MBA Community Loans PLC
Directors' report and audited financial statements
For the financial period ended 7 January 2024
Registered Number 486917
MBA Community Loans PLC
Page(s)
Directors and other information 1
Directors' report 2 - 6
Directors' responsibilities statement 7
Independent auditor's report to the members of MBA Community Loans plc 8 - 13
Statement of comprehensive income 14
Statement of financial position 15
Statement of changes in equity 16
Statement of cash flows 17
Notes to the financial statements 18 - 40
Contents
MBA Community Loans PLC
Page 1
2nd Floor, Block 5
Irish Life Centre
Abbey Street Lower
Dublin 1
Ireland
2nd Floor, Block 5
Irish Life Centre
Abbey Street Lower
Dublin 1
Ireland
PricewaterhouseCoopers
1 Spencer Dock
North Wall Quay
IFSC
Dublin 1
Ireland
Lisa Hand (Irish) (Independent) (Resigned on 14 August 2023)
Maria Dawson (Irish) (Alternate) (Appointed and resigned on 1 November 2023)
Registered Office
Secretary and Corporate
Service Provider
Apex IFS Limited
Directors and other information
Directors
Ciaran Connolly (Irish) (Independent)
Rhys Owens (Irish) (Independent)
London SE1 1YB United Kingdom
United Kingdom
Trustee
Apex Corporate Trustees (UK) Limited
6th Floor, 125 London Wall
Bank
HSBC Bank Plc Barclays Bank Plc
City of London Commercial Centre PO Box 299
28 Borough High Street Birmingham B1 3PF
1-4 Argyll Street
London W1F 7LD
Ireland
Legal Advisors and
Listing Agent
McCann Fitzgerald
Riverside One
Sir John Rogerson's Quay
Dublin 2
United Kingdom
London EC2Y 5AS
United Kingdom
Loan Servicer, Manager,
Transfer Agent and
Calculation Agent
Prodigy Finance Limited
Palladium House
Independent Auditor and
statutory audit firm
Page 2
Key performance indicators
During the financial period:
•
•
•
•
• the Notes that the Company has issued and redeemed are included in note 13 to the financial statements.
As at 7 January 2024:
•
•
• the Notes that the Company has in issue in respect of each Series are included in note 13 to the financial statements; and
•
Future developments
Change in financial year
the profit after taxation of the Company was EUR Nil (financial year ended 7 July 2023: profit of EUR 596,918);
the finance income earned by the Company was EUR 5,529,323 (financial year ended 7 July 2023: EUR 12,306,977);
the impairment credit on Loans and Receivables was EUR 58,567 (financial year ended 7 July 2023: EUR 718,958);
the finance expense on the Company's Notes issued was EUR 5,098,124 (financial year ended 7 July 2023: EUR 10,787,412) and
the Company’s Notes in issue amounted to EUR 84,499,644(7 July 2023: EUR 104,987,342);
the net asset carrying value of the Company was EUR 52,683 (7 July 2023: EUR 52,683);
the ECL metrics as disclosed in note 15(a) have increased reflecting that as the student loan portfolio matures a higher number of student loans may be in
arrears and become non-performing loans which are specifically impaired (default).
During the financial period, the financial year end changed from 7 July to 7 January. Consequently, the Statement of comprehensive income, the Statement of
changes in equity, the Statement of cash flows and the related notes are for a period of 6 months for the period ended 7 January 2024 and the Statement of
financial position is as at 7 January 2024. The comparative figures are for a period of one year for the year ended 7 July 2023.
MBA Community Loans PLC
No significant changes in the principal activities of the Company are anticipated.
The Company did not have any employees during the financial period ended 7 January 2024 (2023: none).
The principal risks for the Company are dealt with in this report and in note 15 to the financial statements. Each Series of Notes is segregated from each other.
The Company is a special purpose vehicle (the ''SPV'') and its principal activity is to issue Notes and make investments.
The Directors confirm that the key performance indicators as disclosed below in the financial statements are those that are used to assess the performance of the
Company.
Directors' report
The Board of Directors (or the "Directors") present their annual report and the audited financial statements of MBA Community Loans PLC (the "Company") for
the financial period ended 7 January 2024.
Principal activities and business review
The principal activity of the Company is to invest in student loan assets (the ''Loans and Receivables''), the acquisition of which is funded by the issue of notes
(the ''Notes'') to investors. These Notes are issued in separate series (the ''Series''). The Company does not undertake any business other than the acquisition,
holding, financing, selling and granting of security over its assets.
The net proceeds of the issue of the Notes will be used by the Company to acquire relevant student loans (the "Student Loans") from Prodigy Finance Limited,
the loan originator (the "Loan Originator") in accordance with the terms of the respective agreements and to pay for permitted expenses.
Each Note provides for one or more alternative payment schedules because the Company is obligated to make payments on a Note only to the extent that it
receives payments on the Student Loans, less the discharge of certain fees and expenses. Each Note is expected to provide a return at the target interest rate,
which is a fixed margin above a variable rate of return, to the noteholders (the ''Noteholders''). The terms of the Note will specify payment dates pursuant to
which an amount of principal and interest will be payable in respect of the Note on an available funds basis from funds received by the Company from the
Student Loans. Interest will be payable following the payment of certain fees and expenses and will be payable up to the accrued interest balance. The Notes
issued by the Company are limited recourse in nature.
The Directors expect that the present level of activity will be sustained for the foreseeable future. The Directors will continue to seek new opportunities for the
Company and will continue to ensure proper management of the current portfolio of Series of the Company. It is anticipated that while some Series will redeem
or mature, it is also expected that new issuances will be made.
The Company recognises loss allowances for expected credit loss on financial assets measured at amortised cost including Loans and Receivables.
Page 3
Going concern
Early repayment and reinvestment risk
Operational risk exposure
Shares and shareholders
The results for the financial period/year are set out on page 14. The Directors do not recommend the payment of a dividend for the financial period (2023: EUR
nil).
The Directors have engaged competent service providers and put in place a Directors' Compliance Policy to review the structures and arrangements of the
Company annually, and to take any remedial steps if required.
Results and dividends for the financial period/year
Directors, secretary and their interests
None of the Directors and secretary who held office from 8 July 2023 to 7 January 2024 held any shares in the Company at that date or during the financial
period. Except for the Corporate Services agreement entered into by the Company with Apex IFS Limited, there were no contracts of any significance in relation
to the business of the Company in which the Directors had material interest, as defined in Section 309 of the Companies Act 2014, at any time during the
financial period. Directors remuneration is disclosed in note 3 to the financial statements. Further information are set out in note 17 to the financial statements.
Changes in Directors, secretary and registered office during the financial period
On 14 August 2023, Lisa Hand resigned as independent Director. Rhys Owens was appointed as Director same day.
There were no other changes in Directors, secretary and registered office during the financial period.
On 1 November 2023, Maria Dawson was appointed as alternate Director to Rhys Owens for 1 day.
Directors' report (continued)
Business risks and principal uncertainties
The underlying business of the Company, being the purchase of student loan assets and the issuance of Notes to investors, is expected to continue in an orderly,
consistent manner over the coming financial period. The principal risk exposures for the Company relate to default by the borrowers, credit risk in dealings with
counterparties and interest rate movements. The loan platform has been designed and developed to minimise the risk of arrears and default rates for loans to
international students and a risk management framework is in place in order to manage and mitigate remaining risks. The principal risks and uncertainties are
discussed in more detail in note 15 to the financial statements.
The Notes will be subject to early repayment risk. Due to the limited recourse nature of the notes, the timing of principal payments in respect of the Notes will
depend entirely on payments received by the Company from the relevant Student Loans. Investors in Notes bear the risk that, if and when they receive a principal
payment in respect of the Notes, they will not be able to reinvest the amount of the principal payment in alternative investments that bear a yield or return equal to
or greater than the interest rate on the Notes.
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company's processes, infrastructure, and from
external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of
corporate behaviour. Operational risk arises from all the Company's operations.
The audited financial statements of the Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European
Union ("IFRS") and have been prepared on a going concern basis. The Directors of the Company believe that it remains appropriate to prepare the financial
statements of the Company on a going concern basis and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business.
MBA Community Loans PLC
Accounting records
The Directors believe that they have complied with the requirements of Sections 281 to 285 of the Companies Act 2014 with regard to adequate accounting
records by engaging a service provider who employs accounting personnel with the appropriate expertise and by providing adequate resources to the finance
function. The accounting records of the Company are maintained at 2nd Floor, Block 5, Irish Life Centre, Abbey Street Lower, Dublin 1, Ireland.
The authorised share capital of the Company is EUR 40,000 which has been fully issued and paid. The issued shares are held in trust by Apex Trust Nominees
No. 1 Limited (the "Share Trustee") under the terms of a declaration of trust (the "Declaration of Trust“) under which the Share Trustee hold the benefit of the
shares on trust for charitable purposes. The Share Trustee has no beneficial interest in and derive no benefit from their holding of the shares. There are no other
rights that pertain to the shares and the shareholders.
Page 4
The Electoral Act, 1997 (as amended by the Electoral Amendment Political Funding Act, 2012) requires companies to disclose all political donations over EUR
200 in aggregate made during a financial year. The Directors, on enquiry, have satisfied themselves that no such donations in excess of this amount have been
made by the Company during the financial period ended 7 January 2024 (2023: EUR nil).
Corporate Governance Statement
The Board is responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to the financial
reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Company’s financial reporting objectives and can
only provide reasonable and not absolute assurance against material misstatement or loss.
The Board has established processes regarding internal control and risk management systems to ensure its effective oversight of the financial reporting process.
These include appointing Apex IFS Limited (the ''Corporate Service provider''), to maintain the accounting records of the Company independently of Prodigy
Finance Limited (the ''Loan Servicer'') and Apex Corporate Trustees (UK) Limited (the ''Trustee''). The Administrator is contractually obliged to maintain proper
books and records as required by the Corporate Administration Agreement. To that end the Administrator performs reconciliations of its records to those of the
Loan Servicer and Trustee.
The Administrator is also obliged to prepare for review and approval by the Board the annual and semi-annual reports including financial statements intended to
give a true and fair view.
100% of the issued shares in the Company are held by Apex Trust Nominees No. 1 Limited, which is a company incorporated in England and Wales. The Share
Trustee holds the benefit of the shares on trust for charity. The Share Trustee has no beneficial interest in and derives no benefit other than its fees for acting as
Share Trustee, from its holding of the shares. With regard to the appointment and replacement of Directors, the Company is governed by its Constitution, Irish
Statute comprising the Companies Act 2014 and the Listing Rules of the Euronext Dublin. The Constitution themselves may be amended by special resolution of
the shareholders.
MBA Community Loans PLC
Directors' report (continued)
Financial Reporting Process
The Company is subject to and complies with Irish Statute comprising the Companies Act 2014 and the listing rules of the Euronext Dublin which are applicable
to debt listed companies. The Company does not apply additional requirements in addition to those required by the above. Each of the service providers engaged
by the Company is subject to their own corporate governance requirements.
Introduction
Political donations
Monitoring
The Board has an annual process to ensure that appropriate measures are taken to consider and address the shortcomings identified and measures recommended
by the independent auditors. Given the contractual obligations on the Administrator, the Board has concluded that there is currently no need for the Company to
have a separate internal audit function in order for the Board to perform effective monitoring and oversight of the internal control and risk management systems
of the Company in relation to the financial reporting process.
Capital Structure
The Board evaluates and discusses significant accounting and reporting issues as the need arises. The Board also reviews significant judgements and assumptions
used in assessing the impairment provision on an ongoing basis. On a semi annual basis, the Board also examines and evaluates the Administrator’s financial
accounting and reporting routines and monitors and evaluates the external auditors’ performance, qualifications and independence.
The Administrator has operating responsibility for internal control in relation to the financial reporting process and the Administrator’s report to the Board.
Risk Assessment and Risk Management
The Board is responsible for assessing the risk of irregularities whether caused by fraud or error in financial reporting and ensuring the processes are in place for
the timely identification of internal and external matters with a potential effect on financial reporting. The Board has also put in place procedures and processes to
identify changes in accounting rules and recommendations and to ensure that these changes are accurately reflected in the Company’s financial statements. These
procedures have been in place since incorporation and are regularly reviewed by the Board. More specifically, the Administrator has a review procedure in place
to ensure errors and omissions in the financial statements are identified and corrected and regular training on accounting rules and recommendations is provided
to the accountants employed by the Administrator.
Control Activities
The Administrator is contractually obliged to design and maintain control structures to manage the risks which the Board judges to be significant for internal
control over financial reporting. These control structures include appropriate division of responsibilities and specific control activities aimed at detecting or
preventing the risk of significant deficiencies in financial reporting for every significant account in the financial statements and the related notes in the
Company’s annual report.
Page 5
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Research and development costs
The Company did not incur any research and development costs during the financial period (2023: EUR nil).
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Independent auditor and statutory audit firm
Statement on relevant audit information
The takeover bids directive is not applicable as the Company does not have transferable securities carrying voting rights listed on a regulated market.
Audit committee
Pursuant to the requirements set out in the Companies Act 2014, Section 167(1) & (3), as the sole business of the Company relates to the issuing of asset-backed
Notes, the Company has availed of an exemption from the requirements to establish an audit committee under Section 115(10) of SI 312/2016 (European Union
(Statutory Audits) (Directive 2006/43/EC, as amended by Directive 2014/56/EU, and Regulation (EU) No 537/2014) Regulations 2016). The Board has
concluded that there is currently no need for the Company to have an audit committee in order for the Board to perform effective monitoring and oversight of the
internal control and risk management systems of the Company in relation to the financial reporting process.
Powers of Directors
The Board is responsible for managing the business affairs of the Company in accordance with the Constitution. The Directors may delegate certain functions to
the Administrator and other parties, subject to the supervision and direction by the Directors. The Directors have delegated the day to day administration of the
Company to the Administrator. The Constitution provides that the Directors may exercise all the powers of the Company to borrow money or to mortgage or
charge its undertaking, property and uncalled capital or any part thereof and, subject to Section 20 of the 1983 Act, to issue debentures, debenture stock or other
security whether outright or as security for any debt, liability or obligation of the Company or of any third party without limitation.
The Notes are admitted to trading on the regulated market of the Euronext Dublin pursuant to the base prospectus dated 14 August 2017 ("Base Prospectus").
The Central Bank of Ireland approved the Base Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive
2003/71/EC (as amended, including by Directive 2010/73/EU).
MBA Community Loans PLC
Directors' report (continued)
Corporate Governance Statement (continued)
they have drawn up a compliance policy statement setting out the Company's policies (that, in the Directors' opinion, are appropriate to the Company)
respecting compliance by the Company with its relevant obligations;
The Directors confirm that:
PricewaterhouseCoopers, Chartered Accountants and Statutory Audit Firm, have signified their willingness to continue in office. Annual audit fee amounts are
disclosed in note 7 to the financial statements.
relevant arrangements and structures have been put in place that provide a reasonable assurance of compliance in all material respects by the Company with
its relevant obligations, which arrangements and structures may, if the Directors so decide, include reliance on the advice of one or more than one person
employed by the Company or retained by it under a contract for services, being a person who appears to the Directors to have the requisite knowledge and
experience to advise the Company on compliance with its relevant obligations; and
they acknowledge that they are responsible for securing the Company's compliance with its relevant obligations and have, to the best of their knowledge,
complied with its relevant obligations as defined in Section 225 of the Companies Act 2014;
Subsequent events
Events after reporting date has been disclosed in note 19 to the financial statements.
So far as the Directors are aware, each Director at the date of approval of this report and financial statements confirms that:
there is no relevant audit information of which the Company’s auditor are unaware; and
the arrangements and structures in place are reviewed on an annual basis.
as per Section 330 of the Companies Act 2014, the Directors have taken all steps that they ought to have taken as a Director in order to make themselves
aware of any relevant audit information and to establish that the Company’s auditor are aware of this information.
Directors' compliance policy statement
Page 6
Responsibility statement in accordance with the Transparency Regulation
Each of the persons whose names and functions appear on page 1 confirm to the best of their knowledge:
Director
MBA Community Loans PLC
As the war in Ukraine and Palestine continues, the Directors have assessed the impact this may have on borrowers ability to repay their loans. The total exposure
to Russian citizens based on outstanding balance is immaterial. The Company has reached out to affected borrowers (with a Russian, Ukrainian or Belarussian
nexus) to establish their circumstances, and has offered forbearance. Response has been limited with a small number requesting forbearance. The conflicts in
Palestine have no direct impact on the Company.
Directors' report (continued)
Approved by the Board and signed on its behalf by
Maria Dawson Rhys Owens
Alternate Director
the financial statements, prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company; and
the management report, which is incorporated into the Directors’ report, includes a fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks and uncertainties that it faces.
Russia-Ukraine and Israel-Palestine conflicts
Date:
1 May 2024
Page 7
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Maria Dawson Rhys Owens
Alternate Director Director
Date:
Directors' responsibilities statement
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities
and financial position of the Company and of its profit or loss for that financial year. In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
Company law requires the Directors to prepare financial statements for each financial year. Under the law, the Directors have elected to prepare the financial
statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities, financial
position and profit or loss of the Company and enable them to ensure that the financial statements comply with the Companies Act 2014. They are responsible for
such internal controls as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and
detect fraud and other irregularities. The Directors are also responsible for preparing a Directors' report that complies with the requirements of the Companies Act
2014.
On behalf of the Board
state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
MBA Community Loans PLC
The Directors are responsible for preparing the Directors' report and financial statements, in accordance with applicable law and regulations.
assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do
so.
make judgements and estimates that are reasonable and prudent;
1 May 2024
Independent auditors’ report to the members of MBA Community
Loans PLC
Report on the audit of the financial statements
Opinion
In our opinion, MBA Community Loans PLC’s financial statements:
∙ give a true and fair view of the company’s assets, liabilities and financial position as at 7 January 2024 and of its
result and cash flows for the 6 month period (the “period”) then ended;
∙
have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as
adopted by the European Union; and
∙
have been properly prepared in accordance with the requirements of the Companies Act 2014.
We have audited the financial statements, included within the Directors' report and audited financial statements, which
comprise:
∙ the Statement of financial position as at 7 January 2024;
∙
the Statement of comprehensive income for the period then ended;
∙
the Statement of cash flows for the period then ended;
∙
the Statement of changes in equity for the period then ended; and
∙
the notes to the financial statements, which include a description of the accounting policies.
Our opinion is consistent with our reporting to the Board of Directors.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”) and
applicable law.
Our responsibilities under ISAs (Ireland) are further described in the Auditors’ responsibilities for the audit of the
financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in Ireland, which includes IAASA’s Ethical Standard as applicable to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by IAASA’s Ethical Standard were
not provided to the company.
We have provided no non-audit services to the company in the period from 8 July 2023 to 7 January 2024.
Our audit approach
Overview
Overall materiality
∙ €0.9 million (2023: €1.1 million)
∙
Based on 1% of total assets.
Performance materiality
∙ €0.7 million (2023: €0.8 million)
Audit scope
∙ The Company is a private company incorporated in the Republic of Ireland and
engages Prodigy Finance Limited (the "Loan Servicer") as Manager of the Company's
loan portfolio.
∙
The Company targets investments in student loan assets ("loans and receivables").
These are funded through the issue of loan notes that are listed on the main market of
Euronext Dublin.
∙
We tailored the scope of our audit taking into account the financial assets within the
Company and the involvement of the third parties referred to above.
Key audit matters
∙ Impairment of loans and receivables.
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions and considering future events that are inherently
uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including
evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to
fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Key audit matter How our audit addressed the key audit matter
Impairment of loans and receivables
As detailed in Note 2 (n), Note 9 and Note 15 (a), loans and
receivables are measured at amortised cost.
IFRS 9 requires the recognition of a loss allowance for
expected credit losses (‘ECL’) using the Company’s
forward-looking expectation of credit risk.
With the assistance of our expert, we understood and
evaluated processes and assumptions used in the ECL
model.
∙ We evaluated the methodology documentation for
the development of the ECL model for compliance
with IFRS 9 methodology;
∙ We evaluated the definition of default and the
criteria applied in the classification of loans as
Stage 1, 2 or 3, including the identification of
significant increase in credit risk (‘SICR’). We
As described in the notes to the financial statements,
significant management judgement is required in the
calculation of the ECL.
We focused on what we considered to be the key areas of
management judgement in estimating the provision for
ECL:
∙ The determination by management of the
assumptions used in estimating ECL particularly a
determination of significant increase in the credit
risk (“SICR”) of a borrower as well as collection
profiles;
∙ The consideration, selection, and application of
forward-looking macro-economic information.
assessed the reasonability of the criteria as well as
assessed the level of the thresholds compared to
benchmark metrics, and considered the effect of
forward-looking information;
∙ We tested the completeness and accuracy over
data input to the model;
∙
We evaluated the methodology for estimating the
expected loss parameters (probability of default,
exposure at default and loss given default) and
tested the calculation of these parameters
by reference to historical data on the portfolio;
∙
We considered the appropriateness of forward-
looking prospective information by reference to
external data where applicable;
∙
We reperformed the ECL calculation and
compared our output to management's estimate.
We agreed the year end provision calculation
output from the ECL model to the financial
statements.
We concluded that the provision for ECL was within an
acceptable range of reasonable estimates.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the
industry in which it operates.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality €0.9 million (2023: €1.1 million).
How we determined it 1% of total assets.
Rationale for benchmark
applied
We believe total assets to be the appropriate basis for determining benchmark
materiality since the primary consideration for members of the Company is asset
value.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the
scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for
example in determining sample sizes. Our performance materiality was 75% of overall materiality, amounting to €0.7
million.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our
normal range was appropriate.
We agreed with the Board of Directors that we would report to them misstatements identified during our audit above
€0.09 million (2023: €0.1 million) as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going concern
The Company is a public limited company special purpose vehicle whose principal activity is to issue Notes and make
investments. The Notes issued by the Company are listed on the main market of Euronext Dublin. As noted in Note 2 (c) to
the financial statements, the financial statements have been prepared on a going concern basis as the directors are of the
view that the company can continue in operational existence for the foreseeable future.
Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of
accounting included:
∙ Obtaining an understanding of the key indicators that are monitored with respect to the going concern
assumption and future plans for the Company over the going concern period (being 12 months from the date of
approval of the financial statements). This assessment of going concern considered: 1) intent with regard to the
structure, 2) the obligations and the purpose of the structure, 3) the liquidity of the underlying investment
portfolio; and 4) the nature of the notes;
∙ Reviewing available board minutes during the period under audit and those available up to the date of this report;
∙ Considering post period end activity as recorded in the underlying records.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a
period of at least twelve months from the date on which the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the
company’s ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the Directors' report and audited financial statements other than
the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our
opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or
material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
With respect to the Directors’ Report, we also considered whether the disclosures required by the Companies Act 2014
have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (Ireland) and the
Companies Act 2014 require us to also report certain opinions and matters as described below.
∙ In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors’
Report for the period ended 7 January 2024 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
∙
Based on our knowledge and understanding of the company and its environment obtained in the course of the
audit, we have not identified any material misstatements in the Directors’ Report.
∙
In our opinion, based on the work undertaken in the course of the audit of the financial statements, the
description of the main features of the internal control and risk management systems in relation to the financial
reporting process included in the Corporate Governance Statement, is consistent with the financial statements
and have been prepared in accordance with section 1373(2)(c).
∙
Based on our knowledge and understanding of the company and its environment obtained in the course of the
audit of the financial statements, we have not identified material misstatements in the description of the main
features of the internal control and risk management systems in relation to the financial reporting process
included in the Corporate Governance Statement.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ Responsibilities Statement set out on page 7, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a
true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a
going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the company or to cease operations or have no realistic alternative but to do
so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with
laws and regulations related to breaches of the Companies Act 2014, and we considered the extent to which non-
compliance might have a material effect on the financial statements. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and
determined that the principal risks were related to the risk of management override of controls.
Audit procedures performed by the engagement team included:
∙ Enquiry of management to identify any instances of non-compliance with laws and regulations;
∙
Identifying and testing journal entries, where any such journal entries, that met our specific risk based criteria,
were identified;
∙
Testing material accounting estimates and judgements and considered potential for management bias;
∙
Designing audit procedures to incorporate unpredictability; and
∙
Reviewing minutes of the meetings of the board of directors.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In
other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is
selected.
A further description of our responsibilities for the audit of the financial statements is located on the IAASA website at:
https://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-
a98202dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf
This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance
with section 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2014 opinions on other matters
∙ We have obtained all the information and explanations which we consider necessary for the purposes of our
audit.
∙
In our opinion the accounting records of the company were sufficient to permit the financial statements to be
readily and properly audited.
∙
The financial statements are in agreement with the accounting records.
Other exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of directors’
remuneration and transactions specified by sections 305 to 312 of that Act have not been made. We have no exceptions to
report arising from this responsibility.
Appointment
We were appointed by the directors on 7 July 2020 to audit the financial statements for the year ended 7 July 2020 and
subsequent financial periods. The period of total uninterrupted engagement is four and a half years, covering the
years/period ended 7 July 2020 to 7 January 2024.
Aoife O'Connor
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin
1 May 2024
Page 14
07-Jan-24 07-Jul-23
Note EUR EUR
Interest income on EIR basis 5 5,529,323 12,306,997
Other income 4 149,000
117,150
Operating income
5,678,323
12,424,147
Operating expenses 7 (636,257) (1,641,950)
Finance expense 6 (5,098,124) (10,787,412)
Interest expense on loan from Prodigy Finance Ltd (2,509) (4,918)
Impairment reversal of Loans and Receivables 9 58,567 718,958
Profit before taxation
-
708,825
Tax expense 8 - (111,907)
Profit after taxation
-
596,918
Other comprehensive income
-
-
Total comprehensive profit for the financial period/year
-
596,918
Financial period
ended
Financial year
ended
For the financial period ended 7 January 2024
The notes to the financial statements on pages 18 to 40 form an integral part of these financial statements.
MBA Community Loans PLC
Statement of comprehensive income
Page 15
07-Jan-24 07-Jul-23
Note EUR EUR
9 75,973,949
94,396,171
10 5,308,693
5,683,508
11 6,143,713
7,941,864
87,426,355
108,021,543
13 84,499,644
104,987,342
12 2,874,028
2,981,518
87,373,672
107,968,860
14 40,000
40,000
12,683
12,683
52,683
52,683
87,426,355
108,021,543
Director
Equity
Maria Dawson Rhys Owens
Called up share capital presented as equity
Retained earnings
Total equity
Total liabilities and equity
Date:
Other payables
Total assets
Liabilities and equity
As at 7 January 2024
Assets
Loans and Receivables
Other receivables
MBA Community Loans PLC
Notes issued
Cash and cash equivalents
Statement of financial position
Total liabilities
Liabilities
Alternate Director
On behalf of the Board
The notes to the financial statements on pages 18 to 40 form an integral part of these financial statements.
1 May 2024
Page 16
EUR EUR EUR
40,000 (584,235) (544,235)
Total comprehensive expense for the financial year
Profit for the financial year -
596,918
596,918
Total comprehensive income for the financial year
- 596,918
596,918
40,000 12,683
52,683
Balance at 8 July 2023
40,000 12,683
52,683
Total comprehensive income for the financial period
Profit for the financial period
-
-
-
Total comprehensive income for the financial period
- -
-
40,000 12,683
52,683
Statement of changes in equity
As at 7 January 2024
Share Capital
MBA Community Loans PLC
Balance at 8 July 2022
Balance at 7 January 2024
Balance at 7 July 2023
Retained
earnings
Total
The notes to the financial statements on pages 18 to 40 form an integral part of these financial statements.
Page 17
07-Jan-24 07-Jul-23
Note EUR EUR
Cash flows from operating activities
Profit before taxation -
708,825
Adjustments for:
Net impairment gain on Loans and Receivables (58,567) (718,958)
Foreign exchange movements 7 (198,720) (368,935)
Interest income 5 (5,529,323) (12,306,997)
Finance expense 6 5,098,124
10,787,412
Movements in working capital
Decrease in other receivables -
270,766
(Increase)/decrease in other payables (96,789)
532,643
Net cash used in operating activities
(785,275) (1,095,244)
Cash flows from investing activities
Purchase and origination of Loans and Receivables 9 -
-
Sale of Loans and Receivables 9 -
-
Principal payments received from Loans and Receivables 9 18,030,146
45,787,352
Interest received 5,904,138
14,406,194
Net cash generated from investing activities
23,934,284
60,193,546
Cash flows from financing activities
Issuance of Notes 13 -
-
Principal repayments on Notes issued 13 (19,709,534) (48,932,041)
Interest payments (5,218,218) (9,805,736)
Net cash used in financing activities
(24,927,752) (58,737,777)
Net (decrease)/increase in cash and cash equivalents during the financial period/year (1,778,743)
360,525
Cash and cash equivalents at the start of the financial period/year 7,941,864
7,764,124
Unrealised foreign exchange movements on cash balance (19,408) (182,785)
Cash and cash equivalents at the end of the financial period/year
6,143,713
7,941,864
Statement of cash flows
For the financial period ended 7 January 2024
Financial period
ended
Financial year
ended
MBA Community Loans PLC
The notes to the financial statements on pages 18 to 40 form an integral part of these financial statements.
Page 18
1
2
(a) Basis of preparation
Change in financial year end
(b) Basis of measurement
(c) Going concern
(d) Significant judgements and estimates
(e) New standards, amendments or interpretations
(i) Standards effective for annual periods beginning on or after 1 January 2023
The following standards were effective during the financial period:
- IFRS 17 Insurance Contracts
- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
Corporate information
- Definition of Accounting Estimates - Amendments to IAS 8
The adoption of the above standards has not had any material impact on the disclosures or on the amounts reported in these financial
statements.
The financial statements have been prepared on a going concern basis because the Directors consider that this is a fair basis for presenting the results
of the accounting period and the state of the affairs at the end of the financial year. Having considered the Company's future cash flows and its
business plans, the Directors confirm they have a reasonable expectation that the Company has adequate resources to continue in operational existence
for the next 12 months, and that the financial statements have been properly prepared on a going concern basis. Also, the Notes issued by the Company
are limited recourse in nature and the ultimate risk is borne by the Noteholders and not the Company. The Directors have not identified any material
uncertainties in relation to going concern.
The preparation of the financial statements in conformity with IFRS and its interpretations as adopted by the EU requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates. The main area where judgement and estimates are utilised is in relation to the
expected credit losses on the Loans and Receivables.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial year in
which the estimate is revised if the revision affects only the financial year or in the financial year of the reviews and future financial years if the
revision affects both current and future financial years.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the entity's financial
statements relate to the IFRS 9 expected credit loss (“ECL”) calculation and are disclosed in note 2 n (vi) and note 15 (a) to the financial statements.
During the financial period, the financial year end changed from 7 July to 7 January. Consequently, the Statement of comprehensive income, the
Statement of changes in equity, the Statement of cash flows and the related notes are for a period of 6 months for the period ended 7 January 2024 and
the Statement of financial position is as at 7 January 2024. The comparative figures are for a period of one year for the year ended 7 July 2023.
The Company's financial assets, Loans and Receivables, financial liabilities and Notes issued are measured at amortised cost.
- Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
The Company is a public limited company incorporated under the laws of Ireland with the registered office address 2nd Floor, Block 5, Irish Life Centre,
Abbey Street Lower, Dublin 1, Ireland and company number 486917. The Company was incorporated on 22 July 2010 and is domiciled in the Republic of
Ireland. The Notes issued by the Company are listed on the main market of the Euronext Dublin.
The sole shareholder is Apex Trust Nominees No. 1 Limited (the Share Trustee), which is a company incorporated in England and Wales who owns 100%
of the issued shares (7 July 2023: 100%).
Accounting policies
The financial statements are prepared on the historical cost basis.
MBA Community Loans PLC
Notes to the financial statements
For the financial period ended 7 January 2024
The Company's financial statements have been prepared in accordance with IFRS and its interpretations as adopted by the EU and as applied in
accordance with the Companies Act 2014. The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods
presented in these financial statements. The comparative information relates to the financial year ended 7 July 2023.
Page 19
2
(e) New standards, amendments or interpretations (continued)
(ii) Standards available for adoption
Description
Amendment to IAS 1 – Non-current liabilities with covenants
(f) Finance income and finance expense
(g) Operating expenses
(h) Other receivables
(i) Functional and presentation currency
(j) Foreign currencies
(k) Other payables
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
Impact of revision of cash flows on Notes issued relates to changes in estimated future cashflow arising on the liabilities. The loan asset impairment is
now based on an expected credit loss model in line with the requirements of IFRS 9 and therefore the Company has used the ECL estimates as part of
the calculation of the amortised cost carrying amount of the loan liabilities.
01 January 2024
01 January 2024
For Stage 1 and Stage 2 loans, the finance income is calculated using the effective interest rate on gross carrying amount while for Stage 3 loans, the
finance income is based on the effective interest rate on gross carrying amount less loss allowance.
Foreign currency differences arising on retranslation are recognised through profit or loss in the statement of comprehensive income and are included
under net foreign exchange gain/loss, as appropriate.
Other payables are classified as financial liabilities and are subsequently measured at amortised cost.
Other receivables include interest receivable and are measured at amortised cost.
These financial statements are presented in Euro (EUR) which is the Company’s functional currency. Functional currency is the currency of the
primary economic environment in which the entity operates. The issued share capital of the Company is denominated in EUR and the Directors of the
Company believe that EUR most faithfully represents the economic effects of the underlying transactions, events and conditions.
The amounts in these financial statements are rounded to the nearest EUR.
Amendment to IFRS 16 – Leases on sale and leaseback
01 January 2024
01 January 2024
Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at the dates of the transactions. Monetary
assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.
The operating expenses of the Company are recognised in the financial statements on an accruals basis. The expenses include administration fees
(calculated on Note originations at 0.75%) and annual management fees (calculated on a monthly basis as 2% per annum of the total performing loan
outstanding) charged by the Loan Servicer. The remaining expenses are listed in note 7 to the financial statements.
*Where new requirements are endorsed, the EU effective date is disclosed. For un-endorsed standards and interpretations, the IASB’s effective date is
noted. Where any of the upcoming requirements are applicable to the Company, it will apply them from their EU effective date.
The Directors have considered the new standards as detailed in the above table and do not plan to adopt the standards early. The application of the
above standards will be considered in detail in advance of a confirmed effective date by the Company.
Finance expense includes interest expense and any impact of revision of cash flows on the Notes issued. Interest expense is calculated using the
effective interest rate on gross carrying amount. Interest expense is payable following the payment of certain fees and expenses out of income received
on the loans and is payable up to the accrued interest balance.
Effective date*
For the financial period ended 7 January 2024
Accounting policies (continued)
MBA Community Loans PLC
Notes to the financial statements (continued)
Lack of exchangeability – Amendments to IAS 21 01 January 2025
Page 20
2
(l) Taxation
(m) Cash and cash equivalents
(n) Financial instruments
(i) Initial recognition of financial instruments
(ii) Classification and subsequent measurement of financial assets
Classification of financial assets
●
●
●
●
At initial recognition, financial liabilities are classified into two categories: financial liabilities measured at FVTPL and other financial
liabilities.
The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash
flow characteristics. On initial recognition, a financial asset is classified as measured at amortised cost, at FVOCI or at FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing
financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in
the business model.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets;
and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
Income tax expense comprises current and deferred tax. Income tax expense, when arising, is recognised through profit or loss, in other comprehensive
income or directly in equity consistent with the accounting for the item to which it is related. Current tax is the expected tax payable on the taxable
income for the financial year, using tax rates applicable to the Company’s activities enacted or substantively enacted at the reporting date, and
adjustment to tax payable in respect of previous financial years.
Deferred tax is provided for temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. Deferred tax is not recognised for temporary differences arising on the initial recognition of assets or
liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted
by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
For financial assets and financial liabilities measured at FVTPL, any related directly attributable transaction costs are charged to profit or loss;
for other categories of financial assets and financial liabilities, any related directly attributable transaction costs are included in their initial
costs.
Cash and cash equivalents include deposits held on call with banks, other short term highly liquid investments with original maturities of less than
three months which are subject to insignificant risk of changes in their fair value, and are used by the Company for the management of its short term
commitments. Cash and cash equivalents are carried at amortised cost in the statement of financial position.
Notes to the financial statements (continued)
For the financial period ended 7 January 2024
Accounting policies (continued)
MBA Community Loans PLC
At initial recognition, financial assets are classified into three categories: financial assets measured at amortised cost, financial assets measured
at fair value through other comprehensive income (“FVOCI”) and financial assets measured at fair value through profit or loss (“FVTPL”).
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
Page 21
2 Accounting policies (continued)
(n) Financial instruments (continued)
(ii) Classification and subsequent measurement of financial assets (continued)
Classification of financial assets (continued)
Subsequent measurement of financial assets
Financial assets measured at amortised cost
(iii) Classification and subsequent measurement of financial liabilities
Financial liabilities at amortised cost
(iv) Presentation of financial instruments
●
●
the Company intends either to settle on a net basis, or to realise the financial asset and settle the financial liability simultaneously.
Financial assets and financial liabilities are generally presented separately in the statement of financial position and are not offset. However, a
financial asset and a financial liability are offset and the net amount is presented in the statement of financial position when both the following
conditions are satisfied:
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition,
the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI
as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Classification and measurement of financial assets depends on the results of the SPPI (Solely Payments of Principal and Interest) and the
business model test. The Company determines the business model at a level that reflects how groups of financial assets are managed together to
achieve a particular business objective. This assessment includes judgement reflecting all relevant evidence including how the performance of
the assets is evaluated and their performance measured, the risks that affect the performance of the assets and how these are managed.
Monitoring is part of the Company's continuous assessment of whether the business model for which the remaining financial assets are held
continues to be appropriate and if it is not appropriate whether there has been a change in business model and so a prospective change to the
classification of those assets. No such changes were required during the periods presented.
These assets are subsequently measured at amortised cost using the effective interest method. A gain or loss on a financial asset that is
measured at amortised cost and is not part of a hedging relationship shall be recognised in profit or loss when the financial asset is
derecognised, through the amortisation process or in order to recognise impairment gains or losses.
Financial liabilities are classified as measured at FVTPL or amortised cost. Based on IFRS 9 assessment, the Company has classified its
liabilities at amortised cost.
Financial liabilities at amortised cost are subsequently measured at amortised cost adjusted for the impact of revision of cash flows on Notes
issued.
MBA Community Loans PLC
The business model refers to how the Company manages its financial assets in order to generate cash flows. That is, the Company’s business
model determines whether cash flows will result from collecting contractual cash flows, selling financial assets or both. The Company
determines the business model for managing the financial assets according to the facts and based on the specific business objective for
managing the financial assets determined by the Company’s key management personnel.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of
the instrument. For the purposes of this assessment, ‘principal’ is defined as the fair value of the student loans on initial recognition. ‘Interest’
is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a
particular period of time and for other basic lending risks and costs, as well as a profit margin. The Company also assesses whether the
financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this
condition.
Notes to the financial statements (continued)
the Company currently has a legally enforceable right to set off the recognised amounts; and
For the financial period ended 7 January 2024
Page 22
2 Accounting policies (continued)
(n) Financial instruments (continued)
(v) Derecognition of financial assets and liabilities
Financial assets
●
●
●
Financial liabilities
(vi) Impairment of assets
●
Impairment of financial assets
Significant Increase in Credit Risk ("SICR")
Under IFRS 9, impairments on Loans and Receivables classified as stages 2 and 3 are based on lifetime expected credit losses, using
a forward-looking expectation of deterioration of credit risk. At each reporting date, an impairment loss equal to 12-month expected
credit losses (allocated to stage 1) is recognised for all financial assets for which there is no significant increase in credit risk since
initial recognition. For financial assets for which there is a significant increase in credit risk since their initial recognition (allocated
to stage 2), and that are credit impaired (allocated to stage 3) an impairment loss equal to lifetime expected credit losses will be
recognised. The Loan Servicer impairs its loan book according to the status of each loan’s credit risk.
The Loan Servicer holds lifetime impairments for loans where we can identify that a significant increase in credit risk has occurred.
This will include loans that are delinquent, loans that have been granted payment arrangements and loans that have defaulted. If an
up-to-date loan is expected to become delinquent within 12 months (if they are in repayment) or delinquent in the first 12 months of
repayment (if they are in grace), the Loan Servicer will hold lifetime impairments now instead of only after the delinquency occurs.
This ensures a forward-looking approach. It will make use of the 12-month delinquency rate to set thresholds to identify if an
increase in credit risk is significant. Loans are grouped into risk bands based on their 12-month PDs. Separate thresholds are
calculated for each risk group. To calculate the thresholds, first it looks at the through-the-cycle average proportion of loans that
become delinquent (bucket 2 or worse) within the next 12-months (loans in repayment) or first 12 months (loans in grace). It then
groups loans according to their percentage increase in lifetime PD. This is done by comparing the current lifetime PD to the lifetime
PD at origination. Then it uses the above delinquency rates to find a threshold above which it expects accounts to become
delinquent.
The Company derecognises a financial liability (or part of it) only when its contractual obligation (or part of it) is extinguished.
the Company’s contractual rights to the cash flows from the financial asset expire;
the financial asset has been transferred and the Company transfers substantially all of the risks and rewards of ownership of the
financial asset; or
the financial asset has been transferred, although the Company neither transfers nor retains substantially all of the risks and rewards
of ownership of the financial asset, it does not retain control over the transferred asset.
Impairment of financial assets is accounted for using the following principles:
The Company recognises loss allowances for ECL on financial assets measured at amortised cost including Loans and Receivables.
Under IFRS 9, student loans which fall into arrears of 90+ days are considered, non-performing loans, and are specifically impaired
(default). The arrears analysis of non-performing loans include interest charges. Expected credit losses provisions are calculated
using a forward-looking expectation of deterioration of credit risk. Management along with its Loan Servicer will continue to
monitor historical trends, current economic factors and layer in future economic data to update its impairment provision model
accordingly.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e.
the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects
to receive).
Where the Company has transferred its rights to receive cash flows from an asset or has retained its rights to receive cash flows from the asset
but assumed the obligation to pay those cash flows to the eventual recipients and meanwhile meet the conditions of the transfer of financial
assets, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is
recognised to the extent of the Company’s continuing involvement in the asset.
MBA Community Loans PLC
Notes to the financial statements (continued)
For the financial period ended 7 January 2024
Financial asset is derecognised when one of the following conditions is met:
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of
the asset and the maximum amount of consideration that the Company could be required to repay.
When the terms and conditions of a loan have been significantly modified due to arrangements with the borrowers, the Company derecognises
the initial and records a new asset in accordance with the new terms of the loan.
Page 23
2 Accounting policies (continued)
(n) Financial instruments (continued)
(vi) Impairment of assets (continued)
Macro-Economic Forecast
●
●
● Upside – 10%
● Base – 60%
● Downside – 30%
The macro scenarios are as follows:
Upside Base Downside Weighted No FLI
Weighting 10% 60% 30% N/A N/A
GDP 10,476 - 73,028 8,012 - 66,065 4,194 - 55,966 7,113 - 63,732 N/A
Inflation 0.12% - 2.992% 2.73% - 4.39% 8.42% - 11.80% 4.18% - 6.47% N/A
Unemployment 3.02% - 3.54% 4.46% - 8.14% 8.99% - 11.44% 5.68% - 8.67% N/A
Grace/Ahead/On-Schedule SICR % 5.41% 5.41% 5.41% 5.41% 5.41%
Total Loans 4,042 4,042 4,042 4,042 4,042
Total Balance 110,569,239 110,569,239 110,569,239 110,569,239 110,569,239
12-Month PD % 34.66% 34.76% 35.07% 34.83% 34.32%
Lifetime PD % 45.52% 46.40% 49.15% 46.98% 42.52%
EAD % 80.69% 80.84% 80.96% 81.03% 80.91%
LGD % 54.44% 54.44% 54.44% 54.44% 54.44%
IFRS 9 Impairment 28,372,210 28,437,484 28,590,322 28,472,569 28,200,870
Coverage ratio 25.66% 25.72% 25.86% 25.75% 25.51%
For the financial period ended 7 January 2024
The Loan Servicer needs to use macroeconomic variables that are readily available and expected to be available in the future. The
Loan Servicer has therefore chosen GDP, Inflation and Unemployment Rate. Variables such as Debt to Income might make more
sense in the case of unsecured debt, but this variable (and others who might also be intuitive) is not populated/forecast for each
country in the IMF World Economic Outlook.
The Loan Servicer will group residence by continent so that it has sufficient data points in each group. Macroeconomic variables
from the largest geographies within each continent will be used, so that the Loan Servicer is using metrics that are representative
within each continent. The 12- and 24-month PD models will be adjusted with macroeconomic data separately. Logistic regression
models are used, based on the 12- or 24-month PD’s together with the macroeconomic variables described above. These models are
deemed reasonable if the macroeconomic variables result in intuitive changes in the PD values (for example, an improved GDP
leading to improved credit risk) as well as not resulting in a worse r-squared (we prefer an improved r-squared, but where this is not
the case, the Loan Servicer will ensure that the r-square does not deteriorate significantly when incorporating macroeconomic
variables). The IMF World Economic Outlook is used as the Base forecast. The Loan Servicer has created 2 additional scenarios
using data from the year 2020 onwards:
MBA Community Loans PLC
The base case for forward-looking macroeconomic information is sourced from the International Monetary Fund (IMF) World
Economic Outlook. The IMF update their World Economic Outlook twice per year – once in April, and once in October. This
ensures that the Loan Servicer has forward-looking macroeconomic data for most of the countries in the portfolio. It will use this
information to adjust the previously calculated lifetime default curves, to introduce a forward-looking macroeconomic effect to the
IFRS 9 expected credit losses. Since the nature of the client base is to move around internationally, it can happen that they do not
always update their residence country. They estimate their residence based on additional information, such as the country where they
are making payments from and the location of the IP address where they log in to the Prodigy Finance app.
Notes to the financial statements (continued)
Upside – consider the best 10th percentile point (GDP/Inflation/Unemployment). The difference between this and
the 50th percentile is applied to the base case forecast to design the upside scenario.
Downside – consider the worst 10th percentile point (GDP/Inflation/Unemployment). The difference between this
and the 50th percentile is applied to the base case forecast to design the downside scenario. It will use this weighting
when calculating impairments:
Impairment of financial assets is accounted for using the following principles (continued):
Page 24
2 Accounting policies (continued)
(n) Financial instruments (continued)
(vi) Impairment of assets (continued)
Impairment of financial assets is accounted for using the following principles (continued)
●
Measurement of ECLs
The status of the loans are defined below:
Grace and Ahead
Delinquency and Default
Forbearance
Impairments are calculated differently for each stage of credit risk:
●
Measurement of ECLs (continued)
Stage Allocation Impairment
Stage 1 Grace
Ahead
On-Schedule
Stage 2 More than 30 days past due (delinquent)
Significant Increase in Credit Risk
Stage 3 More than 90 days past due (default)
Settled with Outstanding Balance
Arrangements
Post-Term Loans
Stage 1
Stage 2
Stage 3
●
Presentation of allowance for ECL
Notes to the financial statements (continued)
For the financial period ended 7 January 2024
MBA Community Loans PLC
Loans in stage 3 are impaired based on expected credit losses over specific impairment.
Loans that are delinquent or that have triggered SICR are classified as stage 2.
Loans in stage 2 are impaired based on expected credit losses over the entire lifetime of the loan.
Loans that are in default, in arrangement, post term or settled but still have an outstanding balance are classified as
stage 3.
During the grace period, or when borrowers are ahead of schedule with repayments, no repayments are required. Borrowers are said
to be in grace while they are studying, and this period can be either 1 or 2 years depending on the length of the course.
Cash and cash equivalents and other receivables (excluding finance income receivable) are low risk assets. The Company has
determined that the application of IFRS 9's impairment requirements at 8 July 2023 and 7 January 2024 did not result in any
material impairment allowance.
Loans that are in grace, ahead or on-schedule that have not triggered SICR are classified as stage 1.
Loans that are more than 30 days past due are defined to be delinquent. Delinquency buckets are based on the amount of days past
due. The non-performing loan book consists of all loans where objective evidence of credit impairment (default) is observed. Loans
are defined to be in default once they are more than 90 days past due.
Borrowers can request temporary payment arrangements if they are experiencing temporary financial difficulty, which means their
loan status will be ‘Arrangement’. These requests are either approved/declined based on the Credit Risk Operational Committee
decision. Arrangements as well as loans that are post-term are considered to be in forbearance. All forbearance loans are defined to
be in stage 3.
Loan Status
12-Month Expected Credit Losses
ECLs are remeasured at the end of each reporting period to reflect changes in the financial instrument’s credit risk since initial
recognition. Any change in the ECL amount is recognised as an impairment in profit or loss. The Company recognises an
impairment gain or loss for financial instruments measured at amortised cost with a corresponding adjustment to their carrying
amount through a loss allowance account. The Company recognises loss allowances for Loans and Receivables.
Loans in stage 1 are impaired based on expected credit losses over the next 12 months.
Lifetime Expected Credit Losses
Specific Impairment on expected
credit loss basis
Page 25
2 Accounting policies (continued)
(n) Financial instruments (continued)
(vi) Impairment of assets (continued)
●
Write-off
(vii) Offsetting of financial instruments
(o) Segmental reporting
EUR EUR EUR EUR
1,364,867 23,595,802 (4,871,771) 1,151,703
USA 148,152 3,347,460 (701,694) 109,303
United Kingdom 306,894 5,967,891 (1,458,261) 186,636
Brazil 648,555 9,691,235 (3,017,687) 599,416
Russia 73,719 1,711,756 (634,993) 100,074
Ukraine 27,206 684,155 (368,043) 72,547
Others 2,959,930 58,955,946 (16,839,162) 3,089,014
5,529,323 103,954,245 (27,891,611) 5,308,693
EUR EUR EUR EUR
India 1,688,643 29,065,082 (5,124,585) 1,304,623
USA 82,510 3,942,986 (687,837) 109,148
United Kingdom 264,222 7,157,984 (1,540,298) 195,525
Brazil 729,955 14,606,947 (2,999,028) 631,223
Russia 69,740 2,080,109 (677,851) 104,529
Ukraine 119,981 728,633 (387,551) 82,822
Others 9,351,946 64,853,293 (16,621,713) 3,255,639
12,306,997 122,435,034 (28,038,863) 5,683,508
Notes to the financial statements (continued)
For the financial period ended 7 January 2024
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the
liabilities simultaneously. This policy is applicable for both financial period ended 7 January 2024 and for the financial year ended 7 July
2023.
MBA Community Loans PLC
Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the
period in which the recovery occurs.
07-Jul-23
Finance income
Loan principal
Interest
receivable
Following Russia-Ukraine conflict, the Directors have assessed the loan portfolios situated under the Russian and Ukraine geography and concluded that
there is no material impact which would require disclosure in the financial statements.
The book value of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of
recovery. A write-off constitutes a derecognition event. This is generally the case when the Company determines that the debtor does
not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.
However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s
procedures for recovery of amounts due. No such event occurred during the financial period ended 7 January 2024 and financial
year ended 7 July 2023.
Loan principal
The Company has applied IFRS 8 Operating Segments which puts emphasis on the "management approach" to reporting on operating segments. An
operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses. The
Company is engaged in one segment, which involves the packaging of student loans for international students, purchased from Prodigy Finance
Limited, on behalf of investors.
Financial results of operating in this segment encompass total assets of EUR 87,373,672 and total liabilities of EUR 87,462,355 (financial year ended
7 July 2023: EUR 108,021,543 and EUR 107,968,860). The segment also generated a profit after taxation for the financial period ended 7 January
2024 of EUR Nil (financial year ended 7 July 2023: profit of EUR 596,918). The Directors are considered to be the chief operating decision makers.
Impairment
provision
Interest
receivable
India
Impairment
provision
The following is a geographical analysis of the income from Loans and Receivables by the students' current country of residence:
07-Jan-24
Finance income
Page 26
3 Directors and employees
4 Other income
07-Jan-24 07-Jul-23
EUR EUR
149,000
117,150
149,000
117,150
5 Interest income on EIR basis
07-Jan-24 07-Jul-23
EUR EUR
-
4,449,205
8,452,534
-
income on non-performing Loans and Receivables 1,080,118
3,854,463
5,529,323
12,306,997
6 Finance expense
07-Jan-24 07-Jul-23
EUR EUR
5,213,655
10,118,670
(115,531)
668,742
5,098,124
10,787,412
7 Operating expenses
07-Jan-24 07-Jul-23
EUR EUR
679,581
1,898,349
155,396
112,536
(198,720) (368,935)
636,257
1,641,950
Included in other expenses:
07-Jan-24 07-Jul-23
EUR EUR
-
-
-
-
-
-
07-Jan-24 07-Jul-23
EUR EUR
87,350
141,274
-
-
87,350
141,274
Impact of revision of cash flows on Notes issued
The result arrived at after charging:
Auditor's fees
Taxation fees
The operating expense of the Company are settled by the loan servicer Prodigy Finance Limited.
Coupon expense on Notes issued
Financial period
ended
Financial
period ended
Other expenses
Financial period
ended
Financial year
ended
Foreign exchange gain
Financial period
ended
Financial
period ended
No remuneration was paid to the Directors of the Company in respect of the financial period ended 7 January 2024 (financial year ended 7 July 2023: EUR
nil). The Company has no employees (2023: none) during the financial period and the Directors who are also employees of Apex Group received no
remuneration during the financial period (2023: EUR nil). The terms of the corporate services agreement provide for a single fee for the provision of
corporate services (including making available of individuals to act as Directors of the Company). The Company has allocated an amount of 1% of the total
administration fees paid to Apex IFS Limited for the provision of the services of a Director. The individuals acting as Directors do not (and will not), in
their personal capacity or any other capacity, receive any fee for acting or having acted as Directors of the Company. As a result, the allocation of fees
between the different services provided is a subjective and approximate calculation.
*The Reimbursement by Loan Servicer relates to the funding of certain operating expenses of the Company by the Loan Servicer.
Interest income on Loans and Receivables
income on performing Loans and Receivables
Notes to the financial statements (continued)
MBA Community Loans PLC
Other non-audit services
Auditors' remuneration for work carried out relate to fees payable to PWC, the Statutory audit firm. Fees are exclusive of VAT and include expenses.
Financial period
ended
Financial
period ended
Auditor's remuneration for work carried out for the Company in respect of the
financial period is as follows:
For the financial period ended 7 January 2024
Management fees - annual fee 2%
Financial period
ended
Financial
period ended
Reimbursement by Loan Servicer*
Financial period
ended
Financial year
ended
Audit of individual company accounts
Page 27
8 Tax expense
07-Jan-24 07-Jul-23
Current tax: EUR EUR
Current tax on income for the period/year -
177,206
Utilisation of tax losses carried forward - (177,206)
Total current tax credit
-
-
Deferred tax:
Reversal of temporary differences -
111,907
Total deferred tax charge -
111,907
Total tax charge
-
111,907
Reconciliation of effective tax rate
Profit on ordinary activities before tax -
708,825
-
177,206
Utilisation of tax losses carrying forward - (177,206)
Reversal of temporary differences -
111,907
Total tax charge for the period/year -
111,907
Tax losses
Unused tax losses for which no deferred tax asset has been recognised - (974,769)
Potential tax benefit at 25% - (243,692)
9 Loans and Receivables
07-Jan-24 07-Jul-23
EUR EUR
122,435,034
170,940,715
(18,030,146) (45,787,352)
(450,643) (2,718,329)
103,954,245
122,435,034
07-Jan-24 07-Jul-23
EUR EUR
(28,038,863) (28,757,821)
Impairment reversal of student loans during the financial period/year 792,140
1,796,665
(733,573) (1,077,707)
(27,980,296) (28,038,863)
75,973,949
94,396,171
Unrealised foreign exchange movement
Balance at end of financial period/year
Impairment of student loans
Balance at beginning of financial period/year
Foreign exchange loss on impairment of student loans
Balance at end of financial period/year
Net book value
Less principal repayments
For the financial period ended 7 January 2024
MBA Community Loans PLC
Notes to the financial statements (continued)
During the financial period, the Company acquired EUR Nil and sold EUR Nil (financial year ended 7 July 2023: acquired EUR Nil and sold EUR Nil) of
loan assets. These assets consist of portfolios of student loans. Please refer to note 13 to the financial statements.
At Cost
Loans and Receivables
Balance at beginning of financial period/year
Profit on ordinary activities multiplied by higher rate of corporation tax in Ireland of 25% (2023: 25%).
Effects of:
The total tax charge in future periods will be affected by any changes to corporation tax rates in force in the Republic of Ireland. In prior financial year, the
temporary difference relates to the tax adjustment arisen on the impairment, following the first time adoption of IFRS 9., which had been fully amortised
over 5 years since 2019 , finishing in July 2023.
Financial period
ended
Financial
period ended
The reconciliation of current tax on profit on ordinary activities to the total tax charge for the financial period 7 January 2024 is shown as follows:
Page 28
9 Loans and Receivables (continued)
07-Jan-24 07-Jul-23
EUR EUR
< 1 year 12,748,410
13,601,356
1 to 2 years 12,748,410
13,601,356
2 to 5 years 25,496,820
27,202,712
> 5 years 24,980,309
39,990,747
75,973,949
94,396,171
10 Other receivables 07-Jan-24 07-Jul-23
EUR EUR
Interest income receivable 5,308,693
5,683,508
5,308,693
5,683,508
11 Cash and cash equivalents 07-Jan-24 07-Jul-23
EUR EUR
6,103,713
7,901,864
40,000
40,000
6,143,713
7,941,864
12 Other payables
07-Jan-24 07-Jul-23
EUR EUR
1,718,851
1,729,552
165,932
190,840
Loan from Prodigy Finance Ltd 169,098
166,588
Payable to loan Servicer 820,147
894,538
2,874,028
2,981,518
For the financial period ended 7 January 2024
Student loans which fall into arrears of 90+ days are considered, non-performing loans, and are specifically impaired (default). The arrears analysis of non-
performing loans include interest charges after the loan is considered a non-performing loan. Expected credit losses provisions are provided for student
loans that fall into arrears less than or equal to 90 days (ahead, grace, on-schedule and delinquencies) and also for performing and grace period loans.
Expected credit losses provisions are calculated using a forward-looking expectation of deterioration of credit risk. Management along with its Loan
Servicer will continue to monitor historical trends, current economic factors and layer in future economic data to update its impairment provision model
accordingly.
MBA Community Loans PLC
Notes to the financial statements (continued)
Management fees payable to Loan Servicer
The Notes bear interest at a rate based on a margin plus three-month Euribor (some Notes have a floor on Euribor of 0%), three-month USD Libor (for
Series 10, 19, 27, 35, 37, 38, 39, 40, 41, 42, 43, 44, 45, 47, 48, 49, 52, 54, 55, 58, 59, 60, 61, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 80, 82, 83, 84, 85, 86,
87, 89, 90, 92, 93, 95, 98, 100, 101, 105, 107, 108, 109, 110, 111, 113, 114, 115, 117, 118, 121, 122, 126, 134, 160, 170 and 201), synthetic GBP Libor as
approved by FCA (for Series 15, 16, 17, 22, 23, 24, 29, 30, 31, 32, 34, 36, 51, 53, 56, 62, 75, 76, 77, 88, 97, 102, 147, 150, 151, 152, 153, 164, 167, 183
and 184) and GBP BOE (as denoted at note 13 to the financial statements) as determined on the relevant Euribor and GBP Libor determination date which
is paid subject to available cashflows from the student loans.
Maturity analysis
Interest payable on Notes issued (Note 13)
HSBC Bank Plc
Barclays Bank Plc
The Company's cash balances are held with HSBC Bank Plc and Barclays Bank Plc at their London and Coventry branches.
The Company’s cash is held mainly with HSBC Bank Plc and Barclays Bank Plc which have a short term credit rating of A-1 and A-1 respectively from
Standard and Poor’s as at 7 January 2024 (2023: A-1 and A-1).
Each Series of loans and Notes in issue has a separate bank account with HSBC Bank Plc, through which all transactions for the specific Series are made.
The paid up share capital of the Company, amounting to EUR 40,000 is held in a segregated bank account with Barclays Bank Plc.
Page 30
13 Notes issued
07-Jan-24 07-Jul-23
EUR EUR
Balance at beginning of financial period/year 104,987,342
156,498,101
Cash transactions
Issuance of Notes -
-
Principal repayment on Notes (19,709,534) (48,932,041)
791,217
1,731,621
Unrealised foreign exchange movement (662,633) (3,233,560)
Excess (loss)/gain transferred to the Noteholders (906,748) (1,076,779)
Balance at end of financial period/year 84,499,644
104,987,342
Reconciliation of finance expense:
Opening interest payable on Notes issued 1,729,552 1,453,107
Interest payments during the financial period/year (5,218,218) (9,805,736)
Coupon expense on Notes issued 5,213,655 10,118,670
Unrealised foreign exchange movement (6,138) (36,489)
Closing interest payable on Notes issued 1,718,851
1,729,552
Ccy 07-Jan-24 07-Jul-23
EUR EUR EUR EUR EUR
6 EUR 3,451,700 (3,451,700) - - (207)
7 GBP 548,614 (548,614) - - (1,673)
8 EUR 295,700 (295,700) - -
35
9 EUR 2,908,600 (2,887,438) - 21,162
21,162
10 USD 852,950 (614,740) (78,553) 159,657
170,146
11* EUR 2,979,417 (2,707,841) (265,731) 5,845 (104,784)
12 GBP 1,128,730 (1,128,730) - - (14,861)
15 GBP 440,205 (385,734) (16,534) 37,937
48,826
16 GBP 338,619 (338,619) - - (20,365)
17* GBP 3,708,731 (3,601,443) (94,427) 12,861
81,820
18 EUR 3,883,130 (3,883,130) 2,547 2,547
3,124
19 USD 3,661,896 (2,890,337) (402,918) 368,641
453,463
20 EUR 115,200 (115,200) - - (7)
21 EUR 3,505,931 (3,505,930) 99 100
99
22 GBP 403,957 (372,906) (30,952) 99
100
23 GBP 998,362 (984,924) (7,159) 6,279
7,368
24 GBP 451,492 (451,492) 99 99 (300)
25 EUR 3,403,502 (3,222,869) (177,952) 2,681
4,067
26 EUR 285,000 (262,896) (22,104) -
-
33,361,736 (31,650,243) (1,093,585) 617,908
648,013
The outstanding balance of the Notes in issue at 7 January 2024 and 7 July 2023 are as follows:
Series
Original nominal
Cumulative
issuances/
payments
Cumulative
impact of
revision of cash
flows
Sub total
Impact of revision of cash flows on Notes issued
For the financial period ended 7 January 2024
MBA Community Loans PLC
Notes to the financial statements (continued)
Page 31
13
Ccy 07-Jan-24 07-Jul-23
EUR EUR EUR EUR EUR
Sub total 33,361,736 (31,650,243) (1,093,585) 617,908
648,013
27 USD 1,066,188 (847,029) (135,959) 83,200
96,707
28* EUR 4,715,793 (4,610,348) (58,735) 46,710
60,680
29 GBP 1,805,968 (1,696,248) (103,637) 6,083
12,965
30 GBP 919,915 (872,292) (38,587) 9,036
11,136
31 GBP 327,332 (327,332) 99 99
100
32 GBP 231,954 (231,954) 99 99
100
34 GBP 500,027 (430,797) (69,132) 98
100
35 USD 1,066,188 (989,134) (10,635) 66,419
85,311
36* GBP 1,241,603 (1,115,325) (112,007) 14,271
30,067
37 USD 1,279,425 (1,224,801) 42,644 97,268
138,812
38 USD 980,893 (759,445) (133,947) 87,501
118,402
39 USD 1,066,188 (923,454) (99,041) 43,693
61,619
40 USD 2,558,850 (1,823,729) (631,229) 103,892
116,098
41 USD 1,765,607 (1,421,505) (185,375) 158,727
188,978
42 USD 1,279,425 (1,049,271) (66,918) 163,236
185,804
43 USD 2,558,850 (1,712,095) (642,921) 203,834
244,036
44 USD 6,104,347 (3,522,448) (2,237,339) 344,560
396,692
45 USD 1,748,548 (1,340,606) (362,516) 45,426
52,816
46* EUR 3,274,879 (3,192,199) (77,135) 5,545
39,202
47 USD 2,737,970 (2,096,824) (401,267) 239,879
263,735
48 USD 2,558,850 (1,711,249) (690,030) 157,571
175,263
49 USD 7,036,838 (5,017,920) (1,510,092) 508,826
714,293
50 EUR 3,765,753 (3,319,500) (301,575) 144,678
175,117
51 GBP 2,504,910 (2,221,861) (92,991) 190,058
273,328
52 USD 5,670,784 (4,921,562) (434,532) 314,690
449,844
53 GBP 919,915 (796,573) (91,105) 32,237
53,179
54 USD 3,625,038 (3,130,174) (356,990) 137,874
255,484
55 USD 4,264,750 (3,586,437) (391,911) 286,402
396,498
56 GBP 507,929 (423,704) (19,700) 64,525
95,255
57 USD 200,443 (184,584) 4,863 20,722
22,983
58 USD 2,132,375 (1,240,057) (687,793) 204,525
237,240
59 USD 682,360 (603,501) (190) 78,669
90,534
60 USD 1,705,900 (1,337,387) (199,215) 169,298
167,984
61 USD 1,450,015 (1,119,536) (213,281) 117,198
152,448
62 GBP 959,421 (904,782) (38,213) 16,426
24,897
63 EUR 3,403,294 (3,117,247) (167,015) 119,032
168,726
64 USD 1,194,130 (883,215) (39,797) 271,118
299,865
65 USD 938,245 (866,417) (15,499) 56,329
64,039
66 USD 1,172,806 (836,041) (177,780) 158,985
184,261
67 USD 1,492,663 (1,210,479) (218,094) 64,090
74,883
68 USD 3,838,275 (2,725,950) (822,863) 289,462
405,445
69 USD 712,213 (712,213) 13,131 13,131
36,679
70 USD 852,950 (651,696) (178,833) 22,421
22,284
71 USD 426,475 (393,973) (2,690) 29,812
34,717
72 USD 2,670,586 (2,003,523) (433,621) 233,442
263,990
73 USD 758,614 (758,614) 47,035 47,035
119,278
75 GBP 5,951,762 (4,947,657) (453,840) 550,265
804,626
76 GBP 406,401 (293,832) (48,376) 64,193
81,942
77 GBP 665,189 (487,067) (98,604) 79,518
93,938
133,060,570 (112,243,830) (14,036,724) 6,780,016
8,690,393
The outstanding balance of the Notes in issue at 7 January 2024 and 7 July 2023 are as follows (continued):
Sub total
Cumulative
impact of
revision of cash
flows
MBA Community Loans PLC
Notes to the financial statements (continued)
For the financial period ended 7 January 2024
Notes issued (continued)
Series
Original nominal
Cumulative
issuances/
payments
Page 32
13
Ccy 07-Jan-24 07-Jul-23
EUR EUR EUR EUR EUR
133,060,570 (112,243,830) (14,036,724) 6,780,016
8,690,393
79 EUR 4,863,176 (4,361,641) (238,346) 263,189
427,287
80 USD 1,445,750 (1,279,212) (97,615) 68,923
96,821
81 EUR 2,286,757 (1,592,429) (108,775) 585,553
699,990
82 USD 1,093,260 (984,938) 4,473 112,795
188,168
83 USD 1,088,229 (717,470) (137,750) 233,009
252,004
84 USD 639,713 (434,854) (67,831) 137,028
132,853
85 USD 1,647,983 (1,222,171) (207,580) 218,232
258,603
86 USD 315,592 (184,241) (69,874) 61,477
67,554
87 USD 1,108,922 (743,613) (198,978) 166,331
173,970
88 GBP 1,155,956 (843,152) (150,591) 162,213
184,172
89 USD 4,714,117 (3,551,002) (614,392) 548,723
631,589
90 USD 3,642,096 (2,494,398) (540,328) 607,370
703,549
92 USD 504,093 (458,740) 26,909 72,262
89,851
93 USD 597,065 (555,301) 14,331 56,095
59,879
95 USD 3,061,238 (2,400,884) (343,062) 317,292
400,350
96 EUR 4,500,000 (2,824,683) (800,282) 875,035
1,042,478
97 GBP 1,643,432 (818,601) (585,926) 238,905
288,515
98 USD 2,636,084 (2,373,212) (75,100) 187,772
226,224
100 USD 997,564 (781,332) (101,997) 114,235
133,986
101 USD 776,185 (591,836) (46,295) 138,054
157,014
102 GBP 564,365 (398,560) (81,591) 84,214
115,284
103 EUR 4,000,001 (3,211,826) (309,074) 479,101
601,208
EUR 2,977,862 (2,138,206) (160,397) 679,259
748,288
USD 1,591,204 (1,109,224) (134,843) 347,137
418,100
USD 439,798 (364,195) (57,209) 18,394
20,125
USD 478,228 (401,941) (29,238) 47,049
49,252
USD 251,032 (180,479) (28,699) 41,854
46,645
USD 865,744 (533,389) (219,134) 113,221
163,351
USD 648,754 (210,270) (261,574) 176,910
207,114
USD 589,559 (537,089) (13,575) 38,895
51,870
USD 8,219,047 (5,894,734) (1,214,053) 1,110,260
1,452,038
EUR 6,054,423 (5,230,384) (288,323) 535,716
672,414
USD 2,611,905 (2,559,536) 115,746 168,115
215,452
USD 3,207,924 (2,300,990) (417,380) 489,554
607,989
USD 618,389 (506,649) (57,050) 54,690
59,251
USD 852,950 (818,472) (6,155) 28,323
66,724
USD 1,288,381 (1,065,240) (136,705) 86,436
109,011
USD 1,375,177 (1,285,240) (56,755) 33,182
54,778
EUR 5,945,036 (5,243,119) (112,180) 589,737
786,801
EUR 3,250,000 (2,114,782) (451,542) 683,676
767,136
EUR 2,395,108 (1,480,658) (155,029) 759,421
845,722
EUR 4,014,558 (3,048,352) (93,988) 872,218
1,068,129
EUR 750,000 (697,000) (5,968) 47,032
48,636
GBP 3,483,838 (2,976,230) (127,754) 379,854
502,548
EUR 4,627,825 (3,595,239) (376,085) 656,501
831,546
GBP 547,321 (382,577) (81,523) 83,221
135,234
GBP 564,365 (498,353) (7,972) 58,040
88,373
GBP 614,368 (521,917) 5,628 98,079
116,446
234,604,944 (190,762,191) (23,138,155) 20,704,598
25,754,715
113
114
116
126
134
141
142
144
145
146
147
148
104
105
108
109
110
111
Sub total
For the financial period ended 7 January 2024
Notes issued (continued)
The outstanding balance of the Notes in issue at 7 January 2024 and 7 July 2023 are as follows (continued):
Series
Original nominal
Cumulative
issuances/
payments
Cumulative
impact of
revision of cash
flows
MBA Community Loans PLC
Notes to the financial statements (continued)
117
118
115
121
122
150
151
152
Sub total
Page 33
13
Ccy 07-Jan-24 07-Jul-23
EUR EUR EUR EUR EUR
234,604,944 (190,762,191) (23,138,155) 20,704,598
25,754,715
153 GBP 557,970 (400,654) (12,270) 145,046
193,508
154 EUR 1,000,000 (734,068) (2,643) 263,289
419,019
156 EUR 5,830,921 (4,283,901) (85,110) 1,461,910
1,700,283
157 EUR 1,200,000 (1,023,002) (5,265) 171,733
224,950
158 EUR 1,000,000 (620,070) (50,521) 329,409
348,603
159 EUR 2,786,000 (1,584,334) (319,941) 881,725
1,097,496
160 USD 3,415,585 (2,776,220) (509,966) 129,399
137,640
161 EUR 1,000,000 (560,134) (36,155) 403,711
474,666
164 GBP 3,567,276 (2,865,731) (163,175) 538,370
728,594
166 EUR 885,000 (754,392) (102,615) 27,993
27,872
167 GBP 1,860,769 (1,667,549) (130,442) 62,778
68,646
180 EUR 3,605,000 (3,040,959) (32,843) 531,198
587,551
170 USD 3,336,138 (2,962,177) (253,899) 120,062
81,805
181 EUR 4,819,656 (3,546,590) (59,510) 1,213,556
1,509,973
182 EUR 4,959,470 (2,840,024) (293,049) 1,826,397
2,143,035
183 GBP 569,166 (382,594) (59,274) 127,298
160,803
184 GBP 3,414,993 (1,978,950) (232,890) 1,203,153
1,385,776
185 EUR 2,530,289 (1,708,420) (45,313) 776,556
1,049,772
186 USD 10,645,899 (7,634,321) (212,209) 2,799,369
3,619,421
188 EUR 2,301,213 (992,586) (1,673) 1,306,954
1,466,724
189 USD 712,736 (199,172) (140,334) 373,230
462,919
192 EUR 1,000,000 (172,948) (84,813) 742,239
797,358
193 GBP 228,273 (142,708) (22,396) 63,169
133,961
195 USD 321,738 (50,883) (44,707) 226,148
223,616
196 EUR 1,330,617 - (13,700) 1,316,917
1,669,213
199 EUR 26,779,226 - (532,522) 26,246,704
31,176,587
200 GBP 23,331,495 (314,821) (549,618) 22,467,056
27,201,930
201 USD 1,729,000 (952,010) (111,714) 665,276
1,217,685
349,323,374 (234,951,409) (27,246,722) 87,125,243
106,064,121
On 8 April 2023, only Series 10, 160, 170, 18, 189, 195 and 201 amounting to EUR 5,913,232 were transitioned to the new Libor rates.
Each Series of Notes is backed by a diversified pool of loans to international students. Interest payment will be referenced to three-month Euribor, three-
month USD Libor, three-month GBP Libor and GBP BOE (i.e. the reference rate plus a margin). The Noteholders are also affected by the grace period.
During the grace period, or when borrowers are ahead of schedule with repayments, no repayments are required. Borrowers are said to be in grace while
they are studying, and this period can be either 1 or 2 years depending on the length of the course. During this period, no payment will be made by the
Company in respect of Notes. The currency that each Note is issued is in the same currency that the loans to students is issued.
* The original maturity of these Series has been extended during the financial period 7 January 2024.
Total
The outstanding balance of the Notes in issue at 7 January 2024 and 7 July 2023 are as follows (continued):
Series
Original nominal
Cumulative
issuances/
payments
MBA Community Loans PLC
Notes to the financial statements (continued)
For the financial period ended 7 January 2024
Cumulative
impact of
revision of cash
flows
Notes issued (continued)
Sub total
Page 34
14 07-Jan-24 07-Jul-23
EUR EUR
40,000
40,000
40,000
40,000
Called up share capital presented as equity 40,000
40,000
15
(a)
07-Jan-24 07-Jul-23
EUR EUR
Loans and Receivables 75,973,949
94,396,171
Other receivables 5,308,693
5,683,508
Cash and cash equivalents 6,143,713
7,941,864
87,426,355
108,021,543
Loans and Receivables
Credit risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The
Company’s principal financial assets are cash and cash equivalents, other receivables and Loans and Receivables, which represents the Company’s
maximum exposure to credit risk.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to the credit risk at the reporting date was:
Default risk refers to the risk that a loan counterparty will default on its contractual obligations resulting in financial loss to the Company. The ability
of the Company to meet its payment obligations under the Notes will be affected by defaults in the underlying students loans. The loan platform has
been designed and developed to minimise the risk of arrears and default rates for loans to international students. The Loan Servicer, Prodigy Finance
Limited, has developed comprehensive risk and background vetting procedures that are used to screen every applicant as well as a proprietary
scorecard which assesses each applicant's expected ability (post-graduation) to repay the loan.
Financial risk management
For the financial period ended 7 January 2024
Authorised share capital:
All the issued shares in the Company are owned by Apex Trust Nominees No. 1 Limited, which is a company incorporated in England and Wales. The
Share Trustee holds the benefit of the shares on trust for charity. The Share Trustee has no beneficial interest in and derives no benefit other than its fees for
acting as Share Trustee, from its holding of the shares.
40,000 Ordinary shares of EUR 1 each
Presented as follows:
Introduction and overview
As at 7 January 2024, the Company had its principal amount of Notes in issue amounting to EUR 84,499,644 (financial year ended 7 July 2023: EUR
104,987,342).
The principal activity of the Company is to invest in Loans and Receivables, the acquisition of which is funded by the issue of Notes to investors. The net
proceeds of the issue of the Notes will be used by the Company to acquire relevant Student Loans from the Loan Originator in accordance with the terms of
the respective agreements and to pay for permitted expenses.
Risk management framework
The Directors have overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company is exposed to a
variety of financial risks as a result of its activities. The principal risks arising from the Company's financial instruments are credit risk, market risk
(including interest rate risk and foreign exchange risk) and liquidity risk. The principal nature of such risks is summarised below.
40,000 Ordinary shares of EUR 1 each
Allotted, called up and fully paid:
Share capital
Notes to the financial statements (continued)
MBA Community Loans PLC
Page 35
15
(a) Credit risk (continued)
Loans and Receivables (continued)
On schedule 31 - 90 Days 90+ Days
EUR EUR EUR
Student Loans 62,672,274 11,400,375 38,477,045
(Principal & Interest)
On schedule 31 - 90 Days 90+ Days
EUR EUR EUR
Student Loans 78,253,448 13,135,605 40,041,238
(Principal & Interest)
Impairment policy
Cash and cash equivalents
For the financial period ended 7 July 2023
The portfolio is also analysed monthly, by the Loan Servicer, to identify spikes in delinquency and investigate root causes. This allows the Loan
Servicer's credit team to propose management actions.
Student loans which fall into arrears of 90+ days are considered, non-performing loans, and are specifically impaired (default). The arrears analysis of
non-performing loans include interest charges after the loan is considered a non-performing loan. Expected credit losses allowances are provided for
student loans that fall into arrears less than or equal to 90 days (ahead, grace, on-schedule and delinquencies) and also for performing and grace period
loans. Expected credit losses allowances are calculated using a forward-looking expectation of deterioration of credit risk. Management along with its
Loan Servicer will continue to monitor historical trends, current economic factors and layer in future economic data to update its impairment
allowance model accordingly.
The Loan Servicer holds lifetime impairments for loans where the Loan Servicer can identify that a significant increase in credit risk has occurred.
This will include loans that are delinquent, loans that have been granted payment arrangements and loans that have defaulted. This ensures a forward-
looking approach. The Loan Servicer makes use of the 12-month delinquency rate to set thresholds to identify if an increase in credit risk is
significant. Separate thresholds are calculated for each loan status as well as each risk bucket grouping.
No loan payment is required during the study period.
Once the loan is disbursed, the loan is managed in line with the Loan Management Policy and is loaded to the Loan Servicer's loan management
system. After the grace period, the loans are monitored for payment performance. Any arrears are flagged and borrowers are contacted to understand
the reason for missed payments. The collections tools to improve payment performance include temporary forbearance and escalation through
enforcement stages.
MBA Community Loans PLC
Notes to the financial statements (continued)
Financial risk management (continued)
7 July 2023
The ECL impact on cash and cash equivalents is immaterial.
Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the short maturities of the exposures. The
Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties.
7 January 2024
Where there are insufficient funds available from a Series to cover the obligations due to that Series' Noteholders, this ultimate loss will be borne by
the Noteholders for a default on their respective Series.
Cash and cash equivalents are not perceived as being exposed to significant credit risk as they are held in reputable banks or financial institutions. The
S&P's credit long term rating of the banks in which the Company has held cash deposits is A+ (2023: A+) for HSBC Bank Plc and A (2023: A) for
Barclays Bank plc.
Page 36
15
(a) Credit risk (continued)
Other receivables
Quality of Loans and Receivables
Stage 1 Stage 2 Stage 3
Total
EUR EUR EUR EUR
Opening balance 78,253,448 13,135,605 40,041,238
131,430,291
Transfer to stage 1 13,464,995 (10,749,307) (2,715,688)
-
Transfer to stage 2 (10,123,825) 10,971,411 (847,586)
-
Transfer to stage 3 (1,976,672) (793,326) 2,769,998
-
Net remeasurement of loss allowance (existing assets) (16,707,130) (1,114,979) (625,440) (18,447,549)
Foreign currency translation (238,542) (49,029) (145,477) (433,048)
Closing balance 62,672,274 11,400,375 38,477,045
112,549,694
Stage 1 Stage 2 Stage 3
Total
EUR EUR EUR EUR
Opening balance 116,116,663 22,924,585 46,227,402
185,268,650
Transfer to stage 1 27,290,026 (18,148,127) (9,141,899)
-
Transfer to stage 2 (12,952,104) 13,980,653 (1,028,549)
-
Transfer to stage 3 (4,927,968) (2,417,649) 7,345,617
-
Net remeasurement of loss allowance (46,456,595) (3,037,283) (2,093,810) (51,587,688)
New financial assets originated or purchased (816,574) (166,574) (1,267,523) (2,250,671)
Closing balance 78,253,448 13,135,605 40,041,238
131,430,291
Movements in the allowance for impairment in respect of Loans and Receivables
07-Jan-24 07-Jul-23
EUR EUR
Opening balance under IFRS 9 (28,038,863) (28,757,821)
Net remeasurement of loss allowance 58,567
718,958
Closing balance (27,980,296) (28,038,863)
Stage 1 Stage 2 Stage 3 Total
EUR EUR EUR EUR
Balance at the beginning of the year (855,176) (945,227) (26,238,459) (28,038,863)
Transfer to/(from) stage 1 (2,030,186) 644,947 1,385,239 -
Transfer to/(from) stage 2 188,219 (645,323) 457,104 -
Transfer to/(from) stage 3 40,200 136,387 (176,586) -
Net Remeasurement of ECL (existing assets) 2,066,704 (189,507) (1,905,547) (28,350)
-
Foreign currency translation 2,295 4,379 80,243 86,917
Balance at the End of the Year (587,945) (994,345) (26,398,007) (27,980,296)
For the financial period ended 7 January 2024
MBA Community Loans PLC
Notes to the financial statements (continued)
The amount of the allowance on other receivables did not change during the financial period.
The movement in the allowance for impairment in respect of Loans and Receivables during the financial period was as follows:
Impairment on other receivables (not including interest income receivable) has been measured on a 12-month expected loss basis and reflects the short
maturities of the exposures. The Company considers that its other receivables have low credit risk based on the external credit ratings of the
counterparties.
07-Jul-23
As at the reporting date, the credit risk exposures of the Company’s Loans and Receivables (including interest income receivable) are listed as below:
Financial risk management (continued)
07-Jan-24
07-Jan-24
Page 37
15
(a) Credit risk (continued)
Stage 1 Stage 2 Stage 3 Total
EUR EUR EUR EUR
Balance at the beginning of the year (751,695) (1,669,243) (26,336,913) (28,757,851)
Transfer to/(from) stage 1 (5,911,312) 1,195,448 4,715,864 -
Transfer to/(from) stage 2 85,164 (598,811) 513,647 -
Transfer to/(from) stage 3 53,106 305,041 (358,147) -
Net Remeasurement of ECL (existing assets) 5,659,646 (188,783) (5,712,225) (241,362)
-
Foreign currency translation 9,914 11,121 939,315 960,350
Balance at the End of the Year (855,176) (945,227) (26,238,459) (28,038,863)
Three Risk Stages
Average PD Average EAD ECL ratio Ccy ECL ECL
Ccy EUR
Stage 1 2.80% 79.51% 43.59% 0.97% USD 93,612
85,721
Stage 2 32.20% 75.87% 43.59% 10.65% USD 168,846
154,612
Stage 3 96.32% 99.08% 82.51% 78.74% USD 14,866,630
13,613,373
Stage 1 2.67% 78.66% 43.59% 0.92% EUR 311,179
311,179
Stage 2 29.17% 64.50% 43.59% 8.20% EUR 472,702
472,702
Stage 3 92.30% 98.84% 67.55% 61.62% EUR 7,665,166
7,665,166
Stage 1 2.82% 78.09% 43.59% 0.96% GBP 164,694
191,045
Stage 2 29.57% 68.03% 43.59% 8.77% GBP 316,403
367,027
Stage 3 90.04% 98.86% 65.69% 58.48% GBP 4,413,335
5,119,471
27,980,296
Three Risk Stages
Average PD Average EAD ECL ratio Ccy ECL ECL
Ccy EUR
Stage 1 14.24% 77.25% 43.59% 1.23% USD 145,877
133,973
Stage 2 24.33% 63.74% 43.59% 6.60% USD 161,585
148,400
Stage 3 94.42% 96.97% 78.36% 74.33% USD 14,523,951
13,338,797
Stage 1 23.87% 75.03% 43.59% 1.09% EUR 453,959
453,959
Stage 2 28.41% 58.35% 43.59% 6.94% EUR 438,105
438,105
Stage 3 90.94% 94.55% 64.42% 57.86% EUR 7,833,797
7,833,797
Stage 1 21.17% 73.21% 43.59% 1.04% GBP 227,946
267,244
Stage 2 29.95% 58.62% 43.59% 7.84% GBP 305,973
358,723
Stage 3 92.92% 96.57% 64.12% 59.21% GBP 4,320,936
5,065,865
28,038,863
Sensitivity analysis
(b)
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other pricing effects will affect the Company's
income or the value of its holding of financial instruments.
Expected credit loss assessment for Loans and Receivables as at 7 January 2024:
MBA Community Loans PLC
Notes to the financial statements (continued)
For the financial period ended 7 January 2024
Financial risk management (continued)
Expected credit loss assessment for Loans and Receivables as at 7 July 2023:
Average LGD
Average LGD
Market risk
Management considers applying an adjustment for significant increase of credit risk event ("SICR") to be an appropriate methodology for evaluating
the sensitivity and risk to the Company. If the Manager's SICR was adjusted by 10 basis points, which management consider to be a reasonable
possible shift, with all other variables remaining constant, the change in ECL on loans and receivables at amortised cost in the period would be EUR
336,463 (2023: EUR 799,186).
07-Jul-23
Page 38
15
(b) Market risk (continued)
(i)
EUR
EUR
USD
32,791,367
+/- 983,741
GBP
30,369,476
+/- 911,084
EUR
EUR
USD
25,589,060
+/- 767,672
GBP
30,251,755
+/- 907,553
(ii)
Amount Amount
EUR % EUR %
75,973,949 5.32% 94,396,171 6.40%
6,143,713 0.00% 7,941,864 0.00%
84,499,644 4.53% 104,987,342 10.45%
(c)
At 7 January 2024, the directors are of the view that, considering the trend of the weighted average rate year by year, a movement of 10% in
rates was a reasonable threshold to use, as the 10% movement was representative based on interest rate variances that the Company considered
to be reasonably possible at the reporting date.
If the underlying interest rate on the closing balance for the financial period ended 7 January 2024 were to increase or decrease by 10%, the
interest income would increase/decrease by EUR 7,597,395 and the interest expense would increase or decrease by EUR 8,449,964.
The loans and Notes are denominated in EUR, GBP and USD, as indicated at note 9 and 13 to the financial statements respectively. The
currency that each Note is issued in is the same currency that the loan to students is issued in.
Total Notes issued amount exposed
to currency fluctuation
+/-5% movement in foreign
exchange rate
At 7 January 2024, the Directors are of the view that a movement of 5% in foreign exchange rates was a reasonable threshold to use.
Total Loans amount exposed to
currency fluctuation
+/-5% movement in foreign
exchange rate
07-Jul-23
Weighted
Average Rate
For the financial period ended 7 January 2024
Interest rate risk
Currency risk
MBA Community Loans PLC
Notes to the financial statements (continued)
The Notes are tradable and are listed on the Euronext Dublin but no established secondary market exists for the Notes. Also the amortizing nature of
the Notes and the fact that many borrowers repay early means that the majority of principal may be repaid before final maturity.
At 7 January 2024, the Directors are of the view that a movement of 5% in foreign exchange rates was a reasonable threshold to use.
If the underlying foreign exchange rate on the United States Dollar and Great British Pound closing balances for the financial period ended 7 January
2024 were to increase or decrease by 5%, the resulting increase or decrease on the value of the loan balances in those respective currencies is shown
above.
07-Jan-24
Weighted
Average Rate
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial instruments.
Interest rate risk exists where assets and liabilities have interest rates under a different basis or which reset at a different time.
The Notes bear interest at a rate based on a margin plus three-month Euribor (some Notes have a floor on Euribor of 0%), three-month USD
Libor, synthetic GBP Libor as approved by FCA and GBP BOE (as denoted at note 13 to the financial statements) as determined on the
relevant Euribor and GBP Libor determination date which is paid subject to available cashflows from the student loans. There is a spread on
each Series between the rate on the Student Loans and the relevant Notes, where the student loans accrue at a higher rate than the Notes.
According to a sensitivity analysis, if the underlying interest rate on the closing balance for the financial year ended 7 July 2023 were to
increase or decrease by 10%, the interest income would increase/decrease by EUR 9,439,617 and the interest expense would increase or
decrease by EUR 10,498,734.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company matches the properties of its financial
liabilities to its assets to avoid significant elements of risk generated by mismatches of investment performance against its obligations.
Cash and cash equivalents
Notes issued
Loans and Receivables
If the underlying foreign exchange rate on the United States Dollar and Great British Pound closing balances for the financial period ended 7 January
2024 were to increase or decrease by 5%, the resulting increase or decrease on the value of the Notes issued in those respective currencies is shown
above.
Financial risk management (continued)
Page 39
15 Financial risk management (continued)
(c) Liquidity risk (continued)
EUR EUR EUR EUR EUR EUR
84,499,644 122,986,336 20,349,215 20,296,879 44,754,991 37,585,251
Other payables 2,874,028 2,874,028 2,874,028 - -
-
87,373,672 125,860,364 23,223,243 20,296,879 44,754,991 37,585,251
EUR EUR EUR EUR EUR EUR
104,987,342 141,408,558 21,202,161 21,149,825 46,460,883 52,595,689
Other payables 2,981,518 2,981,518 2,981,518 - -
-
107,968,860 144,390,076 24,183,679 21,149,825 46,460,883 52,595,689
(d) Concentration risk
EUR EUR EUR EUR
35,320,855 (8,831,855) 1,631,213 28,120,213
37,018,456 (8,111,017) 1,866,150 30,773,589
16,496,285 (4,719,620) 822,953 12,599,618
13,082,792 (5,980,395) 925,775 8,028,172
2,035,857 (337,409) 62,602 1,761,050
103,954,245 (27,980,296) 5,308,693 81,282,642
EUR EUR EUR EUR
40,356,866 (8,594,818) 1,726,700 33,488,748
44,307,970 (8,233,915) 2,024,736 38,098,791
20,690,957 (5,009,976) 897,396 16,578,377
14,599,537 (5,788,717) 975,259 9,786,079
2,479,704 (411,437) 59,417 2,127,684
122,435,034 (28,038,863) 5,683,508 100,079,679
(e)
16
Australasia
Interest
receivable
Total
Europe
Americas
Asia
Europe
Africa
Australasia
07-Jul-23
More than five
years
All of the loans are issued to students which presents a concentration risk to the Company. However, controls are in place by Prodigy Finance Limited
as it relates to the vetting and on going monitoring procedures to mitigate this risk.
MBA Community Loans PLC
Notes to the financial statements (continued)
07-Jul-23
The following are the contractual maturities of financial liabilities, assuming no early repayments, including interest payments:
07-Jan-24
Fair value
The Company's financial instruments not measured at fair value through profit or loss consist of cash and cash equivalents, Loans and Receivables,
other receivables, Notes issued and other payables. The carrying values of the financial instruments approximate their fair values.
Ownership of the Company
Apex Trust Nominee No.1 Limited, which is a company incorporated in England and Wales, is the sole shareholder of the Company.
Gross contractual
cashflows
One to two years
Interest
receivable
Africa
For the financial period ended 7 January 2024
Carrying amount
Americas
Loan principal
Total
Impairment
allowance
All shares are held in trust for charity under the terms of declaration of trust. The trustee has appointed a Board of Directors to run the day-to-day activities
of the Company. The Board of Directors have considered the issue as to who is the controlling party of the Company. It has determined that the control of
the day-to-day activities of the Company rests with the Board and there is no single controlling party.
Asia
Two to five
years
More than five
years
Notes issued
The Company’s obligation to the Noteholders of a particular Series is limited to the net proceeds upon realisation of the assets of that Series or it
having any funds to make the repayment. Should the net proceeds be insufficient to make all payments, the other assets of the Company will not be
available for payment and the deficit is instead borne by the Noteholders according to the established priorities of payment.
Notes issued
The following is a geographical analysis of the Loans and Receivables by the students' current country of residence:
07-Jan-24
Loan principal
Impairment
allowance
Less than one
year
Carrying amount
Gross contractual
cashflows
Less than one
year
One to two years
Two to five
years
Page 40
17
18
19 Subsequent events
20 Approval of financial statements
On the 20 March 2024 the Company approved to enter into a Deed of Amendment ("the agreement") with Apex Corporate Trustees (UK) Limited (the
''Trustee'') to implement amendments to the final Terms of Series 17. The agreement would note the changes to the current Base Rate as ’synthetic’ LIBOR
will no longer be available from 31 March 2024. There has been no other significant events after financial year end up to the date of signing this report that
require disclosure and/or adjustment in the financial statements.
The Company view the share capital as its capital. The board reviews the Company’s management accounts and financial statements periodically to ensure
the capital structure is maintained. Share capital of EUR 40,000 was issued in line with Irish Company Law and is not used for financing the investment
activities of the Company. The Company is not subject to any other externally imposed capital requirements.
Related party transactions
Transactions with the Administrator
During the financial period ended 7 January 2024, fees of EUR 93,255 (financial year ended 7 July 2023: EUR 93,500) were earned by Apex Group, the
corporate secretary, the corporate service provider and the security trustee, in respect of corporate secretary, administration fees and trustee services and
received the payment of EUR 93,255 (financial year ended 7 July 2023: EUR 93,500). As at 7 January 2024, there was an amount of EUR nil (financial
year ended 7 July 2023: EUR Nil) owed by the Company.
Transactions with the Loan Servicer
The Company has received a loan from Prodigy Finance Limited to settle its 2019 tax liability. As at 7 January 2024, the remaining loan balance amounts to
EUR 169,098 (financial year ended 7 July 2023: EUR 166,588).
Lisa Hand, Rhys Owens, Maria Dawson and Ciaran Connolly who acted as Directors of the Company during the financial period, are employed by the
corporate secretary and the corporate service provider. The corporate secretary, the corporate service provider and the security trustee are all companies
whose ultimate parent is the Apex Group. These operating companies provide company administration, trustee and secretarial services to the Company at an
arm's length basis, at normal commercial rates. On 1 November 2023, Maria Dawson was appointed as alternate Director to Rhys Owens for 1 day. On 14
August 2023, Lisa Hand resigned as independent Director. Rhys Owens was appointed as Director same day.
The Loan Servicer, Prodigy Finance Limited provides loan servicing, transfer agent and collection agent services to the Company. Management fees
charged by Prodigy Finance Limited amounted to EUR 679,581 (financial year ended 7 July 2023: EUR 1,898,349) and 'Administration fees - origination
fees', split between Prodigy Finance Limited and Prodigy Services Limited, amounting to EUR Nil (financial year ended 7 July 2023: EUR Nil). As at 7
January 2024, Prodigy Investments Limited held EUR 2,152,537(financial year ended 7 July 2023: EUR 2,120,746) of the Company's Notes with accrued
interest of EUR 32,800 (financial year ended 7 July 2023: EUR 57,015). As at 7 January 2024, there were outstanding balances of EUR 165,932 (financial
year ended 7 July 2023: EUR 190,840) owed by the Company in respect of management fee and EUR Nil (financial year ended 7 July 2023: EUR nil)
owed by the Company in respect of administration-origination fees respectively.
The Company has no employees (2023: none) and the Directors who are also employees of Apex Group received no remuneration during the financial
period (2023: EUR nil). The terms of the corporate services agreement provide for a single fee for the provision of corporate services (including making
available of individuals to act as Directors of the Company). As a result, the allocation of fees between the different services provided is a subjective and
approximate calculation. The Company has allocated an amount of 1% of the total fees paid to Apex IFS Limited for the provision of the services of a
Director. The individuals acting as Directors do not (and will not), in their personal capacity or any other capacity, receive any fee for acting or having
acted as Directors of the Company. Directors remuneration is disclosed in note 3 to the financial statements.
The Board of Directors have approved these audited financial statements on 1 May 2024.
For the financial period ended 7 January 2024
Capital management
Notes to the financial statements (continued)
MBA Community Loans PLC
An amount of EUR 149,000 (financial year ended 7 July 2023: EUR 117,150) was reimbursed by the Loan Servicer during the financial period ended 7
January 2024 relating to the funding of certain operating expenses of the Company by the Loan Servicer.