. Moreover, supply chain issues have led to suppliers holding more inventory, thus increasing working capital requirements. These favourable tailwinds, coupled with rising interest rates and inflation, make Oxygen's supply side offer even more compelling.
  Having delivered its first full year of EBITDA profit in 2021, Oxygen expects to deliver profitable growth in 2022 and beyond.
• Satago's partnership with Lloyds Bank was cemented on 29 July, with Satago signing a five-year commercial agreement for the Bank to license Satago's software platform for use by its Single Invoice Finance and Whole of Book Invoice Factoring customers. Ben Stephenson, Managing Director and Head of Specialist Client Solutions at Lloyds Bank Commercial Banking has joined Satago's board, and we look forward to reporting the progress of this partnership, which is due to roll out to Lloyd's customers in Q4 2022.

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FINANCIAL HIGHLIGHTS (CONTINUED)

For the six months ended 30 June 2022

• The release of Playstack's 2022 console line-up garnered over 1 million views on YouTube and similar video streaming platforms - reinforcing the strength of the IP identified and championed by the Playstack team. One PC game launch has been rescheduled, from Q4 2022 to Q1 2023, but allowing Playstack to release the game on multiple formats simultaneously.
• Following the acquisition of Magic Fuel in June 2022, the team has been successfully integrated into the Playstack business and they are on track to deliver revenue growth this year.
• Vertus expects to originate a significant portion of pipeline deals, backlogged by regulatory delays, in September and October. The company's loan book is forecast to grow by 50% in 2022, to £24m (from £16m as at 31 December 2021), with new loan facilities up 80%. Despite investments in technology and new product development, Vertus is forecast to achieve full-year profit in 2022.

James van den Bergh, Chief Executive Officer commented:

"We have had an encouraging first half to 2022, with broad-based growth across the Group reflecting the strong competitive position of each of our companies. Despite inflationary pressures on staff costs and the rising rate environment we remain excited about the value creation opportunities ahead of us.

It is important to remember that our strategic goal remains unchanged: to invest at the early stage of a company's life cycle, guiding the company towards sustainable growth, profitability and ultimately an exit. And with this in mind it is very satisfying to report that Oxygen and Vertus are both expected to be profitable and cash flow positive on a full-year basis during 2022.

It was exceptionally pleasing to welcome Lloyds Bank as shareholders into Satago and to report the signing of the five-year commercial agreement between Satago and Lloyds Banking Group. The new digitised proposition for Lloyds Bank will benefit thousands of Single Invoice Finance and Whole of Book Invoice Factoring customers

- which will be especially valuable to these clients as we enter increasingly uncertain economic times.

We see significant further potential in Satago and, as announced on 9 June, the signing of a Letter of Intent ("LOI") with Sage Group plc ("Sage") and Lloyds Bank illustrates this, with further partnerships in the pipeline.

The actions we have taken over the last two years leave TruFin very well positioned; with meaningful progress across all the subsidiaries, we look to the future with confidence."

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CHIEF EXECUTIVE'S STATEMENT

For the six months ended 30 June 2022

The subsidiaries within the TruFin Group have been resilient in the first six months of 2022 and the board remains confident regarding prospects for the remainder of 2022.

As at 31 August 2022, the following assets were not less than:

• £10.6m of cash or cash equivalents
• £1.6m of assets within the Satago Group's loan book

The TruFin Group has no more than £3.1m in near-term liabilities.

Oxygen

Momentum within Oxygen is building, with financial and operational performance records continually being broken throughout the first half of 2022. The strong revenue growth enjoyed in the second half of 2021 continued into 2022, resulting in EBITDA profit reaching £0.4m in the first half of 2022, an increase of 600% on H1 2021 (£0.1m).

Gross margins for the first half were 70%, up 10% year-on-year, with Oxygen's infrastructure offering significant capacity to accommodate expanding revenues with minimal incremental cost.

Oxygen continues to see strong demand for its progressive payment practices, big data services and expertise which enable public sector and private organisations to trade more effectively. Payments become frictionless and data becomes information, driving growth and efficiency. The result is better social and economic outcomes. In addition, Oxygen again co-published with EY the Local Government Third-Party Spend Almanac 2022 which has become an essential industry resource detailing local authority expenditure and, for the first time this year, the carbon emissions of councils and their supply chains.

Oxygen's "Early Payment" client portfolio is maturing. Supplier participation in client Early Payment programmes is tracking forecasts and improving upon historic performance. Strong demand for Oxygen's market intelligence Insight Solutions services continues, evidenced by a growing client base which values the opportunities Oxygen provides private sector firms seeking to expand their business with the public sector.

Oxygen's Early Payment clients totalled 55 as at the end of June 2022 (up from 52 in June 2021), with combined supplier spend totalling £23bn. Unprecedented numbers of clients' suppliers participated in Early Payment programmes, with "on-boarded" annual supplier spend exceeding £1bn for the first time. A record amount of new supplier spend (£165m) was added during H1 2022.

Another achievement during the first half of the year saw Oxygen make significant progress helping clients deliver social value to their local communities by offering "FreePay", a service enabling clients to pay its local micro and small suppliers early at no cost. By the end of June 2022 more than 6,000 suppliers were participating in this programme. These local micro and small suppliers enjoyed early invoice payments totalling £250m, without charge, during the first six months of the year.

Strong relationships combined with its growing client portfolio have enabled Oxygen to build new adjacent services and partnerships, many of which have been monetised in H1 and will continue to deliver financially in the future.

Satago

Satago offers its customers a technically advanced invoice finance and cashflow management system via its online software platform. During the first half of 2022, the company was selected as the platform of choice to support the provision of invoice factoring solutions to Lloyds Bank customers, alongside a £5m investment from Lloyds Bank at a pre-money valuation of £20m (the "£5m Investment"). The five-year commercial agreement sealing this partnership was signed on 29 July.

The tie-up shows a shift from the predominantly "own balance sheet financing" previously pursued by Satago to a hybrid model incorporating "partner balance sheet financing", utilising Satago's LaaS solutions and embedded finance model. It leverages Satago's best-in-class platform to allow third-party working capital

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