TruFin plc ($TRU)

Good morning, and welcome to the TruFin plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to James Van Den Bergh, CEO. Good morning, sir.

Thank you very much, and thank you all for attending today. I'm James Van Den Bergh. I'm the CEO of TruFin. And next to me is James Hussey, the CFO of TruFin. So thank you all for taking the time to listen to us today. So the plan we have is that I'm going to go -- I'm going to give you a short introduction to the group and then I'm going to hand over to James, and James is going to go through the full year numbers in a bit more detail, and I'm going to then present on the key achievements for TruFin during 2025, where we're heading, most importantly, and I'm going to leave plenty of time for questions. So TruFin. So as you know, TruFin is a holding company. We are a majority shareholder in three businesses, Oxygen, Satago, and Playstack. I'm going to go into more detail on each company later. For those of you who don't know us, a very quick overview. Oxygen is an early payments business. It also offers data services to county councils and local authorities and their suppliers in the U.K. It's based in Birmingham, and it's run by Vicki Sloane. Satago offers credit control tools and lending software. It's based in London and is run by Sinead McHale. And Playstack is a games publisher and developer based in the U.K., also with quite a significant presence in the U.S., and that's run by Harvey Elliott. So today, we're focused on the full year. So what does this graph show you? This shows TruFin's full year results split into the first half and the second half. First half is the dark green block at the bottom and the second half is the sort of chevron section at the top. And when combined, obviously, that represents the full year. So as many of you remember, due to the release of the sensation, which is Balatro, we had an exceptional 2024, as you can see. We achieved revenue of GBP 55 million. We grew over 200%. So 2024 was clearly going to be a tough comp for us to beat. And understandably, there are many doubting Thomases, who didn't expect us to grow during 2025. But as you can see, we did. So we grew revenues to GBP 65.9 million. That's an increase of 20%. And we also as a result of that, we had multiple upgrades during the year, and we were thrilled with our performance. So what does this mean -- what did this mean for the bottom line? So this slide shows the group EBITDA. As you can see, EBITDA in 2024 was GBP 7.6 million, that grew last year to GBP 12.6 million. That's a 66% increase. So a 20% increase in revenue, but a 66% increase in EBITDA. So what does that tell you about TruFin? Well, it highlights what we've always said that there is significant operational leverage within TruFin. And what I mean by that, as revenues continue to grow in percentage terms, EBITDA will grow disproportionately faster than revenue. So as revenues grew 20%, our EBITDA grew 66%. So that's the operational leverage within the business. And obviously, as a business, that's an incredible position to be in. So again, thrilled with that performance. So that brings us to 2026 this year. So we are currently bang in line with our own internal budget. Revenue for the first two months were in excess of GBP 9 million. For full transparency, again, due to the remarkable success of Balatro last year, we won multiple awards and also won Game of the Year at the end of 2024. And so if you look at the same period last year as the first two months this year, our revenues were actually GBP 15.4 million, whereas this year, they're GBP 9 million. So again, for the eagle eye once amongst you, you will have noticed that. But I want to reiterate, we are very happy with our current run rate -- revenue run rate and it's bang in line with our own internal forecast. So now I'm going to hand over to James, who's going to go through the full year results in a bit more detail. James?

Thank you, James. As James said, yes, I'm going to reflect on a few of the financial highlights for the year. 2025 was another fantastic year with the momentum created in 2024 continuing. Revenue, the full year revenue was GBP 65.9 million, 20% growth or GBP 11 million growth on 2024. Where did that growth come from? Oxygen reported GBP 1.4 million worth of growth to its top line to report GBP 9.1 million, incredibly predictable and very much anticipated that sort of level of growth. Playstack, despite 2024 being an incredible year, managed to build on 2024 and its revenues grew GBP 10.6 million to report GBP 55.2 million for the full year. So another fantastic performance by Playstack. Satago's revenues fell GBP 1.2 million in '25 over '24. A couple of factors driving that has been well reported. In '24, the Tier 1 bank contract was lost, impacting ongoing revenues. And in addition, as has been said, Satago has made the decision to stop lending off its own balance sheet. And therefore, interest income reported in '24 was very much reduced in '25. So those two factors dropping the revenue for Satago. So overall, revenue, a fantastic performance. What does that mean in terms of the bottom line? So we have an adjusted profit for the year of GBP 8.4 million. Just to confirm what that means adjusted, that's taking the profit before tax on the P&L and adding back the impact of share-based payments. which was of the order of GBP 800,000. But the adjusted PBT for the year was GBP 8.4 million as compared to GBP 0.9 million in '24. Not on this slide, but James mentioned it previously, the adjusted EBITDA number was GBP 12.6 million, a GBP 5 million increase on 2024. And to follow on from the operational leverage point that James mentioned, our net revenue, so revenue less direct costs, that increased by GBP 5.8 million. And because the cost base was very consistent with the prior year, of that increase of GBP 5.8 million, it resulted in an increase in the EBITDA line of GBP 5 million. So you can see there's a very strong flow-through from that increase in the net revenue. That number is also -- despite that impressive flow-through, it's also negatively impacted by the impairment charge that we have on the balance sheet relating to a loan within Playstack. That said, it's still a fantastic growth in the EBITDA by comparison to the revenue and the net revenue. The other item on the P&L to draw to your attention is the tax credits in the year, high material number. So the profit after tax benefiting by that credits and that is due to us increasing the level of deferred tax asset that we are recognizing on the balance sheet. It now stands at GBP 7 million, and that asset it reflects the increasing confidence we have within primarily Oxygen and Playstack to continue to be profitable and able to utilize the accumulated losses that both companies has [indiscernible] highlights to draw to your attention is cash. We leave 2025 with a cash balance of GBP 12.4 million, a decline on the previous year of GBP 2.7 million. But as you know, we successfully completed two share buybacks in the year totaling GBP 8 million. And such as the cash balance going into 2026 that we are -- we've announced we're in the middle of a further GBP 6 million share buyback. So I think 2025, another year of fantastic performance, increased revenue, increased profitability, increased cash generation and the group is very much in good health, and we entered 2026 with much optimism and you can see a few points there, current trading prospects. Playstack's catalogue continue to perform well. Oxygen continuing to grow with benefits operation leverage feeding through in its P&L and Satago has seen an encouraging start to '26. And just to say, actually to touch on Satago. Satago as we have said previously, had significant cost reduction throughout '25, such that despite the revenue drop, its bottom line loss was significantly reduced on the prior year. The business is now reset and it looks to 2026 with optimism to grow the top line and to achieve profitability and cash generation.

Great. Thanks, James. So Oxygen, earlier, is an early payments business and data business [indiscernible] local authorities and their suppliers. And we are extremely fortunate to own this business. The main reasons -- the three main reasons I say that are: One, firstly, everyone likes to be #1 in life, and we are very much #1 in this space. So we have over 65 clients. We're growing that by on average 6 clients a year. Then, #2 in the early payment space has one client. So we are, by a country mile, #1. And as a result, we accrue all the benefits of being #1. Secondly, the contracts we have with our clients are on average five years in duration. So we've got incredible visibility of revenues. And thirdly, the barriers to entry in early payments are extraordinarily high. So just by way of example, let's imagine you want to set up a rival early payments business, so on average, it takes us about four years to win a client, and that's us now, have been #1 with over 65 clients. It took us well over four years to win our first client. So you're setting up an arrival to Oxygen, you think you can't see your chances. So you try and win a council. Let's assume you can win a council within four years, which would be an extraordinary achievement, let's say you do. You're not going to make any meaningful revenue from that client for another two years. So meaningful revenue generation from your first client won't be for another two years. So after six years, you have client generating some money, but you'll still be heavily loss-making as a business. To get to profitability, you need about 30 clients. So let's assume, again, you win as many clients as Oxygen does on an average year, which is six clients a year. Why don't we assume you're better at winning clients. So let's assume you can win 10 clients a year. So to win 30 clients in total, you need to wait another three years to get to the point where your business is profitable. So firstly, four years to win the first client, two years to make any meaningful revenue, another three years to win to get to 30 clients. So you're -- we're now nine years later and you may have a profitable business. But that's working on the basis that you don't have a serious competitor, which we didn't when we started. But you do, you have Oxygen as your competitor. So you would be absolutely mad to start and anyone would be mad to start an early payments business. So to summarize, we have a massive market opportunity. We've got 5-year contracts and almost insurmountable barriers to entry. If you look at the chart on the bottom left, this shows our EBITDA, which is really starting to scale. We said it would and it is. So EBITDA has gone from -- went from GBP 2.3 million in 2024 to GBP 3.8 million in 2025. So that's up 67%. And that is despite the Procurement Act. So this was a once-in-a-generation event that disrupted the market. And to remind you -- to remind -- well, to remind those you know and those who are listening in on TruFin for the first time, the Procurement Act, to summarize it, instead of multiple overlapping regulations, the Procurement Act created one unified framework for public procurement activity. So it puts greater weight on social value, innovation, SMEs and resilience, which all sounds great. But what does that mean in practice for our clients, the local authorities who are purchasing things and tendering? Well, it means really more digital notices, which are events that things they have to do, they have to put through a new central procurement platform. There's more visibility of those contracts and more visibility of the performance of those contracts. So in very practical terms, the old regime Procurement Act meant that on average, there were four notices, which is four actions that our clients had to do to procure something. In the new regime post the Procurement Act, on average, there are 12 actions or events that our clients have to do in order to do the same procurement event. So in short, there's 3x more work for our clients to procure something now than pre the Procurement Act. No one likes to change their habits. I certainly don't. And I can tell you, and you see from this chart that our clients don't either. So this chart basically shows human nature. So this is the 30-day rolling average number of tenders by volume across England since January 2024. So the Procurement Act came into force last year on February 24, and you can see the spike in this chart where that happened. Ahead of the act, predicting this more work and uncertainty and new ways of working, tender volumes rose dramatically and because procurement offices pulled forward their tenders. Post the act, much of the tenders that have been enacted during the spike in the period before the Procurement Act, and they were no longer needed or they were effectively pulled forward, so -- and our clients had to get [indiscernible] with the new way of working. So the tender volumes fell off a cliff, and you can see that happening. And now we're reverting to a more normal level of activity. But it's still worth pointing out that in January, this year at the low point, we were -- the tender volumes were still 27% lower than they were in the previous year. So still sort of -- still significantly lower, but that is a significant improvement from the summer. So you can see in June, July time last year in 2025, the procurement volumes were well over 60% lower than they were in the prior year. So there's been a returning to normal, but we're not there yet, but we are returning some form of normality. But again, I want to reiterate, despite this enormous headwind, despite the tender volumes declining and tender volumes drive our revenues, the EBITDA Oxygen grew by 67%. So a great achievement from Vicki and her tea. There's one chart that shows why Oxygen is such a good business, this is it. This chart shows you that if we don't win another client ever again, then 90% of the next five years early payment revenues are in the bag. So we've got -- because of that -- because due to the duration of our contracts, which are on average five years. So we've got incredible revenue visibility. Our clients are buying more products from us than ever before. Currently, 60% of our clients buy two or more products from us and more than 25% buy three or more products from us. And clients are staying with us for longer. So last year, we had seven early payment clients contracts come up for renewal. 100% of those clients renewed for a further five years or extended their contracts. In 2026 of this year alone, we've had five more contracts come up for renewal. And again, all four of them, so 100% have renewed or extended their contracts. So it shows you sort of the incredible visibility we have on revenue in this business. So Satago, as you know, we had to make some significant headcount reductions at Satago. That was forced upon us by the termination of the Tier 1 bank contract. We acted very swiftly. The headcount was reduced by 76%. And yes, so that was enacted very swiftly post the loss of that contract. And what about revenues? Well, as James mentioned earlier, due to the loss of the bank contract, the Tier 1 bank contract and our decision to stop all balance sheet lending, revenues fell by 50% to GBP 1.2 million. But as James again mentioned earlier, the net loss declined by 46% to GBP 2.4 million. It was -- so the loss in 2024 was GBP 4.5 million and in 2025 was GBP 2.4 million despite a revenue decline. So with a rightsized cost base, how do we get to top line growth? That's the obvious question. And we are doing that by focusing on what is working. We have some phenomenal partners and clients. We renewed a contract with our largest partner for a further three years, which we had announced. And here, you can see the results of our focus. So this graph shows the value of invoices chased by Satago's credit control tools, that's the gray bar chart and then the green line chart is the number of active subscribers for our software. So it looks a little bit like [indiscernible] price at the moment. It's grown -- the number of subscribers has grown 120% in the last 12 months and actually has grown 66% in the last two months alone. So it shows what can be done with focus. Sinead and team have clearly weathered the storm coming out the other side. And as you can see, there's definitely green shoots here. So Playstack. Another blockbuster year for Playstack. The main things to note from last year, our Balatro and Abiotic factor continue to perform. In fact, they exceeded our expectations. We spent much and Harvey and his team spent much of the second half of last year securing this platform contract that we announced. We actually -- we only signed it in January. We expect to sign in December, we didn't sign in January. So we're absolutely thrilled by that. And you'll hear more from us later this year about that contract. And we also focused obviously on major game launches for 2026 this year. So why are we upbeat about 2026? So 2.5 years ago, we raised GBP 7 million from you all shareholders to fund Mortal Shell II. And this is the year that investment is going to pay off. So we're currently months away from its launch. We haven't formally come out with a day for the launch, but we will -- during April, you will hear when the launch date for Mortal Shell II is. And it's currently 188th on the Steams wishlists. So that means it's 188th most wish-listed game in the world today. And we've got an awful PR and marketing activities between now and the launch of that game, which will push that -- push it further up in the rankings. But before Mortal Shell II, we also have the Raccoin launched. I don't want to get ahead of ourselves, but players are -- players of the demo are liking the dopamine hit. And you get from Raccoin, the same sort of hit you get from Balatro, so let's see how that goes. That's going to be released at the end of this month. So yes, it will be interesting to see how that goes. And then this slide shows this summarizes the financial performance of all the investments we made in the games previously. So the graph on the top left, just to remind people, the graph on the top left are the revenue we generate from games. These are some example games that we've launched. So you can see the green line shows our profit from a game, the little purple dot shows the investment we've made in the game. So when the green line is above the purple dot, we are making money. So the vast majority of the time, we make money on the games we launch. And then on the bottom left, you can see the return on invested capital and the IRR of our game launches are still well above 300% and 180%. So incredible financial performance from our game launches, right? So to summarize, excellent results last year. We generated enough cash to fund 2 buybacks, GBP 2 million, GBP 4 million buybacks, and we've initiated a new GBP 6 million buyback this year. We're very focused. We're focused on scaling Playstack, so doing more of the same, driving revenue and EBITDA growth at Oxygen and having reset Satago, we're focused on where we are winning. And we've always had a very long-term mindset. But sitting alongside that, we're also fully aware that our job is to realize value to shareholders, and that's exactly what we intend on doing in the coming months and years. So Lilly, with that, I think we are now ready to go to questions.

That's great. [Operator Instructions] I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q&A can be accessed via investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give response where appropriate to do so, and I'll pick up from you at the end.

Yes. Great. Thanks. So thanks, Lilly. So for both [indiscernible] is quite small for the questions. So firstly, from George, how do you balance buybacks versus M&A given your -- given there's no superior acquisition opportunities? I think really what we laid out, I think, relatively clearly in our capital allocation policy is that we do prioritize internal growth first. We look at all the different opportunities we have within the business if we have excess capital. We make sure we've got a good buffer so that we never come back to you to ask for more capital. And then we do look at external M&A opportunities. But obviously, there are significant risks attached to M&A. But we have made small acquisitions in the past, and we will continue to look at M&A opportunities. And then should there be excess capital post that, then we look at -- we balance the risks of M&A versus the low risk we have when it comes to buying back shares. We know more about our businesses than anyone else in the planet. So if the same sort of return exists from buying shares to M&A, we're obviously going to be buying back shares every day. But clearly, we do look at multiple different acquisition opportunities, and we will continue to do so. Vishal. Hello, Vishal. Please can you talk more about Satago's pipeline? 140% growth in subscribers is interesting, but will pipeline conversion need investment in staff platform? Or will this largely drop through to cash profitability? That's a great question. So in terms of the software sales, that is very much does fall-through to the bottom line, so the growth from there. In terms of other lending software opportunities that we are building the pipeline of those opportunities, we will -- we are very focused on every contract, making sure that much of that falls through to the bottom line. I'm not saying that we won't have to increase the headcount at Satago and if we have an enormous -- much of the pipeline comes through and contracts come through as a result. So I'm not saying we won't increase staff platform, but we have -- we at TruFin have committed a certain amount of money to Satago, and we're happy with the commitment we've made, and we feel that the business can get to profitability with the investment we already made. So hopefully, that goes some way to answering that question, Vishal. Are you looking to invest in further companies? From Stephen. That is not currently part of -- in terms of -- are we looking to invest in further companies outside the three platforms we already have? No, the answer is not currently. But obviously, we do look at -- we have looked at many different other opportunities, but we are focused on making sure we return capital to shareholders. Vishal, again, how does the -- how do you get back to the top so quickly? How does the anticipation of Mortal Shell II compared to the Mortal Shell I? Also, will there be a Balatro 2? If there's a Balatro 2, then players globally will be very excited and there is not currently -- we currently haven't announced anything around that. And in terms of Mortal Shell II, Mortal Shell II is currently tracking ahead of where Mortal Shell I was because remember, Mortal Shell I when launched was a completely unknown title. So no one even heard of that game. It was a new -- completely brand-new IP and Mortal Shell II is not a brand-new IP. It's very much sequel to Mortal Shell I. So you would expect Mortal Shell II to have more interest than Mortal Shell I, which it certainly does at the moment. Can you disclose why your hit ratio has fallen from 90% in the prior presentation to 85% today? Great spot from Joe. Is this due to new games yet to recoup investment and market? That's exactly right. So one of the games we launched at the end of last year hasn't yet recouped. If we have this presentation later this year, which we will at the interims, we very much expect that to be back to 90%. But obviously, there's a -- if we launch a game yesterday, it's unlikely to recoup full investment within a day. So don't Joe, don't read anything dramatic into that at all. We're absolutely thrilled with the performance of our games. In fact, we did talk about just saying a hit ratio of above 50% so that the fluctuations at the top don't give anyone heart palpitations. But we'll keep the -- being completely transparent with shareholders. But yes, nothing to worry about that Joe, so. So again, a question on Satago breakeven on its lean and cost base. We said it's going to -- we're expecting it to break even during 2026, and we very much expect that to happen. Proceeds of future Playstack sale. Johannes asked what will the capital allocation approach be the proceeds of future Playstack sale. That is going to be up to the Board and shareholders, Johannes. And what is the threshold for continued share buybacks versus reinvesting that capital into new IP for Playstack or expanding Oxygen SaaS offering from Joe. So Joe, we look at all the opportunities that are open to us at Oxygen, Satago and Playstack. And if the opportunities mean we will get a higher return on invested capital than we will by buying back shares, we will invest those opportunities. We are not shy about investing. We are going to spend over GBP 9 million in future game launches in Playstack this year. So if we didn't spend any money on the future of Playstack, we have GBP 9 million more money. So you can see that we're making significant investments into Playstack. We're also -- yes, Oxygen is making money and dividend, yes, more money every year, which is amazing. But we are making sure that we also invest in Oxygen, invest in the opportunities that we have within Oxygen. And those will remain our top priority because building long-term value is how you as shareholders will get long-term value for your holding. Would you consider releveraging the balance sheet to accelerate returns? From Stephen. Okay. A bit racy for us, I think, Stephen. It's -- we have obviously looked at that sort of thing. But right now, we don't feel that would be appropriate. [indiscernible] diversified 2026 pipeline revenue? I imagine you mean -- yes, around title, so imagine Stephen. I imagine you mean by Playstack, so what we've said previously and we reiterate that around 50% of 2026 revenues are expected to come from back catalogue at Playstack. So from that, you can see what we expect the game launched this year. And obviously, Mortal Shell II is the biggest launch with the biggest release this year. You can expect -- you can see from that what we expect from the other eight games that we're launching this year. So Alex asked what the trading in line this year, what are the key swing factors for upside versus downside? So the key swing factors will be the game launches at Playstack. We've got a very good handle and very good visibility at Oxygen. Similarly at Satago, we can see the direction travel there. So it will be -- the swing factors will be game new, and we know give or take what the back-catalogue of Playstack will do, so the swing factors will be the new game launches. Given the Playstack -- from George, as given that Playstack dominates revenue, how do you mitigate concentration risk of the group? Well, you know what, George, it's a great question. But when -- in any portfolio, when something is doing exceptionally well, then it's going to become a larger portion of your -- I'm sure truth become a larger portion of your investment portfolio as the shares have gone up. And so our job is to make sure we remain focused and disciplined at a group level. And if Playstack ends up being a bigger portion of revenues and profits, then so be it. But our job is to make sure we're not worried about concentration risk. We're worried about making sure we do the best job that we can with each of the businesses that we have for you, the shareholders. And then Joe, can you elaborate on the marketing approach for new game launches, are you targeting the approach to slightly different titled? What we don't want to do, Joe, is steal any thunder from -- we know exactly what's going to happen in terms of marketing beats, et cetera, but we're not -- we won't share them here. We'll let Playstack deliver. You'll be seeing -- we've clearly explored and our team are exceptional when it comes to marketing and promoting games. So there's obviously going to be some new and interesting surprises for Mortal Shell II given the scale of it, but we won't steal the thunder of Playstack and let you know that, I apologize. But you'll see the marketing beats in the coming months. Bruce, do local authority elections impact tendering activity accounts majorities change? Bruce, whenever there's elections, whether it's nationally or locally, politicians are focused on keeping their jobs. That's their main focus. And so yes, they do -- focus is taking away not necessarily from tendering activities, but from making large decisions related to things such as whether to onboard Oxygen. We've had to face that through general elections, local elections in the past. So our numbers assume relative levels of muted decision-making. But -- on the whole, the decision-makers when it comes to tendering activity are not the politicians. They are the procurement officers within council. So if you need [indiscernible] potholes refilled, that decision has to be made, whether it's labor, the greens or reform. So on the whole, it doesn't help, but it's relatively muted the impact on us. I say that maybe we have some event that never seen before in the greens when every single council and who knows -- but as it stands today, we've got a lot of data on what happens during elections, both nationally and locally, and we're not worried about that. So I think we've managed to exhaust all the questions.

That's great. Thank you for answering all those questions you have from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide their feedback, which I know is particularly important to the company, James, can I please just ask you for a few closing comments.

Yes. Thanks, Lilly. Well, thank you all for attending this meeting. Thank you all for those of you who are shareholders for entrusting your capital with us. We are -- as James said, we are in a great place. We're full of optimism for 2026 and beyond. Thank you again and look forward to seeing you hopefully at our interims or maybe before.

That's great. Thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of TruFin plc, we'd like to thank you for attending today's presentation, and good morning to you all.