mba community loans plc - london stock exchange · the company is a special purpose vehicle (the...

MBA Community Loans PLC

Directors' report and audited financial statements

For the financial year ended 7 July 2019

Registered Number 486917


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 - 12

Statement of comprehensive income 13

Statement of financial position 14

Statement of changes in equity 15

Statement of cash flows 16

Notes to the financial statements 17 - 41

Contents

MBA Community Loans PLCPage 1

Ireland

Ireland

KPMG

City of London Commercial Centre

1-4 Argyll StreetLondon W1F 7LD

London SE1 1YB

Independent Auditor

England

Ireland

Barclays Bank PlcPO Box 299Birmingham B1 3PFEngland

England

Legal Advisors and Listing Agent

Ireland

McCann FitzgeraldRiverside One

Laura Morgan (Irish) (appointed on 5 September 2018 and resigned on 14 September 2018 and re-appointed on 3 October 2018 and resigned on 5 October 2018 as alternate director to Lisa Hand)

Secretary and Corporate Service Provider

Apex IFS Limited (formerly Link IFS Limited)2 Grand Canal Square

Directors Lisa Hand (Irish)

Grand Canal Harbour

Directors and other information

Ciaran Connolly (Irish) (appointed on 28 June 2019)Roddy Stafford (Irish) (resigned on 28 June 2019)Stuart Gallagher (Irish) (appointed on 2 July 2019 and resigned as alternate director to Lisa Hand on 14 July 2019 )

Marion Walsh (Irish) (resigned as alternate director to Roddy Stafford on 31 January 2019)

Dublin 2

Registered Office 2 Grand Canal SquareGrand Canal Harbour

Dublin 2

1 Harbourmaster PlaceIFSCDublin 1

Dublin 2

6th Floor, 65 Gresham StreetLondon EC2V 7NQ

Trustee Apex Corporate Trustees (UK) Limited (formerly Link Corporate Trustees (UK) Limited)

England

Loan Servicer, Manager, Transfer Agent and Calculation Agent

Prodigy Finance LimitedPalladium House

Sir John Rogerson's Quay

Banks HSBC Bank Plc

28 Borough High Street

Key performance indicators

During the financial year:• •••• the Notes that the Company has issued and redeemed are included in note 13 to the financial statements.

As at 7 July 2019:••• the Notes that the Company has in issue in respect of each Series are included in note 13 to the financial statements.

Future developments

Going concern

Each Note provides for one or more alternative payment schedules because the Company is obligated to make payments on a Note only to the extentthat 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 targetinterest rate, which is a fixed margin above a variable rate of return, to the Noteholders. The terms of the Note will specify payment dates pursuant towhich an amount of interest will be payable in respect of the Notes on an available funds basis from funds received by the Company from the StudentLoans. Interest will be payable following the payment of certain fees and expenses and will be payable up to the accrued interest balance.

The net proceeds of the issue of the Notes will be used by the Company to acquire relevant student loans (the "Student Loans") from the loanoriginator (the "Loan Originator") in accordance with the terms of the respective agreements and to pay for permitted expenses.

The directors confirm that the key performance indicators as disclosed below in the financial statements are those that are used to assess theperformance of the Company.

the profit after taxation of the Company was EUR 1,177,188 (2018: EUR 842,532);the finance income earned by the Company was EUR 13,856,588 (2018: EUR 14,253,327);

The Company recognises loss allowances for expected credit loss on financial assets measured at amortised cost including loans and receivables.

the finance expense on the Company's Notes issued was EUR 7,671,852 (2018: EUR 5,359,093) and

the net liability carrying value of the Company was EUR 315,452 (2018: net asset carrying value of EUR 185,989); andthe Company’s Notes in issue amounted to EUR 162,665,280 (2018: EUR 170,205,354);

the impairment increase on loans and receivables was EUR 884,133 (2018: EUR 4,385,693);

The directors expect that the present level of activity will be sustained for the foreseeable future. The board of directors (the ''Board'') will continue toseek new opportunities for the Company and will continue to ensure proper management of the current portfolio of Series of the Company. It isanticipated that while some Series will redeem or mature, it is also expected that new issuances will be made.

The Company’s financial statements for the financial year ended have been prepared on a going concern basis. Each asset is referenced with aspecific Note, and any loss derived from the asset will be ultimately borne by the Noteholders. The directors anticipate that the loans and receivableswill continue to generate enough cash flow on an ongoing basis to meet the Company‘s liabilities as they fall due. For these reasons, the directorsbelieve that the going concern basis is appropriate.

Directors' report

The directors present their annual report and the audited financial statements of MBA Community Loans PLC (the "Company") for the financial yearended 7 July 2019.

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 issueof notes (the ''Notes'') to investors. These Notes are issued in separate series (the ''Series''). The Company does not undertake any business other thanthe acquisition, holding, financing, selling and granting of security over its assets.

No significant changes in the principal activities of the Company are anticipated.

The principal risks for the Company are dealt with 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 Company did not have any employees during the financial year end (2018: none).

Corporate Administrator

On 5 September 2018 and 3 October 2018, Laura Morgan was appointed as alternate director to Lisa Hand.

On 14 September 2018 and 5 October 2018, Laura Morgan resigned as alternate director to Lisa Hand.

On 31 January 2019, Marion Walsh resigned as alternate director to Roddy Stafford.

On 28 June 2019, Roddy Stafford resigned as director of the Company; and Ciaran Connolly was appointed as director of the Company.

On 2 July 2019, Stuart Gallagher was appointed as alternate director to Lisa Hand.

On 14 July 2019, Stuart Gallagher resigned as alternate director to Lisa Hand.

Apart from the above, there were no other changes in directors, secretary and registered office during the financial year.

Shares and shareholders

The underlying business of the Company, being the purchase of student loan assets and the issuance of Notes to investors, is expected to continue inan orderly, consistent manner over the coming financial year. The principal risk exposures for the Company relate to default by the borrowers, creditrisk in dealings with counterparties and interest rate movements. The loan platform has been designed and developed to minimise the risk of arrearsand 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 deal to acquire the Corporate and Private Client Services (“CPCS”) businesses of Link Group’s Asset Services division was closed on 28 June2019 by the Apex Group. The CPCS business delivers Trust and Corporate Service solutions to multinationals, financial institutions and assetmanagers. Therefore, the Corporate Administrator changed its name from Link IFS Limited to Apex IFS Limited.

Directors, secretary and their interests

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company's processes, personnel andinfrastructure, and from external factors other than credit, market and liquidity risks such those arising from legal and regulatory requirements andgenerally accepted standards of corporate behaviour. Operational risks arise from all of the Company's operations.

None of the directors and secretary who held office on 8 July 2018 and 7 July 2019 hold any shares in the Company at that date or during thefinancial year. Except for the Administration agreement entered into by the Company with Apex IFS Limited (formerly Link IFS Limited), there wereno contracts of any significance in relation to the business of the Company in which the directors had been party or involved, as defined in Section309 of the Companies Act 2014, at any time during the financial year. Directors remuneration is disclosed in note 3 to the financial statements.Further information are set out in note 17 to the financial statements.

The results for the financial year are set out on page 13. The directors do not recommend the payment of a dividend for the financial year (2018: EURNil).

Results and dividends for the financial year

Operational risk

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 TrustNominees No. 1 Limited (formerly Link 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 nobeneficial 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.

Business risks and principal uncertainties

Directors' report (continued)


Changes in directors, secretary and registered office during the financial year

The Board has an annual process to ensure that appropriate measures are taken to consider and address the shortcomings identified and measuresrecommended by the independent auditors. Given the contractual obligations on the Administrator, the Board has concluded that there is currently noneed for the Company to have a separate internal audit function in order for the Board to perform effective monitoring and oversight of the internalcontrol and risk management systems of the Company in relation to the financial reporting process.


Accounting records

The Administrator is contractually obliged to design and maintain control structures to manage the risks which the Board judges to be significant forinternal control over financial reporting. These control structures include appropriate division of responsibilities and specific control activities aimedat detecting or preventing the risk of significant deficiencies in financial reporting for every significant account in the financial statements and therelated notes in the Company’s annual report.

Monitoring

The directors believe that they have complied with the requirements of Sections 281 to 285 of the Companies Act 2014 with regard to adequateaccounting records by engaging a service provider who employs accounting personnel with the appropriate expertise and by providing adequateresources to the finance function. The accounting records of the Company are maintained at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2,Ireland.


The Electoral Act, 1997 (as amended by the Electoral Amendment Political Funding Act, 2012) requires companies to disclose all political donationsover EUR 200 in aggregate made during a financial year. The directors, on enquiry, have satisfied themselves that no such donations in excess of thisamount have been made by the Company during the financial year ended 7 July 2019 (2018: EUR Nil).

The Board is responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to thefinancial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Company’s financialreporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Company is subject to and complies with Irish Statute comprising the Companies Act 2014 and the listing rules of the Euronext Dublin which areapplicable to debt listed companies. The Company does not apply additional requirements in addition to those required by the above. Each of theservice providers engaged by the Company is subject to their own corporate governance requirements.

Financial Reporting Process

The Administrator is also obliged to prepare for review and approval by the Board the annual and semi-annual reports including financial statementsintended to give a true and fair view.

Corporate Governance Statement

Introduction

The Administrator has operating responsibility for internal control in relation to the financial reporting process and the Administrator’s report to theBoard.

Risk Assessment and Risk ManagementThe Board is responsible for assessing the risk of irregularities whether caused by fraud or error in financial reporting and ensuring the processes arein place for the timely identification of internal and external matters with a potential effect on financial reporting. The Board has also put in placeprocedures and processes to identify changes in accounting rules and recommendations and to ensure that these changes are accurately reflected in theCompany’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 regulartraining on accounting rules and recommendations is provided to the accountants employed by the Administrator.

Control Activities

The Board has established processes regarding internal control and risk management systems to ensure its effective oversight of the financialreporting process. These include appointing Apex IFS Limited (formerly Link IFS Limited) (the ''Administrator''), to maintain the accounting recordsof the Company independently of Prodigy Finance Limited (the ''Loan Servicer'') and Apex Corporate Trustees (UK) Limited (formerly LinkCorporate Trustees (UK) Limited) (the ''Trustee''). The Administrator is contractually obliged to maintain proper books and records as required by theCorporate Administration Agreement. To that end the Administrator performs reconciliations of its records to those of the Loan Servicer and Trustee.

The Board evaluates and discusses significant accounting and reporting issues as the need arises. From time to time the Board also examines andevaluates the Administrator’s financial accounting and reporting routines and monitors and evaluates the external auditors’ performance,qualifications and independence.

Political donations

●●

Research and development costs

The Company did not incur any research and development costs during the financial year (2018: EUR Nil).

The Notes are admitted to trading on the regulated market of the Euronext Dublin pursuant to the base prospectus dated 14 August 2017 ("BaseProspectus"). The Central Bank of Ireland approved the Base Prospectus as meeting the requirements imposed under Irish and EU law pursuant to theProspectus Directive 2003/71/EC (as amended, including by Directive 2010/73/EU).

So far as the directors are aware, each director at the date of approval of this report and financial statements confirms that:

Subsequent events have been disclosed in note 19 to the financial statements.

Powers of directorsThe Board is responsible for managing the business affairs of the Company in accordance with the Constitution. The directors may delegate certainfunctions to the Administrator and other parties, subject to the supervision and direction by the directors. The directors have delegated the day to dayadministration of the Company to the Administrator. The Constitution provides that the directors may exercise all the powers of the Company toborrow 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, toissue debentures, debenture stock or other security whether outright or as security for any debt, liability or obligation of the Company or of any thirdparty without limitation.

Independent auditor

The takeover bids directive is not applicable as the Company does not have transferable securities carrying voting rights listed on a regulated market.

there is no relevant audit information of which the Company’s auditor are unaware; and

Statement on relevant audit information


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 ofasset-backed Notes, the Company has availed of an exemption from the requirements to establish an audit committee under section 115(10) of SI312/2016 (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 have concluded that there is currently no need for the Company to have an audit committee in order for the Board toperform effective monitoring and oversight of the internal control and risk management systems of the Company in relation to the financial reportingprocess.

KPMG, Chartered Accountants and Statutory Audit firm, have expressed their willingness to continue in office in accordance with Section 383(2) ofthe Companies Act 2014.

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 makethemselves aware of any relevant audit information and to establish that the Company’s auditor are aware of this information.

Subsequent events


Corporate Governance Statement (continued)

100% of the issued shares in the Company are held by Apex Trust Nominees No. 1 Limited (formerly Link Trust Nominees No. 1 Limited), which is acompany incorporated in England and Wales. The Share Trustee holds the benefit of the shares on trust for charity. The Share Trustee has nobeneficial interest in and derives no benefit other than its fees for acting as Share Trustee, from its holding of the shares. With regard to theappointment and replacement of Directors, the Company is governed by its Constitution, Irish Statute comprising the Companies Act 2014 and theListing Rules of the Euronext Dublin. The Constitution themselves may be amended by special resolution of the shareholders.

Capital Structure

The directors confirm that:●

●

●

●

Brexit comment

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



Lisa Hand

Date:

relevant arrangements and structures have been put in place that provide a reasonable assurance of compliance in all material respects by theCompany with its relevant obligations, which arrangements and structures may, if the directors so decide, include reliance on the advice of oneor 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 tohave the requisite knowledge and experience to advise the Company on compliance with its relevant obligations; and

Director

Approved by the Board and signed on its behalf by

The Board has performed an initial assessment of the potential impact of Brexit on the Company and its activities. Notwithstanding the uncertaintyaround the possible outcome for Brexit, the Board is of the view that the Company will not be significantly impacted as the Company is not exposedto assets with demand risk and assets outside the UK and its business does not involve import, export and general trade or the employment of labour.The Board will continue to monitor developments as the process continues to unfold, and will reassess this analysis once the nature of the Brexitarrangements are agreed.

Ciaran Connolly

the management report, which is incorporated into the directors’ report, includes a fair review of the development and performance of thebusiness and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

7 November 2019

the arrangements and structures in place, are reviewed on an annual basis.

they have drawn up a compliance policy statement setting out the Company's policies (that, in the directors' opinion, are appropriate to theCompany) respecting compliance by the company with its relevant obligations;

they acknowledge that they are responsible for securing the company's compliance with its relevant obligations and have, to the best of theirknowledge, complied with its relevant obligations as defined in section 225 of the Companies Act 2014;

the financial statements, prepared in accordance with IFRS as issued by the IASB and as adopted by the EU, give a true and fair view of theassets, liabilities, financial position and profit or loss of the Company; and

Directors' compliance policy statement

●●●

●●

Lisa Hand Ciaran ConnollyDirector Director

Date: 7 November 2019

state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financialstatements;

make judgements and estimates that are reasonable and prudent;

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 directorsare required to:


The directors are responsible for preparing the directors report and financial statements, in accordance with applicable law and regulations.

On behalf of the Board

assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; anduse the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realisticalternative but to do so.

Company law requires the directors to prepare financial statements for each financial year. Under the law, the directors have elected to prepare thefinancial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").

Directors' responsibilities statement

select suitable accounting policies and then apply them consistently;

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 frommaterial misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguardthe assets of the Company and to prevent and detect fraud and other irregularities. The directors are also responsible for preparing a directors reportthat complies with the requirements of the Companies Act 2014.

07-Jul-19 07-Jul-18Note EUR EUR

Finance income on EIR basis 5 13,856,588 14,253,327 Finance expense 6 (7,671,852) (5,359,093)

Net finance income 6,184,736 8,894,234

Other income 4 264,548 308,200

Operating income - continuing operations 6,449,284 9,202,434

Operating expenses 7 (3,995,567) (3,926,376)

Impairment of loans and receivables 9 (884,133) (4,385,693)

Profit before taxation 1,569,584 890,365

Tax expense 8 (392,396) (47,833)

Profit after taxation 1,177,188 842,532

Other comprehensive income - -

Total comprehensive profit for the financial year 1,177,188 842,532


Statement of comprehensive income

The notes to the financial statements on pages 17 to 41 form an integral part of these financial statements.


Financial year ended


07-Jul-19 07-Jul-18Note EUR EUR

9 140,933,085 149,871,287 10 8,165,708 11,213,611

447,634 - 11 17,263,662 13,728,646

166,810,089 174,813,544

13 162,665,280 170,205,354 12 4,460,261 4,422,201

167,125,541 174,627,555

14 40,000 40,000 (355,452) 145,989 (315,452) 185,989

166,810,089 174,813,544

Director

7 November 2019

Deferred tax asset

Notes issued

Called up share capital presented as equity

Assets


Statement of financial positionAs at 7 July 2019

Liabilities and equity

Lisa Hand

Other payables

Liabilities

Ciaran ConnollyDirector

Equity

Loans and receivables

Cash and cash equivalents

Other receivables

Total equityRetained (deficit)/ earnings

On behalf of the Board

Date:

Total assets

Total liabilities


Total liabilities and equity

EUR EUR EUR

40,000 (696,543) (656,543)

Total comprehensive profit for the financial yearNet profit for the financial year - 842,532 842,532 Other comprehensive income/(expense) - - -

Total comprehensive profit for the financial year - 842,532 842,532

Balance at 7 July 2018 40,000 145,989 185,989

Balance at 8 July 2018 40,000 145,989 185,989

Adjustment on initial application of IFRS 9:Impairment on loans and receivables - (1,678,629) (1,678,629)

Adjusted opening balance at 08 July 2018 - (1,678,629) (1,678,629)

Total comprehensive profit/(loss) for the financial yearNet profit for the financial year - 1,177,188 1,177,188 Other comprehensive income/(expense) - - -

Total comprehensive (loss) for the financial year - (501,441) (501,441)

40,000 (355,452) (315,452)

Balance at 8 July 2017

Statement of changes in equityAs at 7 July 2019


Balance at 7 July 2019

Share Capital


Retained earnings/ (Deficit)

Total

07-Jul-19 07-Jul-18Note(s) EUR EUR

Cash flows from operating activitiesProfit before taxation 1,569,584 890,365

Adjustments for:Net impairment loss on loans and receivables 884,133 4,385,693 Foreign exchange movements 4 & 7 230,372 (39,507)Finance income 5 (13,856,588) (14,253,327)Finance expense 6 7,671,852 5,359,093

Movements in working capitalDecrease/(increase) in other receivables 546,626 (91,225)Increase/(decrease) in other payables 101,462 (53,007)Tax paid (47,833) - Net cash used in operating activities (2,900,392) (3,801,915)

Cash flows from investing activitiesPurchase and origination of loans and receivables 9 (29,944,046) (32,529,679)Principal payments received from loans and receivables 9 39,228,521 50,877,809 Interest received 16,357,865 15,836,913 Net cash generated from investing activities 25,642,340 34,185,043

Cash flows from financing activitiesIssuance of Notes 13 32,142,676 32,271,562 Principal repayments on Notes issued 13 (40,843,487) (49,187,616)Interest payments (10,833,305) (11,557,038)Net cash used in financing activities (19,534,116) (28,473,092)

Net increase in cash and cash equivalents during the financial year 3,207,832 1,910,036 Cash and cash equivalents at the start of the financial year 13,728,646 11,971,756

Unrealised foreign exchange movements on cash balance 327,184 (153,146)Cash and cash equivalents at the end of the financial year 17,263,662 13,728,646

For the financial year ended 7 July 2019Statement of cash flows





1

2

(a) Basis of preparation

(b) Basis of measurement

(c) Going concern

(d) Significant judgements and estimates

(e) New standards, amendments or interpretations

(i) New standards and interpretations adopted during the financial year

Notes to the financial statements

The Company's financial assets, loans and receivables, financial liabilities and Notes issued are measured at amortised cost.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the entity'sfinancial statements relate to the IFRS 9 ECL calculation and are disclosed in note 2 n (vi) and note 15 (a) to the financial statements.

Management has updated the presentation of some of the prior year disclosures to be in line with current year presentation to reflect moredetailed information as disclosed in each of the relevant notes.

The financial statements are prepared on the historical cost basis.


The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptionsthat affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associatedassumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, theresults of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent fromother sources. Actual results may differ from these estimates. The main area where judgement and estimates are utilised is in relation to theexpected credit losses on the loans and receivables.


Accounting policies

Corporate information

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in thefinancial year in which the estimate is revised if the revision affects only the financial year or in the financial year of the reviews and futurefinancial years if the revision affects both current and future financial years.

The Company is a public limited company incorporated under the laws of Ireland with the registered office address 2 Grand Canal Square,Grand Canal Harbour, Dublin 2, Ireland and company number 486917. The Company was incorporated on 22 July 2010 and is domiciled in theRepublic 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 (formerly Link Trust Nominees No. 1 Limited) (the Share Trustee), which is acompany incorporated in England and Wales who owns 100% of the issued shares (2018: 100%).

The financial statements have been prepared on a going concern basis because the directors consider that this is a fair basis for presentingthe results of the accounting period and the state of the affairs at the end of the financial year. Having considered the Company's futurecash flows and its business plans, the directors confirm they have a reasonable expectation that the Company has adequate resources tocontinue in operational existence for the foreseeable future, and that the financial statements have been properly prepared on a goingconcern basis.

Except for the changes summarised below, the Company has consistently applied the accounting policies to all periods presented inthese financial statements. New and amended standards issued by the International Accounting Standards Board (“IASB”) andendorsed by the EU, applicable to the current financial year are:

The Company's financial statements have been prepared in accordance with IFRS and its interpretations as adopted by the EU and asapplied in accordance with the Companies Act 2014. The accounting policies set out below have, unless otherwise stated, been appliedconsistently to all periods presented in these financial statements. The comparative information relates to the financial year ended 7 July2018.

2

(e) New standards, amendments or interpretations (continued)

(i) New standards and interpretations adopted during the financial year (continued)

IFRS 9 Financial Instruments

Classification and measurement of financial assets and financial liabilities

Financial assets EUR EURLoans and receivables Loans and receivables 149,871,287 Amortised cost 147,633,115Other receivables Loans and receivables 11,213,611 Amortised cost 11,213,611Cash and cash equivalents Loans and receivables 13,728,646 Amortised cost 13,728,646

Financial liabilitiesNotes issued Other financial liabilities (170,205,354) Amortised cost (170,205,354)Other payables Other financial liabilities (4,422,201) Amortised cost (4,422,201)

Impairment of financial assets

IFRS 9 amends some of the requirements of IFRS 7 Financial Instruments: Disclosures including adding disclosures aboutinvestments in equity instruments designated at fair value through other comprehensive income, disclosures on risk managementactivities and hedge accounting and disclosures on credit risk management and impairment. Refer to note 2(n) and note 15 to thefinancial statements for additional disclosures.

As a result of the adoption of IFRS 9, the Company has adopted consequential amendments to IAS 1 Presentation of FinancialStatements, which require that:

impairment losses and impairment gains are presented in a separate line item in the statement of comprehensiveincome.

IFRS 9 replaces the 'incurred loss' model in IAS 39 with an 'expected credit loss' ("ECL") model. The new impairment modelapplies to financial assets measured at amortised cost and debt investments at FVOCI, but not to investments in equity instruments.Under IFRS 9, credit losses are recognised earlier than under IAS 39.

The Company has determined that the application of IFRS 9's ECL model at 8 July 2018 resulted in a cumulative increase in theECL allowance at 8 July 2018 of EUR 2,238,172 on loans and receivables measured at amortised cost.

The following table and accompanying notes below explain the original measurement categories under IAS 39 and the newmeasurement categories under IFRS 9 for each class of the Company's financial assets and liabilities as at 8 July 2018.

The impact of IFRS 9 on the classification and measurement of financial assets is set out in note 2(n) to the financial instruments.

The adoption of IFRS 9 has not had a significant effect on the Company's accounting policies related to financial liabilities.

IFRS 9 contains three classification categories for financial assets: measured at amortised cost, Fair Value through OtherComprehensive Income ("FVOCI") and Fair Value through Profit or Loss ("FVTPL"). The classification of financial assets underIFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.IFRS 9 eliminates the previous IAS 39 categories of held to maturity, financial assets measured at amortised cost and available forsale. Under IFRS 9, derivatives embedded in contracts where the host is a financial asset in the scope of the standard are neverseparated. Instead, the hybrid financial instrument as a whole is assessed for classification.

IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities.


Notes to the financial statements (continued)

IFRS 9 Financial Instruments (“IFRS 9”) sets out requirements for recognising and measuring financial assets, financial liabilitiesand some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition andMeasurement as and from 1 January 2018.

Accounting policies (continued)


Classification of financial assets and liabilities following the transition to IFRS 9 from IAS 39 as at 8 July 2018 are as follows:

New classification underIFRS 9

Original classification under IAS 39

2

(e) New standards, amendments or interpretations (continued)

(i) New standards and interpretations adopted during the financial year (continued)

IFRS 9 Financial Instruments (continued)Transition

Adjustment on initial application of IFRS 9: Financial instrument impairment

under IAS39 under IFRS907-Jul-18 08-Jul-18

EUR EUR EUR EURLoans and receivables 149,871,287 - (2,238,172) 147,633,115 Deferred tax asset - - 559,543 559,543

IFRS 15 Revenue from Contracts

(ii) Standards not yet effective, but available for early adoption

* Not endorsed.

(f) Finance income and finance expense

Policy applicable prior to 8 July 2018

IFRS 17: Insurance contracts

The directors have considered the new standards, amendments and interpretations as detailed in the above table and does not planto adopt these standards early. The application of all of these standards, amendments or interpretations will be considered in detailin advance of a confirmed effective date by the Company.

1 January 2019IFRIC 23 Uncertainty over Income Tax TreatmentsAmendments to IAS 19: Plan amendment, Curtailment or Settlement

1 January 2019Annual improvements to IFRS Standards 2015-2017 Cycle (issued on 12 December 2017)1 January 2019

1 January 20191 January 2020*1 January 2022*

Amendments to references to the Conceptual Framework in IFRS Standards

Carrying amount





Re-classification

1 January 20191 January 2019

IFRS 16: Leases

IFRS 15 Revenue from Contracts (“IFRS 15”) establishes a comprehensive framework for determining whether, how much andwhen revenue is recognised. It replaced IAS 18 Revenue (“IAS 18”) and IAS 11 Construction Contracts and related interpretations.

The Company has adopted IFRS 15 using the cumulative effect method without practical expedients, with the effect of initiallyapplying this standard recognised at the date of initial application on 1 January 2018. Accordingly, the information presented for2018 has not been restated. It is presented, as previously reported, under IAS 18 and related interpretations.

The impact of IFRS 15 was assessed and concluded that there is no material impact to the Company’s financial statements.

DescriptionAmendments to IFRS 9 Prepayment Features with Negative CompensationAmendments to IAS 28: Long-term interests in Associates and Joint Ventures

Finance income is recognised on an accruals basis calculated by reference to the loan principal outstanding, applicable interest rate andloan term of each student loan.

Finance expense is recognised on an accruals basis calculated by reference to the outstanding nominal, applicable interest rate and term ofeach Series of Notes.

Changes in accounting policies resulting from the adoption of IFRS 9 have been applied retrospectively. However, comparativeperiods have not generally been restated. Differences in the carrying amounts of financial assets resulting from the adoption ofIFRS 9 are recognised in equity as at 8 July 2018. Accordingly, the information presented for prior year does not reflect therequirements of IFRS 9, but rather those of IAS 39.

Effective date*

Carrying amount

Re-measurement

2

(f) Finance income and finance expense (continued)

Policy applicable from 8 July 2018

(g) Operating expenses

(h) Other receivables

(i) Functional and presentation currency

(j) Foreign currencies

(k) Trade payables

(l) Taxation

Other receivables include interest receivable and a receivable from Loan Servicer which mostly consists of income receivable to coveroperating expenses 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 currencyof the primary economic environment in which the entity operates. The issued share capital of the Company is denominated in EUR andthe directors of the Company believe that EUR most faithfully represents the economic effects of the underlying transactions, events andconditions.

The amounts in these financial statements are rounded to the nearest EUR.

Income tax expense comprises current and deferred tax. Income tax expense, when arising, is recognised through profit or loss, in othercomprehensive income or directly in equity consistent with the accounting for the item to which it is related.


The operating expenses of the Company are recognised in the financial statements on an accruals basis. The expenses includeadministration fees (calculated on Note originations at 0.75%) and annual management fees (calculated on a monthly basis as 2% perannum of the total performing loan outstanding) charged by the Loan Servicer. The remaining expenses are listed in note 7.

Current tax is the expected tax payable on the taxable income for the financial year, using tax rates applicable to the Company’s activitiesenacted or substantively enacted at the reporting date, and adjustment to tax payable in respect of previous financial years.

Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at the dates of thetransactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functionalcurrency at the exchange rate at that date.

Trade payables are recognised initially at transaction price plus attributable transaction costs. Trade payables are classified as financialliabilities and are subsequently measured at amortised cost.

Finance expense includes interest expense and any impact of revision of cash flows on the Notes issued. Interest expense is calculatedusing the effective interest rate on gross carrying amount. Interest expense is payable following the payment of certain fees and expensesout of income received on the loans and is payable up to the accrued interest balance.

Foreign currency differences arising on retranslation are recognised through profit or loss in the statement of comprehensive income andare included under net foreign exchange gain/loss, as appropriate.

Impact of revision of cash flows on Notes issued relates to changes in estimated future cashflow arising on the liabilities. In the prior yearthe company estimated cash flows using the incurred loss impairment approach on the loan assets. Due to the adoption of IFRS 9 for thecurrent year, loan asset impairment is now based on an expected credit loss model in line with the requirements of IFRS 9 and therefore thecompany has used the ECL estimates as part of the calculation of the amortised cost carrying amount of the loan liabilities. This hasresulted in a remeasurement of EUR 2,238,172 recorded in the finance expense line as disclosed in note 6 to the financial statements.

Notes to the financial statements (continued)For the financial year ended 7 July 2019


For Stage 1 and Stage 2 loans, the finance income is calculated using the effective interest rate on gross carrying amount while for Stage 3loans, the finance income is based on the effective interest rate on gross carrying amount less loss allowance.

2

(l) Taxation (continued)

(m) Cash and cash equivalents

(n) Financial instruments

Policy applicable prior to 8 July 2018

(i) Loans and receivables

(ii) Impairment of loans and receivables

(iii) Notes issued


Deferred tax is provided for temporary differences arising between the carrying amounts of assets and liabilities for financial reportingpurposes and the amounts used for taxation purposes. Deferred tax is not recognised for temporary differences arising on the initialrecognition 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 lawsthat have been enacted or substantively enacted by the reporting date.

Loans and receivables are assessed for indicators of impairment at the end of each reporting period.

Student loans which fall into arrears of 181+ 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.Impairment losses can be reversed once there is a clear indication that the non-performing loan can be considered a performingloan. A collective provision is provided for student loans that fall into arrears between 1 - 180 days (early and middledelinquencies) and also for performing and grace period loans. Collective provisions is calculated based on historical trends ofloans that fall into arrears. Management along with its Loan Servicer will continue to monitor historical trends and update itsimpairment provision model accordingly.


Loans and receivables are recognised in the statement of financial position when the Company becomes a party to the contractualprovisions of the financial instrument. Loans and receivables are initially measured at fair value (which is equal to cost atinception) and are subsequently measured at amortised cost less any allowance for impairment. Interest calculated on the loans forthe period is recognised in the statement of comprehensive income on an accruals basis.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the assetcan be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that therelated tax benefit will be realised.

Notes issued are recognised in the statement of financial position when the Company becomes a party to the contractual provisionsof the financial instrument. Notes issued are initially measured at fair value (which is equal to cost at inception) and aresubsequently measured at amortised cost using the effective interest rate method. Interest accrued on the Company's Notes issued ischarged to the statement of comprehensive income.

Cash and cash equivalents include deposits held on call with banks, other short term highly liquid investments with original maturities ofless than three months which are subject to insignificant risk of changes in their fair value, and are used by the Company for themanagement of its short term commitments. Cash and cash equivalents are carried at amortised cost in the statement of financial position.


Notes issued is derecognised when the obligation under the liability is discharged, cancelled or expired.

2 Accounting policies (continued)

(n) Financial instruments (continued)

Policy applicable from 8 July 2018

(i) Initial recognition of financial instruments

(ii) Classification and subsequent measurement of financial assets

Classification of financial assets

●●

●

●

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 sellingfinancial assets; and

At initial recognition, financial assets are classified into three categories: financial assets measured at amortised cost, financialassets measured at fair value through other comprehensive income (“FVOCI”) and financial assets measured at fair value throughprofit or loss (“FVTPL”).

At initial recognition, financial liabilities are classified into two categories: financial liabilities measured at FVTPL and otherfinancial liabilities.

The classification of financial assets is generally based on the business model in which a financial asset is managed and itscontractual cash flow characteristics. On initial recognition, a financial asset is classified as measured at amortised cost, at FVOCIor at FVTPL.

Financial assets and financial liabilities are measured initially at fair value. For financial assets and financial liabilities measured atFVTPL, any related directly attributable transaction costs are charged to profit or loss; for other categories of financial assets andfinancial liabilities, any related directly attributable transaction costs are included in their initial costs.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initialrecognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured atamortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that wouldotherwise arise.

The business model refers to how the Company manages its financial assets in order to generate cash flows. That is, the Company’sbusiness 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 specificbusiness objective for managing the financial assets determined by the Company’s key management personnel.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on theprincipal amount outstanding.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model formanaging financial assets in which case all affected financial assets are reclassified on the first day of the first reporting periodfollowing the change in the business model.


it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on theprincipal amount outstanding.




Policy applicable from 8 July 2018 (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 currently has a legally enforceable right to set off the recognised amounts; andthe Company intends either to settle on a net basis, or to realise the financial asset and settle the financial liabilitysimultaneously.



In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers thecontractual terms of the instrument. For the purposes of this assessment, ‘principal’ is defined as the fair value of the student loanson initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with theprincipal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profitmargin. The Company also assesses whether the financial asset contains a contractual term that could change the timing or amountof contractual cash flows such that it would not meet this condition.

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 aremanaged together to achieve a particular business objective. This assessment includes judgement reflecting all relevant evidenceincluding how the performance of the assets is evaluated and their performance measured, the risks that affect the performance ofthe assets and how these are managed.

These assets are subsequently measured at amortised cost using the effective interest method. A gain or loss on a financial assetthat is measured at amortised cost and is not part of a hedging relationship shall be recognised in profit or loss when the financialasset is derecognised, through the amortisation process or in order to recognise impairment gains or losses.

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 positionwhen both the following conditions are satisfied:

Monitoring is part of the Company's continuous assessment of whether the business model for which the remaining financial assetsare held continues to be appropriate and if it is not appropriate whether there has been a change in business model and so aprospective change to the classification of those assets. No such changes were required during the periods presented.

Financial liabilities at amortised cost are subsequently measured at amortised cost adjusted for the impact of revision of cash flowson Notes issued.

Financial liabilities are classified as measured at FVTPL or amortised cost. Based on IFRS 9 assessment, the Company hasclassified its liabilities at amortised cost.




(v) Derecognition of financial assets and liabilities

Financial assets

●●

●

Financial liabilities

(vi) Impairment of assets

● Impairment of financial assets



Financial asset is derecognised when one of the following conditions is met:

Where the Company has transferred its rights to receive cash flows from an asset or has retained its rights to receive cash flowsfrom the asset but assumed the obligation to pay those cash flows to the eventual recipients and meanwhile meet the conditions ofthe transfer of financial assets, and has neither transferred nor retained substantially all the risks and rewards of the asset nortransferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset.

The Company recognises loss allowances for expected credit loss (“ECL”) on financial assets measured at amortisedcost including loans and receivables.

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 ofownership of the financial asset; orthe financial asset has been transferred, although the Company neither transfers nor retains substantially all of the risksand rewards of ownership of the financial asset, it does not retain control over the transferred asset.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the originalcarrying 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 Companyderecognises the initial and records a new asset in accordance with the new terms of the loan (applies to both pre and post 8 July2018).

Under IFRS 9, impairments on loans and receivables classified as stages 2 and 3 are based on lifetime expected creditlosses, using a forward-looking expectation of deterioration of credit risk. At each reporting date, an impairment lossequal to 12-month expected credit losses (allocated to stage 1) is recognised for all financial assets for which there is nosignificant increase in credit risk since initial recognition. For financial assets for which there is a significant increasein credit risk since their initial recognition (allocated to stage 2), and that are credit impaired (allocated to stage 3) animpairment loss equal to lifetime expected credit losses will be recognised. The Loan Servicer impairs its loan bookaccording to the status of each loan’s credit risk.

Following the adoption of IFRS 9, student loans which fall into arrears of 91+ days are considered, non-performingloans, and are specifically impaired (default). The arrears analysis of non-performing loans include interest chargesafter the loan is considered a non-performing loan. 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 monitorhistorical trends, current economic factors and layer in future economic data to update its impairment provision modelaccordingly.

The Company derecognises a financial liability (or part of it) only when its contractual obligation (or part of it) is extinguished.

Impairment of financial assets is accounted for using the following principles:

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cashshortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flowsthat the Company expects to receive).





(vi) Impairment of assets (continued)

● Impairment of financial assets (continued)

Significant Increase in Credit Risk ("SICR")

Macro-Economic Forecast

● Measurement of ECLs

The status of the loans are defined below:

Grace and Ahead

Delinquency and Default

The macro-economic variable forecasts available from International Monetary Fund ("IMF") were used in calculatingthe ECL. This data was tested by adding an additional percentage to the rate of change of the forecasted value. As anexample, if unemployment is forecasted to be 10% higher after 1 year, 5% stress testing means the unemployment ratewas forecasted to be 10+5% = 15% higher after 1 year. The positive values correspond to worse economic conditions,whereas the negative values correspond to better conditions (+ does not necessarily mean increase, since increase inunemployment is worse but increase in Gross Domestic Product ("GDP") is better).


The model is most sensitive to changes in GDP. GDP is only part of the model for high-risk borrowers, as it was notpredictive for medium/low risk borrowers. A change of 5% means that 5% is added/subtracted from the forecastedGDP growth (GDP Growth +5% and not GDP Growth * 1.05). US GDP Growth is currently at about 4.2% meaningsubtracting 5% would make the growth negative.



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 thelength of the course.

The Loan Servicer holds lifetime impairments for loans where the Loan Servicer can identify that a significant increasein credit risk has occurred. This will include loans that are delinquent, loans that have been granted paymentarrangements and loans that have defaulted. This ensures a forward-looking approach. The Loan Servicer makes use ofthe 12-month delinquency rate to set thresholds to identify if an increase in credit risk is significant. Separatethresholds are calculated for each loan status as well as each risk bucket grouping.

Loans that are more than 30 days past due are defined to be delinquent. Delinquency buckets are based on the amountof 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.





● Measurement of ECLs (continued)

Forbearance

Impairments are calculated differently for each stage of credit risk:

Stage Allocation ImpairmentStage 1 Grace

AheadOn-Schedule

Stage 2 More than 30 days past due (delinquent) Lifetime Expected Credit LossesSignificant Increase in Credit Risk

Stage 3 More than 90 days past due (default)Settled with Outstanding BalanceArrangementsPost-Term Loans

Stage 1

Stage 2

Stage 3

● Presentation of allowance for ECL

Cash and cash equivalents and other receivables (excluding finance income receivable) are low risk assets. TheCompany has determined that the application of IFRS 9's impairment requirements at 8 July 2018 and 7 July 2019 didnot result in any material impairment allowance.

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 Companyrecognises an impairment gain or loss for financial instruments measured at amortised cost with a correspondingadjustment to their carrying amount through a loss allowance account. The Company recognises loss allowances forloans and receivables.


Loans that are in default, in arrangement, post term or settled but still have an outstanding balance areclassified as stage 3.Loans in stage 3 are impaired based on expected credit losses over the entire lifetime of the loan.

12-Month Expected Credit Losses


Loans in stage 2 are impaired based on expected credit losses over the entire lifetime of the loan.


Loans that are in grace, ahead or on-schedule that have not triggered SICR are classified as stage 1.Loans in stage 1 are impaired based on expected credit losses over the next 12 months.

Loans that are delinquent or that have triggered SICR are classified as stage 2.

Borrowers can request temporary payment arrangements if they are experiencing temporary financial difficulty, whichmeans their loan status will be ‘Arrangement’. These requests are either approved/declined based on the Credit RiskOperational 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

Specific Impairment on expected credit loss basis





● Write-off

(vii) Measurement of fair values

● Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.●

●

(viii) Offsetting of financial instruments

(o) Segmental reporting

EUR EUR EUR EUR2,402,348 23,124,045 (890,782) 1,358,603

USA 1,892,923 20,023,811 (1,380,246) 984,039United Kingdom 1,472,736 17,415,191 (1,085,823) 606,916Others 8,088,581 91,052,710 (7,325,821) 4,879,575

13,856,588 151,615,757 (10,682,672) 7,829,133

The book value of a financial asset is written off (either partially or in full) to the extent that there is no realisticprospect of recovery. A write-off constitutes a derecognition event. This is generally the case when the Companydetermines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repaythe amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcementactivities in order to comply with the Company’s procedures for recovery of amounts due.

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is acurrently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise theassets and settle the liabilities simultaneously. This policy is applicable for both 2018 and 2019 financial year ends.

Financial results of operating in this segment encompass total assets of EUR 166,810,089 and total liabilities of EUR 167,125,541 (2018:EUR 174,813,544 and EUR 174,627,555). The segment also generated a profit after taxation for the financial year ended 7 July 2019 ofEUR 1,177,188 (2018: EUR 842,532). The directors are considered to be the chief operating decision makers.



Impairment provision

07-Jul-19

The following is a geographical analysis of the income from loans and receivables by the students' current country of residence:

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair valuehierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowestlevel input that is significant to the entire measurement. This policy is applicable for both 2018 and 2019 financial year ends.


India

The Company has applied IFRS 8 Operating Segments which puts emphasis on the "management approach" to reporting on operatingsegments. An operating segment is a component of the Company that engages in business activities from which it may earn revenue andincur 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.

Interest receivable

Loan principal

Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit orloss in the period in which the recovery occurs.

Finance income

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly(i.e. as prices) or indirectly (i.e. derived from prices).Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).


(o) Segmental reporting (continued)

EUR EUR EUR EUR2,666,405 27,103,451 (627,952) 2,164,663

USA 1,662,890 17,767,011 (855,228) 881,894United Kingdom 1,550,140 17,952,012 (882,047) 732,496Others 8,373,892 94,609,180 (5,195,140) 6,551,357

14,253,327 157,431,654 (7,560,367) 10,330,410

3 Directors and employees

4 Other income

07-Jul-19 07-Jul-18EUR EUR

250,648 262,193 - 39,507 - 6,500

13,900 - 264,548 308,200

5 Finance income


- 11,713,222 13,590,228 - 2,143,366 663,099

13,856,588 14,253,327

6 Finance expense

07-Jul-19 07-Jul-18EUR EUR*

10,537,249 9,744,786 (2,865,397) (4,385,693) 7,671,852 5,359,093

*The above table has been updated to reflect the geographical analysis for income earned by country in line with the current year.

*The 2018 finance expense has been updated to align with the current year presentation. In prior year, the impact of revision of cash flows wasincluded within other income.

Interest receivable

Transaction fee

Finance income on loans and receivablesincome on performing loans and receivables



The following is a geographical analysis of the income from loans and receivables by the students' current country of residence:

India


income on non-performing loans and receivables




Coupon expense on Notes issued

Impairment provision

Loan principal 07-Jul-18*



Foreign exchange gain

The Reimbursement by Loan Servicer relates to the operating expenses of the Company.

Finance income

Reimbursement by Loan Servicer

One of the directors received remuneration amounting to EUR 7,803 in respect of the financial year under review (2018: EUR 8,000). TheCompany has no employees (2018: Nil) during the financial year and the directors who are also employees of Apex Group received noremuneration during the financial year (2018: EUR Nil). The terms of the corporate services agreement provide for a single fee for the provisionof corporate services (including making available of individuals to act as directors of the Company). As a result, the allocation of fees betweenthe different services provided is a subjective and approximate calculation. The Company has allocated an amount of 1% of the totaladministration fees paid to Apex IFS Limited for the provision of the services of a director. The individuals acting as directors do not (and willnot), in their personal capacity or any other capacity, receive any fee for acting or having acted as directors of the Company.

Corporate benefit

Impact of revision of cash flows on Notes issued

7 Operating expenses


3,321,063 3,392,223 250,648 262,193 230,372 - 193,484 271,960 3,995,567 3,926,376

Included in other expenses:


7,803 8,000 85,116 65,559 3,001 3,001 95,920 76,560


69,200 53,300 - -

2,440 2,440 - -

71,640 55,740

8 Income tax expense

07-Jul-19 07-Jul-18Current tax: EUR EURCurrent tax on income for the year 280,487 47,833 Total current tax charge 280,487 47,833

Deferred tax:Origination and reversal of temporary differences 111,909 - Adjustment in respect of prior periods - - Total deferred tax charge 111,909 -

Total tax charge 392,396 47,833

Reconciliation of effective tax rateProfit on ordinary activities before tax 1,569,584 890,365

392,396 222,591

Utilisation of previously unrecognised losses - (174,758)Total tax charge for the period 392,396 47,833

Other expenses



The result arrived at after charging:

Auditor's remuneration for work carried out for the Company in respect ofthe financial year is as follows:Audit of individual company accounts


Foreign exchange loss

Directors' remunerationAuditor's feesTaxation fees

The reconciliation of current tax on profit on ordinary activities to the total tax charge for the financial year ended 7 July 2019 is shown asfollows:

Management fees - annual fee 2%

Administration fees - origination fee 0.75%




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.

Profit on ordinary activities multiplied by higher rate of corporation tax in Ireland of 25% (2018: 25%)



Other assurance services


Auditors' remuneration for work carried out relate to fees payable to KPMG, the Statutory audit firm. Fees are exclusive of VAT and includeexpenses.

Tax compliance servicesOther non-audit services



9 Loans and receivables


157,431,654 179,028,480 29,944,046 32,529,679 (39,228,521) (50,877,809) 3,468,578 (3,248,696) 151,615,757 157,431,654

(7,560,367) (3,164,536)Impairment adjustment following IFRS 9 adoption at transition (2,238,172) -

(9,798,539) (3,164,536) (790,872) (4,374,916) (93,261) (20,915)

(10,682,672) (7,560,367)

140,933,085 149,871,287

07-Jul-19 07-Jul-18EUR EUR*

< 1 year 20,998,581 20,545,512 1 to 2 years 20,630,399 20,354,342 2 to 5 years 55,661,331 57,734,476 > 5 years 43,642,774 51,236,957

140,933,085 149,871,287

10 Other receivables 07-Jul-19 07-Jul-18EUR EUR

Interest income receivable 7,829,133 10,330,410 Receivables from Loan Servicer 336,575 883,201

8,165,708 11,213,611

Unrealised foreign exchange movement



During the financial year, the Company purchased EUR 29,944,046 (2018: EUR 32,529,679) of loan assets. The purchase price in respect ofthese loans was settled by the issue of Notes. These assets consist of portfolios of student loans. Please refer to note 13 to the financialstatements.

Less principal repayments

At Cost


Balance at beginning of financial yearLoans purchased


Impairment of student loans during the financial yearForeign exchange loss on impairment of student loans

Impairment of student loansBalance at beginning of financial year

Balance at end of financial year

Net book value

Maturity analysis

Following the adoption of IFRS 9, student loans which fall into arrears of 91+ days are considered, non-performing loans, and are specificallyimpaired (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 anddelinquencies) and also for performing and grace period loans. Expected credit losses provisions are calculated using a forward-lookingexpectation of deterioration of credit risk. Management along with its Loan Servicer will continue to monitor historical trends, current economicfactors and layer in future economic data to update its impairment provision model accordingly.

*The 2018 table has been updated to reflect more detailed calculation of the 2018 maturity profile to be in line with current year analysis of thematurity profile, by allocating the principal repayments across the term of the loans.

Prior year to 8 July 2018, student loans which fall into arrears of 181+ days were considered, non-performing loans and were impaired. Incomewill continue to accrue on loans, unless a loan is both in default and is under enforcement. Impairment losses can be reversed once there is aclear indication that the non-performing loan can be considered a performing loan. A collective provision was provided for student loans thatfall into arrears between 1 - 180 days and also for performing and grace period loans. Collective provisions were calculated based on historicaltrends.

Balance at end of financial year

Based on the fair value hierarchy, the loans and receivables are considered as Level 3 as there are no quoted or observable market prices and theCompany has determined an ECL provision for each loan based on unobservable inputs.

11 Cash and cash equivalents 07-Jul-19 07-Jul-18EUR EUR

17,223,662 13,688,646 40,000 40,000 17,263,662 13,728,646

12 Other payables 07-Jul-19 07-Jul-18EUR EUR

3,795,375 4,091,431 251,406 165,509 132,993 117,428 280,487 47,833 4,460,261 4,422,201

13 Notes issued 07-Jul-19 07-Jul-18EUR EUR

Balance at beginning of financial year 170,205,354 194,352,738

Cash transactionsIssuance of Notes 32,142,676 32,271,562 Principal repayment on Notes (40,843,487) (49,187,616)

(2,865,397) (4,385,693)

Unrealised foreign exchange movement 4,026,134 (2,845,637)

Balance at end of financial year 162,665,280 170,205,354

Reconciliation of finance expense:Opening interest payable on Notes issued 4,091,431 5,903,683Interest payments during the financial year (10,833,305) (11,557,038)Coupon expense on Notes issued 10,537,249 9,744,786Closing interest payable on Notes issued 3,795,375 4,091,431

Impact of revision of cash flows on Notes issued

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-1respectively from Standard and Poor’s as at 7 July 2019 (2018: 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 Seriesare 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.

Interest payable on Notes issued Management fees payable to Loan Servicer

Barclays Bank Plc

Corporation tax payableOperating expenses payable




HSBC Bank Plc

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 USDLibor (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, 168and 169), three-month GBP Libor (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 and 167) and GBP BOE (as denoted at note 13) as determined on the relevant Euribor and GBP Libor determination datewhich is paid subject to available cashflows from the student loans. There is a spread on each Series between the rate on the student loans andthe relevant Notes, where the student loans accrue at a higher rate than the Notes.

13

Ccy 07-Jul-19 07-Jul-18

EUR EUR EUR EUR EUREUR 4,243,830 (4,243,830) - - - EUR 1,967,600 (1,967,600) - - 28,009 EUR 3,494,590 (3,494,590) - - 123,657 EUR 662,348 (662,348) - - - EUR 208,287 (208,287) - - 35,271 EUR 3,451,700 (3,299,490) (8,369) 143,841 280,668 GBP 548,614 (506,402) 67 42,279 54,164 EUR 2,908,600 (2,702,259) 18,608 224,949 418,784 USD 852,950 (400,757) (21,042) 431,151 566,036 EUR 295,700 (270,998) 2,042 26,744 44,947 EUR 2,979,417 (2,525,990) (109,456) 343,971 538,720 GBP 1,128,730 (959,244) (11,770) 157,716 230,000 GBP 623,094 (558,642) 28,689 93,141 147,904 EUR 316,525 (306,016) 24,720 35,229 49,137 GBP 440,205 (214,554) (750) 224,901 310,095 GBP 338,619 (294,739) (17,855) 26,025 69,296 GBP 3,708,731 (2,841,503) 12,526 879,754 1,227,055 EUR 3,883,130 (3,310,905) 15,380 587,605 797,130 USD 3,661,896 (1,956,027) (86,215) 1,619,654 2,114,710 EUR 115,200 (106,061) 3,405 12,544 17,805 EUR 3,505,931 (2,950,057) (24,326) 531,548 710,491 GBP 403,957 (299,043) 299 105,213 113,832 GBP 998,362 (799,620) 2,407 201,149 294,361 GBP 451,492 (328,787) (3,922) 118,783 122,875 EUR 3,403,502 (2,631,259) (12,367) 759,876 1,011,275 EUR 285,000 (202,660) (8,646) 73,694 87,821 USD 1,066,188 (591,363) (50,604) 424,221 630,977 EUR 4,715,793 (3,445,680) 36,513 1,306,626 1,981,145 GBP 1,805,968 (1,383,093) (13,780) 409,095 512,744 GBP 919,915 (711,556) 20,272 228,631 302,662 GBP 327,332 (220,796) (39) 106,497 151,083 GBP 231,954 (162,986) (6,648) 62,320 93,234 EUR 104,365 (104,365) 8,265 8,265 11,576 GBP 500,027 (311,567) (5,057) 183,403 255,211 USD 1,066,188 (597,091) (18,474) 450,623 640,732 GBP 1,241,603 (578,839) (11,115) 651,649 738,711 USD 1,279,425 (678,913) (19,551) 580,961 717,293 USD 980,893 (453,997) (59,628) 467,268 715,435 USD 1,066,188 (629,364) (60,709) 376,115 545,631 USD 2,558,850 (957,281) (121,292) 1,480,277 1,478,862 USD 1,765,607 (776,409) (103,923) 885,275 1,173,169 USD 1,279,425 (805,264) (21,038) 453,123 685,274 USD 2,558,850 (1,238,965) (293,309) 1,026,576 1,352,620 USD 6,104,347 (1,696,662) (881,440) 3,526,245 4,408,318 USD 1,748,548 (971,837) (175,500) 601,211 894,715 EUR 3,274,879 (2,347,622) (19,255) 908,002 1,258,982 USD 2,737,970 (1,099,259) (134,953) 1,503,758 2,086,105 USD 2,558,850 (1,185,323) (254,291) 1,119,236 1,680,501 USD 7,036,838 (2,506,232) (601,551) 3,929,055 4,850,710 EUR 3,765,753 (2,332,510) (142,004) 1,291,239 2,055,489 GBP 2,504,910 (1,319,825) 14,780 1,199,865 1,781,056

98,078,676 (65,148,467) (3,110,906) 29,819,303 40,396,278

2

16

9108

Impact of revision of cash

flows

51

Sub total

50

13

The outstanding balance of the Notes in issue at 7 July 2019 and 7 July 2018 are as follows:

4847

1211

21

2827262524

2223

20

1819

15

Notes issued (continued)


29

4241

4443

Original nominal

4645

3637

4039

49


654

31

35

38

34

7

Series

1

3

17

14

3233

30

Cumulative issuances/ payments

13

Ccy 07-Jul-19 07-Jul-18

EUR EUR EUR EUR EUR 98,078,676 (65,148,467) (3,110,906) 29,819,303 40,396,278

USD 5,670,784 (2,917,637) (306,011) 2,447,136 3,683,594 GBP 919,915 (435,550) (32,301) 452,064 569,345 USD 3,625,038 (2,154,072) (183,952) 1,287,014 2,011,605 USD 4,264,750 (2,758,501) (118,778) 1,387,471 2,108,702 GBP 507,929 (233,263) (19,104) 255,562 312,259 USD 200,443 (61,447) (734) 138,262 187,090 USD 2,132,375 (880,621) (256,633) 995,121 1,266,439 USD 682,360 (473,346) (515) 208,499 322,997 USD 1,705,900 (739,031) (102,624) 864,245 1,212,146 USD 1,450,015 (607,875) (92,285) 749,855 1,047,134 GBP 959,421 (547,423) (15,379) 396,619 562,005 EUR 3,403,294 (1,890,477) (60,501) 1,452,316 2,018,189 USD 1,194,130 (357,909) (56,653) 779,568 956,070 USD 938,245 (510,115) (8,658) 419,472 536,331 USD 1,172,806 (410,455) (104,596) 657,755 1,062,020 USD 1,492,663 (769,222) (143,791) 579,650 1,111,385 USD 3,838,275 (1,395,160) (388,776) 2,054,339 2,527,552 USD 712,213 (452,144) 26,143 286,212 434,168 USD 852,950 (414,826) (65,331) 372,793 468,906 USD 426,475 (203,118) (32,439) 190,918 237,126 USD 2,670,586 (1,323,439) (229,953) 1,117,194 1,625,305 USD 758,614 (408,952) 74,833 424,495 752,229 GBP 5,951,762 (1,762,859) (246,841) 3,942,062 5,386,624 GBP 406,401 (108,830) (13,198) 284,373 403,438 GBP 665,189 (181,409) (41,518) 442,262 563,773 EUR 4,863,176 (2,058,709) (116,171) 2,688,296 4,114,447 USD 1,445,750 (334,997) (69,357) 1,041,396 1,363,387 EUR 2,286,757 (39,004) (25,282) 2,222,471 2,251,949 USD 1,093,260 (427,337) 12,963 678,886 883,573 USD 1,088,229 (260,150) (108,694) 719,385 1,064,009 USD 639,713 (137,042) (55,144) 447,527 633,451 USD 1,647,983 (458,710) (54,600) 1,134,673 1,454,282 USD 315,592 (47,859) (28,118) 239,615 251,189 USD 1,108,922 (208,048) (80,489) 820,385 1,020,827 GBP 1,155,956 (305,680) (52,202) 798,074 1,113,307 USD 4,714,117 (1,002,106) (230,168) 3,481,843 4,370,372 USD 3,642,096 (1,007,988) (181,232) 2,452,876 3,232,303 USD 504,093 (154,934) (5,038) 344,121 401,983 USD 597,065 (161,697) 984 436,352 591,439 USD 3,061,238 (1,347,715) (152,763) 1,560,760 2,359,054 EUR 4,500,000 (261,738) (296,595) 3,941,667 4,437,899 GBP 1,643,432 (296,098) (184,332) 1,163,002 1,565,961 USD 2,636,084 (1,408,555) (7,957) 1,219,572 2,059,636 USD 997,564 (434,409) (42,986) 520,169 720,594 USD 776,185 (300,607) (43,513) 432,065 579,683 GBP 564,365 (59,308) (38,246) 466,811 546,267 EUR 4,000,001 (1,085,081) (94,880) 2,820,040 3,686,425 EUR 2,977,862 (435,919) (85,753) 2,456,190 2,923,014

190,940,649 (99,379,839) (7,470,074) 84,090,736 113,387,761

Sub total


flows

5253

7271

575655

60




64

61

59

62

The outstanding balance of the Notes in issue at 7 July 2019 and 7 July 2018 are as follows (continued):

7069

63

66

68

65

103

101102

54

58

83

8584

82

73

104

90

818079

75

9593

8786

Sub total

10098

8988

92

9796

Original nominal

Cumulative issuances/ payments

Series

67

7776

13

Ccy 07-Jul-19 07-Jul-18

EUR EUR EUR EUR EUR 190,940,649 (99,379,839) (7,470,074) 84,090,736 113,387,761

USD 1,591,204 (351,527) (44,836) 1,194,841 1,517,540 USD 448,498 (360,112) (1,041) 87,345 289,263 USD 439,798 (246,257) (17,781) 175,760 360,037 USD 478,228 (170,041) (12,039) 296,148 378,824 USD 251,032 (64,107) (26,128) 160,797 205,538 USD 865,744 (274,778) (90,634) 500,332 674,775 USD 648,754 18,455 (92,281) 574,928 601,221 USD 589,559 (384,115) 5,011 210,455 393,795 USD 8,219,047 (1,588,565) (535,194) 6,095,288 7,705,179 EUR 6,054,423 (2,213,277) (170,715) 3,670,431 6,022,908 USD 2,611,905 (1,064,899) 46,548 1,593,554 2,467,660 USD 3,207,924 (703,722) (165,311) 2,338,891 3,037,609 USD 618,389 (120,472) (14,195) 483,722 613,733 USD 852,950 (300,282) (37,865) 514,803 686,865 USD 1,288,381 (23,190) (77,503) 1,187,688 1,272,424 USD 1,375,177 (465,431) (61,064) 848,682 1,357,930 EUR 5,945,036 (1,101,159) (124,223) 4,719,654 5,866,781 EUR 3,250,000 (77,562) (189,407) 2,983,031 3,205,174 EUR 2,395,108 - (66,359) 2,328,749 2,365,516 EUR 4,014,558 - (176,317) 3,838,241 3,960,380 EUR 750,000 - (28,995) 721,005 740,216 GBP 3,483,838 (355,170) (57,448) 3,071,220 3,438,521 EUR 4,627,825 - (154,109) 4,473,716 4,566,680 GBP 547,321 (6,202) (45,372) 495,747 540,683 GBP 564,365 (126,310) (17,723) 420,332 558,332 GBP 614,368 (6,962) (34,746) 572,660 604,418 GBP 557,970 - 32,235 590,205 - EUR 1,000,000 - (9,698) 990,302 - EUR 5,830,921 - (85,704) 5,745,217 - EUR 1,200,000 - (28,924) 1,171,076 - EUR 1,000,000 - (22,708) 977,292 - EUR 2,786,000 - (40,562) 2,745,438 - USD 3,415,585 151,445 (150,656) 3,416,374 3,385,591 EUR 1,000,000 - (13,799) 986,201 - GBP 3,567,276 - (54,659) 3,512,617 - EUR 885,000 - (21,117) 863,883 - GBP 1,860,769 - (53,810) 1,806,959 - USD 4,453,850 - (77,010) 4,376,840 - USD 4,453,850 - (217,295) 4,236,555 - EUR 3,605,000 - (7,435) 3,597,565 -

74 GBP 3,041,589 (3,041,589) - - - 119 USD 4,296,309 (4,296,309) - - - 120 USD 10,568,906 (10,568,906) - - -

300,197,106 (127,120,883) (10,410,943) 162,665,280 170,205,354

Amounts in bold in the "Original nominal" column are new Series issued during the year.

180

107





122121

148

Total


flows

The outstanding balance of the Notes in issue at 7 July 2019 and 7 July 2018 are as follows (continued):Series Cumulative

issuances/ payments

Sub total

Original nominal

118117116115

105

108

114113

147

141

168169

158159

161164

167

156157

153154

166

145146

150

152151

160

144

111110109

134126

142

13

14 07-Jul-19 07-Jul-18EUR EUR

40,000 40,000

40,000 40,000

Called up share capital presented as equity 40,000 40,000

15

(a)


Loans and receivables 140,933,085 149,871,287 Other receivables 8,165,708 11,213,611 Deferred tax asset 447,634 - Cash and cash equivalents 17,263,662 13,728,646

166,810,089 174,813,544

Risk management framework

Allotted, called up and fully paid:

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to the credit risk at the reporting date was:

As at 7 July 2019, the Company had its principal amount of Notes in issue amounting to EUR 162,665,280 (2018: EUR 170,205,354).

The principal activity of the Company is to invest in Loans and Receivables, the acquisition of which is funded by the issue of Notes toinvestors. The net proceeds of the issue of the Notes will be used by the Company to acquire relevant Student Loans from the Loan Originator inaccordance with the terms of the respective agreements and to pay for permitted expenses.

Presented as follows:

40,000 Ordinary shares of EUR1 each

Share capital


All the issued shares in the Company are owned by Apex Trust Nominees No. 1 Limited (formerly Link Trust Nominees No. 1 Limited) (theShare Trustee), 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 theshares.

The board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. TheCompany is exposed to a variety of financial risks as a result of its activities. The principal risks arising from the Company's financialinstruments are credit risk, market risk (including interest rate risk and foreign exchange risk) and liquidity risk. The principal nature of suchrisks is summarised below.

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 theCompany’s maximum exposure to credit risk.

Credit risk

Introduction and overview

Financial risk management

Authorised share capital:40,000 Ordinary shares of EUR1 each


Each Series of Notes is backed by a diversified pool of loans to international students. Interest payment will be referenced to three-monthEuribor, three-month USD Libor, three-month GBP Libor and GBP BOE (i.e. the reference rate plus a margin). The Noteholders are alsoaffected 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 currencythat the loans to students is issued. This eliminates any foreign exchange risk to the Noteholders.

Based on the fair value hierarchy, the Notes are considered as Level 3 as there are no quoted or observable market prices.

For the financial year ended 7 July 2019Notes to the financial statements (continued)

15

(a) Credit risk (continued)


(following IFRS 9 transition) On schedule 31 - 90 Days 90+ DaysEUR EUR EUR

Student Loans 119,347,227 16,908,883 12,506,108(Principal & Interest)

(IAS 39) 1 - 60 Days 61 - 120 Days 121 - 180 Days 181+ DaysEUR EUR EUR EUR

Student Loans 147,529,412 4,697,635 2,211,131 5,763,519

Impairment policy during the year ended 7 July 2018 (IAS 39 compliant)

Impairment policy during the year ended 7 July 2019 (IFRS 9 compliant)

The portfolio is also analysed monthly, by the Loan Servicer, to identify spikes in delinquency and investigate root causes. This allows theLoan Servicer's credit team to propose management actions.

Once the loan is disbursed, the loan is managed in line with the Loan Management Policy and is loaded to the Loan Servicer's loanmanagement system. After the grace period, the loans are monitored for payment performance. Any arrears are flagged and borrowers arecontacted to understand the reason for missed payments. The collections tools to improve payment performance include temporaryforbearance and escalation through enforcement stages.

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 holds lifetime impairments for loans where the Loan Servicer can identify that a significant increase in credit risk hasoccurred. 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 anincrease in credit risk is significant. Separate thresholds are calculated for each loan status as well as each risk bucket grouping.



Where there are insufficient funds available from a Series to cover the obligations due to that Series' Noteholders, this ultimate loss will beborne by the Noteholders for a default on their respective Series.

Student loans which fall into arrears of 181+ days were considered, non-performing loans and were specifically impaired (default). Thearrears analysis of non-performing loans include interest charges after the loan is considered a non-performing loan. Impairment losses canbe reversed once there is a clear indication that the non-performing loan can be considered a performing loan. A collective provision isprovided for student loans that fall into arrears between 1 - 180 days (early and middle delinquencies) and also for performing and graceperiod loans. Collective provisions is calculated based on historical trends of loans that fall into arrears. Management along with its loanservicer will continue to monitor historical trends and update its impairment provision model accordingly.

Student loans which fall into arrears of 91+ days are considered, non-performing loans, and are specifically impaired (default). The arrearsanalysis of non-performing loans include interest charges after the loan is considered a non-performing loan. Expected credit lossesallowances 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 ofdeterioration of credit risk. Management along with its Loan Servicer will continue to monitor historical trends, current economic factorsand layer in future economic data to update its impairment allowance model accordingly.

Financial risk management (continued)


7 July 2018

7 July 2019

The Loan Servicer, Prodigy Finance Limited, has developed comprehensive risk and background vetting procedures that are used to screenevery applicant as well as a proprietary scorecard which assesses each applicant's expected ability (post-graduation) to repay the loan.

No loan payment is required during the study period and for approximately 6 months post-graduation which in total gives a grace period of18 - 42 months. Equally important, the community nature of the platform and the sources of funding provide a significant degree of socialpressure for borrowers to meet all their loan repayments.

15


Cash and cash equivalents

Other receivables

Quality of loans and receivables

Stage 1 Stage 2 Stage 3 Total EUR EUR EUR EUR

Opening balance 124,352,994 26,191,277 9,657,426 160,201,697 IFRS 9 transition adjustment (667,774) (1,941,971) 371,573 (2,238,172)Transfer to stage 1 17,022,593 (14,341,133) (2,681,460) - Transfer to stage 2 (11,349,184) 12,498,929 (1,149,745) - Transfer to stage 3 (22,322,276) (5,947,561) 28,269,837 - Net remeasurement of loss allowance 822,726 1,896,814 (3,603,673) (884,133)New financial assets originated or purchased 28,876,018 976,703 91,325 29,944,046 Principal repayments (15,951,265) (2,561,468) (20,715,788) (39,228,521)Foreign exchange and other movements (1,436,605) 137,293 2,266,613 967,301 Closing balance 119,347,227 16,908,883 12,506,108 148,762,218

Impairment on other receivables (not including interest income receivable) has been measured on a 12-month expected loss basis andreflects the short maturities of the exposures. The Company considers that its other receivables have low credit risk based on the externalcredit ratings of the counterparties.

As the amount has been assessed as not material, on initial application of IFRS 9, the Company did not recognise an impairment allowanceas at 8 July 2018. The amount of the allowance on other receivables did not change during the financial year.

07-Jul-19

As the amount has been assessed as not material, on initial application of IFRS 9, the Company did not recognise an impairment allowanceas at 8 July 2018. The amount of the allowance on cash and cash equivalents did not change during the financial year.

No comparative has been included for prior year (2018) as the Accounting Standards used were based on IAS 39. Refer to note 2 (e) of thefinancial statements for change in accounting policy.

As at the reporting date, the credit risk exposures of the Company’s loans and receivables (including interest income receivable) are listedas below:




Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the short maturities of theexposures. The Company considers that its cash and cash equivalents have low credit risk based on the external credit ratings of thecounterparties.

Cash and cash equivalents are not perceived as being exposed to significant credit risk as they are held in reputable banks or financialinstitutions. The S&P's credit long term rating of the banks in which the Company has held cash deposits is AA- (2018: AA-) for HSBCBank plc and A (2018: A) for Barclays Bank plc.

15


Movements in the allowance for impairment in respect of loans and receivables


Opening balance under IAS 39 (7,560,367) (3,164,536)Adjustment on initial application of IFRS 9 (2,238,172) - Opening balance under IFRS 9 (9,798,539) (3,164,536)Net remeasurement of loss allowance (884,133) (4,395,831)Closing balance (10,682,672) (7,560,367)

Three Risk StagesAverage PD Average EAD Average LGD ECL ratio Ccy ECL ECL

Ccy EURStage 1 6.10% 16.28% 34.46% 1.02% USD 620,719 552,918 Stage 2 25.77% 12.13% 34.58% 9.82% USD 1,190,252 1,060,241 Stage 3 100.00% 99.09% 88.30% 43.17% USD 6,451,461 5,746,768

Stage 1 5.40% 15.42% 32.87% 0.81% EUR 396,940 396,940 Stage 2 24.75% 27.44% 28.44% 8.08% EUR 430,133 430,133 Stage 3 100.00% 98.90% 93.76% 32.87% EUR 1,491,773 1,491,773

Stage 1 3.88% 19.31% 30.37% 0.42% GBP 65,151 72,705 Stage 2 22.60% 23.80% 27.67% 5.78% GBP 125,476 140,024 Stage 3 100.00% 98.82% 89.48% 29.46% GBP 708,972 791,170

10,682,672

(b)

(i)

(ii)

Currency risk




Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financialinstruments. Interest rate risk exists where assets and liabilities have interest rates under a different basis or which reset at adifferent time.

The Notes bear interest at a rate based on three-month Euribor (some Notes have a floor on Euribor of 0%), three-month USDLibor, three-month GBP Libor and GBP BOE as indicated at note 13 and determined on the relevant Euribor and GBP Libordetermination date plus a margin which is paid subject to available cashflows from the student loans. The Company's assets alsobear interest at a rate based on three-month Euribor, three-month USD Libor, three-month GBP Libor and GBP BOE.

Market risk

The movement in the allowance for impairment in respect of loans and receivables during the financial year was as follows. Comparativeamounts for 2018 represent the allowance account for impairment losses under IAS 39.

Expected credit loss assessment for loans and receivables as at 7 July 2019:

Interest rate risk

The loans and Notes are denominated in EUR, GBP and USD, as indicated at note 13. The currency that each Note is issued in isthe same currency that the loans to students is issued in. This eliminates any foreign exchange risk to the Noteholders.

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other pricing effects will affect theCompany's income or the value of its holding of financial instruments.

15 Financial risk management (continued)

(b) Market risk (continued)

(ii) Interest rate risk (continued)

Amount Amount

EUR % EUR % 140,933,085 8.58% 149,871,287 8.72% 17,263,662 0.00% 13,728,646 0.00% 162,665,280 5.68% 170,205,354 5.78%

(c)

EUR EUR EUR EUR EUR EUR162,665,280 213,511,901 28,243,438 27,828,628 76,653,496 80,786,339

Other payables 4,460,261 4,460,261 4,460,261 - - - 167,125,541 217,972,162 32,703,699 27,828,628 76,653,496 80,786,339

EUR EUR EUR EUR EUR EUR177,750,900 226,757,452 28,357,833 28,169,701 80,588,065 89,641,853

Other payables 4,422,201 4,422,201 4,422,201 - - - 182,173,101 231,179,653 32,780,034 28,169,701 80,588,065 89,641,853

Notes issued

Two to five years

Carrying amount

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 ofits financial liabilities to its assets to avoid significant elements of risk generated by mismatches of investment performance against itsobligations.

The Notes are tradable and are listed on the Euronext Dublin but no established secondary market exists for the Notes. Also the amortizingnature of the Notes and the fact that many borrowers repay early means that the majority of principal may be repaid long before finalmaturity.

07-Jul-19 Two to five years

More than five years

Gross contractual

cashflows

Cash and cash equivalentsNotes issued

07-Jul-19

One to two years

Less than one year


According to a sensitivity analysis, if the underlying interest rate on the closing balance for the financial year ended 7 July 2019were to increase or decrease by 1%, the interest income would increase/decrease by EUR 1,409,331 (2018: EUR 1,498,713) andthe interest expense would increase or decrease by EUR 1,626,653 (2018: EUR 1,702,054).

Notes issued



The following are the contractual maturities of financial liabilities, assuming no early repayments, including interest payments:

Less than one year

07-Jul-18 One to two years

Weighted Average Rate

07-Jul-18Weighted

Average Rate


Carrying amount

Gross contractual

cashflows

More than five years

The Company’s obligation to the Noteholders of a particular Series is limited to the net proceeds upon realisation of the assets of thatSeries or it having any funds to make the repayment. Should the net proceeds be insufficient to make all payments, the other assets of theCompany will not be available for payment and the deficit is instead borne by the Noteholders according to the established priorities ofpayment.

*The 2018 table has been updated to reflect more detailed calculation of the 2018 maturity profile to be in line with current year analysis ofthe maturity profile, by allocating the principal repayments throughout the term of the Notes.

15

(d) Concentration risk

EUR EUR EUR EUR56,771,894 (4,115,076) 2,951,642 55,608,46041,017,243 (1,721,430) 2,194,199 41,490,01241,929,992 (3,029,998) 1,944,882 40,844,876

9,222,865 (1,650,888) 668,779 8,240,7562,673,763 (165,280) 69,631 2,578,114

151,615,757 (10,682,672) 7,829,133 148,762,218

EUR EUR EUR EUR56,792,487 (2,421,167) 3,810,867 58,182,18745,066,085 (1,397,013) 3,299,267 46,968,33943,903,462 (2,632,578) 2,339,365 43,610,249

9,231,920 (1,040,323) 773,988 8,965,5852,437,700 (69,286) 106,923 2,475,337

157,431,654 (7,560,367) 10,330,410 160,201,697

(e) Early repayment and reinvestment risk

(f)

(g)

16

The directors have engaged competent service providers and put in place a directors' Compliance Policy to review the structures andarrangements of the Company annually, and to take any remedial steps if required.

Europe

The Company's financial instruments not measured at fair value through profit or loss consist of cash and cash equivalents, loans andreceivables, other receivables, Notes issued and other payables. The carrying values of the financial instruments approximate their fairvalues.





Total

All of the loans are issued to students which presents a concentration risk to the Company. However, controls are in place by ProdigyFinance Limited as it relates to the vetting and on going monitoring procedures to mitigate this risk.

The following is a geographical analysis of the loans and receivables by the students' current country of residence:

Apex Trust Nominee No.1 Limited (formerly Link Trust Nominee No.1 Limited) (the Share Trustee), which is a company incorporated inEngland and Wales, is the sole shareholder of the Company.

Interest receivable

Fair value

Total

Americas

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-dayactivities of the Company. The Board of directors have considered the issue as to who is the controlling party of the Company. It has determinedthat the control of the day-to-day activities of the Company rests with the Board and there is no single controlling party.

Ownership of the Company

Operational risk

Asia

AfricaAustralasia

The Notes will be subject to early repayment risk. The timing of principal payments in respect of the Notes will depend principally onpayments received by the Company under the relevant Student Loans. Investors in Notes bear the risk that, if and when they receive aprincipal payment in respect of the Notes, they will not be able to reinvest the amount of the principal payment in alternative investmentsthat bear a yield or return equal to or greater than the interest rate on the Notes.

07-Jul-18 Loan principal

Impairment allowance

Americas

Impairment allowance

07-Jul-19

Interest receivable

AsiaEuropeAfrica

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 regulatoryrequirements and generally accepted standards of corporate behaviour. Operational risk arises from all the Company's operations.

Loan principal

Australasia

17

18

19 Subsequent events

● Series 170 - USD 10,000,000 Secured Limited Recourse Notes due 2042● Series 181 - EUR 10,000,000 Secured Limited Recourse Notes due 2031● Series 182 - EUR 10,000,000 Secured Limited Recourse Notes due 2032● Series 183 - GBP 10,000,000 Secured Limited Recourse Notes due 2031● Series 184 - GBP 10,000,000 Secured Limited Recourse Notes due 2032

20

The Company view the share capital as its capital. The board reviews the Company’s management accounts and financial statementsperiodically to ensure the capital structure is maintained. Share capital of EUR 40,000 was issued in line with Irish Company Law and is notused for financing the investment activities of the Company. The Company is not subject to any other externally imposed capital requirements.

Capital management

The Loan Servicer, Prodigy Finance Limited provides loan servicing, transfer agent and collection agent services to the Company. Managementfees charged by Prodigy Finance Limited amounted to EUR 3,321,063 (2018: EUR 3,392,223) and 'Administration fees - origination fees', splitbetween Prodigy Finance Limited and Prodigy Services Limited, amounting to EUR 193,484 (2018: EUR 271,960). Prodigy Finance Limitedreceived the payment of EUR 3,235,166 (2018: EUR 3,153,028) for management fee and EUR 193,484 (2018: EUR 271,960) foradministration fees-origination fees in the financial year ended 7 July 2019. As at 7 July 2019, Prodigy Investments Limited held EUR4,678,423 (2018: EUR 2,562,635) of the Company's Notes with accrued interest of EUR 309,187 (2018: EUR 25,023). As at 7 July 2019, therewere outstanding balances of EUR 251,406 (2018: EUR 165,509) owed by the Company in respect of management fee and EUR Nil (2018:EUR Nil) owed by the Company in respect of administration-origination fees respectively.

Approval of financial statements

The following Series of Notes were issued after the financial year end:

The Board of directors have approved these audited financial statements on 7 November 2019.

The Company has no employees (2018: Nil) and the directors who are also employees of Apex Group received no remuneration during thefinancial year (2018: 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 servicesprovided is a subjective and approximate calculation. The Company has allocated an amount of 1% of the total fees paid to Apex IFS Limitedfor the provision of the services of a adirector. The individuals acting as directors do not (and will not), in their personal capacity or any othercapacity, receive any fee for acting or having acted as directors of the Company. Directors remuneration is disclosed in note 3 to the financialstatements.

Related party transactions

Transactions with the Administrator

Lisa Hand and Ciaran Connolly who acted as directors of the Company during the financial year, are employed by the corporate secretary andthe corporate service provider. The corporate secretary, the corporate service provider and the security trustee are all companies whose ultimateparent is the Apex Group (formerly Link Group). These operating companies provide company administration, trustee and secretarial services tothe Company at an arm's length basis, at normal commercial rates.

During the financial year ended 7 July 2019, fees of EUR 118,204 (2018: EUR 132,314) were earned by Apex Group (formerly Link Group),the corporate secretary, the corporate service provider and the security trustee, in respect of corporate secretary, administration fees and trusteeservices and received the payment of EUR 75,954 (2018: EUR 99,314). As at 7 July 2019, there was an amount of EUR 42,250 (2018: EUR38,750) owed by the Company.

There has been no other significant events after financial year end up to the date of signing this report that require disclosure and/or adjustmentin the financial statements.

Transactions with the Loan Servicer




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