TruFin rebounds from Lloyds Bank contract loss

By John Foster
6th January 2025

Related topics: AIM stocks, TruFin [LON:TRU], The financial services sector, The information technology sector

TruFin rebounds from Lloyds Bank contract loss

TruFin LON:TRU the AIM-listed, London-headquartered financial services and software company published a trading update today (6th January).

The company was founded in 2016. Next month it will have been listed on the London Stock Exchange for seven years. The firm develops and distributes specialist financial software through its subsidiaries Oxygen and Satago. The company also develops and distributes software into the mobile and console market through its Playstack subsidiary.

Oxygen also supports its clients’ working capital management through its early payment programmes and payments controls. In 2024 the story of the company’s shares was a tale of two seasons. Between last January and last June, TruFin’s shares climbed from 48.5p to 86p. They then experienced a dramatic collapse in July where the shares fell from 76p to 49.6p in one-day.

This crumble in share price came on the back of news that Satago, the company’s financial software solutions subsidiary, lost Lloyds Banking Group LON:LLOY as a client. Satago had a five-year commercial agreement with Lloyds Bank to provide invoice finance and whole-of-book invoice factoring. Lloyds Bank also withdrew its director on the board of Satago.

Despite contract loss, TruFin still ahead of expectations

At the time, the company’s management issued a statement saying that the company was still trading ahead of market expectations, especially with strong performance from Playstack, and that Satago still maintained strong client relationships with accountancy software group, Sage LON:SGE and Bank of Ireland [LON:BIRG], as well as a number of other Tier-1 banks. Management reiterated its statement that the company was still heading towards profitability in 2024 and was fully-funded to achieve profitability.

TruFin had a quiet summer with share price bumping along the bottom of its range until September. However, the slow leak of positive news throughout the summer, with new contract wins for Satago and good sales numbers for Playstack, started to move the share price again in the right direction.

Significant turnaround leads to maiden profit

A strong half-year report in September saw a 261% year-on-year increase in revenue to GBP25.3m, positive earnings of GB2.9m – a significant turnaround from the GBP3.6m loss it made for the first-half of 2023 – and TruFin’s first first-half profit before tax of GBP200,000. This was followed by strong support for the company’s shares in the second half of the calendar year. The share price ramped from 45p to the 89.3p it opened this week at.

Over one year the company’s shares have advanced by 80.4%, but since the mid-point of last year the shares are only up 7%. That said, since the start of September the company shares are up 95%. TruFin has a market capitalisation of GBP92.2m.

“A year of many firsts”

So, to today’s announcement, TruFin’s CEO James van den Bergh said: “What a year for the Group! […] A year of many firsts. This is the first time we have grown revenues by more than 190%. It is the first year we have recorded an EBITDA profit and the first year we have achieved a profit before tax – a year ahead of schedule.”

The company said it was expecting adjusted profit before tax significantly ahead of market expectations. Also, that TruFin should deliver its first full-year of profit; a year ahead of the management team’s own expectations.

The company is expecting profit of more than GBP500,000, earnings of more than GBP7m and revenue of around GBP54m – nearly 200% up y-o-y. The strong financial performance was mainly driven by Playstack success. But Oxygen Finance also contributed strongly, with 21% growth in revenues y-o-y and earnings up 65% and a record number of clients.

Satago, subsequent to losing the Lloyds Bank contract, retrenched its cost base and losses increased GBP700,000 to GBP4.9m, but hopes to break-even within the next one-and-a-half-years.

The company has started out strong, and much is anticipated in the coming year.