Annual Financial Report

Oban Cards 2021-1 PLC

11 June 2024

 

Company Registered No: 12757121

OBAN CARDS 2021-1 PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS

For the financial year ended 31 December 2023

CONTENTS	Page
OFFICERS AND PROFESSIONAL ADVISERS	1
STRATEGIC REPORT	2
DIRECTORS' REPORT	4
DIRECTORS' RESPONSIBILITIES STATEMENT	6
INDEPENDENT AUDITOR'S REPORT	7
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME	15
STATEMENT OF FINANCIAL POSITION	16
STATEMENT OF CHANGES IN EQUITY	17
NOTES TO THE FINANCIAL STATEMENTS	18

OFFICERS AND PROFESSIONAL ADVISERS

DIRECTORS:                                        Lara Nasato (resigned 21 February 2024) Catherine McGrath (appointed 21 February 2024) CSC DIRECTORS (NO.1) LIMITED

CSC DIRECTORS (NO.2) LIMITED

COMPANY SECRETARY:                      CSC Corporate Services (UK) Limited

REGISTERED OFFICE:                         5 Churchill Place 10th Floor London

E14 5HU

United Kingdom

INDEPENDENT AUDITOR:                     Deloitte LLP

4 Brindley Place Birmingham

B1 2HZ

BANKER:                                             Bank of New York Mellon, London Branch One Canada Square

London

The Directors present the Strategic Report for Oban Cards 2021-1 PLC (the 'Company') for the financial year ended 31 December 2023.

Business review and principal activities

The Company was incorporated on 21 July 2020 as a special purpose entity ("SPE") to issue series of asset backed floating rate notes as part of the securitisation of credit card receivables (the "Receivables") originated by Vanquis Bank Limited ("Vanquis", the "Originator", the "Servicer"). As part of the securitisation structure, Vanquis sells a beneficial interest in present and future credit card receivables originated by Vanquis on designated consumer credit card accounts to Oban Cards Receivables Trustee Limited (the 'Receivables Trustee', a SPE incorporated in England and Wales), who hold the Receivables on trust for the benefit of the Company.

On 26 January 2021, the Company issued £233,346,000 Class A notes and £219,754,000 Class D notes (the 'Loan Notes'). The Loan Notes were purchased by Vanquis.

Vanquis Bank Limited fails the derecognition test under IFRS 9 as it retains the risks and rewards of the Receivables. Therefore the Receivables remain on the balance sheet of Vanquis and the Company recognises a Deemed Loan to the Originator (the "Deemed Loan to the Originator") for an initial amount of £453,100,000 which represents the obligation on the Originator to transfer the cash flows on the credit credit card receivables. The Company funds the purchase of the Deemed Loan to the Originator through the issuance of the Loan Notes. Further details on the Deemed Loan to the Originator are outlined in Note 8.

Business performance

During the financial year, the Company made a profit and total comprehensive income for the financial year of £900 (2022:£972). The total net assets at the end of the financial year were £31,626 (2022:

£30,726).

Principal risks and uncertainties

The Company is exposed to internal and external risks of ongoing activities. The risks are managed as part of the Company's business model.

The principal risk is that the Company is unable to meet its obligations should the interest and principal received on the Deemed Loan to the Originator not be sufficient to pay the note holders interest and principal and the associated expenses of the Company. This could arise if the cash flows generated on the Deemed Loan to the Originator from the revolving credit card receivables are not sufficient to settle interest and principal due on the Loan Notes.

Information on how the Company's Directors manage these risks and uncertainties is explained in Note 14 to the accompanying financial statements.

Key performance indicators

The Company receives a full breakdown of the performance from the Servicer around the underlying receivables to the Deemed Loan to the Originator. The value of the Deemed Loan to the Originator is a key performance indicator held by the Company which decreased from £225,134,268 (2022: decreased from £226,544,230) at the start of the financial year to £223,914,867 (2022: £225,134,268) as at 31 December 2023 largely due to the sale of Receivables and netting of the Note Class D as outlined in Note 8.

Key performance indicators (Continued)

The profit after tax for the financial year was £900 (2022: £972) and the Company received interest income on the Deemed Loan to the Originator of £32,583,610 (2022: £20,650,548) during the financial year.

The increase in the income interest when compared to prior year is due to an increase in the interest rate on the underlying receivables.

At the financial year end the balance of the Class A Loan Notes outstanding amounted to £233,346,000 (2022: £233,346,000).

Financial Instruments

The Company's operations are financed primarily by means of issuance of the Loan Notes. The Company issued such Loan Notes to finance the acquisition of the Deemed Loan to the Originator as explained in the business review above. The risk profile of the Company is such that all risks of the Deemed Loan to the Originator are ultimately borne by the Noteholders.

Streamlined Energy and Carbon Reporting

The Company is out of the scope of the Streamlined Energy and Carbon Reporting (SECR), as it does not meet the numerical thresholds in relation to turnover and number of employees.

Directors' statement of compliance with Section 172(1) of the Companies Act 2006

As an securitisation entity, the governance structure of the Company is such that the key policies have been predetermined at the time of issuance. The Directors have had regards to the matters set out in section 172(1) of the Companies Act 2006 as follows:

a) the transaction documents have been formulated to achieve the Company's purpose and business objectives, safeguard the assets and promote the success of the Company with a long term view and in accordance with relevant securitisation legislation the Company is only permitted to retain minimal profit;

(b)  the Company has no employees;

(c) the Company is a securitisation vehicle and fosters its relationships with suppliers and others via professional third parties who have been assigned operational roles with their roles strictly governed by the transaction documents and fee arrangements agreed in advance. The Company has no customers;

(d) as a securitisation vehicle the Company has no physical presence or operations and accordingly has minimal impact on the community and the environment;

(e)  the Company maintains a reputation for high standards of business conduct via professional third parties who have been assigned operational roles. Fee arrangements have been agreed in advance and supplier invoices paid strictly in accordance with the transaction documents including a priority of payments, if applicable; and

(f)  the Company has a sole member with the issued shares all held on a discretionary trust basis for charitable purpose.

In accordance with s.426B of the Companies Act 2006, a copy of this statement is available at https://portal.cscgfm.com/issuers/oban-cards-2021-1-plc

This report was approved by the board and signed on its behalf by:

Dragos Savacenco, per pro CSC Directors (No.1) Limited

Director

Date 17 May 2024

The Directors present their annual report together with the audited financial statements of Oban Cards 2021-1 PLC ("the Company") for the financial year ended 31 December 2023.

Profits and dividends

Per the transaction agreements governing the Company ("the Transaction Documents"), the Company is required to recognise £3,000 profit before tax per month up to September 2021 and £100 per month thereafter. During the financial year, the Company made a profit after tax of £900 (2022: £972). The Directors have not recommended the payment of a dividend for the financial year ended 31 December 2023 (2022: none).

Subsequent events

There have been no significant events affecting the Company since the financial year end.

Directors and Company shareholdings

The Directors who served during the year and up to the date of signing the financial statements were:

Lara Nasato (resigned 21 February 2024)

Catherine McGrath (appointed 21 February 2024) CSC DIRECTORS (NO.1) LIMITED

CSC DIRECTORS (NO.2) LIMITED

CSC Corporate Services (UK) Limited was appointed Company secretary on 21 July 2020 and Continued to act as secretary for the financial year ending 31 December 2023.

The Directors and their immediate relatives and the Company secretary did not hold an interest in any shares, share options, deferred shares or loan stock of the Company as at 31 December 2023 or at any time during or since the financial year end.

The Directors do not recommend payment of a dividend.

Directors' interest in contracts

The Company has no employees. CSC Capital Markets UK Limited provides corporate services to the Company at arm's length commercial rates. CSC Capital Markets UK Limited received fees in the amount of £28,475 (2022: £25,685) for corporate administrative services which includes the provision of directorship services by its employees. The Directors provided are not remunerated directly by the Company for their services.

Going concern

The Directors, having a reasonable expectation that the Company will continue in operational existence for a period of not less than twelve months, have prepared the financial statements on a going concern basis. Please see further details relating to going concern at Note 2 b) to the financial statements.

Corporate governance

The Directors have been charged with governance in accordance with the Transaction Documents describing the structure and operation of the transaction. The governance structure of the Company is such that the key policies have been predetermined at the time of issuance of the Loan Notes and the operational roles have been assigned to third parties with their roles strictly governed by the transaction documents.

The transaction documents provide for procedures that have been designed for safeguarding assets against unauthorised use or disposition, for maintaining proper accounting records and for the reliability and usefulness of financial information used within the business or for publication. Such procedures are designed to manage rather than eliminate the risk of failure to achieve business objectives whilst enabling them to comply with the regulatory obligations.

Share capital

The issued share capital consists of 1 Ordinary Share of £1 fully paid and 49,999 £1 Ordinary Shares quarter paid.

Charitable and political donations

During the year the Company made no political donations and donated £NIL (2022: £NIL) to charities.

Third party indemneties

No qualifying third party indemnity provisions were in force during the year under review or as at the date of approval of the annual reports and financial statements.

Future outlook

Based upon the performance of the underlying receivables and the various levels of support offered by the structure of the instruments, the Directors remain confident that the Deemed Loan to the Originator will be repaid in full and therefore that the Company will be able to repay the Loan Notes in issue in full, along with their interest, at maturity. The Directors intention in the future is to continue issuing additional Loan Notes and increasing its interest in the Deemed Loan to the Originator when it is strategically optimal to do so.

The Directors do not expect there to be any change in the Company's principal activity in the foreseeable future.

Financial risk management

The Company's activities are exposed to a variety of financial risks. The Company is required to follow the requirements of the Vanquis Banking Group PLC (the "Group") risk management policies, which include specific guidelines on the management of foreign exchange, interest rate and credit risks, and advice on the use of financial instruments to manage them. The main financial risks that the Company is exposed to are outlined in note 14.

Independent auditors

The auditors, Deloitte LLP, will be proposed for reappointment in accordance with section 489 of the Companies Act 2006.

Disclosure of information to auditors

Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:

1.    so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

2.    the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

This report was approved by the Board and signed on behalf its behalf:

Dragos Savacenco, per pro CSC Directors (no.1) Limited

Director

Date 17 May 2024

Statement of Directors responsibilities in respect of the Strategic Report, the Directors' Report and the financial statements

Directors' responsibilities statement

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 101 "Reduced Disclosure Framework". 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 state of affairs of the Company and of the profit or loss of the Company for that year. In preparing these financial statements, the directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgments and accounting estimates that are reasonable and prudent; and

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Dragos Savacenco, per pro CSC Directors (no.1) Limited

Director

Date 17 May 2024

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF OBAN CARDS 2021- 1 PLC

Report on the audit of the financial statements

1.  Opinion

In our opinion the financial statements of Oban Cards 2021-1 PLC (the 'company'):

·    give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;

·    have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 101 "Reduced Disclosure Framework"; and

·    have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

·    the statement of profit or loss and other comprehensive income;

·    the statement of financial position;

·    the statement of changes in equity; and

·    the related notes 1 to 18.

The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 "Reduced Disclosure Framework" (United Kingdom Generally Accepted Accounting Practice).

2.  Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.

We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council's (the 'FRC's') Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that we have not provided any non-audit services prohibited by the FRC's Ethical Standard to the company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3.  Summary of our audit approach

Key audit matter

The key audit matter that we identified in the current year was: ·   Interest income on the Deemed Loan to the Originator

Materiality	The materiality that we used in the current year was £2.24m which represents 1% of Deemed Loan to the Originator.
Scoping	Our audit was scoped by obtaining an understanding of the Company and its environment including internal control and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatements was performed directly by the audit engagement team.
Significant changes in our approach	There have been no significant changes to our approach in comparison to the prior year.

4.  Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the directors' assessment of the company's ability to continue to adopt the going concern basis of accounting included:

·    Inspecting the prospectus and other agreements between the company and Vanquis Bank Limited ("Transaction Documents") to assess the appropriateness of assumptions applied by management in arriving at their conclusions on going concern; and

·    Evaluating the going concern disclosures included within the financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

5.  Key audit matter

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.

The matter was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.

Interest income on the Deemed Loan to the Originator

Key        audit               matter description

During the year the company held £233.35m (FY22: £233.35m) Class A loan notes and £227.65m (FY22: £229.22m) Class D loan notes ("the Loan Notes") to a related entity, Vanquis Limited ("Bank"), as disclosed in Note 11 and Note 8, respectively. As disclosed in Note 8, the Loan Notes Class D was netted off against securitised

	credit card receivables to arrive at Deemed Loan to the Originator balance of £223.91m (FY22: £225.13m) Subsequently, the company recognised interest income due on the Deemed Loan to the Originator totalling £32.58m (FY22: £25.64m) in the current financial year. This is calculated by interest on Loan Notes Class D being offset against interest on securitised credit card receivables to arrive at interest receivable and similar income balance which represent Interest income on the Deemed Loan to the Originator. The classification of the Deemed Loan to the Originator and the related interest is governed by the Transaction documents. As the Deemed Loan to the Originator is measured at amortised cost, its interest income is recognised on an effective interest rate ('EIR') basis. In accordance with IFRS 39, management is required to determine EIR based on the expectation of future cash flow. Management use cash flows considering all contractual terms of the Deemed Loan to the Originator as a proxy for EIR interest income. Given the judgement involved in accounting for EIR, we determined it to be a key audit matter. Further detail in respect of Loan Notes held and the accounting policies is set out in Page 2 of the Strategic report, in note 4 and note 8 of the financial statements.
How the scope of our audit responded to the key audit matter	Our procedures included: ·    Obtaining an understanding of the relevant controls over the valuation of interest income on the Deemed Loan to the Originator; ·    Assessing the Transaction Documents governing the company to understand the composition of Deemed Loan to the Originator and the respective interest income; ·    Evaluating management's analysis over cash received on the Deemed Loan to the Originator to assess whether it is a reasonable proxy for EIR interest income; and ·    Recalculating interest income and tracing the amounts to third party evidence.
Key observations	Based on our substantive testing, the interest income on the Deemed Loan to the Originator is appropriate.

6.  Our application of materiality

6.1.  Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Materiality	£2.24m (FY22: £2.25m)
Basis                  for determining materiality	1.0% of Deemed Loan to the Originator (FY22: 1.0% of Deemed Loan to the Originator)
Rationale for the benchmark applied	This balance represents the receivables transferred as part of the master trust arrangement and as such this is the balance that the users of the financial statements are most concerned with.

6.2.  Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. Performance materiality was set at 70% of materiality for the 2023 audit (2022: 70%). In determining performance materiality, we considered the following factors:

·    Our understanding of the business;

·    the quality of the control environment and whether we were able to rely on controls; and

·    the low number of corrected and uncorrected misstatements identified in the prior period.

6.3.  Error reporting threshold

We agreed with those charged with governance that we would report all audit differences in excess of £0.11m (FY22: £0.11m), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to those charged with governance on disclosure matters that we identified when assessing the overall presentation of the financial statements.

7.  An overview of the scope of our audit

7.1.  Scoping

Our audit was scoped by obtaining an understanding of the Company and its environment, including internal control, and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team.

7.2.  Our consideration of the control environment

We identified the financial reporting systems to be the most relevant to the audit. We have obtained an understanding of the financial reporting process and of the related relevant controls. Due to the size and nature of the business, we have not placed reliance on controls and taken a fully substantive approach.

8.  Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

9.        Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

10.      Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

11.      Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

11.1.             Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non- compliance with laws and regulations, we considered the following:

·    the nature of the industry and sector, control environment and business performance including the design of the company's remuneration policies, key drivers for directors' remuneration, bonus levels and performance targets;

·    results of our enquiries of management and the directors and those charged with governance about their own identification and assessment of the risks of irregularities, including those that are specific to the company's sector;

·    any matters we identified having obtained and reviewed the company's documentation of their policies and procedures relating to:

o  identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

o  detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

o  the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

·    the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act 2006 and tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Company's ability to operate or to avoid a material penalty. These included the Bank's compliance with the Prudential Regulation Authority (PRA) Rulebook and the Financial Conduct Authority (FCA) Handbook.

11.2.             Audit response to risks identified

As a result of performing the above, we did not identify any key audit matters related to the potential risk of fraud or non-compliance with laws and regulations.

Our procedures to respond to risks identified included the following:

•   reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

•   enquiring of management and the Directors concerning actual and potential litigation and claims;

•   performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

•   reading minutes of meetings of those charged with governance; and

•   in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Report on other legal and regulatory requirements

12.      Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·      the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

·      the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors' report.

13.      Matters on which we are required to report by exception

13.1.             Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

·    we have not received all the information and explanations we require for our audit; or

·    adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

·    the financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

13.2.             Directors' remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made.

We have nothing to report in respect of this matter

14.      Other matters which we are required to address

14.1.             Auditor tenure

Following the recommendation of those charged with governance, we were appointed by the Directors of the Company on 28 March 2022 to audit the financial statements for the period ending 31 December 2021 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 3 years, covering the years ending 31 December 2021 to 31 December 2023.

14.2.             Consistency of the audit report with the additional report to those charged with governance

Our audit opinion is consistent with the additional report to those charged with governance we are required to provide in accordance with ISAs (UK).

15.      Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Kieren Cooper (Senior statutory auditor) For and on behalf of Deloitte LLP Statutory Auditor

Birmingham, United Kingdom 17 May 2024

Company Registration number: 12757121

Statement of Profit or Loss and Other Comprehensive Income for the financial year ended 31 December 2023

		Financial year ended		Financial year ended
	Notes	31-Dec-23		31-Dec-22
		£		£
Interest receivable and similar income	4	33,518,029		25,771,618
Interest payable and similar expenses	5	(14,278,076)		(6,754,415)
		19,239,953		19,017,203
Other operating expenses	6	(19,238,753)		(19,016,003)
Profit on ordinary activities before taxation		1,200		1,200
Tax on profit	7	(300)		(228)
Profit for the financial year		900		972
Other comprehensive income		-		-
Total comprehensive income		900		972

The accompanying notes on pages 17 to 29 form an integral part of these financial statements.

Statement of Financial Position as at 31 December 2023

	Notes	31-Dec-23		31-Dec-22
				£
Assets
Deemed Loan to the Originator	8	223,914,867		225,134,268
Other receivables	9	11,102,434		9,665,539
Total assets		235,017,301		234,799,807
Liabilities
Accruals, deferred income and other liabilities	10	1,639,675		1,423,081
Loan Notes	11	233,346,000		233,346,000
Total liabilities		234,985,675		234,769,081
Equity
Share capital	12	12,501		12,501
Retained earnings		19,125		18,225
Total equity		31,626		30,726
Total equity and liabilities		235,017,301		234,799,807

The accompanying notes on pages 17 to 29 form an integral part of these financial statements.

The financial statements of the Company were authorised and approved by the Board of Directors on 15thMay 2024 and signed on its behalf by:

Dragos Savacenco, per pro CSC Directors (no.1) Limited

Director

Date 17 May 2024

Statement of Changes in Equity

for the financial year ended 31 December 2023

	Called-up	Retained	Total
	share capital	earnings
	£	£	£
Balance as at 1 January 2023	12,501	18,225	30,726
Total profit and comprehensive income for the year	-	900	900
Balance as at 31 December 2023	12,501	19,125	31,626

	Note	Called-up	Retained	Total
		share capital	earnings
		£	£	£
Balance as at 1 January 2022		12,501	17,253	29,754
Issued share capital	12	-	-	-
Total profit and comprehensive income for the year		-	972	972
Balance as at 31 December 2022		12,501	18,225	30,726

The accompanying notes on pages 17 to 29 form an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

1.    General Information

The Company was incorporated on 21 July 2020 in the United Kingdom and registered in England

and Wales under the Companies Act 2006 as a public limited Company. The address of its registered office is 10thFloor, 5 Churchill Place, London, E14 5HU, United Kingdom.

The following principal accounting policies have been applied:

2.    Accounting policies

a)    Preparation and presentation of financial statements

These financial statements are prepared:

·      on a going concern basis;

·      under FRS 101 in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 101 "Reduced Disclosure Framework"; and

·      on the historical cost basis.

The Company meets the definition of a qualifying entity under Financial Reporting Standard 100 Application of Financial Reporting Requirements issued by the Financial Reporting Council. The Company's financial results are consolidated into the results of Vanquis Banking Group PLC and are eligible to prepare the financial statements under Financial Reporting Standard 101.

The Company is incorporated and registered in England and Wales as a public Company (Registration number - 12757121).

The financial statements are presented:

·      in accordance with the Companies Act 2006;

·      in GBP (£) which is the functional currency of the Company; and

·      with the benefit of the disclosure exemptions permitted by FRS 101 with regard to:

i.   a cash flow statement;

ii.   related party transactions;

iii.   paragraph 40A of IAS 1 'Presentation of Financial Statements';

iv.   standards not yet effective.

Where required, equivalent disclosures are given in the financial statements of Vanquis Banking Group PLC. These financial statements are available to the public.

Adoption of new and revised accounting standards

The changes to IFRS that were effective from 1 January 2023 have had no material effect on the Company's financial statements for the financial year ended 31 December 2023.

2.  Accounting policies (Continued)

b)    Going concern

During the year the Company made a profit of £900 (2022: £972) as shown in the Statement of Profit or Loss and Other Comprehensive Income. The obligations of the Company to pay amounts due on the Loan Notes are limited to the application of receipts from the Deemed Loan to the Originator under the terms of the priority of payments as set out in the terms and conditions of the Loan Notes. If on full realisation of the security, insufficient funds exist to settle the liabilities owed to the Noteholders, there will be no further recourse to the Company (even in the event of default).

The Directors, having a reasonable expectation that the Company will continue in operational existence for a period of not less than twelve months, have prepared the financial statements on a going concern basis. The Loan Notes are of limited recourse in nature, so repayments are only made to the extent of funds received from the Deemed Loan to the Originator.

The Directors do not believe, given the current operational level and liquidity resources, cash outflows over the coming 12 months and the limited recourse nature of the Loan Notes, that a material uncertainty exists that would cast a significant doubt over the Company's ability to continue as a going concern in the next 12 months after the date of signing the financial statements.

It is the intention of the Directors for the Company to continue operations until such a time as the amounts due from the receivables have been fully realised. Ultimately, due to the limited recourse nature of the Loan Notes, any shortfall in the proceeds of the receivables will be a risk to the holders of these Loan Notes.

Therefore, the Directors consider that the Company is able to meet its liabilities as they fall due, and accordingly, the financial statements have been prepared on a going concern basis.

c)    Interest income and expense

Interest income and expense are recognised within 'interest receivable and similar income' and 'interest payable and similar charges' in the Statement of Profit or Loss and Other Comprehensive Income. Accrued interest income and accrued interest expense are recognised in other receivables and current liabilities on the Statement of Financial Position. All income and expenses are accounted for on an accruals basis.

The Company accounts for interest income and interest expense on an effective interest rate basis. The effective interest method is a method of calculating the amortised cost of a financial asset or liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses.

d) Taxation

For UK corporation tax purposes, the Company has been considered as a securitisation Company under the 'Taxation of Securitisation Companies Regulations 2006' (SI 2006/3296). Therefore, the Company is not required to pay corporation tax on its accounting profit or loss. Instead, the Company is required to pay tax on its retained profit, which was £1,200 (2022: £1,200) for the financial year ending 31 December 2023, as specified in the documentation governing the securitisation transaction into which the Company has entered.

2.  Accounting policies (Continued)

d)  Taxation (Continued)

Income tax expense or income, comprising current tax and deferred tax, is recorded in the Statement of Profit or Loss and Other Comprehensive Income account except income tax on items recognised outside profit or loss which is credited or charged to other comprehensive income or to equity as appropriate.

Current tax is income tax payable or recoverable in respect of the taxable profit or loss for the financial year arising in income or in equity. Provision is made for current tax at rates enacted or substantively enacted at the Statement of Financial Position date.

Deferred tax is the tax expected to be payable or recoverable in respect of temporary differences between the carrying amount of an asset or liability for accounting purposes and its carrying amount for tax purposes. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered. Deferred tax is not recognised on temporary differences that arise from initial recognition of an asset or liability in a transaction (other than a business combination) that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is calculated using tax rates expected to apply in the periods when the assets will be realised or the liabilities settled, based on tax rates and laws enacted, or substantively enacted, at the Statement of Financial Position date.

e)  Cash and cash equivalents

Cash and cash equivalents comprise cash and demand deposits with banks together with short-term highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.

f)   Financial assets and liabilities

The Company applies IFRS 9 Financial Instruments to the recognition, classification and measurement, and derecognition of financial assets and financial liabilities and the impairment of financial assets.

Recognition

Financial assets are recognised on the balance sheet when, and only when, the Company becomes a party to the contractual provision of the instrument. Where a transfer of a financial asset under IFRS 9 does not qualify for de-recognition, the transferee does not recognise the transferred asset as its asset. The transferee derecognises the cash or other consideration paid and recognises a receivable from the transferor. In relation to the Receivables transferred to the Company, de-recognition is considered to be inappropriate for the Originator's own financial statements as the Originator has retained the significant risks of the Receivables portfolio. The Loan Notes are classified as other financial liabilities and are initially recognised at fair value at the date of issuance of the liability, and are subsequently measured at amortised cost using the effective interest rate method.

Derecognition

Financial assets and liabilities are de-recognised when the rights to receive cash flows from them has expired or where the Company has transferred substantially all the risks and rewards of ownership.

Classification and measurement

Financial assets are classified on the basis of two criteria:

I)          the business model within which financial assets are managed; and

II)          their contractual cash flow characteristics (whether the cash flows represent 'solely payments of principal and interest' (SPPI).

The Company assesses the business model criteria at a portfolio level. Information that is·considered in determining the applicable business model includes (i) policies and objectives for the relevant portfolio, (ii) how the performance and risks of the portfolio are managed, evaluated and reported to management, and (iii) the frequency, volume and timing of sales in prior periods, sales expectation for future periods, and the reasons for such sales.

2.  Accounting policies (Continued)

f) Financial assets and liabilities (Continued)

Classification and measurement (Continued)

The contractual cash flow characteristics of financial assets are assessed with reference to whether the cash flows represent SPPI. In assessing whether contractual cash flows are SPPI compliant, interest is defined as consideration primarily for the time value of money and the credit risk of the principal outstanding. The time value of money is defined as the element of interest that provides consideration only for the passage of time and not consideration for other risks or costs associated with holding the· financial asset. Terms that could change the contractual cash flows so that it would not meet the condition for SPPI are considered, including: (i) contingent and leverage features and (ii) features that could modify the time value of money.

Financial assets will be measured at amortised cost if they are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and their contractual cash flows represent solely payments of principal and interest. The carrying value of these financial assets at initial recognition includes any directly attributable transaction costs.

Financial assets will be measured at fair value through other comprehensive income if they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and their contractual cash flows represent solely payments of principal and interest.

The Deemed Loan to the Originator, trade and other receivables and cash and cash equivalents are held at amortised cost. That is, the initial fair value is adjusted for repayments and the amortisation of coupon, fees and expenses to represent the effective interest rate of the asset or liability.

In determining whether the business model is a 'hold to collect' model, the objective of the business model must be to hold the financial asset to collect contractual cash flows rather than holding the financial asset for trading or short-term profit taking purposes. While the objective of the business model must be to hold the financial asset to collect contractual cash flows, this does not mean the Company is required to hold the financial assets until maturity. When determining if the business model objective is to collect contractual cash flows, the Company will consider past sales and expectations about future sales.

Deemed Loan to the Originator

The Deemed Loan to the Originator is initially recognised at fair value and subsequently carried at amortised cost. The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest rate method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.

Impairment of financial assets - Deemed Loan to the Originator

The Company's Deemed Loan to the Originator as defined above, was subject to IFRS 9's expected credit loss model. The Company recognises expected credit loss impairment on the Deemed Loan to the Originator at amortised cost when it is estimated that it will not be in a position to receive all payments due. At each reporting date, an impairment loss equal to 12-month expected credit losses (allocated to stage 1) is recognised for all financial assets for which there is no significant increase in credit risk since initial recognition. For financial assets for which there is a significant increase in credit risk since their initial recognition (allocated to Stage 2), and those that are credit impaired (allocated to stage 3), an impairment loss equal to lifetime expected credit losses will be recognised.

2.    Accounting policies (Continued)

f)  Financial assets and liabilities (Continued)

Impairment of financial assets - Deemed Loan to the Originator (Continued)

The recoverability of the Deemed Loan to the Originator is dependent on the collections from the underlying Receivables and the credit enhancement available in the structure. If there is no enhanced credit available within the entity (Class D Notes payable to the Originator), this would result in the Deemed Loan to the Originator to be classified as Stage 2. The key assumptions for recoverability relate

to estimates of the probability of any account going into default and cash flows from borrowers' accounts and their timing. These key assumptions are based on observed data from historical patterns which is updated regularly and reviewed by management as new data becomes available.

IFRS 9 does not include a definition of what constitutes a significant increase in credit risk ("SICR"). An assessment of whether credit risk has increased significantly since the initial recognition of the Deemed Loan to the Originator is performed at each reporting period by considering primarily the change in the risk of default occurring over the remaining life of the Deemed Loan to the Originator.

The Company assess whether a SICR has occurred since the initial recognition based on qualitative and quantitative, reasonable and supportable forward-looking information that includes a degree of management judgement.

g)  Loan Notes held at amortised cost

The notes were initially recognised at the fair value of the issue proceeds incurred and are subsequently stated at amortised cost using the effective interest method. In the event that impairment losses exceed the credit enhancement provided by the Originator, some loss may be borne by the Noteholders.

h) Accruals and deferred income

Accruals and deferred income are not interest bearing and are stated at their nominal value.

i)  Segmental analysis

The main asset of the Company is the Deemed Loan to the Originator, collateralised by the credit card Receivables originated in the UK.

3.    Critical accounting estimates and areas of judgement

The preparation of the financial statements requires management to make judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.

The judgments and estimates involved in the Company's accounting policies that are considered by the Directors to be the most important to the portrayal of the Company's financial condition and that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed on the below:

Judgements - Deemed Loan to the Originator

The decision to recognise the Deemed Loan in respect of the Receivables is considered as a significant judgement. Details have been described above in accounting policies section 'Deemed Loan to the Originator'.

3.    Critical accounting estimates and areas of judgement (Continued)

Estimates - Impairment of the Deemed Loan

The impairment of the Deemed Loan depends on the recoverability of the underlying Receivables

and credit enhancement available within the Company. The recoverability of the Receivables is dependent on the collections from the borrowers. The key assumptions for recoverability relate to estimates of the probability of any account going into default, cash flows from borrowers' accounts and their timing. The Directors are confident that sufficient means of credit enhancement are available in the Company to protect against any significant downturn in the market. The impairment provision on the Receivables would have to increase to £227,649,498 (2022: £229,216,844) before the Receivables become impaired. Please refer to note 8 for the carrying amount of the Deemed Loan.

4.    Interest receivable and similar income

	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Interest income from Deemed Loan to the Originator	32,583,610	25,638,489
Other income	934,419	133,129*
	33,518,029	25,771,618

Interest income from Deemed Loan to the Originator represents finance charges earned on the Receivables underpinning the Deemed Loan. The Note Class D interest expense is netted against interest receivable and similar income due on the Company's recognition of a Deemed Loan from the Originator. Other income is generate by cash held in the bank account.

*Interest receivables and similar income was re-presented in the comparative year to align with current year showing the split between interest income from deemed loan and other income.

5.    Interest payable and similar charges

	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Note Class A interest expense	(14,278,076)	(6,754,415)
	(14,278,076)	(6,754,415)

6.    Other operating expenses

	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Servicer fees	(19,102,626)	(18,903,064)
Other expenses	(136,127)	(112,939)
	(19,238,753)	(19,016,003)
	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Fees payable to the Company's auditor for the audit of the Company's annual accounts (excluding expenses and excluding VAT)	(22,550)	(16,250)

The Company has no employees. The Directors received no remuneration from the Company in respect of qualifying services rendered during the financial year. CSC Capital Markets UK Limited as corporate service provider received fees of £28,475 (2022: £25,685) during the financial year in respect of the provision of a suite of corporate services, including the provision of Directors. No additional payment or specific payment was due in respect of Director services.

7.    Tax on profit

The tax assessed for the financial year is the same as the standard rate of corporation tax in the UK of 25% as set out below:

	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Profit before taxation	1,200	1,200

Current tax charge at 25% (2022:19%)	(300)	(228)
Total tax charge for the year	300	228

For UK Corporation tax purposes, the Company has been considered as a Securitisation Company under the Taxation of Securitisation Companies Regulations 2006 (SI 2006/3296). Therefore, the Company is not required to pay corporation tax on its accounting profit nor recover tax on its loss. Instead, the Company is required to pay tax on its cash retained profits of £1,200 (2022: £1,200), as specified in the documentation the securitisation transaction.

8.    Deemed Loan to the Originator

	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Deemed Loan to the Originator	223,914,867	225,134,268
	223,914,867	225,134,268

Deemed Loan to the Originator relates to the Company's interest in the Receivables. As part of the securitisation structure, Vanquis transferred a beneficial interest in present and future credit card receivables originated by Vanquis on designated consumer credit card accounts to Oban Cards Receivables Trustee, who hold the receivables in Trust for the Company.

The Loan Notes Class D were funded by the Originator and are subordinated to the Class A Notes in the structure. As the Deemed Loan and Loan Notes Class D have the same counterparty the net position is shown on the Statement of Financial Position. The Loan Notes Class D amounted to £227,649,498 (2022: £229,216,844).

The Deemed Loan is classifed as Non-Current.

9.    Other receivables

	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Other debtors	1,080,049	145,630
Cash held by Oban Cards Receivables Trustee	10,022,385	9,519,909
	11,102,434	9,665,539

 

10.  Accruals, deferred income and other current liabilities

	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Servicing fee accrual	(822,448)	(829,306)
Other creditors	(126,775)	(79,046)
Corporation tax accrual	(300)	(228)
Interest due on Class A notes	(690,152)	(514,500)
	(1,639,675)	(1,423,081)

The above are all considered current as they are payable within one year of the reporting period date.

11.  Loan Notes

Loan Note	ISIN	Interest rate	Opening	Repayments	Closing
			Balance		Balance
			£	£	£
Class A Notes	XS2274099832	Compounded daily SONIA plus 1.55%	233,346,000	-	233,346,000
			233,346,000	-	233,346,000

The Loan Notes are listed on the main market of the London Stock Exchange and have a maturity date of 15 January 2026. The Class A Loan Notes are considered non-current as their scheduled redemption date is 15 January 2026.

12.  Share capital presented as equity

	Financial year	Financial year
	ended	ended
	31-Dec-23	31-Dec-22
	£	£
Authorised, allotted and issued
1 ordinary share issued	1	1
Ordinary shares of £1 each: 49,999 - quarter paid	12,500	12,500
	12,501	12,501

Oban Cards 2021-1 Holdings Limited is the sole member of the Company. All shares were issued at par; one share was issued on incorporation and 49,999 partly paid shares were issued on 27 October 2020.

13.  Related parties

The Company has no employees. CSC Capital Markets UK Limited entered into an agreement with the Company to certain corporate administrative services, bookkeeping and accounting services to the Company. CSC Corporate Services (UK) Limited acted as Company Secretary and so had an interest in this fee. During the financial year ended 31 December 2023, the Company paid £28,475 (2022:

£25,685) to CSC Capital Markets UK Limited for the provision of services. The Company paid CSC fees of Oban Cards Receivables Trustee Limited amounting to £19,384 and Oban Cards 2021-1 Holdings Limited fees of £5,022.

The terms of the corporate services agreement in place between the Company and CSC provide for a single fee for the provision of corporate administration services (including the making available of individuals to act as Directors of the Company). As a result, the allocation of fees between the different services provided is a subjective and approximate calculation. The Directors estimate that approximately less than 10% of the fees relate to provision of Directors to the board of the Company.

Auditor's fees of £37,500 (2022: £37,500), net of VAT, will be paid to the Company's external auditors. Of this fee, £7,500 (2022: £7,500), net of VAT, is related to the audit fee of Oban Cards 2021-1 Holdings Limited and a further £7,500 (2022: £7,500), net of VAT, is related to the audit fee of the Receivables Trustee.

14.  Financial risk management

The Company's Directors follow the risk management policies of Vanquis Banking Group PLC because the Company is ultimately controlled, under IFRS, by Vanquis Banking Group PLC and is consolidated into the financial statements of Vanquis Banking Group PLC as they consider these policies to be the most appropriate ones for the Company. These policies include specific guidelines on the management of interest rate and credit risks and advice on the use of financial instruments to manage them. The Board of Directors monitors the Company's financial risks and has responsibility for ensuring effective risk management and control.

The Company's activities expose it to a variety of financial risks, which can be categorised as credit risk, liquidity risk, interest rate risk, foreign exchange rate risk and market risk. The objective of the Company's risk management framework is to identify and assess the risks facing the Company and to minimise the potential adverse effects of these risks on the Company's financial performance. Financial risk management is overseen by the Group Risk Committee.

The Company's financial instruments comprise of loans and advances at amortised cost (Deemed Loan to the Originator), borrowings (Loan Notes), cash and trade payables that arise directly from its operations. It is, and has been throughout the year, the Company's policy that no trading in financial instruments shall be undertaken. The main risks arising from the Company's financial instruments are interest rate risk and credit risk. The Board reviews and agrees policies for managing these risks as summarised below.

14. Financial risk management (Continued)

Credit risk

Credit risk is the risk that the Group will suffer loss in the event of a default by a customer or bank counterparty. A default occurs when the customer or bank fails to honour repayments as they fall due.

The Group Risk Committee is responsible for setting the credit policy. The Chief Risk Officer (the "CRO") is responsible for ensuring that the approach to lending is within sound risk and financial parameters and that key metrics are reviewed to ensure compliance with policy. The CRO discharges and informs this decision making through the Credit Committee. The Credit Committee meets quarterly, or more frequently if required.

A customer's risk profile and credit line are evaluated at the point of application and at various times during the agreement. Internally generated scorecards based on historical payment patterns of customers are used to assess the applicant's potential default risk and their ability to manage a specific credit line. For new customers, the scorecards incorporate data from the applicant, such as income/expenditure and employment, and data from external credit bureau.

Initial credit limits are low, typically as low as £250. For existing customers, the scorecards also incorporate data on actual payment performance and product utilisation and take data from an external credit bureau each month to refresh customers' payment performance position with other lenders. Credit lines can go up as well as down according to this point in time risk assessment.

Arrears management is a combination of central letters, inbound and outbound telephony, SMS, email and outsourced debt collection agency activities. Contact is made with the customer to discuss the reasons for non-payment and specific strategies are employed to support the customer in returning to a good standing or appropriate forbearance arrangements are put in place.

Maximum exposure to credit risk

The Company's maximum exposure to credit risk is reflected by the amounts disclosed in the statement of financial position. The follow table shows the maximum exposure to credit risk at 31 December 2023:

	Financial year	Financial year
	ended	ended
	31-Dec-2023	31-Dec-2022
	£	£
Deemed Loan to the Originator	223,914,867	225,134,268
Total maximum exposure	223,914,867	225,134,268

The Company's Deemed Loan to the Originator represents a beneficial interest in a portfolio of underlying credit card receivables. The Deemed Loan to the Originator entitles the Company to payments of interest and principal from collections on the underlying receivables. Therefore, the Company's credit risk is that the cash generated by the Deemed Loan to the Originator and credit enhancement (the buffer of excess credit card receivables assigned to the Receivables Trustee) will not be sufficient for the Company to be able to meet its debts as they fall due. Vanquis have been appointed as Servicer to the Receivables. They manage credit risk by assessing a borrowers' ability to repay the receivables and the borrower's risk profile. Additionally, credit risk is monitored and managed on a regular basis through preparation and review of monthly reports.

14. Financial risk management (Continued)

Financial assets subject to credit risk

For the purposes of the Company's disclosures regarding credit quality, financial assets subject to credit risk relate to the Deemed Loan to the Originator, which in turn is dependent on underlying credit card receivables to the interest and cash at bank. Collections received on the revolving credit card receivables are used to settle principal and interest due on the Deemed Loan to the Originator.

For the purposes of the Company's disclosures regarding credit quality, financial assets against which the Company is subject to credit risk have been analysed as follows:

As at 31 December 2023	Stage 1	Stage 2	Stage 3	Total
Gross Exposure	£	£	£	£
Deemed Loan to the Originator	223,914,867	-	-	224,512,609
	223,914,867	-	-	224,512,609

As at 31 December 2022	Stage 1	Stage 2	Stage 3	Total
Gross Exposure	£	£	£	£
Deemed Loan to the Originator	225,134,268	-	-	225,134,268
	225,134,268	-	-	225,134,268

	Stage 1	Stage 2	Stage 3	Total
	£	£	£	£
Deemed Loan to the Originator as at 1 January 2023	225,134,268	-	-	225,134,268
Collections due	(11,309,126)	-	-	(11,309,126)
Loan Note Class D	1,567,346	-	-	1,567,346
Accrued interest income	8,522,379	-	-	8,522,379
Deemed Loan to the Originator as at 31 December 2023	223,914,867	-	-	223,914,867

	Stage 1	Stage 2	Stage 3	Total
	£	£	£	£
Deemed Loan to the Originator as at 1 January 2022	226,544,230	-	-	226,544,230
Collections due	(13,227,058)	-	-	(13,227,058)
Loan Note Class D	1,046,075	-	-	1,046,075
Accrued interest income	10,771,022	-	-	10,771,022
Deemed Loan to the Originator as at 31 December 2022	225,134,268	-	-	225,134,268

14.Financial risk management (Continued)

Market risk

Market risk is the risk of loss due to adverse market movements caused by active trading positions taken in interest rates, foreign exchange markets, bonds and equities.

The Company's corporate policies do not permit it to undertake position taking or trading books of this type and therefore it does not do so.

Interest rate risk

Interest rate risk is the risk of potential loss through unhedged or mismatched asset and liability positions, which are sensitive to changes in interest rates. Primarily, the Group is at risk of a change in external interest rates which leads to an increase in the Group's cost of borrowing.

The Group's exposure to movements in interest rates is managed by the Assets and Liabilities Committee and is governed by a Board-approved Interest Rate Hedging Policy which forms part of the Group's treasury policies.

The Group seeks to limit the net exposure to changes in interest rates. This is achieved through a combination of issuing fixed-rate debt and by the use of derivative financial instruments.

The Company has mitigated its interest rate risk as interest due on the Loan Notes is only due to the extent funds are received from the Deemed Loan to the Originator. Therefore, interest rate risk is minimal. Due to the nature of the Company, any fluctuations in the inputs would be reflected equally on both the asset and liability side and therefore would have no effect on the total profit of the Company.

Liquidity risk

Liquidity risk is the risk that the Company will have insufficient liquid resources available to fulfil its operational plans and/or to meet its financial obligations as they fall due.

The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining years and current interest rates at the Statement of Financial Position date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

14.  Financial risk management (Continued)

2023	0 month to 3 months	3 months to 1 year	1 year to 2 years	2 years to 5 years	Over 5 years	Total
Loan Notes	(4,627,866)	(11,813,141)	(15,750,855)	(264,847,710)	-	(297,039,572)
Accrued Expenses	(860,248)	-	-	-	-	(860,248)
	(5,488,114)	(11,813,141)	(15,750,855)	(264,847,710)	-	(297,899,820)

2022	0 month to	3 months to	1 year	2 years	Over	Total
	3 months	1 year	to 2 years	to 5 years	5 years
Loan Notes	(3,355,488)	(8,522,963)	(11,363,950)	(256,073,900)	-	(279,316,301)
Accrued Expenses	(908,580)	-	-	-	-	(908,580)
	(4,264,068)	(8,522,963)	(11,363,950)	(256,073,900)	-	(280,224,881)

All payments made by the Company are made in strict order using a payment waterfall set out in the transaction documents and the funding raised by the Company is limited recourse in nature which means that it is only obliged to pay amounts falling due to the extent that it has received income from the Deemed Loan to the Originator.

Foreign exchange rate risk

Foreign exchange rate risk is the risk of a change in foreign currency exchange rates leading to a reduction in profits or equity.

All of the Company's assets and liabilities are denominated in GBP ("£"), and therefore currently there is no foreign currency risk.

15.  Capital management

The Company considers its capital to comprise its ordinary share capital and its profits. The Company is not subject to any external capital requirements except for the minimum requirement under the Companies Act 2006. The Company has not breached the minimum requirement.

16.  Financial instruments

Classification of financial assets and financial liabilities

All of the Company's financial assets and financial liabilities are classified at amortised cost.

Fair values of financial assets and financial liabilities

The Directors consider that the carrying values of cash and cash equivalents and other receivables recorded on the Statement of Financial Position are approximately equal to their fair values due to their short-term nature.

The fair values of the Deemed Loan and the Loan Notes in Issue are not materially different to their carrying values. Based on the method used to establish their fair values, the Deemed Loan is considered to be Level 3 in the fair value hierarchy and the Loan Notes are considered to be Level 2.

16. Financial instruments (continued)

Fair values of financial assets and financial liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where an active market is considered to exist, fair values are based on quoted prices. For instruments which do not have active markets, fair value is calculated using present value models, which take individual cash flows together with assumptions based on market conditions and credit spreads and are consistent with accepted economic methodologies for pricing financial instruments.

In each case the fair value is calculated by discounting future cash flows using benchmark observable market interest rates. This is kept under review. There are three levels to the hierarchy as follows:

Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (for example, as prices) or indirectly (for example, derived from prices).

Level 3 - Inputs for the asset or liability are not based on observable market data (unobservable inputs). There were no transfers between levels in the financial year to 31 December 2023.

16.  Subsequent events

There have been no significant events affecting the Company since the financial year end.

17.  Controlling party

The entire share capital of Oban Cards 2021-1 PLC is held by Oban Cards 2021-1 Holdings Limited, a Company incorporated in the United Kingdom and registered in England and Wales.

The smallest and largest group in which the Company is consolidated is Vanquis Banking Group PLC., a limited Company registered in the United Kingdom. Copies of the financial statements of Vanquis Banking Group PLC. may be obtained from No. 1 Godwin Street, Bradford, West Yorkshire, BD1 2SU.

18.  Contingent liabilities and commitments

There were no contingent liabilities or commitments as of 31 December 2023. Contingent liabilities are assessed continually to determine whether transfers of economic benefits have become probable. Where future transfers of economic benefits change from previous disclosed contingent liabilities, provisions are recognised in the year in which the changes in probability occur.

 

END