Financial
INCLUSION
today, for tomorrow
Annual Report and Financial Statements 2022
Contents
Strategic Report
Financial inclusion today, for tomorrow
Chair’s statement
Building a better world through
financial inclusion
Our products and services
Our social role
Business model
Market review
Our strategy
Chief Executive Officer’s review
Investment proposition
Strategy in action
Performance against strategy
Key performance indicators
Operational review
Financial review
Stakeholder engagement
Sustainability
Environment
Non-financial information statement
Principal risks and uncertainties
Directors’ Report
Chair’s introduction
Our Board and Committees
Governance at a glance
Role of the Board and its Committees
Nominations and Governance Committee
Report
Audit and Risk Committee Report
Directors’ Remuneration Report
Directors’ responsibilities
Financial Statements
Independent Auditor’s Report
Consolidated income statement
Statements of comprehensive income
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the Financial Statements
Alternative performance measures
Supplementary Information
Shareholder information
1
2
4
6
8
10
12
14
15
17
18
20
22
24
30
38
40
49
57
58
64
66
68
70
85
89
95
119
121
130
130
131
132
134
135
172
177
Follow us on Twitter and Instagram @ipfplc
Find out more at www.ipfin.co.uk
2022 highlights
Strong growth and financial performance
Customers (‘000)
Customer lending (£m)
1,733
+0.3%
1
0
3
,
2
9
0
1
,
22
8
6
,
1
7
2
7
,
1
3
3
7
,
1
£1,126.4m
+14%*
6
.
0
6
3
,
1
0
.
3
5
3
,
1
4
.
6
2
1
,
1
1
.
2
8
9
2
.
2
7
7
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
Closing receivables (£m)
Profit before tax (£m)
£868.8m
£77.4m
+14%*
8
.
2
9
9
6
.
3
7
9
8
.
8
6
8
8
.
6
1
7
1
.
9
6
6
+14%
3
.
9
0
1
0
.
4
1
1
8
1
9
1
0
2
1
2
2
2
8
1
9
1
4
.
7
7
7
.
7
6
)
7
.
0
4
(
0
2
1
2
2
2
Earnings per share (p)
Dividend per share (p)
25.6p
+36%
8
.
3
3
2
.
2
3
6
.
5
2
8
.
8
1
9.2p
+15%
4
.
2
1
4
.
2
1
2
.
9
0
.
8
)
9
.
8
2
(
0
2
8
1
9
1
1
2
2
2
8
1
9
1
0
.
0
–
0
2
1
2
2
2
* At constant exchange rates
Alternative Performance Measures
This Annual Report and Financial Statements provides alternative performance measures (APMs) which
are not defined or specified under the requirements of International Financial Reporting Standards. We
believe these APMs provide readers with important additional information on our business. To support
this, we have included an accounting policy note on APMs on page 135, a reconciliation of the APMs
we use where relevant and a glossary on pages 172 to 173 indicating the APMs that we use,
an explanation of how they are calculated and why we use them.
Percentage change figures for all performance measures, other than profit or loss before taxation and
earnings per share, unless otherwise stated, are quoted after restating prior year figures at a constant
exchange rate (CER) for 2022 in order to present the underlying performance variance.
International Personal Finance plc (IPF)
Company number: 6018973.
Contents
Strategic Report
Financial inclusion today, for tomorrow
Chair’s statement
Building a better world through
financial inclusion
Our products and services
Our social role
Business model
Market review
Our strategy
Chief Executive Officer’s review
Investment proposition
Strategy in action
Performance against strategy
Key performance indicators
Operational review
Financial review
Stakeholder engagement
Sustainability
Environment
Non-financial information statement
Principal risks and uncertainties
Directors’ Report
Chair’s introduction
Our Board and Committees
Governance at a glance
Role of the Board and its Committees
Nominations and Governance Committee
Report
Audit and Risk Committee Report
Directors’ Remuneration Report
Directors’ responsibilities
Financial Statements
Independent Auditor’s Report
Consolidated income statement
Statements of comprehensive income
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the Financial Statements
Alternative performance measures
Supplementary Information
Shareholder information
1
2
4
6
8
10
12
14
15
17
18
20
22
24
30
38
40
49
57
58
64
66
68
70
85
89
95
119
121
130
130
131
132
134
135
172
177
2022 highlights
Strong growth and financial performance
Customers (‘000)
Customer lending (£m)
1,733
+0.3%
1
0
3
,
2
9
0
1
,
22
8
6
,
1
7
2
7
,
1
3
3
7
,
1
£1,126.4m
+14%*
6
.
0
6
3
,
1
0
.
3
5
3
,
1
4
.
6
2
1
,
1
1
.
2
8
9
2
.
2
7
7
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
Closing receivables (£m)
Profit before tax (£m)
£868.8m
£77.4m
+14%*
8
.
2
9
9
6
.
3
7
9
8
.
8
6
8
8
.
6
1
7
1
.
9
6
6
+14%
3
.
9
0
1
0
.
4
1
1
4
.
7
7
7
.
7
6
8
1
9
1
0
2
1
2
2
2
8
1
9
1
1
2
2
2
Earnings per share (p)
Dividend per share (p)
)
7
.
0
4
(
0
2
0
.
0
–
0
2
9.2p
+15%
4
.
2
1
4
.
2
1
2
.
9
0
.
8
25.6p
+36%
8
.
3
3
2
.
2
3
6
.
5
2
8
.
8
1
)
9
.
8
2
(
0
2
8
1
9
1
1
2
2
2
8
1
9
1
1
2
2
2
* At constant exchange rates
Alternative Performance Measures
This Annual Report and Financial Statements provides alternative performance measures (APMs) which
are not defined or specified under the requirements of International Financial Reporting Standards. We
believe these APMs provide readers with important additional information on our business. To support
this, we have included an accounting policy note on APMs on page 135, a reconciliation of the APMs
we use where relevant and a glossary on pages 172 to 173 indicating the APMs that we use,
an explanation of how they are calculated and why we use them.
Percentage change figures for all performance measures, other than profit or loss before taxation and
earnings per share, unless otherwise stated, are quoted after restating prior year figures at a constant
exchange rate (CER) for 2022 in order to present the underlying performance variance.
Follow us on Twitter and Instagram @ipfplc
International Personal Finance plc (IPF)
Find out more at www.ipfin.co.uk
Company number: 6018973.
Financial
INCLUSION
today, for tomorrow
IPF is a global financial services provider striving
to deliver on our purpose to build a better world
through financial inclusion.
We play a vital role in the lives of millions of
customers, who are often unable to access credit
from banks and traditional lenders, by providing
access to unsecured, affordable credit and great
value insurance products, in a responsible way.
And we are not only here to help our customers
buy the everyday things they want or need today,
but they can be sure of our support on their
financial journey so they can plan for tomorrow.
Annual Report and Financial Statements 2022
1
Strategic Report
Chair’s statement
Chair’s statement
“I am pleased to report
another year of very
good operational and
financial performance.
We have compelling
products, skilled and
committed teams, and
strong local knowledge
which combine to make
IPF a strong business.”
Stuart Sinclair
Chair
Welcome to our 2022 Annual Report.
2022 was a significant year for IPF. Since our very first loan
was granted in Poland over 25 years ago, IPF’s people have
provided a vital service for customers in the markets we serve,
offering accessible credit and other financial services. In 2022,
we continued to deliver on this important objective, but also
continued to evolve the business to reflect changing customer
preferences and regulatory requirements.
Overall, 2022 saw us deliver strong growth and a very good
financial performance, despite the challenges of resurgent
Covid-19 disruption early in the year, the outbreak of war in
Ukraine and the cost-of-living crisis. We were able to achieve
these results because of excellent operational execution
against our strategy, meaning our customer lending increased
by 14% (at CER) year on year and closing net receivables grew
by a similar amount, ending the year at £869m. Profit before
tax grew by14.3% to £77.4m and, pleasingly, all our business
divisions delivered good lending growth and contributed
profitable performances. Consistent with our prudent
approach to risk management, the Group continues to have
a well-capitalised balance sheet and robust funding position,
with headroom on debt facilities of £76m, which supports our
business plans into 2024.
But these figures only tell part of the story as, during 2022,
we also continued to invest in growth and developing
capabilities, acquire new customers and deliver on our
purpose. The rest of this Annual Report goes into these points
in more detail, but it falls to me to say, on behalf of the Board,
thank you to my colleagues at IPF for working so hard to
achieve these results.
Strategy
As Chair, my role is to ensure our governance both challenges
and supports decision-making that will ultimately ensure IPF
is a company which delivers for all its stakeholders. But one
thing I never lose sight of is the simple fact that day in, day out,
our colleagues serve over 1.7m customers; people who
would almost certainly struggle to obtain loans from more
mainstream providers, and whose circumstances require
a careful and sympathetic response and access to products
which help them keep on track. A fundamental value
therefore, and one which I think provides a telling insight
into how this business operates, is that customer
representatives are paid primarily for collecting from their
customers, not the number of loans they grant. They can
also grant interest and fee-free extensions as warranted by
the customer’s circumstances.
This sense of the larger purpose we play in society
and of doing the right thing provides me and, I know,
the other members of the Board, with an excellent framework
to set IPF’s strategy, oversee performance and ensure risks
are well managed. In 2022 it meant the Board oversaw
a strategy which built on our successful propositions
for the next generation of customers, diversifying our
product mix, introducing new products and overseeing
our technology agenda.
The Board has also supported and encouraged the executive
team in making the business more operationally efficient
and delivering critical projects such as the new credit card
in Poland, an improved digital wallet product and an
enhanced customer relationship management solution
for our European home credit business.
One further area of change in 2022 was the regulatory
environment, which is now considerably more complicated
than when the business started – a challenge facing all
financial services businesses. But we have embraced these
changes, and where possible anticipated them, evolving our
products and operations to reflect all new requirements,
including in Poland where a tighter total cost of credit cap
came into force in December 2022. An update on regulatory
developments can be found on pages 16 and 26.
2
International Personal Finance plc
Strategic Report
Chair’s statement
Chair’s statement
“I am pleased to report
another year of very
good operational and
financial performance.
We have compelling
products, skilled and
committed teams, and
strong local knowledge
which combine to make
IPF a strong business.”
Stuart Sinclair
Chair
Welcome to our 2022 Annual Report.
2022 was a significant year for IPF. Since our very first loan
was granted in Poland over 25 years ago, IPF’s people have
provided a vital service for customers in the markets we serve,
offering accessible credit and other financial services. In 2022,
we continued to deliver on this important objective, but also
continued to evolve the business to reflect changing customer
preferences and regulatory requirements.
Overall, 2022 saw us deliver strong growth and a very good
financial performance, despite the challenges of resurgent
Covid-19 disruption early in the year, the outbreak of war in
Ukraine and the cost-of-living crisis. We were able to achieve
these results because of excellent operational execution
against our strategy, meaning our customer lending increased
by 14% (at CER) year on year and closing net receivables grew
by a similar amount, ending the year at £869m. Profit before
tax grew by14.3% to £77.4m and, pleasingly, all our business
divisions delivered good lending growth and contributed
profitable performances. Consistent with our prudent
approach to risk management, the Group continues to have
a well-capitalised balance sheet and robust funding position,
with headroom on debt facilities of £76m, which supports our
business plans into 2024.
But these figures only tell part of the story as, during 2022,
we also continued to invest in growth and developing
capabilities, acquire new customers and deliver on our
our colleagues serve over 1.7m customers; people who
would almost certainly struggle to obtain loans from more
mainstream providers, and whose circumstances require
a careful and sympathetic response and access to products
which help them keep on track. A fundamental value
therefore, and one which I think provides a telling insight
into how this business operates, is that customer
representatives are paid primarily for collecting from their
customers, not the number of loans they grant. They can
also grant interest and fee-free extensions as warranted by
the customer’s circumstances.
This sense of the larger purpose we play in society
and of doing the right thing provides me and, I know,
the other members of the Board, with an excellent framework
to set IPF’s strategy, oversee performance and ensure risks
are well managed. In 2022 it meant the Board oversaw
a strategy which built on our successful propositions
for the next generation of customers, diversifying our
product mix, introducing new products and overseeing
our technology agenda.
The Board has also supported and encouraged the executive
team in making the business more operationally efficient
and delivering critical projects such as the new credit card
in Poland, an improved digital wallet product and an
enhanced customer relationship management solution
for our European home credit business.
purpose. The rest of this Annual Report goes into these points
One further area of change in 2022 was the regulatory
in more detail, but it falls to me to say, on behalf of the Board,
environment, which is now considerably more complicated
thank you to my colleagues at IPF for working so hard to
achieve these results.
Strategy
As Chair, my role is to ensure our governance both challenges
and supports decision-making that will ultimately ensure IPF
is a company which delivers for all its stakeholders. But one
thing I never lose sight of is the simple fact that day in, day out,
than when the business started – a challenge facing all
financial services businesses. But we have embraced these
changes, and where possible anticipated them, evolving our
products and operations to reflect all new requirements,
including in Poland where a tighter total cost of credit cap
came into force in December 2022. An update on regulatory
developments can be found on pages 16 and 26.
Dividends
Based on the leadership’s successful execution of our growth
strategy, the Board is pleased to declare a 12.1% increase in
the final dividend to 6.5 pence per share. This is in line with the
Group’s progressive dividend policy and brings the full-year
dividend to 9.2 pence per share (2021: 8.0 pence per share),
an increase of 15% on 2021 and represents a payout ratio
of 44% of pre-exceptional post-tax earnings (2021: 43%).
It is worth reflecting that since IPF was listed in 2007 we have
delivered more than £1bn profit before tax and returned
over £200m to shareholders in dividends. I think this picture
demonstrates that we are an organisation with a real
long-term focus.
Operating with purpose
The role businesses can play in tackling wider global and societal
challenges is rightly a focus of many of our stakeholders.
It seems clear that many organisations are considering afresh
what their purpose is or should be. In my experience the
position at IPF is different – our purpose is rooted in what we
do every day – and it’s something we know well. It is inherent
to who we are. We know that for our customers, without our
involvement, they couldn’t have provided the things they
or their families needed. It also means, in my view, that when
we talk about our purpose, we don’t have to agonise about
“why do we exist” or “how do we know we leave customers
in a good place” as the evidence is clear on these points.
However, work on purpose never stops. In 2022, the Board
and broader executive team have considered extensively how
we do business and engage with our customers to ensure that
we are living our purpose in all that we do.
But our purpose-related work is broader than simply doing
what we do in a fair and ethical manner. As I travelled around
our markets in 2022, I saw the remarkable ethos of community
engagement first-hand, particularly in the work that is done
through our Invisibles programme as well as our work to help
those most affected by the conflict in the Ukraine. One thing
which sticks in my mind was my visit to our centre in Warsaw
known as the Mother’s House and was touched to see the
results of the immense volunteering and fundraising efforts
that our colleagues have made to renovate and create
a long-term safe place for women and children displaced
by the war in Ukraine.
Along with purpose comes partnership. Working with investors,
regulators, colleagues, customers, communities and suppliers
is key to our long-term health as a company. The Board takes
a significant degree of direct responsibility in relation to
understanding the views of stakeholders. In 2022, as the world
opened up after the pandemic, I and other Board members
were able to travel to our markets. As well as meeting with
business leaders we ensure that as Board members we visit
customers in their homes and spend time with front-line
colleagues, seeing our broader social contribution and
engaging with the talent of tomorrow . I feel sure this input
helps guide the Board’s deliberations to ensure the balance
of the value we create for all our stakeholders is sensible and
proportionate. From a personal perspective I appreciated the
candour of those I met during the past year.
“I look forward to the year ahead,
knowing that the talent and commitment
of our people, the operational and
financial strength of our business,
our ability to innovate and our
commitment to good governance
will help us to fulfil our potential
as a socially responsible business.”
A Board for the future
My focus continues to be on maintaining a strong Board
with a diverse range of professional backgrounds, skills and
perspectives. Succession planning was a priority for me in 2022
to ensure we continue to deliver on this objective.
As part of our succession plans, Gary Thompson was
appointed to the Board as Chief Financial Officer on 4 April
2022 and, with his wealth of sector-specific experience, has
proven to be a very strong addition to the IPF executive team.
I was also delighted to welcome two new non-executive
directors, Katrina Cliffe and Aileen Wallace, who joined the
Board in August and December 2022 respectively, bringing
extensive experience of retail financial services and
technology to the Group.
Non-executive directors Bronwyn Syiek and John Mangelaars
resigned from the Board in June and December respectively
and, on behalf of the Board, I would like to thank them both
for their valuable contributions.
Looking ahead
The last two years have shown that our ambitious strategy,
underpinned by our purpose, has enabled us to respond
to even the most severe challenges and deliver a strong
performance for the benefit of our stakeholders.
Whilst there continue to be macroeconomic challenges
including inflationary pressure, the executive team has
continually proven its ability to adapt to changing
circumstances whether arising from the pandemic,
economic factors or the war in Ukraine. I therefore
remain confident in the ability of IPF and the team
to deliver attractive returns in the future.
I also look forward to the year ahead, knowing that the talent
and commitment of our people, the operational and financial
strength of our business, our ability to innovate and our
commitment to good governance will help us to fulfil our
potential as a socially responsible business providing high-
quality, essential services to our customers and ultimately,
helping to build a better world through financial inclusion.
Stuart Sinclair
Chair
1 March 2023
2
International Personal Finance plc
Annual Report and Financial Statements 2022
3
Strategic Report
IPF at a glance
Building a better world
through financial inclusion
In the past 25 years we have served 14m individual customers
Our place in the market
Our purpose is to build a better world
through financial inclusion for a growing
financially underserved population, many
of whom are excluded from day-to-day
financial services.
According to the World Bank, together with our
own analysis, it is estimated that there are more
than 70m financially underserved adults within
our nine markets alone. Not being part of the
regulated financial system, people find it difficult
to save, obtain fair-priced credit or start
a business.
We often represent the first rung on the credit
ladder and, for many, this is the start of a journey
to build their credit profile. Our unrivalled
expertise in this particular consumer segment
puts us in a strong position to financially include
more customers while growing the business.
We operate in the highly regulated non-bank
financial sector with price caps and affordability
regulations in place in most of our markets.
Banks
Non-bank financial institutions
Home credit loans
Digital credit lines
Digital loans
Credit card
Mobile wallet
Insurances
Point of sale finance
Credit
unions
Home
credit
Digital
lenders
Pawn
brokers
Grey market
Family and friends
Unregulated lenders
Our customers
Our customers budget very carefully
and typically want to borrow small sums
with transparent costs and regular,
affordable repayments.
Most are aged between 30 and 50 and have
a family with children. Around 60% are female
and are contributing to the family budget.
They have low or medium incomes and tell
us they want a sympathetic approach and flexible
repayments if they face difficulty repaying their loan.
Many are excluded by banks for a number
of reasons including:
– They work but their income is difficult to verify.
– They have not borrowed before and have
no formal credit history.
– They have defaulted on a credit agreement in
the past resulting in a damaged credit history.
Read more on financial inclusion on pages 42 and 43.
How our customers use their loans:
– Education and return-to-school expenses.
– Healthcare and medical expenses.
– Smoothing their budgets and managing
unexpected expenses.
– Home improvements and household goods.
– Building a micro business (Mexico).
– Family celebrations and Christmas.
European home credit
Mexico home credit
IPF Digital
784,000 customers
696,000 customers
253,000 customers
Serving 1.7m customers
4
International Personal Finance plc
Strategic Report
IPF at a glance
Building a better world
through financial inclusion
In the past 25 years we have served 14m individual customers
Our place in the market
Our purpose is to build a better world
through financial inclusion for a growing
financially underserved population, many
of whom are excluded from day-to-day
financial services.
According to the World Bank, together with our
own analysis, it is estimated that there are more
than 70m financially underserved adults within
our nine markets alone. Not being part of the
regulated financial system, people find it difficult
to save, obtain fair-priced credit or start
a business.
We often represent the first rung on the credit
ladder and, for many, this is the start of a journey
to build their credit profile. Our unrivalled
expertise in this particular consumer segment
puts us in a strong position to financially include
more customers while growing the business.
We operate in the highly regulated non-bank
financial sector with price caps and affordability
regulations in place in most of our markets.
Banks
Non-bank financial institutions
Home credit loans
Digital credit lines
Digital loans
Credit card
Mobile wallet
Insurances
Point of sale finance
Credit
unions
Home
credit
Digital
lenders
Pawn
brokers
Our unique approach
Our values
Our expertise and special focus on providing
credit to those that are underserved has
made us a global leader in our sector.
We are the only business to offer both home credit
and digital credit options, plus a range of insurance
products. At the heart of our business model are
strong, personal relationships with our customers,
the majority of whom we visit week in, week out.
We pride ourselves on being a trusted lender
and serving our customers responsibly.
Our values unite the way we work every day
to meet our customers’ needs and support
the communities in which we operate. They are
underpinned by our Code of Ethics which guides
responsible behaviour and decisions.
Responsible
Respectful
Straightforward
Taking due care
in all our actions
and decisions
Treating others
as we would like
to be treated
Being open and
transparent in
everything we do
Code of Ethics
14m
people served
Grey market
Family and friends
Unregulated lenders
25 years
in business
Over £1bn
profit
Long-established, award-winning
business with positive brand recognition
and significant future growth potential
Profitable every year since listing in 2007
with 2020 being the only exception due
to the Covid-19 pandemic
Dedicated to creating financial inclusion
and have served 14m people since 1997
Our customers
Our customers budget very carefully
and typically want to borrow small sums
with transparent costs and regular,
affordable repayments.
Most are aged between 30 and 50 and have
a family with children. Around 60% are female
and are contributing to the family budget.
They have low or medium incomes and tell
us they want a sympathetic approach and flexible
repayments if they face difficulty repaying their loan.
Many are excluded by banks for a number
of reasons including:
– They work but their income is difficult to verify.
– They have not borrowed before and have
no formal credit history.
– They have defaulted on a credit agreement in
the past resulting in a damaged credit history.
Read more on financial inclusion on pages 42 and 43.
Our sustainable returns
We operate with strong financial
disciplines to ensure our loans are
affordable while delivering an
appropriate financial return
which balances the needs of
all our stakeholders.
The most integral part of our financial model is
that we must deliver a return on required equity
(RORE) of between 15% and 20%. We believe that
returns materially in excess of this range would
result in us not balancing the needs of all of our
stakeholders in delivering our purpose.
As we capture the significant growth opportunities
we see for the Group, we aim to deliver
sustainable earnings whilst maintaining a strong
balance sheet, adopting a minimum return to
shareholders of 40% of post-tax earnings and
investing in the future growth of the business.
Read more on our financial model on page 30.
Our award-winning culture
How our customers use their loans:
– Education and return-to-school expenses.
– Healthcare and medical expenses.
– Smoothing their budgets and managing
unexpected expenses.
– Home improvements and household goods.
– Building a micro business (Mexico).
– Family celebrations and Christmas.
European home credit
Mexico home credit
IPF Digital
784,000 customers
696,000 customers
253,000 customers
Serving 1.7m customers
Target RORE
Clearly defined financial model
aligns the needs of all stakeholders
15% – 20%
Best
Workplaces™
For ALL
MEXICO
2022
4
International Personal Finance plc
Annual Report and Financial Statements 2022
5
Strategic Report
IPF at a glance continued
Our products and services
We offer a broad suite of traditional and innovative products and
services to suit our customers’ preferences and different credit profiles.
Our range of simple, affordable credit products has been developed to suit the different credit profiles of our customers
and to provide a flexible path to move between our home credit and digital offerings, if their financial circumstances
and credit history allow. We also provide access to a number of services including medical and life insurance which,
due to our buying power, are offered at much lower prices than our customers can obtain themselves.
Supporting our customers on their credit journey
Online payment
transactions and
value-added services.
Offers a competitive
advantage within our
customer segment.
Mobile wallet
Flexible access
to money up to a preset
limit and when customers
pay down, more credit
becomes available.
Revolving
credit line
Affordable, end-to-end
digital service with terms
up to three years and
monthly repayments.
Digital instalment
loans
Credit card
A convenient way for
customers to pay instore,
buy online, or obtain cash
from their customer
representative or ATM.
Hybrid loans
A unique blend of customer
representative and digital
channels for those who do
not have a strong enough
credit profile to get a fully
digital offer.
Home credit
instalment loans
Small-sum cash loans with
weekly personal service
provided in customers’
homes by our customer
representatives.
f
e
c
n
e
r
e
e
r
p
r
e
m
o
t
s
u
c
d
n
a
e
l
i
f
o
r
p
t
i
d
e
r
C
Value-added services including medical and life insurances
Customer journey
Our business divisions
We operate three successful and geographically diverse business divisions which generate good returns.
European
home credit
Mexico
home credit
IPF Digital
Typical loan
£780
Average term
74 weeks
Typical loan
£300
Average term
46 weeks
Average credit line
principal outstanding
£1,100
Average instalment loan
£975
6
International Personal Finance plc
Strategic Report
IPF at a glance continued
Our products and services
We offer a broad suite of traditional and innovative products and
services to suit our customers’ preferences and different credit profiles.
Our range of simple, affordable credit products has been developed to suit the different credit profiles of our customers
and to provide a flexible path to move between our home credit and digital offerings, if their financial circumstances
and credit history allow. We also provide access to a number of services including medical and life insurance which,
due to our buying power, are offered at much lower prices than our customers can obtain themselves.
Supporting our customers on their credit journey
Online payment
transactions and
value-added services.
Offers a competitive
advantage within our
customer segment.
Mobile wallet
Flexible access
to money up to a preset
limit and when customers
pay down, more credit
becomes available.
Revolving
credit line
e
c
n
e
r
e
f
e
r
p
r
e
m
o
t
s
u
c
d
n
a
e
l
i
f
o
r
p
t
i
d
e
r
C
Affordable, end-to-end
digital service with terms
up to three years and
monthly repayments.
Digital instalment
loans
Credit card
A convenient way for
customers to pay instore,
buy online, or obtain cash
from their customer
representative or ATM.
Hybrid loans
A unique blend of customer
representative and digital
channels for those who do
not have a strong enough
credit profile to get a fully
digital offer.
Home credit
instalment loans
Small-sum cash loans with
weekly personal service
provided in customers’
homes by our customer
representatives.
Value-added services including medical and life insurances
Customer journey
Our business divisions
We operate three successful and geographically diverse business divisions which generate good returns.
European
home credit
Mexico
home credit
IPF Digital
Typical loan
£780
Average term
74 weeks
Typical loan
£300
Average term
46 weeks
Average credit line
principal outstanding
£1,100
Average instalment loan
£975
Offering financial support to our
CUSTOMERS
with affordable financial products and services
Jennifer lives with her three daughters in Oaxaca, Mexico
When Jennifer took her first loan with Provident
in Mexico, she was facing some financial
challenges. A single mother of three girls,
she had no savings or support from a bank.
Because we specialise in serving people who
have a limited credit profile we were able to lend
Jennifer the money she needed. Jennifer repaid
her first loan and has come back to us a number
of times for a loan to make home improvements
and support her children’s education.
“Provident doesn’t just help you buy things,
it makes dreams come true. I took out a loan
to pay the tuition fees for one of my daughters
and I saw the results of this when she graduated
saying “Mum I did it!”. Now my dream is to create
my own training company and continue helping
families because, at the end of the day that’s
what it’s about.”
6
International Personal Finance plc
Annual Report and Financial Statements 2022
7
Strategic Report
IPF at a glance continued
Our social role
We play an important role in creating financial inclusion and make
a positive social contribution to the wider economy. We are continually
improving the great things our business means to all our stakeholders
from how we serve customers and design our products, to the way
we make decisions, treat each other and support our communities.
How we are delivering for all our stakeholders
Building a
better world
through
financial
inclusion
Our
customers
Our
colleagues
Investors
Our
communities
– Providing access to
affordable, regulated and
flexible credit when others
won’t or can’t.
– Helping develop customers’
credit history enabling more
credit choices in future.
– Providing careers and
an income for over
20,000 colleagues.
– Investing in leadership
development and
promotion opportunities.
– Offering an inclusive and
diverse work environment.
– Delivering fair and
sustainable returns.
– Maintaining an open,
transparent dialogue.
– Being a force for good
in society with a
meaningful purpose.
– Contributing positively
to our communities
and the environment.
– Investing in local causes
that are important to us.
– Global programme ‘Invisibles’
supports underprivileged and
excluded people.
Our
regulators
Governments
NGOs
Suppliers
and partners
– Abiding by all relevant
regulations and
contractual obligations.
– Providing clear information
so customers can make
informed borrowing decisions.
– With regulators, helping
to shape financially
inclusive regulation.
– Transparent, ethical
and fair practices.
– Providing a valuable service
and fulfilling government
inclusion strategies.
– Strong foundation of corporate
citizenship and contributing
to local economies through
taxes paid.
– Providing insight into the lives
of the voting public.
– Providing funding and support.
– Active membership of
sector associations.
– Open, honest debate to
improve the lives of customers.
– Professional, reliable
and trustworthy.
– 4,150 supplier partnerships.
– Paying invoices on time.
KPIs
1.7m
customers we
currently include in the
financial mainstream
£128m*
taxes paid in 2022,
supporting the
wider economy
80%
of our colleagues
are female
£1.1m
invested in our
community programmes
* Comprising £48m taxes paid (representing a cost to the Group) and £80m taxes collected on behalf of governments such as payroll taxes and employees’
social security contributions. The £48m taxes paid is stated net of repayments of £26m of tax received in the year from the Polish Tax Authority relating to
earlier periods as set out in the Financial review on page 34.
Read more on stakeholder engagement on pages 38 and 39
8
International Personal Finance plc
Strategic Report
IPF at a glance continued
Our social role
We play an important role in creating financial inclusion and make
a positive social contribution to the wider economy. We are continually
improving the great things our business means to all our stakeholders
from how we serve customers and design our products, to the way
we make decisions, treat each other and support our communities.
How we are delivering for all our stakeholders
Building a
better world
through
financial
inclusion
Our
customers
Our
colleagues
Investors
Our
communities
– Providing access to
– Providing careers and
affordable, regulated and
flexible credit when others
won’t or can’t.
– Helping develop customers’
an income for over
20,000 colleagues.
– Investing in leadership
development and
credit history enabling more
promotion opportunities.
credit choices in future.
– Offering an inclusive and
diverse work environment.
– Delivering fair and
sustainable returns.
– Maintaining an open,
transparent dialogue.
– Being a force for good
in society with a
meaningful purpose.
– Contributing positively
to our communities
and the environment.
– Investing in local causes
that are important to us.
– Global programme ‘Invisibles’
supports underprivileged and
excluded people.
Our
regulators
Governments
NGOs
Suppliers
and partners
– Providing a valuable service
– Providing funding and support.
– Professional, reliable
– Active membership of
sector associations.
– Open, honest debate to
improve the lives of customers.
and trustworthy.
– 4,150 supplier partnerships.
– Paying invoices on time.
– Abiding by all relevant
regulations and
contractual obligations.
and fulfilling government
inclusion strategies.
– Providing clear information
– Strong foundation of corporate
so customers can make
informed borrowing decisions.
citizenship and contributing
to local economies through
– With regulators, helping
taxes paid.
– Providing insight into the lives
of the voting public.
to shape financially
inclusive regulation.
– Transparent, ethical
and fair practices.
KPIs
1.7m
customers we
currently include in the
financial mainstream
£128m*
taxes paid in 2022,
supporting the
wider economy
80%
of our colleagues
are female
£1.1m
invested in our
community programmes
* Comprising £48m taxes paid (representing a cost to the Group) and £80m taxes collected on behalf of governments such as payroll taxes and employees’
social security contributions. The £48m taxes paid is stated net of repayments of £26m of tax received in the year from the Polish Tax Authority relating to
earlier periods as set out in the Financial review on page 34.
Read more on stakeholder engagement on pages 38 and 39
Financial inclusion to
ACCESS
affordable financial products and services
8
International Personal Finance plc
Annual Report and Financial Statements 2022
9
Gavril Texe is one of our customers in Romania
Gavril is a retired doctor from Romania who, at the age of 70, found he needed a credit
history to access European funding for a special project he was developing.
“I wanted to open an educational centre in
Oradea to teach people about healthy food
and living though plant-based diets and
medicine, but to access the funding I was told
I needed a bank account and credit history.
I signed up with a well known bank but when I
asked for a loan to create the credit history I
needed, I was refused because of my age.
I told them that I work and also have a pension
but they said because I am 70 they can no
longer serve me. When I’ve wanted money
quickly before I’ve borrowed from a colleague
or my wife. So I had an idea – I asked Provident
and they were there. We are now waiting for the
approval of the project and soon we will be
holding courses in the centre to help local
people interested in changing their way of life.”
Strategic Report
Business model
A resilient, sustainable and
responsible business model
Our unique proposition helps underserved consumers access financial
services and creates long-term value for the communities we serve.
Relationships
A unique consumer finance proposition that is…..
Customers
Trusted, personal relationships help us
understand our customers and design
products that meet their needs in
a responsible, affordable and
sustainable way.
Colleagues
Motivating valued employees and
customer representatives who are
committed and proud to serve our
customers and deliver on our strategy.
Regulators and legislators
Regular open dialogue with
regulators and legislators builds their
understanding of our customers’
needs and our essential role in society.
Suppliers
Collaboration with partners who
embrace our values and help our
business grow, improve efficiency
and enhance performance.
Communities
Our customer representatives live and
work in the communities they serve,
building positive relationships with
customers and providing unique insight
into the needs of our communities.
Investors
Relationships with our shareholders
and funding partners help us maintain
a strong financial profile and invest for
the long term.
What we do
We play a vital role in society by helping underserved consumers
in nine markets gain access to affordable financial products
and services.
We have built a suite of products ranging from home credit and
digital instalment loans, a credit card and digital credit lines to a
mobile wallet, insurances and other value-added services. They are
tailored to our customers’ financial circumstances and needs, and
we deliver them in a responsible way. In doing so we are building
financial inclusion for millions of people.
Please see pages 4 to 6 for more information.
ur cre d it p r o d u c t s and value-ad
Attract targ
custo
t m e n t
t u r n s
s
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d r e
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Building a better
world through
financial inclusion
d
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s s e ss afford
n
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Our values
Responsible • Straightforward • Respectful
10
International Personal Finance plc
Strategic Report
Business model
A resilient, sustainable and
responsible business model
Our unique proposition helps underserved consumers access financial
services and creates long-term value for the communities we serve.
Customers
Trusted, personal relationships help us
understand our customers and design
products that meet their needs in
a responsible, affordable and
sustainable way.
Colleagues
Motivating valued employees and
customer representatives who are
committed and proud to serve our
customers and deliver on our strategy.
Regulators and legislators
Regular open dialogue with
regulators and legislators builds their
understanding of our customers’
needs and our essential role in society.
Suppliers
Collaboration with partners who
embrace our values and help our
business grow, improve efficiency
and enhance performance.
Communities
Our customer representatives live and
work in the communities they serve,
building positive relationships with
customers and providing unique insight
into the needs of our communities.
What we do
We play a vital role in society by helping underserved consumers
in nine markets gain access to affordable financial products
and services.
We have built a suite of products ranging from home credit and
digital instalment loans, a credit card and digital credit lines to a
mobile wallet, insurances and other value-added services. They are
tailored to our customers’ financial circumstances and needs, and
we deliver them in a responsible way. In doing so we are building
financial inclusion for millions of people.
Please see pages 4 to 6 for more information.
ur cre d it p r o d u c t s and value-ad
Attract targ
t m e n t
custo
t u r n s
d r e
ers
e i n
m
R
e
a
n
v
s
e
t
d
e
d
s
O
e
u
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e
v
e
R
a
n
C
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o
f
a
m
l
l
e
c
a
c
i
n
n
t
r
g
a
e
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p
d
e
a
i
f
fi
y
c
c
u
m
e
u
st
o
ltie
s
m
nts
ers
Building a better
world through
financial inclusion
Lend
responsi b l y
e
r
v
i
c
e
s
r
e
L
q
o
u
a
e
n
s
t
y
bilit
s
s
e
a
s s e ss afford
d cre ditworthin
A
n
a
Relationships
A unique consumer finance proposition that is…..
….delivering long-term value for society
What makes us different
Specialist lender
We are experts with deep market knowledge
gained over the past 25 years of serving customers
who are underbanked and underserved.
Unique product offering
We are the only financial services business to
provide both home credit and digital offerings,
plus a range of insurances which meet our
customers’ different credit profiles and create
a flexible path for them to access our products
as their credit history improves.
Close customer relationships
Our customer representatives meet customers in
their homes every week. They build unique personal
relationships and offer high levels of contact which
helps customers stay in control of their repayments.
We are also in regular dialogue with our digital
customers who we reach across a range of digital
channels. Knowing our customers so well helps
us to make better affordability assessments,
thus allowing us to approve more loans
and support financial inclusion.
Difficult to replicate
The home credit model, with its large customer
representative infrastructure, is extremely difficult
to replicate, and takes years of experience
to manage effectively.
Profitable and highly scalable
Our digital business is profitable and highly
scalable as it meets the growing number of
consumers who want affordable credit online.
Investors
Relationships with our shareholders
and funding partners help us maintain
a strong financial profile and invest for
the long term.
Our values
Responsible • Straightforward • Respectful
Read our investment proposition on page 17
Customers
Giving access to affordable credit helps
customers buy the things they want and
build a credit history.
1.7m
customers
Colleagues
Developing rewarding and retaining
colleagues so they are motivated to serve
customers well, achieve exciting careers
and deliver our growth plans.
20,000+
colleagues
Communities
Enabling financial inclusion, supporting
community initiatives, providing careers
and paying taxes.
4,000
colleagues volunteered in their community
Suppliers
Supporting thousands of businesses
and forming strong and sustainable
partnerships with them.
4,150
direct suppliers
Regulators and government
Providing consumers with access to
regulated credit and complying with
the regulations in all our markets.
53
sector associations
Investors
Generating good returns, delivering
growth responsibly and capturing
market opportunities
>£200m
dividends paid to shareholders since listing in 2007
10
International Personal Finance plc
Annual Report and Financial Statements 2022
11
Strategic Report
Market review
Our market place
and overview
Our business offers significant long-term growth opportunities.
A large proportion of people living in our nine markets find it difficult
to access credit, particularly during challenging economic times.
We have the expertise, product offering and robust capital foundation
to serve more customers and deliver sustainable returns.
We track consumer and market trends continually and use this insight
to shape our strategy and respond to the challenges and opportunities
that arise. Here are some of the key drivers and our response.
Market trends
Market trend highlights
Our response
Growing demand
for unsecured
consumer credit
Related principal risks
1
4
7
8
High inflationary
landscape
Related principal risks
1
3
High levels
of competition
Related principal risks
7
Regulation
Related principal risks
2
4
7
– Significant long-term demand for affordable
– We have developed a broad suite of
credit from our target consumers.
– It is harder for our consumer segment to find
products that suits the different credit
profiles and preferences of our customers.
affordable finance as other lenders reduce
– We are growing our digital lending capacity
>70m
estimated underserved consumers
in our markets
their risk appetite.
– Consumers are demanding personalised
digital finance experiences, and seamless
interaction with their financial provider.
– Consumers want easier and faster access
to their finances and mobile is the dominant
channel for digital customers.
and rolling out our mobile wallet, which
is unique to target segment of consumers
we serve.
– We have developed ‘ProviGo’, a new app for
customers to improve and personalise the
customer experience.
– The war in Ukraine and rising costs of living
– We will continue to serve our loyal customers
GDP growth forecasts (%)
negatively impacted consumer sentiment.
who are underserved by other lenders,
– Disposable incomes likely to come under
even in difficult times.
further pressure.
– High wage inflation and employment levels
in most of our markets.
– Non-bank financial institutions will
continue to be a crucial source of finance
for lower-income individuals.
– Interest rate rises increasing funding costs.
– We proactively tightened our credit settings
for consumers with higher credit risk profiles.
– We will continue to adopt a cautious
approach to lending and will further
tighten credit settings, if necessary.
– We have a strong focus on cost efficiency
and process optimisation to mitigate
inflation and the rising cost of funding.
Source: World Bank Financial Inclusion
database 2021 and IPF analysis
3
.
4
7
.
3
0
.
3
8
.
2
8
.
1
9
.
1
6
.
1
2
.
1
8
.
0
2
2
3
2
4
2
Weighted Europe
Mexico
Australia
Sources: European Commission and HSBC
quarterly economic updates
– Our direct competitors remain broadly
– We will continue to develop customer choice
unchanged though there has been some
by increasing our digital and mobile options,
market rationalisation due to financing issues.
broadening price options and increasing the
channels through which customers can
access our credit products.
– Some banks are tightening their lending
criteria in response to the cost-of-living crisis.
– Many fintechs and buy now, pay later models
struggling to reach profitability.
– There have been very few new entrants trying
to serve our segment of consumers.
Key competitors
– Banks
– Digital lenders
– Home credit operators
– Credit unions
– Pawn brokers
– Point of sale finance
– Payday lenders
– Regulators and legislators continue to focus
– We are fully supportive of regulation that
on the consumer credit sector with key areas
protects consumers and ensures that only
of interest being affordability, responsible
reputable businesses are permitted to provide
lending and fair pricing.
them with financial products and services.
– A tighter price cap was introduced in Poland
– We maintain good relationships with
in December 2022 and new affordability rules
regulators and legislators and strive to ensure
will come into force in May 2023.
Areas of regulatory interest
– Price
– Affordability
– Responsible lending
– Financial inclusion
– Regulatory compliance
that they understand the important role our
business plays in extending financial inclusion.
– We have an excellent track record
of managing through changes
in the regulatory landscape.
See pages 58-62 for further information on principal risks
12
International Personal Finance plc
Strategic Report
Market review
Our market place
and overview
Our business offers significant long-term growth opportunities.
A large proportion of people living in our nine markets find it difficult
to access credit, particularly during challenging economic times.
We have the expertise, product offering and robust capital foundation
to serve more customers and deliver sustainable returns.
We track consumer and market trends continually and use this insight
to shape our strategy and respond to the challenges and opportunities
that arise. Here are some of the key drivers and our response.
Market trends
Market trends
Market trend highlights
Market trend highlights
Our response
Our response
Growing demand
Growing demand
for unsecured
for unsecured
consumer credit
consumer credit
Related principal risks
Related principal risks
1
1
4
4
7
7
8
8
High inflationary
High inflationary
landscape
landscape
Related principal risks
Related principal risks
1
1
3
3
High levels
High levels
of competition
of competition
Related principal risks
Related principal risks
7
7
Regulation
Regulation
Related principal risks
Related principal risks
2
2
4
4
7
7
– Significant long-term demand for affordable
– Significant long-term demand for affordable
credit from our target consumers.
credit from our target consumers.
– It is harder for our consumer segment to find
– It is harder for our consumer segment to find
affordable finance as other lenders reduce
affordable finance as other lenders reduce
their risk appetite.
their risk appetite.
– Consumers are demanding personalised
– Consumers are demanding personalised
digital finance experiences, and seamless
digital finance experiences, and seamless
interaction with their financial provider.
interaction with their financial provider.
– Consumers want easier and faster access
– Consumers want easier and faster access
to their finances and mobile is the dominant
to their finances and mobile is the dominant
channel for digital customers.
channel for digital customers.
– We have developed a broad suite of
– We have developed a broad suite of
products that suits the different credit
products that suits the different credit
profiles and preferences of our customers.
profiles and preferences of our customers.
– We are growing our digital lending capacity
– We are growing our digital lending capacity
and rolling out our mobile wallet, which
and rolling out our mobile wallet, which
is unique to target segment of consumers
is unique to target segment of consumers
we serve.
we serve.
– We have developed ‘ProviGo’, a new app for
– We have developed ‘ProviGo’, a new app for
customers to improve and personalise the
customers to improve and personalise the
customer experience.
customer experience.
>70m
>70m
estimated underserved consumers
estimated underserved consumers
in our markets
in our markets
Source: World Bank Financial Inclusion
Source: World Bank Financial Inclusion
database 2021 and IPF analysis
database 2021 and IPF analysis
– The war in Ukraine and rising costs of living
– The war in Ukraine and rising costs of living
negatively impacted consumer sentiment.
negatively impacted consumer sentiment.
– Disposable incomes likely to come under
– Disposable incomes likely to come under
further pressure.
further pressure.
– High wage inflation and employment levels
– High wage inflation and employment levels
in most of our markets.
in most of our markets.
– Non-bank financial institutions will
– Non-bank financial institutions will
continue to be a crucial source of finance
continue to be a crucial source of finance
for lower-income individuals.
for lower-income individuals.
– Interest rate rises increasing funding costs.
– Interest rate rises increasing funding costs.
– We will continue to serve our loyal customers
– We will continue to serve our loyal customers
GDP growth forecasts (%)
GDP growth forecasts (%)
who are underserved by other lenders,
who are underserved by other lenders,
even in difficult times.
even in difficult times.
– We proactively tightened our credit settings
– We proactively tightened our credit settings
for consumers with higher credit risk profiles.
for consumers with higher credit risk profiles.
– We will continue to adopt a cautious
– We will continue to adopt a cautious
approach to lending and will further
approach to lending and will further
tighten credit settings, if necessary.
tighten credit settings, if necessary.
– We have a strong focus on cost efficiency
– We have a strong focus on cost efficiency
and process optimisation to mitigate
and process optimisation to mitigate
inflation and the rising cost of funding.
inflation and the rising cost of funding.
3
3
.
.
4
4
7
7
.
.
3
3
0
0
.
.
3
3
8
8
.
.
2
2
8
8
.
.
1
1
9
9
.
.
1
1
6
6
.
.
1
1
2
2
.
.
1
1
8
8
.
.
0
0
Weighted Europe
Weighted Europe
Mexico
Mexico
Australia
Australia
2
2
2
2
3
3
2
2
4
4
2
2
Sources: European Commission and HSBC
Sources: European Commission and HSBC
quarterly economic updates
quarterly economic updates
– Our direct competitors remain broadly
– Our direct competitors remain broadly
unchanged though there has been some
unchanged though there has been some
market rationalisation due to financing issues.
market rationalisation due to financing issues.
– Some banks are tightening their lending
– Some banks are tightening their lending
criteria in response to the cost-of-living crisis.
criteria in response to the cost-of-living crisis.
– Many fintechs and buy now, pay later models
– Many fintechs and buy now, pay later models
struggling to reach profitability.
struggling to reach profitability.
– There have been very few new entrants trying
– There have been very few new entrants trying
to serve our segment of consumers.
to serve our segment of consumers.
– We will continue to develop customer choice
– We will continue to develop customer choice
by increasing our digital and mobile options,
by increasing our digital and mobile options,
broadening price options and increasing the
broadening price options and increasing the
channels through which customers can
channels through which customers can
access our credit products.
access our credit products.
Key competitors
Key competitors
– Banks
– Banks
– Digital lenders
– Digital lenders
– Home credit operators
– Home credit operators
– Credit unions
– Credit unions
– Pawn brokers
– Pawn brokers
– Point of sale finance
– Point of sale finance
– Payday lenders
– Payday lenders
– Regulators and legislators continue to focus
– Regulators and legislators continue to focus
on the consumer credit sector with key areas
on the consumer credit sector with key areas
of interest being affordability, responsible
of interest being affordability, responsible
lending and fair pricing.
lending and fair pricing.
– A tighter price cap was introduced in Poland
– A tighter price cap was introduced in Poland
in December 2022 and new affordability rules
in December 2022 and new affordability rules
will come into force in May 2023.
will come into force in May 2023.
– We are fully supportive of regulation that
– We are fully supportive of regulation that
protects consumers and ensures that only
protects consumers and ensures that only
reputable businesses are permitted to provide
reputable businesses are permitted to provide
them with financial products and services.
them with financial products and services.
– We maintain good relationships with
– We maintain good relationships with
regulators and legislators and strive to ensure
regulators and legislators and strive to ensure
that they understand the important role our
that they understand the important role our
business plays in extending financial inclusion.
business plays in extending financial inclusion.
– We have an excellent track record
– We have an excellent track record
of managing through changes
of managing through changes
in the regulatory landscape.
in the regulatory landscape.
Areas of regulatory interest
Areas of regulatory interest
– Price
– Price
– Affordability
– Affordability
– Responsible lending
– Responsible lending
– Financial inclusion
– Financial inclusion
– Regulatory compliance
– Regulatory compliance
Principal risks
1 Credit
2 Regulatory
4 Reputation
5 Taxation
7 Product proposition
8 Technology
3 Funding, liquidity, market and counterparty
6 Change management
9 People
See pages 58-62 for further information on principal risks
See pages 58-62 for further information on principal risks
12
International Personal Finance plc
Annual Report and Financial Statements 2022
13
Strategic Report
Our strategy
A strategy to deliver
a thriving business
Guided by our purpose, our strategy provides the direction to deliver excellent service to our loyal customers and
build on our successful product propositions to attract the next generation. Excellent execution will enable us to
build a thriving business with strong growth prospects whilst balancing the needs of our customers, colleagues,
investors and society at large. Underpinning our strategy is a clearly defined financial model which aligns all
stakeholders and is bound by a target RORE of 15% to 20%.
Expanding
product range
Credit card
Mobile wallet
Value-added services
Enhancing
customer
experience
Building distribution
Mexico geographic expansion
Retail partnerships
Hybrid
Investing in
technology
Customer app
Digital onboarding
Omni-channel
14
International Personal Finance plc
Strategic Report
Our strategy
A strategy to deliver
a thriving business
Guided by our purpose, our strategy provides the direction to deliver excellent service to our loyal customers and
build on our successful product propositions to attract the next generation. Excellent execution will enable us to
build a thriving business with strong growth prospects whilst balancing the needs of our customers, colleagues,
investors and society at large. Underpinning our strategy is a clearly defined financial model which aligns all
stakeholders and is bound by a target RORE of 15% to 20%.
Expanding
product range
Credit card
Mobile wallet
Value-added services
Enhancing
customer
experience
Building distribution
Mexico geographic expansion
Retail partnerships
Hybrid
Investing in
technology
Customer app
Digital onboarding
Omni-channel
Chief Executive Officer’s review
Delivering on
our strategy
“We made excellent
progress against
our strategy in 2022
which contributed to
a very good financial
performance delivered
by all our divisions.”
Gerard Ryan
Chief Executive Officer
How would you sum up performance in 2022?
What were the key strategic achievements?
Having had such a positive return to growth in 2021,
we entered 2022 full of energy and committed to rebuilding
our business post the pandemic and making good on our
promise of creating financial inclusion for the underbanked
and underserved communities around the world. And then,
towards the end of February, Russia invaded Ukraine, and we
had to rapidly rethink our plans for the year. As I thought about
this interview and the areas we might cover, it occurred to me
that first and foremost, I should call out the outstanding
humanitarian response by my colleagues across the Group to
what can only be described as a huge human tragedy. We
operate in a number of countries that border Russia, but in
truth, all of our businesses were impacted by this war. Whilst
the level of activity in our European businesses dropped
dramatically in the immediate aftermath of the invasion by
Russia, our primary concern was to assist our colleagues who
were volunteering to help refugees flowing across their border,
particularly in Poland. Our colleagues provided shelter, food
and transport to the dispossessed and, to this day, they are still
giving their own time and resources in a way that makes me
very proud to say that we work in the same business.
By mid May, we saw a return to more normalised levels of
consumer demand for credit, and I am delighted to say that
for the year as a whole we delivered 14% growth in customer
lending and maintained portfolio quality at levels above our
own expectations. We executed consistently against all the
major pillars of our strategy, and, although we tightened our
lending criteria in the fourth quarter in response to increasing
economic uncertainty, consistent customer repayment
behaviour, positive growth in lending and strong cost
control enabled us to increase our profit before tax by
14.3% to £77.4m.
We agreed with the Board early in the year that our strategy
remains fit for purpose as we respond to the challenges
and opportunities facing the business. We continued
to expand our product and distribution capabilities,
and invested in technology to make customer journeys
easier and improve efficiency.
Of particular note are the expansion of our business in Mexico
home credit, the launch in Poland of our first ever credit card
and the continued digitisation of many of the customer
representative interactions that have met with a very positive
reaction from our customers.
How does IPF have a positive impact on society?
The easiest way for me to explain it would be to say that we,
both as a business and a community of colleagues, absolutely
believe in our purpose. We spent a long time thinking about
how we could capture our purpose in words that would
resonate across all our businesses and with all our
stakeholders. We don’t believe for one second that we have
achieved our mission; building a better world through financial
inclusion is a journey, and there will always be more to be
done. And we are not trying for one moment to pretend that
we are anything other than a commercial organisation, but we
are an organisation with heart. We provide access to an ever
increasing range of financial services for consumers who
would otherwise struggle to get these products and services,
and we do so in a way that is fair and transparent and always
focuses on the suitability of the product for the individual
consumer. On my visits to meet customers for instance, I see
first hand their appreciation of the value-added services, such
as health insurance, that we can make available to them at
prices that would be simply unobtainable as an individual.
14
International Personal Finance plc
Annual Report and Financial Statements 2022
15
Strategic Report
Chief Executive Officer’s review continued
We also provide employment to over 20,000 colleagues, and
we invest time and effort to ensure that we continually develop
our people and provide them with new skills and opportunities.
We have created a global learning development programme
with LinkedIn and invested in a development programme with
Harvard University for our next generation of future leaders.
And in Mexico, we are making huge strides in providing
development paths for customer representatives to be
promoted to development managers.
How are you supporting customers and colleagues
facing the cost-of-living crisis?
Unsurprisingly, this is the biggest challenge facing our
business as it impacts our customers, employees and
customer representatives.
If I look first at our customers, it is clear that they spend a
proportionately larger share of their income on essentials
such as housing, food, energy and transport, all of which are
being impacted by high inflation. Based on our analysis of
inflationary impacts on affordability, we have taken proactive
steps to tighten our scorecards so that we do not overindebt
people. In addition, for existing customers who may face
difficulties in the months ahead, we will make use of our
forbearance and payment holiday options to help them
manage through difficult periods.
As regards our employees and customer representatives, we
are working on a country-by-country basis to understand the
appropriate level of pay increase or changes to commission
structures required to ensure our colleagues are rewarded
fairly for the work they do. Whilst this will undoubtedly increase
our cost base, we will be looking to achieve efficiencies to
offset much of these impacts.
How much more will you tighten credit scorecards?
The actions we have taken to date have been pre-emptive
and I should reiterate that we are very pleased with our
portfolio quality and customer repayment behaviour.
To the extent we see any meaningful change in our core
key performance indicators, particularly those focused on
customer affordability, we will of course take appropriate
action at that stage, but to date, we are satisfied that our
current tightening is appropriate. The situation in Poland
will be different, as new affordability rules that will apply from
May 2023 will significantly restrict the availability of credit
for customers who have less disposable income.
How are you transforming your technical capability?
This is a hugely exciting area for us. Our technology investment
could be broadly categorised as expanding our product set
and distribution, improving our customer experience and
making our business more efficient. We are accelerating the
rollout of digital onboarding of new customers in our Mexico
home credit business. This improves their experience and, at
the same time, makes us more efficient. In Poland, we have
rolled out ProviGo, an app that allows customers to view their
account on their phone, apply for a new loan or settle their
existing loan early. In the Baltics, our mobile wallet is helping us
to better understand customer spending and repayment
patterns whilst providing customers with richer functionality
that they appreciate. And internally, unseen by our customers,
we are upgrading our customer relationship management
systems and moving our operations to the cloud. To enable us
to maximise the benefit from this investment programme, we
have significantly strengthened our technology team and this
will continue to be a key focus area for us in the year ahead.
How confident are you of success in Poland now
there is a tighter rate cap?
There is no doubting the sheer scale of the change that the
new regulations will impose on our business in Poland. As we
explained during our third quarter update, our strategic
response was the launch of our first ever credit card. The card
combines the flexibility of a credit card with many of the
features of an instalment loan. Our customer representatives
will continue to be at the heart of our relationship with our
customers, so we have developed a full suite of training
programmes to ensure they are comfortable with the product
and its features. Our tests in the last quarter of 2022 reinforced
our belief that this product change will be welcomed by and
be beneficial for our customers. And because it is a new
product structure, we will roll out the credit card at a steady
pace and, as our customers become more accustomed to
using it, we will progressively release new features to enhance
their experience.
Has competition changed in the past year?
It is clear that we are now in a very different economic
environment than 12 months ago. Central banks are no longer
priming economies with huge amounts of near-free money,
investors are liquidating investments and moving to cash,
and the hype around fintech that led to incredible valuations
has all but evaporated. As for the impact of these changes
on competition in our markets, it is not significant today but
is likely to grow in time. Broadly speaking, all of our markets
continue to be very competitive, but we do see a significant
reduction in risk appetite from buy now, pay later operations
and smaller fintech businesses. Many of the latter had often
spoken of their global ambitions but are now reining in their
investments to conserve cash. Competition from banks and
point of sale finance continues, but we expect to see
a tightening of underwriting by these businesses as the
impacts of high inflation continue to bite.
What are the most pressing ESG issues for IPF?
Undoubtedly, our focus is always on responsible lending,
and ensuring that the loans we provide are appropriate
for our customers’ circumstances, both at the point we offer
a loan but also with a view to affordability during the life of the
loan. A good example here would be how we have proactively
tightened scorecards, not because of what we see today,
but what we believe might be the adverse impacts on
affordability in the months ahead.
How are you ensuring diversity at IPF?
As an international group, our ability to understand, adapt to
and respect diversity will continue to be a core ingredient in
our continued success. My own leadership team has seven
different nationalities, and we have successfully relocated
senior colleagues across borders to bring new experiences
and gain new skills. Today, 38% of our senior managers
are female and we have a thriving womens’ network across
the Group. We are also engaged in providing opportunities
to promote greater gender diversity, which is covered
on page 45.
16
International Personal Finance plc
Strategic Report
Chief Executive Officer’s review continued
We also provide employment to over 20,000 colleagues, and
systems and moving our operations to the cloud. To enable us
we invest time and effort to ensure that we continually develop
to maximise the benefit from this investment programme, we
our people and provide them with new skills and opportunities.
have significantly strengthened our technology team and this
We have created a global learning development programme
will continue to be a key focus area for us in the year ahead.
with LinkedIn and invested in a development programme with
Harvard University for our next generation of future leaders.
And in Mexico, we are making huge strides in providing
development paths for customer representatives to be
promoted to development managers.
How are you supporting customers and colleagues
facing the cost-of-living crisis?
How confident are you of success in Poland now
there is a tighter rate cap?
There is no doubting the sheer scale of the change that the
new regulations will impose on our business in Poland. As we
explained during our third quarter update, our strategic
response was the launch of our first ever credit card. The card
combines the flexibility of a credit card with many of the
Unsurprisingly, this is the biggest challenge facing our
features of an instalment loan. Our customer representatives
business as it impacts our customers, employees and
will continue to be at the heart of our relationship with our
customer representatives.
If I look first at our customers, it is clear that they spend a
proportionately larger share of their income on essentials
such as housing, food, energy and transport, all of which are
being impacted by high inflation. Based on our analysis of
inflationary impacts on affordability, we have taken proactive
steps to tighten our scorecards so that we do not overindebt
people. In addition, for existing customers who may face
difficulties in the months ahead, we will make use of our
forbearance and payment holiday options to help them
manage through difficult periods.
As regards our employees and customer representatives, we
are working on a country-by-country basis to understand the
appropriate level of pay increase or changes to commission
structures required to ensure our colleagues are rewarded
fairly for the work they do. Whilst this will undoubtedly increase
our cost base, we will be looking to achieve efficiencies to
offset much of these impacts.
How much more will you tighten credit scorecards?
The actions we have taken to date have been pre-emptive
and I should reiterate that we are very pleased with our
portfolio quality and customer repayment behaviour.
To the extent we see any meaningful change in our core
key performance indicators, particularly those focused on
customer affordability, we will of course take appropriate
action at that stage, but to date, we are satisfied that our
current tightening is appropriate. The situation in Poland
will be different, as new affordability rules that will apply from
May 2023 will significantly restrict the availability of credit
for customers who have less disposable income.
How are you transforming your technical capability?
This is a hugely exciting area for us. Our technology investment
could be broadly categorised as expanding our product set
and distribution, improving our customer experience and
making our business more efficient. We are accelerating the
rollout of digital onboarding of new customers in our Mexico
home credit business. This improves their experience and, at
the same time, makes us more efficient. In Poland, we have
rolled out ProviGo, an app that allows customers to view their
account on their phone, apply for a new loan or settle their
existing loan early. In the Baltics, our mobile wallet is helping us
to better understand customer spending and repayment
patterns whilst providing customers with richer functionality
that they appreciate. And internally, unseen by our customers,
we are upgrading our customer relationship management
customers, so we have developed a full suite of training
programmes to ensure they are comfortable with the product
and its features. Our tests in the last quarter of 2022 reinforced
our belief that this product change will be welcomed by and
be beneficial for our customers. And because it is a new
product structure, we will roll out the credit card at a steady
pace and, as our customers become more accustomed to
using it, we will progressively release new features to enhance
their experience.
Has competition changed in the past year?
It is clear that we are now in a very different economic
environment than 12 months ago. Central banks are no longer
priming economies with huge amounts of near-free money,
investors are liquidating investments and moving to cash,
and the hype around fintech that led to incredible valuations
has all but evaporated. As for the impact of these changes
on competition in our markets, it is not significant today but
is likely to grow in time. Broadly speaking, all of our markets
continue to be very competitive, but we do see a significant
reduction in risk appetite from buy now, pay later operations
and smaller fintech businesses. Many of the latter had often
spoken of their global ambitions but are now reining in their
investments to conserve cash. Competition from banks and
point of sale finance continues, but we expect to see
a tightening of underwriting by these businesses as the
impacts of high inflation continue to bite.
What are the most pressing ESG issues for IPF?
Undoubtedly, our focus is always on responsible lending,
and ensuring that the loans we provide are appropriate
for our customers’ circumstances, both at the point we offer
a loan but also with a view to affordability during the life of the
loan. A good example here would be how we have proactively
tightened scorecards, not because of what we see today,
but what we believe might be the adverse impacts on
affordability in the months ahead.
How are you ensuring diversity at IPF?
As an international group, our ability to understand, adapt to
and respect diversity will continue to be a core ingredient in
our continued success. My own leadership team has seven
different nationalities, and we have successfully relocated
senior colleagues across borders to bring new experiences
and gain new skills. Today, 38% of our senior managers
are female and we have a thriving womens’ network across
the Group. We are also engaged in providing opportunities
to promote greater gender diversity, which is covered
on page 45.
Do you have a plan to tackle climate change?
While recognising our carbon footprint is not as large
as many other organisations, we are committed to minimising
our impact on the environment in every way that we can.
We have used the TCFD framework to integrate climate
change into our risk management structure and processes.
This will also serve as a clear and reliable way of informing all
our stakeholders about the risks and opportunities of climate
change on our business. In 2023, we plan to progress scenario
analysis to provide greater insight on the resilience of the
Group’s strategy in different climate scenarios and identify
targets relating to climate.
Where is IPF going to be in five years?
We are a specialist business and over the coming five years
I see us working diligently to fulfil our purpose by continuing
to grow our range of products and services, expanding our
distribution, and investing to improve our customer experience
and our own efficiency. There are great opportunities to grow
within our existing markets and if the economic outlook
improves in the next two years, I would see us looking to
expand into new geographies thereafter. If we deliver on these
strategic initiatives, I see us serving somewhere in the region
of 2.5m customers in the next five years compared with
1.7m today. For my colleagues and I, that would feel like
a major achievement in our goal to build a better world
through financial inclusion.
What are your key plans for 2023?
As I look to the year ahead, we will continue to be there
to support our customers even in these uncertain times.
Our focus will be on transitioning our Polish business to the
new lower rate cap and serving more customers with our
exciting credit card offering. We will also continue the very
successful expansion of our home credit business in Mexico.
And in IPF Digital, we will be extending the reach of our mobile
wallet and expanding the new hybrid lending opportunities
that our digital and home credit businesses are partnering
on in Mexico.
Gerard Ryan
Chief Executive Officer
A strong investment proposition
IPF is a global consumer credit business delivering financial
inclusion for millions of people and having a positive impact on
society. Our growth strategy combined with market leading brands,
personal customer relationships and digital innovation position us
uniquely to take advantage of increasing demand and deliver a
RORE of between 15% and 20%.
Market leading and financially inclusive
Specialist financial services operator providing a range of
credit products and value-added services to underserved
consumers in a responsible way.
Substantial opportunities for sustainable,
long-term growth
Increasing consumer demand and a broad range of
products and distribution channels offer attractive,
sustainable growth prospects.
Effective risk management
Successful track record of managing key risks including
credit, regulation, competition and liquidity. Well-developed
risk management framework and processes aligned to
strategic objectives.
Strong financial profile
The Group is profitable, resilient and cash generative with a
robust balance sheet and strong funding position to invest in
our strategic plan and deliver growth.
Attractive, sustainable returns
Our financial model focuses on sustainable portfolio growth
to deliver a RORE of 15% to 20%, which supports a progressive
dividend payout ratio of at least 40% of earnings.
Significant future value
A great value business comprising three profitable divisions with
attractive long-term growth prospects, proven returns and higher
valuation potential.
>£1bn
profit before tax delivered since listing in 2007
>£200m
dividends paid since listing in 2007
15%–20%
target RORE
16
International Personal Finance plc
Annual Report and Financial Statements 2022
17
Strategic Report
Strategy in action
Strategy in action
We made great strides in executing our strategy, developing new products to attract more customers,
improving the customer experience and introducing new development programmes for our colleagues.
Credit card
We launched an exciting new credit card proposition
in Poland which retains the best of our home credit
instalment loan features with a card account. The credit
cards are distributed and instalments repaid through our
customer representatives so the process is familiar and
well liked by our customers. They can receive their cash
loan through their customer representative, withdraw it
from an ATM or use the card to make in-store and online
purchases up to their credit limit. All transactions need
be repaid within 11 months so our customers can keep
on track and there are no fixed fees or penalty fees
applied. As repayments are made, it opens up more
credit options for customers if they want to take
advantage of this. The credit card is valid for four years
with the credit limit reviewed annually.
10,000
credit cards issued
Expanding in Mexico
Growing the customer representative
network in Mexico is a key driver of
increasing customers and lending
in this significant growth market. In 2022,
we increased the number of agencies by
660 within or close to our existing territory.
We also expanded our geographic
footprint with the opening of a new
branch in the northwest of Mexico around
the densely populated area of Tijuana.
In this region alone our research found
there are around 1.4 million consumers
in our target segment. We began to build
the management team and customer
representative network, and are now
actively attracting new customers. We also
plan to open in Tampico located in the
east of Mexico in March 2023.
1.7m
potential consumers in our target
segment in Tijuana and Tampico
18
International Personal Finance plc
Strategic Report
Strategy in action
Strategy in action
We made great strides in executing our strategy, developing new products to attract more customers,
improving the customer experience and introducing new development programmes for our colleagues.
Credit card
We launched an exciting new credit card proposition
in Poland which retains the best of our home credit
instalment loan features with a card account. The credit
cards are distributed and instalments repaid through our
customer representatives so the process is familiar and
well liked by our customers. They can receive their cash
loan through their customer representative, withdraw it
from an ATM or use the card to make in-store and online
purchases up to their credit limit. All transactions need
be repaid within 11 months so our customers can keep
on track and there are no fixed fees or penalty fees
applied. As repayments are made, it opens up more
credit options for customers if they want to take
advantage of this. The credit card is valid for four years
with the credit limit reviewed annually.
10,000
credit cards issued
ProviGo customer app
Our new ProviGo app seeks to put customers in charge
of their finances. For the first time, customers can view
their account online, look at their balance, track receipts
of payments and see if they can access another loan or
value-added service should they wish to do so. It also
enables us to communicate directly with customers
in real time with offers and promotions we are running.
ProviGo is currently available to customers in Poland
and we intend to start to roll out the app to other
markets in 2023.
60,000
customers using ProviGo
Hybrid product offering
Retail partnership tests
Our hybrid product strategy is a perfect example of
how we can say ‘yes’ to more customers. Increasingly,
consumers want to access finance digitally, but for
a large proportion of these people their credit record is
simply not strong enough to warrant a fully digital service.
For these customers, we are now successfully providing
hybrid services in Poland and Mexico, where the initial
journey is carried out online, and the transaction
completed in many cases by a customer representative.
We have started building more points at which
consumers can access credit through retail partnerships.
In 2022, we focused on understanding the customer
journey and building our capability with test point of sale
finance for consumers in Romania and Mexico. In 2023,
we plan to extend the number of retail partners to create
additional growth momentum.
Mobile wallet
Our mobile wallet offers unique value to our segment of
consumers who are often underserved by other lenders.
The wallet is now available in three markets – Estonia,
Latvia and Lithuania – providing consumers with
bank-like facilities on their mobile and the ability to use
their revolving credit in conjunction with a payment card
to buy goods online or in stores. Looking ahead we plan
to roll out mobile wallet in Mexico.
15,000
mobile wallet users
Global development programmes
We partnered with global experts LinkedIn Learning and
Harvard University to provide personalised development
materials and the first intake of colleagues embarked on
our new Global Leaders Connect programme. We also
developed an extensive development programme to
support customer representatives to extend their careers
beyond their current roles.
See page 44 for more information.
18
International Personal Finance plc
Annual Report and Financial Statements 2022
19
Expanding in Mexico
Growing the customer representative
network in Mexico is a key driver of
increasing customers and lending
in this significant growth market. In 2022,
we increased the number of agencies by
660 within or close to our existing territory.
We also expanded our geographic
footprint with the opening of a new
branch in the northwest of Mexico around
the densely populated area of Tijuana.
In this region alone our research found
there are around 1.4 million consumers
in our target segment. We began to build
the management team and customer
representative network, and are now
actively attracting new customers. We also
plan to open in Tampico located in the
east of Mexico in March 2023.
1.7m
potential consumers in our target
segment in Tijuana and Tampico
Strategic Report
Our strategy
Delivering a strong performance
against our strategy
Group
European home credit
2022 progress against strategic priorities
2022 progress against strategic priorities
– Broadened our product offering with a new
credit card and retail partnership pilot tests.
– Launched a new credit card offering in Poland.
– Increased customers choosing hybrid credit
– Developed a cloud-based customer relationship
propositions in Poland.
management tool to improve the customer
experience, and support customer lending
and repayments.
– Embedded our new financial model into
decision-making processes. See page 30
for more information.
– Increased access to quality development
opportunities for colleagues.
– Successfully extended £169m of bank facilities
and refinanced £40m of the sterling retail bond.
Challenges
– Inflationary pressure on customers’ disposable
incomes and costs.
– Interest rate rises impacted the cost of funding.
2023 priorities
– Continue to support our customers during
challenging economic times.
– Successfully execute our strategy to support
financial inclusion and deliver further growth.
– Maintain strict control of costs and drive
operational and structural cost efficiencies.
– Began testing a retail point of sale partnership
in Romania to support new customer acquisition.
– Launched ProviGo customer mobile app in Poland.
– Extended value-added services offering including
an online education package.
Challenges
– The war in Ukraine weakened demand in the first
quarter of the year.
– Proactive tightening of credit scoring from the fourth
quarter in light of the cost-of-living crisis.
– Introduction of tighter rate cap in Poland in December
2022 and new affordability rules from May 2023.
– Temporary debt repayment moratorium in Hungary
expired in December 2022.
2023 priorities
– Transition our Polish business serving customers
with our new credit card proposition.
– Launch digital and hybrid offerings in Romania.
– Focus on customer experience.
Strategic KPIs
1.7m
Customers
51.9%
Revenue yield
60.9%
14%
Year-on-year closing
receivables growth
8.6%
Impairment rate
£77.4m
Strategic KPIs
784,000
Customers
42.5%
Revenue yield
64.3%
14%
Year-on-year closing
receivables growth
0.7%
Impairment rate
£65.6m
Cost-income ratio
Profit before tax
Cost-income ratio
Profit before tax
20
International Personal Finance plc
Strategic Report
Our strategy
Delivering a strong performance
against our strategy
Group
European home credit
Mexico home credit
IPF Digital
2022 progress against strategic priorities
2022 progress against strategic priorities
2022 progress against strategic priorities
2022 progress against strategic priorities
– Broadened our product offering with a new
credit card and retail partnership pilot tests.
– Launched a new credit card offering in Poland.
– Increased customers choosing hybrid credit
– Developed a cloud-based customer relationship
propositions in Poland.
management tool to improve the customer
experience, and support customer lending
and repayments.
– Embedded our new financial model into
decision-making processes. See page 30
for more information.
– Increased access to quality development
opportunities for colleagues.
– Successfully extended £169m of bank facilities
and refinanced £40m of the sterling retail bond.
Challenges
– Inflationary pressure on customers’ disposable
incomes and costs.
– Interest rate rises impacted the cost of funding.
2023 priorities
– Continue to support our customers during
challenging economic times.
– Successfully execute our strategy to support
financial inclusion and deliver further growth.
– Maintain strict control of costs and drive
operational and structural cost efficiencies.
– Began testing a retail point of sale partnership
in Romania to support new customer acquisition.
– Launched ProviGo customer mobile app in Poland.
– Extended value-added services offering including
an online education package.
Challenges
– The war in Ukraine weakened demand in the first
quarter of the year.
– Proactive tightening of credit scoring from the fourth
quarter in light of the cost-of-living crisis.
– Introduction of tighter rate cap in Poland in December
2022 and new affordability rules from May 2023.
– Temporary debt repayment moratorium in Hungary
expired in December 2022.
2023 priorities
– Transition our Polish business serving customers
with our new credit card proposition.
– Launch digital and hybrid offerings in Romania.
– Focus on customer experience.
– Continued strong growth momentum.
– Grew the customer representative network
by 660 agencies to maximise customer reach.
– Opened Northwest region with a potential target
market of 1.4m consumers in our segment.
– Digitised value-adding elements of the customer
journey to reduce the time taken to accept
applications and serve loans to customers.
– Began testing a retail point of sale partnership
to support new customer acquisition.
Challenges
– Covid-19 pandemic impacted operations early
in 2022.
2023 priorities
– Continue to expand geographic footprint.
– Maximise synergies with IPF Digital in Mexico.
– Extend value-added services and insurance products.
– Successfully rebuilding the receivables portfolio
post-pandemic.
– Upgraded our mobile wallet offering in Estonia
and launched it in Lithuania and Latvia.
– Increased the number of customers taking
our hybrid proposition in Mexico.
– Strong collect-out performances in Finland
and Spain where the businesses are being closed.
Challenges
– The war in Ukraine weakened demand
in the first quarter of the year.
– Proactive tightening of credit scoring from the
fourth quarter in light of the cost-of-living crisis.
– Introduction of tighter rate cap in Poland in December
2022 and new affordability rules from May 2023.
2023 priorities
– Develop mobile wallet to attract customers in Mexico.
– Improve the process by which applications lead
to credit acceptance, and further personalise
our digital service.
– Develop value-added services.
– Complete Finland and Spain collect-out operations.
Strategic KPIs
1.7m
Customers
51.9%
Revenue yield
60.9%
14%
Year-on-year closing
receivables growth
8.6%
Impairment rate
£77.4m
Strategic KPIs
784,000
Customers
42.5%
Revenue yield
64.3%
14%
Year-on-year closing
receivables growth
0.7%
Impairment rate
£65.6m
Strategic KPIs
696,000
Customers
88.2%
Revenue yield
51.1%
14%
Year-on-year closing
receivables growth
31.6%
Impairment rate
£17.7m
Strategic KPIs
253,000
Customers
45.4%
Revenue yield
57.2%
14%
Year-on year-closing
receivables growth
10.1%
Impairment rate
£8.8m
Cost-income ratio
Profit before tax
Cost-income ratio
Profit before tax
Cost-income ratio
Profit before tax
Cost-income ratio
Profit before tax
20
International Personal Finance plc
Annual Report and Financial Statements 2022
21
Strategic Report
Key performance indicators
Key performance indicators
Financial
Closing receivables
£868.8m
8
.
2
9
9
6
.
3
7
9
8
.
8
6
8
8
.
6
1
7
1
.
9
6
6
Revenue yield
51.9%
6
.
8
5
2
.
9
5
8
.
9
4
1
.
8
4
9
.
1
5
Impairment rate
8.6%
6
.
8
1
2
.
6
1
4
.
5
1
6
.
8
9
.
4
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
What we measure: The closing
amounts receivable from customers
translated at constant exchange rates.
Why it’s important: This enables
changes in customer receivables to be
compared on a consistent basis, which
is important because it is a key driver of
revenue growth.
What we measure: Revenue divided by
average gross receivables.
Why it’s important: This metric reflects
the revenue we earn from receivables
and the amounts charged to our
customers. It is an important measure
in ensuring our pricing is fair and
appropriate to deliver our target returns.
How we performed: Closing
receivables increased by 14% in 2022
driven by excellent execution of our
strategy to rebuild post-pandemic.
Growth in closing receivables will be
relatively modest in 2023 as we transition
the Polish business to meet the
requirements of the new lower rate cap.
How we performed: Revenue yield
strengthened in 2022 reflecting stronger
growth in Mexico, improved repayment
performance, selective price increases
and a reduction in promotional activity.
In 2023, we expect revenue yield to
improve towards our medium-term
target of 53% to 56%.
What we measure: Impairment
as a percentage of average gross
receivables before impairment provision
Why it’s important: Profitability is
maximised by optimising the balance
between growth and credit quality.
Impairment rate helps us assess the
amount of principal we are unable
to collect.
How we performed: The Group
impairment rate remains lower than
normal benefiting from improved credit
quality, strong debt sale activity and
central collections. We expect the rate
to rise to around 14% to 16% as we
regrow the business and the Covid-19
period flows out of the calculations.
Cost-income ratio
60.9%
6
.
7
6
9
.
0
6
4
.
4
5
7
.
2
5
6
.
8
5
Pre-exceptional return
on required equity
14.6%
6
.
9
1
3
.
8
1
1
.
5
1
6
.
4
1
)
2
.
6
1
(
Pre-exceptional return
on equity
11.5%
3
.
8
1
5
.
6
1
4
.
1
1
5
.
1
1
)
0
.
3
1
(
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
What we measure: The direct expenses
of running the business including
customer representatives’ commission
as a percentage of revenue.
Why it’s important: To ensure that
we focus on running our business in
the most efficient manner because
the cost-income ratio is a key driver
of profitability.
How we performed: The ratio improved
as we maintained stringent focus on
costs while investing in growth. We are
continuing to drive efficiencies through
technology and expect the ratio to
improve within a range of 52% to 54%
in the medium term.
What we measure: RORE is pre-exceptional profit after tax divided by average
required equity of 40% of receivables. ROE is pre-exceptional profit after tax
divided by average equity.
Why it’s important: RORE and ROE are good measures of overall returns
for shareholders. We target 15% to 20% as this is a return which we consider
to be sustainable and balances the needs of all our stakeholders.
How we performed: RORE and ROE are lower than our target range
of 15% to 20%. ROE is lower than RORE due to the additional capital held
above our target level of 40%. We expect both measures to reduce modestly
in 2023 as we transition the Polish business to the new lower TCC cap but
expect to rebuild in 2024 and deliver our target returns in 2025.
22
International Personal Finance plc
Strategic Report
Key performance indicators
Financial
£868.8m
8
.
2
9
9
6
.
3
7
9
8
.
8
6
8
8
.
6
1
7
1
.
9
6
6
Key performance indicators
Closing receivables
Revenue yield
Impairment rate
51.9%
6
.
8
5
2
.
9
5
8
.
9
4
1
.
8
4
9
.
1
5
8.6%
6
.
8
1
2
.
6
1
4
.
5
1
6
.
8
9
.
4
What we measure: The closing
What we measure: Revenue divided by
What we measure: Impairment
amounts receivable from customers
average gross receivables.
translated at constant exchange rates.
as a percentage of average gross
receivables before impairment provision
Why it’s important: This metric reflects
Why it’s important: This enables
the revenue we earn from receivables
Why it’s important: Profitability is
changes in customer receivables to be
and the amounts charged to our
maximised by optimising the balance
compared on a consistent basis, which
customers. It is an important measure
between growth and credit quality.
is important because it is a key driver of
in ensuring our pricing is fair and
Impairment rate helps us assess the
revenue growth.
appropriate to deliver our target returns.
amount of principal we are unable
How we performed: Closing
How we performed: Revenue yield
to collect.
receivables increased by 14% in 2022
strengthened in 2022 reflecting stronger
How we performed: The Group
driven by excellent execution of our
growth in Mexico, improved repayment
impairment rate remains lower than
strategy to rebuild post-pandemic.
performance, selective price increases
normal benefiting from improved credit
Growth in closing receivables will be
and a reduction in promotional activity.
quality, strong debt sale activity and
relatively modest in 2023 as we transition
In 2023, we expect revenue yield to
central collections. We expect the rate
the Polish business to meet the
improve towards our medium-term
to rise to around 14% to 16% as we
requirements of the new lower rate cap.
target of 53% to 56%.
regrow the business and the Covid-19
period flows out of the calculations.
Pre-exceptional return
Cost-income ratio
60.9%
6
.
7
6
9
.
0
6
4
.
4
5
7
.
2
5
6
.
8
5
Pre-exceptional return
on required equity
14.6%
6
.
9
1
3
.
8
1
1
.
5
1
6
.
4
1
)
2
.
6
1
(
on equity
11.5%
3
.
8
1
5
.
6
1
4
.
1
1
5
.
1
1
)
0
.
3
1
(
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
What we measure: The direct expenses
What we measure: RORE is pre-exceptional profit after tax divided by average
of running the business including
required equity of 40% of receivables. ROE is pre-exceptional profit after tax
customer representatives’ commission
divided by average equity.
as a percentage of revenue.
Why it’s important: To ensure that
for shareholders. We target 15% to 20% as this is a return which we consider
we focus on running our business in
to be sustainable and balances the needs of all our stakeholders.
Why it’s important: RORE and ROE are good measures of overall returns
the most efficient manner because
the cost-income ratio is a key driver
of profitability.
How we performed: RORE and ROE are lower than our target range
of 15% to 20%. ROE is lower than RORE due to the additional capital held
above our target level of 40%. We expect both measures to reduce modestly
How we performed: The ratio improved
in 2023 as we transition the Polish business to the new lower TCC cap but
as we maintained stringent focus on
expect to rebuild in 2024 and deliver our target returns in 2025.
costs while investing in growth. We are
continuing to drive efficiencies through
technology and expect the ratio to
improve within a range of 52% to 54%
in the medium term.
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
8
1
9
1
0
2
1
2
2
2
Non-financial
Customers
1.7m
1
0
3
,
2
9
0
1
,
22
8
6
,
1
7
2
7
,
1
3
3
7
,
1
Employee and customer representative turnover and stability*
Employees
Customer representatives
6
47
77
6
8
3
2
3
9
2
1
8
4
8
2
2
2
2
3
6
2
5
5
6
0
5
3
7
2
7
7
6
9
54
4
0
4
MAT%
Stability %
What we measure: Total number of
customers across the Group.
Why it’s important: Customer numbers
demonstrate level of financial inclusion
and our scale in our markets.
How we performed: In 2022, customer
numbers increased by 0.3%. Excluding
Finland and Spain where we are
collecting out the businesses,
customer growth in 2022 was 1.9%.
What we measure: Moving annual total
(MAT) is the total leavers in the last
12 months divided by the average
headcount in the same period. Stability
is the number of employees with more
than 12 months’ service compared
to the corresponding number
12 months ago.
Why it’s important: Low and stable MAT
correlates with providing high levels of
customer service and strong employee
and customer representative
engagement. High levels of stability
indicate that skills and experience are
being retained, and support the
maintenance of strong working
relationships, which in turn supports
high levels of customer service.
How we performed: Customer
representative MAT continued to
improve and stability was broadly
constant driven by quality recruitment
and development programmes to build
their agency with us. The significant
rightsizing we undertook during the
Covid-19 pandemic in 2020 impacted
employee MAT but we saw stabilisation
in 2022 and expect it to improve in 2023.
Employee stability continued to improve
to high levels in 2022 indicating good
colleague engagement, despite there
being an active labour market.
Community investment**
£1.1m
Customer recommendations
(Net Promoter Score)
69
What we measure: The proportion of customers recommending our products to
others minus those who would not.
Why it’s important: Net Promoter Score is a measurement of customer loyalty and
satisfaction which are important drivers of future growth.
How we performed: Our Group Net Promoter Score at December 2022 was 69,
and in line with the position in 2021. Our focus on 2023 will be on maintaining this
strong score.
What we measure: Total value of our
contribution to supporting communities
(cash donations, in kind donations, and
colleague volunteering).
Why it’s important: This investment
demonstrates our contribution to the
communities where we live and work.
How we performed: In 2022, we
invested £1.1m in our communities which
was focused on financial education,
our flagship global initiative ‘Invisibles’
and the response to supporting people
displaced by the war in Ukraine. Our
focus in 2023 will be the expanding the
Invisibles programme in our markets.
* Employee and customer representative turnover and stability has replaced retention in our non-financial reporting. Together they better determine
the effectiveness of our people strategy and how well we serve our customers.
** Community investment is an integral part of purpose management reporting across the Group and has been included in our non-financial reporting
for the first time.
22
International Personal Finance plc
Annual Report and Financial Statements 2022
23
Strategic Report
Operational review
Group performance review
We made further good progress against our strategy in 2022, delivering strong growth and a very good financial
performance. Profit before tax increased by 14.3% to £77.4m and all our business divisions contributed profitable
performances to the result.
Group performance
We delivered strong growth and a very good financial
performance across the Group as we continued to execute
well against our strategy in 2022. Profit before tax of £77.4m
(2021: £67.7m) shows growth of 14.3% and reflects a strong
recovery in lending post Covid-19 and a very good operational
performance, despite the challenges of the macroeconomic
landscape. Excluding the benefit of Covid-19 impairment
provision releases of £32.0m from 2021 reported profits,
underlying profit before tax grew 117% in 2022. An analysis
of profits between our three trading divisions is set out below:
We play an important role in delivering financial inclusion,
enabling people with limited borrowing options to access
regulated credit in a responsible way. The successful execution
of our growth strategy to rescale the business following the
pandemic resulted in customer lending growth of 14% (at
CER), driven by strong performances from all three divisions.
This growth was achieved despite the Covid-19 restrictions
earlier in the year, the impact of the war in Ukraine which
resulted in softer demand in the first quarter of 2022 in Europe,
and the challenging macroeconomic landscape which
subsequently unfolded across the globe. Demand improved
though the remainder of the year, although we continue to
European home credit
Mexico home credit
IPF Digital
Central costs
Profit before taxation
2021
Change
2022
£m
65.6
17.7
8.8
(14.7)
77.4
Reported
£m
54.5
18.4
8.7
(13.9)
67.7
Underlying*
£m
33.9
10.7
5.0
(13.9)
35.7
Reported
%
20.4
(3.8)
1.1
(5.8)
14.3
Underlying*
%
93.5
65.4
76.0
(5.8)
116.8
* Prior to Covid-19 impairment provision releases of £32m in 2021 which have not been repeated in 2022.
The detailed income statement of the Group, together with associated KPIs is set out below:
Customer numbers (000s)
Customer lending
Closing net receivables
Revenue
Impairment
Revenue less impairment
Costs
Interest expense
Reported profit before taxation
Reported profit before taxation
Covid-19 provision releases
Underlying profit before taxation
Revenue yield
Impairment rate
Cost-income ratio
Pre-exceptional EPS1
Pre-exceptional ROE1
Pre-exceptional RORE1,2
1. Prior to an exceptional tax credit of £10.5m in 2022.
2. Based on required equity to receivables of 40%.
Change
£m
Change
%
Change
at CER
%
13.7
14.2
15.1
(70.4)
8.1
(4.4)
(26.8)
6
144.3
152.0
96.8
(50.5)
46.3
(22.5)
(14.1)
9.7
9.7
32.0
41.7
0.3
14.7
21.2
17.6
(89.9)
9.4
(6.1)
(26.1)
14.3
14.3
n/a
116.8
2022
£m
1,733
1,126.4
868.8
645.5
(106.7)
538.8
2021
£m
1,727
982.1
716.8
548.7
(56.2)
492.5
(393.3)
(370.8)
(54.0)
67.7
67.7
(32.0)
35.7
(68.1)
77.4
77.4
–
77.4
51.9%
8.6%
60.9%
20.8p
11.5%
14.6%
48.1%
3.8 ppts
4.9%
(3.7) ppts
67.6%
18.8p
11.4%
15.1%
6.7 ppts
2.0 ppts
0.1 ppts
(0.5) ppts
24
International Personal Finance plc
Strategic Report
Operational review
Group performance review
We made further good progress against our strategy in 2022, delivering strong growth and a very good financial
performance. Profit before tax increased by 14.3% to £77.4m and all our business divisions contributed profitable
performances to the result.
Group performance
We delivered strong growth and a very good financial
performance across the Group as we continued to execute
well against our strategy in 2022. Profit before tax of £77.4m
(2021: £67.7m) shows growth of 14.3% and reflects a strong
recovery in lending post Covid-19 and a very good operational
performance, despite the challenges of the macroeconomic
landscape. Excluding the benefit of Covid-19 impairment
provision releases of £32.0m from 2021 reported profits,
underlying profit before tax grew 117% in 2022. An analysis
of profits between our three trading divisions is set out below:
We play an important role in delivering financial inclusion,
enabling people with limited borrowing options to access
regulated credit in a responsible way. The successful execution
of our growth strategy to rescale the business following the
pandemic resulted in customer lending growth of 14% (at
CER), driven by strong performances from all three divisions.
This growth was achieved despite the Covid-19 restrictions
earlier in the year, the impact of the war in Ukraine which
resulted in softer demand in the first quarter of 2022 in Europe,
and the challenging macroeconomic landscape which
subsequently unfolded across the globe. Demand improved
though the remainder of the year, although we continue to
* Prior to Covid-19 impairment provision releases of £32m in 2021 which have not been repeated in 2022.
The detailed income statement of the Group, together with associated KPIs is set out below:
European home credit
Mexico home credit
IPF Digital
Central costs
Profit before taxation
Customer numbers (000s)
Customer lending
Closing net receivables
Revenue
Impairment
Revenue less impairment
Costs
Interest expense
Reported profit before taxation
Reported profit before taxation
Covid-19 provision releases
Underlying profit before taxation
Revenue yield
Impairment rate
Cost-income ratio
Pre-exceptional EPS1
Pre-exceptional ROE1
Pre-exceptional RORE1,2
1. Prior to an exceptional tax credit of £10.5m in 2022.
2. Based on required equity to receivables of 40%.
2021
Change
Reported
Underlying*
Reported
Underlying*
Change
Change
Change
at CER
%
%
93.5
65.4
76.0
(5.8)
116.8
13.7
14.2
15.1
(70.4)
8.1
(4.4)
(26.8)
2022
£m
65.6
17.7
8.8
(14.7)
77.4
2022
£m
1,733
1,126.4
868.8
645.5
(106.7)
538.8
(68.1)
77.4
77.4
–
77.4
51.9%
8.6%
60.9%
20.8p
11.5%
14.6%
£m
54.5
18.4
8.7
(13.9)
67.7
2021
£m
1,727
982.1
716.8
548.7
(56.2)
492.5
(54.0)
67.7
67.7
(32.0)
35.7
£m
33.9
10.7
5.0
(13.9)
35.7
£m
6
144.3
152.0
96.8
(50.5)
46.3
(22.5)
(14.1)
9.7
9.7
32.0
41.7
%
20.4
(3.8)
1.1
(5.8)
14.3
%
0.3
14.7
21.2
17.6
(89.9)
9.4
(6.1)
(26.1)
14.3
14.3
n/a
116.8
48.1%
3.8 ppts
4.9%
(3.7) ppts
67.6%
18.8p
11.4%
15.1%
6.7 ppts
2.0 ppts
0.1 ppts
(0.5) ppts
(393.3)
(370.8)
take a conservative approach to lending and tightened
our credit criteria across most of our geographies as a
precautionary measure due to the significant increase
in the cost of living for our customers. We remain very mindful
of the impact of inflation on disposable incomes, particularly
the significant increases in food, fuel and utility prices, and will
continue to manage our credit settings to match the situation
in each of our markets.
Our closing net receivables portfolio increased by £152m
(14% at CER) to £869m at the end of 2022 as we continued
to successfully execute our rebuild strategy. All three divisions
delivered strong receivables growth, despite tightened credit
criteria. As communicated at our third quarter update,
we expect overall Group receivables growth in 2023 to be
relatively modest as we transition our Polish business to the
new lower TCC cap.
The Group’s annualised revenue yield strengthened from
48.1% in 2021 to 51.9% in 2022, reflecting a combination of four
factors: (i) the stronger growth in Mexico home credit which
carries a higher yield; (ii) the reduction in customer accounts
in stage 3 (which do not attract as much interest under IFRS 9)
due to improved repayment performance post Covid-19; (iii)
selective price increases, mainly in European home credit; and
(iv) a reduction in promotional activity. These factors have
been partially offset by an increase in rebates provided to
customers in Poland. Based on our current product set and
regulation, in the medium term, we expect the Group revenue
yield to increase to within a range of 53% to 56% as Mexico
home credit grows to represent a larger proportion of the
Group’s receivables book.
Having close relationships with our customers encourages a
strong repayment ethos and is a core strength of the business.
Combined with the responsible lending decisions we take
when serving them, the quality of our loan portfolio continues
to be good in all divisions. Customer repayments remained
robust driven by solid operational execution, and this resulted
in an annualised impairment rate of 8.6% (2021: 4.9%). This
metric continues to be lower than pre-Covid-19 levels and has
benefited from improved credit quality and strong execution
on debt sale activity and post-charge off recoveries, delivering
c. £15m more customer repayments than 2021. We expect our
Group annualised impairment rate to rise to around 14% to
16% as we regrow the business and the Covid-19 period flows
out of the calculations. Our balance sheet remains robust
against the combined impact of cost-of-living increases and
the aftereffects of Covid-19, with an impairment coverage ratio
of 36.4% at the end of 2022 (2021: 37.8%). This compares with
a pre-Covid-19 ratio of 33.5% at the end of 2019.
We continued to maintain a stringent focus on costs as we
grew the business and as a result, the annualised cost-income
ratio improved by 6.7 ppts year on year to 60.9% in 2022
(2021: 67.6%). We are continuing to drive process efficiency
through investing in technology and we expect the cost-
income ratio to reduce to within a range of 52% to 54% over
the medium term as we achieve greater scale.
Reported EPS was 25.6p per share (2021: 18.8p), up 36% on
2021. Excluding an exceptional tax credit of £10.5m in 2022,
EPS growth was 11%.
Our pre-exceptional RORE for 2022 of 14.6% (2021: 15.1%) is
close to the lower threshold of our target level of 15% to 20%,
reflecting the strong progress made in the year on rebuilding
the Group following Covid-19. The Group’s pre-exceptional
“Based on the leadership’s successful
execution of our growth strategy the
Board is proposing a final dividend of
9.2 pence per share, resulting in
full-year dividend growth of 15%.”
ROE, based on actual equity, was 11.5% in 2022, up from 11.4%
in 2021. We anticipate Group returns moderating in 2023 as we
transition the Polish business to the new lower TCC cap but
expect to rebuild in 2024 and deliver our target returns in 2025.
A strategy for growth
Our growth strategy focuses on delivering excellent service
to our existing loyal customers and increasing our number
of compelling product choices and channels to attract the
next generation of consumers. Over the last 25 years we have
built a family of lending products ranging from customer
representative-managed loans through to digital instalment
loans, revolving credit lines and mobile wallet products.
We deploy a range of products across our nine markets
tailored to meet both the preferences of our target customers
and local regulatory requirements. As well as our credit
products, we also provide additional value to our customers
through the provision of customised insurances at much lower
prices than our customers can obtain themselves.
We continued to successfully execute our strategy to support
financial inclusion and deliver growth throughout 2022 and,
as a result of our deep understanding of their needs,
we remain in a strong position to support our customers
even in these more difficult times.
In addition to navigating the impacts of the war in Ukraine and
the resulting cost-of-living crisis in 2022, another significant
hurdle arose with the introduction of a significantly lower,
non-interest rate cap in Poland which was first proposed six
years ago, and eventually came into force in December 2022.
The new total cost of credit (TCC) legislation reduced the
maximum non-interest fees that can be charged on a loan
to 45% of the loan value, from 100% previously. Unaffected
by these proposals is the ability for consumer credit lenders
in Poland to continue to charge interest (currently 20.5% per
annum), in addition to non-interest charges. The new
legislation also includes new affordability rules and a
requirement for nonbank financial institutions to be supervised
by the Polish financial supervision authority, the Komisja
Nadzoru Finansowego (KNF), which come into force
in May 2023 and January 2024 respectively
To enable us to carry on serving our consumer segment
in Poland, we have evolved our product offering to meet
changing consumer needs and to prepare for the introduction
of the new lower TCC. We are pleased with the progress we
have made in diversifying our product range, which includes
digital instalment loans, an expanded range of value-added
services and the launch of a new credit card product in the
third quarter of 2022. Developed specifically for our consumer
segment, the credit card combines many features of an
instalment loan with the added flexibility of a credit card.
Our customer representatives remain at the core of our
relationship with customers and will continue to visit their
homes regularly to provide service and collect repayments.
We have issued almost 10,000 cards and, encouragingly, the
rollout is tracking ahead of our plans.
24
International Personal Finance plc
Annual Report and Financial Statements 2022
25
Strategic Report
Operational review continued
We also made further good progress throughout the Group
against our other strategic objectives in 2022. In Mexico, where
we are expanding our geographic footprint to capture the
significant customer and lending growth potential in this
market, we opened in Tijuana in northwest Mexico in July 2022,
and will commence operations in Tampico located in the east
of Mexico from March 2023. Our research indicates a target
market of 1.7m consumers in our segment in these regions.
We also increased our customer representative network
by 660 agencies in Mexico, within or close to our existing
geographic footprint.
In order to support people who apply for a digital loan but
whose credit record is not strong enough to warrant a fully
digital service, we increased the number of customers taking
advantage of our hybrid product offering – a unique blend
of customer representative and digital channels available in
Poland and Mexico. Our mobile wallet is now available in three
markets – Estonia, Latvia and Lithuania, and our retail point
of sale partnership tests continue in Romania and Mexico.
Following a successful test in Romania, we also invested
in and began the rollout of a single, cloud-based customer
relationship management (CRM) tool to improve the customer
experience, as well as laying the foundation for future digital
channels.
Environment, social and governance (ESG)
We have a very strong social purpose and are committed
not only to supporting our customers by providing affordable
and transparent credit in a responsible way but also striving
to have a positive effect on all our stakeholders as we invest
in promoting financial inclusion, developing the capabilities
of our team who serve millions of customers and implementing
our climate change strategy.
See pages 40 to 56 for more information
Regulatory update
As previously reported, a proposal to reduce the non-interest
cost of credit cap in Poland was enacted in December 2022.
The new legislation also includes new affordability rules which
become effective in May 2023 and all non-bank financial
institutions will be supervised by the Polish financial supervision
authority, the KNF, from January 2024. See pages 16 and 25 for
more information.
There have been no material updates on the EU’s review of the
Consumer Credit Directive or a revised draft law imposing
a total cost of credit cap in Romania, details of which were
included in our 2022 half-year results statement. We expect
that a final compromise proposal on the Consumer Credit
Directive will be published later in 2023.
In Hungary, the temporary Covid-19 debt repayment
moratorium expired on 31 December 2022.
Outlook
Everyday we aim to provide underserved consumers with
access to simple, personal, and affordable loans and
insurances to help and protect them and their families.
There is significant demand for affordable credit within
our demographic and we see substantial and sustainable
long-term growth opportunities through meeting the needs
of more consumers with an increased choice of products
and distribution channels.
2022 represented a very good year of operational execution
and strong recovery following the Covid-19 pandemic.
Both our European and Mexico home credit businesses are
delivering our target returns of a RORE of around 20% whilst
also delivering strong growth. IPF Digital is also very well placed
to rebuild scale and deliver our target returns in the medium
term. It is very pleasing that our digital businesses in Mexico
and Australia both delivered profit contributions for the first
time in 2022.
In 2023, our focus will be on transitioning our Polish business to
the new lower TCC, rolling out mobile wallet and continuing
the very successful territory extension plan in Mexico home
credit. We will also maintain strict control of costs and we see
further opportunities to drive operational and structural cost
efficiencies.
We have a strong balance sheet and robust funding position
with headroom on our funding facilities to support our business
plans into 2024. As previously outlined, we expect overall
Group receivables growth in 2023 to be more modest and our
returns to moderate as we transition the Polish business under
the new lower TCC. We are very encouraged by the roll-out of
the new credit card which is tracking above our initial
expectations, and we remain focused on rebuilding returns in
2024 and then delivering target returns of 15% to 20% from
2025 onwards.
All three business divisions have started 2023 well and we have
seen no discernible impact on customer demand or
repayment behaviour from the increases in the cost of living.
Notwithstanding this, we continue to adopt a cautious
approach to credit. We have a strong track record as a
resilient business through economic cycles and are well
positioned to respond quickly if we see any material changes
while continuing to support our customers through more
difficult times.
26
International Personal Finance plc
Strategic Report
Operational review continued
We also made further good progress throughout the Group
Outlook
against our other strategic objectives in 2022. In Mexico, where
we are expanding our geographic footprint to capture the
significant customer and lending growth potential in this
market, we opened in Tijuana in northwest Mexico in July 2022,
and will commence operations in Tampico located in the east
of Mexico from March 2023. Our research indicates a target
market of 1.7m consumers in our segment in these regions.
We also increased our customer representative network
by 660 agencies in Mexico, within or close to our existing
geographic footprint.
In order to support people who apply for a digital loan but
whose credit record is not strong enough to warrant a fully
digital service, we increased the number of customers taking
advantage of our hybrid product offering – a unique blend
of customer representative and digital channels available in
Poland and Mexico. Our mobile wallet is now available in three
markets – Estonia, Latvia and Lithuania, and our retail point
of sale partnership tests continue in Romania and Mexico.
Following a successful test in Romania, we also invested
in and began the rollout of a single, cloud-based customer
experience, as well as laying the foundation for future digital
channels.
Environment, social and governance (ESG)
We have a very strong social purpose and are committed
not only to supporting our customers by providing affordable
and transparent credit in a responsible way but also striving
to have a positive effect on all our stakeholders as we invest
in promoting financial inclusion, developing the capabilities
of our team who serve millions of customers and implementing
our climate change strategy.
See pages 40 to 56 for more information
Regulatory update
Everyday we aim to provide underserved consumers with
access to simple, personal, and affordable loans and
insurances to help and protect them and their families.
There is significant demand for affordable credit within
our demographic and we see substantial and sustainable
long-term growth opportunities through meeting the needs
of more consumers with an increased choice of products
and distribution channels.
2022 represented a very good year of operational execution
and strong recovery following the Covid-19 pandemic.
Both our European and Mexico home credit businesses are
delivering our target returns of a RORE of around 20% whilst
also delivering strong growth. IPF Digital is also very well placed
to rebuild scale and deliver our target returns in the medium
term. It is very pleasing that our digital businesses in Mexico
and Australia both delivered profit contributions for the first
time in 2022.
In 2023, our focus will be on transitioning our Polish business to
the new lower TCC, rolling out mobile wallet and continuing
credit. We will also maintain strict control of costs and we see
further opportunities to drive operational and structural cost
efficiencies.
We have a strong balance sheet and robust funding position
with headroom on our funding facilities to support our business
plans into 2024. As previously outlined, we expect overall
Group receivables growth in 2023 to be more modest and our
returns to moderate as we transition the Polish business under
the new lower TCC. We are very encouraged by the roll-out of
the new credit card which is tracking above our initial
expectations, and we remain focused on rebuilding returns in
2024 and then delivering target returns of 15% to 20% from
2025 onwards.
All three business divisions have started 2023 well and we have
relationship management (CRM) tool to improve the customer
the very successful territory extension plan in Mexico home
As previously reported, a proposal to reduce the non-interest
seen no discernible impact on customer demand or
cost of credit cap in Poland was enacted in December 2022.
repayment behaviour from the increases in the cost of living.
The new legislation also includes new affordability rules which
Notwithstanding this, we continue to adopt a cautious
become effective in May 2023 and all non-bank financial
approach to credit. We have a strong track record as a
institutions will be supervised by the Polish financial supervision
resilient business through economic cycles and are well
authority, the KNF, from January 2024. See pages 16 and 25 for
positioned to respond quickly if we see any material changes
more information.
while continuing to support our customers through more
difficult times.
There have been no material updates on the EU’s review of the
Consumer Credit Directive or a revised draft law imposing
a total cost of credit cap in Romania, details of which were
included in our 2022 half-year results statement. We expect
that a final compromise proposal on the Consumer Credit
Directive will be published later in 2023.
In Hungary, the temporary Covid-19 debt repayment
moratorium expired on 31 December 2022.
European home credit
European home credit performed very well in 2022, delivering a profit before tax of £65.6m (2021: £54.5m)
up 20.4%, reflecting strong execution against our recovery plan. Excluding the benefit of Covid-19 impairment
provision releases of £20.6m from 2021 reported profits, underlying profit before tax grew 93.5% in 2022.
2022
£m
2021
£m
Change
£m
Change
%
Change
at CER
%
Customer numbers
(000s)
784
810
(26)
(3.2)
Customer lending
637.0
599.2
Closing net receivables
501.0
425.9
37.8
75.1
6.3
17.6
9.9
14.4
Revenue
Impairment
Revenue less
impairment
Costs
317.5
284.7
32.8
11.5
14.8
(5.2)
1.6
(6.8)
(425.0)
(533.3)
Interest expense
(42.8)
(34.0)
312.3
286.3
(203.9)
(197.8)
26.0
(6.1)
(8.8)
9.1
12.5
(3.1)
(5.8)
(25.9)
(30.5)
Reported profit
before taxation
Reported profit
before taxation
Covid-19 provision
releases
Underlying profit
before taxation
65.6
54.5
11.1
20.4
65.6
54.5
11.1
20.4
–
(20.6)
20.6
n/a
65.6
33.9
31.7
93.5
Revenue yield
42.5%
40.2%
2.3 ppts
Impairment rate
0.7%
(0.3%) (1.0) ppts
Cost-income ratio
64.3%
69.5%
5.2 ppts
Pre-exceptional RORE
21.3%
20.7%
0.6 ppts
Despite the challenging trading environment in Europe and
ongoing concerns about the war in Ukraine, we delivered a 10%
increase in customer lending in 2022. This was despite a decline
in lending of 1.6% in the first quarter of the year. This strong
performance reflects steady growth in demand for credit from
the second quarter onwards, and a very good operational
performance in all four markets despite continued tight credit
standards and the increase in the costs of living for consumers.
Customer numbers reduced modestly by 3% to 784,000, reflecting
the weaker demand during the first quarter and our decision to
proactively tighten our credit settings for consumers with higher
credit risk profiles as a precautionary measure in the fourth
quarter of the year. Customer repayment performance in the
early months of 2023 remains robust.
Closing net receivables grew by 14% (at CER) to £501m, reflecting
the strong growth in customer lending. This, in turn, supported
revenue growth of 15% (at CER). The revenue yield improved from
40.2% to 42.5%, reflecting: (i) the reduction in customer accounts
in stage 3 (which do not attract as much interest under IFRS 9)
due to improved repayment performance post Covid-19; and (ii)
actions to bolster the revenue yield, including modest price
increases in all four countries and reduced promotional activity.
These positive impacts to the yield were partly offset by the impact
of changes in rebates in Poland which means that we refund
more of the service charge back to customers when they repay
early (c. £12m impact in 2022).
Customer repayment performance during the year was strong
which, together with tight credit standards, delivered an
impairment rate of 0.7%, up from a credit of 0.3% in 2021. The
2021 metric benefited from Covid-19 provision releases of £20.6m
and, excluding this provision release the metric would have been
2.5%. The underlying improvement in the year reflects improved
credit quality and strong execution on debt sale and centralised
post-charge off recoveries which delivered approximately £15m
more in customer repayments than the relatively low level
achieved in 2021. We will continue to maintain tight credit
standards in light of the ongoing uncertainty regarding the
cost-of-living crisis.
The cost-income ratio showed a marked reduction of 5.2 ppts
year on year to 64.3% (2021: 69.5%), reflecting the growth in
lending and continued tight cost control across each of our
businesses. We continue to drive more efficient processes and
deliver greater synergies across our four countries, including
through the deployment of technology.
The pre-exceptional RORE in European home credit strengthened
from 20.7% in 2021 to 21.3% in 2022, as a result of strong growth,
a sound impairment performance and tight control of costs.
This is in line with the Group’s expected returns from each
of our divisions. We expect European home credit returns
to be at a lower level in 2023 and 2024 as we transition
our Polish business to the new lower TCC.
In advance of the new lower TCC in Poland being enacted in
December 2022 and as part of our strategy to enhance our
product offering to existing and new customers, we launched our
first credit card proposition in Poland. The new offering features a
revolving credit limit and credit card that provides greater flexibility
to our customers who can use it for both online and offline
transactions. Funds can be withdrawn from ATMs or disbursed
through customer representatives, and it is envisaged that
repayments will, in the vast majority of cases, be collected by a
customer representative, thus retaining the unique relationship
they have with their customers. We have issued almost 10,000
cards to customers and expect to build the new portfolio to a
broadly similar customer base that we have always served over
the next two to three years. We expect the receivables book in
Poland to reduce by c. 25% in 2023, resulting in an overall decline
in European home credit receivables, before substantially
recovering through 2024. We estimate that the impact of the
transition to our credit card product will reduce European home
credit profits by between £15m to £20m in each of 2023 and 2024,
after which the Polish business and European home credit will
return to delivering our target returns of approximately 20% RORE.
More widely in European home credit, we will continue to expand
our remote digital offering in the Czech Republic and examine
the feasibility of a digital offering wherever we have a home credit
business. We will also continue to closely monitor the impact of
the macroeconomic uncertainty on customers’ disposable
incomes and their demand for credit, and will continue to
maintain our strong credit standards.
26
International Personal Finance plc
Annual Report and Financial Statements 2022
27
Strategic Report
Operational review continued
Mexico home credit
Mexico home credit delivered strong growth and a very good operational performance, reporting profit before
tax of £17.7m (2021: £18.4m). Excluding the benefit of Covid-19 impairment provision releases of £7.7m in 2021,
underlying profit before tax grew 65.4%.
2022
£m
2021
£m
Change
£m
Change
%
Change
at CER
%
Customer numbers
(000s)
696
654
Customer lending
257.4
194.2
Closing net receivables
158.5
117.6
42
63.2
40.9
6.4
32.5
34.8
16.8
14.2
Revenue
Impairment
Revenue less
impairment
Costs
210.9
146.0
64.9
44.5
27.4
(75.5)
(33.8)
(41.7)
(123.4)
(91.6)
135.4
112.2
23.2
20.7
7.3
(107.8)
(87.2)
(20.6)
(23.6)
(10.7)
Interest expense
(9.9)
(6.6)
(3.3)
(50.0)
(32.0)
Reported profit
before taxation
Reported profit
before taxation
Covid-19 provision
releases
Underlying profit
before taxation
17.7
18.4
(0.7)
(3.8)
17.7
18.4
(0.7)
(3.8)
–
(7.7)
7.7
n/a
17.7
10.7
7.0
65.4
Revenue yield
88.2%
81.5%
6.7 ppts
Impairment rate
31.6%
18.9% (12.7) ppts
Cost-income ratio
51.1%
59.7%
8.6 ppts
Pre-exceptional RORE
19.2%
27.1% (7.9%) ppts
Mexico home credit is delivering strong returns in a market
with high demand for credit and significant growth potential.
Our growth strategy to capture Mexico’s potential centres
on increasing penetration within our existing footprint and
extending into new regions. We are also improving the
customer experience and leveraging synergies with IPF Digital.
We opened 660 new agencies in 2022 within or close to our
current territory and launched a new region in the Northwest
of Mexico (Tijuana). We will also open a new region in
Tampico in March 2023. The investments we made in
expanding our reach together with good customer demand
supported a 17% increase (at CER) in customer lending year
on year and a 6% rise in customers to 696,000.
Closing net receivables increased by 14% (at CER) to £158.5m
which drove a significant increase in revenue of 27% year on
year (at CER). The revenue yield improved from 81.5% in 2021
to a more normalised level of 88.2% in 2022, reflecting the
reduction in customers in stage 3 which attract less interest
under IFRS 9. During the peak of Covid-19, approximately
50% of customers were in stage 3 compared with just under
30% at 2022.
At the same time as delivering significant growth,
we continued to maintain robust customer repayments.
The impairment rate increased by 12.7 ppts to 31.6% year
on year reflecting the impact of IFRS 9 on a strongly growing
receivables book as well as Covid-19 provisions released
in 2021 no longer being included in the calculation
(2021: £7.7m). The rate was marginally above our target
level for Mexico home credit of approximately 30%.
Customer repayments in January 2023 have been strong
and we expect to bring the impairment rate down to target
levels in 2023.
In line with our growth strategy, we continued to invest in
expanding our customer representative network and
geographic footprint into the Northwest of Mexico which
resulted in costs in 2022 increasing by 10.7% (at CER). However,
the cost-income ratio improved by 8.6 ppts to 51.1% year on
year (2021: 59.7%) demonstrating the benefit of operational
leverage in this growing business and good cost control.
Mexico home credit delivered a pre-exceptional RORE of 19.2%
(2021: 27.1%), only marginally below our upper target of 20%,
despite delivering significant growth and opening a new
region in Tijuana. Investing in sustainable growth whilst
maintaining target returns remains our key focus.
Our Mexico home credit business offers very exciting and
significant long-term prospects. By successfully delivering
on our strategy, we will continue to deliver sustainable
growth to ensure consistent returns. We will enhance territory
management to maximise customer reach within the current
geographic footprint and selectively digitise the customer
journey. We will also continue to build on the synergies
developed with IPF Digital which is helping us financially
include more people in Mexico.
28
International Personal Finance plc
Strategic Report
Operational review continued
Mexico home credit
IPF Digital
Mexico home credit delivered strong growth and a very good operational performance, reporting profit before
tax of £17.7m (2021: £18.4m). Excluding the benefit of Covid-19 impairment provision releases of £7.7m in 2021,
underlying profit before tax grew 65.4%.
IPF Digital delivered very positive growth momentum in all our ongoing markets and reported a profit before
tax of £8.8m (2021: £8.7m). Excluding the benefit of Covid-19 impairment provision releases of £3.7m in 2021,
underlying profit before tax grew by 76.0% in 2022.
2022
£m
2021
Change
Change
at CER
£m
£m
%
%
Change
Customer numbers
(000s)
696
654
Customer lending
257.4
194.2
Closing net receivables
158.5
117.6
42
63.2
40.9
6.4
32.5
34.8
16.8
14.2
Closing net receivables increased by 14% (at CER) to £158.5m
which drove a significant increase in revenue of 27% year on
year (at CER). The revenue yield improved from 81.5% in 2021
to a more normalised level of 88.2% in 2022, reflecting the
reduction in customers in stage 3 which attract less interest
under IFRS 9. During the peak of Covid-19, approximately
50% of customers were in stage 3 compared with just under
30% at 2022.
210.9
146.0
64.9
44.5
27.4
(75.5)
(33.8)
(41.7)
(123.4)
(91.6)
135.4
112.2
23.2
20.7
7.3
At the same time as delivering significant growth,
we continued to maintain robust customer repayments.
The impairment rate increased by 12.7 ppts to 31.6% year
on year reflecting the impact of IFRS 9 on a strongly growing
receivables book as well as Covid-19 provisions released
(107.8)
(87.2)
(20.6)
(23.6)
(10.7)
in 2021 no longer being included in the calculation
Revenue
Impairment
Revenue less
impairment
Costs
Reported profit
before taxation
Interest expense
(9.9)
(6.6)
(3.3)
(50.0)
(32.0)
17.7
18.4
(0.7)
(3.8)
Reported profit
before taxation
Covid-19 provision
releases
Underlying profit
before taxation
17.7
18.4
(0.7)
(3.8)
–
(7.7)
7.7
n/a
17.7
10.7
7.0
65.4
Revenue yield
88.2%
81.5%
6.7 ppts
Impairment rate
31.6%
18.9% (12.7) ppts
Cost-income ratio
51.1%
59.7%
8.6 ppts
Pre-exceptional RORE
19.2%
27.1% (7.9%) ppts
Mexico home credit is delivering strong returns in a market
with high demand for credit and significant growth potential.
Our growth strategy to capture Mexico’s potential centres
on increasing penetration within our existing footprint and
extending into new regions. We are also improving the
customer experience and leveraging synergies with IPF Digital.
We opened 660 new agencies in 2022 within or close to our
current territory and launched a new region in the Northwest
of Mexico (Tijuana). We will also open a new region in
Tampico in March 2023. The investments we made in
expanding our reach together with good customer demand
supported a 17% increase (at CER) in customer lending year
on year and a 6% rise in customers to 696,000.
(2021: £7.7m). The rate was marginally above our target
level for Mexico home credit of approximately 30%.
Customer repayments in January 2023 have been strong
and we expect to bring the impairment rate down to target
levels in 2023.
In line with our growth strategy, we continued to invest in
expanding our customer representative network and
geographic footprint into the Northwest of Mexico which
resulted in costs in 2022 increasing by 10.7% (at CER). However,
the cost-income ratio improved by 8.6 ppts to 51.1% year on
year (2021: 59.7%) demonstrating the benefit of operational
leverage in this growing business and good cost control.
Mexico home credit delivered a pre-exceptional RORE of 19.2%
(2021: 27.1%), only marginally below our upper target of 20%,
despite delivering significant growth and opening a new
region in Tijuana. Investing in sustainable growth whilst
maintaining target returns remains our key focus.
Our Mexico home credit business offers very exciting and
significant long-term prospects. By successfully delivering
on our strategy, we will continue to deliver sustainable
growth to ensure consistent returns. We will enhance territory
management to maximise customer reach within the current
geographic footprint and selectively digitise the customer
journey. We will also continue to build on the synergies
developed with IPF Digital which is helping us financially
include more people in Mexico.
2022
£m
2021
£m
Change
£m
Change
%
Change
at CER
%
Customer numbers
(000s)
253
263
(10)
(3.8)
Customer lending
232.0
188.7
Closing net receivables
209.3
173.3
43.3
36.0
22.9
20.8
21.5
13.9
Revenue
Impairment
Revenue less
impairment
Costs
117.1
118.0
(26.0)
(24.0)
(0.9)
(2.0)
(0.8)
(8.3)
(1.3)
(6.6)
91.1
94.0
(2.9)
(3.1)
(3.4)
(67.0)
(72.0)
5.0
6.9
8.0
Interest expense
(15.3)
(13.3)
(2.0)
(15.0)
(15.0)
Reported profit
before taxation
Reported profit
before taxation
Covid-19 provision
releases
Underlying profit
before taxation
8.8
8.7
0.1
1.1
8.8
8.7
0.1
1.1
–
(3.7)
3.7
n/a
8.8
5.0
3.8
76.0
Revenue yield
45.4%
46.4% (1.0) ppts
Impairment rate
10.1%
9.4% (0.7) ppts
Cost-income ratio
57.2%
61.0%
3.8 ppts
Pre-exceptional RORE
6.9%
7.5% (0.6) ppts
Our strategy to grow our IPF Digital business reflects increasing
demand from consumers who are looking for end-to-end
digital services, and we are rebuilding receivables to gain
scale and deliver our target returns following the closure of our
businesses in Finland in 2020 and Spain in 2021. All six ongoing
countries of Estonia, Latvia, Lithuania, Poland, Mexico and
Australia and our two collect-out countries of Finland and
Spain, delivered a profit contribution in 2022. Very pleasingly,
2022 was the first year of Mexico and Australia moving
into profit.
We saw very strong demand for credit in 2022 and delivered
a 22% increase in customer lending year on year with Mexico
(67%) and Australia (36%) growing particularly strongly, and
Poland (26%) and the Baltic markets (22%) also delivering
good growth. We are now serving 253,000 customers and
excluding the impact of the portfolio collect outs in Finland
and Spain, customer numbers increased by 7%, mainly driven
by the strong growth in Mexico and Australia.
The strong growth in lending resulted in closing net receivables
ending the year at £209m, an increase of 14% (at CER).
The growth was delivered despite a £12m reduction in
receivables in Finland and Spain, where the collect-outs have
exceeded expectations. Excluding the collect-out portfolios,
net receivables growth of 22% (at CER) was delivered despite
continued tight credit standards, with Mexico (63%) and
Australia (37%) delivering the most significant growth whilst the
Baltic markets also delivered growth of 13%. The receivables
book in Poland showed a modest reduction as we closed one
of our two brands to improve returns.
The revenue yield decreased marginally from 46.4% in 2021
to 45.4% in 2022. This reflects the impact of a combination
of factors: (i) a tighter rate cap in Latvia; (ii) the reduction
in higher yielding Finland receivables during the collect-out;
(iii) the impact of increased competition which has resulted
in price reductions in Lithuania; and (iv) the growth in Australia
which is relatively lower yielding. These adverse variances have
been partly offset by the growth in Mexico which has a higher
revenue yield.
The impairment rate increased marginally from 9.4% in 2021
to 10.1% in 2022. This reflects two factors. Firstly, the £3.7m
release of Covid-19 provisions benefited the impairment rate in
2021 and excluding this release, the impairment rate in 2021
would have been 10.7% showing an underlying improvement
of 0.8ppts. The improvement mainly reflects the strong
collect-out performance in Finland and Spain which have
exceeded expectations.
Although we continued to invest in developing our product
offering and marketing to attract new customers and build
scale, tight control on costs delivered an 8% (at CER) reduction
in costs during 2022 and this was reflected in the cost-income
ratio which decreased by 3.8 ppts to 57.2% (2021: 61.0%).
We expect the cost-income ratio to further improve as we
continue to rebuild the business.
IPF Digital’s pre-exceptional RORE in 2022 was 6.9%, little
changed from 7.5% in 2021 which benefited from the release
of Covid-19 provision of £3.7m. Although IPF Digital currently
lacks scale following Covid-19 and the closure of Finland and
Spain, we have strong organic growth opportunities in our
existing markets, particularly Mexico and Australia, and we will
continue to consider inorganic opportunities to deliver scale
and increase returns to our target levels. In 2023, we will
continue to extend the reach of our mobile wallet in Latvia,
Estonia and Lithuania and we will also continue to expand the
new hybrid lending opportunities that our digital and home
credit businesses are partnering on in Mexico as well as
launching a modified mobile wallet offering there.
28
International Personal Finance plc
Annual Report and Financial Statements 2022
29
Strategic Report
Financial review
Continued strong financial performance
delivering returns to shareholders
“The Group continued to
deliver a strong return to
growth in 2022 driven by
an excellent operational
performance whilst
maintaining careful
management
of credit settings.”
Gary Thompson
Chief Financial Officer
The Group continued to deliver a strong return to
growth in 2022 driven by an excellent operational
performance whilst maintaining careful management
of credit settings. We continued to maintain a
conservative balance sheet to mitigate any potential
deterioration in the macroeconomic environment.
I am delighted to present my first Financial review as Chief
Financial Officer of the Group. Since I joined the Group in April,
I have been impressed with the passion, energy and quality of
all of our colleagues towards our purpose of building a better
world through financial inclusion. I am very excited by the
excellent opportunities we have to grow the business, through
a broadened product offering, in order to deliver a sustainable
business for all of our stakeholders.
One of my first objectives has been to formalise our financial
model and to embed it into all of our business decisions,
performance analysis and planning. Some aspects of this
model are not new, but I believe it is very important to clearly
articulate what we are aiming to achieve, both internally
and externally. We live and breathe by this financial model,
and we will not undertake activity which is not consistent
with it. It underpins both our strategy and, very importantly,
our purpose.
Deliver an RORE
of 15-20%
Maintains equity
to receivables
ratio at 40%
Target
financial
model
Supports
minimum return
to shareholders
of 40% of post-tax
earnings
Allows receivables
growth of up to
10% per annum
30
International Personal Finance plc
Strategic Report
Financial review
Continued strong financial performance
delivering returns to shareholders
“The Group continued to
deliver a strong return to
growth in 2022 driven by
an excellent operational
performance whilst
maintaining careful
management
of credit settings.”
Gary Thompson
Chief Financial Officer
The Group continued to deliver a strong return to
growth in 2022 driven by an excellent operational
performance whilst maintaining careful management
of credit settings. We continued to maintain a
conservative balance sheet to mitigate any potential
deterioration in the macroeconomic environment.
I am delighted to present my first Financial review as Chief
Financial Officer of the Group. Since I joined the Group in April,
I have been impressed with the passion, energy and quality of
all of our colleagues towards our purpose of building a better
world through financial inclusion. I am very excited by the
excellent opportunities we have to grow the business, through
a broadened product offering, in order to deliver a sustainable
business for all of our stakeholders.
One of my first objectives has been to formalise our financial
model and to embed it into all of our business decisions,
performance analysis and planning. Some aspects of this
model are not new, but I believe it is very important to clearly
articulate what we are aiming to achieve, both internally
and externally. We live and breathe by this financial model,
and we will not undertake activity which is not consistent
with it. It underpins both our strategy and, very importantly,
our purpose.
Maintains equity
to receivables
ratio at 40%
Target
financial
model
Supports
minimum return
to shareholders
of 40% of post-tax
earnings
Deliver an RORE
of 15-20%
Allows receivables
growth of up to
10% per annum
Financial model
Our business is well managed and operates with strong ethical
and financial disciplines. As we navigate our future growth
opportunities and business choices, we have formalised our
financial model to underpin our strategy and balance the
needs of our various stakeholders including customers,
colleagues, regulators, shareholders and debt providers.
We aim to deliver sustainable earnings whilst maintaining
a strong balance sheet, adopting a progressive dividend
policy and investing in the future growth of the business.
Our financial model is as follows:
1. RORE
The first, most integral part of our model is to deliver a target
RORE of between 15% and 20%. We believe that returns
materially above this range would not balance the needs
of all of our stakeholders in delivering our purpose of building
a better world through financial inclusion.
We calculate RORE as profit after tax over the average
required equity of 40% of receivables. This allows us to ensure
comparability between divisions and is more consistent with
the financial model which assumes a 40% equity to receivables
ratio. We will also continue to disclose our ROE, but only on a
Group basis. Here we set out the RORE of the Group between
2018 and 2022:
Group pre-exceptional returns %
20
10
0
-10
2018
2019
2020
2021
2022
RORE
ROE
The Group’s RORE was adversely impacted by the reduction
in scale of the business during Covid-19 in 2020 and 2021
as we significantly tightened underwriting in response to the
pandemic. Despite rightsizing of the cost base, the reduction
in Group receivables of over £300m in 2020 has meant that the
Group has been sub-scale throughout the period 2020 to 2022.
Through strong execution of our rebuilding strategy, it is pleasing
that we rebuilt the receivables book by £200m through 2021
and 2022 and the RORE of 14.6% in 2022 is only just below our
minimum threshold, notwithstanding the pressure on funding
costs caused by the war in Ukraine and the cost-of-living crisis.
The Group’s pre-exceptional ROE, based on actual equity,
was 11.5% in 2022, up from 11.4% in 2021.
We anticipate Group returns moderating in 2023 as we
transition the Polish business to the new lower TCC cap but
expect to rebuild returns in 2024 and deliver the lower
threshold return target of 15% in 2025. We target each of our
businesses to deliver a RORE of 20%+ and in the medium term
we anticipate delivery of a Group RORE closer to 20%.
We firmly believe each of our businesses are capable of
delivering a 20% RORE and the RORE by division is set out
below:
European home credit
Mexico home credit
IPF Digital
2022
21.3%
19.2%
6.9%
2021
20.7%
27.1%
7.5%
European and Mexico home credit are already delivering
a RORE around the 20% threshold we set for each division.
IPF Digital remains sub-scale following the closure of Finland
and Spain and the impact of Covid-19. Our focus is on
regaining scale through strong organic growth opportunities
in our existing markets, particularly in Mexico and Australia,
and we will also consider inorganic opportunities to deliver
scale and increase returns.
2. Distribution of earnings
The delivery of a RORE of 15% supports the distribution of 40%
of our post-tax earnings. A RORE of nearer 20% would either
allow us to distribute more than 40% of our earnings to
shareholders and/or deliver additional receivables growth
(see 3. Receivables growth below).
Our total dividend of 9.2 pence per share in 2022 represents a
pre-exceptional payout ratio of 44%. We expect to continue
paying in excess of 40% of our earnings through 2023 and 2024
as we continue to regain scale following Covid-19 and as we
transition the Polish business to the new lower TCC cap before
returning towards our target level from 2025 onwards.
3. Receivables growth
Returning capital of 40% of post-tax earnings allows us
to fund receivables growth in the following year by up to 10%.
If we grow in excess of 10% we will utilise any additional
capital resources over our target capital base. If we expect
to grow at less than 10% we will either retain capital or
increase the capital return to shareholders above our
40% minimum threshold.
In 2023, we saw strong receivables growth of 14% as we
continued to rebuild scale following Covid-19. This growth
is greater than 10% and, as a result, we utilised part of our
additional capital during 2023.
4. Equity to receivables ratio
A target equity to receivables ratio of 40% is our current view of
an appropriate balance sheet, offering plenty of security both
in good and more difficult times. Our equity to receivables
ratio at the end of 2022 was 51%, unchanged from 2021. We
intend to use our additional capital above our target level of
40% as we:
i. rebuild receivables levels to pre-Covid-19 levels and rebuild
our RORE above 15%;
ii. maintain a progressive dividend policy; and
iii. provide balance sheet strength as we navigate the
cost-of-living crisis and transition the Polish business through
2023 and 2024 to the new lower TCC cap.
30
International Personal Finance plc
Annual Report and Financial Statements 2022
31
Strategic Report
Financial review continued
Changes in terminology and
key performance indicators (KPIs)
As part of the formulation of our financial model, we have
made some changes to terminology and KPIs. IPF is
a far broader organisation than the traditional home credit
business it was when it was established 25 years ago.
As such, it is important that our reporting terminology better
reflects the Group’s broader distribution channels, including
a greater level of digital transactions, and to better align with
consumer finance lenders more generally.
In conjunction with this, we have changed the calculation
of a number of KPIs which were established when the Group
was solely a home credit business. The new KPIs are also more
consistent with current accounting standards (principally IFRS
9) and are more aligned to other consumer finance lenders.
The changes we have made, and their impact on 2019
(pre-Covid-19) and 2022, are set out below:
KPIs supporting the financial model
Our financial model is supported by a stringent focus on the
revenue yield, impairment rate and cost-income ratio being
delivered by each of our businesses together with the Group
funding rate and tax rate.
The table below shows the associated ranges for each
of these KPIs to deliver our minimum RORE of 15% together
with the threshold level for funding, tax and the equity to
receivables ratio. We have included the metrics for 2022
to demonstrate the movement we need to undertake
to progress towards our target financial model, as well
as the pre-pandemic metrics at the end of 2019.
Equity to receivables
Revenue yield
Impairment rate
Cost-income ratio
Funding rate
Tax rate
RORE
Targets
40%
53%-56%
14%-16%
52%-54%
10%
40%
15%+
2022
51%
51.9%
8.6%
60.9%
13.3%
40%
14.6%
2019
45%
59.2%
16.2%
52.7%
9.0%
37%
18.3%
Revenue yield
Revenue divided by average net
receivables after impairment provision
Revenue divided by average gross
receivables before impairment provision
Previous KPI*
New KPI*
2019 – 90.1%
2022 – 83.3%
2019 – 59.2%
2022 – 51.9%
Impairment rate
Impairment as a percentage of revenue
Impairment as a percentage of average
gross receivables before impairment
provision
2019 – 27.4%
2022 – 16.5%
2019 – 16.2%
2022 – 8.6%
Cost-income ratio
Costs excluding customer representatives
commission divided by revenue
All costs divided by revenue
* Both the previous KPIs and the new KPIs are calculated on a rolling 12-month basis.
2019 – 43.6%
2022 – 48.9%
2019 – 52.7%
2022 – 60.9%
32
International Personal Finance plc
Strategic Report
Financial review continued
Changes in terminology and
key performance indicators (KPIs)
As part of the formulation of our financial model, we have
made some changes to terminology and KPIs. IPF is
KPIs supporting the financial model
Our financial model is supported by a stringent focus on the
revenue yield, impairment rate and cost-income ratio being
delivered by each of our businesses together with the Group
a far broader organisation than the traditional home credit
funding rate and tax rate.
Revenue yield – Our target range for revenue yield is 53% to
56% which is based on our current product structure and
today’s regulatory landscape. This is a lower, more
sustainable, yield than the equivalent Group revenue yield of
59% in 2019 and reflects a number of factors:
“The returns in 2022 improved materially
across all reporting segments with all
businesses contributing profitable
performances.”
business it was when it was established 25 years ago.
As such, it is important that our reporting terminology better
reflects the Group’s broader distribution channels, including
a greater level of digital transactions, and to better align with
consumer finance lenders more generally.
In conjunction with this, we have changed the calculation
of a number of KPIs which were established when the Group
was solely a home credit business. The new KPIs are also more
consistent with current accounting standards (principally IFRS
9) and are more aligned to other consumer finance lenders.
The changes we have made, and their impact on 2019
(pre-Covid-19) and 2022, are set out below:
The table below shows the associated ranges for each
of these KPIs to deliver our minimum RORE of 15% together
with the threshold level for funding, tax and the equity to
receivables ratio. We have included the metrics for 2022
to demonstrate the movement we need to undertake
to progress towards our target financial model, as well
as the pre-pandemic metrics at the end of 2019.
Equity to receivables
Revenue yield
Impairment rate
Cost-income ratio
Funding rate
Tax rate
RORE
Targets
40%
53%-56%
14%-16%
52%-54%
10%
40%
15%+
2022
51%
51.9%
8.6%
60.9%
13.3%
40%
14.6%
2019
45%
59.2%
16.2%
52.7%
9.0%
37%
18.3%
Revenue yield
Revenue divided by average net
Revenue divided by average gross
receivables after impairment provision
receivables before impairment provision
Previous KPI*
New KPI*
Impairment rate
Impairment as a percentage of revenue
Impairment as a percentage of average
gross receivables before impairment
2019 – 90.1%
2022 – 83.3%
2019 – 27.4%
2022 – 16.5%
2019 – 43.6%
2022 – 48.9%
2019 – 59.2%
2022 – 51.9%
provision
2019 – 16.2%
2022 – 8.6%
2019 – 52.7%
2022 – 60.9%
Cost-income ratio
Costs excluding customer representatives
All costs divided by revenue
commission divided by revenue
* Both the previous KPIs and the new KPIs are calculated on a rolling 12-month basis.
– The change in rebates in Poland in 2020 which means that
we refund more of the service charge back to customers
when they repay their loans early;
– Changes in the revenue yield at IPF Digital due to the closure
of Finland, which delivered a relatively high yield, and also
reductions in the level of price caps in the Baltics; and
– Some overall price reduction in European home credit over
the last three years due to changes in regulation and in
response to competition.
The Group’s revenue yield strengthened from 48.1% in 2021 to
51.9% in 2022 reflecting a combination of four factors: (i) the
stronger growth in Mexico home credit which carries a higher
yield; (ii) the reduction in customer accounts in stage 3 (which
do not attract as much interest under IFRS 9) due to improved
repayment performance post Covid-19; (iii) selective price
increases, mainly in European home credit; and (iv) a
reduction in promotional activity. These positive impacts have
been partially offset by
an increase in rebates provided to customers in Poland when
they settle their accounts early and the impact of the
moratorium in Hungary, which expired in December 2022.
In the medium term, we expect the Group revenue yield to
increase to within our target range of 53% to 56%, based on
our current product set and regulation, as Mexico home
credit grows to represent a larger proportion of the Group’s
receivables book.
Impairment rate – We have a target range of between
14% and 16% for our impairment rate, which is comparable
with 2019.
Having close relationships with our customers to encourage
repayment is a core strength of our business and, combined
with the responsible lending decisions we take when serving
them, the quality of our loan portfolio continues to be excellent
in all divisions. Customer repayments remained robust in 2022
driven by solid operational execution, and this resulted in an
annualised impairment rate of 8.6% (2021: 4.9%). This metric
continues to be lower than normal levels and has benefited
from improved credit quality and strong execution on debt
sale activity and post charge-off recoveries which delivered
c.£15m more gains than the relatively low level in 2021. We
expect our Group annualised impairment rate to rise to
around 14% to 16% as we regrow the business and the
Covid-19 period flows out of the calculations.
Cost-income ratio – Cost efficiency is a strong focus in the
business. Our target cost income ratio is a range of between
52% and 54%, which is consistent with 2019 when the Group
was at scale. We continue to maintain a stringent focus on
costs as we grow the business and mitigate the high
inflationary environment. As a result, the cost-income ratio
improved by 6.7 ppts year on year to 60.9% in 2022
(2021: 67.6%). We are continuing to drive process efficiency
through investing in technology and we expect the cost-
income ratio to reduce to within our target range of 52% to
54% over the medium term as we achieve greater scale.
Indeed, it is our aspiration to reduce our target range in due
course to around 50%.
Funding rate – After taking account of the cost of hedging,
10% is around the funding rate we were at prior to the very
volatile market conditions we have seen in 2022. The funding
rate of 13.3% in 2022 is significantly higher than this rate, due to
increased interest rates in our markets as a result of the
cost-of-living crisis and increased hedging costs. We expect
the higher funding costs to persist for the short to the medium
term and as a result we are heavily focused on bolstering the
revenue yield and cost control to mitigate the impact of higher
funding costs. We are also actively exploring diversification of
our funding sources.
Tax rate – We consider a tax rate of around 40% to be
reflective of the Group’s structure and we consider this to be
our normalised rate, albeit we continue to ensure that we are
as tax efficient as possible. Our tax rate in 2022 was 40%, in line
with our financial model.
The target KPIs, taken together, will deliver our target RORE
of 15% to 20%. Each of our countries has a different income
statement composition reflecting their credit risk and their
respective regulatory, funding and tax environments.
As mentioned earlier, we believe that each of our businesses is
capable of delivering a target RORE of 20%, and we have
established similar KPI targets for each territory. We will
manage each business to deliver these targets in order to
deliver the target Group financial model.
32
International Personal Finance plc
Annual Report and Financial Statements 2022
33
Strategic Report
Financial review continued
Taxation
Earnings per share (EPS)
Statutory EPS of 25.6 pence in 2022, showed growth of 36.2%
compared with 18.8 pence per share in 2021.
Excluding the impact of the exceptional tax credit in 2022 of
£10.5m, as set out in Taxation above, pre-exceptional EPS grew
by 10.6% from 18.8 pence in 2021 to 20.8 pence in 2022,
reflecting very good operational delivery of the Group’s post
Covid-19 rebuild strategy notwithstanding an increased cost of
funding and the impact of the cost-of-living crisis. This growth in
pre-exceptional EPS is lower than the 14.3% increase in
reported profit before tax due to the higher tax rate in 2022.
Dividend
Based on the leadership’s successful execution of our growth
strategy, the Board is pleased to declare a 12.1% increase in
the final dividend to 6.5 pence per share. This is in line with the
Group’s progressive dividend policy and brings the full-year
dividend to 9.2 pence per share (2021: 8.0 pence per share),
an increase of 15%% on 2021 and representing a pre-
exceptional payout rate of 44% (2021: 43%). This is a higher
payout rate than the 40% minimum rate within our financial
model and, as previously indicated, the Board is utilising its
additional capital above our 40% equity to receivables ratio to
payout a higher rate whilst the business rebuilds both scale
and our returns to the target range of between 15% and 20%.
Subject to shareholder approval, the final dividend will be paid
on 5 May 2023 to shareholders on the register at the close
of business on 11 April 2023. The shares will be marked
ex-dividend on 6 April 2023.
The pre-exceptional taxation charge on the profit for 2022 is
£31.1m, which represents an effective tax rate for the year of
approximately 40% (2021: 38%). The higher tax rate in 2022
reflects the normalisation of impairment charges in Poland
following Covid-19. In Poland, we only get a small deduction
for bad debt tax relief.
The full-year results reflect a net exceptional tax credit of
£10.5m comprising three items:
1. Following a favourable Supreme Administrative Court
decision, the Group’s Polish subsidiary successfully obtained
a Ministry of Finance ruling confirming the tax deductibility of
certain expenses linked to intra-group transactions in
respect of years 2018 onwards. These expenses had
originally been disallowed following the introduction of new
legislation with more restrictive rules during 2017. The returns
for years 2018 to 2021 have been re-filed with the tax office
along with claims for repayment of £27.4m, of which
£26m has been received in 2022. A further benefit is
estimated at £3.5m comprising a reduction in the 2022
corporate income tax liability of £1.5m and a reduction in
subsequent years’ liabilities of £2m. As a result, an
exceptional tax credit of £30.9m has been recognised in
2022, with £1.4m reflected as a current tax asset (in respect
of claims submitted but not refunded at the year end) and
£2m held as a deferred tax asset on the balance sheet.
2. An exceptional tax charge of £15.3m has arisen following
the derecognition of the non-current asset previously held in
respect of the Group’s finance company arrangements. This
stems from the decision by the General Court of the
European Union in June 2022 confirming the European
Commission’s earlier decision that the United Kingdom’s
Group Financing Exemption constitutes partial illegal
state aid.
3. An exceptional tax charge of £5.1m has been reflected
relating to the Hungarian government’s announcement in
June 2022 which introduced a series of temporary taxes
aimed at raising revenue to support the armed forces in view
of the ongoing war in Ukraine and protect households
against rising energy costs. The new tax package, which
was passed by Government Decree, included a new “extra
profit special tax” chargeable on the financial sector
including non-bank financial institutions, and which is
payable in respect of 2022 and 2023 only. This new tax will
increase the taxes payable by the Group’s Hungarian
subsidiary by £5.1m for 2022, with an estimated further £6m
payable in respect of 2023.
34
International Personal Finance plc
Taxation
Earnings per share (EPS)
The pre-exceptional taxation charge on the profit for 2022 is
Statutory EPS of 25.6 pence in 2022, showed growth of 36.2%
£31.1m, which represents an effective tax rate for the year of
compared with 18.8 pence per share in 2021.
The full-year results reflect a net exceptional tax credit of
Covid-19 rebuild strategy notwithstanding an increased cost of
Excluding the impact of the exceptional tax credit in 2022 of
£10.5m, as set out in Taxation above, pre-exceptional EPS grew
by 10.6% from 18.8 pence in 2021 to 20.8 pence in 2022,
reflecting very good operational delivery of the Group’s post
funding and the impact of the cost-of-living crisis. This growth in
pre-exceptional EPS is lower than the 14.3% increase in
reported profit before tax due to the higher tax rate in 2022.
Dividend
Based on the leadership’s successful execution of our growth
strategy, the Board is pleased to declare a 12.1% increase in
the final dividend to 6.5 pence per share. This is in line with the
Group’s progressive dividend policy and brings the full-year
dividend to 9.2 pence per share (2021: 8.0 pence per share),
an increase of 15%% on 2021 and representing a pre-
exceptional payout rate of 44% (2021: 43%). This is a higher
payout rate than the 40% minimum rate within our financial
model and, as previously indicated, the Board is utilising its
additional capital above our 40% equity to receivables ratio to
payout a higher rate whilst the business rebuilds both scale
and our returns to the target range of between 15% and 20%.
Subject to shareholder approval, the final dividend will be paid
on 5 May 2023 to shareholders on the register at the close
of business on 11 April 2023. The shares will be marked
ex-dividend on 6 April 2023.
Strategic Report
Financial review continued
approximately 40% (2021: 38%). The higher tax rate in 2022
reflects the normalisation of impairment charges in Poland
following Covid-19. In Poland, we only get a small deduction
for bad debt tax relief.
£10.5m comprising three items:
1. Following a favourable Supreme Administrative Court
decision, the Group’s Polish subsidiary successfully obtained
a Ministry of Finance ruling confirming the tax deductibility of
certain expenses linked to intra-group transactions in
respect of years 2018 onwards. These expenses had
originally been disallowed following the introduction of new
legislation with more restrictive rules during 2017. The returns
for years 2018 to 2021 have been re-filed with the tax office
along with claims for repayment of £27.4m, of which
£26m has been received in 2022. A further benefit is
estimated at £3.5m comprising a reduction in the 2022
corporate income tax liability of £1.5m and a reduction in
subsequent years’ liabilities of £2m. As a result, an
exceptional tax credit of £30.9m has been recognised in
2022, with £1.4m reflected as a current tax asset (in respect
of claims submitted but not refunded at the year end) and
£2m held as a deferred tax asset on the balance sheet.
2. An exceptional tax charge of £15.3m has arisen following
the derecognition of the non-current asset previously held in
respect of the Group’s finance company arrangements. This
stems from the decision by the General Court of the
European Union in June 2022 confirming the European
Commission’s earlier decision that the United Kingdom’s
Group Financing Exemption constitutes partial illegal
state aid.
3. An exceptional tax charge of £5.1m has been reflected
relating to the Hungarian government’s announcement in
June 2022 which introduced a series of temporary taxes
aimed at raising revenue to support the armed forces in view
of the ongoing war in Ukraine and protect households
against rising energy costs. The new tax package, which
was passed by Government Decree, included a new “extra
profit special tax” chargeable on the financial sector
including non-bank financial institutions, and which is
payable in respect of 2022 and 2023 only. This new tax will
increase the taxes payable by the Group’s Hungarian
subsidiary by £5.1m for 2022, with an estimated further £6m
payable in respect of 2023.
Balance sheet, treasury risk management
and funding
Balance sheet
We continue to maintain a very conservatively capitalised
balance sheet, a strong funding position and robust financial
risk management.
At the end of 2022, our equity to receivables ratio was 51%
(2021: 51%) and this compares with our target of 40%. The ratio
has remained flat in 2022 despite: (i) receivables growth being
greater than 10% in our financial model; (ii) returns being
below the lower target threshold of 15%; and (iii) a dividend
payment ratio in excess of 40%. The absorption of capital from
these factors has been offset directly by a £42m foreign
exchange gain being credited to reserves in the year without
which the equity to receivables ratio would have reduced to
48%. As noted earlier, we expect to progressively reduce the
equity to receivables ratio over the next two to three years as
we invest in growth, deliver our progressive dividend policy
and build RORE to our target level of 15% to 20%. The gearing
ratio was 1.2 times (2021: 1.3 times), comfortably ahead of our
covenant limit of 3.75 times.
Closing receivables in 2022 were £869m, which is £152m
higher than 2021 (14.2% at CER), reflecting strong execution
against the Group’s strategy to rebuild the Group following the
impact of Covid-19 through 2020 and 2021. The strong growth
has been achieved despite weak demand in the first quarter
of the year in Europe due to the Ukraine war and the
implementation of tightened credit criteria in the last quarter
of the year. The average period of receivables outstanding at
the end of 2022 was 13.0 months (2021: 12.3 months) with 76%
of year-end receivables due within one year (2021: 79%).
The Group continues to maintain a conservative balance
sheet position in respect of receivables, with an impairment
coverage ratio of 36.4% at the end of 2022 compared with
37.8% at the end of 2021 and 33.5% at the end of 2019 (pre
Covid-19). The reduction in impairment provision reflects the
combination of the write off of heavily provisioned Covid-19
debt and improved credit quality. The Group’s impairment
provision includes £24.9m of post-model adjustments in
respect of the cost-of-living crisis and the moratorium in
Hungary compared with £22.4m held at the end of 2021 in
respect of Covid-19 and the cost-of-living crisis. The gross
contractual cashflows supporting the receivables valuation
amounts to £1.4bn at the end of 2022 (2021: £1.2bn).
The business has a strong track record of cash generation,
even during adverse market and regulatory conditions. During
the outbreak of Covid-19 in 2020, the business restricted
lending to customers and had a strong focus on customer
repayments. Due to the short-term nature of the receivables
book, this action generated cash from operating activities of
£330m, which enabled the Group to reduce borrowings by
£184m and increase cash by £80m. In addition, when a
decision has been taken to withdraw from a territory due to
inadequate returns being available (e.g. Slovakia in European
home credit in 2015 and more recently Finland in IPF Digital in
2020), we have demonstrated that the collect-out takes
around 2 to 3 years and the cash recoveries (net of any costs)
have typically been close to the value of the net receivables
from the time of the decision to cease the operations.
This represents 1.7 times to 2.0 times the value of the debt
funding supporting those receivables.
Treasury risk management
There are Board-approved policies to address the key treasury
risks that the business faces – funding and liquidity risk,
financial market risk (currency and interest rate risk), and
counterparty risk. The policies are designed to provide robust
risk management, even in more volatile financial markets and
economic conditions within our planning horizon.
Our funding policy requires us to maintain a resilient funding
position for our existing business and for future growth. We aim
to maintain a prudent level of headroom on undrawn bank
facilities. Our currency policy addresses economic currency
exposures and requires us to fund our receivables portfolios
with local currency borrowings (directly or indirectly) to
achieve a high level of balance sheet hedging. We do not
hedge the translational risk of foreign currency movements on
accounting profits and losses. Our interest rate policy requires
us to hedge interest rate risk in each currency to a relatively
high level. Our counterparty policy requires exposures to
financial counterparties to be limited to BBB-rated entities
as a minimum except as approved, or delegated for approval,
by the Board. In addition to these policies, our operational
procedures and controls ensure that funds are available
in the right currency at the right time to serve our customers
throughout the Group.
The currency structure of our debt facilities matches the asset
and cash flow profile of our business. We have multiple local
currency bank facilities and our main €341m Eurobond
provides direct funding to our markets using the euro currency,
and to markets using other currencies via foreign exchange
transactions. For this reason, we do not expect fluctuations
in the value of sterling to have a major impact on our
funding position.
Debt funding is provided through a diversified debt portfolio
with acceptable terms and conditions. We have bonds
denominated in euro, sterling and Swedish krona, wholesale
and retail, with varying maturities, together with facilities from
a group of banks that have a good strategic and geographic
fit with our business. IPF’s debt is senior unsecured debt,
with all lenders substantially in the same structural position.
We maintain our Euro Medium Term Note programme as the
platform for bond issuance across a range of currencies.
34
International Personal Finance plc
Annual Report and Financial Statements 2022
35
Strategic Report
Financial review continued
Funding
Maturity profile of debt facilities (£m)
At the end of 2022, the Group had total debt facilities of £611m,
comprising £419m of bonds and £192m of bank facilities.
We have borrowings of £554m and, together with undrawn
facilities and non-operational cash balances, our headroom
is £76m. The Group’s current funding capacity together with
strong business cash generation, is expected to meet the
Group’s funding requirements into 2024. Our additional funding
requirement in 2023 is not expected to be significant due to the
expected contraction in Polish receivables as we transition
the business to the new lower TCC cap.
Despite the difficult macroeconomic backdrop, we have
successfully extended £169m of bank facilities in 2022 and
extended the maturity profile of the Groups’ sources of funding
to 2.5 years. In addition, consistent with our normal practice,
in December 2022 we refinanced our £78m sterling retail bond
maturing in December 2023, one year in advance of its
maturity. The new retail bond has a maturity of December 2027
and carries a coupon of 12%, compared with the previous
sterling bond which carried a coupon of 7.75% with the
increase reflective of the rise in UK gilt prices and the iTraxx
crossover rate. In total, £38m of the original bond was
exchanged into the new bond with a further £2m of new retail
bonds issued. In addition, a further £10m of bonds were
retained by the Group and will be issued to the market in due
course (£2m of which was issued in early January 2023). The
£40m of the original retail bonds which were not exchanged will
be repaid in line with their maturity in December 2023. We are
continuing to actively seek new sources of funding in addition
to our strong in-country bank relationships and our access to
debt capital markets.
A full analysis of the maturity profile of the debt facilities is set
out in note 21 to the Financial Statements and is summarised
below:
Maturity profile of debt facilities
Eurobond
Swedish krona bond
Sterling bond
Sterling bond
Total bonds
Bank facilities
Total debt facilities
Total borrowings
Headroom against debt facilities
Non-operational cash balances
Headroom and non-operational
cash balances
Maturity
November 2025
October 2024
December 2023
December 2027
2023 to 2026
£m
302.6
35.8
40.5
40.2
419.1
191.9
611.0
554.2
56.8
19.0
75.8
27
40
26
12
25
24
23
36
7
14
3
40
41
32
303
39
44
Bonds
Term loans
Revolving credit facilities
Overdrafts
Our blended cost of funding in 2022 was 13.3%, up from 11.3%
in 2021. This reflects a significant step-up in interest rates across
our markets which has resulted in higher costs of bank funding
and hedging. An analysis of our interest cost and funding rate
is set out below:
Bond costs
Bank funding cost
Hedging costs
Other
Total interest
Average gross borrowings
Cost of funding %
2022
£m
40.7
8.2
16.7
2.5
68.1
509.3
13.3%
2021
£m
41.2
3.4
6.3
3.1
54.0
478.5
11.3%
Our credit ratings remain unchanged. We have a long-term
credit rating of BB- (Outlook Stable) from Fitch Ratings and Ba3
(Outlook Stable) from Moody’s Investors Services.
As a result of maintaining a strong financial profile, we operate
with adequate headroom on the key financial covenants in
our debt facilities, as set out in the table below:
Gearing1
Interest cover
Covenant
Max 3.75x
Min 2x times
2022
1.3x
2.3x
2021
1.3x
2.5x
1. Borrowings adjusted for lease liabilities, unamortised arrangement fees
and issue discount. Net assets adjusted for pension assets and derivative
financial instruments, in accordance with the debt funding covenant
definitions.
Foreign exchange on reserves
The majority of the Group’s net assets are denominated
in our operating currencies and, therefore, the sterling
value fluctuates with changes in currency exchange rates.
In accordance with accounting standards, we have restated
the opening foreign currency net assets at the year-end
exchange rate and this resulted in a £42m foreign
exchange movement, which has been credited to the
foreign exchange reserve.
36
International Personal Finance plc
Strategic Report
Financial review continued
Funding
Maturity profile of debt facilities (£m)
Going concern
Bonds
Term loans
Revolving credit facilities
Overdrafts
Our blended cost of funding in 2022 was 13.3%, up from 11.3%
in 2021. This reflects a significant step-up in interest rates across
our markets which has resulted in higher costs of bank funding
and hedging. An analysis of our interest cost and funding rate
303
39
44
2022
£m
40.7
8.2
16.7
2.5
68.1
509.3
13.3%
2021
£m
41.2
3.4
6.3
3.1
54.0
478.5
11.3%
At the end of 2022, the Group had total debt facilities of £611m,
27
40
comprising £419m of bonds and £192m of bank facilities.
We have borrowings of £554m and, together with undrawn
facilities and non-operational cash balances, our headroom
is £76m. The Group’s current funding capacity together with
strong business cash generation, is expected to meet the
Group’s funding requirements into 2024. Our additional funding
requirement in 2023 is not expected to be significant due to the
expected contraction in Polish receivables as we transition
the business to the new lower TCC cap.
Despite the difficult macroeconomic backdrop, we have
successfully extended £169m of bank facilities in 2022 and
extended the maturity profile of the Groups’ sources of funding
to 2.5 years. In addition, consistent with our normal practice,
in December 2022 we refinanced our £78m sterling retail bond
maturing in December 2023, one year in advance of its
maturity. The new retail bond has a maturity of December 2027
and carries a coupon of 12%, compared with the previous
sterling bond which carried a coupon of 7.75% with the
increase reflective of the rise in UK gilt prices and the iTraxx
crossover rate. In total, £38m of the original bond was
exchanged into the new bond with a further £2m of new retail
bonds issued. In addition, a further £10m of bonds were
Other
retained by the Group and will be issued to the market in due
course (£2m of which was issued in early January 2023). The
£40m of the original retail bonds which were not exchanged will
be repaid in line with their maturity in December 2023. We are
continuing to actively seek new sources of funding in addition
to our strong in-country bank relationships and our access to
debt capital markets.
A full analysis of the maturity profile of the debt facilities is set
out in note 21 to the Financial Statements and is summarised
below:
Maturity profile of debt facilities
26
12
25
24
23
36
7
14
3
40
41
32
is set out below:
Bond costs
Bank funding cost
Hedging costs
Total interest
Average gross borrowings
Cost of funding %
Our credit ratings remain unchanged. We have a long-term
credit rating of BB- (Outlook Stable) from Fitch Ratings and Ba3
(Outlook Stable) from Moody’s Investors Services.
As a result of maintaining a strong financial profile, we operate
with adequate headroom on the key financial covenants in
our debt facilities, as set out in the table below:
Covenant
Max 3.75x
Min 2x times
2022
1.3x
2.3x
2021
1.3x
2.5x
1. Borrowings adjusted for lease liabilities, unamortised arrangement fees
and issue discount. Net assets adjusted for pension assets and derivative
financial instruments, in accordance with the debt funding covenant
Maturity
November 2025
October 2024
December 2023
December 2027
Gearing1
Interest cover
definitions.
2023 to 2026
Foreign exchange on reserves
The majority of the Group’s net assets are denominated
in our operating currencies and, therefore, the sterling
value fluctuates with changes in currency exchange rates.
In accordance with accounting standards, we have restated
the opening foreign currency net assets at the year-end
exchange rate and this resulted in a £42m foreign
exchange movement, which has been credited to the
foreign exchange reserve.
£m
302.6
35.8
40.5
40.2
419.1
191.9
611.0
554.2
56.8
19.0
75.8
Eurobond
Swedish krona bond
Sterling bond
Sterling bond
Total bonds
Bank facilities
Total debt facilities
Total borrowings
Headroom against debt facilities
Non-operational cash balances
Headroom and non-operational
cash balances
In considering whether the Group is a going concern,
the Board has taken into account the Group’s 2023 business
plan and its principal risks (with particular reference to
macroeconomic and regulatory risks). The forecasts have
been prepared for the three years to 31 December 2025
and include projected profit and loss, balance sheet,
cashflows, borrowings, headroom against debt facilities
and funding requirements. These forecasts represent the
best estimate of the Group’s expected performance,
and in particular the evolution of customer lending
and repayments cash flows.
The financial forecasts have been stress tested in a range
of downside scenarios to assess the impact on future
profitability, funding requirements and covenant compliance.
The scenarios reflect the crystallisation of the Group’s principal
risks, with particular reference to macroeconomic and
regulatory risks. Consideration has also been given to multiple
risks crystallising concurrently and the availability of mitigating
actions that could be taken to reduce the impact of the
identified risks. In addition, we examined a reverse stress test
on the financial forecasts to assess the extent to which
a macroeconomic scenario would need to impact our
operational performance in order to breach a covenant.
This showed that net revenue would need to deteriorate
significantly from the financial forecast and the Directors
have a reasonable expectation that it is unlikely to deteriorate
to this extent.
At 31 December 2022, the Group had £76m of non-operational
cash and headroom against its debt facilities (comprising a
range of bonds and bank facilities), which have a weighted
average maturity of 2.5 years. The total debt facilities as at
31 December 2022 amounted to £611m of which £116m
(including £32m which is uncommitted) is due for renewal over
the following 12 months. A combination of these debt facilities,
the embedded business flexibility in respect of cash generation
and a successful track record of accessing funding from debt
capital markets over a long period (including periods with
challenging macroeconomic conditions and a changing
regulatory environment, tested both in 2020 and 2022),
are expected to meet the Group’s funding requirements
for the foreseeable future (12 months from the date of
approval of this report).Taking these factors into account,
together with regulatory risks set out on page 60 of the
Annual Report, the Board has a reasonable expectation that
the Group has adequate resources to continue in operation
for the foreseeable future. For this reason, the Board has
adopted the going concern basis in preparing the Annual
Report and Financial Statements.
Gary Thompson
Chief Financial Officer
36
International Personal Finance plc
Annual Report and Financial Statements 2022
37
Strategic Report
Stakeholder engagement
Investing in relationships
with our stakeholders
Active and effective engagement with our stakeholders helps us respond to opportunities and protect the
business against challenges as they arise. It also helps us gain a better understanding of their needs and how
Board and operational decisions impact them. Through open conversations with our customers, colleagues
and communities, , and with the support of our investors and suppliers we will create greater financial inclusion,
execute our strategy more effectively and deliver long-term sustainable growth.
Customers
Why we engage
Listening to our customers
allows us to build a greater
understanding of their needs
and behaviours so we can deliver
a unique and personalised
experience to them.
What matters to our customers?
– Affordability and price
– Flexible repayments
– Convenience
– Simple, seamless experience
– Trusted brands
Business engagement
– Customer visits
– Digital interfaces
– Customer satisfaction surveys
– Responsible borrowing
communications
– Product innovations
– Website tools
– Financial education
Board engagement
– Customer visits with customer
representatives
– Board presentations on
customer experience
– Participation in strategic reviews
– Approval of credit
card proposition
Link to Our Risks
– Reputation; Product proposition;
and Credit
Colleagues
Why we engage
Our colleagues are fundamental to
achieving our strategy. It is vital that
they are engaged and understand
the positive impact they have on our
customers and the business.
Creating opportunities to develop
skills and capabilities is essential to
the sustainability of the Group.
What matters to our colleagues?
– Development opportunities
– Recognition and reward
– Wellbeing
– Ethical customer-focused culture
– Safe and productive working
environment
Business engagement
– Development programmes
– Opinion and feedback surveys
– Conferences and business
updates
– Recognition
– Global Care Plan
– MyNews app, intranet, social
media and email news
Board engagement
– Meeting colleagues in market
– Interactions with Workforce
Engagement Director
– Board and colleague dinners
– Annual review of Group HR strategy
– Review of succession planning
Link to Our Risks
– People; and Reputation
Regulators and legislators
Why we engage
Together with our sector trade
associations, we talk to regulators
and legislators to build their
understanding of consumer
needs, our important role in
extending financial inclusion and
how we support customers in
making informed borrowing
decisions.
What matters to regulators and
legislators?
– Regulatory compliance
– Control and supervision
– Fair pricing and promotions
– Responsible lending
– Social inclusion
– Tax contribution
– Fair employment contracts
– Ethics training
Business engagement
– Sector association membership
– Public consultations
– Engagement on draft
regulations
– External advisor network
– Partnership with NGOs
Board engagement
– Board presentations on legal
and regulatory developments
Link to Our Risks
– Regulatory; and Reputation
69
Net Promoter Score
97%
colleagues completed
ethics training
53
sector association
memberships
38
International Personal Finance plc
Strategic Report
Stakeholder engagement
Investing in relationships
with our stakeholders
Active and effective engagement with our stakeholders helps us respond to opportunities and protect the
business against challenges as they arise. It also helps us gain a better understanding of their needs and how
Board and operational decisions impact them. Through open conversations with our customers, colleagues
and communities, , and with the support of our investors and suppliers we will create greater financial inclusion,
execute our strategy more effectively and deliver long-term sustainable growth.
and behaviours so we can deliver
the positive impact they have on our
Customers
Why we engage
Listening to our customers
allows us to build a greater
understanding of their needs
a unique and personalised
experience to them.
What matters to our customers?
– Affordability and price
– Flexible repayments
– Convenience
– Simple, seamless experience
– Trusted brands
Business engagement
– Customer visits
– Digital interfaces
– Customer satisfaction surveys
– Responsible borrowing
communications
– Product innovations
– Website tools
– Financial education
Board engagement
– Customer visits with customer
representatives
– Board presentations on
customer experience
– Participation in strategic reviews
– Approval of credit
card proposition
Link to Our Risks
and Credit
– Reputation; Product proposition;
Colleagues
Why we engage
Our colleagues are fundamental to
achieving our strategy. It is vital that
they are engaged and understand
customers and the business.
Creating opportunities to develop
skills and capabilities is essential to
the sustainability of the Group.
What matters to our colleagues?
– Development opportunities
– Recognition and reward
– Wellbeing
– Ethical customer-focused culture
– Safe and productive working
environment
Business engagement
– Development programmes
– Opinion and feedback surveys
– Conferences and business
updates
– Recognition
– Global Care Plan
– MyNews app, intranet, social
media and email news
Board engagement
– Meeting colleagues in market
– Interactions with Workforce
Engagement Director
– Board and colleague dinners
– Annual review of Group HR strategy
– Review of succession planning
Link to Our Risks
– People; and Reputation
Regulators and legislators
Why we engage
Together with our sector trade
associations, we talk to regulators
and legislators to build their
understanding of consumer
needs, our important role in
extending financial inclusion and
how we support customers in
making informed borrowing
decisions.
What matters to regulators and
legislators?
– Regulatory compliance
– Control and supervision
– Fair pricing and promotions
– Responsible lending
– Social inclusion
– Tax contribution
– Fair employment contracts
– Ethics training
Business engagement
– Sector association membership
– Public consultations
– Engagement on draft
regulations
– External advisor network
– Partnership with NGOs
Board engagement
– Board presentations on legal
and regulatory developments
Link to Our Risks
– Regulatory; and Reputation
Section 172 (1) statement
The directors individually and collectively fully understand their responsibility to act as they consider most likely to promote
the success of the business having regard to:
– the likely long-term consequences of decisions
– the interests of the Group’s employees
– the relationships with customers suppliers, and others
– the impact of the Group’s operations on communities
and the environment
– the desirability of the Group maintaining a reputation
for high standards of business conduct and
– the need to act fairly between members of the Company.
Healthy engagement with our stakeholders underpins our governance framework with consideration of these factors and
other relevant matters deeply embedded into all Board decision-making, strategy development and risk assessment.
For further information on how the Board considered stakeholders in its decision-making see pages 75 and 76.
Suppliers
Why we engage
We develop policies and improve
practices with our key suppliers,
to minimise sustainability risk within
our supply chain and ensure we
all work to the highest ethical
standards. Our interactions also
help extend their expertise and
innovation to our business.
What matters to our suppliers?
– Strategy and business challenges
– Business performance
– Timely payments
– Customers’ service requirements
and opportunities
– Good reputation
Business engagement
– Strategic sourcing processes
– Ongoing supplier and contract
management
– Due diligence and risk
management processes
– Industry research
– Strategic governance processes
– Service-level performance reviews
Board engagement
– Approval of a new supplier
relationship manager policy
– Approval of our Modern Slavery
Act statement
– Supported the implementation
of new responsible procurement
policy
Link to Our Risks
– Technology; Change
management; Product
proposition and Reputation
Communities
Why we engage
We forge meaningful relationships
in our communities to support
local causes and address issues
that colleagues and customers
care about. This also increases
the visibility and understanding of
issues, empowers communities
and helps attract people to work
with us.
What matters to our communities?
– Financial literacy
– Social wellbeing
– Volunteering
– Community support
programmes
Business engagement
– ‘Invisibles’ global initiative
– Financial literacy programmes
– NGO partnerships
– Colleague volunteering
– Financial wellbeing research
– Supporting causes chosen by
colleagues
Board engagement
– Visits to community projects
– Reviewed and endorsed actions
designed to enable compliance
with the TCFD
Link to Our Risks
– Reputation; and People
Investors
Why we engage
Our investors expect to earn a
return on their investment in a
sustainable, ethical business.
They want access to timely, fair and
balanced information so they can
understand our business and make
an informed investment decision.
What matters to our investors?
– Performance and growth
potential
– Risk management
– Cash generation
– ESG risks and reporting
– Executive remuneration
– Dividends
– Share price accretion
Business engagement
– Dialogue and meetings
– AGM
– Results presentations, trading
updates and roadshows
– Annual Report and website
– Capital markets webinars
Board engagement
– Remuneration policy consultation
– Shareholder meetings
– Regular investor feedback
– Approval of retail bond strategy
Link to Our Risks
– Funding, liquidity, market and
counterparty; and Taxation
69
Net Promoter Score
97%
colleagues completed
ethics training
53
sector association
memberships
4,150
supplier partners
across the Group
4,000
colleagues volunteered
in our communities
£169m
of bank facilities
extended in 2022
38
International Personal Finance plc
Annual Report and Financial Statements 2022
39
Strategic Report
Sustainability
Focused on a
sustainable business
We are committed to building a better world
through financial inclusion and contributing
positively to the world around us.
40
International Personal Finance plc
Strategic Report
Sustainability
Focused on a
sustainable business
We are committed to building a better world
through financial inclusion and contributing
positively to the world around us.
2022 highlights
Our approach to delivering on our purpose and ESG
Financial
inclusion
Valued
people and
communities
Responsible
business
practices
Environment
Financial inclusion
– New products developed to
reach more customers and
support financial inclusion.
– Simplified our language in
customer documents to make
borrowing decisions more
easily understood.
– Aligned our advertising to our
purpose reflecting our role as
a trusted partner offering
transparent, affordable products.
– Launched a flexible interest rate
to reward loyal customers in
Lithuania and Latvia.
– Developed a loyalty programme
that rewards customers in the
Czech Republic with discounts
in shops.
– All three divisions undertook
financial education initiatives to
help consumers make informed
decisions on their finances.
– Launched responsible spending
and lending campaigns in
Romania and Hungary.
Valued people
and communities
– New development programme
supported the promotion of
130 customer representatives
to development managers
in Mexico.
– Partnered with Harvard University
and LinkedIn Learning to support
our development programmes.
– Mexico home credit
implementing the ISO 45001
Occupational Health and Safety
Management Standard with
accreditation expected in 2023.
– Developed Employer brand and
launched global careers portal.
– 80% female representation
across the Group.
– 5,000 colleagues joined annual
Global Learning Festival.
– Invested over £1m in our
communities (data compiled
using London Benchmarking
Group (LBG) framework).
– Extended global community
initiative, ‘Invisibles’.
– Created award-winning
Mother’s House in Poland for
Ukrainian refugees.
Responsible business practices
Environment
– Environment Oversight
Group established.
– Climate risk incorporated as a
key risk in the Group’s risk
management framework.
– 21,457 tCO2e emissions in 2022.
– Gradually replacing diesel and
petrol company car fleet with
lower emission LPG vehicles.
– Solar panel installation test
underway in Mexico.
– 6,000 trees planted by
Hungarian colleagues.
– Our ‘What’s with this world?!’
environment education
project in Poland nominated
by the Carbon Footprint
Foundation as one of the top
10 eco-influencer initiatives.
– Playing a key role in shaping
the consumer finance sector.
– Working with regulators and
legislators to build a sustainable
regulatory environment for
responsible lenders.
– Policies and procedures covering
all key governance areas are
well embedded through
communication and training.
– Framework to combat all forms
of financial crime and corruption.
– Strong governance processes
to ensure data privacy.
– Whistleblowing service and
effective investigation processes
well-established and used in all
markets by employees, customer
representatives and suppliers.
– Ethical supplier risk assessments
introduced to support our
Groupwide responsible
procurement policy.
– Ethics training completed
by 97% of employees and
customer representatives.
– Member of the UN Global
Compact Network UK
40
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Annual Report and Financial Statements 2022
41
Strategic Report
Sustainability continued
Financial inclusion
Our purpose is to build a better world through financial
inclusion. For us, financial inclusion means providing
people who are underserved by mainstream lenders
with affordable financial products and services that
meet their needs, delivered in a responsible and
sustainable way.
Why financial inclusion is so important
We strive to help people access affordable credit when and
where they need it. Our customers have low-or medium
incomes and are regularly turned away by banks because
they often have an incomplete or no credit history. The
consumer segment we serve is not well supported by the
financial services sector for a number of reasons, in particular
our customers often:
– work hard but their income is difficult to verify;
– have never borrowed before and have no formal
credit history;
– have defaulted on a credit agreement resulting in a
damaged credit history;
– may not have a bank account;
– may lack internet access excluding them from
digital services;
– live in a rural area and access to a bank is difficult;
– want to borrow a small amount on a repayment schedule
which is not of interest to banks.
Meeting our customers’ needs
People often believe our customers take loans without thinking
about it, and that they can’t handle money. We know this is
not the case. With less disposable income, our customers are
very good managers of money, think carefully before they
borrow and try hard to save. In fact, 44% of customers and
potential customers we surveyed in 2022 said they have saved
some money every month in the past year.
We are happy to serve these customers and include them in
the financial mainstream when other lenders do not because
our business model and product offering is designed to meet
their unique needs and different credit profiles.
Affordability: Affordability is central to our responsible
approach to lending. Stringent credit procedures and
affordability checks ensure that customers do not take on
debt they cannot afford. We always provide clear terms and
conditions and in 2022 we simplified the language in our
customer documents even further to make borrowing
decisions more easily understood.
Personal service: Our personal face-to-face relationships with
home credit customers distinguish us from most other financial
services providers, and deliver customer satisfaction, retention
and growth. This regular contact helps customers to stay on
track with their repayment schedule. We are also in regular
dialogue with our digital customers whom we reach across a
range of digital channels.
Forbearance flexibility: Our financial model does not rely on
penalty fees and late payment interest charges. When a
borrower faces difficulty in repaying their loan, we take a
sympathetic, flexible approach to rescheduling repayments
or we can offer a payment holiday, if appropriate, until they
get back on track.
Tailored products and services: We have a differentiated
proposition from that of other credit providers ranging from
traditional home credit and digital instalment loans through to
a credit card, digital credit lines and a mobile wallet offering.
Our home credit model offers high levels of contact with
customers to help them stay in control of their repayments.
Our mobile wallet is unique for our segment of consumers and
in 2022 we launched a flexible interest rate to reward mobile
wallet customers for their loyalty. We also extended our
value-added services to include an online language learning
package in Poland.
We play a key role in society
Knowing our customers so well
helps us make better affordability
assessments. This, in turn, allows us
to approve more loans and extend
financial inclusion. With both our
digital and home credit models we
can also reach more customers
living in rural areas where traditional
banks are not located.
40%
of home credit
customers
live in a rural
area or small
village
42
International Personal Finance plc
Strategic Report
Sustainability continued
Financial inclusion
inclusion. For us, financial inclusion means providing
people who are underserved by mainstream lenders
with affordable financial products and services that
meet their needs, delivered in a responsible and
sustainable way.
Why financial inclusion is so important
We strive to help people access affordable credit when and
where they need it. Our customers have low-or medium
incomes and are regularly turned away by banks because
they often have an incomplete or no credit history. The
consumer segment we serve is not well supported by the
financial services sector for a number of reasons, in particular
our customers often:
– work hard but their income is difficult to verify;
– have never borrowed before and have no formal
credit history;
– have defaulted on a credit agreement resulting in a
damaged credit history;
– may not have a bank account;
– may lack internet access excluding them from
digital services;
– live in a rural area and access to a bank is difficult;
– want to borrow a small amount on a repayment schedule
which is not of interest to banks.
Meeting our customers’ needs
People often believe our customers take loans without thinking
about it, and that they can’t handle money. We know this is
not the case. With less disposable income, our customers are
very good managers of money, think carefully before they
borrow and try hard to save. In fact, 44% of customers and
potential customers we surveyed in 2022 said they have saved
some money every month in the past year.
the financial mainstream when other lenders do not because
our business model and product offering is designed to meet
their unique needs and different credit profiles.
Affordability: Affordability is central to our responsible
approach to lending. Stringent credit procedures and
affordability checks ensure that customers do not take on
debt they cannot afford. We always provide clear terms and
conditions and in 2022 we simplified the language in our
customer documents even further to make borrowing
decisions more easily understood.
Personal service: Our personal face-to-face relationships with
home credit customers distinguish us from most other financial
services providers, and deliver customer satisfaction, retention
and growth. This regular contact helps customers to stay on
track with their repayment schedule. We are also in regular
dialogue with our digital customers whom we reach across a
range of digital channels.
Forbearance flexibility: Our financial model does not rely on
penalty fees and late payment interest charges. When a
borrower faces difficulty in repaying their loan, we take a
sympathetic, flexible approach to rescheduling repayments
or we can offer a payment holiday, if appropriate, until they
get back on track.
Tailored products and services: We have a differentiated
proposition from that of other credit providers ranging from
traditional home credit and digital instalment loans through to
a credit card, digital credit lines and a mobile wallet offering.
Our home credit model offers high levels of contact with
customers to help them stay in control of their repayments.
Our mobile wallet is unique for our segment of consumers and
in 2022 we launched a flexible interest rate to reward mobile
wallet customers for their loyalty. We also extended our
value-added services to include an online language learning
package in Poland.
We play a key role in society
Knowing our customers so well
helps us make better affordability
assessments. This, in turn, allows us
to approve more loans and extend
financial inclusion. With both our
digital and home credit models we
can also reach more customers
living in rural areas where traditional
banks are not located.
40%
of home credit
customers
live in a rural
area or small
village
Our purpose is to build a better world through financial
We are happy to serve these customers and include them in
“As a responsible and inclusive lender,
Financial education
we invest in financial education initiatives
throughout our communities.”
Being a responsible lender
Behaving ethically and lending responsibly are core to the
sustainability of our business model and are embedded in
everything from strategic decision-making and product
design through to the millions of credit checks and everyday
interactions we have with our customers.
– We only lend to customers who can prove they have a
regular, secure income and can afford their repayments.
– We carefully assess a customer’s ability to borrow and make
credit bureau checks to obtain information on existing debts
to prevent over-indebtedness and make a responsible loan
offer. This is done in line with local legislation and the
consent of our customers.
– We support a new customer’s credit journey by lending
smaller amounts at first, over shorter periods of time. As they
prove their ability to repay, they build a positive credit history
with us and the credit bureau, thereby enabling more credit
choice in the future.
– Our customer representatives form relationships with
customers, allowing them to assess their circumstances and
ability to repay.
– Our customer representatives are rewarded primarily on
repayments rather than loans granted so it is in their interest
to lend amounts that their customers can afford to repay.
– We provide clear guidance on how much a customer will
repay and provide forbearance if they face difficulty in
making loan repayments.
– Late-payment fees, where applicable, are fair,
proportionate and are designed to re-engage with non-
performing customers.
– Our engagement with credit bureaus helps paying
customers to establish a positive credit history.
40,000
children and young people undertook financial
literacy programmes in Mexico in 2022
44%*
of customers and potential customers have saved
some money every month in the past year
*IPF Reptrak survey
As a responsible and inclusive lender, we invest in financial
education initiatives throughout our communities. While our
customers are skilled at managing tight household budgets, our
research into financial wellbeing highlights that many have
never received any financial education which can limit their
ability to engage with the financial sector. Each of our divisions
run programmes in partnership with charities or non-
governmental organisations (NGOs). We use both face-to-face
and online media to help people develop the knowledge and
skills to manage their household budget, save, borrow
responsibly and prioritise spending. By promoting financial skills
development, we help customers and the general public
access financial services with more confidence, and make
responsible and informed decisions about their finances.
‘Let’s talk money’
Financial literacy is a key step towards achieving
economic stability. ‘Let’s talk money’ is an established
financial education programme run by our home credit
operation in Mexico. Working in close partnership with
leading charities and NGOs, including Save the Children,
MIDE (Interactive Museum of Economics) and the EDUCA
Foundation, we offer classes to educate people living in
the communities we serve on how to better manage their
personal finances. Between 2008 and 2022 more than
150,000 people took part in this programme. In 2022,
we also provided nearly 40,000 children and young
people with financial literacy education to improve their
financial skills and attitudes towards spending, saving
and borrowing.
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Annual Report and Financial Statements 2022
43
Strategic Report
Sustainability continued
Valued people and communities
2022 has been a year of genuine transformation
in the area of the personal and professional value
proposition we offer colleagues, both employed
and self employed.
We are dedicated to providing high-quality learning and
personal development opportunities and during 2022 we
deployed our global IPF employer brand which is based
firmly upon our purpose. A major achievement has been the
deployment of learning academies which comprise structured
development pathways for all of our customer representatives.
The evolution of our care programme, which served us so well
during the pandemic, has taken us forward into areas such as
menopause, and psychosocial risk will be a further focus in
2023. We protect our culture fiercely, grounded as it is in the
deep feeling all of our colleagues have for supporting and
helping customers in our sector.
Enhanced employee value proposition
Building on our employer value proposition and responding
to focus group feedback from colleagues, we created a
global learning academy for our customer representatives
and call centre colleagues. Featuring 25 pathways, customer
representatives are now benefiting from support to develop
their agency, and broaden their customer service and
sales skills.
New careers portal
We launched our first global careers portal to attract and
retain great talent and ensure a high-quality experience
when applying to join our company.
The new websites showcase why the business is a great place
to work and the international opportunities available when
candidates apply for roles.
Enhanced employee experience
We undertake regular opinion and feedback surveys to
measure colleague engagement, commitment and career
aspirations. In response to the findings, we significantly
enhanced our global development programmes.
– We partnered with LinkedIn Learning and Harvard Business
School to provide best-in-class development materials and
experiences for colleagues throughout the Group.
– The first intake of senior managers whom we see as the
future generation of leaders at IPF joined our Global Leaders
Connect programme.
– We hosted our second annual Learning Festival comprising
70 online multi-language events which attracted 5,000
colleagues to learn about diversity and inclusion, business
growth, innovation and leadership.
Spotlight on Mexico:
A key focus in 2022 was to encourage and support
our customer representatives in Mexico to extend their
careers beyond their current roles. To drive this we set
a target that 50% of development manager vacancies,
which are the next rung up the career ladder, should
be filled by customer representatives who have extensive
experience and knowledge of our customers and the
business. We developed a new learning programme
to support career progression and identified those
colleagues with the potential to be promoted. In 2022,
130 customer representatives were promoted to
development managers.
We also:
– introduced the provision of company cars
– removed the requirement to work on a Saturday to
enhance work-life balance; and
– extended medical insurance to protect our
customer representatives.
The progress we are making on colleague care also
resulted in an improved position in the Workplace Wellness
Council assessment in Mexico, which recognised our
health promotion programme and provision of working
environments conducive to wellbeing.
25%
of development manager positions in Mexico
are now held by former customer representatives
44
International Personal Finance plc
Strategic Report
Sustainability continued
Valued people and communities
2022 has been a year of genuine transformation
New careers portal
in the area of the personal and professional value
proposition we offer colleagues, both employed
and self employed.
We launched our first global careers portal to attract and
retain great talent and ensure a high-quality experience
when applying to join our company.
We are dedicated to providing high-quality learning and
personal development opportunities and during 2022 we
deployed our global IPF employer brand which is based
firmly upon our purpose. A major achievement has been the
deployment of learning academies which comprise structured
development pathways for all of our customer representatives.
The evolution of our care programme, which served us so well
during the pandemic, has taken us forward into areas such as
menopause, and psychosocial risk will be a further focus in
2023. We protect our culture fiercely, grounded as it is in the
deep feeling all of our colleagues have for supporting and
helping customers in our sector.
Enhanced employee value proposition
Building on our employer value proposition and responding
to focus group feedback from colleagues, we created a
global learning academy for our customer representatives
and call centre colleagues. Featuring 25 pathways, customer
representatives are now benefiting from support to develop
their agency, and broaden their customer service and
sales skills.
The new websites showcase why the business is a great place
to work and the international opportunities available when
candidates apply for roles.
Enhanced employee experience
We undertake regular opinion and feedback surveys to
measure colleague engagement, commitment and career
aspirations. In response to the findings, we significantly
enhanced our global development programmes.
– We partnered with LinkedIn Learning and Harvard Business
School to provide best-in-class development materials and
experiences for colleagues throughout the Group.
– The first intake of senior managers whom we see as the
future generation of leaders at IPF joined our Global Leaders
Connect programme.
– We hosted our second annual Learning Festival comprising
70 online multi-language events which attracted 5,000
colleagues to learn about diversity and inclusion, business
growth, innovation and leadership.
Spotlight on Mexico:
A key focus in 2022 was to encourage and support
our customer representatives in Mexico to extend their
careers beyond their current roles. To drive this we set
a target that 50% of development manager vacancies,
which are the next rung up the career ladder, should
be filled by customer representatives who have extensive
experience and knowledge of our customers and the
business. We developed a new learning programme
to support career progression and identified those
colleagues with the potential to be promoted. In 2022,
130 customer representatives were promoted to
development managers.
We also:
– introduced the provision of company cars
– removed the requirement to work on a Saturday to
enhance work-life balance; and
– extended medical insurance to protect our
customer representatives.
The progress we are making on colleague care also
resulted in an improved position in the Workplace Wellness
Council assessment in Mexico, which recognised our
health promotion programme and provision of working
environments conducive to wellbeing.
25%
of development manager positions in Mexico
are now held by former customer representatives
Diversity
Equal opportunities
The Group is an equal opportunities employer. It is our policy
that no job applicant, employee or customer representative
will receive less favourable treatment because of their race,
colour, nationality, ethnic or other national origin, gender,
sexual orientation, marital status, age, disability or religion.
The purpose of this policy is to ensure that recruitment and
progression opportunities are open to all and are based purely
on merit, with all employees having the same access to
training and career development. We also give full and fair
consideration to applications for employment from disabled
people, having regard to their particular aptitudes and
abilities. If an employee becomes disabled, we make every
effort to ensure their employment with the Group continues
and reasonable adjustments are arranged where necessary.
Gender and diversity
The overall gender balance across the Group including all
employees and customer representatives is 80% female.
This reflects our large and unique customer representative
workforce who are predominantly female and mirror the
demographics of our largely female customer base.
The gender split of our employed workforce is set out in the
chart below. The proportion of female senior management
including direct reports was 31% in 2022. At 31 December 2022,
the Board comprised 43% female members, meeting the
Parker Review standard. Further information on Board diversity
are included on pages 86 and 87.
Gender split of employees at 31 December 2022
Board
Senior management
All other
3,182
Male
Female
4
60
3
27
5,586
In 2022, we continued to develop a number of initiatives to
support the development of women in our business.
New gender-focused recruitment practices
In Mexico, our recruitment process now requires that at least
one female should be considered in the selection process for
all vacant positions. In 2022, this led to material improvements
in leadership gender balance with the ratio of women to men
in management positions improving year on year by 11ppts to
47%. We plan to share this best practice across the IPF Group.
Health and safety
We place a high degree of importance on colleague
wellbeing. The Board has overall responsibility for health
and safety policy and receives regular briefings to review
performance. To ensure our people are as safe as possible a
global care group delivers initiatives which in 2022 included:
– Spring and Autumn health and safety awareness
campaigns providing advice and guidance on personal
safety, physical health and mental wellbeing;
– a Global Togetherness Day brought together 1,700
colleagues virtually to celebrate how we are building a
better world, in particular recognising the efforts colleagues
had made to help refugees fleeing Ukraine;
– the BUPA Menopause Plan providing GP support and
advice to UK colleagues and partners; and
– the Aviva DigiCare+ Workplace offering an annual
health check, digital GP services and mental health
and nutritional consultation.
We have held the ISO 45001 Occupational Health and
Safety Management Standard in all European home credit
markets since 2020. Mexico home credit has entered the
implementation phase with certification expected in 2023.
Operating under this independently verified safety management
system ensures all employees and self-employed customer
representatives are provided with the highest standards of
safety supervision, training, education and advice.
During 2023 and 2024, our global care group will work to
implement best practice based on ISO 45003, the first
international standard that provides organisations with
guidance on managing workplace psychological health and
safety. This standard allows organisations to identify the
hazards which have the potential to impair the psychological
health and wellbeing of workers, assess the primary risk factors
and determine the changes required to improve the working
environment. This is a significant development in embedding
a culture of safety within IPF and protecting colleagues’
physical and psychological health, safety and wellbeing
in the workplace.
Women’s development programme
Flexible working
The first women’s development programme in Mexico, ‘The
Power of Women’ was launched and 110 participants
undertook developmental training and learning experiences
focused on self-awareness, discipline to grow and openness
to change through self-learning.
Understanding potential barriers
In Poland, a survey among female colleagues was undertaken
to better understand the motivations and barriers to women’s
development and promotion. This led to the creation of a
programme to help female colleagues discover their strengths
and apply for more senior roles.
We have flexible working policies in place in all markets for all
employees encouraging a healthy work-life balance. Over and
above the benefit of this policy, we also have part-time roles,
maternity/paternity options and flexible hours working.
44
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Annual Report and Financial Statements 2022
45
Strategic Report
Sustainability continued
Valued communities
Employee volunteering
Building strong relationships in our local communities provides
a valuable platform to engage with colleagues, customers,
local governments and NGOs. We focus on the issues that are
important to our stakeholders namely financial inclusion and
education. In 2022, we invested over £1m in programmes to
support education, social welfare and emergency relief for
Ukraine. 4,000 volunteers invested 15,500 volunteering hours to
support community projects and promote financial inclusion.
All community investment data is compiled using the London
Benchmarking Group’s measurement framework.
£1.1m
invested in communities
We support colleagues to volunteer in their local communities
not only to support society, but to improve teamwork,
engagement and motivation. Despite restrictions brought
about by the pandemic, our colleagues dedicated time to
helping local causes and, in particular, supporting people
fleeing the war in Ukraine.
15,500
volunteering hours
undertaken by colleagues
Invisibles – our global community programme
In 2022, we began to roll out our flagship community
programme, Invisibles, highlighting the plight of
underprivileged, marginalised and excluded
members of society. We believe everyone deserves
fair treatment and as a business that specialises in
serving underserved consumers, we have an
important role to play in building a long-term social
programme that links directly to our purpose and
business activities. We are making the issue of
invisibility visible among public and government
decision-makers. We plan to quantify the issue in our
markets by demonstrating the social and economic
impact on ‘invisible’ people and highlighting real-life
stories of those in this situation. We are also beginning
to implement support initiatives to deliver positive
changes by providing advice through NGOs and
experts, and directly through volunteering
programmes for our colleagues.
Our Invisibles programme highlights the plight of
underprivileged and excluded members of society
Colleagues volunteered and raised funds to support
the creation of the Mother’s House in Warsaw
Award-winning ’Mother’s House’
for Ukrainian refugees
The onset of the war in Ukraine spurred a heartfelt
surge in colleagues supporting refugees escaping
to our markets, in particular Poland, Romania and
Hungary. Pooling financial donations from around
the Group, our colleagues took to creating a unique,
long-term social initiative, known as the Mother’s
House to provide a home for ten refugee families
displaced from Ukraine. Our volunteers renovated a
large property in Warsaw in cooperation with a NGO
to provide safe shelter, psychological support and
school places for the children. In the long term,
we intend that the Mother’s House will help other
single mothers who are forced to cope with crisis
in their lives.
46
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Strategic Report
Sustainability continued
Managing a responsible business
Valued communities
Employee volunteering
Building strong relationships in our local communities provides
We support colleagues to volunteer in their local communities
a valuable platform to engage with colleagues, customers,
not only to support society, but to improve teamwork,
local governments and NGOs. We focus on the issues that are
engagement and motivation. Despite restrictions brought
important to our stakeholders namely financial inclusion and
about by the pandemic, our colleagues dedicated time to
education. In 2022, we invested over £1m in programmes to
helping local causes and, in particular, supporting people
support education, social welfare and emergency relief for
fleeing the war in Ukraine.
Ukraine. 4,000 volunteers invested 15,500 volunteering hours to
support community projects and promote financial inclusion.
All community investment data is compiled using the London
Benchmarking Group’s measurement framework.
15,500
volunteering hours
undertaken by colleagues
£1.1m
invested in communities
All our operations and decisions are underpinned by
responsible leadership, governance and transparency.
Engagement with regulators
We support regulation which protects consumers and ensures
that only responsible businesses are permitted to provide
financial products. We maintain good relationships with
regulators and legislators who play a key role in shaping the
consumer finance sector. We help them understand that we
are an important member of a well-functioning market playing
a vital role in extending financial inclusion in society.
We engage through a range of industry associations,
legislative consultations and conferences to communicate our
views to policymakers. This contributes to maintaining high
standards across the industry, building a positive reputation
and creates a sustainable regulatory and operational
environment. We are committed to working with regulators
and legislators to help shape the regulatory future of the
consumer lending sector.
We are a politically neutral organisation. We comply with legal
requirements on disclosing political donations and do not
provide financial support to political parties. See page 84.
Invisibles – our global community programme
In 2022, we began to roll out our flagship community
programme, Invisibles, highlighting the plight of
underprivileged, marginalised and excluded
members of society. We believe everyone deserves
fair treatment and as a business that specialises in
serving underserved consumers, we have an
important role to play in building a long-term social
programme that links directly to our purpose and
business activities. We are making the issue of
invisibility visible among public and government
decision-makers. We plan to quantify the issue in our
markets by demonstrating the social and economic
impact on ‘invisible’ people and highlighting real-life
stories of those in this situation. We are also beginning
to implement support initiatives to deliver positive
changes by providing advice through NGOs and
experts, and directly through volunteering
programmes for our colleagues.
Our Invisibles programme highlights the plight of
underprivileged and excluded members of society
Colleagues volunteered and raised funds to support
the creation of the Mother’s House in Warsaw
Award-winning ’Mother’s House’
for Ukrainian refugees
The onset of the war in Ukraine spurred a heartfelt
surge in colleagues supporting refugees escaping
to our markets, in particular Poland, Romania and
Hungary. Pooling financial donations from around
the Group, our colleagues took to creating a unique,
long-term social initiative, known as the Mother’s
House to provide a home for ten refugee families
displaced from Ukraine. Our volunteers renovated a
large property in Warsaw in cooperation with a NGO
to provide safe shelter, psychological support and
school places for the children. In the long term,
we intend that the Mother’s House will help other
single mothers who are forced to cope with crisis
in their lives.
Responsible shopping campaign
To coincide with Black Friday, we launched a
responsible shopping campaign in Romania focused
on educating consumers to only buy the things they
need and to think carefully before borrowing. We also
collaborated with online influencers to extend the
financial education message. Following its success, it
was extended into Hungary where we aired a 3-week
initiative to coincide with the new year sales early in
2023. The responsibility campaigns reached nearly
6 million people on TV, radio, press and social media.
97%
of employees and customer representatives,
including self-employed and part-time colleagues,
completed ethics e-learning in 2022
Code of Ethics and policies
The Board has overall responsibility for risk management
including compliance and ethics.
Policies and procedures are embedded across the business
covering all key governance areas including fraud, anti-money
laundering, anti-bribery, gifts and hospitality, conflicts of
interest, anti-tax evasion, modern slavery, data protection,
information security, health and safety and whistleblowing. Our
common values and Code of Ethics ensure that colleagues
have a clear understanding of how we serve our customers
with respect and conduct our business ethically.
Our policies and values are translated and communicated to
colleagues through induction processes, training, internal
communications and seasonal awareness campaigns. All our
employees and customer representatives undertake ethics
training annually. The training is based on real-life ethical
dilemmas and helps colleagues better understand the
complexity and importance of decisions they make in their
day-to-day work.
Anti-money laundering (AML) and
Know your customer (KYC)
We have an established AML and KYC framework to minimise
financial crime risk. The framework is managed and assured
through a three lines of defence approach, comprising
prevention and detection processes and controls which
ensure that the Group is not used to launder the proceeds of
criminal activity and/or facilitate the financing of terrorist
organisations and/or terrorist acts. All our businesses provide
induction and annual training on fraud and anti-money
laundering plus two awareness campaigns each year.
46
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47
Strategic Report
Sustainability continued
Anti-bribery and corruption
Responsible procurement
We co-operate with our supplier partners to develop
relationships based on our values and mutual benefits.
We want our suppliers to be informed about and engaged
with our business so they are better able to understand how
their services contribute to the delivery of our goals. We have
a Groupwide responsible procurement policy which governs
how all external products and services are sourced. In 2022,
we introduced Group standards for our procurement teams
ensuring a common approach to supplier relationship
management. They also require a key supplier annual
risk assessment procedure including evaluation metrics
on supplier reputation, data protection controls and an
ethical assessment.
Whistleblowing
Our ‘Speak Up’ whistleblowing services (web reporting and
hotlines) are available to all employees, contractors and
customer representatives to ensure they have access to
appropriate channels to report any wrongdoing in the
workplace or concerns for their safety and wellbeing. We
have now extended our whistleblowing services to external
stakeholders and proactively communicate to suppliers in all
our markets. We encourage colleagues to feel able to raise
concerns with senior management or human resources but
recognise the importance of an independent, confidential
whistleblowing service allowing anonymous reporting, and
this is well embedded in every market (EthicsGlobal in Mexico
and WhistleB across the rest of the business). All matters raised
are treated sensitively and confidentially, and receive the
appropriate level of impartial and independent investigation.
Significant matters are escalated for the attention of relevant
Group directors. Data is compiled on key metrics such as
subject matter, geography and investigation outcomes,
and the Board receives reports on operation of the services
twice a year.
We ensure compliance with anti-bribery and corruption
legislation through our policy, training, internal controls and
procedures which prohibit all forms of bribery by the Group
and anyone who works for us. Our processes aim to prevent
bribery occurring throughout all our operations. Risk
assessments are carried out every year in every market against
the six prevention principles of the UK Bribery Act. Mandatory
annual anti-bribery training is completed by all employees
and customer representatives in all our markets.
Tax strategy
We are a responsible taxpayer, committed to ensuring
compliance with tax law and practice in all of the territories
in which we operate, whilst recognising our responsibility to
protect shareholder value. We seek to maintain honest and
open relationships with the relevant tax authorities and
operate in a straightforward and transparent manner in our
dealings with them. An anti-facilitation of tax evasion policy
is formally in place in the UK, with appropriate procedures
embedded in our procurement processes and training is
provided regularly. Our approach to anti-facilitation of tax
evasion is also reinforced in the annual Group-wide ethics
training which takes place annually. Information on our
approach to the management of taxation can be found in
the Group’s tax strategy, which has been reviewed and
approved by the Board, on our website at www.ipfin.co.uk.
Human rights and modern slavery
We are dedicated to human rights and make regular
communication on progress through our membership of the
United Nations Global Compact Network UK. We are
committed to addressing modern slavery, forced labour and
human trafficking in all its forms and our policy sets out the
measures, systems and procedures that we employ to
minimise this taking place within the Group and our supply
chain. Modern slavery is included as part of our annual
Groupwide ethics training to ensure the risks are understood
by all employees and customer representatives. Our statement
on the Modern Slavery Act can be found on our website at
www.ipfin.co.uk.
Data privacy
We take our data protection obligations very seriously and
comply with relevant legislation in all of the jurisdictions in
which we operate. We are committed to preserving our
customers’ trust, respecting the choices they make about how
their personal data is processed throughout our business and
protecting their privacy rights while ensuring appropriate
transparency. Policies, processes and controls are in place as
part of our data privacy compliance framework to apply the
standards required by GDPR legislation. These are subject to
regular reviews, monitoring and testing supported by internal
audits on data privacy. The Group Data Protection Officer
reports annually to the Board. Key functions receive regular
training and updates on relevant topics and all employees
and customer representatives are required to undertake an
annual personal data protection training module.
48
International Personal Finance plc
Strategic Report
Sustainability continued
Anti-bribery and corruption
Responsible procurement
We ensure compliance with anti-bribery and corruption
We co-operate with our supplier partners to develop
legislation through our policy, training, internal controls and
relationships based on our values and mutual benefits.
procedures which prohibit all forms of bribery by the Group
We want our suppliers to be informed about and engaged
and anyone who works for us. Our processes aim to prevent
with our business so they are better able to understand how
bribery occurring throughout all our operations. Risk
their services contribute to the delivery of our goals. We have
assessments are carried out every year in every market against
a Groupwide responsible procurement policy which governs
the six prevention principles of the UK Bribery Act. Mandatory
how all external products and services are sourced. In 2022,
annual anti-bribery training is completed by all employees
we introduced Group standards for our procurement teams
and customer representatives in all our markets.
Tax strategy
ensuring a common approach to supplier relationship
management. They also require a key supplier annual
risk assessment procedure including evaluation metrics
on supplier reputation, data protection controls and an
We are a responsible taxpayer, committed to ensuring
compliance with tax law and practice in all of the territories
in which we operate, whilst recognising our responsibility to
protect shareholder value. We seek to maintain honest and
ethical assessment.
Whistleblowing
open relationships with the relevant tax authorities and
Our ‘Speak Up’ whistleblowing services (web reporting and
operate in a straightforward and transparent manner in our
hotlines) are available to all employees, contractors and
dealings with them. An anti-facilitation of tax evasion policy
customer representatives to ensure they have access to
is formally in place in the UK, with appropriate procedures
appropriate channels to report any wrongdoing in the
embedded in our procurement processes and training is
workplace or concerns for their safety and wellbeing. We
provided regularly. Our approach to anti-facilitation of tax
have now extended our whistleblowing services to external
evasion is also reinforced in the annual Group-wide ethics
stakeholders and proactively communicate to suppliers in all
training which takes place annually. Information on our
our markets. We encourage colleagues to feel able to raise
approach to the management of taxation can be found in
concerns with senior management or human resources but
the Group’s tax strategy, which has been reviewed and
recognise the importance of an independent, confidential
approved by the Board, on our website at www.ipfin.co.uk.
whistleblowing service allowing anonymous reporting, and
this is well embedded in every market (EthicsGlobal in Mexico
and WhistleB across the rest of the business). All matters raised
are treated sensitively and confidentially, and receive the
appropriate level of impartial and independent investigation.
Significant matters are escalated for the attention of relevant
Group directors. Data is compiled on key metrics such as
subject matter, geography and investigation outcomes,
and the Board receives reports on operation of the services
twice a year.
Human rights and modern slavery
We are dedicated to human rights and make regular
communication on progress through our membership of the
United Nations Global Compact Network UK. We are
committed to addressing modern slavery, forced labour and
human trafficking in all its forms and our policy sets out the
measures, systems and procedures that we employ to
minimise this taking place within the Group and our supply
chain. Modern slavery is included as part of our annual
Groupwide ethics training to ensure the risks are understood
by all employees and customer representatives. Our statement
on the Modern Slavery Act can be found on our website at
www.ipfin.co.uk.
Data privacy
We take our data protection obligations very seriously and
comply with relevant legislation in all of the jurisdictions in
which we operate. We are committed to preserving our
customers’ trust, respecting the choices they make about how
their personal data is processed throughout our business and
protecting their privacy rights while ensuring appropriate
transparency. Policies, processes and controls are in place as
part of our data privacy compliance framework to apply the
standards required by GDPR legislation. These are subject to
regular reviews, monitoring and testing supported by internal
audits on data privacy. The Group Data Protection Officer
reports annually to the Board. Key functions receive regular
training and updates on relevant topics and all employees
and customer representatives are required to undertake an
annual personal data protection training module.
Environment
We recognise that climate change is a critical issue for our stakeholders as well as for wider society. The impact of
climate change also poses potential risks and opportunities to our business which need to be effectively managed
on behalf of all our stakeholders.
Climate and TCFD
This section sets out our understanding of the impact of climate change on the Group. It also explains the activity we have
completed during 2022, and have planned for 2023 and beyond with regard to managing the risks and opportunities to the
Group in relation to climate change. In our 2021 Annual Report, we confirmed that we support the recommendations provided by
the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), which call on companies to disclose the
impacts of climate change on their business. In 2022, we looked to move to disclose in line with the TCFD. The information
disclosed within this report is therefore structured to demonstrate our understanding of the risks associated with climate change,
in a way that is transparent and in accordance with the TCFD. The following pages set out our progress against the 11 TCFD
recommendations and indicate our priorities for 2023. We have included a summary table of compliance on page 56.
Climate Achievements and Priorities Overview
Governance
The Board has the ultimate
responsibility for the management
of risks and opportunities relating
to climate change. The Audit and
Risk Committee considers climate
risk in detail as part of its broader
risk oversight remit. Executive
governance of climate-related
matters is undertaken through the
Environment Oversight Group with
strategic matters considered at
Country Management Team
(CMT) meetings.
Strategy
The Group looks to create robust
assessments about the risks and
opportunities of climate change
and ensure these are considered
appropriately when making key
decisions, such as strategic
planning, budgeting and
project oversight.
Risk management
The Group seeks to understand
the risks from climate change
which will impact its operations,
business model and customers
over time.
Metrics and targets
The Group has in place targets
for greenhouse gas (GHG)
emissions and other
environmental impacts and
can accurately measure these.
Achievements in 2022
– The Board reviewed and endorsed actions designed to enable compliance with the TCFD.
– The Audit and Risk Committee approved changes to our Enterprise Risk Management Framework
(ERMF) concerning climate-related risk.
– The formal responsibilities of the Board and its Committees were updated to include explicit
reference to climate.
2023 Focus Areas
– Enhance reporting to the Board and its Committees on relevant external climate related developments.
– Incorporate climate considerations into key decisions taken by the Board including strategic planning.
– Develop management information for the Board to assist with oversight of our management of
climate-related risks.
Achievements in 2022
– Insight into the risks and opportunities of climate change on our business model was developed.
– Assessments were made about future impact of climate on the Group’s business and strategy.
– We reviewed externally-developed proposals for green lending products in our European home
credit markets.
2023 Focus Areas
– Embed new processes to ensure climate-related issues serve as an input to key decision-making
processes at Group and market level.
– Progress scenario analysis to provide greater insight on the resilience of the Group’s strategy in
different climate scenarios.
– Identify targets relating to climate and report on progress regularly to the Board.
Achievements in 2022
– Climate risk was incorporated as a key risk in the Group’s risk management framework.
– Climate risk was regularly reviewed through existing risk governance forums.
– Climate risk was assessed by a cross-functional group of subject matter experts over different time
horizons and the output of this work was endorsed by the Board.
2023 Focus Areas
– Enhance KPIs for monitoring climate risk.
– Refine internal control arrangements for this risk category.
– Identify specific risks through credible scenario analysis processes.
Achievements in 2022
– Scope 1 and 2 emissions reported in line with GHG Protocol and verified independently.
– Scope 1 and 2 emissions increased by 1% as normal business operations resumed post-pandemic
2023 Focus Areas
– Creating a credible transition plan which aligns to the 1.5°C pathway.
– Develop credible emissions-related targets.
– Measure other climate targets including those for energy use, paper use, and waste and recycling.
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Annual Report and Financial Statements 2022
49
Strategic Report
Sustainability continued
Governance
TCFD recommendation:
a) Describe the Board’s oversight of climate-related risks and opportunities
The Board has ultimate accountability for the management of all risks and opportunities relating to climate change as well as our
broader approach to sustainability. The Board discharged this responsibility in 2022 by receiving two detailed updates on climate
related matters. Our Chief Financial Officer and Executive Director, Gary Thompson, has been appointed as the lead Board
member for climate-related matters.
In early 2022, the Board received an update outlining the Group’s overall approach to implementing the TCFD in the context of a
broader climate strategy. In late 2022, the Board engaged in a detailed review of the work undertaken to implement the TCFD and
endorsed a number of key decisions and assumptions on this topic. Further details on these decisions are set out below. Also in
late 2022, the Board reviewed and approved a revised Matters Reserved document, which formalised its role in oversight of this
area. The Board also approved revised terms of reference for each board committee, which included amending the
responsibilities of the Audit and Risk Committee to formalise its role in oversight of external disclosures relating to: (i) sustainability
and (ii) the Group’s management of the financial risks arising from climate change. In 2022, the Board did not explicitly monitor
progress against goals and targets for addressing climate-related targets, but this is a priority for 2023.
Whilst the Group’s Board has overall accountability for the management of all risks and opportunities relating to climate change,
as part of its role in determining the Group’s broader approach to sustainability, it delegates some of its responsibilities in this area
to the Audit and Risk Committee, Remuneration Committee and the Nominations and Governance Committee.
Committee
Climate change responsibilities
Audit and Risk Committee
– Review and oversight of the activities undertaken by the Group to respond to the
financial risks arising from climate change.
– Oversight of external disclosures relating to the Group’s management of the financial
risks arising from climate change.
Remuneration Committee
– Oversight of the application of climate and other ESG targets to remuneration.
Nominations and Governance
Committee
– Ensuring that suitable arrangements are in place to manage climate risks and
opportunities at Board level.
In 2022, the Audit and Risk Committee approved changes to the Group’s ERMF to include climate risk as a key risk and received
updates in relation to progress on compliance with the TCFD. The Remuneration Committee discussed the importance of adding
broader ESG metrics to future variable pay schemes and agreed to follow up on this area in 2023. The Nominations and
Governance Committee reviewed and recommended to the Board changes to the Matters Reserved to the Board and Board
Committee terms of reference which made explicit responsibilities on managing the risks and opportunities of climate change.
Looking to 2023, the Board has endorsed the following priorities to further improve governance in this area:
i. to incorporate climate considerations into key decisions taken by the Board including strategic planning;
ii. to approve targets relating to climate related issues and receive reports on progress towards these targets; and
iii. ensure reporting on climate matters forms part of the regular reporting suite for the Board so that progress against climate-
related targets is monitored and overseen effectively.
50
International Personal Finance plc
Strategic Report
Sustainability continued
Governance
TCFD recommendation:
a) Describe the Board’s oversight of climate-related risks and opportunities
The Board has ultimate accountability for the management of all risks and opportunities relating to climate change as well as our
broader approach to sustainability. The Board discharged this responsibility in 2022 by receiving two detailed updates on climate
related matters. Our Chief Financial Officer and Executive Director, Gary Thompson, has been appointed as the lead Board
member for climate-related matters.
In early 2022, the Board received an update outlining the Group’s overall approach to implementing the TCFD in the context of a
broader climate strategy. In late 2022, the Board engaged in a detailed review of the work undertaken to implement the TCFD and
endorsed a number of key decisions and assumptions on this topic. Further details on these decisions are set out below. Also in
late 2022, the Board reviewed and approved a revised Matters Reserved document, which formalised its role in oversight of this
area. The Board also approved revised terms of reference for each board committee, which included amending the
responsibilities of the Audit and Risk Committee to formalise its role in oversight of external disclosures relating to: (i) sustainability
and (ii) the Group’s management of the financial risks arising from climate change. In 2022, the Board did not explicitly monitor
progress against goals and targets for addressing climate-related targets, but this is a priority for 2023.
Whilst the Group’s Board has overall accountability for the management of all risks and opportunities relating to climate change,
as part of its role in determining the Group’s broader approach to sustainability, it delegates some of its responsibilities in this area
to the Audit and Risk Committee, Remuneration Committee and the Nominations and Governance Committee.
Committee
Climate change responsibilities
financial risks arising from climate change.
– Oversight of external disclosures relating to the Group’s management of the financial
risks arising from climate change.
Remuneration Committee
– Oversight of the application of climate and other ESG targets to remuneration.
Nominations and Governance
– Ensuring that suitable arrangements are in place to manage climate risks and
Committee
opportunities at Board level.
In 2022, the Audit and Risk Committee approved changes to the Group’s ERMF to include climate risk as a key risk and received
updates in relation to progress on compliance with the TCFD. The Remuneration Committee discussed the importance of adding
broader ESG metrics to future variable pay schemes and agreed to follow up on this area in 2023. The Nominations and
Governance Committee reviewed and recommended to the Board changes to the Matters Reserved to the Board and Board
Committee terms of reference which made explicit responsibilities on managing the risks and opportunities of climate change.
Looking to 2023, the Board has endorsed the following priorities to further improve governance in this area:
i. to incorporate climate considerations into key decisions taken by the Board including strategic planning;
ii. to approve targets relating to climate related issues and receive reports on progress towards these targets; and
iii. ensure reporting on climate matters forms part of the regular reporting suite for the Board so that progress against climate-
related targets is monitored and overseen effectively.
TCFD recommendation:
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
Climate-related matters are considered at the Environmental Oversight Group, which meets at least monthly and whose
membership comprises representatives of a range of functions who provide leadership on broader climate issues. The material
outputs from this forum are considered by the CMT and Board. In 2022, the forum reviewed detailed proposals concerning the
Group’s broader climate performance as well as considering and recommending to the Board a range of important decisions
about the Group’s approach to the TCFD. It also analysed the options for a credible net-zero commitment, potential approaches
to Scope 3 reporting, options for targets and metrics and reviewed data concerning travel by customer representatives in
six markets.
Material matters relating to climate are considered at the CMT alongside other key strategic topics. This is an important forum
comprising the senior leaders at Group and market level. In 2022, the CMT reviewed the overall approach to managing climate-
related risks and the approach to measuring and reducing the emissions of the Group. The CMT also reviewed in detail proposals
developed by an external consultancy to originate loans in European home credit markets to enable customers to fund home
improvements which would reduce energy usage and drive decarbonisation. The CMT discussed these proposals in detail and
determined not to progress them in 2023. This decision reflected concerns that the Group’s European home credit customers
would be able to source other funding for this purpose.
The Risk Advisory Group (RAG) is attended by the Group executive team and a range of other senior-level individuals from
across the Group and oversees the management of climate risk alongside other key risks. The RAG considers updates on
climate risk quarterly.
Looking forward to 2023, we plan to further strengthen our executive governance in this area by more formal reporting to the
Board on the work undertaken and developing more structured oversight of regulatory changes relating to climate in all our
markets which have the potential to materially impact our activities.
Audit and Risk Committee
– Review and oversight of the activities undertaken by the Group to respond to the
Our governance structure around climate-related risks and opportunities is presented below.
Our climate-related governance at a glance
Governance
Board
Scope and what they do
The Board has overall accountability for the management of all
risks and opportunities relating to climate change as part of its role
in determining the Group’s broader approach to sustainability
Audit and Risk
Committee
The Audit and Risk Committee has delegated responsibility for
climate-related risk. Consideration of climate-related risks is a
regularly scheduled agenda item.
Country Management
Team (CMT)
The CMT comprises senior executives in the UK and leaders of our
markets and divisional operations. The CMT’s role in 2022 included
consideration and approval of matters relating to our broader
environmental strategy.
Frequency
Six times per year
Six times per year
Three times per year
Risk Advisory Group
(RAG)
This RAG comprises senior executives and internal risk management
professionals. The RAG:
Quarterly
i. reviews reports concerning the assessment and management
of climate-related risks;
ii. provides regular reports to the Audit and Risk Committee
on climate-related risks; and
iii. monitors the management of climate-related risks in relation
to the overall risk exposure of the Group.
Environment
Oversight Group
Introduced in January 2022, this group of senior executives is
responsible for setting and managing the Groups’ environment
strategy and ensuring compliance with the TCFD. The draft risk
register relating to environmental risks is presented to the forum
for agreement before presentation to the RAG.
Monthly
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Annual Report and Financial Statements 2022
51
Strategic Report
Sustainability continued
Strategy
TCFD recommendation:
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium
and long term.
To aid our assessment of the potential impact of the risks and opportunities of climate change, a four-stage process was followed
by a group of subject matter experts working cross functionally in 2022. The output of the work described below was then reviewed
and endorsed by the Environment Oversight Group and then by the Board.
Stage 1 – Determining definition of “materiality”
Utilising the four major categories of financial impact in alignment with the methodology put forward by the TCFD as a basis for
determining materiality, led the Group to formally adopt a definition of a material climate-related risk or opportunity as being an
event which would have a significant impact on the profitability of the Group (e.g. through delayed customer repayments),
expenditure (e.g. increased costs relating to increased impairment), assets (e.g. closing branches), or financing (e.g. loss of
investors due to legal breaches). “Significant” for these purposes means a material impact on the Group’s ability to meet the
targets detailed in its strategic plan.
Stage 2 – Determining relevant time periods
A process of analysis was undertaken to determine the time periods relevant to the Group for assessing climate related risks and
opportunities. These are presented in the table below with the associated rationale.
Time period
Short-term
Time horizon
Reasoning
0-2 years
This time period reflects the average term of our loans and the flexibility in
both our credit strategies and field operations that allow us to adapt rapidly
to changing scenarios.
Medium-term
2-5 years
This time period reflects the strategic planning horizon used by the Group.
Long-term
5 plus years
This time period is based on the useful economic life of the majority of
Group assets.
Stage 3 – Risk and opportunity definition
A review of definitions of climate risk used by external stakeholders was undertaken and the definitions detailed below were
identified as being the most relevant for the Group from a risk perspective
Risk type
Physical
Transition
Risk
Acute Increased frequency and severity of extreme weather events affecting customers,
customer representatives and employees could impact the business model.
Chronic Permanent changes to sea, river or lake levels could impact our ability to conduct
our business in some areas.
Policy and Legal (i) Exposure to litigation due to our inability to comply with environmental
law; and (ii) increased operating costs due to the increased cost of transport.
Market Uncertainty around the costs incurred in moving to a net zero economy.
Reputation (i) Increased stakeholder concern or negative stakeholder feedback relating to
our ability to transition effectively to a lower carbon economy; and (ii) increased
shareholder concern or negative shareholder feedback relating to our strategy to address
climate-related risks.
The same process was followed to identify the potential climate-related opportunities which would be most relevant to the Group.
The following opportunities were identified:
Opportunity type
Opportunity
Resource efficiency
Energy source
(i) Reduced operating costs through reduced air and other travel; and (ii) reduced
operating costs through reduced paper consumption.
(i) Use of lower-emission sources of energy; and (ii) use of supportive policy incentives (iii)
Use of new technologies.
Products and services
Development of new products and services through innovation.
Markets
Resilience
52
Increased attractiveness of the Group to customers and employees by effective execution
and communication of the a climate strategy.
Ability for the Group to access reduced priced funding due to its climate impacts.
International Personal Finance plc
Strategic Report
Sustainability continued
Strategy
TCFD recommendation:
and long term.
To aid our assessment of the potential impact of the risks and opportunities of climate change, a four-stage process was followed
by a group of subject matter experts working cross functionally in 2022. The output of the work described below was then reviewed
and endorsed by the Environment Oversight Group and then by the Board.
Stage 1 – Determining definition of “materiality”
Utilising the four major categories of financial impact in alignment with the methodology put forward by the TCFD as a basis for
determining materiality, led the Group to formally adopt a definition of a material climate-related risk or opportunity as being an
event which would have a significant impact on the profitability of the Group (e.g. through delayed customer repayments),
expenditure (e.g. increased costs relating to increased impairment), assets (e.g. closing branches), or financing (e.g. loss of
investors due to legal breaches). “Significant” for these purposes means a material impact on the Group’s ability to meet the
targets detailed in its strategic plan.
Stage 2 – Determining relevant time periods
A process of analysis was undertaken to determine the time periods relevant to the Group for assessing climate related risks and
opportunities. These are presented in the table below with the associated rationale.
Time period
Short-term
Time horizon
Reasoning
0-2 years
This time period reflects the average term of our loans and the flexibility in
both our credit strategies and field operations that allow us to adapt rapidly
Medium-term
2-5 years
This time period reflects the strategic planning horizon used by the Group.
Long-term
5 plus years
This time period is based on the useful economic life of the majority of
to changing scenarios.
Group assets.
Stage 3 – Risk and opportunity definition
A review of definitions of climate risk used by external stakeholders was undertaken and the definitions detailed below were
identified as being the most relevant for the Group from a risk perspective
Risk type
Physical
Risk
Transition
Policy and Legal (i) Exposure to litigation due to our inability to comply with environmental
Acute Increased frequency and severity of extreme weather events affecting customers,
customer representatives and employees could impact the business model.
Chronic Permanent changes to sea, river or lake levels could impact our ability to conduct
our business in some areas.
law; and (ii) increased operating costs due to the increased cost of transport.
Market Uncertainty around the costs incurred in moving to a net zero economy.
Reputation (i) Increased stakeholder concern or negative stakeholder feedback relating to
our ability to transition effectively to a lower carbon economy; and (ii) increased
shareholder concern or negative shareholder feedback relating to our strategy to address
climate-related risks.
The same process was followed to identify the potential climate-related opportunities which would be most relevant to the Group.
The following opportunities were identified:
Opportunity type
Opportunity
Resource efficiency
(i) Reduced operating costs through reduced air and other travel; and (ii) reduced
operating costs through reduced paper consumption.
Energy source
(i) Use of lower-emission sources of energy; and (ii) use of supportive policy incentives (iii)
Use of new technologies.
Products and services
Development of new products and services through innovation.
Increased attractiveness of the Group to customers and employees by effective execution
and communication of the a climate strategy.
Ability for the Group to access reduced priced funding due to its climate impacts.
Markets
Resilience
52
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium
Opportunity type
Short term
Medium term
Reasoning
Stage 4 – Materiality assessment
Using the definitions described on page 52, the following assessment was made of the likely material impacts over the short,
medium and long term of the opportunities to the Group arising from climate change.
Resource efficiency
Energy source
Products and services
Markets
Resilience
Low
Low
Low
Medium
Low
Medium
Medium
Low
Medium
Medium
Medium
Medium
Low
Medium
Medium
The exercise confirmed that the Group does not envisage material opportunities arising in the short-to-medium term from climate
change. The opportunity which was assessed as most likely to occur over the short term was the potential for the Group to derive
benefits in terms of customer satisfaction and other stakeholder feedback from the successful execution of a credible
environmental strategy.
In respect of risks from climate change over the different time periods specified the following assessment in terms of likely material
impacts was made:
Risk type
Physical
Risk
Low
Chronic
Transition
Policy and legal
Market
Reputation
Short term
Medium term
Long term
Low
Low
Low
Low
Low
Low
Low
Medium
Low
Medium
Medium
Medium
Medium
Medium
Medium
The exercise confirmed that risk had not been assessed as a material concern over the short term. Over the medium term the risk
most likely to crystallise was assessed as arising from the impact on the Group of regulatory change which could increase costs or
have operational impacts. More broadly it also reflects the fact that the Group does not have significant credit exposure to
carbon related assets.
Looking forward, we will continue to develop our insight on this area and re-assess the assumptions which underpin the various
judgements outlined above. We aim to focus on embedding the process to ensure climate-related issues serve as an input to key
decision-making processes at Group and market level. We also aim to further quantify the financial implications of the key
climate-related risks and opportunities in our exposure,(i.e. revenue, expenditure, assets and liabilities, and capital and financing).
TCFD recommendation:
b) Describe the impact of climate-related risks and opportunities in the organisation’s businesses, strategy,
and financial planning.
The process outlined above provided insight into the impact of climate-related risks and opportunities over differing time periods,
including the time periods used for strategic planning purposes by the Group. On the basis of this assessment it is not envisaged
that there will be material impacts on the Group’s business or strategy over the short term and limited impacts over the medium
term in each of the risk types described above. This assessment will be repeated annually to ensure that the Group continues to
have an up-to-date assessment of this area. In making this assessment the Group did not utilise climate-related scenarios to inform
the formulation of strategy or broader financial planning, but this is an area of focus for 2023.
TCFD recommendation:
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2ºC or lower scenario.
In 2022, we focused on understanding the impact of risks and opportunities that climate change might have on the Group and
undertaking the actions outlined above. To complete a scenario analysis assessment, we identified a subset of those risks and
assessed their likely impacts on the Group over the different time periods described above.
International Personal Finance plc
Annual Report and Financial Statements 2022
53
Strategic Report
Sustainability continued
Scenario analysis
Physical risk (chronic)
Transition: policy and legal
Transition: reputation
Transition: market
Risks
Description
Likelihood
Impacts
Permanent changes to
sea, river or lake levels
could impact our ability
to conduct our business
in some areas.
i. Exposure to litigation
due to our inability to
comply with
environmental law.
ii. Emerging new
reporting standards in
many of our markets
will impact the Group.
Increased stakeholder
concern or negative
stakeholder feedback
relating to our ability to
transition effectively to a
lower carbon economy.
Uncertainty around the
costs incurred in
moving to a net zero
economy.
Unlikely
Possible
Unlikely
Likely
Decreased revenue and
assets, capital and
financing.
Increased costs and
decreased revenue.
Increase in liabilities.
Decreased capital and
financing.
Decreased capital and
financing.
Increased costs.
Decreased capital and
financing.
Impacts on different
time periods
S – Low
M – Low
S – Medium
M – Medium
S – Low
M – Low
S – Low
M – Low
L – Medium
L – High
L – Medium
L – Medium
This work has led us to conclude that:
1. the Group’s business strategy appears to be resilient to climate risks and opportunities, in particular over the short term;
2. the Group will continue to review how it might need to address risks and opportunities through the regular strategy process; and
3. the Group does not envisage material impacts on its financial performance or financial position in the short term and will
continue to review this assessment as it gains better insights into relevant physical and transition risks.
Further enhancing our approach to scenario analysis process will be a key focus in 2023.
Risk Management
TCFD recommendation:
a) Describe the organisation’s processes for identifying and assessing climate-related risks.
Climate risk is one of 19 key risk categories used to monitor risks relevant to the Group. The process for assessing and identifying
climate-related risks is the same as other risk categories and is described on pages 58 and 59. For each of our key risks we have a
risk management framework detailing the controls we have in place, who is responsible for managing both the overall risk and the
individual controls mitigating it. The Group Risk Owner for climate change is responsible for identifying and categorising the risks;
inputting and maintaining them on the Group Risk Register and reporting them to the Risk Advisory Group, which meets quarterly.
The outputs from this meeting are reported to the Audit and Risk Committee.
The Group Risk Owner is also responsible for ensuring that the financial impacts are assessed as accurately as possible. This is
undertaken through discussions with subject matter experts and business owners across the Group to understand the full impact
and likelihood of the risk materialising. Key Risk Indicators (KRIs) are also discussed with all business owners, with a view to having
both leading and lagging KRIs for all the risks identified. Discussions with business owners also cover mitigation or controls that
may already be in place. Existing controls are examined to ensure they are appropriate and as all-encompassing as possible.
Where gaps are identified, the Group Risk Owner works with the business to understand what is needed to address such gaps.
TCFD recommendation:
b) Describe the organisation’s processes for identifying and assessing climate-related risks.
In 2021, the Board agreed that climate change would become a risk monitored through the Enterprise Risk Management framework
and during 2022 it was integrated in the Group’s risk management framework. Throughout the year, the priority was to ensure we
embed climate risk within our broader risk framework through improvements to risk taxonomy, risk control and risk monitoring.
TCFD recommendation:
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the
organisation’s overall risk management.
Climate change risk, by its nature, requires integration and support with other risk categories, including Safety, Reputation and
Business Continuity. These inter-relationships have been identified, analysed and agreed, with action plans in place to ensure that
the negative impact on the business are minimised.
Looking forward, we will refine our risk management processes in respect of climate. In particular we will look to update our
financial modelling to ensure that the potential financial impacts on the Group arising from climate are assessed properly. We will
also continue to develop controls and the key risk indicators used to monitor this risk.
54
International Personal Finance plc
Strategic Report
Sustainability continued
Scenario analysis
Physical risk (chronic)
Transition: policy and legal
Transition: reputation
Transition: market
Description
Permanent changes to
i. Exposure to litigation
Increased stakeholder
Uncertainty around the
sea, river or lake levels
due to our inability to
concern or negative
costs incurred in
could impact our ability
comply with
stakeholder feedback
moving to a net zero
to conduct our business
environmental law.
relating to our ability to
economy.
in some areas.
ii. Emerging new
transition effectively to a
lower carbon economy.
reporting standards in
many of our markets
will impact the Group.
Likelihood
Impacts
Unlikely
Possible
Unlikely
Likely
Decreased revenue and
Increased costs and
Decreased capital and
Increased costs.
assets, capital and
decreased revenue.
financing.
Decreased capital and
financing.
Increase in liabilities.
Decreased capital and
financing.
S – Medium
M – Medium
S – Low
M – Low
financing.
S – Low
M – Low
L – Medium
L – High
L – Medium
L – Medium
Impacts on different
S – Low
time periods
M – Low
This work has led us to conclude that:
1. the Group’s business strategy appears to be resilient to climate risks and opportunities, in particular over the short term;
2. the Group will continue to review how it might need to address risks and opportunities through the regular strategy process; and
3. the Group does not envisage material impacts on its financial performance or financial position in the short term and will
continue to review this assessment as it gains better insights into relevant physical and transition risks.
Further enhancing our approach to scenario analysis process will be a key focus in 2023.
Risk Management
TCFD recommendation:
a) Describe the organisation’s processes for identifying and assessing climate-related risks.
Climate risk is one of 19 key risk categories used to monitor risks relevant to the Group. The process for assessing and identifying
climate-related risks is the same as other risk categories and is described on pages 58 and 59. For each of our key risks we have a
risk management framework detailing the controls we have in place, who is responsible for managing both the overall risk and the
individual controls mitigating it. The Group Risk Owner for climate change is responsible for identifying and categorising the risks;
inputting and maintaining them on the Group Risk Register and reporting them to the Risk Advisory Group, which meets quarterly.
The outputs from this meeting are reported to the Audit and Risk Committee.
The Group Risk Owner is also responsible for ensuring that the financial impacts are assessed as accurately as possible. This is
undertaken through discussions with subject matter experts and business owners across the Group to understand the full impact
and likelihood of the risk materialising. Key Risk Indicators (KRIs) are also discussed with all business owners, with a view to having
both leading and lagging KRIs for all the risks identified. Discussions with business owners also cover mitigation or controls that
may already be in place. Existing controls are examined to ensure they are appropriate and as all-encompassing as possible.
Where gaps are identified, the Group Risk Owner works with the business to understand what is needed to address such gaps.
TCFD recommendation:
b) Describe the organisation’s processes for identifying and assessing climate-related risks.
In 2021, the Board agreed that climate change would become a risk monitored through the Enterprise Risk Management framework
and during 2022 it was integrated in the Group’s risk management framework. Throughout the year, the priority was to ensure we
embed climate risk within our broader risk framework through improvements to risk taxonomy, risk control and risk monitoring.
TCFD recommendation:
organisation’s overall risk management.
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the
Climate change risk, by its nature, requires integration and support with other risk categories, including Safety, Reputation and
Business Continuity. These inter-relationships have been identified, analysed and agreed, with action plans in place to ensure that
the negative impact on the business are minimised.
Looking forward, we will refine our risk management processes in respect of climate. In particular we will look to update our
financial modelling to ensure that the potential financial impacts on the Group arising from climate are assessed properly. We will
also continue to develop controls and the key risk indicators used to monitor this risk.
Risks
Metrics and targets
TCFD recommendation:
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with
its strategy and risk management process.
We report Scope 1 and Scope 2 emissions in line with current regulations as detailed below. We report on Scope 1 and 2 emissions
which comprise electricity, district heating, gas and fuel for cars. Of this, transport by car, is our most material GHG emission. In
2023 we will look to conclude on appropriate metrics and targets.
TCFD recommendation:
b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
We report annually on the most material carbon emission sources required under the Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013 – Scope 1 and 2 greenhouse gas emissions and energy consumption data. We have applied
the Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard to calculate our emissions data and have
used emission factors from the UK Government’s latest GHG conversion factors and the current edition of the IEA emission factors
for non-UK electricity. The emission data covers all our offices. These sources fall within our Consolidated Financial Statements.
Where data was incomplete, we have extrapolated data in line with this methodology.
In 2022, the Group’s GHG emissions for Scope 1 and 2 increased year on year by 1% as normal business operations resumed
following the pandemic. Our employees returned to work in our offices on a flexible basis and customer representatives were able
to visit customers on a weekly basis. This resulted in a 4% increase in business-related car travel compared with 2021. However,
overall fuel use has decreased by 21.7% since 2019 which was the last year of full scale operations before the pandemic. This is
due primarily to the gradual replacement of diesel and petrol cars with lower emission LPG vehicles in the Company’s fleet, as
well as the increasing share of digital loans in our product portfolio. Taking into account that business travel by car represents
91% of our total Scope 1 and 2 emissions each year, our overall footprint in 2022 also decreased significantly by 24.5% compared
with 2019.
In 2022, in accordance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008:
i. the Group’s Scope 1 and 2 emissions in the UK represent 0.8% of the Group’s total (2021: 0.5%);
ii. the Group used 4.2m kWh of electricity (2021: 4.3m kWh) with the UK representing approximately 2.9% of the Group’s total
(2021: 5.2%); and
iii. no actions were taken during the year with the express purpose of increasing the Company’s energy efficiency.
For Scopes 1 and 2, transport by car will remain our priority in 2023 and we plan to continue replacing our petrol and diesel car
fleet with LPG and hybrid cars. Scope 3 (indirect emissions) have not been included in our 2022 reporting. However, we intend to
assess how best to measure indirect emissions (Scope 3) in 2023, in particular: paper use, waste and recycling. In line with best
practice, we have restated our Scope 1 and 2 emissions for 2021 in the table below.
Our GHG emissions report has been reviewed and verified by Be Sustainable Limited and the statement of verification can be
found in the sustainability section of our website at ipfin.co.uk
GHG emission sources
Travel and utilities
Gas
Scope 1
Scope 2
Scope 1 and 2
Business travel by car
24,273
16,304
18,277
19,012
Purchased electricity and district
heating
tCO2e emissions by customer
3,236
28,437
0.013
2,664
19,976
0.011
2,494
21,247
0.013
2022 as a
% 2021
Difference
106.8%
104%
78%
101%
1,937
21,457
0.128
98.5%
6.8%
4.0%
(22.0)%
1.0%
(1.5)%
Tonnes CO2e
2019
927
2020
1 008
2021*
476
2022
508
* 2021 data was restated from 20,841 to 21,247 tCO2e to account for estimates made for Q4 2021 when final figures for some gas, electricity and district heating
were not available.
TCFD recommendation:
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance
against targets.
Our focus in 2022 has been on robustly assessing the risks and opportunities of climate change for the Group and enhancing our
risk management, and we have not progressed defining and agreeing specific targets beyond initial scoping discussions.
In 2023, we will look to set targets which are credible. We will also look to progress preparation of a transition plan designed to
achieve delivery of these targets.
54
International Personal Finance plc
Annual Report and Financial Statements 2022
55
Strategic Report
Sustainability continued
TCFD compliance status as at January 2023
TCFD
Recommendation
Principle
1
2
3
4
5
6
7
8
9
10
11
Governance – a) Describe the board’s oversight of climate-related
risks and opportunities.
Governance – b) Describe management’s role in assessing
and managing climate-related risks and opportunities.
Strategy – a) Describe the climate-related risks and
opportunities the company has identified over the short,
medium, and long term.
Strategy – b) Describe the impact of climate related risks
and opportunities on the company’s businesses, strategy
and financial planning.
Strategy – c) Describe the resilience of the company’s strategy,
taking into consideration different climate related scenarios,
including a 2°C or lower scenario.
Risk management – a) Describe the company’s processes
for identifying and assessing climate-related risks.
Risk management – b) Describe the company’s processes
for identifying and assessing climate-related risks.
Risk management – c) Describe how processes for identifying,
assessing, and managing climate-related risks are integrated
in the company’s overall risk management.
Compliance
Substantive compliance.
Substantive compliance.
Substantive compliance.
Substantive compliance.
Working towards – we expect to
complete scenario analysis in 2023.
Substantive compliance.
Substantive compliance.
Substantive compliance.
Metrics and targets – a) Disclose the metrics used by the
company to assess climate related risks and opportunities in
line with its strategy and risk management process.
Working towards – we expect to
conclude on appropriate metrics
and targets in 2023.
Metrics and targets – b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas (GHG) emissions,
and the related risks.
Substantive compliance on Scopes
1 and 2. We will review further the
position on Scope 3 in 2023.
Metrics and targets – c) Describe the targets used by the
company to manage climate-related risks and opportunities
and performance against targets.
Working towards – we expect to
conclude on appropriate metrics
and targets in 2023.
56
International Personal Finance plc
Strategic Report
Sustainability continued
Non-financial information statement
Non-financial
information statement
TCFD compliance status as at January 2023
TCFD
Recommendation
Principle
The table below sets out where stakeholders can find information in our Annual Report that relates to non-financial
matters detailed under section 414CB of the Companies Act 2006.
Reporting
requirement
Business model
Employees
Relevant policies
Relevant section of our report
– Our business model – p10-11
– Key performance indicators – p22-23
– Principal risks and uncertainties – p58-62
– Managing a responsible business – p47-48
– Code of Ethics
– Group health
and safety policy
– Wellbeing policy
– Diversity policy
– Our social role – p8
– Valued people and communities – p44-46
– Board diversity – p45, p69 and p86
– Equal opportunities – p45
– Principal risks and uncertainties: People risk – p62
– Managing a responsible business – p47-48
– Our social role – p8
– Principal risks: Reputation risk – p61
– Financial inclusion – p42-43
– Managing a responsible business – p47-48
– Code of Ethics – p47
– Managing a responsible business – p47-48
Human rights
– Code of Ethics
– Human rights
and modern
slavery policy
Social matters
– Code of ethics
– Tax strategy
– Anti-bribery and
corruption policy
– Gifts and
hospitality policy
– Anti-facilitation of
tax evasion policy
– Know your
customer and
anti-money
laundering
Anti-bribery
and corruption
Environmental
matters
Principal risks
Non-financial KPIs
Measurements of effectiveness
– Customer numbers
– Customer recommendations
– Complaint levels
– Colleague turnover
and stability
– Risk assessment completion
by customer representatives
– Percentage of relevant
colleagues completing
safety training
– Proportion of female
colleagues
– Access to confidential
whistleblowing service
– Percentage of relevant
colleagues completing ethics
and modern slavery
awareness training
– Investment in local
communities
– Hours of colleague
volunteering
– Tax payments
– Percentage of relevant
colleagues completing
anti-bribery training, ethics
training and anti-facilitation of
tax evasion training
– Coverage of current
anti-bribery risk assessments
– Anti-facilitation of tax evasion
risk assessment
– TCFD – p49-56
– Greenhouse gas reporting – p55
– Tonnes of CO2e emissions per
customer per annum
– Principal risks and uncertainties – p58-62
– Non-financial key performance indicators – p23
– Customer numbers
– Customer recommendations
(Net Promoter Score)
– Employee and customer
representative
turnover and stability
– Community investment
1
2
3
4
5
6
7
8
9
10
11
Compliance
Governance – a) Describe the board’s oversight of climate-related
Substantive compliance.
risks and opportunities.
Governance – b) Describe management’s role in assessing
Substantive compliance.
and managing climate-related risks and opportunities.
Strategy – a) Describe the climate-related risks and
Substantive compliance.
opportunities the company has identified over the short,
medium, and long term.
Strategy – b) Describe the impact of climate related risks
Substantive compliance.
and opportunities on the company’s businesses, strategy
and financial planning.
Strategy – c) Describe the resilience of the company’s strategy,
Working towards – we expect to
taking into consideration different climate related scenarios,
complete scenario analysis in 2023.
including a 2°C or lower scenario.
Risk management – a) Describe the company’s processes
Substantive compliance.
for identifying and assessing climate-related risks.
Risk management – b) Describe the company’s processes
Substantive compliance.
for identifying and assessing climate-related risks.
Risk management – c) Describe how processes for identifying,
Substantive compliance.
assessing, and managing climate-related risks are integrated
in the company’s overall risk management.
Metrics and targets – a) Disclose the metrics used by the
Working towards – we expect to
company to assess climate related risks and opportunities in
conclude on appropriate metrics
line with its strategy and risk management process.
and targets in 2023.
Metrics and targets – b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas (GHG) emissions,
and the related risks.
Substantive compliance on Scopes
1 and 2. We will review further the
position on Scope 3 in 2023.
Metrics and targets – c) Describe the targets used by the
Working towards – we expect to
company to manage climate-related risks and opportunities
conclude on appropriate metrics
and performance against targets.
and targets in 2023.
56
International Personal Finance plc
Annual Report and Financial Statements 2022
57
Strategic Report
Principal risks and uncertainties
Principal risks
and uncertainties
Our Enterprise Risk Management approach delivers an
effective and critical process to manage the risks and
opportunities facing the business, particularly in times
of heightened uncertainty. This supports the Group in
delivering long-term shareholder value and protects
our people, assets and reputation.
Enterprise Risk Management approach
Our risk management process is tailored to deliver appropriate
and adequate information to ensure risk is considered in the
wider business decision-making process. It also ensures our
Board has relevant risk data to perform its supervisory role,
and that the Group’s risk management activities are aligned
to the UK Corporate Governance Code (2018).
The approach that the Group has taken to fulfil the Code’s
provisions is the Enterprise Risk Management (ERM)
methodology. As part of this approach, the Board has
established processes and procedures to manage risks.
The ERM process covers a wide range of risks and uncertainties
that could have a significant impact on the Group’s objectives
or on key stakeholder expectations. Within this, we have
identified the principal risks detailed on pages 60-62 which we
believe have the greatest potential to threaten the business
model, future performance, solvency or liquidity, and
reputation. This approach to principal risks is in line with
the UK Corporate Governance Code (2018) guidance.
In 2022, we performed regular assessments of the principal
risks to the Group in line with the ERM approach. While we
continued to assess and monitor the same risk categories as
we did in 2021, we concluded that some of these risks are not
material threats to the business model, future performance,
reputation, solvency or liquidity and have, therefore, removed
them from the list presented in Principal risks and uncertainties
section of this report. These are Competition, Business
Continuity, Information Security, and Safety.
We have also included two new risk categories in the ERM
programme. While we considered climate-related risks as an
emerging risk in 2021, we took further actions in 2022 to
include climate change as a risk category under the ERM
programme. We have also defined, assessed, and set the risk
management strategy for the Financial Reporting and Control
risk category, which is the risk of failure or breakdown in the
integrity of the financial control and reporting systems. The
terms of reference for the Audit and Risk Committee were
updated following consideration by the Committee and
amongst the changes was a specific reference to managing
climate risk.
The Board completed the assessment of the Group’s emerging
and principal risks. Further detail is included on page 59
demonstrating how the principal risks to the future success of
the business have been considered and addressed.
Risk appetite
We evaluate each risk category formally at least quarterly
based on the likelihood and potential impact of the risk at
both market and Group level. We consider three aspects:
– Inherent risk level – the level of risk before internal controls;
– Residual risk level – the level of risk that remains after the
effect of current controls is considered; and
– Appetite risk level – the level of risk that the Group is
prepared to accept in execution of the strategy.
In addition, we measure and monitor the key risk indicators
set for each risk category. Using this assessment, we then
compare the level of current risk with the Board-approved risk
appetite and determine whether further actions are required
to mitigate the risk to fit within our risk appetite levels.
Risk appetite is reviewed and approved by the Board at least
on an annual basis. Our risk management strategy involves
mitigating, to the maximum reasonable extent, those risks
which are within our control and therefore the internal control
system is key in how we manage risks. Externally-driven risks
are monitored to ensure prompt response, should the context
become favourable, to further mitigate the risk and are
subject to contingency planning to ensure business
resilience.
Risk governance and oversight structure
Our framework for the identification, evaluation and
management of our principal and emerging risks is illustrated
on page 59. The framework has been designed to ensure
there is adequate oversight on how risks are managed
across the Group, and to allocate roles and responsibilities
in the ERM process.
The three lines of defence
Risk ownership and assurance is defined in alignment with
the three lines of defence principles as follows:
First line:
– Group Risk Owner: Provides oversight of risk management
effectiveness and leadership for the risk category. Designs
the risk management strategy for their area and advises
the local risk owner around implementation.
– Local Risk Owner: We have a local risk owner in each
business unit for each risk category. They identify, assess
and manage risks in their business and work closely with
the Control Owner in the risk control phase.
– Control Owner: Executes risk control and actions within
their remit as requested by the Local Risk Owner.
Second line:
– Risk Advisory Group (RAG) Chair: Establishes the ERM
framework and strategy. They also provide assurance over
the ERM process.
– ERM function: Supports the RAG Chair with implementation
of the ERM framework and facilitation of the quarterly risk
assessment process.
Third line:
– Internal Audit: Internal Audit reviews the operation
and oversight of the systems of internal control, including
risk management. The Group Head of Internal Audit
reports independently to the Chair of the Audit and
Risk Committee.
58
International Personal Finance plc
Our Enterprise Risk Management approach delivers an
Risk appetite
Risk governance and oversight structure
Board of Directors
Determines the nature and extent of principal risks we are
willing to take to achieve strategic objectives
Audit and Risk Committee
Reviews the processes for management of principal risks
and internal control systems on behalf of the Board
Risk Advisory Group
Supports the Audit and Risk Committee in reviewing
risk exposure levels against risk appetite
Management team
Responsible for the day-to-day risk management
and internal control systems
Strategic Report
Principal risks and uncertainties
Principal risks
and uncertainties
effective and critical process to manage the risks and
opportunities facing the business, particularly in times
of heightened uncertainty. This supports the Group in
delivering long-term shareholder value and protects
our people, assets and reputation.
Enterprise Risk Management approach
We evaluate each risk category formally at least quarterly
based on the likelihood and potential impact of the risk at
both market and Group level. We consider three aspects:
– Inherent risk level – the level of risk before internal controls;
– Residual risk level – the level of risk that remains after the
effect of current controls is considered; and
– Appetite risk level – the level of risk that the Group is
Our risk management process is tailored to deliver appropriate
prepared to accept in execution of the strategy.
and adequate information to ensure risk is considered in the
wider business decision-making process. It also ensures our
Board has relevant risk data to perform its supervisory role,
and that the Group’s risk management activities are aligned
to the UK Corporate Governance Code (2018).
The approach that the Group has taken to fulfil the Code’s
provisions is the Enterprise Risk Management (ERM)
methodology. As part of this approach, the Board has
established processes and procedures to manage risks.
In addition, we measure and monitor the key risk indicators
set for each risk category. Using this assessment, we then
compare the level of current risk with the Board-approved risk
appetite and determine whether further actions are required
to mitigate the risk to fit within our risk appetite levels.
Risk appetite is reviewed and approved by the Board at least
on an annual basis. Our risk management strategy involves
mitigating, to the maximum reasonable extent, those risks
which are within our control and therefore the internal control
The ERM process covers a wide range of risks and uncertainties
system is key in how we manage risks. Externally-driven risks
that could have a significant impact on the Group’s objectives
are monitored to ensure prompt response, should the context
or on key stakeholder expectations. Within this, we have
become favourable, to further mitigate the risk and are
identified the principal risks detailed on pages 60-62 which we
subject to contingency planning to ensure business
believe have the greatest potential to threaten the business
resilience.
model, future performance, solvency or liquidity, and
reputation. This approach to principal risks is in line with
the UK Corporate Governance Code (2018) guidance.
In 2022, we performed regular assessments of the principal
risks to the Group in line with the ERM approach. While we
continued to assess and monitor the same risk categories as
we did in 2021, we concluded that some of these risks are not
material threats to the business model, future performance,
reputation, solvency or liquidity and have, therefore, removed
them from the list presented in Principal risks and uncertainties
section of this report. These are Competition, Business
Continuity, Information Security, and Safety.
Risk governance and oversight structure
Our framework for the identification, evaluation and
management of our principal and emerging risks is illustrated
on page 59. The framework has been designed to ensure
there is adequate oversight on how risks are managed
across the Group, and to allocate roles and responsibilities
in the ERM process.
The three lines of defence
Risk ownership and assurance is defined in alignment with
the three lines of defence principles as follows:
We have also included two new risk categories in the ERM
programme. While we considered climate-related risks as an
First line:
emerging risk in 2021, we took further actions in 2022 to
– Group Risk Owner: Provides oversight of risk management
include climate change as a risk category under the ERM
effectiveness and leadership for the risk category. Designs
programme. We have also defined, assessed, and set the risk
the risk management strategy for their area and advises
management strategy for the Financial Reporting and Control
the local risk owner around implementation.
risk category, which is the risk of failure or breakdown in the
integrity of the financial control and reporting systems. The
terms of reference for the Audit and Risk Committee were
updated following consideration by the Committee and
amongst the changes was a specific reference to managing
climate risk.
– Local Risk Owner: We have a local risk owner in each
business unit for each risk category. They identify, assess
and manage risks in their business and work closely with
the Control Owner in the risk control phase.
– Control Owner: Executes risk control and actions within
their remit as requested by the Local Risk Owner.
The Board completed the assessment of the Group’s emerging
and principal risks. Further detail is included on page 59
Second line:
demonstrating how the principal risks to the future success of
– Risk Advisory Group (RAG) Chair: Establishes the ERM
the business have been considered and addressed.
framework and strategy. They also provide assurance over
the ERM process.
– ERM function: Supports the RAG Chair with implementation
of the ERM framework and facilitation of the quarterly risk
assessment process.
Third line:
– Internal Audit: Internal Audit reviews the operation
and oversight of the systems of internal control, including
risk management. The Group Head of Internal Audit
reports independently to the Chair of the Audit and
Risk Committee.
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Annual Report and Financial Statements 2022
59
Emerging risks In our view, an emerging risk is an existing or future trend which could have a significant impact on the Group, but where the likelihood, timescale and/or materiality may be difficult to assess.When we consider the Group’s risk profile, which is established through quarterly risk assessments to determine a point-in-time representation of the risks that the business faces, we acknowledge the identified emerging risks as well because these may significantly change the overall risk landscape. Emerging risks are monitored to determine if they have become key risks and if any mitigating actions should be taken. When we consider our response to emerging risks, we classify these into two categories, based on the type of response action. Those with a high velocity will be addressed as crisis events and crisis management protocols will be triggered. Those with moderate and low velocity, will be monitored and reported on until the impact is better understood and specific response actions developed (contingency plans). Throughout 2022 we monitored the following emerging risks:Geopolitical risk: war in Ukraine – We anticipated that the situation in Ukraine would have several impacts across the Group, ranging from unavailability of our people, customers or suppliers through to the potential impact on credit risk, fraud, and funding, currency and liquidity. Our markets have taken the lead on addressing this situation as a crisis for the majority of operational risks. Impacts on currency, counterparty, liquidity and information security were further analysed and addressed. The risk has been reflected in the risk register and at the end of 2022 was no longer considered as an emerging risk. EU Consumer Credit Directive Review (CCD) – Numerous amendments were proposed to the CCD especially in relation to potential price caps, credit worthiness and advertising. The frequency and number of proposed amendments made it challenging to assess the likelihood and impact on the Group and as such it has been considered an emerging risk. A Group-led project has been implemented to understand, monitor and engage in the consultations.Tax developments – There are a few emerging trends, including potential initiatives affecting EU operations, such as the European Commission’s initiative on debt-equity bias reduction allowance (DEBRA) and the potential reform of the financial services VAT exemption. Expected to be incorporated into domestic legislation in 2023 is the OECD’s minimum corporate income tax initiative (Pillar 2) which we have been monitoring throughout the year. We have reviewed OECD guidance and draft legislation published by the UK government to implement the initiative. The position continues to develop and the impact on the Group cannot yet be assessed accurately. The Group will continue to review further guidance and legislation relating to the new regime and assess its potential impact.Disruptive new business models – The emergence of new consumer finance business models including buy-now-pay-later and other non-traditional fintech models are attractive to certain consumer segments and could impact existing and potential customer numbers. However, it is difficult to assess if these models will be successful in the long term and what the impact may be on the Group. We continue to monitor these trends. Strategic Report
Principal risks and uncertainties continued
Principal risks
1 Credit risk
The risk of the Group suffering
financial loss if its customers
fail to meet their contracted
repayment obligations;
or the Group fails to
optimise profitable business
opportunities because of its
credit, collection or fraud
strategies and processes.
2 Regulatory risk
The risk of failure to operate in
compliance with, or effectively
anticipate changes to, all
applicable laws and regulations
(including data protection
and privacy laws), or due to
a regulator interpreting these
in a different way.
Impact
There has been a challenging macroeconomic environment in 2022, with increasing and high levels of
inflation particularly in our European markets. In this context, the Group performed well, with customer
repayments in 2022 slightly better than pre-pandemic levels, although there was increasing pressure on
customers’ affordability towards the end of the year.
Overall, credit losses were lower than pre-pandemic levels, and the impairment rate at the year end of
8.6% is well within our risk appetite.
It is expected that the cost-of-living crisis will continue to put pressure on customers’ ability to afford
repayments through 2023 in many markets.
How it is managed
– Detailed, regular monitoring of customer repayments to identify specific issues.
– Detailed analysis and enhancement of our credit scorecards and credit policy to ensure they
remain optimal.
– Implemented a targeted tightening of credit rules for higher-risk customers from the fourth quarter
as a precautionary measure to protect against the risk of customer’s affordability worsening.
– Careful, regular assessment of the external environment.
– Ensuring repayments and arrears management activities remain a key part of incentive schemes.
Impact
The EU’s review of the European Consumer Credit Directive continues and is not expected to conclude before
the end of 2024.
New legislation reducing the non-interest cost of credit cap in Poland came into force on 18 December 2022.
New affordability rules and supervision of non-bank financial institutions (NBFIs) by the Polish authority, KNF,
will be effective from May 2023 and January 2024 respectively. See pages 25-27.
The repayment moratorium in Hungary, introduced in response to the pandemic in 2020, expired in
December 2022.
A more regulated and unified financial system may develop across European markets in future. We also
anticipate some regulatory developments around labour laws across our markets.
How it is managed
– Robust horizon-scanning monitoring political, legislative and regulatory developments and risks.
– Regulatory Management Framework in place.
– Engagement with regulators, legislators, politicians and other stakeholders together with active
participation in relevant sector associations.
– Contingency plans in place to manage significant regulatory changes.
– Compliance programme focused on key consumer legislation and data privacy.
3 Funding, liquidity, market and counterparty risk
The risk of insufficient availability
of funding, unfavourable
pricing, or that performance is
significantly impacted by
interest rate or currency
movements, or failure of a
banking counterparty.
Impact
The Group maintained a robust funding and liquidity position throughout 2022, extending £169m of bank
facilities in the year and refinancing £40m of the retail bond.
During 2022, Fitch and Moody’s reaffirmed the Group’s credit rating as BB- (Stable Outlook) and Ba3 (Stable
Outlook) respectively.
Global markets continue to be impacted significantly by concerns around high inflation, rising interest rates,
supply chain disruptions, and the war in Ukraine. This is likely to continue in 2023 and affect the price and
availability of debt funding.
For further information on funding see the Financial review on pages 30-37.
How it is managed
– Board-approved policies require the Group to maintain a resilient funding position with good headroom on
undrawn bank facilities, appropriate hedging of market risk, and appropriate limits to counterparty risk.
– Investor engagement and supporting actions.
– Diversified funding profile.
– High equity to receivables ratio.
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International Personal Finance plc
Strategic Report
Principal risks and uncertainties continued
Principal risks
1 Credit risk
The risk of the Group suffering
financial loss if its customers
fail to meet their contracted
repayment obligations;
or the Group fails to
optimise profitable business
opportunities because of its
credit, collection or fraud
strategies and processes.
Impact
There has been a challenging macroeconomic environment in 2022, with increasing and high levels of
inflation particularly in our European markets. In this context, the Group performed well, with customer
repayments in 2022 slightly better than pre-pandemic levels, although there was increasing pressure on
customers’ affordability towards the end of the year.
Overall, credit losses were lower than pre-pandemic levels, and the impairment rate at the year end of
It is expected that the cost-of-living crisis will continue to put pressure on customers’ ability to afford
8.6% is well within our risk appetite.
repayments through 2023 in many markets.
How it is managed
– Detailed, regular monitoring of customer repayments to identify specific issues.
– Detailed analysis and enhancement of our credit scorecards and credit policy to ensure they
remain optimal.
– Implemented a targeted tightening of credit rules for higher-risk customers from the fourth quarter
as a precautionary measure to protect against the risk of customer’s affordability worsening.
– Careful, regular assessment of the external environment.
– Ensuring repayments and arrears management activities remain a key part of incentive schemes.
2 Regulatory risk
The risk of failure to operate in
compliance with, or effectively
anticipate changes to, all
Impact
applicable laws and regulations
the end of 2024.
The EU’s review of the European Consumer Credit Directive continues and is not expected to conclude before
(including data protection
and privacy laws), or due to
a regulator interpreting these
in a different way.
New legislation reducing the non-interest cost of credit cap in Poland came into force on 18 December 2022.
New affordability rules and supervision of non-bank financial institutions (NBFIs) by the Polish authority, KNF,
will be effective from May 2023 and January 2024 respectively. See pages 25-27.
The repayment moratorium in Hungary, introduced in response to the pandemic in 2020, expired in
A more regulated and unified financial system may develop across European markets in future. We also
anticipate some regulatory developments around labour laws across our markets.
December 2022.
How it is managed
– Robust horizon-scanning monitoring political, legislative and regulatory developments and risks.
– Regulatory Management Framework in place.
– Engagement with regulators, legislators, politicians and other stakeholders together with active
participation in relevant sector associations.
– Contingency plans in place to manage significant regulatory changes.
– Compliance programme focused on key consumer legislation and data privacy.
3 Funding, liquidity, market and counterparty risk
The risk of insufficient availability
Impact
of funding, unfavourable
pricing, or that performance is
The Group maintained a robust funding and liquidity position throughout 2022, extending £169m of bank
facilities in the year and refinancing £40m of the retail bond.
During 2022, Fitch and Moody’s reaffirmed the Group’s credit rating as BB- (Stable Outlook) and Ba3 (Stable
significantly impacted by
interest rate or currency
movements, or failure of a
banking counterparty.
Global markets continue to be impacted significantly by concerns around high inflation, rising interest rates,
supply chain disruptions, and the war in Ukraine. This is likely to continue in 2023 and affect the price and
For further information on funding see the Financial review on pages 30-37.
Outlook) respectively.
availability of debt funding.
How it is managed
– Board-approved policies require the Group to maintain a resilient funding position with good headroom on
undrawn bank facilities, appropriate hedging of market risk, and appropriate limits to counterparty risk.
– Investor engagement and supporting actions.
– Diversified funding profile.
– High equity to receivables ratio.
Risk environment
Risk environment improving
Risk environment remains stable
Risk environment worsening
4 Reputation risk
Risk of reputational damage
due to our methods of
operation, ill-informed
comment, malpractice,
fines or activities of some
of our competition.
5 Taxation risk
The risk of additional costs due
to failure to comply with tax
legislation or adoption of an
interpretation of the law which
cannot be sustained together
with the risk of a higher tax
burden due to future changes
in tax law and practice.
Impact
Rising inflation and energy costs put additional pressure on the disposable income of consumers during 2022,
which resulted in increased negative sentiment towards the financial sector. However, we proactively
maintain dialogue with customers to enable continued access to affordable credit and offer repayment
support where appropriate. We also received awards recognising our business as a top employer, our high
standards of customer experience and for being a socially responsible business.
We maintain strong relationships with key stakeholders to develop their understanding of our business model,
our purpose and role in society, and how we deliver products and services to our customers. This helps
protect the business from unforeseen events that could damage our reputation.
How it is managed
– Clearly defined corporate values and ethical standards are communicated throughout the organisation.
– Employees and customer representatives undertake annual ethics e-learning training.
– Regular monitoring of key reputation drivers both internally and externally.
– Strong oversight by the senior leadership team on reputation challenges.
Impact
In June 2022 a ruling of the General Court of the European Union was issued, confirming the European
Commission’s April 2019 Decision on State Aid. In consequence, the Group has derecognised the asset
originally booked in respect of payments made during 2021 under Charging Notices issued by HMRC in
accordance with the European Commission’s Decision. Windfall taxes have been implemented in a number
of countries across Europe during 2022. The Group’s Hungarian subsidiary is subject to a temporary two year
windfall tax and this has been reflected in the Group’s tax charge for 2022 as an exceptional item. Further
information regarding these issues is set out in the Financial review on page 34.
We continued to monitor international tax developments during the year.
One of the Group’s Mexican entities and the Group’s Polish digital entity are currently subject to tax audit.
How it is managed
– Tax strategy and policy in place.
– Qualified and experienced tax teams at Group level and in market.
– External advice taken on material tax issues in line with tax strategy.
– Binding rulings or clearances obtained from authorities where appropriate.
– Appropriate oversight at executive level over taxation matters.
6 Change management risk
The risk that the Group suffers
losses or fails to optimise
profitable growth resulting from
strategic business projects
failing to deliver to
requirements, budget or
timescale, failing to implement
change effectively or failing to
realise desired benefits.
Impact
The change agenda can be assessed through three lenses:
– regulatory-driven change, which is sometimes unpredictable and might have significant
business impact if not addressed and prioritised;
– migration to ‘next-gen’ platforms which mitigate end-of-life risk; and
– business-driven change which reflects internal requests that will enable improvements or
enhance performance.
While 2022 was a challenging year due to both the economic downturn and changes in the regulatory
environment, we have taken significant actions to address the resource capacity required to deliver the
change agenda, prioritise the change portfolio and run the delivery framework across the Group.
How it is managed
– Change management framework and monitoring process in place.
– Appropriate methods and resources used in the delivery of change programmes.
– Continuous review of change programmes, with strong governance of all major delivery activity.
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Annual Report and Financial Statements 2022
61
Strategic Report
Principal risks and uncertainties continued
Risk environment
Risk environment improving
Risk environment remains stable
Risk environment worsening
7 Product proposition risk
The Group fails to optimise
profitable operation due to
a failure to understand and
respond to market trends,
(e.g. customer needs,
regulatory, macroeconomic or
competition) or failing to deliver
products which address these
trends in a profitable manner.
8 Technology risk
The risk of failure to develop
and maintain effective
technology solutions.
9 People risk
The risk that our strategy is
impacted by not having
sufficient depth and quality of
people or being unable to
retain key people and treat
them in accordance with our
values and ethical standards.
Impact
The challenging macroeconomic environment, particularly high inflation in the Group’s European markets,
may have a negative impact on the delivery of product and promotions benefits. However, there are robust
processes in place to monitor and address issues at the earliest opportunity.
In 2022, a relatively stable competitive environment returned as the impact of Covid-19 reduced. There are
indications that buy-now-pay-later operators, which grew rapidly in 2021 in many of our markets, are less
successful than previously anticipated, particularly in light of increased interest rates and cost-of-living
pressures.
There is some evidence of reducing risk appetite from banks in response to increasing inflation.
We continue to develop our propositions to improve financial inclusion, enhance customer value,
improve the customer experience, and extend our digital and mobile propositions to meet consumers’
changing needs.
How it is managed
– Product development committees and processes in place to review the product development roadmap,
manage product risks and develop new products.
– Regular monitoring of competitors and their offerings, advertising and share of voice in our markets.
– Strategic planning and tactical responses on competition threats.
Impact
Technology risks can arise from the speed of technology advancements that could make current technology
obsolete or require significant effort to align to strategic requirements.
The focus for 2022 from an IT risk perspective was concentrated around removing some components which
were nearing technological obsolescence. Our replacement of telephony systems for our Customer Service
Centres with a modern omni-channel solution is progressing well. In addition, good progress was made to
move away from a number of physically--hosted data centres into a centralised cloud environment.
How it is managed
– Ongoing reviews of services and relationships with partners to ensure effective service operations.
– Annual review to prioritise investment in technology and ensure appropriateness of the technology estate.
Impact
One of our key people risks is ensuring that we have sufficient capability and quantity of customer
representatives to serve our customers. We are constantly taking actions to retain, develop and engage
customer representatives to minimise impact on the customer experience or the Group’s performance.
Throughout 2022, we undertook a global programme to re-engineer our customer representative employee
value proposition (EVP). This comprised 25+ workstreams, improving experiences from recruitment and
recognition to reward. The result will be a fundamental improvement in the working experience of our
customer representatives.
The labour market became increasingly active in 2022, especially in certain specialist areas like IT, but we
have taken robust actions to retain and develop our most talented employees through tailored leadership
and engagement programmes.
How it is managed
– Actions taken focused on customer representatives including better integration for new joiners, diversifying
learning options and monitoring vacant agencies.
– Appropriate distribution of strategy-aligned objectives among employees and customer representatives.
– Key people processes including succession planning, performance reviews and development plans.
– Our people, organisation and planning processes ensure that we develop appropriate and significant
strength and depth of talent across the Group, and we have the ability to move people between countries,
which reduces our exposure to critical roles being under-resourced.
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International Personal Finance plc
Risk environment
Risk environment improving
Risk environment remains stable
Risk environment worsening
Strategic Report
Principal risks and uncertainties continued
7 Product proposition risk
The Group fails to optimise
profitable operation due to
a failure to understand and
respond to market trends,
(e.g. customer needs,
regulatory, macroeconomic or
competition) or failing to deliver
products which address these
trends in a profitable manner.
Impact
pressures.
The challenging macroeconomic environment, particularly high inflation in the Group’s European markets,
may have a negative impact on the delivery of product and promotions benefits. However, there are robust
processes in place to monitor and address issues at the earliest opportunity.
In 2022, a relatively stable competitive environment returned as the impact of Covid-19 reduced. There are
indications that buy-now-pay-later operators, which grew rapidly in 2021 in many of our markets, are less
successful than previously anticipated, particularly in light of increased interest rates and cost-of-living
There is some evidence of reducing risk appetite from banks in response to increasing inflation.
We continue to develop our propositions to improve financial inclusion, enhance customer value,
improve the customer experience, and extend our digital and mobile propositions to meet consumers’
changing needs.
How it is managed
– Product development committees and processes in place to review the product development roadmap,
manage product risks and develop new products.
– Regular monitoring of competitors and their offerings, advertising and share of voice in our markets.
– Strategic planning and tactical responses on competition threats.
8 Technology risk
The risk of failure to develop
Impact
and maintain effective
technology solutions.
Technology risks can arise from the speed of technology advancements that could make current technology
obsolete or require significant effort to align to strategic requirements.
The focus for 2022 from an IT risk perspective was concentrated around removing some components which
were nearing technological obsolescence. Our replacement of telephony systems for our Customer Service
Centres with a modern omni-channel solution is progressing well. In addition, good progress was made to
move away from a number of physically--hosted data centres into a centralised cloud environment.
How it is managed
– Ongoing reviews of services and relationships with partners to ensure effective service operations.
– Annual review to prioritise investment in technology and ensure appropriateness of the technology estate.
9 People risk
The risk that our strategy is
impacted by not having
Impact
sufficient depth and quality of
One of our key people risks is ensuring that we have sufficient capability and quantity of customer
people or being unable to
retain key people and treat
them in accordance with our
values and ethical standards.
representatives to serve our customers. We are constantly taking actions to retain, develop and engage
customer representatives to minimise impact on the customer experience or the Group’s performance.
Throughout 2022, we undertook a global programme to re-engineer our customer representative employee
value proposition (EVP). This comprised 25+ workstreams, improving experiences from recruitment and
recognition to reward. The result will be a fundamental improvement in the working experience of our
The labour market became increasingly active in 2022, especially in certain specialist areas like IT, but we
have taken robust actions to retain and develop our most talented employees through tailored leadership
customer representatives.
and engagement programmes.
How it is managed
– Actions taken focused on customer representatives including better integration for new joiners, diversifying
learning options and monitoring vacant agencies.
– Appropriate distribution of strategy-aligned objectives among employees and customer representatives.
– Key people processes including succession planning, performance reviews and development plans.
– Our people, organisation and planning processes ensure that we develop appropriate and significant
strength and depth of talent across the Group, and we have the ability to move people between countries,
which reduces our exposure to critical roles being under-resourced.
Viability Statement
The Directors have assessed the long-term prospects of the
business and taken into account:
– Structural changes impacting business growth
and profitability;
– The beneficial portfolio effect of operating across a number
of different jurisdictions which mitigates concentration risk;
– The Group’s multi-channel strategy and strategic priorities;
– Risk appetite, principal risks and risk management
processes;
– That the Group provides access to regulated credit in a
responsible, transparent and ethical manner, for people
who might otherwise be excluded from mainstream credit
operators, acknowledging that it is possible to regulate
away the supply of credit but not the demand; and
– The historical resilience of the Group’s business
model over many years, including times of adverse
macroeconomic conditions and a changing competitive
and regulatory environment.
Assessment of continuing operations
The Group has a clear strategy to deliver its purpose and
long-term profitable growth. The Group has a robust capital
structure supported by significant equity and a balanced
portfolio of debt funding, the largest element of which matures
in 2025, all of which together form the strong capital
foundations required to support business growth. Based on this
analysis, the Directors confirm that they have a reasonable
expectation that the Group will continue to operate and meet
its liabilities as they fall due for the period of three years from
the date of this report and that the Group has adequate
long-term prospects. This assessment has been made with
reference to the Group’s current financial position, its
prospects, its strategy and its principal risks, as set out in the
Strategic Report.
Business planning and stress testing
The Group undertakes an annual business planning and
budgeting process that includes updated strategic plans
together with an assessment of expected performance, cash
flows, funding requirements and covenant compliance. The
financial forecasts in the business plan have been stress tested
over a range of downside scenarios to assess the impact on
future profitability, funding requirements and covenant
compliance. The scenarios reflect the crystallisation of the
Group’s principal risks (with particular reference to
macroeconomic and regulatory risks) as outlined on pages
60-62. Consideration has also been given to multiple risks
crystallising concurrently and the availability of mitigating
actions that could be taken to reduce the impact of the
identified risks. In addition, the Group undertook a reverse
stress test on the financial forecasts to assess the extent to
which a recession would need to impact our operational
performance in order to breach a covenant.
Viability assessment
The Directors have determined that three years is an
appropriate period over which to provide the viability
statement because it aligns to the key period of the planning
process, and reflects the relatively short term nature of our
business and our ability to change products, adjust credit risk
in the receivables book and flex our business model. Delivery
of the business plan is expected to require the Group to
access wholesale funding markets by 2024 and the Directors
have assumed that those markets remain accessible so as to
allow the Group’s existing arrangements to be refinanced and
further funding put in place if necessary, and that the legal,
taxation, and regulatory framework allows for the provision of
short term credit to the markets in which the Group operates.
For further information on funding see pages 35-36.
Approval of the Strategic Report
The Strategic Report has been approved by the
Board of Directors and signed on its behalf by:
Gerard Ryan
Chief Executive Officer
1 March 2023
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International Personal Finance plc
Annual Report and Financial Statements 2022
63
Directors’ Report
Chair’s introduction
“A robust corporate
governance framework
sits at the heart
everything we do as a
Board in supporting the
delivery of the Company’s
strategy aligned to our
purpose and culture.”
Stuart Sinclair
Chair
I am delighted to present to our shareholders this Corporate
Governance Report covering the year to 31 December 2022.
Whilst the challenges arising from the pandemic lessened
during the year, these were unfortunately replaced by
concerns raised by the war in Ukraine and by the knock-on
effect of rising energy costs and other inflationary effects
leading to a cost-of-living crisis, particularly in the UK and
across Europe.
deemed to be independent non-executive directors and with
the target set by the Hampton-Alexander review for 33% female
representation. At the end of 2022, the Board comprised four
men and three women, with two born outside of the UK. For a
Company such as ours, with a diverse workforce and a wide
geographic spread, we believe this level of diversity is key to
ensuring that the Board’s support and challenge has an
appropriate focus.
As a Board, we remain committed to the highest standards
of corporate governance in delivering long-term, sustainable
value to our stakeholders and have worked closely with our
management team to provide oversight, challenge and
debate to drive positive outcomes. To support the Board in its
commitment, a comprehensive review of governance-related
documentation for the Board and its Committees was
undertaken at the end of the year. This included a refresh of
the Matters Reserved to the Board schedule and the Terms of
Reference for each of the Board Committees, to better align
them with the 2018 UK Corporate Governance Code and
market best practice, and to address specific requirements
arising from the Task Force on Climate-related Financial
Disclosures (pages 49 to 56).
As the adverse impacts of the pandemic continued to ease,
the Board settled into a routine of hybrid and face-to-face
meetings, noting the preference was for the latter in
recognition of the benefits of engaging with colleagues across
the Group face to face.
Board composition
The composition and size of the Board is reviewed regularly,
and the skills and experience directors bring are summarised
on pages 66 and 67. Our Board is well balanced and diverse,
with a good mix of business knowledge, board experience,
international exposure and independence.
During the year, the Board’s composition met with the
requirements set out in the 2018 UK Corporate Governance
Code, with more than half of its directors (excluding the Chair)
Board changes
The Board was pleased to welcome Chief Financial Officer,
Gary Thompson, who joined the Board in April 2022, following
CFO Justin Lockwood’s departure in July 2021. During 2022,
Bronwyn Syiek and John Mangelaars stepped down as
non-executive directors of the Board in July and December,
respectively, after many years of excellent service. A rigorous
selection process was undertaken which resulted in Katrina
Cliffe and Aileen Wallace joining the Board as non-executive
directors in August and December, respectively. Further details
on the recruitment process can be found on page 88. On
behalf of the Board, I would like to take this opportunity to
thank wholeheartedly, Bronwyn and John for being
outstanding Board members, both highly engaged throughout
their tenure, with significant contributions made to the Board’s
debates and decisions. Upon joining the Board, Katrina was
appointed a member of the Audit and Risk Committee and
Workforce Engagement Director, and Aileen a member of the
Nominations and Governance Committee.
All the directors will be proposed for re-election, or election in
the case of Katrina and Aileen, at the AGM in April 2023.
Succession planning
Our succession-planning process has been strong, particularly
in a year when we saw the departure of two valued Board
members, the appointment of a new Chief Financial Officer
and the replacement of our Workforce Engagement Director.
The Board, assisted by the Nominations and Governance
Committee, has continued to broaden its understanding of
64
International Personal Finance plc
Directors’ Report
Chair’s introduction
“A robust corporate
governance framework
sits at the heart
everything we do as a
Board in supporting the
delivery of the Company’s
strategy aligned to our
purpose and culture.”
Stuart Sinclair
Chair
I am delighted to present to our shareholders this Corporate
deemed to be independent non-executive directors and with
Governance Report covering the year to 31 December 2022.
the target set by the Hampton-Alexander review for 33% female
Whilst the challenges arising from the pandemic lessened
representation. At the end of 2022, the Board comprised four
during the year, these were unfortunately replaced by
men and three women, with two born outside of the UK. For a
concerns raised by the war in Ukraine and by the knock-on
Company such as ours, with a diverse workforce and a wide
effect of rising energy costs and other inflationary effects
geographic spread, we believe this level of diversity is key to
leading to a cost-of-living crisis, particularly in the UK and
ensuring that the Board’s support and challenge has an
across Europe.
As a Board, we remain committed to the highest standards
of corporate governance in delivering long-term, sustainable
value to our stakeholders and have worked closely with our
management team to provide oversight, challenge and
debate to drive positive outcomes. To support the Board in its
commitment, a comprehensive review of governance-related
documentation for the Board and its Committees was
undertaken at the end of the year. This included a refresh of
the Matters Reserved to the Board schedule and the Terms of
Reference for each of the Board Committees, to better align
them with the 2018 UK Corporate Governance Code and
market best practice, and to address specific requirements
arising from the Task Force on Climate-related Financial
Disclosures (pages 49 to 56).
As the adverse impacts of the pandemic continued to ease,
the Board settled into a routine of hybrid and face-to-face
meetings, noting the preference was for the latter in
recognition of the benefits of engaging with colleagues across
the Group face to face.
Board composition
The composition and size of the Board is reviewed regularly,
and the skills and experience directors bring are summarised
on pages 66 and 67. Our Board is well balanced and diverse,
with a good mix of business knowledge, board experience,
international exposure and independence.
During the year, the Board’s composition met with the
requirements set out in the 2018 UK Corporate Governance
Code, with more than half of its directors (excluding the Chair)
appropriate focus.
Board changes
The Board was pleased to welcome Chief Financial Officer,
Gary Thompson, who joined the Board in April 2022, following
CFO Justin Lockwood’s departure in July 2021. During 2022,
Bronwyn Syiek and John Mangelaars stepped down as
non-executive directors of the Board in July and December,
respectively, after many years of excellent service. A rigorous
selection process was undertaken which resulted in Katrina
Cliffe and Aileen Wallace joining the Board as non-executive
directors in August and December, respectively. Further details
on the recruitment process can be found on page 88. On
behalf of the Board, I would like to take this opportunity to
thank wholeheartedly, Bronwyn and John for being
outstanding Board members, both highly engaged throughout
their tenure, with significant contributions made to the Board’s
debates and decisions. Upon joining the Board, Katrina was
appointed a member of the Audit and Risk Committee and
Workforce Engagement Director, and Aileen a member of the
Nominations and Governance Committee.
All the directors will be proposed for re-election, or election in
the case of Katrina and Aileen, at the AGM in April 2023.
Succession planning
Our succession-planning process has been strong, particularly
in a year when we saw the departure of two valued Board
members, the appointment of a new Chief Financial Officer
and the replacement of our Workforce Engagement Director.
The Board, assisted by the Nominations and Governance
Committee, has continued to broaden its understanding of
executive talent requirements and the capabilities needed to
ensure effectiveness in driving the business forward. There is an
annual session dedicated to succession planning as well as a
mid-year review to ensure robust succession plans and talent
development pipelines are in place.
Environmental, social and governance (ESG)
The Board recognises the continued importance with which
ESG matters are viewed by investors with the link between
ESG performance and long-term sustainability being
widely acknowledged.
The Board and the Nominations and Governance Committee
were satisfied that the Company has effective and up-to-date
succession planning processes, including appropriate
development plans for individuals, and understands areas
where external candidates may need to be considered.
We have made good progress and are committed to
continuing to develop our talent at all levels to create our
leaders of the future.
Stakeholder engagement
We have a diverse and global community of stakeholders
which we consider to include our customers, colleagues,
communities, investors, suppliers and the regulators and
legislators relevant to our businesses. The Board recognises the
importance of creating and maintaining close relationships
with our stakeholders in order to better understand their needs
and to inform decision-making including how each
stakeholder group will be impacted. These deeper insights into
particular areas also assist the Board and the senior leadership
team in shaping our overall strategy.
The Board actively seeks opportunities to engage with all
stakeholders, whether this be directly, or indirectly through
management and further details of how the Board engages
with each of our key stakeholders and examples of how they
have been considered in the decisions made during the year
are included on pages 75 and 76. The directors’ duties under
s172 of the Companies Act 2006 underpin the sound
governance at the centre of our decision-making. Further
information regarding our s172(1) statement is on page 39.
Whilst the Board strives to achieve the best outcome for all our
stakeholders, it recognises that It is not always practicable to
please all stakeholders all of the time and therefore a key part
of the Board process is to balance the sometimes conflicting
needs of our stakeholders to ensure all are treated consistently
and fairly.
Purpose, culture and values
Our purpose is to build a better world through financial
inclusion and our culture of doing what is right for our
customers, colleagues and communities is integral to this.
Following on from the extensive engagement exercise on
purpose undertaken in 2021, the Board’s focus in 2022,
in what has been a transitional year, has been on ensuring
that management continued to embed and communicate
our purpose and values across the business. There have been
many changes made throughout the business, all of which
have built on our culture and how we do the right thing
for our customers, our shareholders, our communities,
and the environment, to continue the Group’s evolution
in the years ahead.
For further information on how we ensure that our purpose, values,
culture and strategy are aligned and embedded throughout the
Group, see page 74.
Our purpose to build a better world through financial inclusion
encompasses all aspects of ESG and drives our actions to
ensure that our business is responsibly run and sustainable.
Consideration of ESG issues is fundamental
to the way in which we operate as a purpose-led and
responsible business and the Board’s approach is reflected
in the Group’s corporate culture and values of being
responsible, respectful, and straightforward.
One of the key priorities for 2022 agreed by the Board at the
beginning of the year was to oversee the development of the
Group’s ESG strategy which included monitoring and
reviewing ESG risks and opportunities material to the Group’s
stakeholders and increase awareness of the social importance
of the business and the wider role it plays in society.
Further detail on how our ESG-related strategy has been
progressed is on 77.
Board evaluation and effectiveness
An important requirement of good governance is for an
annual Board evaluation to be carried out to assess whether
the Board continues to operate and perform effectively. In line
with the 2018 UK Corporate Governance Code, an externally-
led evaluation was undertaken at the end of the year.
The overall conclusions were that the Board was working
well and further details on the review findings and
recommendations, and the actions agreed can be found
on pages 77 and 78.
Board training
The Board recognises the importance of ongoing training for
the directors. As well as a formal annual Board training session,
all directors are given the opportunity to update their skills and
knowledge on a regular basis and new directors are provided
with a tailored induction programme. The non-executive
directors also undertake to keep themselves briefed and
informed about current issues and to deepen their
understanding of the business. Any individual development
needs are discussed with the directors on an ad-hoc basis
and at the annual performance evaluation. Board training
received during the year included:
– An overview of the Group’s value-added services offering,
including insurance, with a focus on financial performance
and regulatory compliance;
– An update on e-Money Licence regulatory requirements
in Estonia;
– An explanation of Small Payment and Payment Institution
Licence requirements in Poland;
– An assessment of potential outcomes of planned changes
to the European Union Consumer Credit Directive; and
– An explanation of political and regulatory developments in
the markets in which we operate.
Other training in relation to audit and risk matters is
detailed on page 94.
64
International Personal Finance plc
Annual Report and Financial Statements 2022
65
Directors’ Report
Our Board
and Committees
Stuart Sinclair
Chair
Length of service: 3 years
Responsibilities: Good corporate
governance and best practice,
leading an effective Board with a
focus on strategic planning and
implementation. Chair of
Nominations and Governance
Committee.
Key skills: Highly experienced
non-executive director, committee
chair and senior independent
director (SID) with a background in
consumer financial services.
Contributions: A strong and
effective leader of the Board, his
extensive experience in retail
banking, insurance and consumer
finance ensures a good balance of
strategic and operational oversight.
His insightful and inclusive style
encourages a culture of openness
and debate within the Board with
an appropriate level of challenge
to management.
Current directorships:
Non-executive director and chair
of Willis Ltd.
Former roles: Non-executive director
roles at QBE Insurance (Europe) Ltd,
Provident Financial Group plc,
Swinton Group Ltd, PruHealth/Vitality
Ltd and Universal Insurance Inc.
Non-executive director and chair of
remuneration committee for Lloyds
Banking Group plc and also council
member of the Royal Institute of
International Affairs, president and
COO at Aspen, president and CEO
at GE Capital, China, Chief
Executive of Tesco Personal Finance
and director of UK Retail Banking at
Royal Bank of Scotland Group plc.
Qualifications: Master’s degree in
Economics and Master in Business
Administration from University of
California (UCLA).
International expertise: EMEAs,
Americas, Asia Pacific
Gerard Ryan
Executive director
and Chief Executive Officer
Length of service: 11 years
Responsibilities: Group strategy,
operational management,
leadership of the executive and
senior leadership team and Chair of
the Disclosure Committee. Ensuring
good relations with employees,
customer representatives,
customers, regulators and investors.
Key skills: Inspirational leadership
and effective, objective
implementation of strategy; over
30 years’ multi-country experience
in consumer financial services.
Contributions: Acute market insight
which provides a real advantage
in driving the implementation of
the strategy and identifying and
pursuing growth opportunities.
Former roles: CEO for Citigroup’s
consumer finance businesses in
Western Europe, Middle East and
Africa region, a director of Citi
International plc, Egg plc and
Morgan Stanley Smith Barney UK,
CFO of Garanti Bank, Turkey and
CEO of GE Money Bank, Prague.
Qualifications: Fellow of the Institute
of Chartered Accountants in Ireland.
International expertise: EMEAs,
Americas
Deborah Davis
Independent
non-executive director
Richard Holmes
Senior independent
non-executive director
Length of service: 4 years
Responsibilities: Chair of the
Remuneration Committee.
Key skills: Experience in fintech,
consumer and technology
businesses undergoing digital
transformation, growth and
geographic expansion. Digital
technology expertise including
omni-channel payments; over 25
years’ senior leadership experience
in high-growth companies in
international markets.
Contributions: Valuable strategic
and operational insights on growth
and expansion of digital capabilities
as well as customer experience,
innovation and governance
throughout the Company.
Current directorships:
Non-executive director of Lloyds
Banking Group/Scottish Widows
Insurance Board, non-executive
Chair of Diaceutics PLC, non-
executive director of The Institute of
Directors in the UK, IDEX Biometrics
ASA in Norway, and a Trustee of
Southern African Conservation Trust
in South Africa.
Former roles: Vice President of
Global Partnerships and Global Risk
Operations at PayPal, London, and
Vice President of European
Operations for eBay Marketplaces,
Germany. Member of The Digital
Banking Club Advisory Panel and
non-executive director of Which?
and IE Digital.
Qualifications: Chartered Director
(CDir), Diploma in Company
Direction, MSc in Management,
BAppSc in Electronics, and a fellow
of the Institute of Directors UK.
International expertise: EMEAs,
Americas, Asia Pacific
Length of service: 3 years
Responsibilities: Chair of the Audit
and Risk Committee and SID.
Key skills: A former senior executive
with over 40 years of broad
international financial services
experience, including 20 years as
CEO and board member in private
banking, wholesale banking, capital
markets, trading operations, strategy
and finance.
Contributions: Risk management
and how this interacts with
strategy and operations with
technical expertise valued in
Board discussions.
Current directorships: Advisor to
Revolut UK Ltd, non-executive
director of Itau BBA International PLC
and a trustee of the Barry and Peggy
High Charitable Foundation.
Former roles: Non-executive director
and member of the audit, risk and
sustainability committees for Ulster
Bank Ireland DAC Ltd; non-executive
director for Business Growth Fund
and British Bankers Association;
Chair of Financial Services Council
at CBI; CEO, Europe at Standard
Chartered plc, Chair and CEO of
American Express Bank at American
Express Company and executive
vice president of private bank at
Bank of America Corporation.
Qualifications: Degree and
Master’s degree in Economics
and a fellow of the Institute of
Chartered Accountants.
International expertise: EMEAs,
Americas
66
International Personal Finance plc
Directors’ Report
Our Board
and Committees
Stuart Sinclair
Chair
Gerard Ryan
Executive director
and Chief Executive Officer
Length of service: 3 years
Current directorships:
Length of service: 11 years
Responsibilities: Good corporate
governance and best practice,
of Willis Ltd.
Non-executive director and chair
Responsibilities: Group strategy,
operational management,
leading an effective Board with a
Former roles: Non-executive director
leadership of the executive and
focus on strategic planning and
roles at QBE Insurance (Europe) Ltd,
implementation. Chair of
Provident Financial Group plc,
senior leadership team and Chair of
the Disclosure Committee. Ensuring
Nominations and Governance
Swinton Group Ltd, PruHealth/Vitality
good relations with employees,
Former roles: CEO for Citigroup’s
consumer finance businesses in
Western Europe, Middle East and
Africa region, a director of Citi
International plc, Egg plc and
Morgan Stanley Smith Barney UK,
CFO of Garanti Bank, Turkey and
CEO of GE Money Bank, Prague.
Committee.
Key skills: Highly experienced
non-executive director, committee
chair and senior independent
director (SID) with a background in
consumer financial services.
Contributions: A strong and
effective leader of the Board, his
extensive experience in retail
banking, insurance and consumer
finance ensures a good balance of
strategic and operational oversight.
His insightful and inclusive style
encourages a culture of openness
and debate within the Board with
Ltd and Universal Insurance Inc.
Non-executive director and chair of
remuneration committee for Lloyds
Banking Group plc and also council
member of the Royal Institute of
International Affairs, president and
COO at Aspen, president and CEO
at GE Capital, China, Chief
Executive of Tesco Personal Finance
and director of UK Retail Banking at
Royal Bank of Scotland Group plc.
Qualifications: Master’s degree in
Economics and Master in Business
Administration from University of
California (UCLA).
an appropriate level of challenge
International expertise: EMEAs,
to management.
Americas, Asia Pacific
customer representatives,
customers, regulators and investors.
Qualifications: Fellow of the Institute
Key skills: Inspirational leadership
of Chartered Accountants in Ireland.
and effective, objective
International expertise: EMEAs,
implementation of strategy; over
Americas
30 years’ multi-country experience
in consumer financial services.
Contributions: Acute market insight
which provides a real advantage
in driving the implementation of
the strategy and identifying and
pursuing growth opportunities.
Deborah Davis
Independent
non-executive director
Richard Holmes
Senior independent
non-executive director
Length of service: 4 years
Chair of Diaceutics PLC, non-
Length of service: 3 years
Former roles: Non-executive director
Responsibilities: Chair of the
Remuneration Committee.
Key skills: Experience in fintech,
consumer and technology
businesses undergoing digital
transformation, growth and
geographic expansion. Digital
technology expertise including
omni-channel payments; over 25
years’ senior leadership experience
in high-growth companies in
international markets.
Contributions: Valuable strategic
and operational insights on growth
and expansion of digital capabilities
as well as customer experience,
innovation and governance
throughout the Company.
Current directorships:
Non-executive director of Lloyds
Banking Group/Scottish Widows
Insurance Board, non-executive
executive director of The Institute of
Directors in the UK, IDEX Biometrics
ASA in Norway, and a Trustee of
Southern African Conservation Trust
in South Africa.
Former roles: Vice President of
Global Partnerships and Global Risk
Operations at PayPal, London, and
Vice President of European
Operations for eBay Marketplaces,
Germany. Member of The Digital
Banking Club Advisory Panel and
non-executive director of Which?
and IE Digital.
Qualifications: Chartered Director
(CDir), Diploma in Company
Direction, MSc in Management,
BAppSc in Electronics, and a fellow
of the Institute of Directors UK.
International expertise: EMEAs,
Americas, Asia Pacific
Responsibilities: Chair of the Audit
and Risk Committee and SID.
Key skills: A former senior executive
with over 40 years of broad
international financial services
experience, including 20 years as
CEO and board member in private
banking, wholesale banking, capital
markets, trading operations, strategy
and finance.
Contributions: Risk management
and how this interacts with
strategy and operations with
technical expertise valued in
Board discussions.
Current directorships: Advisor to
Revolut UK Ltd, non-executive
director of Itau BBA International PLC
and a trustee of the Barry and Peggy
High Charitable Foundation.
and member of the audit, risk and
sustainability committees for Ulster
Bank Ireland DAC Ltd; non-executive
director for Business Growth Fund
and British Bankers Association;
Chair of Financial Services Council
at CBI; CEO, Europe at Standard
Chartered plc, Chair and CEO of
American Express Bank at American
Express Company and executive
vice president of private bank at
Bank of America Corporation.
Qualifications: Degree and
Master’s degree in Economics
and a fellow of the Institute of
Chartered Accountants.
International expertise: EMEAs,
Americas
Gary Thompson
Executive director
and Chief Financial Officer
Length of service: 11 months
Responsibilities: Group financing,
financial performance and
reporting; Board accountability for
Internal audit and taxation; the
executive relationship with the
external auditor; leadership of the
Group Finance team and other
corporate functions; and lead Board
member for climate-related matters.
Key skills: Strong financial
leadership with over 20 years’
financial experience spent in
both the accounting and
corporate sectors.
Contributions: Since joining IPF
and the Board, developing a sound
understanding of the Group’s
operations, enabling him to
effectively support the Board, the
CEO and executive management
in driving optimum financial
performance.
Aileen Wallace
Independent
non-executive director
Length of service: 2 months
Key skills: Senior financial
services executive with a wealth
of transformational leadership
experience including business
build-out and digitally enabled
growth.
Contributions: Enhancing Board
discussions focused on technology,
innovation and change.
Current directorships:
Non-executive director of Hodge
Group Board and Hodge Bank
and Chair of the Innovation and
the Remuneration Committees and
non-executive director of Target
Group Ltd, a Tech Mahindra
business and Chair of the
Group Risk Committee.
Katrina Cliffe
Independent
non-executive director
Former roles: Finance Director of
Vanquis Bank Limited, the major
subsidiary of Provident Financial plc,
following a number of finance roles,
including Director of Group Finance
and Investor Relations, at Provident
Financial Group plc. Qualified
as a Chartered Accountant at
PricewaterhouseCoopers and
spent 10 years working in
professional practice.
Qualifications: Fellow of the Institute
of Chartered Accountants in
England and Wales.
International expertise: EMEAs
Length of service: 8 months
Responsibilities: Workforce
Engagement Director
Key skills: Extensive experience of
financial services with a breadth of
executive experience in retail
financial services, credit cards,
customer service and marketing.
Contributions: Expertise in retail
financial services, credit cards,
customer service and marketing.
Current directorships: To be
appointed a non-executive director
of DCC plc with effect from 1 May
2023.
Former roles: Senior Independent
non-executive director of Homeserve
plc until January 2023. Senior roles
at American Express, Lloyds TSB
Group PLC, Goldfish Bank Ltd and
MBNA International Bank and has
been a non-executive director at
London and County Mortgages
Limited, Shop Direct Finance
Company Limited, Cembra Money
Bank AG and Naked Wines plc.
Qualifications: Degree in
Archaeology and Anthropology
from the University of Cambridge
International expertise: EMEAs
Audit and Risk Committee
Disclosure Committee
Nominations and Governance Committee
Remuneration Committee
Committee Chair
Former roles: Executive director of
Co-operative Bank and Chair of ESG
Committee; executive director of
Yorkshire Bank Home Loans Board;
executive director of National
Australia Bank; and head of and
director roles at CYBG Plc.
Qualifications: Chartered Banker
(MCBI), and various qualifications
from the Institute of Risk
Management, the Institute of
Directors and the British Computer
Society.
International expertise: EMEAs,
Asia Pacific
66
International Personal Finance plc
Annual Report and Financial Statements 2022
67
Directors’ Report
Directors’ Report continued
Governance at a glance
2022 highlights
Key priorities for 2023
Made progress on enhancing our product
propositions and distribution channels for the
next generation of customers.
To successfully execute our strategy to support
our customers who are experiencing challenging
economic times.
Responded to regulatory change in Poland
and evolved strategy and products to reflect
new requirements and mitigate impact on
financial performance.
Invested in technology to support innovation,
improve customer journeys and make the
business more efficient.
Continued progress on the Group’s
purpose journey, embedding this within
the Group’s culture.
Increased access to quality development
opportunities for all colleagues.
Successfully extended banking facilities
and refinanced the sterling retail bond.
To transition our Polish business to the new lower
total cost of credit cap, serving customers with
our new credit card proposition.
To continue the development and enhancement
of technology platforms for our credit card,
mobile wallet and new digital onboarding, and to
continue to create value from data science.
To seek additional structural cost savings to
counter inflationary effects.
To diversify funding sources and seek longer term
options to increase the Group’s access to funding
at acceptable rates.
Board skills
Financial services
Finance
43%
Capital markets
Banking
Operational experience
Governance/regulatory
Digital/technology
Overseas markets
Customer service
Non-profit making
organisations
ESG
Cyber security
29%
71%
43%
International expertise
EMEA
Americas
Asia Pacific
100%
71%
43%
86%
86%
100%
100%
100%
57%
57%
57%
68
International Personal Finance plc
Directors’ Report
Directors’ Report continued
Governance at a glance
2022 highlights
Key priorities for 2023
Made progress on enhancing our product
propositions and distribution channels for the
next generation of customers.
To successfully execute our strategy to support
our customers who are experiencing challenging
economic times.
Responded to regulatory change in Poland
and evolved strategy and products to reflect
new requirements and mitigate impact on
financial performance.
Invested in technology to support innovation,
improve customer journeys and make the
business more efficient.
Continued progress on the Group’s
purpose journey, embedding this within
the Group’s culture.
Increased access to quality development
opportunities for all colleagues.
Successfully extended banking facilities
and refinanced the sterling retail bond.
To transition our Polish business to the new lower
total cost of credit cap, serving customers with
our new credit card proposition.
To continue the development and enhancement
of technology platforms for our credit card,
mobile wallet and new digital onboarding, and to
continue to create value from data science.
To seek additional structural cost savings to
counter inflationary effects.
To diversify funding sources and seek longer term
options to increase the Group’s access to funding
at acceptable rates.
Finance
43%
Board skills
Financial services
Capital markets
Banking
Operational experience
Governance/regulatory
Digital/technology
Overseas markets
Customer service
Non-profit making
organisations
ESG
Cyber security
86%
86%
100%
100%
100%
57%
57%
57%
29%
71%
43%
Board attendance 2022
There were seven scheduled Board meetings and one ad hoc meeting where the Board discussed and approved the refinancing
of the £78m retail bond maturing in December 2023, with details of attendance set out in the table below. There was also a
mid-year and an annual strategy review meeting.
Director
Stuart Sinclair
Gerard Ryan
Katrina Cliffe2
Deborah Davis
Richard Holmes
John Mangelaars3
Bronwyn Syiek4
Gary Thompson5
Aileen Wallace6
No. of
meetings
attended
% of
meetings
attended
Meetings1
8
8
4
8
8
8
4
5
–
8
8
4
8
8
6
4
5
–
100%
100%
100%
100%
100%
75%
100%
100%
–
1. The meetings that each individual was entitled to and had the opportunity to attend.
2. Katrina Cliffe was appointed as a director on 1 August 2022.
3. John Mangelaars stepped down as a director in December 2022.
4. Bronwyn Syiek stepped down as a director in July 2022.
5. Gary Thompson was appointed as a director on 4 April 2022.
6. Aileen Wallace was appointed as a director on 20 December 2022.
Board composition
Board tenure
Board diversity
International expertise
EMEA
Americas
Asia Pacific
100%
71%
43%
■ Chair
■ Executive directors
■ Non-executive directors
14%
29%
57%
Committee compositions
■ Under 3 years
■ 3-6 years
■ 6-9 years
■ Over 9 years
43%
43%
0%
14%
■ Male
■ Female
57%
43%
Nominations and Governance Committee
Audit and Risk Committee
Remuneration Committee
68
International Personal Finance plc
Annual Report and Financial Statements 2022
■ Chair
■ Executive directors
■ Non-executive directors
20%
20%
60%
■ Chair
■ Executive directors
■ Non-executive directors
33%
0%
67%
■ Chair
■ Executive directors
■ Non-executive directors
33%
0%
67%
69
Directors’ Report
Directors’ Report continued
Role of the Board
and its Committees
The Board
Role of the Board
The role of the Board is to represent shareholders and promote and protect the interests of the Group in the short and long term.
The Board considers the interests of the Group’s shareholders as a whole and the interests of other relevant stakeholders.
It is responsible for approving Group strategy consistent with the purpose of the business and for overseeing its implementation.
The CEO is responsible for preparing and recommending the strategy and for the day-to-day management of the Group.
The Group’s senior leadership team implements the Group’s strategy and provides the CEO and the Board as a whole with the
information needed to make decisions that will determine the long-term success of the Group.
In carrying out their duties as a Board, the directors are fully aware of, and comply with, their responsibilities
and duties under Section 172 of the Companies Act 2006 (see page 39 for our s172(1) statement).
There is a schedule of matters reserved for the decision of the Board. The formal schedule can be found on our website
at www.ipfin.co.uk and includes: approval of strategy and determining the nature and extent of significant risks the Group is willing
to take; Board and Committee composition and Committee terms of reference; annual budgets, significant project expenditure
and funding strategy; and approval of the Annual Report and Financial Statements and regulatory announcements.
The Board has established certain principal Committees to assist it in fulfilling its oversight responsibilities,
providing dedicated focus on particular areas, as set out below. Each Committee chair reports to the
Board on the Committee’s activities after each meeting.
Board Committees and their reserved matters
The Board delegates authority to the Board Committees which are responsible for maintaining
effective governance. The specific responsibilities of the Board’s Committees are set out in their
terms of reference available on our website at www.ipfin.co.uk.
Audit and Risk Committee
Remuneration Committee
Monitor integrity of the Financial Statements
and provide advice to the Board on whether
they are fair, balanced and understandable
Review effectiveness of the internal
control system and review principal and
emerging risks and opportunities
Appoint and evaluate the external
auditor and its independence
Review and monitor effectiveness
of the internal audit function
Approve all aspects of remuneration policy
and make recommendations to the Board
Determine the remuneration packages of
the executive directors, the Chair, the Company
Secretary and the senior leadership team
Review wider workforce remuneration
Nominations and Governance Committee
Review structure, size and composition
of the Board and its Committees
Review annually the succession plan
Assist in the process of selection and appointment
of new directors and other senior executives
Evaluate the balance of skills, knowledge,
experience and diversity of the Board
Disclosure Committee
Assist in design and evaluation of
disclosure controls and procedures
Monitor compliance with disclosure
controls and procedures
Review requirement for, and content of,
regulatory announcements
70
International Personal Finance plc
Directors’ Report
Directors’ Report continued
Role of the Board
and its Committees
The Board
Role of the Board
The role of the Board is to represent shareholders and promote and protect the interests of the Group in the short and long term.
The Board considers the interests of the Group’s shareholders as a whole and the interests of other relevant stakeholders.
It is responsible for approving Group strategy consistent with the purpose of the business and for overseeing its implementation.
The CEO is responsible for preparing and recommending the strategy and for the day-to-day management of the Group.
The Group’s senior leadership team implements the Group’s strategy and provides the CEO and the Board as a whole with the
information needed to make decisions that will determine the long-term success of the Group.
In carrying out their duties as a Board, the directors are fully aware of, and comply with, their responsibilities
and duties under Section 172 of the Companies Act 2006 (see page 39 for our s172(1) statement).
There is a schedule of matters reserved for the decision of the Board. The formal schedule can be found on our website
at www.ipfin.co.uk and includes: approval of strategy and determining the nature and extent of significant risks the Group is willing
to take; Board and Committee composition and Committee terms of reference; annual budgets, significant project expenditure
and funding strategy; and approval of the Annual Report and Financial Statements and regulatory announcements.
The Board has established certain principal Committees to assist it in fulfilling its oversight responsibilities,
providing dedicated focus on particular areas, as set out below. Each Committee chair reports to the
Board on the Committee’s activities after each meeting.
Board Committees and their reserved matters
The Board delegates authority to the Board Committees which are responsible for maintaining
effective governance. The specific responsibilities of the Board’s Committees are set out in their
terms of reference available on our website at www.ipfin.co.uk.
Audit and Risk Committee
Remuneration Committee
Monitor integrity of the Financial Statements
and provide advice to the Board on whether
they are fair, balanced and understandable
Review effectiveness of the internal
control system and review principal and
emerging risks and opportunities
Appoint and evaluate the external
auditor and its independence
Review and monitor effectiveness
of the internal audit function
Approve all aspects of remuneration policy
and make recommendations to the Board
Determine the remuneration packages of
the executive directors, the Chair, the Company
Secretary and the senior leadership team
Review wider workforce remuneration
Nominations and Governance Committee
Review structure, size and composition
of the Board and its Committees
Review annually the succession plan
Assist in the process of selection and appointment
of new directors and other senior executives
Evaluate the balance of skills, knowledge,
experience and diversity of the Board
Disclosure Committee
Assist in design and evaluation of
disclosure controls and procedures
Monitor compliance with disclosure
controls and procedures
Review requirement for, and content of,
regulatory announcements
Board – key priorities
The Board reports below on the progress against its 2022 priorities and on the key priorities set for 2023.
2022 progress
Strategy
Key priorities for 2023
– Monitored the financial and operational performance of the
Group’s businesses and the strength of the balance sheet, by
reviewing trading performance against budget.
– Oversaw the implementation of the Group’s strategy to broaden
its offering with new and innovative products including the launch
of a new credit card in Poland and the launch of mobile wallet in
two new markets;
– Oversaw the development of a new cloud-based customer
relationship management tool to improve customer experience.
– Supported the process to embed the new financial model into
management and board decision-making.
– Continue to monitor the financial and operational performance of
the Group’s businesses and the robustness of the balance sheet.
– Seek new ways to drive efficiency gains and make additional
structural cost savings to counter inflationary effects.
– Manage the Polish business through transition to becoming a
predominantly credit card based business to mitigate the impact
of the new Polish total cost of credit cap.
– Increase European home credit customer numbers through
deployment of new products and channels and re-positioning of
our brand to become known more broadly for financial services.
– Increase IPF Digital customer numbers through territory expansion
and operational rigour; and by building digital partnerships and
further accelerating deployment of our mobile wallet.
Colleagues
– Continued to oversee the management of activities introduced
through the Global Care Plan to mitigate the impact of the
pandemic on colleagues across the business, with particular regard
to their safety and protection, and mental health and well-being.
Purpose
– Continue to promote the Global Careers Portal and build on existing
investment in development plans created for all colleagues.
– Supported the continuing journey to become a more purpose-led
business and ensured alignment with the Group’s business model,
values, culture and strategy.
– Continue with purpose-led activities including the Employee Value
Proposition and the Global Community Invisibles initiative.
Digitisation
– Supported the implementation of new technologies and
innovation, enhancing product propositions and improving the
customer experience.
– Continue to develop and enhance technology platforms for credit
cards and mobile wallet propositions and new digital on-boarding.
– Deliver more value from data science.
Risk management
– Monitored principal and emerging risks facing the Group,
– Continue to monitor the principal and emerging risks facing the
embedded climate change within the Enterprise Risk Management
framework and approved the Group’s risk appetite.
Group, to review the Group’s risk appetite for each, and promote
actions to ensure that, so far as possible, each risk falls within such
risk appetite.
Stakeholder engagement
– Following the easing of people movement restrictions, the directors
were able to resume travel to our markets and engage more
effectively with stakeholders. Where applicable feedback was
considered as part of the Board’s decision-making processes,
as described on pages 75 and 76.
Succession planning
– Oversaw the refresh of the Board’s composition with appointments
of a new CFO and two female non-executive directors.
– Supported furtherance of the Group’s people strategy with
significant investment in education, leadership development and
promotion opportunities which will assist succession planning.
Funding strategy
– Continue to engage effectively with all stakeholders and, where
practicable, take their feedback into account in the Board’s
decision-making.
– Continue to support the Group’s people strategy in the furtherance
of leadership, development and succession planning including
through the annual People and Organisational Planning process
and capability assessments.
– Monitored the Group’s funding position and development of
– Consider diversification of funding sources and find longer-term
longer-term funding strategies, approving the refinancing of the
sterling retail bond.
– Endorsed the long-term progressive dividend policy for 2022
and future years.
options to increase the Group’s access to funding at acceptable rates.
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Board activities during 2022
The Board has ultimate responsibility for the overall leadership
of the Group, overseeing the development and delivery of a
clear Group strategy and ensuring the long-term sustainable
success of the Company for all stakeholders. It monitors
operational and financial performance against agreed goals
and objectives, and challenges the executive team on its
proposals relating to the management of the business. The
Board ensures that appropriate controls and systems exist to
manage risk and that there are the financial resources and
people with the required skills to achieve the strategic goals
the Board has set. The information in this section summarises
the Board’s activities during 2022 and the discussions that
took place in the discharge of its duties to the Company.
Our s172(1) statement is on page 39.
The Chair sets the annual Board programme and agenda,
with support from the CEO and the Company Secretary.
The Chair also determines the number of meetings to be held
during the year, with this kept under review, and ensures that
enough time is devoted, during meetings and throughout
the year, to discuss all material matters, including strategic,
financial, operational, business, risk and human resource.
The Board agendas are structured to ensure there is an
appropriate balance of time allocated to strategic matters,
routine reporting and governance-related items.
At each scheduled Board meeting, the CEO and CFO present
separate reports, detailing business performance and progress
against strategy. These are supplemented by regular
performance updates from each of the divisional heads
of the Group.
Other presentations and reports are given by the relevant
business head or manager on matters which are scheduled
to be presented in accordance with the annual board
planner, which is aligned to the Matters Reserved to the
Board schedule. This provides the opportunity for a range
of senior and manager-level colleagues to gain experience
of attending and presenting to the Board.
In addition to the routine Board meetings, the Board
participated in an annual and mid-year strategy review.
The discussions focused on continuing to support our
customers through challenging times, expanding our
customer offering and growing our customer base,and
continuing to invest in and develop our colleagues. An ad hoc
Board meeting was held in November 2022 to consider and
approve the refinancing of the sterling retail bond.
In 2022, with the easing of pandemic-related restrictions, the
Board was able to resume meeting in person and the majority
of meetings were held in the Group’s head office in Leeds, with
a market-based Board meeting re-instated for the October
2022 meeting, The Board welcomed this change in recognition
of the benefits of face-to-face engagement with the senior
leadership team and colleagues.
An overview of the range of matters that the Board considered,
discussed or approved where appropriate and the
stakeholders considered at its meetings during the year
are outlined below and on page 73.
Matters
considered
Outcome
Our stakeholders
Strategy and
management
– Reviewed and approved the Group’s strategy at the annual and mid-year review meetings and
received updates at intervals during the year.
– Reviewed the progress against 2022 Board objectives and agreed the 2023 Board objectives.
– Considered the potential impact of proposed consumer credit legislation in Poland and agreed the
strategic approach to launch a new credit card.
– Reviewed the operational and financial performance with regular presentations from the CEO, CFO and
members of the Group Finance Leadership Team enabling oversight of business performance against
targets, budget and strategy.
– Considered and approved the Group’s climate-related strategy in line with the TCFD recommendations.
– Supported the continuation of the strategic retail partnership initiative with the long-term aim of
strengthening our market position.
– Reviewed and discussed the development of the Group’s IT strategy, as part of the decision to dissolve
the Board Technology Committee.
Board
composition
and
effectiveness
– Reviewed Board composition regularly to ensure the right mix of skills, knowledge, experience and
diversity for the Board to continue to be effective.
– Reviewed succession plans for the Board, its committees and the senior leadership team.
– Reviewed and considered conflicts of interest, independence and time commitments of the directors.
– Participated in an externally-facilitated Board evaluation process and agreed actions following
a review of findings.
– Received training including an annual session on licensing and the Consumer Credit Directive.
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Board activities during 2022
The Board has ultimate responsibility for the overall leadership
of the Group, overseeing the development and delivery of a
clear Group strategy and ensuring the long-term sustainable
success of the Company for all stakeholders. It monitors
operational and financial performance against agreed goals
and objectives, and challenges the executive team on its
proposals relating to the management of the business. The
Board ensures that appropriate controls and systems exist to
manage risk and that there are the financial resources and
people with the required skills to achieve the strategic goals
the Board has set. The information in this section summarises
the Board’s activities during 2022 and the discussions that
took place in the discharge of its duties to the Company.
Our s172(1) statement is on page 39.
The Chair sets the annual Board programme and agenda,
with support from the CEO and the Company Secretary.
The Chair also determines the number of meetings to be held
during the year, with this kept under review, and ensures that
enough time is devoted, during meetings and throughout
the year, to discuss all material matters, including strategic,
financial, operational, business, risk and human resource.
The Board agendas are structured to ensure there is an
appropriate balance of time allocated to strategic matters,
routine reporting and governance-related items.
At each scheduled Board meeting, the CEO and CFO present
separate reports, detailing business performance and progress
against strategy. These are supplemented by regular
performance updates from each of the divisional heads
of the Group.
Matters
considered
Outcome
Strategy and
management
Other presentations and reports are given by the relevant
business head or manager on matters which are scheduled
to be presented in accordance with the annual board
planner, which is aligned to the Matters Reserved to the
Board schedule. This provides the opportunity for a range
of senior and manager-level colleagues to gain experience
of attending and presenting to the Board.
In addition to the routine Board meetings, the Board
participated in an annual and mid-year strategy review.
The discussions focused on continuing to support our
customers through challenging times, expanding our
customer offering and growing our customer base,and
continuing to invest in and develop our colleagues. An ad hoc
Board meeting was held in November 2022 to consider and
approve the refinancing of the sterling retail bond.
In 2022, with the easing of pandemic-related restrictions, the
Board was able to resume meeting in person and the majority
of meetings were held in the Group’s head office in Leeds, with
a market-based Board meeting re-instated for the October
2022 meeting, The Board welcomed this change in recognition
of the benefits of face-to-face engagement with the senior
leadership team and colleagues.
An overview of the range of matters that the Board considered,
discussed or approved where appropriate and the
stakeholders considered at its meetings during the year
are outlined below and on page 73.
Our stakeholders
– Reviewed and approved the Group’s strategy at the annual and mid-year review meetings and
received updates at intervals during the year.
– Reviewed the progress against 2022 Board objectives and agreed the 2023 Board objectives.
– Considered the potential impact of proposed consumer credit legislation in Poland and agreed the
strategic approach to launch a new credit card.
– Reviewed the operational and financial performance with regular presentations from the CEO, CFO and
members of the Group Finance Leadership Team enabling oversight of business performance against
targets, budget and strategy.
– Considered and approved the Group’s climate-related strategy in line with the TCFD recommendations.
– Supported the continuation of the strategic retail partnership initiative with the long-term aim of
– Reviewed and discussed the development of the Group’s IT strategy, as part of the decision to dissolve
strengthening our market position.
the Board Technology Committee.
Board
composition
and
effectiveness
– Reviewed Board composition regularly to ensure the right mix of skills, knowledge, experience and
diversity for the Board to continue to be effective.
– Reviewed succession plans for the Board, its committees and the senior leadership team.
– Reviewed and considered conflicts of interest, independence and time commitments of the directors.
– Participated in an externally-facilitated Board evaluation process and agreed actions following
a review of findings.
– Received training including an annual session on licensing and the Consumer Credit Directive.
Matters
considered
Financial
reporting
Outcome
Our stakeholders
– Approved the 2021 Annual Report and Financial Statements and the long-term viability and going
concern statements.
– Reviewed and approved the half- and full-year results announcements, quarterly trading updates and
presentations to investors and analysts.
– Reviewed the dividend cover and shareholder returns particularly in the context of continued rebuild of
the business following the pandemic.
– Approved the progressive dividend policy for 2022 and future years.
– Monitored the Group’s funding position and compliance with the Group’s financial covenants.
– Reviewed and approved Group Treasury policies including a revised Funding Headroom policy.
– Approved the re-financing of the sterling retail bond in November 2022.
– Approved the 2023 Group budget and business plan for 2023 to 2027, reviewing key assumptions,
inputs and risks, and monitored performance and variances against the 2022 budget.
Risk
management
and internal
controls
– Reviewed and approved risk appetite proposals and the updated Risk Management policy.
– Reviewed and approved the assessment of principal risks, including climate risk and emerging risks.
– Received reports from the Audit and Risk Committee of the Group’s systems of risk management and
internal controls and confirmed their effectiveness.
– Received regular updates through the Audit and Risk Committee in respect of internal and external
audit reviews, and agreed the internal audit programme for the year.
– Approved the reappointment of Deloitte LLP as auditor on the recommendation of the Audit and
Risk Committee.
Governance
– Approved the resolutions to be put to shareholders at the 2022 AGM.
– Proactively sought and considered feedback from investors and proxy advisors on the Company’s 2022
AGM resolutions, particularly in relation to the proposed new 2023 Remuneration Policy.
– Agreed the format of the AGM to be held in person for the first time in two years following the lifting of
restrictions post-pandemic.
– Approved the appointment of two new independent non-executive directors, Katrina Cliffe and Aileen
Wallace, and their respective appointments as members of the Audit and Risk Committee and the
Nominations and Governance Committee.
– Approved the appointment of Katrina Cliffe as the new Workforce Engagement Director.
– Approved updated Matters Reserved to the Board Schedule and Board Committees’ Terms of Reference.
– Approved the dissolution of the Board Technology Committee.
– Reviewed and approved the Group’s Tax strategy.
– Reviewed and approved the Board Diversity policy.
– Noted the resignation of the Company Secretary and the appointment of the new Chief Legal Officer
and Company Secretary.
Stakeholder
engagement
– Reviewed updates presented by the Stakeholder Engagement Director on engagement activities
undertaken in the first half of 2022, and reviewed the updated approach to be followed in 2023 by
the new Workforce Engagement Director in the second half of the year.
– Reviewed output from the operation of the ‘Speak Up’ whistleblowing service.
– Received updates on the general well-being and health and safety of colleagues and customers,
as part of routine reports from the executive directors and management.
– Received reports from across the business on the continuing efforts to support employees and customer
representatives in safe ways of working within the Covid-19 landscape, including mental health and
well-being together with the continued safety of customers.
– Received bi-annual health and safety updates from the Health and Safety Manager.
– Received regular updates on the external regulatory environment in each of our markets, and the
management and engagement strategy to ensure alignment with the Group’s business priorities.
– Received updates on investor sentiment in response to financial results and from bondholders and
potential bondholders garnered in connection with the re-financing of the sterling retail bond.
– Considered the increased focus on community-based initiatives as part of the purpose refresh
across the Group.
Our stakeholders
Customers
Regulators and legislators
Communities
Employees and
customer representatives
Suppliers
Investors and shareholders
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Purpose, culture and stakeholders
Culture and values
The Board understands that the cultural tone of our business
comes from the top. The benefits of a strong culture are seen
in the success of delivering the strategy and in the
engagement, retention and productivity of our employees and
customer representatives. The Board monitors and assesses
the Group’s culture along with its purpose and values through
receiving regular updates from members of the senior
leadership team. The Board also assesses cultural indicators
such as management’s attitude to risk, behaviours and
compliance within the Group’s policies and procedures
as well as reviewing the results of employee surveys.
The Board also recognises that it is accountable to
stakeholders for ensuring that the Group is appropriately
managed and achieves its objectives in a way that is
supported by the right culture and behaviours. Our values,
Responsible, Respectful, Straightforward, are recognised
across the Group. They support our culture and help our
colleagues understand the importance of how we work
together as a team and how we place customers at the centre
of what we do. Leadership behaviours of the Board, executive
directors and senior management further guide our conduct
and decision-making so that we do the right thing for the
business and all our stakeholders.
The Board routinely interacts directly with colleagues and
indirectly through the work of our Workforce Engagement
Director, as part of the Workforce Engagement programme.
This allows the directors not only to learn first-hand of
significant issues and colleagues’ concerns, but also to learn
about what is working well and they are able to provide
feedback in return. As part of this activity the Board is able to
gain assurance that the Group’s policies, practices and
behaviour throughout the business are wholly aligned with the
Company’s purpose and strategy.
Board overview of purpose
Company purpose
The Board has overall responsibility for the Company’s
purpose, values and strategy to deliver long-term sustainable
success and generate value for its shareholders and other
stakeholders. It places great importance on ensuring that
these continue to be appropriate for the business and the
markets in which we operate, while continuing to be aligned
with our culture.
Having a clear purpose guides the Board and the executive
directors in managing the business and provides a common
goal. By delivering on our purpose, we serve and create value
for our stakeholders. This supports a strong culture which drives
performance across the business both in terms of financial
and non-financial value. The Board sets the strategy for the
Group and throughout the year it receives regular updates
to ensure it is delivered in line with our purpose.
Embedding our purpose in 2023
Our purpose ‘to build a better world through financial
inclusion’ explains why we exist and reminds us of whom we
serve and why. As a business we have always had a great
sense of purpose, providing credit to the underbanked and
underserved in a way that is responsible and sustainable.
We help consumers who have lower incomes and often
a limited credit history access the financial system. We are
a responsible lender, well positioned to provide an entry point
to mainstream consumer finance, serving customers with
regulated credit products.
The Board has not only been kept up to date on the activities
undertaken but has also been consulted and had the
opportunity to contribute to the plans. Over the course of 2022,
the Board has supported the four “Pathways to Purpose”
created to help to deliver on the vision. These are:
– to build strong foundations by introducing changes to
processes and polices;
– to ensure that purpose is the centre of daily action;
– to implement changes relevant to each of the stakeholder
groups, demonstrating the journey to shareholders as part of
the annual reporting; and
– to engage in internal communication and education.
The Board has received regular updates on progress and
recognises that delivering on our purpose is a long-term and
evolving journey.
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Board overview of purpose
Company purpose
The Board has overall responsibility for the Company’s
purpose, values and strategy to deliver long-term sustainable
success and generate value for its shareholders and other
stakeholders. It places great importance on ensuring that
these continue to be appropriate for the business and the
markets in which we operate, while continuing to be aligned
with our culture.
Having a clear purpose guides the Board and the executive
directors in managing the business and provides a common
goal. By delivering on our purpose, we serve and create value
for our stakeholders. This supports a strong culture which drives
performance across the business both in terms of financial
and non-financial value. The Board sets the strategy for the
Group and throughout the year it receives regular updates
to ensure it is delivered in line with our purpose.
Embedding our purpose in 2023
Our purpose ‘to build a better world through financial
inclusion’ explains why we exist and reminds us of whom we
serve and why. As a business we have always had a great
sense of purpose, providing credit to the underbanked and
underserved in a way that is responsible and sustainable.
We help consumers who have lower incomes and often
a limited credit history access the financial system. We are
to mainstream consumer finance, serving customers with
regulated credit products.
The Board has not only been kept up to date on the activities
undertaken but has also been consulted and had the
opportunity to contribute to the plans. Over the course of 2022,
the Board has supported the four “Pathways to Purpose”
created to help to deliver on the vision. These are:
– to build strong foundations by introducing changes to
processes and polices;
– to ensure that purpose is the centre of daily action;
– to implement changes relevant to each of the stakeholder
groups, demonstrating the journey to shareholders as part of
the annual reporting; and
– to engage in internal communication and education.
The Board has received regular updates on progress and
recognises that delivering on our purpose is a long-term and
evolving journey.
The Board understands that the cultural tone of our business
comes from the top. The benefits of a strong culture are seen
in the success of delivering the strategy and in the
engagement, retention and productivity of our employees and
customer representatives. The Board monitors and assesses
the Group’s culture along with its purpose and values through
receiving regular updates from members of the senior
leadership team. The Board also assesses cultural indicators
such as management’s attitude to risk, behaviours and
compliance within the Group’s policies and procedures
as well as reviewing the results of employee surveys.
The Board also recognises that it is accountable to
stakeholders for ensuring that the Group is appropriately
managed and achieves its objectives in a way that is
supported by the right culture and behaviours. Our values,
Responsible, Respectful, Straightforward, are recognised
across the Group. They support our culture and help our
colleagues understand the importance of how we work
together as a team and how we place customers at the centre
of what we do. Leadership behaviours of the Board, executive
directors and senior management further guide our conduct
and decision-making so that we do the right thing for the
business and all our stakeholders.
The Board routinely interacts directly with colleagues and
indirectly through the work of our Workforce Engagement
Director, as part of the Workforce Engagement programme.
This allows the directors not only to learn first-hand of
significant issues and colleagues’ concerns, but also to learn
feedback in return. As part of this activity the Board is able to
gain assurance that the Group’s policies, practices and
behaviour throughout the business are wholly aligned with the
Company’s purpose and strategy.
a responsible lender, well positioned to provide an entry point
about what is working well and they are able to provide
Purpose, culture and stakeholders
Culture and values
S172 Stakeholder engagement and summary of key matters debated and agreed by the board
1. Considering customers in Board decision-making
2. Considering employees and customer
The Board routinely receives updates on customers at
meetings from both the CEO, following his regular visits across
the business, and directly from the business heads, covering
European home credit, Mexico home credit and IPF Digital.
The Chair, CEO and CFO visited home credit customers during
the year and following the easing of Covid-19 restrictions, the
Board was able to resume its annual market visit in October,
travelling to Romania to hold the Board meeting and
undertake various customer-related activities.
Such activity enables the Board to interact with customers,
listen to their feedback and then develop a deeper
understanding of their needs which then guides both
operational and Board decision-making. This is particularly
helpful in aiding the design of simple affordable and personal
financial products for our customers.
representatives in Board decision-making
The Board recognises that the engagement of our people
underpins the successful delivery of the Company’s strategy.
Members of the Board have direct engagement with
employees and customer representatives when visiting our
markets, including Board presentations, dinners and ad hoc
interactions. These allow the Board to meet a broad spectrum
of employees from different areas of the business including
Legal, Compliance, Data Protection, Customer Services,
Corporate Affairs, HR, Finance, Health and Safety.
The Board fully supports management’s commitment to
creating a culture that develops and rewards talent and
enables colleagues to achieve their full potential. The Board
also recognises the importance of monitoring and supporting
the well-being of individuals and supports the people strategy
which focuses on colleague engagement. The Board receives
bi-annual updates from the Chief People Officer on
performance, development potential and succession planning
as well as regular reports from the CEO and business heads on
general people-related matters throughout the year.
Key matters debated and or agreed by the
Board include:
Key matters debated and agreed by the
Board include:
– Approved the launch of new products, for example
the Group’s new credit card proposition developed
to meet the future needs of consumers in Poland
under the new, tighter rate cap introduced in this
market in December 2022.
– Established retail partnership pilot test activity with the
aim of creating more points for customers to access
credit in Romania and Mexico.
– Introduced an education package for customers in
Poland as part of the expansion of our value-added
services offering.
Further detail is included on pages 18 and 19.
– Approved the introduction of an enhanced employee
value proposition and enhanced employee
experience and the launch of a careers portal to
attract and retain good talent and ensure a high-
quality experience when applying to join our Group.
– Approved the deployment of learning activities with
structured development pathways for all our customer
representatives.
– Appointed a new Workforce Engagement Director,
in an updated role, and approved a new approach
and programme of activity for 2023.
– Oversaw the evolution of the Care Programme
developed during the pandemic, to cover menopause
and psychosocial risk.
– Approved the introduction of safer systems of work,
introduced post-pandemic, as part of the Group’s
bi-annual health and safety update.
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3. Considering investors in Board decision-making
5. Considering regulators and legislators in Board
The CEO and CFO take the lead, on behalf of the Board,
in engaging with our investors in presenting the Company’s
results, progress against strategy and other matters. Investor
feedback is also sought formally twice a year, and both the
Chair and the Senior Independent Director (SID) are available
to answer shareholder questions at the AGM. In 2022, the
Chair and SID also resumed hosting our annual lunch for
top shareholders.
decision-making
The Board receives regular updates on legal and regulatory
developments across all of the markets in which the business
operates. These are provided mainly by the Chief Legal Officer
and the Group Corporate Affairs Director. The Board supports
the proactive regulatory engagement strategy, which is led
primarily through our corporate affairs teams in each of our
markets, in order to deliver sustainable outcomes that are
positive for customers and businesses alike.
Key matters debated and agreed by the
Board include:
– The Board received updates throughout the year
following CEO and CFO meetings with major
shareholders and other advisory groups to pro-actively
engage with investors and articulate the Group’s
investment case.
– The Board discussed options for additional debt funding
and approved the refinancing of the sterling retail bond
in November 2022.
– The Board endorsed its previous approval of a
progressive dividend policy for 2023 and future years.
– The Board engaged with shareholders in response to
the 22.3% advisory vote against the 2021 Remuneration
Report, issuing a formal statement to the market in
August 2022. Further consultations have been
undertaken as part of the development of the 2023
Remuneration Policy, including the introduction of a
Restricted Stock Plan, in place of the current LTIP. See
pages 96 and 97 for further information.
4. Considering our communities in Board decision-making
The Board understands the importance of nurturing links
and building relationships with our communities in which
the business operates to deliver the long-term sustainability
of the Group. The Board supports the wide range of
community engagement activities, which take place at a local
level, and also participates themselves where it is possible. For
example, as part of the Group’s community investment
programme, members of the Board joined 1,700 colleagues at
the Global Togetherness Day, a virtual event which celebrated
their efforts being made to help people impacted by the war
in Ukraine, Other directors including the Chair, the CEO and
CFO visited the Women’s House in Poland, which has been set
up to help refugees fleeing the war in Ukraine.
Key matters debated and agreed by the
Board include:
– An update was provided following a meeting with
regulators to highlight our global community
programme, ‘Invisibles’, and the provision of credit to
marginalised members of society.
Key matters debated and agreed by the Board
include:
– Following the direct observation of Board members
and feedback received indirectly, the Board
considered and approved the extension of the
Group’s global community initiative, Invisibles.
See page 46 for more information.
– During the year, the Board received updates in relation
to the Polish government’s proposals to introduce a
non-interest total cost of credit cap, which became
effective in December 2022 and approved the
strategies to mitigate the impacts of the new legislation
on the business.
6. Considering our suppliers in Board decision-making
The Board recognises the importance of partnering with
suppliers that share our ethical values and sustainable
approach to business. The Board fully supports
management in its implementation of the operational
policies and procedures in place that help to govern
and guide these relationships. Our engagement with our
suppliers is undertaken via our market operations and
purchasing teams.
Key matters debated and agreed by the
Board include:
– Approval of key contracts in line with the delegation
of authority and matters reserved to the Board, for
example the renewal of funding facilities and
counter-party limits.
– Approval of a new Supplier Relationship Manager
policy, which requires compliance with legislation
relating to human rights, health and safety of workers,
equal rights and employment law.
– The Board supported the recent implementation of a
new responsible procurement policy which sets out
minimum standards to be implemented by all markets
into local polices and processes.
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Directors’ Report continued
3. Considering investors in Board decision-making
5. Considering regulators and legislators in Board
The CEO and CFO take the lead, on behalf of the Board,
decision-making
in engaging with our investors in presenting the Company’s
The Board receives regular updates on legal and regulatory
results, progress against strategy and other matters. Investor
developments across all of the markets in which the business
feedback is also sought formally twice a year, and both the
operates. These are provided mainly by the Chief Legal Officer
Chair and the Senior Independent Director (SID) are available
and the Group Corporate Affairs Director. The Board supports
to answer shareholder questions at the AGM. In 2022, the
the proactive regulatory engagement strategy, which is led
Chair and SID also resumed hosting our annual lunch for
primarily through our corporate affairs teams in each of our
top shareholders.
markets, in order to deliver sustainable outcomes that are
positive for customers and businesses alike.
Key matters debated and agreed by the
Board include:
– The Board received updates throughout the year
following CEO and CFO meetings with major
shareholders and other advisory groups to pro-actively
engage with investors and articulate the Group’s
investment case.
– The Board discussed options for additional debt funding
and approved the refinancing of the sterling retail bond
in November 2022.
– The Board endorsed its previous approval of a
progressive dividend policy for 2023 and future years.
– The Board engaged with shareholders in response to
the 22.3% advisory vote against the 2021 Remuneration
Report, issuing a formal statement to the market in
August 2022. Further consultations have been
undertaken as part of the development of the 2023
Remuneration Policy, including the introduction of a
Restricted Stock Plan, in place of the current LTIP. See
pages 96 and 97 for further information.
4. Considering our communities in Board decision-making
The Board understands the importance of nurturing links
and building relationships with our communities in which
the business operates to deliver the long-term sustainability
of the Group. The Board supports the wide range of
community engagement activities, which take place at a local
level, and also participates themselves where it is possible. For
example, as part of the Group’s community investment
programme, members of the Board joined 1,700 colleagues at
the Global Togetherness Day, a virtual event which celebrated
their efforts being made to help people impacted by the war
in Ukraine, Other directors including the Chair, the CEO and
CFO visited the Women’s House in Poland, which has been set
up to help refugees fleeing the war in Ukraine.
Key matters debated and agreed by the
Board include:
– An update was provided following a meeting with
regulators to highlight our global community
programme, ‘Invisibles’, and the provision of credit to
marginalised members of society.
Key matters debated and agreed by the Board
include:
– Following the direct observation of Board members
and feedback received indirectly, the Board
considered and approved the extension of the
Group’s global community initiative, Invisibles.
See page 46 for more information.
– During the year, the Board received updates in relation
to the Polish government’s proposals to introduce a
non-interest total cost of credit cap, which became
effective in December 2022 and approved the
strategies to mitigate the impacts of the new legislation
on the business.
6. Considering our suppliers in Board decision-making
The Board recognises the importance of partnering with
suppliers that share our ethical values and sustainable
approach to business. The Board fully supports
management in its implementation of the operational
policies and procedures in place that help to govern
and guide these relationships. Our engagement with our
suppliers is undertaken via our market operations and
purchasing teams.
Key matters debated and agreed by the
Board include:
– Approval of key contracts in line with the delegation
of authority and matters reserved to the Board, for
example the renewal of funding facilities and
counter-party limits.
– Approval of a new Supplier Relationship Manager
policy, which requires compliance with legislation
relating to human rights, health and safety of workers,
equal rights and employment law.
– The Board supported the recent implementation of a
new responsible procurement policy which sets out
minimum standards to be implemented by all markets
into local polices and processes.
“Our purpose ‘to build a better world
through financial inclusion’ encompasses
all aspects of ESG and drives our actions
to ensure that our business is responsibly
run and sustainable. Consideration of
ESG issues is fundamental to the way in
which we operate as a purpose-led and
responsible business. The Board’s
approach is reflected in the Group’s
corporate culture and values of being
responsible, respectful and
straightforward.”
The Board and oversight of ESG
The Board recognises the importance of environmental,
social and governance matters not only in relation to their
significance in the execution of the Group’s strategy but also
due to the high degree of interest with which they are viewed
by investors and other stakeholders. A key priority for 2022 for
the Board was therefore to oversee the development of the
Group’s ESG strategy.
For environmental matters, a key highlight has been the
strong Board oversight on the decisions taken to address
climate-related risks and opportunities with the objective of
achieving compliance with TCFD recommendations to the
extent possible. Significant progress was made on embedding
climate change within the Enterprise Risk Management
Framework and refining the definition of the risks and
opportunities associated with climate change. Work has
also commenced on the process to develop controls and
key risk indicators and to design a climate change approach
for activity-focused work streams in 2023 and beyond. This
work will be overseen by the Environmental Oversight Group
which was established in 2022, and reports upwards to the
Risk Advisory Group, which then advises the Audit and
Risk Committee.
A range of priorities have been agreed for 2023 under the four
TCFD pillars of “governance”, “strategy”, “risk management”
and “metrics and targets”. These include ensuring that climate
considerations are incorporated into all key decisions taken
by the Board and assisting with this, seeking to quantify the
financial implications of key climate related risks and
opportunities. We will also update our financial modelling
and create plans for activities aimed at taking advantage of
opportunities identified. Finally, we will look to make progress
on designing appropriate metrics and targets relevant to our
business and in line with market practice. Further details on
our work on TCFD is on pages 49 to 56.
The Board will be updated at regular intervals on progress
against these priorities and activities alongside the programme
of education on climate change which will be established for
the Board, and for employees and customer representatives.
For social matters, our business with its strong social purpose
has a long history of building financial inclusion and also
makes a strong social contribution to the wider economy.
During 2022, we strengthened our ESG strategy to ensure we
deliver on our purpose in a responsible and transparent way
and the Board recognises its role in relation to ESG is to ensure
governance and oversight with the senior leadership team
responsible for managing the ESG-related risks and
opportunities on a day-to-day basis. Further details on our
social role and purpose are on pages 8 and 42 to 43.
From a governance perspective ESG issues are discussed
regularly by the Board, including during Board strategy
sessions, business operational reviews and in the context of
stakeholder engagement. In addition, stakeholder attitudes,
including those of investors, and the direction and momentum
of their expectations are considered in relation to ESG. Our
Board members bring experience from a range of sectors and
perspectives, including finance, technology, banking,
customer service and non-profit making. This equips them to
consider the potential implications of ESG on operational
capacity, as well as understanding the nature of the debate
as it develops. In addition, there is a deep understanding of
the risks and opportunities for the Group. Further details on
how the business acts responsibly from a governance
perspective through its policies and engagement with
stakeholders are on pages 47-48 and 75-76.
Board and Committee effectiveness review
In accordance with the 2018 UK Corporate Governance Code,
and as part of a three year cycle, the 2022 Board and
Committee evaluation was facilitated externally by
Independent Audit Limited using their online governance
platform, Thinking Board®. This followed two years of internally-
led assessments. Independent Audit, which is a global leader
in board effectiveness reviews has no connection to IPF or with
any of the directors, The primary purpose of the review was to
direct the Board’s attention to areas where there might be
opportunities to improve its performance and effectiveness.
Following consultation with the Chairs of the Board and its
Committees, and the Company Secretary, a questionnaire
was prepared by Independent Audit. The views of each board
director, members of the management team and the
Company Secretary were sought in response to a range of
questions grouped into the following themes: Strategy, Risk
and Finance; People, Culture and Stakeholders; Board
Composition Mix; Information and Development; and
Meetings, Dynamics and Committee. The directors did not fill
in the questionnaire for Committees which they did not
routinely attend, however, they were asked to respond to a
series of free-form questions. The external evaluation did not
extend to conducting interviews, although Independent
Audit’s assessment also relied on observation of the December
Board meeting and a review of the December meeting papers.
The Senior Independent Director, Richard Holmes, also led a
separate evaluation of the Chair, Stuart Sinclair, with the
directors asked to appraise his performance.
The responses were assessed and evaluated by Independent
Audit and the comprehensive report of its findings was
presented to the Board in January 2023. The vast majority of
questions indicated that most areas considered were working
well. However, with such positive responses Independent Audit,
suggested that, in the spirit of continuous improvement, the
Board should ensure that they keep challenging themselves
on how well things are working.
Notably there were several key strengths highlighted in relation
to Composition, Chairing, Committees and Dynamics. It was
felt that the right people were around the table and the
Board operated in an environment of trust, openness and
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77
Directors’ Report
Directors’ Report continued
inclusiveness. There was also unanimous agreement that
the Chair leads the Board well and everyone was given the
opportunity to offer their views, and that Committees were
all felt to function well.
The table below sets out the actions which were agreed
at the beginning of 2022 and progress against these and
the key findings and actions from the recent external
effectiveness review. The findings and agreed actions in
relation to the Board Committees can be found in the
respective Committee Reports.
The Board discussed the points raised by the assessment
and the recommendations on follow up actions.
Overall, the evaluation found that the Board and its
Committees continue to operate at a high standard. The
Board is regarded as being cohesive with an open, inclusive,
and supportive culture and strong governance relating to risks
and controls and managing regulatory requirements.
The composition of the Board was considered to be effective,
and it continued to provide successful leadership to the
Group, and comprises the appropriate balance of experience,
skills, knowledge and diversity of background to implement the
Group’s strategy. The Board places significant reliance on its
Committees by delegating a broad range of responsibilities
and issues to them and receives oral updates from the Chairs
of each of the Committees at the Board.
The review concluded that the performance of the Board,
its Committees, the Chair, and each of the directors continues
to be effective.
All directors demonstrated commitment to their roles and
boardroom culture was deemed to be effective and
conducive for creating a positive environment for participation
and challenge by the non-executive directors.
The Board also considered its performance during the year
and was satisfied that the directors had worked well together,
and that the Board had discharged its duties and worked
effectively with its Committees. The composition of the Board in
terms of its diversity, knowledge and skills base was evaluated
and it was a balanced and diverse Board.
The Chair confirmed that the non-executive directors standing
for re-election at this year’s AGM continued to perform
effectively, both individually and collectively as a Board,
and that each demonstrated commitment to their role.
Actions agreed for 2022
Progress in 2022
Key findings /Actions for 2023
New CIO to present regular updates to
the Board to provide clarity on the
Group’s technology strategy and to
consider the resource and capability
required.
Understand the risks and opportunities
relating to technology projects.
Review the information the Board
receives in order to monitor ESG
performance and how it is incorporated
into strategic discussions.
Spend more time considering the wider
stakeholder base, including
communities, regulators and politicians.
Seeking stakeholder views to inform
Board decision-making.
Gain greater understanding around IT
and cyber risks through regular
deep-dive discussions.
A dedicated training session on cyber
risk will be arranged during the year.
Board composition and
succession planning
To successfully on-board the new CFO.
To continue to review succession plans
for key roles in the Group and across
the business, including continued
interactions with the senior leadership
team to assess internal talent pool.
Strategy
To resume Board strategy dinners, when
circumstances allow, to facilitate deep
dives into particular strategic matters.
To increase awareness of the social
purpose of the business and the wider
role it plays in society.
Stakeholder engagement
To continue to develop the effectiveness
of the Group’s stakeholder engagement
strategy to ensure clearer alignment
with discussions and decisions made by
the Board and its Committees.
Training
To continue to monitor the training
needs of the Board and to provide
opportunities for non-executive directors
to gain first-hand insights into the
business.
Appointment and on-boarding of a new
CFO completed successfully in April 2022.
Succession planning is a main Board
agenda item for full discussion annually
and an update bi-annually. This covers
both Board and senior leadership roles. The
Nominations and Governance Committee
supports the Board with this process.
Board dinners are routinely arranged
around both regular Board and annual
and mid-year strategy meetings, which
allows for extended discussion of key
strategic matters.
The Board received quarterly updates on
purpose, which raised its awareness of the
role in which the business’ social purpose
plays in society.
The Board met regularly with key
stakeholders and considered the impact of
decision-making on each stakeholder
group, where relevant. Further details can
be found on pages 75 and 76.
Received training on e-money, Small
Payment and Payment Institution licences
and an update on the Consumer Credit
Directive.
Tailored training was arranged for the
non-executive directors and new directors,
as appropriate.
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International Personal Finance plc
Directors’ Report
Directors’ Report continued
inclusiveness. There was also unanimous agreement that
Committees by delegating a broad range of responsibilities
the Chair leads the Board well and everyone was given the
and issues to them and receives oral updates from the Chairs
opportunity to offer their views, and that Committees were
of each of the Committees at the Board.
all felt to function well.
The table below sets out the actions which were agreed
its Committees, the Chair, and each of the directors continues
at the beginning of 2022 and progress against these and
to be effective.
The review concluded that the performance of the Board,
the key findings and actions from the recent external
effectiveness review. The findings and agreed actions in
relation to the Board Committees can be found in the
respective Committee Reports.
The Board discussed the points raised by the assessment
and the recommendations on follow up actions.
All directors demonstrated commitment to their roles and
boardroom culture was deemed to be effective and
conducive for creating a positive environment for participation
and challenge by the non-executive directors.
The Board also considered its performance during the year
and was satisfied that the directors had worked well together,
Overall, the evaluation found that the Board and its
and that the Board had discharged its duties and worked
Committees continue to operate at a high standard. The
effectively with its Committees. The composition of the Board in
Board is regarded as being cohesive with an open, inclusive,
terms of its diversity, knowledge and skills base was evaluated
and supportive culture and strong governance relating to risks
and it was a balanced and diverse Board.
and controls and managing regulatory requirements.
The composition of the Board was considered to be effective,
and it continued to provide successful leadership to the
Group, and comprises the appropriate balance of experience,
skills, knowledge and diversity of background to implement the
Group’s strategy. The Board places significant reliance on its
The Chair confirmed that the non-executive directors standing
for re-election at this year’s AGM continued to perform
effectively, both individually and collectively as a Board,
and that each demonstrated commitment to their role.
Actions agreed for 2022
Progress in 2022
Key findings /Actions for 2023
Board composition and
succession planning
To successfully on-board the new CFO.
To continue to review succession plans
for key roles in the Group and across
the business, including continued
interactions with the senior leadership
team to assess internal talent pool.
Strategy
To resume Board strategy dinners, when
circumstances allow, to facilitate deep
dives into particular strategic matters.
To increase awareness of the social
purpose of the business and the wider
role it plays in society.
Stakeholder engagement
To continue to develop the effectiveness
of the Group’s stakeholder engagement
strategy to ensure clearer alignment
with discussions and decisions made by
the Board and its Committees.
Training
To continue to monitor the training
needs of the Board and to provide
opportunities for non-executive directors
to gain first-hand insights into the
business.
Appointment and on-boarding of a new
New CIO to present regular updates to
CFO completed successfully in April 2022.
the Board to provide clarity on the
Succession planning is a main Board
agenda item for full discussion annually
and an update bi-annually. This covers
Group’s technology strategy and to
consider the resource and capability
required.
both Board and senior leadership roles. The
Understand the risks and opportunities
Nominations and Governance Committee
relating to technology projects.
supports the Board with this process.
Board dinners are routinely arranged
around both regular Board and annual
and mid-year strategy meetings, which
allows for extended discussion of key
strategic matters.
The Board received quarterly updates on
Seeking stakeholder views to inform
purpose, which raised its awareness of the
Board decision-making.
role in which the business’ social purpose
plays in society.
Review the information the Board
receives in order to monitor ESG
performance and how it is incorporated
into strategic discussions.
Spend more time considering the wider
stakeholder base, including
communities, regulators and politicians.
Gain greater understanding around IT
and cyber risks through regular
deep-dive discussions.
A dedicated training session on cyber
risk will be arranged during the year.
The Board met regularly with key
stakeholders and considered the impact of
decision-making on each stakeholder
group, where relevant. Further details can
be found on pages 75 and 76.
Received training on e-money, Small
Payment and Payment Institution licences
and an update on the Consumer Credit
Directive.
Tailored training was arranged for the
non-executive directors and new directors,
as appropriate.
Compliance with the UK Corporate Governance Code
2018 (the Code)
The Company complied with the provisions set out in the 2018
version of the Code, which applied throughout the financial year
ended 31 December 2022 with one exception. For Code
Provisions 40 and 41 (engagement with shareholders and the
workforce specifically in relation to remuneration). The Company
complies with the requirement in relation to shareholders but has
not undertaken this activity with employees in 2022. It is
envisaged that this will be actioned in 2023 and reported on in
our 2023 Annual Report.
The Code is available on the FRC’s website: www.frc.org.uk. We
set out below how the Code principles have been applied.
Board leadership and company purpose
A successful company is led by an effective and entrepreneurial
board, whose role is to promote the long-term sustainable
success of the company, generating value for shareholders and
contributing to wider society. See pages 2 to 5 and 8.
The board should establish the company’s purpose, values and
strategy, and satisfy itself that these and its culture are aligned.
All directors must act with integrity, lead by example and
promote the desired culture. See pages 65 and 74.
The board should ensure that the necessary resources are in
place for the company to meet its objectives and measure
performance against them. The board should also establish
a framework of prudent and effective controls, which enable risk
to be assessed and managed. See pages 58 to 62.
In order for the company to meet its responsibilities to
shareholders and stakeholders, the board should ensure effective
engagement with, and encourage participation from, these
parties. See pages 75 and 76.
The board should ensure that workforce policies and practices
are consistent with the company’s values and support its
long-term sustainable success. The workforce should be able to
raise any matters of concern. See pages 44 to 46 and 48.
Division of responsibilities
The chair leads the board and is responsible for its overall
effectiveness in directing the company. They should demonstrate
objective judgement throughout their tenure and promote a
culture of openness and debate. In addition, the chair facilitates
constructive board relations and the effective contribution of all
non-executive directors, and ensures that directors receive
accurate, timely and clear information. See pages 77 and 78.
The board should include an appropriate combination of
executive and non-executive (and, in particular, independent
non-executive) directors, such that no one individual or small
group of individuals dominates the board’s decision-making.
There should be a clear division of responsibilities between the
leadership of the board and the executive leadership of the
company’s business. See page 80.
Non-executive directors should have sufficient time to meet their
board responsibilities. They should provide constructive
challenge, strategic guidance, offer specialist advice and hold
management to account. See page 80.
The board, supported by the company secretary, should ensure
that it has the policies, processes, information, time and
resources it needs in order to function effectively and efficiently.
See pages 77 to 78 and 80.
Composition, succession, evaluation
Appointments to the board should be subject to a formal,
rigorous and transparent procedure, and an effective succession
plan should be maintained for board and senior management.
Both appointments and succession plans should be based
on merit and objective criteria and, within this context, should
promote diversity of gender, social and ethnic backgrounds,
cognitive and personal strengths. See pages 86 and 87.
The board and its committees should have a combination of
skills, experience and knowledge. Consideration should be given
to the length of service of the board as a whole and membership
regularly refreshed. See pages 66 to 69.
Annual evaluation of the board should consider its composition,
diversity and how effectively members work together to achieve
objectives. Individual evaluation should demonstrate whether
each director continues to contribute effectively. See pages
77 and 78.
Audit, risk and internal control
The board should establish formal and transparent policies
and procedures to ensure the independence and effectiveness
of internal and external audit functions and satisfy itself as to
the integrity of financial and narrative statements. See pages
92 to 94.
The board should present a fair, balanced and understandable
assessment of the company’s position and prospects.
See page 94.
The board should establish procedures to manage risk, oversee
the internal control framework, and determine the nature and
extent of the principal risks the company is willing to take in order
to achieve its long-term strategic objectives. See pages 58 to 62
and 94.
Remuneration
Remuneration policies and practices should be designed to
support strategy and promote long-term sustainable success.
Executive remuneration should be aligned to company purpose
and values, and be clearly linked to the successful delivery of the
company’s long-term strategy. See pages 99 to 106 and 109.
A formal and transparent procedure for developing policy on
executive remuneration and determining director and senior
management remuneration should be established. No director
should be involved in deciding their own remuneration outcome.
See pages 99 to 106.
Directors should exercise independent judgement and discretion
when authorising remuneration outcomes, taking account of
company and individual performance, and wider circumstances.
See pages 99 to 106.
Other legal and regulatory disclosures
In addition to the Code, we are required to comply with the
Companies Act 2006 (the Act), the Disclosure Guidance and
Transparency Rules (DTR) and the Listing Rules (LR). Where
not covered elsewhere, these requirements are included in
this section.
In accordance with DTR 4.1.5R, the Strategic Report and the
Directors’ Report together are the management report for the
purposes of DTR 4.1.8R.
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International Personal Finance plc
Annual Report and Financial Statements 2022
79
Directors’ Report
Directors’ Report continued
In accordance with LR 9.8.4R, the employment benefit trust
waives its entitlement to received entitlements (see page 83).
The Board has taken advantage of section 414C(11) of the
Companies Act 2006 to include disclosures in the Strategic
Report including:
– the financial position of the Group (see pages 35 to 36).
Articles of Association (Articles)
The Articles may only be amended by a special resolution
at a general meeting of the shareholders. The Articles are
available on our website at www.ipfin.co.uk or direct from
Companies House, UK.
Appointment and replacement of directors
The Articles provide that the Company may by ordinary resolution
at a general meeting appoint any person to act as a director,
provided that written notice is given of the intention to propose
such person and that the Company receives written confirmation
of that person’s willingness to act as director if he or she has not
been recommended by the Board. The Articles also empower
the Board to appoint as a director any person who is willing to
act as such. The maximum number of directors under the
Articles is fifteen.
The Articles provide that, at every annual general meeting, the
following directors must retire: (a) any director appointed by the
Board since the Company’s previous annual general meeting;
(b) any director who has held office at the time of the
Company’s two preceding annual general meetings and who
did not retire at either of them; and (c) any director who has held
office with the Company (other than employment or executive
office) for a continuous period of nine years or more at the date
of the meeting.
The Articles further provide that the Company may, in addition
to any powers of removal conferred by law, by special resolution
remove any director before the expiration of his or her period of
office. The Articles also set out the circumstances in which a
director shall vacate office.
Division of responsibilities
The roles of the Chair and CEO are clearly defined and the
division of responsibilities is established and set out in writing.
The Chair is responsible for the leadership and effectiveness of
the Board. He is also responsible for the effective running of the
Board and its Committees in accordance with corporate
governance standards. He is responsible for ensuring that
consideration is given to the main challenges and opportunities
facing the Company, and facilitates open and constructive
discussion during meetings. The Chair was independent on his
appointment.
The CEO is responsible for executing the strategy effectively,
and managing the Group’s businesses.
Commitment
The Chair and the non-executive directors should have sufficient
time to fulfil their duties and directors’ other commitments are
kept under review to ensure that they have sufficient time to
dedicate to the business.
As part of our annual review of responsibilities, we considered the
time non-executive directors are required to give to their roles.
We were satisfied that each director continues to contribute the
time as well as the focus, care and quality of attention, to fulfilling
their duties to the Company and its shareholders. Based upon
the evaluation of the Board, its Committees and the continued
effective performance of individual directors, the Nominations
and Governance Committee recommended to the Board that
all directors stand for re-election at the Company’s 2023 AGM.
It is also recommended that Katrina Cliffe and Aileen Wallace
stand for election in accordance with the Company’s Articles
of Association.
The Board has approved a policy on other directorships;
any request for an exception to this is considered on its merits.
An executive director will be permitted to hold one non-executive
directorship (and to retain the fees from that appointment)
provided that the Board considers this will not affect their
executive responsibilities adversely. The executive directors
currently do not hold any external directorships. A non-executive
director should not hold more than four other material non-
executive directorships. If they hold an executive role in a FTSE
350 company, they should not hold more than two other material
non-executive directorships.
In line with the Code, non-executive directors are required to seek
Board approval prior to taking on any additional appointments.
In February 2023, the Board, on the recommendation of the
Nominations and Governance Committee, approved Katrina
Cliffe’s appointment as a non-executive director of DCC plc,
which will take effect from 1 May 2023. In making this decision the
Board had been assured that Katrina would continue to be able
to devote the appropriate time to her role as a non-executive
director and the new role would not give rise to any conflict of
interests. The external commitments of the Chair and the other
non-executive directors have also been reviewed and the Board
is satisfied that these do not conflict with their required
commitment to the Company.
The independent non-executive directors are appointed for an
initial period of three years, subject to annual re-election by
shareholders at the AGM. The initial period may be extended,
following recommendation by the Nominations and Governance
Committee, for two further three-year periods. The Board will not
normally extend the aggregate period of service of any
independent non-executive director beyond nine years. Their
letters of appointment may be inspected at our registered office
and copies are available from the Company Secretary.
Each of the non-executive directors has been formally
determined by the Board to be independent for the purposes of
the Code and the Chair was considered to be independent on
appointment. Richard Holmes was appointed as the Senior
Independent Director at the conclusion of the 2022 AGM. He will
be available to shareholders should they have concerns which
contact through the normal channels of Chair and CEO has
failed to address or for which such contact is inappropriate. The
Senior Independent Director will review the performance of the
Chair on an annual basis and will consult with other Board
members as part of the review. He will also consider the
relationship between the Chair and the CEO.
80
International Personal Finance plc
In accordance with LR 9.8.4R, the employment benefit trust
waives its entitlement to received entitlements (see page 83).
Commitment
Directors’ Report
Directors’ Report continued
The Board has taken advantage of section 414C(11) of the
Companies Act 2006 to include disclosures in the Strategic
Report including:
– the financial position of the Group (see pages 35 to 36).
Articles of Association (Articles)
The Articles may only be amended by a special resolution
at a general meeting of the shareholders. The Articles are
available on our website at www.ipfin.co.uk or direct from
Companies House, UK.
Appointment and replacement of directors
The Articles provide that the Company may by ordinary resolution
at a general meeting appoint any person to act as a director,
provided that written notice is given of the intention to propose
such person and that the Company receives written confirmation
of that person’s willingness to act as director if he or she has not
been recommended by the Board. The Articles also empower
the Board to appoint as a director any person who is willing to
act as such. The maximum number of directors under the
Articles is fifteen.
The Articles provide that, at every annual general meeting, the
following directors must retire: (a) any director appointed by the
Board since the Company’s previous annual general meeting;
(b) any director who has held office at the time of the
Company’s two preceding annual general meetings and who
did not retire at either of them; and (c) any director who has held
office with the Company (other than employment or executive
office) for a continuous period of nine years or more at the date
of the meeting.
The Articles further provide that the Company may, in addition
to any powers of removal conferred by law, by special resolution
remove any director before the expiration of his or her period of
office. The Articles also set out the circumstances in which a
director shall vacate office.
Division of responsibilities
The roles of the Chair and CEO are clearly defined and the
division of responsibilities is established and set out in writing.
The Chair is responsible for the leadership and effectiveness of
the Board. He is also responsible for the effective running of the
Board and its Committees in accordance with corporate
governance standards. He is responsible for ensuring that
consideration is given to the main challenges and opportunities
facing the Company, and facilitates open and constructive
discussion during meetings. The Chair was independent on his
appointment.
The Chair and the non-executive directors should have sufficient
time to fulfil their duties and directors’ other commitments are
kept under review to ensure that they have sufficient time to
dedicate to the business.
As part of our annual review of responsibilities, we considered the
time non-executive directors are required to give to their roles.
We were satisfied that each director continues to contribute the
time as well as the focus, care and quality of attention, to fulfilling
their duties to the Company and its shareholders. Based upon
the evaluation of the Board, its Committees and the continued
effective performance of individual directors, the Nominations
and Governance Committee recommended to the Board that
all directors stand for re-election at the Company’s 2023 AGM.
It is also recommended that Katrina Cliffe and Aileen Wallace
stand for election in accordance with the Company’s Articles
of Association.
The Board has approved a policy on other directorships;
any request for an exception to this is considered on its merits.
An executive director will be permitted to hold one non-executive
directorship (and to retain the fees from that appointment)
provided that the Board considers this will not affect their
executive responsibilities adversely. The executive directors
currently do not hold any external directorships. A non-executive
director should not hold more than four other material non-
executive directorships. If they hold an executive role in a FTSE
350 company, they should not hold more than two other material
non-executive directorships.
In line with the Code, non-executive directors are required to seek
Board approval prior to taking on any additional appointments.
In February 2023, the Board, on the recommendation of the
Nominations and Governance Committee, approved Katrina
Cliffe’s appointment as a non-executive director of DCC plc,
which will take effect from 1 May 2023. In making this decision the
Board had been assured that Katrina would continue to be able
to devote the appropriate time to her role as a non-executive
director and the new role would not give rise to any conflict of
interests. The external commitments of the Chair and the other
non-executive directors have also been reviewed and the Board
is satisfied that these do not conflict with their required
commitment to the Company.
The independent non-executive directors are appointed for an
initial period of three years, subject to annual re-election by
shareholders at the AGM. The initial period may be extended,
following recommendation by the Nominations and Governance
Committee, for two further three-year periods. The Board will not
normally extend the aggregate period of service of any
independent non-executive director beyond nine years. Their
letters of appointment may be inspected at our registered office
and copies are available from the Company Secretary.
determined by the Board to be independent for the purposes of
the Code and the Chair was considered to be independent on
appointment. Richard Holmes was appointed as the Senior
Independent Director at the conclusion of the 2022 AGM. He will
be available to shareholders should they have concerns which
contact through the normal channels of Chair and CEO has
failed to address or for which such contact is inappropriate. The
Senior Independent Director will review the performance of the
Chair on an annual basis and will consult with other Board
members as part of the review. He will also consider the
relationship between the Chair and the CEO.
The CEO is responsible for executing the strategy effectively,
Each of the non-executive directors has been formally
and managing the Group’s businesses.
Development
Election or re-election of directors
Our policy is to provide appropriate training to directors.
Training takes into account each individual’s qualifications and
experience and training needs are reviewed annually as part of
the Board evaluation process. Training also covers generic and
specific business topics and in 2022 included presentations to the
Board on e-money, Small Payments and Payment Institution
licences and the Consumer Credit Directive. The Board was able
to resume its usual annual market visit, with the October Board
meeting held in Bucharest, Romania. The Chair also visited
Mexico in April and Poland in August, and Richard Holmes visited
both Hungary and Romania in October. Both the Chair and
Richard Holmes were able to participate in a number of direct
engagements with colleagues in these markets. Further detail
on Board training can be found on page 65.
All directors are able to consult with the Company Secretary,
who also updates the Board on governance developments.
The appointment and removal of the Company Secretary
is a matter for the Board. The Company Secretary acts as
Secretary to the Board and its Committees. Any director may take
independent professional advice at the Company’s expense
relating to the performance of their duties. In November 2022,
Laura Dobson stepped down as Company Secretary and was
replaced by Thomas Crane, who had joined the Company as
Chief Legal Officer in August 2022,
If directors have concerns about the running of the Company,
which cannot be resolved, their concerns are recorded in the
Board minutes. There have been no concerns raised during
the period under review.
Evaluation
Towards the end of 2022, an externally facilitated evaluation of
the performance of the Board and its Committees was carried
out. Directors, senior management and the Company Secretary
completed a questionnaire, the results of which were collated,
reviewed and presented for discussion at the January 2023 Board
meeting. Details of the principal outcomes relating to the Board
evaluation can be found on pages 77 and 78.
Interest in voting rights
All directors are subject to election or re-election at the AGM,
in accordance with the Code. All directors will seek re-election,
or election at our AGM on 27 April 2023. Details of the directors
can be found on pages 66 and 67.
Shares in issue
As at 31 December 2022, the issued share capital was
234,244,437 ordinary shares of 10 pence each, of which
11,495,274 were held in treasury. 11,495,274 shares are held as
treasury shares for the purpose of satisfying options under the
Group’s share option plans. Details of share capital are shown in
note 29 to the Financial Statements.
Share class rights
The share class rights, which are set out in the Company’s
Articles, are summarised as follows. The ordinary shares are listed
on the London Stock Exchange and, up until 22 February 2022,
the Warsaw Stock Exchange.
Restrictions on shareholders’ rights
Any share may have rights attached to it as the Company
may decide by ordinary resolution or the Board may decide,
if no such resolution has been passed. Such rights and restrictions
shall apply to the relevant shares as if the same were set out in
the Articles.
Restrictions on transfer of shares and limitations on holdings
There are no restrictions on the transfer or limitations on the
holding of ordinary shares other than under the Articles or under
restrictions imposed by law or regulation. The Articles set out the
directors’ rights of refusal to effect a transfer of any share.
As at 31 December 2022, we had been notified, pursuant to DTR 5.1.2, of the following interests in voting rights in our issued share
capital. The information provided below was correct at the date of notification, however, the date of receipt may not have been
within the current financial year. It should be noted that these holdings are likely to have changed since the Company was
notified. A notification of any change is not required until the next notifiable threshold is crossed.
Name
Aberforth Partners LLP
abrdn (Standard Life)/Standard Life Aberdeen plc
Marathon Asset Management LLP
Schroder Investment Mgt/Schroders plc
Pendal Group Limited
FMR LLC
Artemis Investment Management LLP
Old Mutual Asset Managers (UK) LTD
Blackrock, Inc.
BNP Paribas Investment Partners
Mr Hendrik Marius van Heyst
Oppenheimer Funds Inc/Baring Asset Management Limited
There have been no further notifications since the year-end.
80
International Personal Finance plc
Annual Report and Financial Statements 2022
Date notified
% of issued share capital1
12/03/2021
08/03/2022
23/08/2021
08/09/2022
27/02/2022
10/01/2018
12/10/2021
12/04/2010
16/07/2009
08/07/2015
09/11/2020
20/06/2009
14.10
11.84
8.41
7.36
6.20
5.28
5.04
4.88
4.54
3.02
3.02
2.02
81
Directors’ Report
Directors’ Report continued
Voting rights
Indemnities
There are no restrictions on voting rights except as set out
in the Articles. Electronic and paper proxy appointments,
and voting instructions, must be received by the Company’s
registrar not less than 48 hours before a general meeting
(or such shorter time as the Board may determine) and the
Board may exclude non-working days in its calculation. The
Company is not permitted to exercise any right in respect
of treasury shares, including any right to attend or vote
at meetings.
Variation of rights
This covers the rights attached to any class of shares that from
time to time may be varied either with the written consent of
the holders of not less than three-quarters in nominal value of
the issued shares of that class or with the sanction of a special
resolution passed at a separate general meeting of the
holders of those shares.
Authority to purchase own shares
At the 2022 AGM, we received shareholder authority to buy
back up to 22,210,093 of the Company’s shares until the earlier
of the conclusion of the 2023 AGM or 30 June 2023. Shares
purchased can be cancelled or held in treasury.
This authority was not exercised in 2022. A further authority
to purchase our own shares will be sought at the 2023 AGM.
As reported in the 2021 Annual Report and Financial
Statements the process to de-list from the Warsaw Stock
Exchange (WSE) was completed and effective from
22 February 2022.
Authority to issue shares
At the 2022 AGM, an ordinary resolution was passed
authorising the directors to issue new shares up to an
aggregate nominal amount of £7,403,364, representing
approximately one third of the issued share capital of the
Company (excluding treasury shares) and allot further
new shares in the case of a rights issue only up to an
aggregate nominal amount of £7,403,364 representing
approximately a further one third of the issued share
capital. Further special resolutions were passed to effect a
disapplication of pre-emption rights in certain circumstances.
Resolutions to renew these authorities will be proposed at
the 2023 AGM. Further details can be found in the separate
notice of meeting.
Directors
Details of the current directors can be found on pages 66
to 67. Bronwyn Syiek and John Mangelaars, who were
both non-executive directors, stepped down from the Board
during the year and will not be seeking re-election at the
2023 AGM. Katrina Cliffe and Aileen Wallace were appointed
non-executive directors of the Board in July and December
respectively and will be seeking election by the shareholders
for the first time at the 2023 AGM.
Our Articles permit us to indemnify our directors (or those
of any associated company) in accordance with the Act.
However, no qualifying indemnity provisions were in force in
2022 or at any time up to 1 March 2023. We have appropriate
directors’ and officers’ liability insurance and this was in force
when the Directors’ Report was approved.
Directors’ conflicts of interest
To take account of the Act, the directors adopted a policy
on conflicts of interest and established a register of conflicts.
The directors consider that these procedures have operated
effectively in 2022 and up to 1 March 2023.
Powers and proceedings of directors
The directors are responsible for the management of the
Company and may exercise all the powers of the Company,
subject to the provisions of the relevant statutes and the
Articles. The Articles contain specific provisions and restrictions
regarding the following: the Company’s powers to borrow
money; provisions relating to the appointment of directors
(subject to subsequent shareholder approval); and delegation
of powers to a director or committees. They also provide that,
subject to certain exceptions, a director shall not vote on or be
counted in a quorum in relation to any resolution of the Board
in respect of any contract in which they have an interest which
they know is material.
Agreements on change of control
We do not have any agreements with any director or
employee that would provide compensation for loss
of office or employment resulting from a takeover.
We are not party to any significant agreements that would
take effect, alter or terminate upon a change of control
following a takeover bid, apart from:
– our bank facility agreements, which provide for a
negotiation period following a change of control and the
ability of a lender to cancel its commitment and for
outstanding amounts to become due and payable;
– our Euro Medium Term Note1 programme, which entitles any
holder of a note to require us to redeem such holder’s notes
if there is a change of control and, following such change
of control, the notes are downgraded; and
– provisions in our equity share incentive plans may cause
awards granted to directors and employees to vest on a
takeover.
1. The Euro Medium Term Note programme was established in 2010.
The following notes (listed on the London or Nasdaq Stockholm
stock exchanges) have been issued under the programme and
are outstanding as at the date of this report: €341.2m with a 2025
maturity and a 9.75% coupon; £40.5m with a 2023 maturity and
a 7.75% coupon; £40.2m with a 2027 maturity and a 12.00% coupon;
and SEK450m Swedish krona bond with a 2024 maturity and a coupon
of three-month STIBOR plus a margin of 7.00%.
82
International Personal Finance plc
Directors’ Report
Directors’ Report continued
Voting rights
Indemnities
There are no restrictions on voting rights except as set out
Our Articles permit us to indemnify our directors (or those
in the Articles. Electronic and paper proxy appointments,
of any associated company) in accordance with the Act.
and voting instructions, must be received by the Company’s
However, no qualifying indemnity provisions were in force in
registrar not less than 48 hours before a general meeting
2022 or at any time up to 1 March 2023. We have appropriate
(or such shorter time as the Board may determine) and the
directors’ and officers’ liability insurance and this was in force
Board may exclude non-working days in its calculation. The
when the Directors’ Report was approved.
Company is not permitted to exercise any right in respect
of treasury shares, including any right to attend or vote
Directors’ conflicts of interest
at meetings.
Variation of rights
To take account of the Act, the directors adopted a policy
on conflicts of interest and established a register of conflicts.
The directors consider that these procedures have operated
This covers the rights attached to any class of shares that from
effectively in 2022 and up to 1 March 2023.
time to time may be varied either with the written consent of
the holders of not less than three-quarters in nominal value of
the issued shares of that class or with the sanction of a special
resolution passed at a separate general meeting of the
holders of those shares.
Authority to purchase own shares
Powers and proceedings of directors
The directors are responsible for the management of the
Company and may exercise all the powers of the Company,
subject to the provisions of the relevant statutes and the
Articles. The Articles contain specific provisions and restrictions
regarding the following: the Company’s powers to borrow
At the 2022 AGM, we received shareholder authority to buy
money; provisions relating to the appointment of directors
back up to 22,210,093 of the Company’s shares until the earlier
(subject to subsequent shareholder approval); and delegation
of the conclusion of the 2023 AGM or 30 June 2023. Shares
of powers to a director or committees. They also provide that,
purchased can be cancelled or held in treasury.
subject to certain exceptions, a director shall not vote on or be
This authority was not exercised in 2022. A further authority
counted in a quorum in relation to any resolution of the Board
to purchase our own shares will be sought at the 2023 AGM.
in respect of any contract in which they have an interest which
As reported in the 2021 Annual Report and Financial
they know is material.
Statements the process to de-list from the Warsaw Stock
Exchange (WSE) was completed and effective from
22 February 2022.
Authority to issue shares
At the 2022 AGM, an ordinary resolution was passed
authorising the directors to issue new shares up to an
aggregate nominal amount of £7,403,364, representing
approximately one third of the issued share capital of the
Company (excluding treasury shares) and allot further
new shares in the case of a rights issue only up to an
aggregate nominal amount of £7,403,364 representing
approximately a further one third of the issued share
capital. Further special resolutions were passed to effect a
disapplication of pre-emption rights in certain circumstances.
Resolutions to renew these authorities will be proposed at
the 2023 AGM. Further details can be found in the separate
notice of meeting.
Directors
Details of the current directors can be found on pages 66
to 67. Bronwyn Syiek and John Mangelaars, who were
both non-executive directors, stepped down from the Board
during the year and will not be seeking re-election at the
2023 AGM. Katrina Cliffe and Aileen Wallace were appointed
non-executive directors of the Board in July and December
respectively and will be seeking election by the shareholders
for the first time at the 2023 AGM.
Agreements on change of control
We do not have any agreements with any director or
employee that would provide compensation for loss
of office or employment resulting from a takeover.
We are not party to any significant agreements that would
take effect, alter or terminate upon a change of control
following a takeover bid, apart from:
– our bank facility agreements, which provide for a
negotiation period following a change of control and the
ability of a lender to cancel its commitment and for
outstanding amounts to become due and payable;
– our Euro Medium Term Note1 programme, which entitles any
holder of a note to require us to redeem such holder’s notes
if there is a change of control and, following such change
of control, the notes are downgraded; and
– provisions in our equity share incentive plans may cause
awards granted to directors and employees to vest on a
takeover.
1. The Euro Medium Term Note programme was established in 2010.
The following notes (listed on the London or Nasdaq Stockholm
stock exchanges) have been issued under the programme and
are outstanding as at the date of this report: €341.2m with a 2025
maturity and a 9.75% coupon; £40.5m with a 2023 maturity and
a 7.75% coupon; £40.2m with a 2027 maturity and a 12.00% coupon;
and SEK450m Swedish krona bond with a 2024 maturity and a coupon
of three-month STIBOR plus a margin of 7.00%.
Related party transactions
Related party transactions are set out in note 33 to the
Financial Statements.
Financial instruments
Details of the Group’s financial instruments are set out in note
23 to the Financial Statements. The information in note 23
is incorporated by reference into, and forms part of, this
Directors’ Report.
Dividends
A final dividend of 6.5 pence per share has been proposed
bringing the full year dividend to 9.2 pence per share. Subject
to approval by shareholders at the AGM, the final dividend will
be payable on 5 May 2023 to shareholders on the register of
members on 6 April 2023. The deadline to elect for the
Dividend Reinvestment Plan (DRIP) is 11 April 2023.
Employees
Employee benefit trust
We operate an employee benefit trust with an independent
trustee, Apex Financial Services (Trust Company) Limited, to hold
shares on behalf of employees pending entitlement to them
under our equity share incentive plans. As at 31 December 2022,
the trustees held 159,038 shares in International Personal Finance
plc. The trust waives its dividend entitlement and abstains from
voting at general meetings. Any shares to be acquired through
our share plans do not have special rights and rank pari passu
with the shares already in issue.
Employee equity incentive plans
UK eligible employees are able to participate in our equity
share incentive plans, details of which are shown below.
Awards granted to the executive directors in 2022 are set out
in the Directors’ Remuneration Report on page 114.
Plan
Abbreviated name
Eligible participants
The International Personal Finance plc Approved Company
Share Option Plan
CSOP
Executive directors and senior managers
The IPF Deferred Share Plan
The IPF Performance Share Plan
The IPF Save As You Earn Plan
DSP
PSP
SAYE
Executive directors and senior managers
Executive directors and senior managers
Executive directors and UK employees
The International Personal Finance plc Discretionary
Award Plan
Discretionary Award Plan
Employees other than executive directors
Details of outstanding awards are included in note 28 to the Financial Statements.
82
International Personal Finance plc
Annual Report and Financial Statements 2022
83
Directors’ Report
Directors’ Report continued
External oversight
Political donations
The Group’s activities in Mexico are subject to general
trade licences and under the supervision of the Consumer
Protection Agency.
Our other operations in Europe and Australia are subject
to certain licensing provisions or supervision by a financial
authority as detailed below.
European home credit
Czech Republic – licensed by Czech National Bank
Hungary – operates under the supervision of the National Bank
of Hungary and subject to an operating licence issued by the
Hungarian National Bank
Poland – registered in the special registry of the Komisja
Nadzoru Finansowego (KNF), the Polish Financial Supervision
Authority, and also licensed and registered in the register of
the Small Payment Institution Licence of the KNF.
IPF Digital
Australia – holds a credit licence issued by the Australia
Securities and Investment Commission
Estonia – e-money licence and creditor licence issued by
the Estonian Financial Supervision Authority
Finland – in a register of credit providers maintained by the
Regional State Administrative Agency of South Finland
Latvia – operates under a licence from the Consumer Rights
Protection Centre
Lithuania – in a register of credit providers maintained by
the Bank of Lithuania
Poland – registered in the special register of Loan Institutions
maintained by the KNF, and supervised in relation to loans
by the KNF from 1 January 2024; registered in the register of
payment institutions kept and supervised by the KNF.
Spain - is subject to general trade licences only.
The Group did not make any political donations nor incur
any political expenditure during the year.
Budgetary process and financial reporting
The Board approves annually a detailed budget for the year
ahead. Actual performance against budget is monitored
regularly and reported monthly for review by the Board.
The Board requires the Group’s subsidiaries to operate in
accordance with corporate policies.
The Financial Statements for the Group are prepared by
aggregating submissions from each statutory entity. Prior to
submission to the Group reporting team, each country
submission is reviewed and approved by the finance director
of the relevant business. When the submissions have been
aggregated and consolidation adjustments made to remove
inter-company transactions, the consolidated result is reviewed
by the Group Financial Controller and the CFO. The results are
compared with the budget and prior year figures, and any
significant variances are explained. Checklists are completed
by each statutory entity and by the Group finance reporting
team to confirm that all required controls, such as key
reconciliations, have been performed and reviewed.
The Financial Statements, which are agreed directly to the
consolidation of the Group results, are prepared by the Group
reporting team and reviewed by the Group Financial Controller
and the CFO. The supporting notes to the Financial Statements
are prepared by aggregating submission templates from each
market and combining them with central information where
applicable. The Financial Statements and all supporting notes
are reviewed, approved and signed by the CFO. For further
details on our risk and internal control processes, see pages
58 to 62.
Research and Development activities
In accordance with The Accounts Regulations (Sch 7, para
7(1)(c)) and DTR 4.1.11 the Company undertakes certain
research and development activities, however, its current
practice is not to collate specific data on this activity.
84
International Personal Finance plc
Directors’ Report
Directors’ Report continued
External oversight
Political donations
The Group’s activities in Mexico are subject to general
The Group did not make any political donations nor incur
trade licences and under the supervision of the Consumer
any political expenditure during the year.
Protection Agency.
Our other operations in Europe and Australia are subject
to certain licensing provisions or supervision by a financial
authority as detailed below.
European home credit
Czech Republic – licensed by Czech National Bank
Hungary – operates under the supervision of the National Bank
of Hungary and subject to an operating licence issued by the
Hungarian National Bank
Poland – registered in the special registry of the Komisja
Nadzoru Finansowego (KNF), the Polish Financial Supervision
Authority, and also licensed and registered in the register of
the Small Payment Institution Licence of the KNF.
IPF Digital
Australia – holds a credit licence issued by the Australia
Securities and Investment Commission
Estonia – e-money licence and creditor licence issued by
the Estonian Financial Supervision Authority
Regional State Administrative Agency of South Finland
Latvia – operates under a licence from the Consumer Rights
Protection Centre
the Bank of Lithuania
Lithuania – in a register of credit providers maintained by
Poland – registered in the special register of Loan Institutions
maintained by the KNF, and supervised in relation to loans
by the KNF from 1 January 2024; registered in the register of
payment institutions kept and supervised by the KNF.
Spain - is subject to general trade licences only.
Budgetary process and financial reporting
The Board approves annually a detailed budget for the year
ahead. Actual performance against budget is monitored
regularly and reported monthly for review by the Board.
The Board requires the Group’s subsidiaries to operate in
accordance with corporate policies.
The Financial Statements for the Group are prepared by
aggregating submissions from each statutory entity. Prior to
submission to the Group reporting team, each country
submission is reviewed and approved by the finance director
of the relevant business. When the submissions have been
aggregated and consolidation adjustments made to remove
inter-company transactions, the consolidated result is reviewed
by the Group Financial Controller and the CFO. The results are
compared with the budget and prior year figures, and any
significant variances are explained. Checklists are completed
by each statutory entity and by the Group finance reporting
team to confirm that all required controls, such as key
reconciliations, have been performed and reviewed.
The Financial Statements, which are agreed directly to the
consolidation of the Group results, are prepared by the Group
and the CFO. The supporting notes to the Financial Statements
are prepared by aggregating submission templates from each
market and combining them with central information where
applicable. The Financial Statements and all supporting notes
are reviewed, approved and signed by the CFO. For further
details on our risk and internal control processes, see pages
58 to 62.
Research and Development activities
In accordance with The Accounts Regulations (Sch 7, para
7(1)(c)) and DTR 4.1.11 the Company undertakes certain
research and development activities, however, its current
practice is not to collate specific data on this activity.
Finland – in a register of credit providers maintained by the
reporting team and reviewed by the Group Financial Controller
Nominations and Governance
Committee Report
Dear shareholder,
On behalf of the Committee, I am delighted to introduce its
report for the year ended 31 December 2022, covering its role
and responsibilities, a review of its activities during the year and
progress made against the objectives set at the start of 2022.
Role of the Committee
The Committee is responsible for reviewing the composition of
the Board and leading the process on proposed appointments
to the Board and senior leadership. Following this, the Committee
makes recommendations to the Board ensuring that both
appointments and succession plans are based on merit and
objective criteria and, within this context, promote diversity of
gender, social and ethnic background, and cognitive and
personal strengths. The Committee is also responsible for
ensuring that the Board and its Committees consist of directors
with the appropriate balance of skills, experience, diversity,
independence and knowledge to enable it to discharge its
duties and responsibilities effectively. Finally, the Committee will
keep the Board’s governance arrangements under review and
make appropriate recommendations to the Board to ensure
that its arrangements are consistent with relevant corporate
governance standards and best practice.
Committee composition and Board changes
The composition of the Committee’s membership remained
unchanged during the year, until Aileen Wallace’s nomination
as a member in place of John Mangelaars, was approved by
the Board in December 2022.
The Board welcomed Chief Financial Officer, Gary Thompson,
who joined the Board in April 2022, following the departure of
CEO, Justin Lockwood in July 2021. Bronwyn Syiek and John
Mangelaars stepped down in July and December respectively
and, following a rigorous selection process were replaced by
Katrina Cliffe and Aileen Wallace also in July and December,
respectively. I would like to reiterate my thanks to both Bronwyn
and John for their significant contributions during their tenure.
Activities in 2022
The Committee met six times during the year and a range of
matters were considered with composition of the Board and
succession planning regular topics for discussion. In the second
half of the year particular focus was on recruitment to fill the two
Board positions vacated by Bronwyn in July and John in
December, resulting with the appointment of Katrina and Aileen,
respectively. The Committee undertook its annual review of the
Board Diversity policy which was updated to recognise the
recommendations of the Parker Review on the ethnic diversity of
Boards, with this to be considered when recruiting new Board
members. The Committee considered the FCA’s final policy
decision on measures to improve transparency of the diversity of
company boards and executive management, issued in April
2022. The policy sets out the rule changes for disclosures in
relation to gender and ethnic diversity which will become
effective for next year’s financial statements
Stuart Sinclair
Chair of the Nominations
and Governance
Committee
“The Committee has led the process
to refresh the Board’s composition
ensuring it comprises the right level
of experience and expertise to deliver
on the Group’s strategy.”
Committee members
Stuart Sinclair, Chair
Deborah Davis, Independent non-executive director
Richard Holmes, Independent non-executive director
Gerard Ryan, Executive director and Chief Executive Officer
The table below shows the number of meetings held and the
directors’ attendance during 2022.
Scheduled
meetings1
No. of
meetings
attended
% of
meetings
attended
6
6
6
6
6
–
6
6
6
4
6
–
100%
100%
100%
67%
100%
–
Committee member
Stuart Sinclair
Deborah Davis
Richard Holmes
John Mangelaars2
Gerard Ryan
Aileen Wallace3
Notes
1. The scheduled meetings that each individual was entitled to and
had the opportunity to attend.
2. John Mangelaars was unable to attend the July and December
meetings due to unforeseen circumstances and stepped down from
the Board in December 2022.
3. Aileen Wallace was appointed a member of the Committee on her
appointment to the Board in December 2022.
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International Personal Finance plc
Annual Report and Financial Statements 2022
85
Directors’ Report
Directors’ Report continued
In September, following Katrina’s appointment, the Committee
recommended her appointment as the Workforce Engagement
Director to meet with the requirements of the 2018 UK Corporate
Governance Code, and this was subsequently confirmed by the
Board. This role had been fulfilled by Bronwyn Syiek until she
stepped down from the Board in July. The role’s objective is to
enable the Board to understand the views of the Company’s
workforce. Finally, I would like to highlight the governance
framework review undertaken in the latter part of the year,
as described in my introduction to the Governance Report. The
Committee’s Terms of Reference have been amended to better
reflect the requirements of the 2018 UK Corporate Governance
Code and current market good practice. The main changes
are highlighted further below. The Committee has also been
renamed to reflect its new wider remit to oversee the Board
and Board Committee governance arrangements.
Recruitment and succession planning
The Committee recognises the importance for the Board to
anticipate and prepare for the future and to ensure that the skills,
experience, knowledge and perspectives of the directors and
members of the senior leadership team reflect the changing
demands of the business. We have a strong talent pipeline,
which considers the core competencies and capabilities for
potential future leaders, comprising many high-performing
individuals. When considering succession plans, the Committee
and the Board are cognisant of the need to ensure that a diverse
range of individuals are included. We believe that the range of
perspectives provided by a diverse and inclusive organisation
such as IPF, which are also reflective of the communities we
serve, gives us a competitive advantage.
The Committee leads the Board’s annual session dedicated to
succession planning as well as a mid-year review as part of the
Group-wide talent mapping exercise to ensure robust succession
plans. During 2022, the Committee and the Board affirmed the
appointment of a number of key senior management positions
as the business continued to strengthen its talent pipeline.
Appointments were made across all three of our business units,
further adding to the diversity of backgrounds, experiences and
cultures within the business. These also included several notable
female appointments demonstrating our commitment to
developing supporting greater gender balance in the Group. In
line with our commitment to develop future leaders, the Board
oversaw the introduction of the Global Leaders Connect
programme. This programme is an important means of
investment in our key talent to meet the Group’s strategy.
Board appointments and diversity
During the year, the Committee reviewed and re-approved the
Board Diversity policy, a copy of which is available on our website
at www.ipfin.co.uk.
Progress against 2022
key objectives
– Board composition and succession planning
regularly reviewed.
– Appointment of two new independent
non-executive directors.
– The re-election of the directors at the 2022 AGM.
– Reviewed he Board Diversity Policy.
– Reviewed and updated the Committee’s Terms
of Reference.
Key objectives for 2023
– To keep under review the Board composition and
succession planning.
– To oversee the implementation of the
recommendations from the external Board
evaluation review.
– To keep under review the governance framework
and make recommendations for improvement
where appropriate.
The policy includes a set of measurable objectives as part of the
approach for selecting candidates to consider for appointment
to the Board, and also provides a high-level indication of the
approach to diversity in senior leadership roles. In identifying
suitable candidates, the Committee will consider people talent
on merit against objective criteria and with due regard for
the benefits of diversity on the Board. The Board will aim to
ensure that:
– it considers candidates from a wider pool including those
with little or no listed company board experience;
– non-executive director ‘long lists’ will include 50% female
candidates;
– it only engages executive search firms which have signed up
to the voluntary Code of Conduct on both gender and ethnic
diversity and best practice; and
– the Board comprises at least two female directors.
The Board places great emphasis on ensuring that its
membership reflects diversity in its broadest sense and which
appropriately represents the Group’s operations, the
geographies in which we operate, our strategic plans and
customer base.
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Directors’ Report continued
In September, following Katrina’s appointment, the Committee
recommended her appointment as the Workforce Engagement
Director to meet with the requirements of the 2018 UK Corporate
Governance Code, and this was subsequently confirmed by the
Board. This role had been fulfilled by Bronwyn Syiek until she
stepped down from the Board in July. The role’s objective is to
enable the Board to understand the views of the Company’s
workforce. Finally, I would like to highlight the governance
framework review undertaken in the latter part of the year,
as described in my introduction to the Governance Report. The
Committee’s Terms of Reference have been amended to better
reflect the requirements of the 2018 UK Corporate Governance
Progress against 2022
key objectives
– Board composition and succession planning
regularly reviewed.
– Appointment of two new independent
non-executive directors.
– The re-election of the directors at the 2022 AGM.
– Reviewed he Board Diversity Policy.
Code and current market good practice. The main changes
– Reviewed and updated the Committee’s Terms
are highlighted further below. The Committee has also been
renamed to reflect its new wider remit to oversee the Board
and Board Committee governance arrangements.
of Reference.
Recruitment and succession planning
The Committee recognises the importance for the Board to
succession planning.
anticipate and prepare for the future and to ensure that the skills,
– To oversee the implementation of the
experience, knowledge and perspectives of the directors and
recommendations from the external Board
Key objectives for 2023
– To keep under review the Board composition and
members of the senior leadership team reflect the changing
demands of the business. We have a strong talent pipeline,
which considers the core competencies and capabilities for
potential future leaders, comprising many high-performing
individuals. When considering succession plans, the Committee
and the Board are cognisant of the need to ensure that a diverse
range of individuals are included. We believe that the range of
perspectives provided by a diverse and inclusive organisation
such as IPF, which are also reflective of the communities we
serve, gives us a competitive advantage.
evaluation review.
– To keep under review the governance framework
and make recommendations for improvement
where appropriate.
The policy includes a set of measurable objectives as part of the
approach for selecting candidates to consider for appointment
to the Board, and also provides a high-level indication of the
approach to diversity in senior leadership roles. In identifying
The Committee leads the Board’s annual session dedicated to
suitable candidates, the Committee will consider people talent
succession planning as well as a mid-year review as part of the
on merit against objective criteria and with due regard for
Group-wide talent mapping exercise to ensure robust succession
the benefits of diversity on the Board. The Board will aim to
plans. During 2022, the Committee and the Board affirmed the
ensure that:
appointment of a number of key senior management positions
as the business continued to strengthen its talent pipeline.
Appointments were made across all three of our business units,
further adding to the diversity of backgrounds, experiences and
cultures within the business. These also included several notable
female appointments demonstrating our commitment to
developing supporting greater gender balance in the Group. In
line with our commitment to develop future leaders, the Board
oversaw the introduction of the Global Leaders Connect
programme. This programme is an important means of
investment in our key talent to meet the Group’s strategy.
Board appointments and diversity
– it considers candidates from a wider pool including those
with little or no listed company board experience;
– non-executive director ‘long lists’ will include 50% female
candidates;
– it only engages executive search firms which have signed up
to the voluntary Code of Conduct on both gender and ethnic
diversity and best practice; and
– the Board comprises at least two female directors.
The Board places great emphasis on ensuring that its
membership reflects diversity in its broadest sense and which
appropriately represents the Group’s operations, the
geographies in which we operate, our strategic plans and
During the year, the Committee reviewed and re-approved the
Board Diversity policy, a copy of which is available on our website
customer base.
at www.ipfin.co.uk.
The membership of our Board is also diverse geographically with
nationals from Australia and Ireland as well as the UK. This
diversity aids the Board’s discussions and decision-making
processes, given the international nature of our business. The
Committee’s work on diversity and inclusion is aligned closely
with succession planning activities delivered through our talent
management processes to improve the depth, quality and
diversity of the Company’s talent. Diversity is also built into Group
policies as appropriate and as a business operating in different
countries, collaboration between our international operations is a
central dynamic of our culture. Diversity and inclusion is about
treating people fairly, equitably and without bias, creating
conditions that encourage and value diversity and promote
respect, dignity and belonging. This is embedded in our culture
and values.
The Board continued to support initiatives undertaken in 2022 to
encourage greater gender balance for female employees across
the Group and further information on the Group’s approach
to diversity, together with diversity statistics, are set out on
page 45.
Finally, I am pleased to report that with the appointment of our
third female non-executive director, we have exceeded the
target of 33% female representation on the Board, as
recommended by the Hampton-Alexander Review:
FTSE Women Leaders.
Responsibilities of the Committee
Following the detailed governance review, the Committee’s
Terms of Reference were refreshed to better align with the 2018
Corporate Governance Code and best market practice. The
Committee’s responsibilities include:
– regularly reviewing Board composition and the balance of
skills, knowledge, experience and diversity to ensure the
continued ability of the Company to be successful and deliver
on its purpose;
– reviewing the results of the annual Board effectiveness
assessments and determining what actions should be
taken to further enhance the effectiveness of the Board
and its Committees;
– determining when appointments and retirements are
appropriate, and lead any director searches ensuring formal,
rigorous and transparent processes;
– giving full consideration to succession planning and
overseeing the development of a diverse pipeline for
succession at Board and senior management levels;
– ensuring that effective, deliberate and well thought through
succession planning and contingency planning processes are
in place across the Group for all key positions;
– ensuring the Group continues to have the necessary level of
Board and senior management skills and leadership to deliver
the strategy;
– providing oversight of the directors, in terms of independence,
conflict of interests, external appointments and any other
matters which could impact the continuance in office and
recommendation to the shareholders for election or re-election;
– keeping the Board’s governance arrangements under review
and making recommendations to the Board, as appropriate,
to ensure that relevant corporate governance standards and
best practice continue to be followed; and
– reporting to the Board a summary of the matters,
recommendations and actions agreed after each
of its meetings.
Committee evaluation
An external Board effectiveness review was undertaken at the
end of 2022 and the Committee’s performance was assessed
as part of this. The results of the evaluation indicated that the
Committee had operated effectively throughout the year, with
particular strengths highlighted relating to chairing, support
and reporting (which was the case for all Board Committees).
The evaluation reflected that the Committee was felt to be
chaired well, that it received strong support and did a good
job of reporting on what it did.
Annual re-election of directors
As in previous years, Board members will stand for election or
re-election by shareholders at the 2023 AGM. All non-executive
directors are considered independent in accordance with UK
requirements, and they continue to make effective
contributions, constructively challenge management and
devote sufficient time to their role. Accordingly, all directors are
proposed for re-election or election, in the case of Katrina Cliffe
and Aileen Wallace. Further details are contained in the Notice
of Meeting circulated to shareholders.
Stuart Sinclair
1 March 2023
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Directors’ Report
Directors’ Report continued
Appointment of new independent non-executive directors
Katrina Cliffe
Independent non-executive director and Workforce
Engagement Director
During the second half of 2022, we were delighted to
welcome two new female non-executive directors to our
Board, which means that we now exceed the Hampton-
Alexander target of 33% female board representation.
When considering the recruitment of new directors, the
Board, supported by the Nominations and Governance
Committee, adopts a formal and transparent procedure
which takes into account the skills, knowledge and level of
experience required for the role, as well as diversity.
Following Bronwyn Syiek’s decision in June to step down
from the Board, a thorough and rigorous recruitment
process was initiated to find a successor and, at the
request of the Board, the Chair and CEO were tasked to
lead this process. Ridgeway Partners, a global advisory
executive search agency and member of the 30 % Club,
with a record for increasing the diversity of its clients’
board composition both from a gender and an ethnicity
perspective, was engaged to conduct a full market
search. Ridgeway Partners has no with connection with
either the Company or its directors.
The focus of the exploratory search was to identify
potential candidates with financial services experience,
with a particular bias towards the retail, credit card and
customer service sectors. The culmination of the search
process resulted in a short list of candidates being drawn
up for interview, with one preferred candidate, Katrina
Cliffe, being selected for recommendation to the
Nominations and Governance Committee and the Board
for consideration and approval. Katrina’s appointment
was subsequently confirmed in July 2022.
Katrina brings with her a breadth of executive experience
in the retail financial services, credit cards, customer
service and marketing.
Aileen Wallace
Independent non-executive director
In October, a second recruitment process was initiated,
following John Mangelaars advising the Board of his desire
to step down as a director in order to dedicate more time
to his other business interests. After detailed discussion by
the Nominations and Governance Committee and
endorsed by the Board, it was determined that a full
market search for a new non-executive director was not
required given the short period of time that had elapsed
since this had been undertaken as part of the process
resulting in Katrina’s appointment. The Committee
reviewed the skills required by the Board collectively and
determined that the candidate appointed to the Board
should have significant experience in technology and
delivering change as well as experience of sustainability
matters. The Chair indicated that there was a candidate,
Aileen Wallace, whom he had met as part of a recruitment
process for another Board on which he was a member
and recommended she be interviewed given her expertise
in the areas identified as important for the role.
At the request of the Board, the Chair and the CEO led the
recruitment process and following interviews with all Board
members, it was agreed that Aileen’s appointment should
be recommended to the Nominations and Governance
Committee and onward to the Board for approval. Aileen
appointment was subsequently confirmed on the
20 December 2022.
Aileen’s considerable breadth of experience in the
technology and change sectors will be extremely
beneficial to the Group as it enters its next stage of growth.
Prior to the appointments of both Katrina and Aileen, the
Board noted that they both met the requirements of the
2018 UK Corporate Governance Code concerning
conflicts of interest, independence and time commitments
for the role, this having been considered previously in
detail by the Nominations and Governance Committee.
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Directors’ Report
Directors’ Report continued
Appointment of new independent non-executive directors
Independent non-executive director and Workforce
Independent non-executive director
Aileen Wallace
Katrina Cliffe
Engagement Director
During the second half of 2022, we were delighted to
In October, a second recruitment process was initiated,
welcome two new female non-executive directors to our
following John Mangelaars advising the Board of his desire
Board, which means that we now exceed the Hampton-
to step down as a director in order to dedicate more time
Alexander target of 33% female board representation.
to his other business interests. After detailed discussion by
When considering the recruitment of new directors, the
Board, supported by the Nominations and Governance
Committee, adopts a formal and transparent procedure
which takes into account the skills, knowledge and level of
experience required for the role, as well as diversity.
Following Bronwyn Syiek’s decision in June to step down
from the Board, a thorough and rigorous recruitment
process was initiated to find a successor and, at the
request of the Board, the Chair and CEO were tasked to
lead this process. Ridgeway Partners, a global advisory
executive search agency and member of the 30 % Club,
with a record for increasing the diversity of its clients’
board composition both from a gender and an ethnicity
perspective, was engaged to conduct a full market
search. Ridgeway Partners has no with connection with
either the Company or its directors.
The focus of the exploratory search was to identify
potential candidates with financial services experience,
with a particular bias towards the retail, credit card and
customer service sectors. The culmination of the search
process resulted in a short list of candidates being drawn
up for interview, with one preferred candidate, Katrina
Cliffe, being selected for recommendation to the
Nominations and Governance Committee and the Board
for consideration and approval. Katrina’s appointment
was subsequently confirmed in July 2022.
Katrina brings with her a breadth of executive experience
in the retail financial services, credit cards, customer
service and marketing.
the Nominations and Governance Committee and
endorsed by the Board, it was determined that a full
market search for a new non-executive director was not
required given the short period of time that had elapsed
since this had been undertaken as part of the process
resulting in Katrina’s appointment. The Committee
reviewed the skills required by the Board collectively and
determined that the candidate appointed to the Board
should have significant experience in technology and
delivering change as well as experience of sustainability
matters. The Chair indicated that there was a candidate,
Aileen Wallace, whom he had met as part of a recruitment
process for another Board on which he was a member
and recommended she be interviewed given her expertise
in the areas identified as important for the role.
At the request of the Board, the Chair and the CEO led the
recruitment process and following interviews with all Board
members, it was agreed that Aileen’s appointment should
be recommended to the Nominations and Governance
Committee and onward to the Board for approval. Aileen
appointment was subsequently confirmed on the
20 December 2022.
Aileen’s considerable breadth of experience in the
technology and change sectors will be extremely
beneficial to the Group as it enters its next stage of growth.
Prior to the appointments of both Katrina and Aileen, the
Board noted that they both met the requirements of the
2018 UK Corporate Governance Code concerning
conflicts of interest, independence and time commitments
for the role, this having been considered previously in
detail by the Nominations and Governance Committee.
Audit and Risk Committee Report
Dear shareholder,
On behalf of the Committee, I am pleased to present the
Audit and Risk Committee’s Report for the year ended
31 December 2022.
The year in review
This section of the Annual Report sets out how the Committee
has addressed both routine and emerging issues during the
year. As mentioned elsewhere in this Annual Report, the key
challenges for the business and for the Committee continued
to be the impacts of the pandemic, combined with the war in
Ukraine, an uncertain macroeconomic environment, the
development of an ESG strategy, and regulatory challenge.
The Committee closely monitored the consequent impacts on
the Group’s Financial Statements and despite continuing
uncertainty, was pleased to see the delivery of a very good
financial performance and sustainable profitability. The
Committee also addressed a range of routine matters,
including the management of cyber threat and information
security and the continuing development of the Group’s
framework for internal non-financial control. The Committee’s
time was also dedicated to considering and then approving
Deloitte LLP’s plan for the 2022 external audit and the 2023
internal audit plan.
The year ahead
Although macroeconomic uncertainty is having a significant
impact on the sector in which we operate, we continue to
respond to the challenges and opportunities that this brings.
The Committee notes the UK Government’s reforms to the
audit and corporate governance regime which were
published on 31 May 2022 and will continue to monitor the
development of this initiative including requirements in relation
to assurance of non-financial information and increased
disclosure requirements in respect of internal control systems.
The Committee is well placed to discharge its duties in the
year ahead.
Richard Holmes
Chair of the
Audit and Risk
Committee
“On behalf of the Committee
I am pleased to present its report for
the year ended 31 December 2022.
During the year, and throughout the
continuing pandemic, the Committee
continued to play an important
oversight role in ensuring the integrity
of the Group’s financial reporting and
the effectiveness of its internal control
and risk management systems.”
Committee members
Richard Holmes, Chair and Senior Independent
non-executive director
Deborah Davis, Independent non-executive director
Katrina Cliffe, Independent non-executive director
Composition, role and responsibilities
The Committee consists of independent non-executive
directors and met six times during the year. Members and their
attendance at meetings can be found on the left.
The external auditor, Deloitte LLP, the CEO, the CFO, and the
Group Head of Internal Audit are invited to attend all meetings.
Periodically, senior management from across the Group are
invited to present on specific aspects of the business. The
members of the Committee meet on a regular basis outside of
scheduled Committee meetings, and the Committee also
meets from time to time with the external auditor, without an
executive director or another member of the senior leadership
team being present.
The table below shows the number of meetings held and the
directors’ attendance during 2022.
Committee member
Scheduled
meetings1
No. of
meetings
attended
% of
meetings
attended
Richard Holmes
Deborah Davis
Bronwyn Syiek2
Katrina Cliffe3
Notes
6
6
6
2
6
6
5
2
100%
100%
83%
100%
1. The scheduled meetings that each individual was entitled to,
and had the opportunity to, attend.
2. Bronwyn Syiek stepped down as a member of the Committee
on 20 July 2022.
3. Katrina Cliffe was appointed as a member of the Committee
effective 1 August 2022.
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Directors’ Report continued
Functionally, the Group Head of Internal Audit reports directly
to the Chair of the Committee. For routine administrative
matters, the Group Head of Internal Audit’s principal contact
is the CFO. The Group Head of Internal Audit operates within
a clearly defined remit and has good linkage to the CEO
and to the rest of the organisation.
The Committee supports the Board in fulfilling its responsibilities
in relation to financial reporting, monitoring the integrity of the
Financial Statements and reviewing and challenging any
significant financial reporting issues and judgements in
relation to the Financial Statements. The Committee’s
responsibilities are outlined in its terms of reference which are
available on our website at www.ipfin.co.uk. The Committee’s
main responsibilities are to:
– monitor the Group’s systems of internal control, including
financial, operational and compliance controls and risk
management systems, and to perform an annual review of
their effectiveness;
– monitor the integrity of the Financial Statements of the
Company and the formal announcements relating to the
Company’s financial performance, reviewing the significant
financial reporting judgements contained in them;
Progress against 2022
key objectives
– Monitored the Group’s management of Covid-19
generated risks for the business.
– Maintained a strong focus on the continuing
development of the Group’s internal control
framework.
– Closely followed the execution of ESG strategic
developments.
– Provided oversight to the management of consumer
credit regulatory challenges.
– Received assurance on cyber security measures and
operational resilience across the Group.
Key objectives for 2023
– Receive and review regular reports on regulatory
developments.
– Continue to focus on the development and execution
– provide advice to the Board on whether the Annual Report
of an ESG strategy.
– Keep under close review the Group’s responses
to developments in the macro economy, in Ukraine,
with cost-of-living concerns and with the ongoing
pandemic.
– Monitor the expansion of the Group’s product and
channel choices.
– Continue to monitor the ongoing alignment of the
Company’s purpose, values, strategy and culture.
– Provide oversight to the audit tender process.
and Financial Statements, taken as a whole, are fair,
balanced and understandable, and provide the information
necessary for shareholders to assess the Group’s position
and performance, business model and strategy;
– make recommendations to the Board, for the Board to put
to shareholders in general meeting, relating to the
appointment, reappointment and removal of the external
auditor and to approve its terms of appointment; review and
monitor the objectivity and independence of the external
auditor and the effectiveness of the external audit process,
taking into consideration relevant UK professional and
regulatory requirements;
– review and approve the internal audit programme for the
year and monitor the effectiveness of the internal audit
function in the delivery of its plan;
– keep under review the work of the Risk Advisory Group, in
particular the Group schedule of key and emerging risks
and consider the principal and emerging risks stated on
pages 58 to 62 facing the Group and their mitigation; and
– review and approve risk appetite proposals, together with
the mechanisms that will be used for monitoring adherence
to them.
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Directors’ Report continued
Functionally, the Group Head of Internal Audit reports directly
to the Chair of the Committee. For routine administrative
matters, the Group Head of Internal Audit’s principal contact
is the CFO. The Group Head of Internal Audit operates within
a clearly defined remit and has good linkage to the CEO
and to the rest of the organisation.
Progress against 2022
key objectives
– Monitored the Group’s management of Covid-19
The Committee supports the Board in fulfilling its responsibilities
generated risks for the business.
in relation to financial reporting, monitoring the integrity of the
– Maintained a strong focus on the continuing
Financial Statements and reviewing and challenging any
development of the Group’s internal control
significant financial reporting issues and judgements in
relation to the Financial Statements. The Committee’s
responsibilities are outlined in its terms of reference which are
available on our website at www.ipfin.co.uk. The Committee’s
main responsibilities are to:
– monitor the Group’s systems of internal control, including
financial, operational and compliance controls and risk
management systems, and to perform an annual review of
their effectiveness;
– monitor the integrity of the Financial Statements of the
framework.
developments.
– Provided oversight to the management of consumer
credit regulatory challenges.
– Received assurance on cyber security measures and
operational resilience across the Group.
Key objectives for 2023
Company and the formal announcements relating to the
– Receive and review regular reports on regulatory
Company’s financial performance, reviewing the significant
developments.
financial reporting judgements contained in them;
– Continue to focus on the development and execution
– provide advice to the Board on whether the Annual Report
of an ESG strategy.
– Keep under close review the Group’s responses
to developments in the macro economy, in Ukraine,
with cost-of-living concerns and with the ongoing
– Monitor the expansion of the Group’s product and
pandemic.
channel choices.
– Continue to monitor the ongoing alignment of the
Company’s purpose, values, strategy and culture.
– Provide oversight to the audit tender process.
and Financial Statements, taken as a whole, are fair,
balanced and understandable, and provide the information
necessary for shareholders to assess the Group’s position
and performance, business model and strategy;
– make recommendations to the Board, for the Board to put
to shareholders in general meeting, relating to the
appointment, reappointment and removal of the external
auditor and to approve its terms of appointment; review and
monitor the objectivity and independence of the external
auditor and the effectiveness of the external audit process,
taking into consideration relevant UK professional and
regulatory requirements;
– review and approve the internal audit programme for the
year and monitor the effectiveness of the internal audit
function in the delivery of its plan;
– keep under review the work of the Risk Advisory Group, in
particular the Group schedule of key and emerging risks
and consider the principal and emerging risks stated on
pages 58 to 62 facing the Group and their mitigation; and
– review and approve risk appetite proposals, together with
the mechanisms that will be used for monitoring adherence
to them.
– Closely followed the execution of ESG strategic
standards and policies;
Activities in 2022
Financial reporting
The Committee reviewed and considered the following
areas in respect of the preparation of the half-year and
full-year Financial Statements:
– the appropriateness of accounting policies used;
– compliance with external and internal financial reporting
– significant judgements made by management regarding
areas of uncertainty;
– disclosures and presentations; and
– whether the Annual Report and Financial Statements are
fair, balanced and understandable.
In carrying out this review, the Committee considered the
work and recommendations of management and received
reports from the external auditor setting out its view on the
accounting treatments and judgements underpinning the
Financial Statements.
The significant accounting judgements considered by the
Committee were:
– Impairment of receivables: the application of IFRS 9 to
the ongoing issues arising from Covid-19 and the impact
of the rising costs-of-living had a significant impact on the
impairment charge and the calculation of provisions. The
key areas of judgement in respect of impairment
provisions made against amounts receivable from
customers are the parameters used in the expected loss
models, the expected timing of future cash flows and
post-model overlays. The expected loss models are driven
by historical data in respect of probability of default and
exposure at default together with loss given default for
each portfolio. At both the half-year and full-year results,
the Committee considered a paper prepared by
management summarising the work performed to update
parameters used in the expected loss and the cash flow
timing models, and the judgements applied in this
process. This paper also addressed the use of post-model
overlays in instances where the most recent trends in the
data were felt to be more relevant than some of the more
historical information. This was particularly relevant in 2022
due to the use of Covid-19 and rising costs-of -living
post-model overlays arising from a full assessment of
expected collection cash flows in order to calculate the
expected impact of these issues on the Group’s
impairment provisions. Further detail on the post-model
overlays considered is given in the key sources of
estimation uncertainty section of this Annual Report on
page 141. The external auditor performed audit
procedures on impairment provisioning and reported its
findings to the Committee. The Committee concluded that
the receivables impairment provisioning in the Financial
Statements was appropriate.
– Revenue recognition: the judgement in respect of
revenue recognition is the methodology used to calculate
the effective interest rate. The calculation takes into
account all the contractual terms together with the extent
and timing of customer early settlement behaviour. The
external auditor performed procedures to assess
management’s calculations and assumptions used to
calculate the effective interest rate and reported its
findings to the Committee. The Committee concluded
that revenue recognition in the Financial Statements
was appropriate.
– Taxation: IPF operates in multiple jurisdictions where the
taxation treatment of transactions is not always certain.
Management is therefore required to make judgements,
based on internal expertise and external advice, on the
methodology to be adopted for accounting for uncertain
tax positions. Key areas of focus in 2022 included
judgements taken relating to accounting for the impact of
the European Commission’s State Aid decision (see
Financial review on page 34). The external auditor
performed procedures to assess management’s
judgement and reported its findings to the Committee.
The Committee concluded that the provision for
uncertain tax risks included in the Financial Statements
was appropriate.
– Regulation: the business is subject to regulatory scrutiny in
multiple jurisdictions and at times it is appropriate to make
provisions for potentially adverse rulings by regulatory
authorities. The Board was advised by the Chief Legal
Officer in relation to any enquiry it had on this area.
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Directors’ Report
Directors’ Report continued
Internal control and risk management
While the Board is responsible for overseeing the Group’s
systems of internal control, including risk management,
the review of its effectiveness is delegated to the Committee.
The Group recognises the importance of strong systems
of internal control in the achievement of its strategy and
objectives. It is also recognised that any system can provide
only reasonable and not absolute assurance against material
misstatement or loss.
The Committee reviews and approves the Group schedule of
key risks, which describes the principal risks and uncertainties
facing the business. The Board formally considers the schedule
on a six-monthly basis and approves risk appetite annually.
The Committee closely monitors and is supported in its work
by the Risk Advisory Group, which in 2022 comprised the CEO,
CFO, Group Credit Director and Chief Legal Officer, together
with other members of the senior leadership team. The Risk
Advisory Group meets four times a year. It reports to the Audit
and Risk Committee and considers the risk assessments and
risk registers produced in each country and updates the
Group schedule of key risks. It also considers emerging risks,
areas of specific risk and particular issues.
During the year, the Committee closely monitored the
implementation of risk management process improvement
recommendations by a third-party assurance provider in 2021.
The Committee challenged robustly the identification,
assessment and planned mitigation of the principal risks
facing the business, notably in the light of the Covid-19
pandemic which continued to impact the Group in the first
quarter of 2022 and the cost-of-living crisis. See principal risks
and uncertainties on pages 58 to 62.
Close attention continued to be paid by the Committee
to the management of the threat of cyber security breach due
to our employees working remotely from home during the year,
in response to the ongoing Covid-19 pandemic and flexible
working patterns, and to the threat of fraud, given the
changed working environment.
In terms of regulatory developments, 2022 was characterised
by the two key external factors that impacted the lives of our
customers, the thinking of politicians and the economy in
general; i.e. the ongoing Covid-19 pandemic and the war
between Russia and the Ukraine. Temporary payment
moratoria and price caps were introduced. In addition to
temporary measures targeted directly at the financial sector,
other new regulation introduced to the wider market also
impacted our operations. There was new regulation tailored
around special or “windfall” taxes to enable governments to
tackle the impacts of the ongoing pandemic and energy
crises. There were also regulatory changes related to labour
regulations, typically manifesting as minimum wage increases
as a reaction to inflation. Additionally, following six years of
discussions, the Polish total cost of credit regulation came into
force at the end of 2022. The review of the Consumer Credit
Directive in the European Union is still underway with updates
expected in 2023.
Additionally, the Committee continued to monitor
developments in respect of the European Commission’s State
Aid challenge. The Committee also received regular updates
on associated matters related to this and ongoing tax audits
within the Group, together with OECD and European Union
international tax initiatives that could potentially impact the
Group in the future. Details of the current status of tax audits
are included in our principal risks and uncertainties on
page 61.
The Committee will continue to assess the impact of these
matters on the business and will monitor management’s
response throughout 2023.
The internal control environments in place to manage
the impact of each risk are monitored by the Committee
on a regular basis, as are the principal actions being taken
to mitigate them. The Committee requests additional
presentations on key business areas as necessary
to supplement its understanding of control environments
in place. The areas covered by these in 2022 are referred
to in the ‘Training’ section on page 94.
Through the Committee, the Group internal audit function
provides independent assurance to the Board on the
effectiveness of the systems of internal control. The Committee
provides oversight and direction to the internal audit plan,
which was developed using an inherent risk-based approach,
to ensure that it provides independent assurance over the
integrity of internal controls and the operational governance
framework. In addition, the external auditor communicates
to the Committee any control deficiencies in the internal
control environment it observes as part of its audit procedures.
Deloitte LLP, as part of its audit, did not highlight any control
weaknesses that we, as a Committee, considered to
be material.
Internal audit
Group Internal Audit is an independent assurance function
within the Group providing services to the Committee and
all levels of management. Its remit is to provide objective
assurance over the design and operating effectiveness of the
system of internal control, through a risk-based approach.
It also provides insight, delivers value, and helps the
organisation to achieve its priorities. Group Internal Audit
does this by bringing a systematic, disciplined approach
to evaluating and improving the effectiveness of risk
management, control and governance processes.
The Group Head of Internal Audit reports into the Chair of the
Committee with administrative oversight from the CFO. Group
Internal Audit is composed of teams across the markets and
at the Group head office in the UK and has a high level of
qualified personnel with a wide range of professional skills
and experience. Co-sourcing agreements with the largest
professional services firms ensure access to additional
specialist skills and an advanced knowledge base.
92
International Personal Finance plc
Directors’ Report
Directors’ Report continued
Internal control and risk management
While the Board is responsible for overseeing the Group’s
systems of internal control, including risk management,
the review of its effectiveness is delegated to the Committee.
The Group recognises the importance of strong systems
of internal control in the achievement of its strategy and
objectives. It is also recognised that any system can provide
only reasonable and not absolute assurance against material
misstatement or loss.
The Committee reviews and approves the Group schedule of
key risks, which describes the principal risks and uncertainties
facing the business. The Board formally considers the schedule
on a six-monthly basis and approves risk appetite annually.
The Committee closely monitors and is supported in its work
Additionally, the Committee continued to monitor
developments in respect of the European Commission’s State
Aid challenge. The Committee also received regular updates
on associated matters related to this and ongoing tax audits
within the Group, together with OECD and European Union
international tax initiatives that could potentially impact the
Group in the future. Details of the current status of tax audits
are included in our principal risks and uncertainties on
page 61.
The Committee will continue to assess the impact of these
matters on the business and will monitor management’s
response throughout 2023.
The internal control environments in place to manage
the impact of each risk are monitored by the Committee
by the Risk Advisory Group, which in 2022 comprised the CEO,
on a regular basis, as are the principal actions being taken
CFO, Group Credit Director and Chief Legal Officer, together
with other members of the senior leadership team. The Risk
Advisory Group meets four times a year. It reports to the Audit
and Risk Committee and considers the risk assessments and
risk registers produced in each country and updates the
Group schedule of key risks. It also considers emerging risks,
areas of specific risk and particular issues.
to mitigate them. The Committee requests additional
presentations on key business areas as necessary
to supplement its understanding of control environments
in place. The areas covered by these in 2022 are referred
to in the ‘Training’ section on page 94.
Through the Committee, the Group internal audit function
provides independent assurance to the Board on the
During the year, the Committee closely monitored the
effectiveness of the systems of internal control. The Committee
implementation of risk management process improvement
provides oversight and direction to the internal audit plan,
recommendations by a third-party assurance provider in 2021.
which was developed using an inherent risk-based approach,
The Committee challenged robustly the identification,
assessment and planned mitigation of the principal risks
facing the business, notably in the light of the Covid-19
pandemic which continued to impact the Group in the first
quarter of 2022 and the cost-of-living crisis. See principal risks
and uncertainties on pages 58 to 62.
to ensure that it provides independent assurance over the
integrity of internal controls and the operational governance
framework. In addition, the external auditor communicates
to the Committee any control deficiencies in the internal
control environment it observes as part of its audit procedures.
Deloitte LLP, as part of its audit, did not highlight any control
weaknesses that we, as a Committee, considered to
Close attention continued to be paid by the Committee
be material.
to the management of the threat of cyber security breach due
to our employees working remotely from home during the year,
in response to the ongoing Covid-19 pandemic and flexible
working patterns, and to the threat of fraud, given the
changed working environment.
In terms of regulatory developments, 2022 was characterised
by the two key external factors that impacted the lives of our
customers, the thinking of politicians and the economy in
general; i.e. the ongoing Covid-19 pandemic and the war
between Russia and the Ukraine. Temporary payment
moratoria and price caps were introduced. In addition to
temporary measures targeted directly at the financial sector,
other new regulation introduced to the wider market also
impacted our operations. There was new regulation tailored
around special or “windfall” taxes to enable governments to
tackle the impacts of the ongoing pandemic and energy
crises. There were also regulatory changes related to labour
regulations, typically manifesting as minimum wage increases
as a reaction to inflation. Additionally, following six years of
discussions, the Polish total cost of credit regulation came into
force at the end of 2022. The review of the Consumer Credit
Directive in the European Union is still underway with updates
expected in 2023.
Internal audit
Group Internal Audit is an independent assurance function
within the Group providing services to the Committee and
all levels of management. Its remit is to provide objective
assurance over the design and operating effectiveness of the
system of internal control, through a risk-based approach.
It also provides insight, delivers value, and helps the
organisation to achieve its priorities. Group Internal Audit
does this by bringing a systematic, disciplined approach
to evaluating and improving the effectiveness of risk
management, control and governance processes.
The Group Head of Internal Audit reports into the Chair of the
Committee with administrative oversight from the CFO. Group
Internal Audit is composed of teams across the markets and
at the Group head office in the UK and has a high level of
qualified personnel with a wide range of professional skills
and experience. Co-sourcing agreements with the largest
professional services firms ensure access to additional
specialist skills and an advanced knowledge base.
Group Internal Audit activities are based on a robust
methodology and are subject to an ongoing programme
of internal quality assurance reviews. The function has invested
in several initiatives to continuously improve its effectiveness
including a third-party quality assessment which reported in
early 2019, and concluded positively on the effectiveness of
the function. The aim is for a similar exercise to be undertaken
in 2024. The team follows a continuous improvement plan and
measures its operational effectiveness via a set of key
performance indicators which are reported at each meeting
of the Committee, and via individual post-audit quality
assessments by auditees, the results of which are also reported
to the Committee.
The Committee has a permanent agenda item to cover
internal audit-related topics. Prior to the start of each financial
year, and at the half year, having considered the principal
areas of risk within the business, the Committee reviews and
approves an inherent risk-based internal audit plan, assesses
the adequacy of the available internal audit resources and
considers the operational initiatives for the continuous
improvement of the function’s effectiveness.
The Committee reviews progress against the approved internal
audit plan and the results of audit activities, with a focus on
unsatisfactory audit results which require timely attention.
During the year, Group Internal Audit focused on the principal
risks which included regulation, reputation, cyber threat and
information security, and the execution of projects and
initiatives of strategic importance.
The Committee monitors progress on the implementation of
any action plans arising on significant audit findings to ensure
they are completed satisfactorily.
The Committee is satisfied that the quality, experience and
expertise of the function are appropriate for the business.
External auditor effectiveness and independence
The Committee considered the external auditor’s assessment
of the significant risks in the Group’s Financial Statements set
out in its audit plan and approved the scope of the external
audit that addressed these risks. The Committee considered
these risks and the associated work undertaken by the
external auditor when forming its judgement on the
Financial Statements.
In line with its established practice, the Committee
monitored the effectiveness and conduct of the external
auditor by reviewing:
– the experience and capabilities of the auditor and the
calibre of the audit firm;
– provision of non-audit services;
– robustness and perceptiveness of the external auditor in its
handling of key accounting and audit judgements;
– the interaction between management and the
external auditor;
– the delivery of its audit work in accordance with the agreed
plan; and
– the quality of its report and communications to
the Committee.
The effectiveness of the external audit process continues to be
evaluated via a questionnaire which was completed by the
Committee members and attendees, and by business unit
finance directors across the Group. The results of the
evaluation were reviewed and considered by the Committee
which concluded that the external audit process is effective.
In order to confirm its independence and objectivity, the
external auditor issued a formal statement of independence to
the Committee. In addition, the Committee ensured
compliance with the Group’s policy on the use of the external
auditor for non-audit services.
Non-audit services carried out by Deloitte LLP in 2022
Other assurance services
Fee £000
183
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International Personal Finance plc
Annual Report and Financial Statements 2022
93
Directors’ Report
Directors’ Report continued
The key requirements of this policy are:
– an update on e-Money Licence regulatory requirements
– the external auditor is prohibited from providing certain
services which include the following: tax services; payroll
services; designing and implementing internal controls
or risk management procedures; legal services; internal
audit services; human resource services; valuation services;
or general management consultancy; and
– the Committee Chair must approve any individual non-audit
service over a specific fee level.
The policy of the Committee in respect of non-audit services
is that the external auditor is only appointed to perform
a non-audit service when doing so would be consistent
with both the requirements and overarching principles
of the Financial Reporting Council’s Revised Ethical Standard
(2019), and when its skills and experience make it the most
suitable supplier.
The Committee believes that the Group receives a particular
benefit from certain non-audit services where a detailed
knowledge of its operations is important or where the auditor
has very specific skills and experience. However, other large
accountancy practices are also used to provide services
where appropriate. During the year, the non-audit services
carried out by Deloitte LLP are set out in the table on the
previous page.
Audit tendering and auditor rotation
The Statutory Auditors and Third Country Auditors Regulations
2016 requires public interest entities to undertake a tender
exercise at least every 10 years and rotate auditors after
at least 20 years. The Company last went out to tender in 2010
when Deloitte LLP was appointed as Group auditor. However
in 2020, the Group requested and received the approval of the
Financial Reporting Council to defer the tender process for up
to two years due to the challenges associated with the process
in the context of Covid-19 and other competing priorities for
management time arising from the pandemic. This deferral
period has now ended and therefore the Company is required
to undertake a tender and audit rotation process for the 2023
financial year. The Company sought to run a tender process in
2022 and contacted nine firms to ascertain if they would
participate in such a process. All firms contacted have
indicated that they do not wish to participate in such a
process, primarily due to the volume of auditing activity they
are currently undertaking for other clients or because of other
non-audit activity they have undertaken for the Company. The
Company has notified the Financial Reporting Council and the
Registrar of Companies of the position and of its intention to
run another tender process in 2023 for the 2024 financial year.
In addition the Company has taken steps to reduce the
amount of non-audit work being provided to accounting firms
who may wish to take part in such tender. In the meantime the
Company’s current auditor has indicated its willingness to
continue acting for the Company.
Training
The Committee, with the Board, undertook a significant
amount of training during 2022. This included presentations
on the following key business areas:
– overview of the Group’s value-added services offering,
including insurance, with a focus on financial performance
and regulatory compliance;
in Estonia;
– an explanation of Small Payment and Payment Institution
Licence requirements in Poland;
– an assessment of potential outcomes of planned changes
to the European Union Consumer Credit Directive
– the management of credit risk;
– a deep dive into the management of foreign exchange risks
embedded in the business;
– an explanation of political and regulatory frameworks and
developments as a result of the European Union’s review of
the Consumer Credit Directive;
– a recap by the external auditor on Audit and Risk Committee
responsibilities, focus areas and best practice; and
– calculation and oversight of revenue and impairment under
IFRS 9 in the continuing uncertain economic environment.
This training was complemented by discussions directly with
management teams in connection with specific focus areas
in the Group.
Committee effectiveness
An externally-facilitated Board evaluation was undertaken at
the end of 2022, including an assessment of the Committee’s
performance. The results of the evaluation indicated that the
Committee had operated effectively throughout the year,
with particular strengths, common to all the Committees,
relating to good chairing, strong support, reporting of its
activities, oversight of the independence and performance of
the external auditor, as well as the effectiveness of the internal
audit function. The Committee continues to be considered as
providing the Board with a high level of assurance that audit
matters are dealt with appropriately.
Review of the effectiveness of the internal control and risk
management systems
On behalf of the Board, with the assistance of the Internal
Audit function, the Committee has monitored the Group’s
internal control and risk management systems, and its
processes for managing principal and emerging risks
throughout 2022, and has assessed that these are effective.
In addition, the Committee, where appropriate, ensures that
necessary actions have been or are being taken to remedy
identified failings or weaknesses in the internal control
framework. These processes were in place throughout 2022
and up to 1 March 2023.
Annual Report and Financial Statements
The Committee has reviewed and considered the Annual
Report and Financial Statements, in line with other information
the Committee has considered throughout the course of the
year. It concluded, and recommended to the Board, that
the Annual Report and Financial Statements 2022, taken as
a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
Group’s position and performance, business model
and strategy.
Richard Holmes
1 March 2023
94
International Personal Finance plc
Directors’ Report
Directors’ Report continued
The key requirements of this policy are:
– an update on e-Money Licence regulatory requirements
– the external auditor is prohibited from providing certain
services which include the following: tax services; payroll
services; designing and implementing internal controls
or risk management procedures; legal services; internal
audit services; human resource services; valuation services;
or general management consultancy; and
in Estonia;
– an explanation of Small Payment and Payment Institution
Licence requirements in Poland;
– an assessment of potential outcomes of planned changes
to the European Union Consumer Credit Directive
– the management of credit risk;
– the Committee Chair must approve any individual non-audit
– a deep dive into the management of foreign exchange risks
service over a specific fee level.
embedded in the business;
The policy of the Committee in respect of non-audit services
is that the external auditor is only appointed to perform
a non-audit service when doing so would be consistent
with both the requirements and overarching principles
of the Financial Reporting Council’s Revised Ethical Standard
(2019), and when its skills and experience make it the most
suitable supplier.
The Committee believes that the Group receives a particular
benefit from certain non-audit services where a detailed
knowledge of its operations is important or where the auditor
has very specific skills and experience. However, other large
accountancy practices are also used to provide services
– an explanation of political and regulatory frameworks and
developments as a result of the European Union’s review of
the Consumer Credit Directive;
– a recap by the external auditor on Audit and Risk Committee
responsibilities, focus areas and best practice; and
– calculation and oversight of revenue and impairment under
IFRS 9 in the continuing uncertain economic environment.
This training was complemented by discussions directly with
management teams in connection with specific focus areas
in the Group.
Committee effectiveness
where appropriate. During the year, the non-audit services
An externally-facilitated Board evaluation was undertaken at
carried out by Deloitte LLP are set out in the table on the
previous page.
Audit tendering and auditor rotation
The Statutory Auditors and Third Country Auditors Regulations
2016 requires public interest entities to undertake a tender
exercise at least every 10 years and rotate auditors after
at least 20 years. The Company last went out to tender in 2010
when Deloitte LLP was appointed as Group auditor. However
in 2020, the Group requested and received the approval of the
Financial Reporting Council to defer the tender process for up
to two years due to the challenges associated with the process
in the context of Covid-19 and other competing priorities for
management time arising from the pandemic. This deferral
period has now ended and therefore the Company is required
to undertake a tender and audit rotation process for the 2023
financial year. The Company sought to run a tender process in
2022 and contacted nine firms to ascertain if they would
participate in such a process. All firms contacted have
indicated that they do not wish to participate in such a
process, primarily due to the volume of auditing activity they
are currently undertaking for other clients or because of other
the end of 2022, including an assessment of the Committee’s
performance. The results of the evaluation indicated that the
Committee had operated effectively throughout the year,
with particular strengths, common to all the Committees,
relating to good chairing, strong support, reporting of its
activities, oversight of the independence and performance of
the external auditor, as well as the effectiveness of the internal
audit function. The Committee continues to be considered as
providing the Board with a high level of assurance that audit
matters are dealt with appropriately.
Review of the effectiveness of the internal control and risk
management systems
On behalf of the Board, with the assistance of the Internal
Audit function, the Committee has monitored the Group’s
internal control and risk management systems, and its
processes for managing principal and emerging risks
throughout 2022, and has assessed that these are effective.
In addition, the Committee, where appropriate, ensures that
necessary actions have been or are being taken to remedy
identified failings or weaknesses in the internal control
framework. These processes were in place throughout 2022
non-audit activity they have undertaken for the Company. The
and up to 1 March 2023.
Company has notified the Financial Reporting Council and the
Registrar of Companies of the position and of its intention to
Annual Report and Financial Statements
run another tender process in 2023 for the 2024 financial year.
In addition the Company has taken steps to reduce the
amount of non-audit work being provided to accounting firms
who may wish to take part in such tender. In the meantime the
Company’s current auditor has indicated its willingness to
continue acting for the Company.
Training
The Committee has reviewed and considered the Annual
Report and Financial Statements, in line with other information
the Committee has considered throughout the course of the
year. It concluded, and recommended to the Board, that
the Annual Report and Financial Statements 2022, taken as
a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
Group’s position and performance, business model
The Committee, with the Board, undertook a significant
amount of training during 2022. This included presentations
on the following key business areas:
– overview of the Group’s value-added services offering,
including insurance, with a focus on financial performance
and regulatory compliance;
and strategy.
Richard Holmes
1 March 2023
Directors’ Remuneration Report
Deborah Davis
Chair of the
Remuneration
Committee
“I am pleased to present the 2022 report
on directors’ remuneration following a
year when our colleagues delivered
strong growth and a very good financial
performance for the Group. The
Committee is also grateful for the
feedback received from shareholders,
which has been valuable in shaping our
proposed 2023 Remuneration Policy.”
Committee members
Deborah Davis, Chair and independent
non-executive director
Richard Holmes, Senior Independent non-executive director
Stuart Sinclair, Chair of the Board
The table below shows the number of meetings held and the
directors’ attendance during 2022.
Scheduled
meetings1
No. of
meetings
attended
% of
meetings
attended
5
5
5
5
5
5
100%
100%
100%
Committee member
Deborah Davis
Richard Holmes
Stuart Sinclair
Notes
1. The scheduled meetings that each individual was entitled to and
had the opportunity to attend.
Dear shareholder,
On behalf of the Board and as Chair of the Remuneration
Committee, I am pleased to present the Directors’
Remuneration Report for the year ended 31 December 2022.
The report explains how the Committee carried out its duties
during the year and the rationale behind the decisions that
were taken. In particular, the report explains the new Directors’
Remuneration Policy and the reasons behind changes to the
2020 Policy. The report is divided into two sections:
1. Our new Directors’ Remuneration Policy (the 2023 Policy);
and
2. The Annual Remuneration Report, providing detail
of amounts paid during the reporting year, including
incentive outcomes and the planned implementation
of Policy in 2023.
Overview
Role and composition
The Committee comprises two independent non-executive
directors and the Chair of the Board. Full biographical details
can be found on pages 66 to 67. The Committee met five
times during the year, with attendance detailed in the table
to the left.
The Committee’s responsibilities include:
– approving the remuneration policy for executive directors
and the senior leadership team and making
recommendations to the Board. The Committee takes
account of the remuneration of the wider workforce when
setting policy for, and making remuneration decisions
in respect of, the executive directors;
– determining appropriate performance targets and incentive
outcomes; and
– engaging with shareholders on matters relating
to remuneration.
The Committee’s terms of reference are available on our
website at www.ipfin.co.uk.
Our remuneration framework is intended to strike an
appropriate balance between fixed and variable pay
components, and to provide a clear link between
pay and our key strategic priorities. For example:
– profitable growth is recognised via the structure and
operation of our annual bonus plan, which carries an
80% weighting on financial metrics;
– delivery of sustainable organisational performance and
shareholder value is reflected in a progressive dividend
policy, which is proposed to underpin our new Restricted
Stock Plan (see pages 96 to 97 and 101); and
– our commitment to building a better world through financial
inclusion will be reflected in the adoption into variable
remuneration of appropriate ESG metrics in 2023, which will
reflect issues of direct importance to our key stakeholders,
including our shareholders.
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International Personal Finance plc
Annual Report and Financial Statements 2022
95
Directors’ Report
Directors’ Remuneration Report continued
Business context
Following the significant rebound in Company performance in
2021 after the impact of the Covid-19 pandemic, this positive
trajectory was maintained in 2022 as we:
– delivered very good financial performance with all
businesses contributing profitable performances amid
challenging global inflationary pressure and uncertainties
caused by the war in Ukraine;
– made good progress against our strategy that delivered
14% growth in customer lending, driven by strong
performances from all three business divisions;
– managed customer repayment performance effectively,
resulting in very good credit quality;
– continued to maintain a robust funding position and
well-capitalised balance sheet;
– expanded our product offering to meet the needs of our
customers; and
– proposed a 15% increase in the full-year dividend of
9.2p consistent with our new progressive dividend policy
announced in February 2022.
2022 focus and progress
The Committee’s principal goals for 2022 were to:
– undertake a comprehensive review of the Directors’
Remuneration Policy;
– consult with our major shareholders on the 77.82% vote in
favour of the 2021 Directors’ Remuneration Report and with
regard to the operation and evolution of Remuneration
Policy; and
– continue to monitor broader market and
governance trends.
Given that the shareholder vote in favour of the 2021
Directors’ Remuneration Report was just below 80%, and in
accordance with the requirements of the UK Corporate
Governance Code, we published an update detailing the
engagement that was undertaken following the vote within
six months of the AGM. Although the feedback we received
was positive and supportive, the Committee understands
that decisions around the treatment of the outgoing CFO
in July 2021and upward discretion in respect of annual
bonus outcomes gave some investors cause for concern.
Having considered the feedback carefully, the Committee
confirmed its view that decisions taken in respect of the
outgoing CFO were fair and reasonable given the specific
circumstances, and that regarding annual bonus outcomes
for 2021, the significant excess cash collected and its resultant
impact on borrowings, impairment and receivables warranted
the exercise of discretion, not least because this outcome was
clearly in the best interests of shareholders.
Our commitment to maintaining an open dialogue with
shareholders continued as the Committee conducted its
review of the Directors’ Remuneration Policy. We have been
pleased with the level of engagement from shareholders and
with the constructive feedback we have received. The 2023
Policy is presented in full on pages 100 to 106, with key
changes and rationale summarised below.
1. The 2020 Policy required 50% of any bonus to be deferred
into the Deferred Share Plan for three years. The Committee
continues to believe that use of deferral is appropriate as it
supports the alignment of executive director and
shareholder interests, while also ensuring that there is an
effective mechanism to underpin our shareholding policy.
However, we believe that 50% deferral is an unnecessarily
high percentage relative to market practice of similar sized
companies, particularly in circumstances where the
executive has met the shareholding requirement and,
as a result, can act as a demotivator. Consequently,
the Committee considers that the 50% deferral should be
retained up to the point where the “in employment”
shareholding requirement of 200% of base salary has been
met, at which point a 25% deferral should apply. We believe
that this will maintain a strong link with shareholder interests
and will incentivise the executive to achieve the
shareholding policy requirement at the earliest opportunity,
through a combination of incentive awards and personal
investment. We continue to encourage this practice, which
has been demonstrated over many years by the CEO.
2. The Committee recognises that it would be entirely
appropriate and in line with the Company’s purpose to
build a better world through financial inclusion, to include
among the strategic/personal bonus targets one or more
objectives for each executive director that is clearly aligned
to environmental, social or governance matters. Therefore,
within the 20% strategic/leadership element of the bonus
construct we will introduce one or more targets which are
aligned clearly to our purpose, and to our environmental,
social and governance ambitions. These will be introduced
in 2023 and disclosed retrospectively.
3. The Committee and wider Board have been concerned by
the lack of lock-in provided by the Company’s Performance
Share Plan (PSP) over many years, and by its failure to act as
an effective motivational and retention tool. In addition, the
Committee believes that a better constructed long-term
incentive will enable the lowering of normal and maximum
opportunity, which would serve to address any shareholder
concerns over total remuneration. Consequently, the 2023
Policy will introduce a Restricted Stock Plan (RSP), coupled
with a 50% reduction to normal and maximum awards
(from 160% and 250% to 80% and 125% respectively). The
Committee believes that the adoption of an RSP offers
the best solution for the Company and its shareholders.
In particular:
a. a key measure of the success of the Company’s strategy is
that it leads to a sustainable recovery and enhancement
of the share price. The Committee believes that an RSP
coupled with the existing share ownership requirement
will ensure that the executive directors have, and retain,
a material shareholding, ensuring full alignment with
shareholders’ interests;
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International Personal Finance plc
Directors’ Report
Directors’ Remuneration Report continued
Business context
Following the significant rebound in Company performance in
2021 after the impact of the Covid-19 pandemic, this positive
trajectory was maintained in 2022 as we:
Our commitment to maintaining an open dialogue with
shareholders continued as the Committee conducted its
review of the Directors’ Remuneration Policy. We have been
pleased with the level of engagement from shareholders and
with the constructive feedback we have received. The 2023
– delivered very good financial performance with all
Policy is presented in full on pages 100 to 106, with key
businesses contributing profitable performances amid
changes and rationale summarised below.
– expanded our product offering to meet the needs of our
executive has met the shareholding requirement and,
challenging global inflationary pressure and uncertainties
caused by the war in Ukraine;
– made good progress against our strategy that delivered
14% growth in customer lending, driven by strong
performances from all three business divisions;
– managed customer repayment performance effectively,
resulting in very good credit quality;
– continued to maintain a robust funding position and
well-capitalised balance sheet;
customers; and
– proposed a 15% increase in the full-year dividend of
9.2p consistent with our new progressive dividend policy
announced in February 2022.
2022 focus and progress
The Committee’s principal goals for 2022 were to:
– undertake a comprehensive review of the Directors’
Remuneration Policy;
– consult with our major shareholders on the 77.82% vote in
favour of the 2021 Directors’ Remuneration Report and with
regard to the operation and evolution of Remuneration
Policy; and
– continue to monitor broader market and
governance trends.
Given that the shareholder vote in favour of the 2021
Directors’ Remuneration Report was just below 80%, and in
accordance with the requirements of the UK Corporate
Governance Code, we published an update detailing the
engagement that was undertaken following the vote within
six months of the AGM. Although the feedback we received
was positive and supportive, the Committee understands
that decisions around the treatment of the outgoing CFO
in July 2021and upward discretion in respect of annual
bonus outcomes gave some investors cause for concern.
Having considered the feedback carefully, the Committee
confirmed its view that decisions taken in respect of the
outgoing CFO were fair and reasonable given the specific
circumstances, and that regarding annual bonus outcomes
for 2021, the significant excess cash collected and its resultant
impact on borrowings, impairment and receivables warranted
the exercise of discretion, not least because this outcome was
clearly in the best interests of shareholders.
1. The 2020 Policy required 50% of any bonus to be deferred
into the Deferred Share Plan for three years. The Committee
continues to believe that use of deferral is appropriate as it
supports the alignment of executive director and
shareholder interests, while also ensuring that there is an
effective mechanism to underpin our shareholding policy.
However, we believe that 50% deferral is an unnecessarily
high percentage relative to market practice of similar sized
companies, particularly in circumstances where the
as a result, can act as a demotivator. Consequently,
the Committee considers that the 50% deferral should be
retained up to the point where the “in employment”
shareholding requirement of 200% of base salary has been
met, at which point a 25% deferral should apply. We believe
that this will maintain a strong link with shareholder interests
and will incentivise the executive to achieve the
shareholding policy requirement at the earliest opportunity,
through a combination of incentive awards and personal
investment. We continue to encourage this practice, which
has been demonstrated over many years by the CEO.
2. The Committee recognises that it would be entirely
appropriate and in line with the Company’s purpose to
build a better world through financial inclusion, to include
among the strategic/personal bonus targets one or more
objectives for each executive director that is clearly aligned
to environmental, social or governance matters. Therefore,
within the 20% strategic/leadership element of the bonus
construct we will introduce one or more targets which are
aligned clearly to our purpose, and to our environmental,
social and governance ambitions. These will be introduced
in 2023 and disclosed retrospectively.
3. The Committee and wider Board have been concerned by
the lack of lock-in provided by the Company’s Performance
Share Plan (PSP) over many years, and by its failure to act as
an effective motivational and retention tool. In addition, the
Committee believes that a better constructed long-term
incentive will enable the lowering of normal and maximum
opportunity, which would serve to address any shareholder
concerns over total remuneration. Consequently, the 2023
Policy will introduce a Restricted Stock Plan (RSP), coupled
with a 50% reduction to normal and maximum awards
(from 160% and 250% to 80% and 125% respectively). The
Committee believes that the adoption of an RSP offers
the best solution for the Company and its shareholders.
In particular:
a. a key measure of the success of the Company’s strategy is
that it leads to a sustainable recovery and enhancement
of the share price. The Committee believes that an RSP
coupled with the existing share ownership requirement
will ensure that the executive directors have, and retain,
a material shareholding, ensuring full alignment with
shareholders’ interests;
b. the Company has routinely faced difficulties in setting
– the extent to which any windfall gains have arisen as a result
three-year performance conditions for the PSP given the
markets in which we operate and factors that are outside
of management control influencing incentive outcomes.
The Covid-19 crisis also highlighted the need for a simple
yet agile approach, which the PSP has been unable to
provide. The Committee believes that an RSP with the
adoption of an appropriate range of underpins will enable
it in future to take a more holistic approach to reviewing
management performance, rather than relying solely on
formulaic outcomes;
c. the introduction of a RSP would strengthen the lock-in
potential of a long-term incentive, which as indicated
above is currently negligible. In view of the fact that the
2020 PSP was cancelled at the request of the executive
directors in order to support the Company’s Covid-19
recovery plan, the Committee is well aware that the
retention factor is particularly low at present; and
d. executive directors have relied for many years on the
delivery of short-term annual bonus targets to generate an
appropriate level of reward. While the correlation between
short-term objectives and bonus payouts has been high,
the Committee is well aware of the need to ensure
sustainable long-term performance, and to incentivise
executive directors to achieve this. Consequently,
replacing the PSP with a carefully constructed and
controlled RSP will support the focus of the executive on
the delivery of short-term and long-term shareholder value.
4. In adopting a new approach to our long-term incentive,
the Committee has also given considerable thought to the
nature of the performance underpins that will be required.
In particular:
a. as explained above, the difficulties of setting accurate
performance conditions under the existing PSP mean that
changes are clearly required;
b. the absence of appropriate comparator companies
means that relative performance underpins may be
misleading when taken in isolation; and
c. the potential for greater overall protection to be provided
by a broad range of underpins, which would allow the
Committee to review holistically the overall performance of
the Company, individual executive director performance,
and wider Company considerations.
Having carefully considered shareholder feedback and having
conducted a thorough review of FTSE RSPs, the Committee has
agreed that the central, quantifiable financial RSP underpin will
be adherence to IPF’s dividend policy throughout the vesting
period of each annual RSP grant. The Committee believes
adherence to the IPF dividend policy is a transparent indicator
of both organisational performance and shareholder value,
and preferable to other financial metrics, including but not
limited to TSR. To ensure a robust assessment, the Committee
will also consider a further basket of underpin factors at the
end of the relevant three-year vesting period. For 2023 awards,
these will be as follows:
of any marked appreciation in share price;
– whether there have been any material sanctions or fines
issued by a regulatory body (which may give rise to
allocation of individual or collective responsibility);
– any material damage to the reputation of individual Group
Companies, or the Group itself (which may give rise to
allocation of individual or collective responsibility);
– the level of employee and customer representative
engagement over the vesting period; and
– the level of customer engagement (as measured by net
promoter scores, Rep Track or such other means as
determined by the Committee).
5. The Committee identified a lack of appropriate detail in the
Post-Cessation Shareholding Policy, which now confirms that
the requirements apply to shares acquired after the
adoption of the Post-Cessation Policy in April 2020.
6. Finally, in order to ensure that executive directors remain
fully focused on the delivery of results even during a notice
period, bonus eligibility during notice has been clarified,
such that executive directors remain eligible on a pro rata
basis up to their date of leaving. The Committee believes
this approach will ensure the best possible outcome for
shareholders and the wider stakeholder community,
including the Company’s employees and customer
representatives. Bonus eligibility will remain subject at all
times to the rules of the Annual Bonus Plan, including those
relating to the treatment of leavers.
The Committee is united in a belief that the changes
described above strike an appropriate balance between the
need to incentivise and retain a high performing executive
and to pay for performance that is wholly aligned with
shareholder interests.
Shareholder context
In line with the Group’s progressive dividend policy and as a
consequence of the executive directors’ successful execution
of our growth strategy and continued growth potential, a full
year dividend of 9.2 pence per share is proposed, representing
a year-on-year increase of 15%.
Employee and customer representative context
The Committee continued to take into account wider
workforce remuneration and related policies in making its
remuneration decisions. The significant cost-of-living
challenges that we see in the UK have also been felt in many
of our markets, with high inflation often coupled with skills
shortages. While it would be impossible and counter-
productive economically to respond to a high consumer
prices index with equally high salary increases, the Committee
has noted the proportionate action taken to protect earnings
as far as possible and retain our people, while maintaining an
appropriate cost-income ratio.
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Annual Report and Financial Statements 2022
97
Directors’ Report
Directors’ Remuneration Report continued
The business continues to work hard to reward and recognise
our employees and customer representatives, and to provide
the best possible opportunities for learning and development.
This has been reflected in:
– extensive work to implement our customer representative
value proposition;
– the development and rollout of learning pathways for
customer-facing roles;
– the rollout and extensive use of LinkedIn Learning modules
for our middle and senior management; and
– the second annual Learning Festival across all markets.
The Committee has noted that the next bi-annual Global
People Survey will be conducted in 2023 and will consider the
outcomes of this in detail.
Remuneration decisions made in 2022
– As noted in the 2021 Directors’ Remuneration Report, a 5%
increase in base salary was awarded to our Chief Executive
Officer, in line with the increase given to the wider UK
workforce, with salary increasing to £559,650; this followed
no increase in 2021 and 2020. There was no increase during
the year for the incoming Chief Financial Officer, who was
appointed on a base salary of £325,000.
– Financial year 2021 bonus awards of 98% of maximum for
the Chief Executive Officer and 98% of maximum (pro-rata)
for the outgoing Chief Financial Officer (the explanation
for which can be found on pages 96 to 99 of the 2021
Annual Report).
– 2022 Performance Share Plan awards of 190% of salary for
the Chief Executive Officer and 120% for the incoming Chief
Financial Officer, to support a focus on generation of
shareholder value as the Company continues to rebuild
and grow in line with our strategy. The award of 190% of
salary for the Chief Executive Officer reflected his
outstanding contribution, over and above what would
normally be expected, in very difficult circumstances. In
particular, the Committee noted the recovery of the business
following the impact of Covid-19; the fact that he covered in
a highly effective way in the absence of a Chief Financial
Officer during the second half of 2021 and Q1 2022; that he
voluntarily surrendered his PSP award in 2020 in order to
support the business during the pandemic, and also
volunteered the cancellation of the 2020 annual bonus;
and his strong commitment to protecting the wider
workforce throughout the pandemic.
Implementation of Remuneration Policy in 2023
The Committee has approved:
– An increase in base salary of 5% each for our Chief Executive
Officer and Chief Financial Officer in line with the typical
annual salary increase for the wider UK workforce and less
than the planned wider workforce pay budget of 7%, with
salaries increasing to £587,633 and £341,250 respectively.
– Financial year 2022 bonus awards of 98% of maximum for
both the Chief Executive Officer and for the Chief Financial
Officer. Despite the very significant growth in profit before
tax, an increase in the full year dividend of 15% and results
exceeding market consensus, the impact of events that
could not reasonably be foreseen when targets were
originally set meant that the threshold profit before tax
would not be met for the Executive Directors or the senior
leadership teams of the Group if a purely formulaic
assessment was to be applied and consequently, the
Committee decided to use an adjusted profit before tax
figure that considered the unforeseen financial impacts.
After very careful consideration, the Committee determined
that an adjusted profit before tax performance of £93.9m
was a fairer reflection of underlying performance and
thereby the stretch target had been achieved against the
profit before tax metric. Full details of bonus outcomes can
be found on pages 111 to 114.
– As disclosed previously, executive directors voluntarily
surrendered their 2020 PSP awards as a consequence of the
impact of Covid-19, therefore there were no PSP awards to
be assessed in respect of the thee year performance period
ending in 2022.
– Subject to shareholder approval of the 2023 Policy,
Restricted Stock Plan awards of 80% of salary each for the
Chief Executive officer and Chief Financial Officer. These
anticipated awards are in line with the normal level
expected under the 2023 Policy and are set at half the
normal level of the former LTIP.
With regard to base salary increases, the Committee
considered, in particular, the impact of current cost-of-living
challenges on our people across the Group and noted that
increases have been tailored in each market to address these
issues; this has resulted in salary increases in most markets
being well above the 5% award made to each of our executive
directors, and in particularly high increases to many of our
lower-paid employees, who have been especially hard hit by
economic circumstances. On that basis, the Committee is
comfortable that the 5% awards made to our executive
directors are fair and proportionate.
Remuneration priorities for the
Committee in 2023
In addition to obtaining formal shareholder approval of the
2023 Policy at the 2023 AGM, the Committee will:
– ensure the effective implementation of the 2023 Policy;
– ensure the incorporation of appropriate ESG metrics
into 2023 annual bonus objectives, as explained on
page 95; and
– continue to monitor broader market and governance
trends, paying particular attention to the ongoing cost-of-
living challenges faced by our people in all markets.
As Chair of the Committee I have greatly appreciated the
constructive feedback provided by shareholders throughout
2022 and am committed to maintaining this open dialogue
with you. I look forward to reporting on further positive progress
in 2023.
Deborah Davis
1 March 2023
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Directors’ Report
Directors’ Remuneration Report continued
The business continues to work hard to reward and recognise
assessment was to be applied and consequently, the
our employees and customer representatives, and to provide
Committee decided to use an adjusted profit before tax
the best possible opportunities for learning and development.
figure that considered the unforeseen financial impacts.
This has been reflected in:
– extensive work to implement our customer representative
– the development and rollout of learning pathways for
value proposition;
customer-facing roles;
– the rollout and extensive use of LinkedIn Learning modules
for our middle and senior management; and
– the second annual Learning Festival across all markets.
The Committee has noted that the next bi-annual Global
People Survey will be conducted in 2023 and will consider the
ending in 2022.
outcomes of this in detail.
After very careful consideration, the Committee determined
that an adjusted profit before tax performance of £93.9m
was a fairer reflection of underlying performance and
thereby the stretch target had been achieved against the
profit before tax metric. Full details of bonus outcomes can
be found on pages 111 to 114.
– As disclosed previously, executive directors voluntarily
surrendered their 2020 PSP awards as a consequence of the
impact of Covid-19, therefore there were no PSP awards to
be assessed in respect of the thee year performance period
– Subject to shareholder approval of the 2023 Policy,
Restricted Stock Plan awards of 80% of salary each for the
Chief Executive officer and Chief Financial Officer. These
anticipated awards are in line with the normal level
expected under the 2023 Policy and are set at half the
normal level of the former LTIP.
With regard to base salary increases, the Committee
considered, in particular, the impact of current cost-of-living
challenges on our people across the Group and noted that
increases have been tailored in each market to address these
issues; this has resulted in salary increases in most markets
being well above the 5% award made to each of our executive
directors, and in particularly high increases to many of our
lower-paid employees, who have been especially hard hit by
economic circumstances. On that basis, the Committee is
comfortable that the 5% awards made to our executive
directors are fair and proportionate.
Remuneration priorities for the
Committee in 2023
In addition to obtaining formal shareholder approval of the
2023 Policy at the 2023 AGM, the Committee will:
– ensure the effective implementation of the 2023 Policy;
– ensure the incorporation of appropriate ESG metrics
into 2023 annual bonus objectives, as explained on
page 95; and
As Chair of the Committee I have greatly appreciated the
constructive feedback provided by shareholders throughout
2022 and am committed to maintaining this open dialogue
with you. I look forward to reporting on further positive progress
in 2023.
Deborah Davis
1 March 2023
Remuneration decisions made in 2022
– As noted in the 2021 Directors’ Remuneration Report, a 5%
increase in base salary was awarded to our Chief Executive
Officer, in line with the increase given to the wider UK
workforce, with salary increasing to £559,650; this followed
no increase in 2021 and 2020. There was no increase during
the year for the incoming Chief Financial Officer, who was
appointed on a base salary of £325,000.
– Financial year 2021 bonus awards of 98% of maximum for
the Chief Executive Officer and 98% of maximum (pro-rata)
for the outgoing Chief Financial Officer (the explanation
for which can be found on pages 96 to 99 of the 2021
Annual Report).
– 2022 Performance Share Plan awards of 190% of salary for
the Chief Executive Officer and 120% for the incoming Chief
Financial Officer, to support a focus on generation of
shareholder value as the Company continues to rebuild
and grow in line with our strategy. The award of 190% of
salary for the Chief Executive Officer reflected his
outstanding contribution, over and above what would
normally be expected, in very difficult circumstances. In
particular, the Committee noted the recovery of the business
following the impact of Covid-19; the fact that he covered in
a highly effective way in the absence of a Chief Financial
Officer during the second half of 2021 and Q1 2022; that he
and his strong commitment to protecting the wider
workforce throughout the pandemic.
Implementation of Remuneration Policy in 2023
The Committee has approved:
– An increase in base salary of 5% each for our Chief Executive
Officer and Chief Financial Officer in line with the typical
annual salary increase for the wider UK workforce and less
than the planned wider workforce pay budget of 7%, with
salaries increasing to £587,633 and £341,250 respectively.
– Financial year 2022 bonus awards of 98% of maximum for
both the Chief Executive Officer and for the Chief Financial
Officer. Despite the very significant growth in profit before
tax, an increase in the full year dividend of 15% and results
exceeding market consensus, the impact of events that
could not reasonably be foreseen when targets were
originally set meant that the threshold profit before tax
would not be met for the Executive Directors or the senior
leadership teams of the Group if a purely formulaic
voluntarily surrendered his PSP award in 2020 in order to
– continue to monitor broader market and governance
support the business during the pandemic, and also
trends, paying particular attention to the ongoing cost-of-
volunteered the cancellation of the 2020 annual bonus;
living challenges faced by our people in all markets.
Remuneration at a glance
The 2023 Policy is intended to strike an appropriate balance between fixed and variable pay components,
and to provide a clear link between pay and our key strategic priorities. Executive director and senior
leadership remuneration are structured so that individuals are rewarded only for the successful delivery
of the strategy over both the short and long term.
Strategy
Guided by our purpose, our strategy
provides the direction to deliver
excellent service to our loyal
customers and build on our
successful product propositions to
attract the next generation. Excellent
execution ensures we will continue
to deliver a sustainable business with
strong growth prospects and
optimise value for our customers,
colleagues, investors and society
at large. Underpinning our strategy
is a clearly defined financial model
which aligns all stakeholders and
is bound by a new target RORE
of 15% to 20%.
Expanding
product range
Enhancing
customer
experience
Building
distribution
Investing in
technology
Outcomes
Long-term
profitable growth
RORE
15% to 20%
Strong capital
generation
Pay for Performance
Total business return for all our shareholders
Remuneration outcomes
– three-year deferral of
up to 50% of bonus
– Annual bonus aligned
to in-year objectives
with 80% weighting
on financial metrics
– RSP with underpin
aligned to progressive
dividend policy;
three-year vesting
plus two-year
holding period
2022 performance
Profit before tax
Earnings per share
Group net receivables
£77.4m
+14.3%
25.6p
+36%
£869m
+14%
Our remuneration outcomes
Base pay award for our CEO
Base pay award for our CFO
Bonus as % of maximum for CEO
Bonus as % of maximum for CFO
Anticipated Restricted Stock Share Plan awards for CEO
Anticipated Restricted Stock Share Plan awards for CFO
Legacy 2020 Performance Share Plan
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Annual Report and Financial Statements 2022
2022
5%
5%
98%
98%
80%
80%
Cancelled
99
Directors’ Report
Directors’ Remuneration Report continued
Our 2023 Remuneration Policy at a glance
Our Remuneration Policy
Links to strategy
Key features
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
Salary,
pension
and benefits
Annual
bonus
Long-term
incentive
plan
Deferral of 50% to 25%
Malus on deferral
Clawback
on cash
Vest period
Two-year post-vest holding
Clawback period
To attract and retain talent capable
of delivering the Group’s strategy.
Normally reviewed annually. Increases take into account
salary reviews across the Group and increases paid to
UK employees.
To motivate and reward sustainable
Group profit before tax and the
achievement of specific
personal objectives linked to the
Company’s strategy.
On-target performance delivers 50% of maximum.
Maximum opportunity 130% of base. 50% cash and 50%
deferred for three years until shareholding requirement
met; thereafter 75% cash and 25% deferred. Typically,
80% based on financial measures and 20% on personal
objectives, linked to strategy.
To motivate and reward longer-term
performance and support
shareholder alignment through
incentivising absolute shareholder
value creation.
Award normally equivalent to 80% of base salary at time of
grant (maximum 125%). Three-year performance period
with the extent of any vesting subject to satisfaction of an
underpin as determined by the Committee. Two-year
post-vesting holding period. Two-year post-cessation
shareholding requirement.
Directors’ Remuneration Policy 2023
The Committee presents the 2023 Policy, which will be put to shareholders for a binding vote at the AGM to be held on 27 April
2023. The 2023 Policy will apply to awards granted from its approval at the AGM onwards. It is a provision of the 2023 Policy that
the Company can honour all pre-existing incentive award obligations and commitments that were entered into before the
2023 Policy takes effect. These awards remain eligible to vest subject to their original terms. In addition, where the terms of any
remuneration payment (including any payments for loss of office) were agreed before the 2023 Policy came into effect or at
a time when the relevant individual was not a director of the Company, these remain eligible to be paid based on their
original terms.
Subject to shareholder approval, the effective date of the 2023 Policy will be 27 April 2023. The intention of the Committee is
that the 2023 Policy will remain in place for three years from the date of its approval.
Policy changes table
The table below summarises the substantive changes to the 2020 Policy, which was explained in full on pages 88-96 of the
2019 Annual Report and Financial Statements, a copy of which can be found on our website at www.ipfin.co.uk.
Aspect
2020 Policy – summary
2023 Policy changes
Rationale
Annual bonus
and Deferred
Share Plan
50% of total annual bonus amount
deferred for three years in Company
shares through the Deferred Share
Plan (DSP). 50% paid as cash.
50% of total annual bonus amount deferred
for three years in Company shares through
the DSP, until such time that the shareholding
requirement (200% of base salary) has been
achieved; thereafter, 25% deferral. 50% paid
as cash until shareholding requirement has
been met; thereafter, 75% paid in cash.
The Committee continues
to believe that use of
deferral is appropriate as it
supports the alignment of
executive and shareholder
interests, while also
ensuring that there is an
effective mechanism to
underpin our shareholding
policy. However, 50%
deferral is an unnecessarily
high percentage relative to
market practice of
similar-sized companies,
particularly in
circumstances where the
executive has met the
shareholding requirement
and, as a result, can act as
a demotivator.
100
International Personal Finance plc
Directors’ Report
Directors’ Remuneration Report continued
Our 2023 Remuneration Policy at a glance
Our Remuneration Policy
Links to strategy
Key features
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
To attract and retain talent capable
Normally reviewed annually. Increases take into account
of delivering the Group’s strategy.
salary reviews across the Group and increases paid to
UK employees.
Deferral of 50% to 25%
To motivate and reward sustainable
On-target performance delivers 50% of maximum.
Group profit before tax and the
Maximum opportunity 130% of base. 50% cash and 50%
achievement of specific
deferred for three years until shareholding requirement
personal objectives linked to the
met; thereafter 75% cash and 25% deferred. Typically,
Company’s strategy.
80% based on financial measures and 20% on personal
objectives, linked to strategy.
To motivate and reward longer-term
Award normally equivalent to 80% of base salary at time of
performance and support
grant (maximum 125%). Three-year performance period
shareholder alignment through
with the extent of any vesting subject to satisfaction of an
incentivising absolute shareholder
underpin as determined by the Committee. Two-year
value creation.
post-vesting holding period. Two-year post-cessation
shareholding requirement.
Salary,
pension
and benefits
Annual
bonus
Long-term
incentive
plan
Malus on deferral
Clawback
on cash
Vest period
Two-year post-vest holding
Clawback period
Directors’ Remuneration Policy 2023
The Committee presents the 2023 Policy, which will be put to shareholders for a binding vote at the AGM to be held on 27 April
2023. The 2023 Policy will apply to awards granted from its approval at the AGM onwards. It is a provision of the 2023 Policy that
the Company can honour all pre-existing incentive award obligations and commitments that were entered into before the
2023 Policy takes effect. These awards remain eligible to vest subject to their original terms. In addition, where the terms of any
remuneration payment (including any payments for loss of office) were agreed before the 2023 Policy came into effect or at
a time when the relevant individual was not a director of the Company, these remain eligible to be paid based on their
Subject to shareholder approval, the effective date of the 2023 Policy will be 27 April 2023. The intention of the Committee is
that the 2023 Policy will remain in place for three years from the date of its approval.
original terms.
Policy changes table
The table below summarises the substantive changes to the 2020 Policy, which was explained in full on pages 88-96 of the
2019 Annual Report and Financial Statements, a copy of which can be found on our website at www.ipfin.co.uk.
Aspect
2020 Policy – summary
2023 Policy changes
Rationale
Annual bonus
and Deferred
Share Plan
50% of total annual bonus amount
50% of total annual bonus amount deferred
The Committee continues
deferred for three years in Company
for three years in Company shares through
to believe that use of
shares through the Deferred Share
the DSP, until such time that the shareholding
deferral is appropriate as it
Plan (DSP). 50% paid as cash.
requirement (200% of base salary) has been
supports the alignment of
achieved; thereafter, 25% deferral. 50% paid
executive and shareholder
as cash until shareholding requirement has
interests, while also
been met; thereafter, 75% paid in cash.
ensuring that there is an
effective mechanism to
underpin our shareholding
policy. However, 50%
deferral is an unnecessarily
high percentage relative to
market practice of
similar-sized companies,
particularly in
circumstances where the
executive has met the
shareholding requirement
and, as a result, can act as
a demotivator.
Aspect
2020 Policy – summary
2023 Policy changes
Rationale
Annual bonus
– eligibility
during notice
No current policy – determined
by terms of the relevant
service agreement.
Executive directors remain eligible to
participate in, and receive pro-rata payments
under the terms of the annual bonus during
notice until their date of leaving.
Long-term
incentive
Performance share plan. Normal
grant of 160% of salary with
maximum of 250%. Annual grant of
awards, made generally as nil-cost
options over a specific number of
shares subject to meeting specified
performance targets. Committee
has discretion to decide whether,
and to what extent, targets have
been met.
Executive directors required to hold
shares acquired on vesting (net of
any shares that may need to be sold
to cover taxes) for a two-year period
starting on the date of vesting.
Provisions for malus and clawback
adjustments on the occurrence of
certain events.
Post-cessation
shareholding
1 x the shareholding requirement
(200%) or the number of shares
actually held at leaving, whichever is
lower, for two years. Requirement
applies to any shares held, including
those acquired from the executive
director’s own funds, and any vested
shares subject to a holding period.
Notes to the policy change table
Restricted stock plan. In normal
circumstances, awards equivalent to 80% of
salary at the time of grant. Annual grant of
conditional awards or options. Rules will
permit annual grants up to 125%. Adherence
to the Company’s dividend policy as the
primary, quantifiable underpin; additional
basket of underpins, which for 2023 will be:
– the extent to which any windfall gains have
arisen as a result of any marked
appreciation in share price;
– whether there have been any material
sanctions or fines issued by a regulatory
body (which may give rise to allocation of
individual or collective responsibility);
– any material damage to the reputation of
individual Group Companies, or the Group
itself (which may give rise to allocation of
individual or collective responsibility;
– the level of employee and customer
representative engagement over the
vesting period; and
– the level of customer engagement (as
measured by net promoter scores, Rep
Track or such other means as determined
by the Committee).
Executive directors required to hold shares
acquired on vesting (net of any shares
that may need to be sold to cover taxes)
for a two-year period starting on the
date of vesting. Provisions for malus and
clawback adjustments on the occurrence
of certain events.
Clarification that the Policy applies to shares
acquired following the adoption of the Policy
in April 2020.
In order to ensure that
executive directors remain
fully focused upon the
delivery of results, even
during a notice period, the
2023 Policy will clarify that
bonus eligibility will apply
during the full period of
notice. This clarification
will ensure the best possible
outcome for shareholders
and the wider stakeholder
community.
Please refer to the Chair’s
detailed explanation on
pages 96 to 97.
Insufficient clarity
in the 2020 Policy;
now recognised and
amended to reflect the
Committee’s intent.
Annual bonus targets will remain weighted 80% on financial and 20% on strategic/leadership metrics. Within the 20% strategic/
leadership element of the bonus construct we will introduce one or more targets which are aligned clearly to our purpose to build
a better world through financial inclusion, and to our environmental, social and governance ambitions.
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Directors’ Report
Directors’ Remuneration Report continued
2023 Policy – executive directors
Purpose and
link to strategy
Base salary
To attract and retain
talent capable
of delivering the
Group’s strategy.
Rewards executives
for their performance
in the role.
Operation
Maximum opportunity
Metrics, weightings and period
None, although overall
performance of the individual is
considered by the Committee
when setting and reviewing
salaries annually.
Base salary is paid in 12 equal monthly
instalments during the year. Salaries are
normally reviewed annually; generally,
any changes are effective from 1 April.
Salary levels are set considering role,
experience, responsibility and
performance, of both the individual
and the Company, and also taking
into account market conditions and
the salaries for comparable roles in
other companies.
Salary increases take into account
salary reviews across the Group and
are usually in line with increases
awarded to UK employees.
Additionally, due regard is given to
any specific external factors or events
relevant to the setting and review of
executive salaries. By exception,
higher awards may be made at the
Committee’s discretion to reflect
individual circumstances.
For example:
– changes to role which increase
scope and/or responsibility;
– development and performance in
the role; and
– responding to competitive market
pressures.
There is no prescribed
maximum increase.
The Company operates a stakeholder
scheme; at the discretion of the
Committee, this may be paid as a
cash allowance.
The Company has closed its defined
benefit scheme to new members and
future accrual.
The Company pays the cost of providing
the benefits on a monthly, annual or
one-off basis.
All benefits are non-pensionable.
Pension
To provide
retirement funding.
Benefits
To provide
market-competitive
benefits that support
the executive
directors to
undertake their role.
Company contribution is set at the
most common rate for the wider
workforce, currently 12%. Cash
allowance is paid net of employer’s
NIC and other employment taxes.
None.
The standard benefits package
includes:
None.
– life assurance of 4x salary;
– car allowance;
– long-term disability cover;
– private medical cover for executive
director and immediate family;
– annual medical; and
– ability to participate in the IPF Save
As You Earn Plan (SAYE) and any
other all-employee share plans on
the same terms as other
employees.
Additional benefits may also be
provided in certain circumstances,
and may include relocation
expenses, housing allowance and
school fees. Other benefits may be
offered if considered appropriate
and reasonable by the Committee.
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Directors’ Remuneration Report continued
Operation
Maximum opportunity
Metrics, weightings and period
Base salary is paid in 12 equal monthly
Salary increases take into account
None, although overall
instalments during the year. Salaries are
salary reviews across the Group and
performance of the individual is
normally reviewed annually; generally,
are usually in line with increases
considered by the Committee
any changes are effective from 1 April.
awarded to UK employees.
when setting and reviewing
Additionally, due regard is given to
salaries annually.
2023 Policy – executive directors
Purpose and
link to strategy
Base salary
To attract and retain
talent capable
of delivering the
Group’s strategy.
Rewards executives
for their performance
in the role.
Salary levels are set considering role,
experience, responsibility and
performance, of both the individual
and the Company, and also taking
into account market conditions and
the salaries for comparable roles in
other companies.
Pension
To provide
retirement funding.
The Company operates a stakeholder
Company contribution is set at the
None.
scheme; at the discretion of the
most common rate for the wider
Committee, this may be paid as a
workforce, currently 12%. Cash
allowance is paid net of employer’s
NIC and other employment taxes.
cash allowance.
The Company has closed its defined
benefit scheme to new members and
future accrual.
The Company pays the cost of providing
The standard benefits package
None.
the benefits on a monthly, annual or
includes:
one-off basis.
All benefits are non-pensionable.
Benefits
To provide
market-competitive
benefits that support
the executive
directors to
undertake their role.
any specific external factors or events
relevant to the setting and review of
executive salaries. By exception,
higher awards may be made at the
Committee’s discretion to reflect
individual circumstances.
For example:
– changes to role which increase
scope and/or responsibility;
– development and performance in
– responding to competitive market
the role; and
pressures.
There is no prescribed
maximum increase.
– life assurance of 4x salary;
– car allowance;
– long-term disability cover;
– private medical cover for executive
director and immediate family;
– annual medical; and
– ability to participate in the IPF Save
As You Earn Plan (SAYE) and any
other all-employee share plans on
the same terms as other
employees.
Additional benefits may also be
provided in certain circumstances,
and may include relocation
expenses, housing allowance and
school fees. Other benefits may be
offered if considered appropriate
and reasonable by the Committee.
Purpose and
link to strategy
Annual bonus
To motivate and
reward the generation
of sustainable Group
profit before tax and
the achievement of
specific personal
objectives linked to
the Company’s
strategy.
Deferred Share
Plan (DSP)
To strengthen
the link between
short- and longer-
term incentives
and the creation
of sustainable
long-term value.
Operation
Maximum opportunity
Metrics, weightings and period
On target bonus: 50% of maximum.
Maximum opportunity: 130% of
base salary.
Performance is measured
over the financial year and
is assessed using the
following criteria:
– typically 80% is based on
achievement of financial
measures; and
– typically 20% is based on
achievement of personal
objectives linked to
achievement of
Company strategy.
Although each of the annual
bonus metrics could pay out
independently, the Committee
will set a minimum threshold
profit target before any other
metrics are assessed.
50% of the total bonus amount
received (or 25% once the
shareholding requirement has
been achieved) during the year.
None.
Measures and targets are set annually,
and payout levels are determined by the
Committee after the year end, based
on performance against those targets.
The Committee may, in exceptional
circumstances, amend the bonus
payout should this not, in the view of the
Committee, reflect overall business
performance or individual contribution.
50% of the total amount is deferred for
three years in Company shares through
the Deferred Share Plan (DSP) until the
executive director has achieved the
shareholding requirement of 200%, at
which point 25% of the total is deferred
on the same basis. The remaining bonus
(50% or 75% depending on
shareholding) is paid in cash. Payments
are made around three months after
the end of the financial year to which
they relate.
There are provisions for clawback
adjustments on the occurrence of
certain events.
Executive directors remain eligible to
participate in, and receive pro rata
payment under, the terms of the annual
bonus during notice, until their date
of leaving.
50% of the total bonus amount is subject
to compulsory deferral for three years in
Company shares without any matching,
until the executive director has achieved
the shareholding requirement of 200%,
at which point 25% of the total Is
deferred on the same basis.
Following the vesting of awards,
executive directors receive an amount
(in cash or shares) in respect of the
dividends paid or payable between the
date of grant and the vesting of the
award on the number of shares that
have vested.
The DSP has provision for malus and
clawback adjustments on the
occurrence of certain events.
Awards may also be adjusted in the
event of a variation of capital, in
accordance with the plan rules.
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Directors’ Report
Directors’ Remuneration Report continued
Purpose and
link to strategy
Operation
Maximum opportunity
Metrics, weightings and period
Restricted Stock
Share Plan (RSP)
Awards are designed
to incentivise
executive directors
to successfully and
sustainably deliver
the Company’s
strategy.
Annual grant of awards, made generally
as conditional awards or options.
Awards vest at the end of the three-year
period subject to:
In normal circumstances, award
levels for executive directors
equivalent to 80% of base salary at
the time of grant.
Rules permit annual grants up to
individual limit of 125%.
There are no performance conditions
on grant, however the Committee
will consider prior year business
and personal performance to
determine whether the level of
grant remains appropriate.
– the executive directors’ continued
employment at the date of vesting;
and
– the satisfaction of an underpin as
determined by the Committee,
whereby the Committee can adjust
vesting for Company or individual
performance.
Executive directors will be required to
hold any shares acquired on vesting
(net of any shares that may need to be
sold to cover taxes) for a two-year period
starting on the date of vesting.
The RSP has provisions for malus and
clawback adjustments on the
occurrence of certain events.
Awards granted under the RSP may
incorporate the right to receive an
amount (in cash or shares) equal to the
dividends which would have been paid
or payable on the shares that vest in the
period up to vesting.
Central, quantifiable financial
RSP underpin will be adherence
to the Group’s dividend policy
throughout the three-year
vesting period of each annual
RSP grant. A further basket of
underpin factors will be
considered at the end of the
relevant three-year vesting
period. For 2023 awards, these
will be as follows:
1. the extent to which any
windfall gains have arisen
as a result of any marked
appreciation in share price;
2. whether there have been
any material sanctions or
fines issued by a regulatory
body (which may give rise
to allocation of individual
or collective responsibility);
3. any material damage to
the reputation of individual
Group Companies, or the
Group itself (which may give
rise to allocation of individual
or collective responsibility);
4. the level of employee and
customer representative
engagement over the
vesting period; and
5. the level of customer
engagement (as measured
by net promoter scores,
Rep Track or such other
means as determined by
the Committee).
The shareholding requirement for
executive directors is 200% of
base salary.
None.
Not applicable.
Two-year post-cessation
holding period.
Shareholding
requirement
Aligns executive
and shareholder
interests.
Post-cessation
shareholding
Aligns executive
and shareholder
interests.
Executive directors expected to acquire
a beneficial shareholding over time.
Shares which have vested
unconditionally under the Company’s
share plans will be taken into account
with effect from the date of vesting
(but not before).
50% of all share awards vesting under
any of the Company’s share incentive
plans (net of exercise costs, income tax
and social security contributions) must
be retained until the shareholding
requirement is met.
Post-cessation shareholding policy is set at
1x the shareholding requirement (200%),
or the number of shares actually held, at
leaving, whichever is lower, for two years.
Requirement applies to any shares held,
including shares acquired from the
executive director’s own funds, and
any vested shares subject to a
holding period.
The policy applies only to shares
acquired after the date on which the
2020 Remuneration Policy was
introduced (30 April 2020).
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Directors’ Remuneration Report continued
Operation
Maximum opportunity
Metrics, weightings and period
Annual grant of awards, made generally
In normal circumstances, award
Central, quantifiable financial
as conditional awards or options.
levels for executive directors
RSP underpin will be adherence
Awards vest at the end of the three-year
equivalent to 80% of base salary at
to the Group’s dividend policy
Awards are designed
period subject to:
the time of grant.
– the executive directors’ continued
Rules permit annual grants up to
employment at the date of vesting;
individual limit of 125%.
Purpose and
link to strategy
Restricted Stock
Share Plan (RSP)
to incentivise
executive directors
to successfully and
sustainably deliver
the Company’s
strategy.
There are no performance conditions
on grant, however the Committee
will consider prior year business
and personal performance to
determine whether the level of
grant remains appropriate.
and
– the satisfaction of an underpin as
determined by the Committee,
whereby the Committee can adjust
vesting for Company or individual
performance.
Executive directors will be required to
hold any shares acquired on vesting
(net of any shares that may need to be
sold to cover taxes) for a two-year period
starting on the date of vesting.
The RSP has provisions for malus and
clawback adjustments on the
occurrence of certain events.
Awards granted under the RSP may
incorporate the right to receive an
amount (in cash or shares) equal to the
dividends which would have been paid
or payable on the shares that vest in the
period up to vesting.
throughout the three-year
vesting period of each annual
RSP grant. A further basket of
underpin factors will be
considered at the end of the
relevant three-year vesting
period. For 2023 awards, these
will be as follows:
1. the extent to which any
windfall gains have arisen
as a result of any marked
appreciation in share price;
2. whether there have been
any material sanctions or
fines issued by a regulatory
body (which may give rise
to allocation of individual
or collective responsibility);
3. any material damage to
the reputation of individual
Group Companies, or the
Group itself (which may give
rise to allocation of individual
or collective responsibility);
4. the level of employee and
customer representative
engagement over the
vesting period; and
5. the level of customer
engagement (as measured
by net promoter scores,
Rep Track or such other
means as determined by
the Committee).
Executive directors expected to acquire
The shareholding requirement for
None.
a beneficial shareholding over time.
executive directors is 200% of
base salary.
Shareholding
requirement
Aligns executive
and shareholder
interests.
Post-cessation
shareholding
Aligns executive
and shareholder
interests.
Shares which have vested
unconditionally under the Company’s
share plans will be taken into account
with effect from the date of vesting
(but not before).
50% of all share awards vesting under
any of the Company’s share incentive
plans (net of exercise costs, income tax
and social security contributions) must
be retained until the shareholding
requirement is met.
1x the shareholding requirement (200%),
or the number of shares actually held, at
leaving, whichever is lower, for two years.
Requirement applies to any shares held,
including shares acquired from the
executive director’s own funds, and
any vested shares subject to a
holding period.
The policy applies only to shares
acquired after the date on which the
2020 Remuneration Policy was
introduced (30 April 2020).
Post-cessation shareholding policy is set at
Not applicable.
Two-year post-cessation
holding period.
2023 Policy – non-executive directors
The Chair of the Board and executive directors review non-executive directors’ fees periodically in the light of fees payable
in comparable companies or to reflect changes in scope of role and/or responsibility, and to attract and retain high-calibre
non-executive directors. Non-executive directors receive no other benefits and take no part in any discussion or decision
concerning their own fees. The Committee reviews the Chair of the Board’s fees. Fees were last increased on 1 October 2013
for the Chair of the Board and 1 January 2014 for non-executive directors. No increases in fees are proposed in 2023.
Element
Purpose
Operation
Fees
To attract and retain a high-calibre Chair of the
Board and non-executive directors by offering
market-competitive fees.
Fees are paid on a per annum basis and are not varied for the
number of days worked.
The level of the Chair of the Board’s fee is reviewed periodically by the
Committee (in the absence of the Chair) and the executive directors.
As approved at the 2014 AGM, the maximum aggregate fee level for
all non-executive directors allowed by the Company’s Articles of
Association is £650,000.
The Senior Independent Director and Chairs of the Board Committees
are paid an additional fee to reflect their extra responsibilities.
Any non-executive director who performs services which, in the
opinion of the Board, go beyond the ordinary duties of a director,
may be paid such additional remuneration as the Board
may authorise.
Fees are paid on a quarterly basis.
Shareholding
requirement
To support shareholder alignment by
encouraging non-executive directors to align
with shareholder interests.
Non-executive directors are expected to acquire a beneficial
shareholding equivalent to 100% of their director’s fee within three
years of appointment.
When determining the 2023 Policy the Committee addressed the requirements of the UK Corporate Governance Code 2018,
as follows:
Factor
Clarity
How the Committee has responded
Performance-based remuneration is intended to support the Company’s strategy and focuses on providing a positive
customer experience and generating strong returns in our European home credit businesses to reinvest in building a
long-term sustainable future for these operations, growing Mexico home credit and IPF Digital, and delivering progressive
returns to our shareholders. Performance measures are aligned to these goals.
Simplicity
Policy comprises fixed remuneration, annual bonus and a single LTIP only. Annual bonus and LTIP constructs are clearly and
unambiguously aligned to the delivery of short- and long-term goals.
Risk
The 2023 Policy includes risk mitigation in the form of:
– clear limits on maximum awards, with no payment of annual bonus for performance below the threshold target;
– requiring the deferral of 50% of annual bonus in shares, for three years, until the shareholding requirement is met
(25% thereafter);
– aligning performance measures with Company strategy;
– ensuring that the Committee can adjust payments through the exercise of discretion and the operation of malus and
clawback to moderate formulaic outcomes which do not reflect the underlying performance of the Company; and
– ensuring that post-vesting and post-cessation shareholding requirements apply.
Predictability
Incentive maxima are clearly stated in the 2023 Policy and there is no annual bonus payment for performance below
threshold target performance. Checks and balances summarised in the Risk factor immediately above further support the
predictability of outcomes.
Proportionality
The annual bonus plan is clearly structured to reward the successful delivery of strategy in-year, while the RSP underpin
assessment ensures reward proportionate to delivery against the Group’s dividend policy and in light of an appropriate
basket of additional underpins.
Alignment with
culture
The Committee considers executive director performance not only in terms of what is achieved, but also how it is achieved.
As such, the Committee expects to see strong alignment between performance and the Company’s core values of being
responsible, respectful and straightforward. The Company’s purpose is to build a better world through financial Inclusion, and
the 2023 Policy and associated performance measures and oversight are intended to support this goal.
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Directors’ Report
Directors’ Remuneration Report continued
Notes to the 2023 Policy
Determination, review and implementation
The 2023 Policy has been set following an extensive review and shareholder consultation, considering both the remuneration
elements and overall balance necessary to support and recognise the delivery of Group strategy. Willis Towers Watson provided
independent advice to the Committee in formulating the 2023 Policy and the Committee will continue to seek independent
advice on key issues including, but not limited to, ongoing implementation of the 2023 Policy.
The Committee is at pains to ensure that no conflict of interest can arise in respect of its activities. Where necessary and
appropriate, input is sought from executive directors, senior leadership team members and the Group Head of Reward.
Attendance at meetings is by invitation and no individual is present when matters relating to their own remuneration are
being determined.
The Committee considers all relevant factors when determining Policy outcomes, including but not limited to:
– in-year and long-term performance of the Group and individuals;
– trading conditions;
– Group strategy;
– alignment with the wider workforce;
– alignment with the Company’s purpose; and
– remuneration trends, shareholder feedback and corporate governance frameworks.
Performance measures and targets
The Committee selects annual bonus performance conditions that are central to the achievement of the Company’s key strategic
priorities for the year and reflect both financial and non-financial objectives. The Committee’s consideration of long-term incentive
performance and vesting takes account of the relevant underpins, which cover a range of indicators of long-term performance.
Performance targets are determined annually by the Committee and are typically set at a level that is stretching but achievable,
considering our strategic priorities and the economic environment in which we operate. Targets are normally set with reference to
a range of data points, including the annual business budget, historical performance and environmental, social and governance
(ESG) risks.
The Board believes the performance measures and targets for the annual bonus are commercially sensitive and that it would be
detrimental to the interests of the Company to disclose them during the financial year. This is particularly so because most of our
competitors are unlisted. However, the Committee commits to making a comprehensive retrospective disclosure in respect of
performance against the targets set where the disclosure of that information is no longer deemed commercially sensitive.
Malus and clawback
The circumstances when malus and clawback may apply include, but are not limited to the following:
– reasonable evidence of fraud;
– reasonable evidence of gross misconduct or gross negligence by the participant;
– reasonable evidence of conduct by the participant which results in significant losses or reputational damage to the Company
or the Group, or has brought, or is likely to bring, the Group or any member of the Group into disrepute in any way;
– misleading data and/or there is an error in the information, assumptions or calculations on the basis of which the award was
granted or paid out or vested;
– a material misstatement of the Group’s or any member of the Group’s or business unit’s financial statements;
– there has been a significant downward restatement of the financial results of the Company;
– there has been a significant deterioration in the financial health of the Group or any member of the Group resulting in severe
financial constraints on the ability to fund awards; and/or
– any other circumstances which, in the Committee’s opinion, justify the operation of malus and/or a clawback adjustment in
relation to the participant’s award.
The clawback period for the RSP normally runs for two years from the date of vesting and from the date of payment in the
case of the cash portion of annual bonus awards. For deferred awards under the DSP, malus will apply for the duration of
the deferral period.
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Directors’ Remuneration Report continued
Notes to the 2023 Policy
Determination, review and implementation
The 2023 Policy has been set following an extensive review and shareholder consultation, considering both the remuneration
elements and overall balance necessary to support and recognise the delivery of Group strategy. Willis Towers Watson provided
independent advice to the Committee in formulating the 2023 Policy and the Committee will continue to seek independent
advice on key issues including, but not limited to, ongoing implementation of the 2023 Policy.
The Committee is at pains to ensure that no conflict of interest can arise in respect of its activities. Where necessary and
appropriate, input is sought from executive directors, senior leadership team members and the Group Head of Reward.
Attendance at meetings is by invitation and no individual is present when matters relating to their own remuneration are
being determined.
The Committee considers all relevant factors when determining Policy outcomes, including but not limited to:
– trading conditions;
– Group strategy;
– alignment with the wider workforce;
– alignment with the Company’s purpose; and
Performance measures and targets
– remuneration trends, shareholder feedback and corporate governance frameworks.
The Committee selects annual bonus performance conditions that are central to the achievement of the Company’s key strategic
priorities for the year and reflect both financial and non-financial objectives. The Committee’s consideration of long-term incentive
performance and vesting takes account of the relevant underpins, which cover a range of indicators of long-term performance.
Performance targets are determined annually by the Committee and are typically set at a level that is stretching but achievable,
considering our strategic priorities and the economic environment in which we operate. Targets are normally set with reference to
a range of data points, including the annual business budget, historical performance and environmental, social and governance
(ESG) risks.
The Board believes the performance measures and targets for the annual bonus are commercially sensitive and that it would be
detrimental to the interests of the Company to disclose them during the financial year. This is particularly so because most of our
competitors are unlisted. However, the Committee commits to making a comprehensive retrospective disclosure in respect of
performance against the targets set where the disclosure of that information is no longer deemed commercially sensitive.
Malus and clawback
The circumstances when malus and clawback may apply include, but are not limited to the following:
– reasonable evidence of fraud;
– reasonable evidence of gross misconduct or gross negligence by the participant;
– reasonable evidence of conduct by the participant which results in significant losses or reputational damage to the Company
or the Group, or has brought, or is likely to bring, the Group or any member of the Group into disrepute in any way;
– misleading data and/or there is an error in the information, assumptions or calculations on the basis of which the award was
granted or paid out or vested;
– a material misstatement of the Group’s or any member of the Group’s or business unit’s financial statements;
– there has been a significant downward restatement of the financial results of the Company;
– there has been a significant deterioration in the financial health of the Group or any member of the Group resulting in severe
financial constraints on the ability to fund awards; and/or
– any other circumstances which, in the Committee’s opinion, justify the operation of malus and/or a clawback adjustment in
relation to the participant’s award.
The clawback period for the RSP normally runs for two years from the date of vesting and from the date of payment in the
case of the cash portion of annual bonus awards. For deferred awards under the DSP, malus will apply for the duration of
the deferral period.
– in-year and long-term performance of the Group and individuals;
– the annual review of performance measures and weighting, and RSP vesting assessment from year to year.
Discretions
The Committee will operate the annual bonus plan, RSP and DSP according to their respective rules and in accordance with the
Listing Rules where relevant. The Committee retains discretion, consistent with market practice, in a number of regards relating to
the operation and administration of these plans. These include, but are not limited to, the following in relation to the RSP and DSP:
– the participants;
– the timing of grant of an award;
– the size of an award;
– the determination of vesting;
– discretion required when dealing with a change of control or restructuring of the Group;
– determination of the treatment of leavers based on the rules of the plan and the appropriate treatment chosen;
– adjustments required in certain circumstances (for example: rights issues, corporate restructuring events and dividend
equivalents); and
In relation to the annual bonus plan, the Committee retains discretion over:
– the participants;
– the timing of grant of an award/payment;
– the determination of the bonus payment;
– dealing with a change of control or restructuring of the Group;
– determination of the treatment of leavers based on the rules of the plan and the appropriate treatment chosen; and
– the annual review of performance measures and weighting, and targets for the annual bonus plan from year to year.
In relation to both the Company’s long-term incentive and annual bonus plans, the Committee retains the ability to adjust the
performance targets if events occur which cause it to determine that the targets are no longer appropriate (for example: material
acquisition and/or divestment of a Group business), so long as the amendment will not make the target materially less difficult to
satisfy. Any use of this discretion would be explained in the Directors’ Remuneration Report and may be the subject of consultation
with the Company’s major shareholders.
The use of discretion in relation to the Company’s SAYE will be in line with the governing UK legislation, HMRC rules and the
Listing Rules.
Illustrations of total remuneration opportunity
The charts below provide an illustration of the proportion of total remuneration made up by each component of the proposed
2023 Policy, together with the value of each. Benefits are calculated as per the single figure of remuneration and four scenarios
have been illustrated: ‘Fixed’, ‘On-target’, ‘Maximum’ and ‘Maximum + 50% share price growth’. The charts are indicative, as share
price movement (other than as indicated) and dividend accrual have been excluded. Assumptions made for each scenario are
as follows:
– Fixed: fixed remuneration only, i.e. latest known salary (2023), benefits and pension.
– On-target: fixed remuneration plus on-target annual bonus (50% of maximum) plus 80% of salary in RSP.
– Maximum: fixed remuneration plus full payout of all incentives, that is 130% of salary in annual bonus, 80% of salary in RSP.
– Maximum plus 50% share price growth: fixed remuneration plus full payout of all incentives, that is 130% of salary in annual
bonus, 80% of salary in RSP. 50% assumed share price growth over three-year RSP vesting period.
Chief Executive Officer
Fixed
82.7%
13.8%
3.5%
On-target
37.6%
6.3%
1.6%
24.4%
30.1%
Maximum
30.2%
5.0%
1.3%
39.3%
24.2%
Maximum with 50% Share Price Increase
27.0%
4.5%
1.1%
35.0%
0
0.5
1.0
1.5
32.4%
2.0
Base Salary
Pension
Benefits
Bonus
PSP
Chief Financial Officer
Fixed
85.7%
8.9%
5.4%
On-target
38.2%
4.0%
2.4%
24.8%
30.6%
Maximum
30.6%
3.2%
1.9%
39.8%
24.5%
Maximum with 50% Share Price Increase
27.3%
2.8%
1.7%
35.4%
32.7%
£0.7m
£1.6m
£1.9m
£2.2m
£0.4m
£0.9m
£1.1m
£1.2m
2.5
0
0.5
1.0
1.5
106
International Personal Finance plc
Annual Report and Financial Statements 2022
107
Directors’ Report
Directors’ Remuneration Report continued
Approach to recruitment remuneration
The Committee’s approach to recruitment remuneration is to pay no more than is necessary to attract appropriate candidates.
Starting salary will be set in accordance with the approved remuneration policy, based on a combination of market information,
internal relativities and individual experience. Thereafter, salary progression will depend on the initial agreed base salary and the
normal review process.
The maximum level and structure of ongoing variable remuneration will be in accordance with the approved remuneration policy,
i.e. at an aggregate maximum of up to 130% in respect of annual bonus and, if necessary, 125% in respect of the RSP and/or cash
awards at equivalent value. For the avoidance of doubt, these limits shall not apply to any replacement awards which the
Committee may determine it necessary to make to secure the services of a preferred candidate.
For external appointments, it may be necessary to buy out an individual’s awards from a previous employer. The Committee will
seek to minimise the need for such arrangements and will aim to recruit executive directors subject to the policy maximum
defined above. However, to be able to attract the required calibre of talent, we may offer additional cash and/or share-based
elements when we consider these to be in the best interests of the Group.
In doing so, the Committee would ensure that any such payments have a fair value no higher than that of the awards forgone
including payments for any benefits in kind, pension and other similar allowances, and reflect the delivery mechanism, i.e. cash,
shares and/or options, time horizons and expected value (likelihood of meeting any existing performance criteria). Replacement
share awards, if used, will be granted using existing share plans. Wherever possible, any new arrangements will be tied into the
achievement of Group targets in either the annual performance bonus or long-term incentives, or both. Full details will be
disclosed in the Directors’ Remuneration Report following the date of recruitment, which will provide explanations in relation to
the amount and delivery structure of the awards made for the purposes of recruitment.
As shares under the RSP will not normally be released for up to three years with a further two-year holding period for executive
directors, some cash-based interim long-term arrangement may be provided, but the level will not be more than would otherwise
have been paid. For internal appointments, any variable pay elements awarded in respect of the prior role may be allowed to pay
out according to the terms of the plan, adjusted as relevant to take account of the new appointment. In addition, any other
ongoing remuneration obligations existing prior to appointment may continue.
Any new executive director will be subject to a maximum annual pension contribution from the Company in line with the most
common rate for UK employees (currently 12%).
For both internal and external appointments, the Committee may agree that the Company will meet certain relocation expenses
as appropriate.
Directors’ service agreements and letters of appointment
In 2014, the Committee adopted a policy in relation to service agreements for newly appointed executive directors of six months’
notice. Gerard Ryan remains an exception to this, having been appointed on a 12-month rolling contract prior to this change in
policy. Gary Thompson was appointed on a six-month rolling contract.
All non-executive directors are appointed for three years, subject to re-election by shareholders. The initial three-year period may
be extended. The Company can terminate the appointment on three months’ notice.
Our Articles of Association require that all directors retire from office if they have not retired at either of the preceding two AGMs.
At the 2023 AGM, all will be standing for election or re-election, in compliance with the UK Corporate Governance Code. Service
agreements are available for inspection at the Company’s registered office. Service agreements and letters of appointment are
not reissued when base salaries or fees are changed.
The date of service agreements of directors who served during the year and their letters of appointment are:
Executive director
Gerard Ryan
Gary Thompson
Date of service agreement
Duration of service agreement
January 2012
April 2022
No fixed term
No fixed term
Non-executive director
Date of appointment
Stuart Sinclair
Deborah Davis
Richard Holmes
Katrina Cliffe
Aileen Wallace
March 2020
October 2018
March 2020
August 2022
December 2022
Bronwyn Syiek was appointed as a non-executive director in October 2018 and stepped down from the Board in July 2022.
John Mangelaars was appointed as a non-executive director in July 2015 and stepped down from the Board in December 2022.
108
International Personal Finance plc
Directors’ Report
Directors’ Remuneration Report continued
The Committee’s approach to recruitment remuneration is to pay no more than is necessary to attract appropriate candidates.
Starting salary will be set in accordance with the approved remuneration policy, based on a combination of market information,
internal relativities and individual experience. Thereafter, salary progression will depend on the initial agreed base salary and the
normal review process.
The maximum level and structure of ongoing variable remuneration will be in accordance with the approved remuneration policy,
i.e. at an aggregate maximum of up to 130% in respect of annual bonus and, if necessary, 125% in respect of the RSP and/or cash
awards at equivalent value. For the avoidance of doubt, these limits shall not apply to any replacement awards which the
Committee may determine it necessary to make to secure the services of a preferred candidate.
For external appointments, it may be necessary to buy out an individual’s awards from a previous employer. The Committee will
seek to minimise the need for such arrangements and will aim to recruit executive directors subject to the policy maximum
defined above. However, to be able to attract the required calibre of talent, we may offer additional cash and/or share-based
elements when we consider these to be in the best interests of the Group.
In doing so, the Committee would ensure that any such payments have a fair value no higher than that of the awards forgone
including payments for any benefits in kind, pension and other similar allowances, and reflect the delivery mechanism, i.e. cash,
shares and/or options, time horizons and expected value (likelihood of meeting any existing performance criteria). Replacement
share awards, if used, will be granted using existing share plans. Wherever possible, any new arrangements will be tied into the
achievement of Group targets in either the annual performance bonus or long-term incentives, or both. Full details will be
disclosed in the Directors’ Remuneration Report following the date of recruitment, which will provide explanations in relation to
the amount and delivery structure of the awards made for the purposes of recruitment.
As shares under the RSP will not normally be released for up to three years with a further two-year holding period for executive
directors, some cash-based interim long-term arrangement may be provided, but the level will not be more than would otherwise
have been paid. For internal appointments, any variable pay elements awarded in respect of the prior role may be allowed to pay
out according to the terms of the plan, adjusted as relevant to take account of the new appointment. In addition, any other
ongoing remuneration obligations existing prior to appointment may continue.
Any new executive director will be subject to a maximum annual pension contribution from the Company in line with the most
common rate for UK employees (currently 12%).
For both internal and external appointments, the Committee may agree that the Company will meet certain relocation expenses
as appropriate.
Directors’ service agreements and letters of appointment
In 2014, the Committee adopted a policy in relation to service agreements for newly appointed executive directors of six months’
notice. Gerard Ryan remains an exception to this, having been appointed on a 12-month rolling contract prior to this change in
policy. Gary Thompson was appointed on a six-month rolling contract.
All non-executive directors are appointed for three years, subject to re-election by shareholders. The initial three-year period may
be extended. The Company can terminate the appointment on three months’ notice.
Our Articles of Association require that all directors retire from office if they have not retired at either of the preceding two AGMs.
At the 2023 AGM, all will be standing for election or re-election, in compliance with the UK Corporate Governance Code. Service
agreements are available for inspection at the Company’s registered office. Service agreements and letters of appointment are
not reissued when base salaries or fees are changed.
Non-executive director
Date of appointment
Date of service agreement
Duration of service agreement
No fixed term
No fixed term
Executive director
Gerard Ryan
Gary Thompson
Stuart Sinclair
Deborah Davis
Richard Holmes
Katrina Cliffe
Aileen Wallace
January 2012
April 2022
March 2020
October 2018
March 2020
August 2022
December 2022
Bronwyn Syiek was appointed as a non-executive director in October 2018 and stepped down from the Board in July 2022.
John Mangelaars was appointed as a non-executive director in July 2015 and stepped down from the Board in December 2022.
Approach to recruitment remuneration
Loss of office payments
Our policy is to limit severance payments on termination to pre-established contractual arrangements. If the employment of an
executive director is terminated, any compensation payable will be determined having regard to the terms of the service contract
between the Company and the employee, as well as the rules of any incentive plans. Except in circumstances of gross
misconduct or voluntary termination, the Company retains discretion to make ex-gratia payments where considered reasonable
and fair in the Committee’s opinion, and to cover costs relating solely to termination of employment by the Company. Example
costs may include legal, tax and outplacement services subject to such fees being de minimis in nature and in the best interests
of the Company.
Under normal circumstances, good leavers who do not serve notice are eligible to receive termination payments in lieu of notice
based on base salary and contractual benefits.
Normally, we expect executive directors to mitigate their loss upon departure. In any specific case that may arise, the Committee
will consider carefully any compensatory payments, having regard to performance, service, health or other circumstances that
may be relevant.
In the event an executive director leaves for reasons of injury, disability, change of control of the Company, or any other reason
which the Committee in its absolute discretion permits (including death in service), any unvested PSP and/or RSP awards will
normally vest at the normal time following the end of the performance period and be pro-rated for time. Performance conditions
would apply. However, awards will vest early on death and the Committee has the discretion to allow the award to vest early on
cessation of employment. In this event, the Committee will determine whether the performance conditions are, or will be, met over
such period as the Committee determines appropriate, although the award will normally be reduced on a pro-rata basis. RSP and
legacy PSP awards that have vested at the time of leaving will be retained and exercisable for a limited period following leaving.
The Committee may determine that the holding period will no longer apply if the director leaves for one of the reasons specified
above. When determining the treatment of outstanding awards for exiting directors, the Committee will consider the executive
director’s level of performance and any contribution to a transition. For all other leavers, outstanding RSP and legacy PSP awards
will lapse.
Approval for payments outside the Remuneration Policy
Remuneration payments and payments for loss of office to directors can only be made if they are consistent with the
approved Remuneration Policy or if an amendment to that Policy authorising the Company to make the payment has been
approved by shareholders.
Differences in remuneration policy for all employees
All employees are entitled to base salary and benefits appropriate to the market in which they are employed. The maximum
opportunity available is based on the seniority and responsibility of the role. Long-term incentive awards are currently available
at the absolute discretion of the Committee to executive directors, senior management, and other selected employees. The SAYE
is available to all UK employees. The Committee considers wider workforce remuneration in determining executive director policy
and outcomes.
Policy on executive directors holding external appointments
With the consent of the Board, executive directors may hold one non-executive directorship in an individual capacity and retain
any fees earned.
Annual Directors’ Remuneration Report 2022
The date of service agreements of directors who served during the year and their letters of appointment are:
Remuneration principles and alignment with strategy
As explained in the Chair’s opening statement on page 95, our remuneration framework is intended to strike an appropriate
balance between fixed and variable pay components, and to provide a clear link between pay and our key strategic priorities.
For example:
– profitable growth is recognised via the structure and operation of our annual bonus plan, which carries an 80% weighting on
financial metrics;
– delivery of sustainable organisational performance and shareholder value is reflected in a progressive dividend policy,
which is proposed to underpin our new Restricted Stock Plan (see pages 96 to 97), which has a three-year vesting period
coupled with two-year post-vesting holding requirements; and
– our commitment to building a better world through financial inclusion will be reflected in the adoption into variable
remuneration of appropriate ESG metrics in 2023, which will reflect issues of direct importance to our key stakeholders,
including our shareholders.
108
International Personal Finance plc
Annual Report and Financial Statements 2022
109
Directors’ Report
Directors’ Remuneration Report continued
Remuneration governance
The Committee met five times in 2022, with consideration given to a range of issues as illustrated below:
Governance
Annual Bonus
Share Plan
Policy
DRR
Design
Performance
Grant
Performance
Salary
Wider
Workforce
Shareholder
January
February
April
September
December
The CEO, Chief People Officer and Group Head of Reward attended meetings by invitation, to provide advice and respond
to questions. Other members of management may attend by invitation. All such attendees are excluded when any matter
concerning their own remuneration and performance is under discussion.
Advisor to the Committee
Willis Towers Watson, appointed in April 2016, provides independent remuneration advice to the Committee. During 2022, total
fees in respect of advice to the Committee (based on time and materials) totalled £48,071 (excluding VAT), (2021: £22,600).
Willis Towers Watson is a founding member of the Remuneration Consultants Group and is a signatory to, and abides by, the
Remuneration Consultants Group Code of Conduct. Further details can be found at www.remunerationconsultantsgroup.com.
The Committee is satisfied that the advice it receives is objective and independent, and that Willis Towers Watson does not have
any connections with the Company or any of the directors that may impair its independence.
Single figure of total remuneration (audited information)
The following table sets out the single figure of total remuneration for directors for the financial years 2021 and 2022.
A.
Salary/Fees
£000
B.
Benefits
£000
C.
Bonus1
£000
D.
LTIP
£000
E.
Pension
£000
Total £000
(A, B, C, D, E)
Total fixed
remuneration
£000
(A, B, E)
Total variable
remuneration
£000
(C, D)
2022
2021
2022
2021
2022
2021 20222 20213
2022
2021
2022
2021
2022
2021
2022
2021
Executive directors
Gerard Ryan
Gary Thompson4
Non-executive directors
Stuart Sinclair
Deborah Davis5
Richard Holmes6
John Mangelaars7
Katrina Cliffe8
Bronwyn Syiek9
Aileen Wallace10
560
242
533
–
25
15
200
200
65
90
65
23
30
–
62
79
65
–
55
–
–
–
–
–
–
–
–
26
–
–
–
–
–
–
–
–
713
309
–
–
–
–
–
–
–
681
13
19
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
98
18
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
94
1,409 1,353
584
–
683
275
653
–
726
309
200
200
200
200
65
90
65
23
30
–
62
79
65
–
55
–
65
90
65
23
30
–
62
79
65
–
55
–
–
–
–
–
–
–
–
700
–
–
–
–
–
–
–
–
1. Bonus payable in respect of the financial year including any deferral element at face value, at date of award.
2. The value of the awards included in the table for 2022 relates to the anticipated value of dividend equivalents that will be payable in 2023, relating to the
2020 DSP from grant to date of vesting.
3. The value of the awards included in the table for 2021 relates to the anticipated value of dividend equivalents relating to the DSP award in 2019.
4. Amounts shown for 2022 reflect the fact that Gary Thompson joined the Company with effect from 4 April 2022.
5. Deborah Davis was paid a fee of £10,000 in her capacity as Chair of the Remuneration Committee, in addition to her base fee of £55,000.
6. Richard Holmes was paid fees of £20,000 as Senior independent director and £15,000 as Chair of the Audit and Risk Committee, in addition to his basic
fee of £55,000.
7. John Mangelaars stepped down from the Board In December 2022. In addition to receiving his base fee of £55,000, he was paid a fee of £10,000 for his
additional responsibility as Chair of the Technology Committee.
8. Katrina Cliffe was appointed to the Board in August 2022 and her base fee of £55,000 was paid pro rata.
9. Bronwyn Syiek stepped down from the Board in July 2022 and her base fee of £55,000 was paid pro rata.
10. Aileen Wallace was appointed to the Board from 20 December 2022. As non-executive directors are paid in arrears, no payment was made during
the financial year. Her base fee is £55,000.
110
International Personal Finance plc
Directors’ Report
Directors’ Remuneration Report continued
January
February
April
September
December
Governance
Annual Bonus
Share Plan
Wider
Policy
DRR
Design
Performance
Grant
Performance
Salary
Workforce
Shareholder
The CEO, Chief People Officer and Group Head of Reward attended meetings by invitation, to provide advice and respond
to questions. Other members of management may attend by invitation. All such attendees are excluded when any matter
concerning their own remuneration and performance is under discussion.
Advisor to the Committee
Willis Towers Watson, appointed in April 2016, provides independent remuneration advice to the Committee. During 2022, total
fees in respect of advice to the Committee (based on time and materials) totalled £48,071 (excluding VAT), (2021: £22,600).
Willis Towers Watson is a founding member of the Remuneration Consultants Group and is a signatory to, and abides by, the
Remuneration Consultants Group Code of Conduct. Further details can be found at www.remunerationconsultantsgroup.com.
The Committee is satisfied that the advice it receives is objective and independent, and that Willis Towers Watson does not have
any connections with the Company or any of the directors that may impair its independence.
Single figure of total remuneration (audited information)
The following table sets out the single figure of total remuneration for directors for the financial years 2021 and 2022.
Salary/Fees
Benefits
A.
£000
B.
£000
C.
Bonus1
£000
D.
LTIP
£000
E.
Pension
£000
Total £000
(A, B, C, D, E)
£000
(A, B, E)
£000
(C, D)
Total fixed
Total variable
remuneration
remuneration
2022
2021
2022
2021
2022
2021 20222 20213
2022
2021
2022
2021
2022
2021
2022
2021
560
242
533
–
25
15
713
309
26
681
13
19
94
1,409 1,353
584
–
683
275
653
–
726
309
700
Executive directors
Gerard Ryan
Gary Thompson4
Non-executive directors
Stuart Sinclair
Deborah Davis5
Richard Holmes6
John Mangelaars7
Katrina Cliffe8
Bronwyn Syiek9
Aileen Wallace10
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
98
18
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
200
200
65
90
65
23
30
–
62
79
65
55
–
–
–
–
–
–
–
–
–
200
200
200
200
65
90
65
23
30
–
62
79
65
55
–
–
65
90
65
23
30
–
62
79
65
55
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1. Bonus payable in respect of the financial year including any deferral element at face value, at date of award.
2. The value of the awards included in the table for 2022 relates to the anticipated value of dividend equivalents that will be payable in 2023, relating to the
2020 DSP from grant to date of vesting.
3. The value of the awards included in the table for 2021 relates to the anticipated value of dividend equivalents relating to the DSP award in 2019.
4. Amounts shown for 2022 reflect the fact that Gary Thompson joined the Company with effect from 4 April 2022.
5. Deborah Davis was paid a fee of £10,000 in her capacity as Chair of the Remuneration Committee, in addition to her base fee of £55,000.
6. Richard Holmes was paid fees of £20,000 as Senior independent director and £15,000 as Chair of the Audit and Risk Committee, in addition to his basic
fee of £55,000.
7. John Mangelaars stepped down from the Board In December 2022. In addition to receiving his base fee of £55,000, he was paid a fee of £10,000 for his
additional responsibility as Chair of the Technology Committee.
8. Katrina Cliffe was appointed to the Board in August 2022 and her base fee of £55,000 was paid pro rata.
9. Bronwyn Syiek stepped down from the Board in July 2022 and her base fee of £55,000 was paid pro rata.
10. Aileen Wallace was appointed to the Board from 20 December 2022. As non-executive directors are paid in arrears, no payment was made during
the financial year. Her base fee is £55,000.
Remuneration governance
Additional disclosures for the single figure of total remuneration
The Committee met five times in 2022, with consideration given to a range of issues as illustrated below:
Base salary
The base salary of the Chief Executive Officer was increased by 5% in to £559,600 following no increase in 2021 or 2020.
The Chief Financial Officer was appointed on a salary of £325,000 and no additional increase was given in 2022.
Benefits
The benefits provided to the executive directors in 2022 included: private healthcare, life assurance, annual medical, long-term
disability cover, and a cash allowance in lieu of a company car.
Determination of 2022 annual bonus
The maximum bonus opportunity for the Chief Executive Officer and Chief Financial Officer was 130% of salary (pro rata to date of
joining for the Chief Financial Officer), with 50% of the maximum for on-target performance. During 2022, a balanced scorecard
approach was used to ascertain annual bonus outcomes whereby:
– 60% of total bonus opportunity was subject to achieving the profit before tax (PBT) element;
– a further 20% was contingent on closing net receivables (CNR); and
– the remaining 20% of the plan was subject to the achievement of personal objectives.
Qualifiers for the 2022 annual bonus were:
– for any bonus to be payable, the Group must first achieve the PBT threshold figure; and
– once the Group PBT threshold is achieved, the CNR metric may pay providing the threshold for that element is achieved.
Group bonus targets
Group bonus targets were set considering the Company’s operating budget. Targets were designed to be stretching in support of
the Company’s strategic objectives, and to focus on metrics and personal targets that would deliver in line with this strategy, as well
as stretching and motivating participants. Bonus targets for the executive directors for 2022 were as follows:
Financial1
Metric
Group PBT
Group Closing Net Receivables
1. Straight line between each point
Weighting in
Scheme
60%
20%
Threshold
£78.3m
Target
£83.0m
Stretch Achievement
£87.2m
£77.4m
£750.0m
£789.5m
£797.4m
£868.8m
Bonus
Payment %
78%
26%
The Committee uses the annual bonus to focus on short term targets that the Board agrees each year consistent with the Group’s
strategy and on individual performance against personal targets. Performance is assessed over each calendar year and at the
start of the following year. The Committee retains the right to exercise its judgement to adjust the formulaic bonus outcomes to
ensure the final bonus outcome for executive directors reflects the broader performance of the Group and the experience of our
employees and shareholders over the reported year.
In 2022 the Group delivered a very strong financial performance, with profit before tax of £77.4m, an increase in underlying profits
of 117% on the prior year despite the impact of various events through the year which were not foreseeable, including the impact
of the war in Ukraine on our businesses in Europe, regulatory changes in Poland and Hungary and the financial impact of a high
inflationary environment on our customers and their ability to continue to meet their repayment obligations. In addition to an
improvement in profit before tax, closing receivables performance was significantly in excess of target and each Executive Director
performed exceptionally well against their balanced scorecard as summarised on pages 112 and 113.
Despite the very significant growth in profit before tax, an increase in the full year dividend of 15% and results exceeding market
consensus, the impact of events that could not reasonably be foreseen when targets were originally set meant that the threshold
profit before tax would not be met for the executive directors or the senior leadership teams of the Group if a purely formulaic
assessment was to be applied. Consequently, the Committee decided to use an adjusted profit before tax figure that
considered the aforementioned financial impacts. After very careful consideration, the Committee determined that an adjusted
profit before tax performance of £93.9m was a fairer reflection of underlying performance and thereby the stretch target had
been achieved.
Consequently, the bonus payment in respect of financial elements totalled 104%.
110
International Personal Finance plc
Annual Report and Financial Statements 2022
111
Directors’ Report
Directors’ Remuneration Report continued
Personal objectives
The following tables explain the objectives that were set for each executive director in 2022 and achievement against them.
Gerard Ryan – Chief Executive Officer
Key
Criteria met
Criteria partially met
Criteria not met
Category
Purpose
Strategy
Climate
change
Objective
Weighting
Results
Achievement
10%
– Provide visible evidence
that our purpose leads to
meaningful change in
our business.
– Ensure that purpose becomes
a core part of our internal
and external communications
with stakeholders.
– Revise internal reward schemes
for senior leadership so that
purpose has a consistently
targeted set of objectives for all.
– Purpose is explicitly embedded in our strategic initiatives.
– Progress on our purpose agenda is tracked via quarterly
purpose review meetings with senior leadership informed
by dedicated MI deck.
– Workshops were held with all market boards to
communicate and educate around purpose
and externally.
– Our purpose-based global employer brand was launched
and is now in active use for appointments at all levels, and
purpose is also a foundational element of induction for our
people across all our markets.
– We are working towards the creation of specific,
measurable KPIs which are a vital prerequisite for reward
schemes to include purpose. Specific objectives related to
our purpose have been included in the senior leadership
team’s objectives and have been assessed as part of the
end-of-year personal performance criteria, which impacts
individual reward.
– Lead the process of creating a
strategy for IPF that will help to
achieve a market capitalisation
for the Group that better
reflects the consistent delivery
by the leadership team of
strong profitability, a robust
balance sheet and good
growth prospects.
30%
– Research and planning stages complete, with a clear view
of the most appropriate time to deliver on agreed plans.
– Key external trends relevant to our business identified.
– Updated strategy agreed with measurable and
challenging objectives for each market.
– Create agreed approach to
10%
– Revised arrangements for Board and executive oversight
climate change, with particular
focus on effectively dealing
with disclosure requirements
in this area.
IPF in society
– Provide visible leadership
and financial support for
a multi-country outreach
programme that benefits
individuals who are
disadvantaged in society.
Attract the next
generation
of customers
– Launch a credit card in Poland.
– Expand our territorial coverage
in Mexico.
– Develop a hybrid solution
in Mexico.
– Develop a thriving
partnership model.
of climate risks and opportunities put in place.
– Assessment of climate risks and opportunities in line with
TCFD created and endorsed by the Board.
– Climate risk embedded in risk management structure and
regularly reviewed.
– Climate related product options considered as part of
2022 strategy process.
10%
– Invisibles was embedded as the Company’s flagship
community programme and supports with the customer
segments we serve in each market.
– Four-step process introduced to: identify the Invisibles
groups in each market; highlight the groups to
stakeholders and the public; engage relevant
stakeholders and NGOs; and help selected groups
through community programmes.
20%
– Successful launch of the Company’s first credit card in
October 2022.
– In Mexico, operations launched successfully in Tijuana in
July 2022 and across Mexico, 660 agencies were opened
during the year.
– In Mexico, a hybrid approach has now enabled a
reduction in time to cash from days to hours, with positive
feedback from customers and customer representatives.
Various other technology enhancements have further
digitised the customer representative journey.
– Strong partnership pipeline in place, with a successful
partnership in operation in Romania. Some issues in
Mexico related to product pricing have restricted progress.
People and
structure
– Strengthen our succession
pipeline following multiple
internal promotions in 2021.
20%
– Good progress made towards building the talent pipeline,
with most key roles having either a named successor or a
pipeline plan in place.
112
International Personal Finance plc
Directors’ Report
Directors’ Remuneration Report continued
Personal objectives
Gary Thompson – Chief Financial Officer (From April 2022)
The following tables explain the objectives that were set for each executive director in 2022 and achievement against them.
Category
Objective
Weighting
Results
Achievement
Key
Criteria met
Criteria partially met
Criteria not met
Key
Criteria met
Criteria partially met
Criteria not met
Gerard Ryan – Chief Executive Officer
Category
Purpose
Objective
Weighting
Results
Achievement
– Provide visible evidence
10%
– Purpose is explicitly embedded in our strategic initiatives.
Financial
performance
focus on delivering sustainable
financial performance.
– Deliver financial results, with a
20%
– Established framework and reporting to drive
People and
structure
– Critically assess finance systems
and capability, and upgrade
where necessary.
Develop a clear
strategy for
shareholder
value creation
– Develop and embed a
20%
framework for linking business
performance to the creation
of shareholder value.
– Enhance investor
communication to attract new
shareholders and ensure
existing shareholders are
provided with sufficient
granular information to assess
their investment.
Funding
– Ensure the Group has
20%
the necessary funding to
support growth.
– Evaluate the funding structure
and seek out opportunities to
diversify funding sources.
Tax
– Develop the framework and
strategies to ensure tax
charges and tax payments
are optimised.
20%
improvements in revenue yield, impairment rate and
cost efficiency.
– Through continuous focus and performance
management, all three metrics have improved in 2022.
– Established increased rigour around product changes
and promotional activity to ensure that any activities drive
required returns.
20%
– New Finance Directors appointed in IPF Digital, Poland and
the Czech Republic.
– Process to upgrade commercial finance talent underway.
– ‘Raising the bar’ mentality embedded within the global
finance community together with greater cross-border
activity to drive better bottom-line performance.
– Improved financial reporting embedded to drive core
metrics to deliver shareholder returns.
– Established a clear and transparent financial model to
drive internal behaviour and performance, and provide
clear linkage to strategy and purpose.
– Development of a revised capital expenditure/
deployment framework underway to ensure that capital is
only deployed when it meets minimum returns criteria.
– Upgraded communication with investors to enable better
understanding of the Group, including webinars, purpose
communication and more granular analysis of results.
– Successfully refinanced £169m of bank facilities in 2022.
– £40m of retail bonds refinanced with a further £10m held
in treasury.
– Improved internal cash and balance sheet management
to drive improvements in funding and liquidity of c.£20m.
– Actions underway to diversify funding sources.
– Successful recovery of tax in Poland of £30m.
– Programme established to deliver reduction in deferred
tax asset over the medium term to improve funding and
core equity.
– Structural review of the Group’s tax position in progress to
optimise tax charge over the medium term.
Having reviewed the executive directors’ performance against their personal objectives and in the context of the progress made
by the Group in 2022, the Committee determined that each executive director met the majority of his objectives. Consequently,
the bonus payout in respect of personal objectives is 23.4% for both the Chief Executive Officer and for the Chief Financial Officer.
112
International Personal Finance plc
Annual Report and Financial Statements 2022
113
Strategy
– Lead the process of creating a
30%
– Research and planning stages complete, with a clear view
that our purpose leads to
meaningful change in
our business.
– Ensure that purpose becomes
a core part of our internal
and external communications
with stakeholders.
– Revise internal reward schemes
for senior leadership so that
purpose has a consistently
targeted set of objectives for all.
strategy for IPF that will help to
achieve a market capitalisation
for the Group that better
reflects the consistent delivery
by the leadership team of
strong profitability, a robust
balance sheet and good
growth prospects.
climate change, with particular
focus on effectively dealing
with disclosure requirements
in this area.
and financial support for
a multi-country outreach
programme that benefits
individuals who are
disadvantaged in society.
– Develop a hybrid solution
in Mexico.
in Mexico.
– Develop a thriving
partnership model.
– Progress on our purpose agenda is tracked via quarterly
purpose review meetings with senior leadership informed
by dedicated MI deck.
– Workshops were held with all market boards to
communicate and educate around purpose
and externally.
– Our purpose-based global employer brand was launched
and is now in active use for appointments at all levels, and
purpose is also a foundational element of induction for our
people across all our markets.
– We are working towards the creation of specific,
measurable KPIs which are a vital prerequisite for reward
schemes to include purpose. Specific objectives related to
our purpose have been included in the senior leadership
team’s objectives and have been assessed as part of the
end-of-year personal performance criteria, which impacts
individual reward.
of the most appropriate time to deliver on agreed plans.
– Key external trends relevant to our business identified.
– Updated strategy agreed with measurable and
challenging objectives for each market.
of climate risks and opportunities put in place.
– Assessment of climate risks and opportunities in line with
TCFD created and endorsed by the Board.
– Climate risk embedded in risk management structure and
– Climate related product options considered as part of
regularly reviewed.
2022 strategy process.
community programme and supports with the customer
segments we serve in each market.
– Four-step process introduced to: identify the Invisibles
groups in each market; highlight the groups to
stakeholders and the public; engage relevant
stakeholders and NGOs; and help selected groups
through community programmes.
– In Mexico, operations launched successfully in Tijuana in
July 2022 and across Mexico, 660 agencies were opened
during the year.
– In Mexico, a hybrid approach has now enabled a
reduction in time to cash from days to hours, with positive
feedback from customers and customer representatives.
Various other technology enhancements have further
digitised the customer representative journey.
– Strong partnership pipeline in place, with a successful
partnership in operation in Romania. Some issues in
Mexico related to product pricing have restricted progress.
Climate
change
– Create agreed approach to
10%
– Revised arrangements for Board and executive oversight
IPF in society
– Provide visible leadership
10%
– Invisibles was embedded as the Company’s flagship
Attract the next
generation
of customers
– Launch a credit card in Poland.
20%
– Successful launch of the Company’s first credit card in
– Expand our territorial coverage
October 2022.
People and
structure
– Strengthen our succession
20%
– Good progress made towards building the talent pipeline,
pipeline following multiple
internal promotions in 2021.
with most key roles having either a named successor or a
pipeline plan in place.
Directors’ Report
Directors’ Remuneration Report continued
Bonus outcomes for 2022
For the year ending 31 December 2022, the Committee awarded bonuses to the executive directors as follows.
Financial objectives
– achievement as
% of bonusable
base salary
Personal objectives
– achievement as
% of bonusable
base salary
104%
104%
23.4%
23.4%
Cash bonus
£000
£356.5
£154.3
DSP – face value
of shares due to
vest in 2026
Total value of 2022
annual bonus
£000
£356.5
£154.3
£000
£713
£308.6
Cash and DSP
shares awarded as
a % of maximum
available bonus
98%
98%
Name
Gerard Ryan
Gary Thompson
In accordance with the 2020 Policy, bonus is payable 50% in cash and 50% in deferred shares, which will vest at the end of a
three-year period, subject to the executive not being dismissed for misconduct. There are also provisions for clawback with respect
to the cash element of the bonus, and malus and clawback with respect to the deferred element of bonus.
Pension
The Company has two pension schemes, the International Personal Finance plc Pension Scheme (‘the pension scheme’), closed
to future accrual, and the International Personal Finance Workplace Pension Scheme (‘the WPP’). During the year, the Company
migrated employees in the International Personal Finance Stakeholder Pension Scheme to the WPP, following a review with the
Company’s pension provider; new employees are eligible to join the WPP.
The rate of Company pension contribution for the Chief Executive Officer to 31 December 2022 was 20% of base salary (17.6%
net). In line with the commitment made in the 2019 Directors’ Remuneration Report to align director pension contributions with the
wider workforce by the end of 2022. The Company contribution rate for the Chief Executive Officer reduced to 12% of base salary
(10.5% net) with effect from 31 December 2022. The rate of Company contribution for the Chief Financial Officer is 12%. At the
discretion of the Committee, this may be paid wholly, or in part, as a cash allowance, net of employer’s NI contributions.
The Company’s contributions in respect of Gerard Ryan during 2022 amounted to £97,762 all of which was paid as a cash
allowance. The Company’s contributions in respect of Gary Thompson during 2022 amounted to £17,862, of which £11,195 was
paid as a cash allowance.
Long-term incentives
Awards estimated to vest during 2023 (included in 2022 single figure)
As explained in the 2020 Annual Report and Financial Statements, executive directors were initially granted long-term incentive
plan awards structured as PSP options in February 2020. However, for reasons related to the business impact of the Covid-19
pandemic, awards were subsequently cancelled at the request of the executive directors, via Deed of Surrender, and no
additional awards were made that year. Consequently, no awards will vest in 2023.
Awards granted in 2022
Executive directors were granted long-term incentive plan awards structured as PSP options; the award for the Chief Executive
Officer was made in March 2022 and for the incoming Chief Financial Officer the award was made in April 2022. The resulting
number of PSP shares and associated performance conditions are set out below. Long-term incentive awards granted in 2023 will
be in line with the 2023 Policy.
Name
Number of PSP
nil-cost options
Face value
£
Percentage of
base salary
End of
performance
period
Threshold
vesting Weighting
Gerard Ryan
1,178,864
1,063,335
190%
31 December 2024
Gary Thompson
383,105
390,000
120%
31 December 2024
25%
25%
25%
25%
25%
25%
50%
25%
25%
50%
25%
25%
Performance
conditions
Absolute TSR
Cumulative EPS growth
Net revenue growth
Absolute TSR
Cumulative EPS growth
Net revenue growth
114
International Personal Finance plc
Directors’ Report
Directors’ Remuneration Report continued
Bonus outcomes for 2022
For the year ending 31 December 2022, the Committee awarded bonuses to the executive directors as follows.
Financial objectives
Personal objectives
– achievement as
– achievement as
DSP – face value
of shares due to
Total value of 2022
shares awarded as
% of bonusable
% of bonusable
Cash bonus
vest in 2026
annual bonus
Name
Gerard Ryan
Gary Thompson
base salary
base salary
104%
104%
23.4%
23.4%
£000
£356.5
£154.3
£000
£356.5
£154.3
Cash and DSP
a % of maximum
available bonus
98%
98%
£000
£713
£308.6
In accordance with the 2020 Policy, bonus is payable 50% in cash and 50% in deferred shares, which will vest at the end of a
three-year period, subject to the executive not being dismissed for misconduct. There are also provisions for clawback with respect
to the cash element of the bonus, and malus and clawback with respect to the deferred element of bonus.
Pension
The Company has two pension schemes, the International Personal Finance plc Pension Scheme (‘the pension scheme’), closed
to future accrual, and the International Personal Finance Workplace Pension Scheme (‘the WPP’). During the year, the Company
migrated employees in the International Personal Finance Stakeholder Pension Scheme to the WPP, following a review with the
Company’s pension provider; new employees are eligible to join the WPP.
The rate of Company pension contribution for the Chief Executive Officer to 31 December 2022 was 20% of base salary (17.6%
net). In line with the commitment made in the 2019 Directors’ Remuneration Report to align director pension contributions with the
wider workforce by the end of 2022. The Company contribution rate for the Chief Executive Officer reduced to 12% of base salary
(10.5% net) with effect from 31 December 2022. The rate of Company contribution for the Chief Financial Officer is 12%. At the
discretion of the Committee, this may be paid wholly, or in part, as a cash allowance, net of employer’s NI contributions.
The Company’s contributions in respect of Gerard Ryan during 2022 amounted to £97,762 all of which was paid as a cash
allowance. The Company’s contributions in respect of Gary Thompson during 2022 amounted to £17,862, of which £11,195 was
paid as a cash allowance.
Long-term incentives
As explained in the 2020 Annual Report and Financial Statements, executive directors were initially granted long-term incentive
plan awards structured as PSP options in February 2020. However, for reasons related to the business impact of the Covid-19
pandemic, awards were subsequently cancelled at the request of the executive directors, via Deed of Surrender, and no
additional awards were made that year. Consequently, no awards will vest in 2023.
Awards granted in 2022
Executive directors were granted long-term incentive plan awards structured as PSP options; the award for the Chief Executive
Officer was made in March 2022 and for the incoming Chief Financial Officer the award was made in April 2022. The resulting
number of PSP shares and associated performance conditions are set out below. Long-term incentive awards granted in 2023 will
be in line with the 2023 Policy.
Name
nil-cost options
£
base salary
period
vesting Weighting
Number of PSP
Face value
Percentage of
performance
Threshold
Gerard Ryan
1,178,864
1,063,335
190%
31 December 2024
End of
Gary Thompson
383,105
390,000
120%
31 December 2024
25%
25%
25%
25%
25%
25%
50%
25%
25%
50%
25%
25%
Performance
conditions
Absolute TSR
Cumulative EPS growth
Net revenue growth
Absolute TSR
Cumulative EPS growth
Net revenue growth
The 2022 LTIP awards will be measured against the following targets, each of which will operate on the basis of a straight line
between threshold, target and stretch.
Performance condition
Absolute TSR performance
Cumulative EPS growth
Net revenue growth
DSP
Threshold
(vesting
25%)
Maximum
(Vesting
100%)
30%
60%
65.9 pence
80.1 pence
8.3%
10.1%
Weighting
½
¼
¼
In 2022, half the annual bonus award earned by the Chief Executive Officer in respect of 2021 was deferred into shares. There are
no further performance conditions attached to the vesting of the deferred shares. The following table sets out details of awards of
nil-cost options made in the year under the DSP:
Gerard Ryan
Date of
award
9 March 2022
Face value1
£
£340,685
1. The face value was calculated using the mid-market closing price for the day preceding the date of grant, being 90.2 pence per share.
SAYE
UK-based executive directors are entitled to participate in the Company’s all-employee plan. Gary Thompson participated in the
IPF Save as You Earn Plan in 2022 and, as a result, was granted 24,000 options at 75 pence under the Plan on 26 August 2022.
No loss of office payments were made in 2022.
Payments to past directors
As noted on page 100 of the 2021 Annual Report and Financial Statements, Justin Lockwood was eligible for an annual bonus in
respect of 2021, paid pro-rata to the date of his resignation and payable in March 2022, in cash; this totalled £220,381.
Awards estimated to vest during 2023 (included in 2022 single figure)
Annual percentage change in the remuneration of directors and employees
The table below shows how the percentage change in each director’s salary, benefits and bonus compared with the average
percentage change in each of those components for employees, on a full-time equivalent basis. The table will build over time to
show five years’ data. Leavers during the year are excluded.
Percentage change in the relevant period
Base
salary
Benefits
Bonus
Base
salary
Benefits1
Bonus2
Base
salary
Benefits1
Bonus2
2020 vs. 2019
2021 vs. 2020
2022 vs. 2021
Executive directors
Gerard Ryan
Gary Thompson
Non-executive directors3
Deborah Davis
Richard Holmes
John Mangelaars
Stuart Sinclair
Katrina Cliffe4
Employees
1%
N/A
0%
N/A
0%
N/A
N/A
1%
0%
N/A
N/A
N/A
N/A
N/A
N/A
3%
(100%)
N/A
N/A
N/A
N/A
N/A
N/A
0%
N/A
12%
79%
0%
42%
N/A
0%
N/A
N/A
N/A
N/A
N/A
N/A
100%
N/A
N/A
N/A
N/A
N/A
N/A
(100%)
(2%)
(2%)
100%
5%
N/A
5%
15%
0%
0%
N/A
15%
(1%)
N/A
N/A
N/A
N/A
N/A
N/A
3%
5%
N/A
N/A
N/A
N/A
N/A
N/A
1%
1. Non-executive directors are ineligible for any benefits.
2. Non-executive directors are ineligible for any bonus.
3. Aileen Wallace was appointed to the Board on 20 December 2022 but received no payment during the financial year.
4. Katrina Cliffe was appointed to the Board with effect from 1 August 2022.
114
International Personal Finance plc
Annual Report and Financial Statements 2022
115
Directors’ Report
Directors’ Remuneration Report continued
TSR performance
The graph below compares the TSR of the Company with the companies comprising the FTSE 250 Index for the 10-year period
ended 31 December 2022. This index was chosen for comparison because it is the index on which IPF originally listed, and to
which it continues to compare itself. TSR data is presented in tandem with CEO single figure total remuneration for the same
period to highlight the relationship between remuneration and shareholder returns.
TSR Performance vs CEO Single Figure
TSR
200
160
120
80
20
CEO Single Figure £ 000
£2,500
£2,000
£1,500
£1,000
£500
31 Dec 2013
31 Dec 2014
31 Dec 2015
31 Dec 2016
31 Dec 2017
31 Dec 2018
31 Dec 2019
31 Dec 2020
31 Dec 2021
31 Dec 2022
CEO single figure (£’000)
International Personal Finance
FTSE 250
The table below shows the corresponding Chief Executive Officer remuneration, as well as the annual variable element award
rates and long-term vesting rates against maximum over the same period:
Year
CEO
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Relative spend on pay
CEO single figure
of remuneration
£000
Annual
bonus payout
(as % of maximum
opportunity)
LTIP vesting
(as % of maximum
opportunity)
1,409
1,353
677
1,260
1,158
1,130
838
1,197
2,172
1,037
98.0%
98.3%
–
72.3%
98.0%
96.6%
16%
45%
74.2%
100%
–
–
–
33%
–
–
23.3%
58.8%
100%
–
The table below shows the expenditure and percentage change in overall spend on employee remuneration and dividend:
£ million unless otherwise stated
Overall expenditure on pay
Dividend paid in the year
1. The percentage change at a constant exchange rate is 19%.
Other directorships
2022
168.4
18.9
Percentage
change
7%1
286%
2021
156.9
4.9
Neither executive director currently holds any external directorships or external appointments.
Directors’ shareholdings and share interests (audited information)
The interests of each person who has served as a director of the Company during the year as at 31 December 2022 (together with
interests held by his or her persons closely associated) are shown in the table overleaf. Stuart Sinclair, Katrina Cliffe and Aileen
Wallace are currently within the three-year period to build their shareholding. However, due to the fall in the Company’s share
price during the year Gerard Ryan’s and Deborah Davis’ shareholding has also fallen below the threshold. This will be rectified as
soon as is practicable. Executive directors are required to retain half of any vested Company share plan options until the
shareholding requirement is met.
116
International Personal Finance plc
Directors’ Report
Directors’ Remuneration Report continued
TSR
200
160
120
80
20
Year
CEO
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Gerard Ryan
Relative spend on pay
£ million unless otherwise stated
Overall expenditure on pay
Dividend paid in the year
TSR performance
The graph below compares the TSR of the Company with the companies comprising the FTSE 250 Index for the 10-year period
ended 31 December 2022. This index was chosen for comparison because it is the index on which IPF originally listed, and to
which it continues to compare itself. TSR data is presented in tandem with CEO single figure total remuneration for the same
period to highlight the relationship between remuneration and shareholder returns.
TSR Performance vs CEO Single Figure
31 Dec 2013
31 Dec 2014
31 Dec 2015
31 Dec 2016
31 Dec 2017
31 Dec 2018
31 Dec 2019
31 Dec 2020
31 Dec 2021
31 Dec 2022
CEO single figure (£’000)
International Personal Finance
FTSE 250
The table below shows the corresponding Chief Executive Officer remuneration, as well as the annual variable element award
rates and long-term vesting rates against maximum over the same period:
CEO single figure
bonus payout
LTIP vesting
of remuneration
(as % of maximum
(as % of maximum
opportunity)
opportunity)
Annual
£2,500
£2,000
£1,500
£1,000
£500
–
–
–
–
–
–
33%
23.3%
58.8%
100%
£000
1,409
1,353
677
1,260
1,158
1,130
838
1,197
2,172
1,037
98.0%
98.3%
–
72.3%
98.0%
96.6%
16%
45%
74.2%
100%
The table below shows the expenditure and percentage change in overall spend on employee remuneration and dividend:
1. The percentage change at a constant exchange rate is 19%.
Other directorships
Neither executive director currently holds any external directorships or external appointments.
Directors’ shareholdings and share interests (audited information)
The interests of each person who has served as a director of the Company during the year as at 31 December 2022 (together with
interests held by his or her persons closely associated) are shown in the table overleaf. Stuart Sinclair, Katrina Cliffe and Aileen
Wallace are currently within the three-year period to build their shareholding. However, due to the fall in the Company’s share
price during the year Gerard Ryan’s and Deborah Davis’ shareholding has also fallen below the threshold. This will be rectified as
soon as is practicable. Executive directors are required to retain half of any vested Company share plan options until the
shareholding requirement is met.
Shares held
Options held
Unvested and
subject to
performance
conditions
Unvested
and subject
to deferral
only
Unvested
and subject
to continued
employment
Owned
outright
Vested but
not yet
exercisable
and subject
to continued
employment
Vested and
exercisable,
but not yet
exercised
Shareholding
required
(% salary/fee)
Shareholding
(% salary/fee)1
Requirement
met
Executive directors2
Gerard Ryan
1,465,288
1,989,049
497,309
CEO Single Figure £ 000
Gary Thompson
110,000
383,105
Non-executive
directors3
Katrina Cliffe
–
Deborah Davis
45,000
Richard Holmes
275,133
Stuart Sinclair
86,944
Aileen Wallace
–
–
–
–
–
–
–
–
–
–
–
–
20,930
24,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
200
200
100
100
100
100
100
191
25
-
51
223
32
-
Y
N
N
N
Y
N
N
1. Based on a share price of 73 pence, being the closing price on 31 December 2022 and using the non-executive directors’ base fee. Any vested but
unexercised shares are included in the shareholding requirement calculation net of tax and NI.
2. Executive directors are expected to acquire a beneficial shareholding over time with 50% of all share awards vesting to be retained until the requirement is
met. Of the 1.5 million shares held by Gerard Ryan, 0.9 million were purchased outright by him using his own funds.
3. Non-executive directors are expected to acquire a beneficial shareholding equivalent to 100% of their director fee within three years of appointment
There were no changes to these interests between 31 December 2022 and 1 March 2023.
No director has notified the Company of an interest in any other shares, transactions or arrangements which requires disclosure.
The current shareholding requirements for executive and non–executive directors are described in the 2020 policy which can be
found on pages 89 to 92 of the 2019 Annual Report and Financial Statements, available via the Investor section of the Company
website at www.ipfin.co.uk.
Executive directors’ interests in Company share options (audited information)
Date of
award
Awards held at
31 December
2021
Awarded
in 2022
Exercised
in 2022
Lapsed /
Surrendered
in 20221
Awards held at
31 December
2022
Performance
condition
period
Market price
at date of
grant (p)
Exercise
price (p) Exercise period
Gerard
Ryan
PSP
08 Mar 19
502,688
23 Mar 21
810,185
–
–
10 Mar 22
– 1,178,864
Deferred
08 Mar 19
Deferred
28 Feb 20
128,709
119,608
–
–
Deferred
10 Mar 22
–
377,701
30 Aug 19
20,930
–
–
–
–
(128,709)
–
–
–
(502,688)
1 Jan 2019 –
31 Dec 2021
–
–
–
–
–
–
–
810,185
1,178,864
–
119,608
377,701
20,930
1 Jan 2021 –
31 Dec 2023
1 Jan 2022 –
31 Dec 2024
–
–
–
–
191
104
97
191
147
97
8 Mar 2022 –
7 Mar 2029
23 Mar 2024 –
22 Mar 2031
11 Mar 2025 –
10 Mar 2032
–
–
–
–
–
–
–
–
–
–
86
1 Nov 2022 –
31 May 2023
1,582,120 1,556,565 (128,709)
(502,688)
2,507,288
Date of
award
Awards held at
31 December
2021
Awarded
in 2022
Exercised
in 2022
Lapsed /
Surrendered
in 2022
Awards held at
31 December
2022
Performance
condition
period
Market price
at date of
grant (p)
Exercise
price (p) Exercise period
2022
168.4
18.9
Percentage
change
7%1
286%
2021
156.9
4.9
SAYE
Total
116
International Personal Finance plc
Annual Report and Financial Statements 2022
117
Gary
Thompson
PSP
05 Apr 22
SAYE
Total
26 Aug 22
–
–
-
383,105
24,000
407,105
–
–
-
–
–
-
383,105
24,000
407,105
1 Jan 2022 –
31 Dec 2024
–
106
–
11 Mar 2025 –
10 Mar 2032
1 Nov 2025 –
31 May 2026
–
75
1. The March 2019 PSP lapsed in full.
The mid-market closing price of the Company’s shares on 31 December 2022 was 73 pence and the range during 2022 was 64
pence to 142 pence. The aggregate gains of directors arising from the exercise of options granted under the DSP in the year
totalled £124,204.
Directors’ Report
Directors’ Remuneration Report continued
Share dilution
The Company manages dilution rates within the standard guidelines of 10% of issued ordinary share capital in respect of the
all-employee share plan and 5% in respect of discretionary plans.
Shareholder voting
The table below summarises voting outcomes at the 2020, 2021 and 2022 AGMs (% of total votes cast):
AGM
2020
2020
2021
2022
Annual Remuneration Report
Directors’ Remuneration Policy
Annual Remuneration Report
Annual Remuneration Report
For
87.24%
87.89%
99.98%
77.82%
Against
12.76%
12.11%
0.02%
22.18%
Withheld1
0.00%
0.00%
0.00%
0.00%
1. Votes withheld are not counted in the votes for or against a resolution but would be considered by the Committee in the event of a significant number of
votes being withheld.
Statement of Remuneration Policy implementation for 2023
The base salary for the Chief Executive Officer will increase by 5% to £587,633.
The base salary for the Chief Financial Officer will increase by 5% to £341,250.
Maximum bonus opportunity will be 130% of base salary (on target 50% of maximum), in line with the 2020 and proposed 2023
Policies, with performance measures weighted 80% financial and strategic and 20% personal, also in line with the 2020 and
proposed 2023 Policies. Annual bonus targets are not disclosed on a forward–looking basis because they are considered by the
Board to be commercially sensitive but will continue to be disclosed retrospectively to ensure transparency.
The Committee expects to make 2023 RSP awards following the 2023 AGM in accordance with the new 2023 Policy, if approved;
awards will be at 80% of base salary for each executive director, in line with the proposed 2023 Policy.
The central, quantifiable financial underpin for 2023 RSP awards will be adherence to IPF’s dividend policy throughout the vesting
period of the RSP grant. To ensure a robust assessment, the Committee will consider a further basket of underpin factors at the end
of the three-year vesting period, as follows:
1. the extent to which any windfall gains have arisen as a result of any marked appreciation in share price;
2. whether there have been any material sanctions or fines issued by a regulatory body (which may give rise to allocation of
individual or collective responsibility);
3. any material damage to the reputation of individual Group Companies, or the Group itself (which may give rise to allocation
of individual or collective responsibility);
4. the level of employee and customer representative engagement over the vesting period; and
5. the level of customer engagement (as measured by net promoter, Rep Track or such other means as determined by
the Committee).
Approved by the Board
Deborah Davis
Chair of the Remuneration Committee
1 March 2023
118
International Personal Finance plc
Directors’ Report
Directors’ Remuneration Report continued
Share dilution
Shareholder voting
AGM
2020
2020
2021
2022
Annual Remuneration Report
Directors’ Remuneration Policy
Annual Remuneration Report
Annual Remuneration Report
The table below summarises voting outcomes at the 2020, 2021 and 2022 AGMs (% of total votes cast):
For
87.24%
87.89%
99.98%
77.82%
Against
12.76%
12.11%
0.02%
22.18%
Withheld1
0.00%
0.00%
0.00%
0.00%
1. Votes withheld are not counted in the votes for or against a resolution but would be considered by the Committee in the event of a significant number of
votes being withheld.
Statement of Remuneration Policy implementation for 2023
The base salary for the Chief Executive Officer will increase by 5% to £587,633.
The base salary for the Chief Financial Officer will increase by 5% to £341,250.
Maximum bonus opportunity will be 130% of base salary (on target 50% of maximum), in line with the 2020 and proposed 2023
Policies, with performance measures weighted 80% financial and strategic and 20% personal, also in line with the 2020 and
proposed 2023 Policies. Annual bonus targets are not disclosed on a forward–looking basis because they are considered by the
Board to be commercially sensitive but will continue to be disclosed retrospectively to ensure transparency.
The Committee expects to make 2023 RSP awards following the 2023 AGM in accordance with the new 2023 Policy, if approved;
awards will be at 80% of base salary for each executive director, in line with the proposed 2023 Policy.
The central, quantifiable financial underpin for 2023 RSP awards will be adherence to IPF’s dividend policy throughout the vesting
period of the RSP grant. To ensure a robust assessment, the Committee will consider a further basket of underpin factors at the end
of the three-year vesting period, as follows:
1. the extent to which any windfall gains have arisen as a result of any marked appreciation in share price;
2. whether there have been any material sanctions or fines issued by a regulatory body (which may give rise to allocation of
4. the level of employee and customer representative engagement over the vesting period; and
5. the level of customer engagement (as measured by net promoter, Rep Track or such other means as determined by
individual or collective responsibility);
of individual or collective responsibility);
the Committee).
Approved by the Board
Deborah Davis
Chair of the Remuneration Committee
1 March 2023
The Company manages dilution rates within the standard guidelines of 10% of issued ordinary share capital in respect of the
all-employee share plan and 5% in respect of discretionary plans.
International Personal Finance plc presents its Annual Report and Financial Statements and its consolidated Annual Report
and Financial Statements as a single Annual Report.
Annual Report and Financial Statements
Directors’ responsibilities
Directors’ responsibilities in relation to the Financial Statements
The directors are responsible for preparing the Annual Report and 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 Group Financial Statements in accordance with United Kingdom adopted International Accounting
Standards (UKIAS) and Article 4 of the International Accounting Standard (IAS) Regulation and have also chosen to prepare
the Parent Company Financial Statements under UKIASs. 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 Group and the Company
and of the profit or loss of the Group and the Company for that period. In preparing these Financial Statements, IAS 1 requires
that directors:
– properly select and apply accounting policies;
– present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
– provide additional disclosures when compliance with the specific requirements in UKIASs are insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial
performance; and
– make an assessment of the Company’s ability to continue as a going concern.
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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Post-balance sheet events and future developments
3. any material damage to the reputation of individual Group Companies, or the Group itself (which may give rise to allocation
There are no post-balance sheet events. Information on indications of future developments is provided in the Strategic Report.
Statements required by the Disclosure Guidance and Transparency Rules and recommended by the UK Corporate
Governance Code.
Responsibility statement under the Disclosure and Transparency Rules
Each of the persons who is a director at the date of approval of this report (and whose name and function is set out
on pages 66 and 67 confirms to the best of his/her knowledge that:
– the Financial Statements, prepared in accordance with UKIASs, give a true and fair view of the assets, liabilities,
financial position and profit/loss of the Company and the undertakings included in the consolidation taken as a whole;
– the Strategic Report and Directors’ Report contained in this report includes a fair review of the development and performance
of the business and the position of the Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face; and
– the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for
shareholders to assess the Company’s position and performance, business model and strategy.
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International Personal Finance plc
Annual Report and Financial Statements 2022
119
Directors’ Report
Directors’ Responsibilities continued
Report review process for Annual Report
The Board came to this view following a rigorous review process throughout the production schedule. The statements are drafted
by appropriate members of the reporting and leadership teams and co-ordinated by the Investor Relations Manager to ensure
consistency. A series of planned reviews is undertaken by the reporting team, leadership team and executive directors. In
advance of final consideration by the Board, they are reviewed by the Audit and Risk Committee.
Disclosure of information to the auditor
In the case of each person who is a director at the date of this report, it is confirmed that, so far as the director is aware, there is
no relevant audit information of which the Company’s auditor is unaware; and he/she has taken all the steps that ought to have
been taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the
Company’s auditor is aware of that information.
Going concern and viability statement
The Board statement on its adoption of the going concern basis in preparing these Financial Statements and the viability
statement concerning the assessment of the Company’s long-term prospects is given on pages 37 and 63.
The Board’s review of the system of internal control
The Board is responsible for the Group’s overall approach to risk management and internal control and, on the advice of the Audit
and Risk Committee, has reviewed the Group’s risk management and internal controls systems for the period 1 January 2022 to
the date of this Annual Report and Financial Statements and is satisfied that they are effective.
By order of the Board
Tom Crane
Company Secretary
1 March 2023
120
International Personal Finance plc
Directors’ Report
Directors’ Responsibilities continued
Report review process for Annual Report
Report on the audit of the Financial Statements
The Board came to this view following a rigorous review process throughout the production schedule. The statements are drafted
by appropriate members of the reporting and leadership teams and co-ordinated by the Investor Relations Manager to ensure
consistency. A series of planned reviews is undertaken by the reporting team, leadership team and executive directors. In
advance of final consideration by the Board, they are reviewed by the Audit and Risk Committee.
1. Opinion
In our opinion:
Independent Auditor’s Report to the
members of International
Personal Finance plc
Disclosure of information to the auditor
In the case of each person who is a director at the date of this report, it is confirmed that, so far as the director is aware, there is
no relevant audit information of which the Company’s auditor is unaware; and he/she has taken all the steps that ought to have
been taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the
Company’s auditor is aware of that information.
Going concern and viability statement
The Board statement on its adoption of the going concern basis in preparing these Financial Statements and the viability
statement concerning the assessment of the Company’s long-term prospects is given on pages 37 and 63.
The Board’s review of the system of internal control
The Board is responsible for the Group’s overall approach to risk management and internal control and, on the advice of the Audit
and Risk Committee, has reviewed the Group’s risk management and internal controls systems for the period 1 January 2022 to
the date of this Annual Report and Financial Statements and is satisfied that they are effective.
By order of the Board
Tom Crane
Company Secretary
1 March 2023
– the Financial Statements of International Personal Finance plc (the ‘parent company’) and its subsidiaries (the ‘Group’) give a true
and fair view of the state of the Group’s and of the parent company’s affairs as at 31 December 2022 and of the Group’s profit for
the year then ended;
– the Group Financial Statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
– the parent company Financial Statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
– the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the Financial Statements which comprise:
– the consolidated income statement;
– the consolidated statement of comprehensive income;
– the consolidated and parent company balance sheets;
– the consolidated and parent company statements of changes in equity;
– the consolidated cash flow statement; and
– the related notes 1 to 33.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted
international accounting standards and, as regards the parent company Financial Statements, as applied in accordance with the
provisions of the Companies Act 2006.
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 Group and the parent 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. The non-audit services
provided to the Group and parent company for the year are disclosed in note 4 to the Financial Statements. We confirm that we have
not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the parent 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 matters
Materiality
Scoping
Significant changes
in our approach
The key audit matters that we identified in the current year were:
– Revenue recognition; and
– Impairment of receivables.
Within this report, key audit matters are identified as follows:
Similar level of risk
The materiality that we used for the Group Financial Statements was £5.1 million which was determined on the basis of 1.3% of
net assets.
We focused our Group audit primarily on the key components based in seven locations, six of which were subject to a full audit,
with the remaining subject to testing of specific balances.
There have been no significant change in our audit approach from the prior period.
120
International Personal Finance plc
Annual Report and Financial Statements 2022
121
Financial Statements
Independent Auditor’s Report to the members of International Personal Finance plc continued
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 Group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included:
– obtaining an understanding of the relevant controls performed at the Group-level in relation to the going concern and forecasting
processes;
– assessing the availability and terms of the Group’s financing arrangements, and evaluating whether management’s forecasts could
result in a breach of banking covenants in the future;
– testing the mechanical accuracy of management’s future forecasts, and evaluating the reasonableness of assumptions made with
reference to our understanding of the Group’s performance in prior periods, changes in its legal and regulatory and economic
environments has had, and is expected to have, on its material components;
– assessing the adequacy and completeness of stress testing performed by management with reference to the principal risks and
uncertainties described in the going concern disclosure;
– challenging the likelihood that reverse stress test scenario prepared by management, which resulted in the Group breaching its
banking covenants, will crystalise during the going concern period through comparing the directors’ assumptions with the Group’s
financial performance in previous periods, our understanding of the Group’s business and the economic outlook in each of its
significant territories; and
– evaluating the disclosures relating to going concern, included on page 37, in order to assess their consistency with our understanding
of the Group’s forecast performance and position.
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 Group’s and parent 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.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the Financial Statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
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 matters
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 period 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.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
5.1. Revenue recognition
Key audit matter
description
How the scope of our
audit responded to
the key audit matter
The Group recognises revenue on loans using the effective interest rate (“EIR”) method applicable under IFRS 9 Financial
Instruments, with revenue totalling £645.5m (2021: £548.7m) being recognised in 2022. This method involves the application of
significant management judgement, in particular over ensuring that early redemptions experience and all contractual terms are
reflected in management’s calculation of the EIR for each product issued.
Specifically, we identified a key audit matter around the accuracy and completeness of cash flows included in management’s
calculation of the EIR for each product, in order to ensure that evidence of early settlement behaviour – including early settlement
rebates where applicable – had been appropriately considered.
The key audit matter is described further in the audit and risk committee’s report on page 91 and within the key sources of estimation
uncertainty note on page 141. The revenue balance for the period is disclosed in the consolidated income statement and note 1 to
the Financial Statements.
We tested the relevant controls to the revenue recognition cycle, including those performed in the component markets, to assess
whether the cash flow data used in management’s calculations is accurate and complete.
We worked with our IT specialists to re-calculate a sample of product and cohort EIRs, based on an independent extract of source
data from core lending systems, and tested the mechanical accuracy of models used by management.
We assessed the appropriateness of management’s key judgements used to calculate the EIR by reference to recently observable
repayments phasing and early redemption behaviour of the Group’s loan portfolios, as well as the impact of changes in rebate
legislation in Poland.
We also assessed whether the revenue recognition policies applied to all material loan types offered by the Group were appropriate
and in accordance with IFRS 9 and other applicable accounting standards.
Key observations
As a result of our audit testing, we found that the methodology used for calculating the EIRs is reasonable and complete in the
context of the Group’s accounting policies and the requirements of the relevant accounting standards.
122
International Personal Finance plc
4. Conclusions relating to going concern
5.2. Impairment of receivables
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 Group’s and parent company’s ability to continue to adopt the going concern basis of
Key audit matter
description
How the scope of our
audit responded to
the key audit matter
Determination of impairment provisions against customer receivables is highly judgemental, requiring estimates to be made
regarding the future losses that are expected to accrue on the Group’s loan portfolios. Key judgements applied include
determination of an individual loan’s probability of default, exposure at default and loss given default. These estimates are based on
a combination of historically observable repayments performance and post model overlays made to account for emerging risks
that are not yet fully observable in the Group’s data.
The emergence of Covid-19 during 2020, in addition to the conflict between Russia and Ukraine during Q1 2021, has led to rises in
the cost of living and potentially impacted the ability of the Group’s customers to make repayments as scheduled. This, in turn, has
affected management’s estimates regarding future losses expected to accrue on the Group’s loan portfolios, with post-model
overlays totalling £20.6m (2021: £6.8m) being recognised as at 31 December 2022 to estimate the impacts that the rising costs of
living will have on future customer repayments.
We identified a key audit matter over the accuracy and completeness of post model overlays applied due to their reliance on
management judgement, as well as their materiality to the Financial Statements of the Group.
The key audit matter is described further in the audit and risk committee’s report on page 91 and within the key sources of estimation
uncertainty on page 141. Please also see note 17 for further information.
We obtained an understanding of the relevant controls performed at a Group-level in relation to the impairment cycle. In addition,
we tested the relevant controls performed in the component markets to assess whether the cash flow data used within
management’s calculations was accurate and complete.
Where necessary, we tested the completeness and accuracy of information used in relevant lending controls, which included
extraction of source data from the core lending systems used and independent re-calculation of the relevant information.
We also worked with our IT specialists to test the relevant IT controls over the systems in which source customer receivable data is
maintained, and obtained an understanding of the key governance review controls in place.
We involved credit risk specialists to evaluate whether management’s impairment provisioning methodology was consistent the
requirements of IFRS 9, and assessed whether management’s approach was materially consistent with those applied by other
similar financial institutions.
We evaluated the appropriateness of the probability of default, exposure at default, and loss given default assumptions used with
reference to our understanding of recently observable repayments performance. We also challenged the appropriateness of using
historical data to predict future repayments performance, with reference to our understanding of internal and external factors
affecting the Group’s businesses. We tested a sample of these assumptions from independent extracts of customer receivable
data and re-performed the year-end impairment calculations on a sample basis to confirm the mechanical accuracy of
management’s calculations.
Finally, we challenged the completeness and accuracy of management’s post-model overlays, with reference to analysis of recent
repayments performance and other identified impairment risks for each of the Group’s material markets. This included working with
credit specialists to evaluate the reasonableness of assumptions made over the collectability of loans affected by recent changes in
the Group’s external environment, and producing independent estimates using alternative data sets and professional judgment.
Key observations
As a result of our testing, we found that the impairment methodology applied by management was reasonable and that the
assumptions used in the calculations performed were appropriately applied.
We concluded that the rationale for post model overlays proposed by management was appropriate and that the valuations
applied are reasonable.
Financial Statements
Independent Auditor’s Report to the members of International Personal Finance plc continued
accounting included:
processes;
– obtaining an understanding of the relevant controls performed at the Group-level in relation to the going concern and forecasting
– assessing the availability and terms of the Group’s financing arrangements, and evaluating whether management’s forecasts could
result in a breach of banking covenants in the future;
– testing the mechanical accuracy of management’s future forecasts, and evaluating the reasonableness of assumptions made with
reference to our understanding of the Group’s performance in prior periods, changes in its legal and regulatory and economic
environments has had, and is expected to have, on its material components;
– assessing the adequacy and completeness of stress testing performed by management with reference to the principal risks and
uncertainties described in the going concern disclosure;
– challenging the likelihood that reverse stress test scenario prepared by management, which resulted in the Group breaching its
banking covenants, will crystalise during the going concern period through comparing the directors’ assumptions with the Group’s
financial performance in previous periods, our understanding of the Group’s business and the economic outlook in each of its
– evaluating the disclosures relating to going concern, included on page 37, in order to assess their consistency with our understanding
significant territories; and
of the Group’s forecast performance and position.
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 Group’s and parent 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.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the Financial Statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
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 matters
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 period 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.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
5.1. Revenue recognition
Key audit matter
The Group recognises revenue on loans using the effective interest rate (“EIR”) method applicable under IFRS 9 Financial
description
Instruments, with revenue totalling £645.5m (2021: £548.7m) being recognised in 2022. This method involves the application of
significant management judgement, in particular over ensuring that early redemptions experience and all contractual terms are
reflected in management’s calculation of the EIR for each product issued.
Specifically, we identified a key audit matter around the accuracy and completeness of cash flows included in management’s
calculation of the EIR for each product, in order to ensure that evidence of early settlement behaviour – including early settlement
rebates where applicable – had been appropriately considered.
The key audit matter is described further in the audit and risk committee’s report on page 91 and within the key sources of estimation
uncertainty note on page 141. The revenue balance for the period is disclosed in the consolidated income statement and note 1 to
the Financial Statements.
How the scope of our
We tested the relevant controls to the revenue recognition cycle, including those performed in the component markets, to assess
audit responded to
whether the cash flow data used in management’s calculations is accurate and complete.
the key audit matter
We worked with our IT specialists to re-calculate a sample of product and cohort EIRs, based on an independent extract of source
data from core lending systems, and tested the mechanical accuracy of models used by management.
We assessed the appropriateness of management’s key judgements used to calculate the EIR by reference to recently observable
repayments phasing and early redemption behaviour of the Group’s loan portfolios, as well as the impact of changes in rebate
legislation in Poland.
We also assessed whether the revenue recognition policies applied to all material loan types offered by the Group were appropriate
and in accordance with IFRS 9 and other applicable accounting standards.
Key observations
As a result of our audit testing, we found that the methodology used for calculating the EIRs is reasonable and complete in the
context of the Group’s accounting policies and the requirements of the relevant accounting standards.
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International Personal Finance plc
Annual Report and Financial Statements 2022
123
Financial Statements
Independent Auditor’s Report to the members of International Personal Finance plc continued
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
Basis for determining materiality
Group Financial Statements
£5.1 million (2021: £4.9 million)
1.1% of consolidated net assets
(2021:1.3% of consolidated net assets).
Rationale for the benchmark
applied
Given the ongoing volatility in the Group’s reported
profit/loss before taxation, we have determined net
assets to be the most stable and appropriate benchmark
for assessing materiality.
Parent company Financial Statements
£2.55 million (2021: £2.45 million)
Parent company materiality equates to 1% of net assets,
which is capped at 50% of Group materiality (2021: 1% of
net assets, capped at 50% of Group materiality).
The main operations of the parent company are to obtain
external finance, with the main balances being the
investments held in its subsidiaries and the external loan
balances. We have therefore determined net assets as the
most appropriate benchmark for assessing materiality.
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.
Net Assets
£445m
£5m
£1m to £3m
£0.26m
■ Net Assets
■ Group Materiality
■ Group Materiality
■ Component materiality range
■ Audit Committee
reporting threshold
Performance materiality
65% (2021: 65%) of Group materiality
50% (2021: 50%) of parent company materiality
Group Financial Statements
Parent company Financial Statements
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered
the heightened level of risk arising from the ongoing
impacts of changes in the Group’s external environment,
as well as the level of uncorrected misstatements identified
in prior periods and elected to maintain performance
materiality at 65% of materiality in line with the prior period.
In determining performance materiality, we considered the
heightened level of risk arising from changes in the Group’s
external environment and the level of uncorrected
misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit and Risk Committee that we would report to the Committee all audit differences in excess of £255,000 (2021:
£245,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the
Audit and Risk Committee on disclosure matters that we identified when assessing the overall presentation of the Financial Statements.
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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
Group Financial Statements
£5.1 million (2021: £4.9 million)
Parent company Financial Statements
£2.55 million (2021: £2.45 million)
Basis for determining materiality
1.1% of consolidated net assets
(2021:1.3% of consolidated net assets).
Parent company materiality equates to 1% of net assets,
which is capped at 50% of Group materiality (2021: 1% of
net assets, capped at 50% of Group materiality).
Rationale for the benchmark
Given the ongoing volatility in the Group’s reported
The main operations of the parent company are to obtain
applied
profit/loss before taxation, we have determined net
external finance, with the main balances being the
assets to be the most stable and appropriate benchmark
investments held in its subsidiaries and the external loan
for assessing materiality.
balances. We have therefore determined net assets as the
most appropriate benchmark for assessing materiality.
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.
Net Assets
£445m
£5m
£1m to £3m
£0.26m
■ Net Assets
■ Group Materiality
■ Group Materiality
■ Component materiality range
■ Audit Committee
reporting threshold
Group Financial Statements
Parent company Financial Statements
Performance materiality
65% (2021: 65%) of Group materiality
50% (2021: 50%) of parent company materiality
Basis and rationale for
In determining performance materiality, we considered
In determining performance materiality, we considered the
determining performance
the heightened level of risk arising from the ongoing
heightened level of risk arising from changes in the Group’s
materiality
impacts of changes in the Group’s external environment,
external environment and the level of uncorrected
as well as the level of uncorrected misstatements identified
misstatements identified in prior periods.
in prior periods and elected to maintain performance
materiality at 65% of materiality in line with the prior period.
6.3. Error reporting threshold
We agreed with the Audit and Risk Committee that we would report to the Committee all audit differences in excess of £255,000 (2021:
£245,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the
Audit and Risk Committee 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. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and
assessing the risks of material misstatement at the Group-level. Based on that assessment, we focused our Group audit scope primarily
on the audit work at given locations, which were subject to a full audit, and one location which involved the testing of specific balances.
The locations subject to a full audit were the components in Poland, Romania, Czech Republic, Hungary, Mexico and the UK, with a
further five entities managed in Poland subject to specific balance testing. The scope of our audit was consistent with that from the prior
period.
These twelve entities represent the principal business units of the Group, and account for 98% (2021: 99%) of the Group’s net credit
receivables, 97% (2021: 99%) of the Group’s revenue and 97% (2021: 97%) of the Group’s profit (2021: profit) before taxation.
Revenue
Profit before tax
Net Credit receivables
■ Full audit scope
■ Specified audit procedures
■ Review at Group level
84%
13%
3%
■ Full audit scope
■ Specified audit procedures
■ Review at Group level
96%
1%
3%
■ Full audit scope
■ Specified audit procedures
■ Review at Group level
80%
18%
2%
7.2. Our consideration of the control environment
We worked with internal IT specialists to perform testing of relevant IT controls over all relevant systems to the financial reporting process,
as well as the lending process, revenue recognition process and impairment process. Our component auditors also worked with local IT
specialists to perform testing of the relevant IT controls over the data storage platform used in-market to record and administrate
customer lending.
Our work in this area enabled us to place controls reliance over all identified relevant IT systems.
We also obtained an understanding of and tested manually operated controls performed at a Group level in relation to the impairment
of receivables key audit matter and tested relevant controls in place over the revenue recognition and customer lending cycles.
As a result of the controls work performed at both a Group and component level, we were able to place controls reliance over both the
revenue and gross carrying value of the customer receivables.
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Independent Auditor’s Report to the members of International Personal Finance plc continued
7.3 Our consideration of climate-related risks
When planning our audit, we considered the impact of climate change on the Group’s operations and the subsequent impact on its
Financial Statements. The Group sets out its assessment of the potential impacts on page 53 of the TCFD section of the Annual Report.
We held discussions with the Group to understand their process for identifying climate-related risks, including the governance controls in
place over this process, as well as their impact on the Financial Statements. We also obtained an understanding of the Group’s long-term
strategy to respond to climate change risks as they involve, including the effect on the Group’s forecasts for future periods.
Our audit work has included assessing the conclusions reached by management regarding the impact of climate-related risks on the
Group’s Financial Statements in the current year and reading the disclosures in the Annual Report to consider whether they are materially
consistent with the Financial Statements and our knowledge obtained in the audit.
7.3. Working with other auditors
At the parent company level, we tested the consolidation process and carried out analytical procedures to confirm our conclusion that
there were no significant risks of material misstatement of the aggregated financial information of the remaining components not subject
to audit or audit of specified account balances.
The Group audit team continued to closely monitor and liaise with all significant component audit teams. In the current year, we visited
the component auditors in Poland and Mexico in-person. We included the component audit partners and teams in our team briefing,
discussed their risk assessment, and reviewed documentation of the findings from their work. In addition, we held virtual meetings with
component teams and with members of component management, and we reviewed component team working papers remotely.
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 Group’s and the parent 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 Group or the parent 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.
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Independent Auditor’s Report to the members of International Personal Finance plc continued
7.3 Our consideration of climate-related risks
When planning our audit, we considered the impact of climate change on the Group’s operations and the subsequent impact on its
Financial Statements. The Group sets out its assessment of the potential impacts on page 53 of the TCFD section of the Annual Report.
We held discussions with the Group to understand their process for identifying climate-related risks, including the governance controls in
place over this process, as well as their impact on the Financial Statements. We also obtained an understanding of the Group’s long-term
strategy to respond to climate change risks as they involve, including the effect on the Group’s forecasts for future periods.
Our audit work has included assessing the conclusions reached by management regarding the impact of climate-related risks on the
Group’s Financial Statements in the current year and reading the disclosures in the Annual Report to consider whether they are materially
consistent with the Financial Statements and our knowledge obtained in the audit.
7.3. Working with other auditors
At the parent company level, we tested the consolidation process and carried out analytical procedures to confirm our conclusion that
there were no significant risks of material misstatement of the aggregated financial information of the remaining components not subject
to audit or audit of specified account balances.
The Group audit team continued to closely monitor and liaise with all significant component audit teams. In the current year, we visited
the component auditors in Poland and Mexico in-person. We included the component audit partners and teams in our team briefing,
discussed their risk assessment, and reviewed documentation of the findings from their work. In addition, we held virtual meetings with
component teams and with members of component management, and we reviewed component team working papers remotely.
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 Group’s and the parent 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 Group or the parent 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 Group’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
– results of our enquiries of management, internal audit, and the audit and risk committee about their own identification and assessment
of the risks of irregularities, including those that are specific to the Group’s sector;
– any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
– the matters discussed among the audit engagement team including significant component audit teams and relevant internal
specialists, including tax, valuations, pensions, IT and credit risk specialists 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 and
identified the greatest potential for fraud in the following areas: revenue recognition and impairment of receivables, due to the potential
for management to manipulate highly judgemental assumptions, and agent cash balances due to the possibility of misappropriation of
assets. 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 Group 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, the London Stock Exchange Listing Rules and
pensions and tax legislation applicable in the territories it operates.
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 Group’s ability to operate or avoid a material penalty. These included the applicable
consumer credit regulations in place across the Group’s significant components.
11.2. Audit response to risks identified
As a result of performing the above, we identified revenue recognition and impairment of receivables as key audit matters related to the
potential risk of fraud. The key audit matters section of our report explains the matters in more detail and also describes the specific
procedures we performed in response to those key audit matters.
In addition to the above, 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, the audit and risk committee and in-house legal counsel 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, reviewing internal audit reports and reviewing correspondence with
the Group’s regulators and tax authorities in each of its significant territories; 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 including
internal specialists and significant component audit teams and remained alert to any indications of fraud or non-compliance with laws
and regulations throughout the audit.
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Financial Statements
Independent Auditor’s Report to the members of International Personal Finance plc continued
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with 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.
IIn the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the
course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the Financial Statements and our knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified, set out on page 37;
– the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is
appropriate, set out on page 63;
– the directors' statement on fair, balanced and understandable, set out on page 94;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks, set out on page 58;
– the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems, set out
on page 94; and
– the section describing the work of the audit and risk committee, set out on page 91.
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Independent Auditor’s Report to the members of International Personal Finance plc continued
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with 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.
IIn the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the
course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
14. Matters on which we are required to report by exception
14.1. 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 by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
– the parent company Financial Statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
UUnder the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not
been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.
13. Corporate Governance Statement
The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
We have nothing to report in respect of these matters.
15. Matters on which we are required to report by exception
15.1. Auditor tenure
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the Financial Statements and our knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
– the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is
uncertainties identified, set out on page 37;
appropriate, set out on page 63;
– the directors' statement on fair, balanced and understandable, set out on page 94;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks, set out on page 58;
– the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems, set out
on page 94; and
– the section describing the work of the audit and risk committee, set out on page 91.
Following the recommendation of the audit and risk committee, we were appointed by the members of International Personal Finance
plc on 11 May 2011 to audit the Financial Statements for the year ending 31 December 2011 and subsequent financial periods. The
period of total uninterrupted engagement including previous renewals and reappointments of the firm is 12 years, covering the years
ending 31 December 2011 to 31 December 2022.
15.2. Consistency of the audit report with the additional report to the audit and risk committee
Our audit opinion is consistent with the additional report to the audit and risk committee we are required to provide in accordance with
ISAs (UK).
16. 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.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these Financial
Statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage
Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides no
assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.
Matthew Bainbridge FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
1 March 2023
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129
Financial Statements
Consolidated income statement
for the year ended 31 December
Group
Revenue
Impairment
Revenue less impairment
Interest expense
Other operating costs
Administrative expenses
Total costs
Profit before taxation
Pre-exceptional tax income – UK
Pre-exceptional tax expense – overseas
Total pre-exceptional tax expense
Exceptional tax income
Total tax expense
Profit after taxation attributable to equity shareholders
Group
Earnings per share – statutory
Basic
Diluted
Group
Earnings per share – pre-exceptional items
Basic
Diluted
See note 6 for further information on earnings per share.
Notes
1
1
2
1
5
5, 10
2022
£m
645.5
(106.7)
538.8
(68.1)
(121.5)
(271.8)
(461.4)
77.4
0.1
(31.2)
(31.1)
10.5
(20.6)
56.8
2021
£m
548.7
(56.2)
492.5
(54.0)
(111.4)
(259.4)
(424.8)
67.7
6.6
(32.4)
(25.8)
–
(25.8)
41.9
Notes
2022
pence
2021
pence
6
6
25.6
24.3
18.8
17.8
Notes
2022
pence
2021
pence
6
6
20.8
19.8
18.8
17.8
Statements of comprehensive income
for the year ended 31 December
Profit/(loss) after taxation attributable to equity shareholders
Other comprehensive income/(expense)
Items that may subsequently be reclassified to income statement
Exchange gains/(losses) on foreign currency translations
Net fair value (losses)/gains – cash flow hedges
Tax credit/(charge) on items that may be reclassified
Items that will not subsequently be reclassified to income statement
Actuarial (losses)/gains on retirement benefit obligation
Tax credit on items that will not be reclassified
Other comprehensive income/(expense) net of taxation
Group
Company
2022
£m
56.8
41.8
(2.3)
0.8
(3.8)
0.9
37.4
2021
£m
41.9
2022
£m
(16.5)
2021
£m
(48.2)
(37.6)
1.4
(0.7)
0.5
0.1
(36.3)
–
(0.1)
–
(3.8)
0.9
(3.0)
–
–
–
0.5
0.1
0.6
5
27
5
Total comprehensive income/(expense) for the year attributable to equity
shareholders
94.2
5.6
(19.5)
(47.6)
The accounting policies and notes 1 to 33 are an integral part of these Financial Statements.
130
International Personal Finance plc
Financial Statements
Group
Revenue
Impairment
Revenue less impairment
Interest expense
Other operating costs
Administrative expenses
Total costs
Profit before taxation
Pre-exceptional tax income – UK
Pre-exceptional tax expense – overseas
Total pre-exceptional tax expense
Exceptional tax income
Total tax expense
Profit after taxation attributable to equity shareholders
Earnings per share – statutory
Group
Basic
Diluted
Group
Basic
Diluted
Earnings per share – pre-exceptional items
See note 6 for further information on earnings per share.
Consolidated income statement
for the year ended 31 December
Balance sheets
as at 31 December
2022
£m
645.5
(106.7)
538.8
(68.1)
(121.5)
(271.8)
(461.4)
77.4
0.1
(31.2)
(31.1)
10.5
(20.6)
56.8
25.6
24.3
20.8
19.8
2021
£m
548.7
(56.2)
492.5
(54.0)
(111.4)
(259.4)
(424.8)
67.7
6.6
(32.4)
(25.8)
–
(25.8)
41.9
18.8
17.8
18.8
17.8
Notes
2022
pence
2021
pence
Notes
2022
pence
2021
pence
Notes
5
5, 10
1
1
2
1
6
6
6
6
Assets
Non-current assets
Goodwill
Intangible assets
Investment in subsidiaries
Property, plant and equipment
Right-of-use assets
Amounts receivable from customers
Deferred tax assets
Non-current tax asset
Retirement benefit asset
Current assets
Amounts receivable from customers
Derivative financial instruments
Cash and cash equivalents
Other receivables
Current tax assets
Total assets
Liabilities
Current liabilities
Borrowings
Derivative financial instruments
Trade and other payables
Provision for liabilities and charges
Lease liabilities
Current tax liabilities
Non-current liabilities
Deferred tax liabilities
Borrowings
Lease liabilities
Total liabilities
Net assets
Equity attributable to owners of the Company
Called-up share capital
Other reserve
Foreign exchange reserve
Hedging reserve
Own shares
Capital redemption reserve
Retained earnings
Total equity
Group
Company
Notes
2022
£m
2021
£m
2022
£m
2021
£m
11
12
13
14
15
17
16
10
27
17
23
18
19
21
23
20
26
15
16
21
15
29
24.2
27.9
–
17.3
19.3
212.2
138.5
–
2.1
22.9
25.2
–
13.8
17.7
150.2
124.7
15.3
4.9
–
–
–
–
732.3
731.4
1.3
2.6
–
0.5
–
2.1
1.4
2.9
–
0.5
–
4.9
441.5
374.7
738.8
741.1
656.6
566.6
4.5
50.7
16.2
1.6
729.6
1,171.1
0.7
41.7
14.0
1.6
624.6
999.3
–
–
5.0
527.6
–
532.6
1,271.4
–
–
4.4
555.5
–
559.9
1,301.0
(71.8)
(4.6)
(3.1)
(7.6)
(40.5)
(0.1)
–
(0.1)
(122.2)
(112.8)
(372.3)
(383.4)
(4.7)
(7.2)
(18.3)
(228.8)
(5.9)
(477.0)
(14.2)
(497.1)
(725.9)
445.2
23.4
(22.5)
9.2
0.1
(43.3)
2.3
476.0
445.2
(5.4)
(6.4)
(8.2)
–
(0.1)
–
–
(0.1)
–
(143.5)
(413.0)
(383.6)
(7.9)
(468.5)
(12.3)
(488.7)
(632.2)
367.1
23.4
(22.5)
(32.6)
1.6
(46.6)
2.3
441.5
367.1
(0.5)
(1.2)
(373.2)
(395.8)
(2.6)
(376.3)
(789.3)
482.1
(2.7)
(399.7)
(783.3)
517.7
23.4
226.3
–
(0.1)
(43.3)
2.3
273.5
482.1
23.4
226.3
–
–
(46.6)
2.3
312.3
517.7
Statements of comprehensive income
for the year ended 31 December
Profit/(loss) after taxation attributable to equity shareholders
Other comprehensive income/(expense)
Items that may subsequently be reclassified to income statement
Exchange gains/(losses) on foreign currency translations
Net fair value (losses)/gains – cash flow hedges
Tax credit/(charge) on items that may be reclassified
Items that will not subsequently be reclassified to income statement
Actuarial (losses)/gains on retirement benefit obligation
Tax credit on items that will not be reclassified
Other comprehensive income/(expense) net of taxation
2022
£m
56.8
41.8
(2.3)
0.8
(3.8)
0.9
37.4
5
27
5
Group
Company
2021
£m
41.9
2022
£m
(16.5)
2021
£m
(48.2)
(37.6)
1.4
(0.7)
0.5
0.1
(36.3)
(0.1)
–
–
(3.8)
0.9
(3.0)
–
–
–
0.5
0.1
0.6
Total comprehensive income/(expense) for the year attributable to equity
shareholders
94.2
5.6
(19.5)
(47.6)
The accounting policies and notes 1 to 33 are an integral part of these Financial Statements.
The accounting policies and notes 1 to 33 are an integral part of these Financial Statements.
The loss after taxation of the Parent Company for the period was £16.5m (2021: loss of £48.2m).
The Financial Statements of International Personal Finance plc, registration number 6018973 comprising the consolidated income
statement, statements of comprehensive income, balance sheets, statements of changes in equity, cash flow statements, accounting
policies and notes 1 to 33 were approved by the Board on 1 March and were signed on its behalf by:
Gerard Ryan
Chief Executive Officer
Gary Thompson
Chief Financial Officer
130
International Personal Finance plc
Annual Report and Financial Statements 2022
131
Financial Statements
Statements of changes in equity
Group – Attributable to owners
of the Company
At 1 January 2021
Comprehensive income
Profit after taxation for the year
Other comprehensive (expense)/income
Exchange losses on foreign currency
translation
Net fair value gains – cash flow hedges
Actuarial gain on retirement benefit obligation
27
Tax (charge)/credit on other comprehensive
income
5
Total other comprehensive (expense)/income
Total comprehensive (expense)/income for
the year
Transactions with owners
Share-based payment adjustment to reserves
Shares acquired by employee and treasury
trusts
Shares granted from treasury and
employee trust
Dividends paid to Company shareholders
7
At 1 January 2022
Comprehensive income
Profit after taxation for the year
Other comprehensive income/(expenses)
Exchange gains on foreign currency
translation
Net fair value losses – cash flow hedges
Actuarial loss on retirement benefit obligation
Tax credit on other comprehensive expense
27
5
Total other comprehensive income/(expense)
Total comprehensive income/(expense) for
the year
Transactions with owners
Share-based payment adjustment to reserves
Shares acquired by employee and treasury
trusts
Shares granted from treasury and
employee trust
Dividends paid to Company shareholders
7
Called-up
share
capital
£m
Other
reserve
£m
Foreign
exchange
reserve
£m
Hedging
reserve
£m
Own
shares
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Notes
23.4
(22.5)
5.0
0.9
(45.2)
2.3
406.6
Total
equity
£m
370.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(37.6)
–
–
–
(37.6)
–
1.4
–
(0.7)
0.7
(37.6)
0.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3.9)
2.5
–
–
–
–
–
–
–
–
–
–
–
–
41.9
41.9
–
–
0.5
0.1
0.6
(37.6)
1.4
0.5
(0.6)
(36.3)
42.5
5.6
(0.2)
(0.2)
–
(2.5)
(4.9)
(3.9)
–
(4.9)
23.4
(22.5)
(32.6)
1.6
(46.6)
2.3
441.5
367.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
41.8
–
–
–
41.8
41.8
–
–
–
–
–
–
(2.3)
–
0.8
(1.5)
(1.5)
–
–
–
–
–
–
–
–
–
–
–
–
(0.4)
3.7
–
–
–
–
–
–
–
–
–
–
–
–
56.8
56.8
–
–
(3.8)
0.9
(2.9)
41.8
(2.3)
(3.8)
1.7
37.4
53.9
94.2
3.2
–
(3.7)
(18.9)
476.0
3.2
(0.4)
–
(18.9)
445.2
At 31 December 2021
23.4
(22.5)
(32.6)
1.6
(46.6)
2.3
441.5
367.1
At 31 December 2022
23.4
(22.5)
9.2
0.1
(43.3)
2.3
132
International Personal Finance plc
Financial Statements
Statements of changes in equity
Group – Attributable to owners
of the Company
At 1 January 2021
Comprehensive income
Profit after taxation for the year
Other comprehensive (expense)/income
Exchange losses on foreign currency
translation
Net fair value gains – cash flow hedges
Actuarial gain on retirement benefit obligation
27
Tax (charge)/credit on other comprehensive
income
5
Total other comprehensive (expense)/income
Total comprehensive (expense)/income for
the year
Transactions with owners
Share-based payment adjustment to reserves
Shares acquired by employee and treasury
trusts
Shares granted from treasury and
employee trust
Dividends paid to Company shareholders
7
At 1 January 2022
Comprehensive income
Profit after taxation for the year
Other comprehensive income/(expenses)
Exchange gains on foreign currency
translation
Net fair value losses – cash flow hedges
Actuarial loss on retirement benefit obligation
Tax credit on other comprehensive expense
27
5
Total other comprehensive income/(expense)
Total comprehensive income/(expense) for
the year
Transactions with owners
Share-based payment adjustment to reserves
Shares acquired by employee and treasury
trusts
Shares granted from treasury and
employee trust
Dividends paid to Company shareholders
7
Called-up
share
capital
£m
23.4
Foreign
Other
exchange
reserve
reserve
Hedging
reserve
£m
(22.5)
£m
5.0
£m
0.9
Notes
Own
redemption
Capital
reserve
£m
2.3
Retained
earnings
£m
406.6
Total
equity
£m
370.5
shares
£m
(45.2)
(37.6)
0.7
42.5
5.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(37.6)
(37.6)
1.4
(0.7)
0.7
41.8
41.8
41.8
(2.3)
0.8
(1.5)
(1.5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3.9)
2.5
–
(0.4)
3.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
41.9
41.9
–
–
0.5
0.1
0.6
(37.6)
1.4
0.5
(0.6)
(36.3)
(0.2)
(0.2)
–
(2.5)
(4.9)
(3.9)
–
(4.9)
56.8
56.8
–
–
(3.8)
0.9
(2.9)
3.2
–
(3.7)
(18.9)
476.0
41.8
(2.3)
(3.8)
1.7
37.4
3.2
(0.4)
–
(18.9)
445.2
At 31 December 2021
23.4
(22.5)
(32.6)
1.6
(46.6)
2.3
441.5
367.1
23.4
(22.5)
(32.6)
1.6
(46.6)
2.3
441.5
367.1
At 31 December 2022
23.4
(22.5)
9.2
0.1
(43.3)
2.3
Company – Attributable to owners of the Company
Notes
At 1 January 2021
Comprehensive expense
Loss after taxation for the year
Other comprehensive income
Actuarial gain on retirement benefit obligation
Tax credit on other comprehensive income
27
5
Total other comprehensive income
Total comprehensive expense for the year
Transactions with owners
Share-based payment adjustment to reserves
Shares acquired by employee and treasury trusts
Shares granted from treasury and employee trust
Dividends paid to Company shareholders
7
At 31 December 2021
At 1 January 2022
Comprehensive expense
Loss after taxation for the year
Other comprehensive (expense)/income
Net fair value losses – cash flow hedges
Actuarial loss on retirement benefit obligation
Tax credit on other comprehensive expense
27
5
Total other comprehensive expense
Total comprehensive expense for the year
Transactions with owners
Share-based payment adjustment to reserves
Shares acquired by employee and treasury trusts
Shares granted from treasury and employee trust
Dividends paid to Company shareholders
7
Called-up
share
capital
£m
23.4
Other
reserve
£m
226.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23.4
226.3
23.4
226.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Hedging
reserve
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.1)
–
–
(0.1)
(0.1)
–
–
–
–
Own
shares
£m
(45.2)
Capital
redemption
reserve
£m
Retained
earnings
£m
2.3
367.5
Total
equity
£m
574.3
–
–
–
–
–
–
(3.9)
2.5
–
(46.6)
–
–
–
–
–
–
–
–
–
(48.2)
(48.2)
0.5
0.1
0.6
0.5
0.1
0.6
(47.6)
(47.6)
(0.2)
–
(2.5)
(4.9)
(0.2)
(3.9)
–
(4.9)
2.3
312.3
517.7
(46.6)
2.3
312.3
517.7
–
–
–
–
–
–
–
(0.4)
3.7
–
–
–
–
–
–
–
–
–
–
–
(16.5)
(16.5)
–
(3.8)
0.9
(2.9)
(0.1)
(3.8)
0.9
(3.0)
(19.4)
(19.5)
3.2
–
(3.7)
(18.9)
273.5
3.2
(0.4)
–
(18.9)
482.1
At 31 December 2022
23.4
226.3
(0.1)
(43.3)
2.3
53.9
94.2
The other reserve represents the difference between the nominal value of the shares issued when the Company became listed on 16 July
2007 and the fair value of the subsidiary companies acquired in exchange for this share capital.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent Company
income statement.
The accounting policies and notes 1 to 33 are an integral part of these Financial Statements.
132
International Personal Finance plc
Annual Report and Financial Statements 2022
133
Financial Statements
Cash flow statements
for the year ended 31 December
Cash flows from operating activities
Cash generated from operating activities
Finance costs paid
Finance income received
Income tax received/(paid)
Net cash (used in)/generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchases of intangible assets
Purchase of shares in subsidiary
Net cash used in investing activities
Net cash (used in)/generated from operating and investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Principal elements of lease payments
Dividends paid to Company shareholders
Shares acquired by employee and treasury trusts
Net cash generated from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at end of year
Cash and cash equivalents at end of year comprise:
Cash at bank and in hand
Group
Company
2022
£m
58.8
(65.2)
–
5.5
(0.9)
(9.1)
0.3
(14.7)
–
(23.5)
(24.4)
99.3
(43.6)
(9.2)
(18.9)
(0.4)
27.2
2.8
41.7
6.2
50.7
2021
£m
74.3
(52.7)
–
(46.4)
(24.8)
(5.1)
0.2
(10.3)
–
(15.2)
(40.0)
49.4
(62.9)
(9.9)
(4.9)
(3.9)
(32.2)
(72.2)
116.3
(2.4)
41.7
2022
£m
30.5
(71.1)
45.3
(1.5)
3.2
–
–
–
–
–
3.2
40.2
(23.3)
(0.2)
(18.9)
(0.4)
(2.6)
0.6
4.4
–
5.0
2021
£m
6.6
(73.2)
38.4
(0.9)
(29.1)
(1.5)
–
–
(0.2)
(1.7)
(30.8)
38.2
(59.3)
–
(4.9)
(3.9)
(29.9)
(60.7)
65.1
–
4.4
Notes
30
14
12
7
18
18
50.7
41.7
5.0
4.4
The accounting policies and notes 1 to 33 are an integral part of these Financial Statements.
134
International Personal Finance plc
Financial Statements
Cash flow statements
for the year ended 31 December
Net cash (used in)/generated from operating and investing activities
Cash flows from operating activities
Cash generated from operating activities
Finance costs paid
Finance income received
Income tax received/(paid)
Net cash (used in)/generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchases of intangible assets
Purchase of shares in subsidiary
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Principal elements of lease payments
Dividends paid to Company shareholders
Shares acquired by employee and treasury trusts
Net cash generated from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at end of year
Cash and cash equivalents at end of year comprise:
Cash at bank and in hand
The accounting policies and notes 1 to 33 are an integral part of these Financial Statements.
Notes to the Financial Statements
Group
Company
General information
Notes
30
14
12
7
18
2022
£m
58.8
(65.2)
–
5.5
(0.9)
(9.1)
0.3
(14.7)
–
(23.5)
(24.4)
99.3
(43.6)
(9.2)
(18.9)
(0.4)
27.2
2.8
41.7
6.2
50.7
2021
£m
74.3
(52.7)
–
(46.4)
(24.8)
(5.1)
0.2
(10.3)
–
(15.2)
(40.0)
49.4
(62.9)
(9.9)
(4.9)
(3.9)
(32.2)
(72.2)
116.3
(2.4)
41.7
2022
£m
30.5
(71.1)
45.3
(1.5)
3.2
–
–
–
–
–
3.2
40.2
(23.3)
(0.2)
(18.9)
(0.4)
(2.6)
0.6
4.4
–
5.0
2021
£m
6.6
(73.2)
38.4
(0.9)
(29.1)
(1.5)
–
–
(0.2)
(1.7)
(30.8)
38.2
(59.3)
–
(4.9)
(3.9)
(29.9)
(60.7)
65.1
–
4.4
International Personal Finance plc (the Company) is a public company limited by shares incorporated in the United Kingdom under the
Companies Act and is registered in England and Wales. The address of the registered office is shown on the back cover of this Annual
Report and Financial Statements.
The principal activities of the Company and its subsidiaries (IPF or the Group) and the nature of the Group’s operations are set out in the
Strategic Report.
These Financial Statements are presented in sterling because that is the currency of the primary economic environment in which the
Group operates. Foreign operations are set out in accordance with the policies set out on page 139.
The Consolidated Group and Parent Company Financial Statements have been prepared in accordance with International Financial
Reporting Standards (‘IFRSs’), International Financial Reporting Interpretations Committee (‘IFRIC’) interpretations and the Companies Act
2006 applicable to companies reporting under IFRS.
The following amendments to standards are mandatory for the first time for the financial year beginning 1 January 2022 but do not have
any material impact on the Group:
– Amendments to IFRS 3 ‘Reference to the Conceptual Framework’;
– Amendments to IAS 16 ‘Property, Plant and Equipment – Proceeds before Intended Use’;
– Amendments to IAS 37 ‘Onerous Contracts – Cost of Fulfilling a Contract’; and
– Annual Improvements to IFRS Standards 2018-2020 – ‘Amendments to IFRS 1 First-time Adoption of International Financial Reporting
Standards, IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture’.
The following standards, interpretations and amendments to existing standards are not yet effective and have not been early adopted
by the Group:
– IFRS 17 ‘Insurance contracts’;
– Amendments to IFRS 10 and IAS 28 ‘Sale or Contribution of Assets between an Investor and its Associate or Joint Venture’;
– Amendments to IAS 1 ‘Classification of Liabilities as Current or Non-current’;
– Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’;
– Amendments to IAS8 ‘Definitions of Accounting Estimates’; and
– Amendments to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’.
18
50.7
41.7
5.0
4.4
Alternative Performance Measures
In reporting financial information, the Group presents alternative performance measures, ‘APMs’ which are not defined or specified under
the requirements of IFRS.
The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders
with additional helpful information on the performance of the business. The APMs are consistent with how the business performance is
planned and reported within the internal management reporting to the Board. Some of these measures are also used for the purpose of
setting remuneration targets.
Each of the APMs, used by the Group are set out on pages 172 to 176 including explanations of how they are calculated and how they
can be reconciled to a statutory measure where relevant.
The Group reports percentage change figures for all performance measures, other than profit or loss before taxation and earnings per
share, after restating prior year figures at a constant exchange rate. The constant exchange rate, which is an APM, retranslates the
previous year measures at the average actual periodic exchange rates used in the current financial year. These measures are presented
as a means of eliminating the effects of exchange rate fluctuations on the year-on-year reported results.
The Group makes certain adjustments to the statutory measures in order to derive APMs where relevant. The Group’s policy is to exclude
items that are considered to be significant in both nature and/or quantum and where treatment as an adjusted item provides
stakeholders with additional useful information to assess the year-on-year trading performance of the Group.
Basis of preparation
The Consolidated Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of
derivative financial instruments at fair value. The principal accounting policies, which have been applied consistently, are set out in the
following paragraphs.
Going concern
The directors have, at the time of approving the Financial Statements, a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the foreseeable future (12 months from the date of this report). Thus they
continue to adopt the going concern basis of accounting in the Financial Statements. Further detail is contained in the Financial review
on page 37.
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135
Financial Statements
Notes to the Financial Statements continued
Basis of consolidation
The Consolidated Financial Statements incorporate the Financial Statements of the Company and the entities controlled by the
Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Company:
– has the power over the investee;
– is exposed, or has rights, to variable return from its involvement with the investee; and
– has the ability to use its power to affects its returns.
All intra-Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between Group companies are
eliminated on consolidation.
The accounting policies of the subsidiaries are consistent with the accounting policies of the Group.
Finance costs
Finance costs comprise the interest on external borrowings which are recognised on an effective interest rate (EIR) basis, and gains or
losses on derivative contracts taken to the income statement. Finance costs also include interest expenses on lease liabilities as required
under IFRS 16.
Segment reporting
The Group’s operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of operating
segments, has been identified as the Board. This information is by business line – European home credit, Mexico home credit and IPF
Digital. A business line is a component of the Group that operates within a particular economic environment and that is subject to risks
and returns that are different from those of components operating in other economic environments.
Revenue
Revenue, which excludes value added tax and intra-Group transactions, comprises revenue earned on amounts receivable from
customers. Revenue on customer receivables is calculated using an EIR. All fees, being interest and non-interest fees are included within
the EIR calculation. The EIR is calculated reflecting all contractual terms using estimated cash flows, being contractual payments
adjusted for the impact of customers paying early.
Directly attributable lending costs are also taken into account in calculating the EIR. Interest income is accrued on all receivables using
the original EIR applied to the loan’s carrying value. Revenue is calculated using the EIR on the gross receivable balance for loans in
stages 1 and 2. For loans in stage 3, the calculation is applied to the net receivable from the start of the next reporting period after the
loan entered stage 3. Revenue is capped at the amount of interest fees charged.
Commissions in respect of insurance products intermediated by the Group are recognised when the underlying insurance is sold
(alongside a loan agreement) if no further service obligations are identified. These commission amounts do not make up a significant
part of the revenue of the Group. The insurance premium payable by the customer is capitalised alongside the customer loan receivable
and both are accounted for on an amortised cost basis.
The accounting for amounts receivable from customers is considered further below.
Exceptional items
Exceptional items are items that are unusual because of their size, nature or incidence and which the directors consider should be
disclosed separately to enable a full understanding of the Group’s underlying results.
Other operating costs
Other operating costs include customer representative commission, marketing costs and foreign exchange gains and losses. All other
costs are included in administrative expenses.
Share-based payments
The cost of providing share-based payments to employees is charged to the income statement over the vesting period of the award. The
corresponding credit is made to retained earnings. The cost is based on the fair value of awards granted at the grant date, which is
determined using both a Monte Carlo simulation and Black-Scholes option pricing model.
At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect
of non market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the income statement
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
In the Parent Company Financial Statements, the fair value of providing share-based payments to employees of subsidiary companies is
treated as an increase in the investment in subsidiaries.
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International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
eliminated on consolidation.
Finance costs
under IFRS 16.
Segment reporting
Revenue
Basis of consolidation
The Consolidated Financial Statements incorporate the Financial Statements of the Company and the entities controlled by the
Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Company:
– has the power over the investee;
– is exposed, or has rights, to variable return from its involvement with the investee; and
– has the ability to use its power to affects its returns.
All intra-Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between Group companies are
The accounting policies of the subsidiaries are consistent with the accounting policies of the Group.
Finance costs comprise the interest on external borrowings which are recognised on an effective interest rate (EIR) basis, and gains or
losses on derivative contracts taken to the income statement. Finance costs also include interest expenses on lease liabilities as required
The Group’s operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of operating
segments, has been identified as the Board. This information is by business line – European home credit, Mexico home credit and IPF
Digital. A business line is a component of the Group that operates within a particular economic environment and that is subject to risks
and returns that are different from those of components operating in other economic environments.
Revenue, which excludes value added tax and intra-Group transactions, comprises revenue earned on amounts receivable from
customers. Revenue on customer receivables is calculated using an EIR. All fees, being interest and non-interest fees are included within
the EIR calculation. The EIR is calculated reflecting all contractual terms using estimated cash flows, being contractual payments
adjusted for the impact of customers paying early.
Directly attributable lending costs are also taken into account in calculating the EIR. Interest income is accrued on all receivables using
the original EIR applied to the loan’s carrying value. Revenue is calculated using the EIR on the gross receivable balance for loans in
stages 1 and 2. For loans in stage 3, the calculation is applied to the net receivable from the start of the next reporting period after the
loan entered stage 3. Revenue is capped at the amount of interest fees charged.
Commissions in respect of insurance products intermediated by the Group are recognised when the underlying insurance is sold
(alongside a loan agreement) if no further service obligations are identified. These commission amounts do not make up a significant
part of the revenue of the Group. The insurance premium payable by the customer is capitalised alongside the customer loan receivable
and both are accounted for on an amortised cost basis.
The accounting for amounts receivable from customers is considered further below.
Exceptional items
Other operating costs
costs are included in administrative expenses.
Share-based payments
Other operating costs include customer representative commission, marketing costs and foreign exchange gains and losses. All other
The cost of providing share-based payments to employees is charged to the income statement over the vesting period of the award. The
corresponding credit is made to retained earnings. The cost is based on the fair value of awards granted at the grant date, which is
determined using both a Monte Carlo simulation and Black-Scholes option pricing model.
At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect
of non market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the income statement
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
In the Parent Company Financial Statements, the fair value of providing share-based payments to employees of subsidiary companies is
treated as an increase in the investment in subsidiaries.
Financial instruments
Classification and measurement
Under IFRS 9 the classification of financial assets is based both on the business model within which the asset is held and the contractual
cash flow characteristics of the asset. There are three principal classification categories for financial assets that are debt instruments:
(i) amortised cost; (ii) fair value through other comprehensive income (FVTOCI); and (iii) fair value through profit or loss (FVTPL). Equity
instruments in the scope of IFRS 9 are measured at fair value with gains and losses recognised in profit or loss unless an irrevocable
election is made to recognise gains or losses in other comprehensive income.
There is no impact on the classification and measurement of the following financial assets held by the Group: derivative financial
instruments; cash and cash equivalents; other receivables and current tax assets.
There is no change in the accounting for any financial liabilities.
Hedge accounting
On initial application of IFRS 9, an entity may choose, as its accounting policy, to continue to apply the hedge accounting requirements
of IAS 39 instead of the hedge accounting requirements of IFRS 9. The Group has elected to apply the IAS 39 hedge accounting
requirements.
Amounts receivable from customers
Amounts receivable from customers are measured at amortised cost under IFRS 9.
Impairment
The impairment model under IFRS 9 reflects expected credit losses. Under the impairment approach in IFRS 9, it is not necessary for a
credit event to have occurred before credit losses are recognised. Instead, an entity always accounts for expected credit losses and
changes in those expected credit losses. The amount of expected credit losses should be updated at each reporting date.
Forward-looking information
Under IFRS 9 macroeconomic overlays are required to include forward-looking information when calculating expected credit losses.
The short-term nature of our lending means that the portfolio turns over quickly, and as a result, changes in the macroeconomic
environment have not historically had a significant impact on amounts receivable from customers.
Where extreme macroeconomic scenarios are experienced, management judgement is used to identify, quantify and apply any
required approach.
Probability of default (PD); loss given default (LGD) and cash flow projections based on the most recent repayments performance,
including management overlays where historic performance is not deemed to be representative of future repayments performance.
See page 141 for key sources of estimation uncertainty on amounts receivable from customers in relation to post model overlays.
Other receivables
Other receivables, including amounts due from Group undertakings, are assessed annually for any evidence of impairment.
Cash and cash equivalents
Exceptional items are items that are unusual because of their size, nature or incidence and which the directors consider should be
disclosed separately to enable a full understanding of the Group’s underlying results.
Cash and cash equivalents comprise cash at bank and in hand. Cash also includes those balances held by agents for operational
purposes. Bank overdrafts are presented in current liabilities to the extent that there is no right of offset with cash balances.
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Annual Report and Financial Statements 2022
137
Financial Statements
Notes to the Financial Statements continued
Derivative financial instruments
The Group uses derivative financial instruments, principally interest rate swaps, currency swaps and forward currency contracts, to
manage the interest rate and currency risks arising from the Group’s underlying business operations. No transactions of a speculative
nature are undertaken and there is not expected to be any sources of hedge ineffectiveness.
All derivative financial instruments are assessed against the hedge accounting criteria set out in IAS 39. The majority of the Group’s
derivatives are cash flow hedges of highly probable forecast transactions and meet the hedge accounting requirements of IAS 39.
Derivatives are recognised initially at the fair value through profit or loss (EVTPL) on the date a derivative contract is entered into and are
remeasured subsequently at each reporting date at their fair value. Where derivatives do not qualify for hedge accounting, movements
in their fair value are recognised immediately within the income statement.
For derivatives that are designated as cash flow hedges and where the hedge accounting criteria are met, the effective portion of
changes in the fair value is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised
immediately in the income statement as part of finance costs. Amounts accumulated in equity are recognised in the income statement
when the income or expense on the hedged item is recognised in the income statement.
The Group discontinues hedge accounting when:
– it is evident from testing that a derivative is not, or has ceased to be, highly effective as a hedge;
– the derivative expires, or is sold, terminated or exercised; or
– the underlying hedged item matures or is sold or repaid.
Borrowings
Borrowings are recognised initially at fair value, being their issue proceeds net of any transaction costs incurred. Borrowings are stated
subsequently at amortised cost; any difference between proceeds net of transaction costs and the redemption value is recognised in the
income statement over the expected life of the borrowings using the EIR. Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance
sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable net assets of the
acquired subsidiary at the date of acquisition.
Goodwill is recognised initially as an asset at cost and is measured subsequently at cost less any accumulated impairment losses.
Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each end of reporting period date.
Goodwill is not amortised but is tested for impairment at least annually and whenever there is an indication that the asset may be
impaired. Impairment is tested by comparing the carrying value of goodwill to the net present value of latest forecast cash flows from the
legacy MCB Finance business cash generating unit. Any impairment is recognised immediately in the income statement. Subsequent
reversals of impairment losses for goodwill are not recognised.
Intangible assets
Intangible assets comprise computer software. Computer software is capitalised as an intangible asset on the basis of the costs incurred
to acquire or develop the specific software and bring it into use.
Intangible assets are amortised (within administrative expenses) on a straight-line basis over their estimated useful economic lives which
is typically five years. The residual values and economic lives are reviewed by management at each balance sheet date, and any
shortfall recognised through the profit and loss account.
Investments in subsidiaries
Investments in subsidiaries are stated at cost, where cost is equal to the fair value of the consideration used to acquire the asset.
Investments are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be
recoverable. An impairment loss is recognised for the amount by which the investment carrying value exceeds the higher of the asset’s
value in use or its fair value less costs to sell.
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Financial Statements
Notes to the Financial Statements continued
The Group uses derivative financial instruments, principally interest rate swaps, currency swaps and forward currency contracts, to
manage the interest rate and currency risks arising from the Group’s underlying business operations. No transactions of a speculative
nature are undertaken and there is not expected to be any sources of hedge ineffectiveness.
All derivative financial instruments are assessed against the hedge accounting criteria set out in IAS 39. The majority of the Group’s
derivatives are cash flow hedges of highly probable forecast transactions and meet the hedge accounting requirements of IAS 39.
Derivatives are recognised initially at the fair value through profit or loss (EVTPL) on the date a derivative contract is entered into and are
remeasured subsequently at each reporting date at their fair value. Where derivatives do not qualify for hedge accounting, movements
in their fair value are recognised immediately within the income statement.
For derivatives that are designated as cash flow hedges and where the hedge accounting criteria are met, the effective portion of
changes in the fair value is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised
immediately in the income statement as part of finance costs. Amounts accumulated in equity are recognised in the income statement
when the income or expense on the hedged item is recognised in the income statement.
The Group discontinues hedge accounting when:
– the derivative expires, or is sold, terminated or exercised; or
– the underlying hedged item matures or is sold or repaid.
Borrowings
Borrowings are recognised initially at fair value, being their issue proceeds net of any transaction costs incurred. Borrowings are stated
subsequently at amortised cost; any difference between proceeds net of transaction costs and the redemption value is recognised in the
income statement over the expected life of the borrowings using the EIR. Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Trade payables
Provisions
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance
sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
Goodwill
acquired subsidiary at the date of acquisition.
Goodwill is recognised initially as an asset at cost and is measured subsequently at cost less any accumulated impairment losses.
Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each end of reporting period date.
Goodwill is not amortised but is tested for impairment at least annually and whenever there is an indication that the asset may be
impaired. Impairment is tested by comparing the carrying value of goodwill to the net present value of latest forecast cash flows from the
legacy MCB Finance business cash generating unit. Any impairment is recognised immediately in the income statement. Subsequent
reversals of impairment losses for goodwill are not recognised.
Intangible assets
Intangible assets comprise computer software. Computer software is capitalised as an intangible asset on the basis of the costs incurred
to acquire or develop the specific software and bring it into use.
Intangible assets are amortised (within administrative expenses) on a straight-line basis over their estimated useful economic lives which
is typically five years. The residual values and economic lives are reviewed by management at each balance sheet date, and any
shortfall recognised through the profit and loss account.
Investments in subsidiaries
Investments in subsidiaries are stated at cost, where cost is equal to the fair value of the consideration used to acquire the asset.
Investments are tested for impairment whenever events or changes in circumstances indicate that the carrying value may not be
recoverable. An impairment loss is recognised for the amount by which the investment carrying value exceeds the higher of the asset’s
value in use or its fair value less costs to sell.
Derivative financial instruments
Property, plant and equipment
Property, plant and equipment is shown at cost less subsequent depreciation and impairment. Cost represents invoiced cost plus any
other costs that are attributable directly to the acquisition of the items. Repair and maintenance costs are expensed as incurred.
Depreciation is calculated to write down assets to their estimated realisable value over their useful economic lives. The following are the
principal bases used:
Category
Fixtures and fittings
Equipment
Motor vehicles
Depreciation rate
10%
20% to 33.3%
Method
Straight–line
Straight–line
25%
Reducing balance
The residual value and useful economic life of all assets are reviewed, and adjusted if appropriate, at each balance sheet date. All items
of property, plant and equipment are tested for impairment whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. An impairment loss is recognised through the income statement for the amount by which the asset’s
carrying value exceeds the higher of the asset’s value in use or its fair value less costs to sell.
– it is evident from testing that a derivative is not, or has ceased to be, highly effective as a hedge;
Share capital
The company has only ordinary share capital. These shares, with a nominal value of 10 pence per share, are classified as equity.
Shares held in treasury and by employee trust
The net amount paid to acquire shares is held in a separate reserve and shown as a reduction in equity.
Foreign currency translation
Items included in the Financial Statements of each of the Group’s subsidiaries are measured using the currency of the primary economic
environment in which the subsidiary operates (the functional currency). The Group’s financial information is presented in sterling.
Transactions that are not denominated in an entity’s functional currency are recorded at the rate of exchange ruling at the date of the
transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the relevant functional currency at the rates
of exchange ruling at the balance sheet date. Differences arising on translation are charged or credited to the income statement,
except when deferred in other comprehensive income as qualifying cash flow hedges.
The income statements of the Group’s subsidiaries (none of which has the currency of a hyperinflationary economy) that have a
functional currency different from sterling are translated into sterling at the average exchange rate and the balance sheets are
translated at the exchange rates ruling at each balance sheet date.
Upon consolidation, exchange differences arising from the translation of the net investment in foreign subsidiaries, and of borrowings
and other currency instruments designated as hedges of such investments, are taken to other comprehensive income.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable net assets of the
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The Group has adopted IFRIC 23. IFRIC 23 sets out how to determine the accounting tax position when there is uncertainty over income
tax treatments. The interpretation requires the Group to determine whether uncertain tax positions are assessed separately or as a group;
and to assess whether it is probable that a tax authority will accept an uncertain tax treatment used/proposed by the entity in its income
tax filings. If this is deemed to be the case, the Group determines its accounting tax position with the treatment used/proposed in its
income tax filings. If this is not deemed to be the case, the Group reflects the effect of uncertainty in determining its accounting tax
position using either the most likely amount or the expected value method.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never
taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date.
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Annual Report and Financial Statements 2022
139
Financial Statements
Notes to the Financial Statements continued
Taxation continued
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. 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 taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition
of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available in the foreseeable future to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based
on tax laws and rates that have been enacted or substantively enacted at the balance sheet date.
The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in
equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is
included in the accounting for the business combination.
Employee benefits
Defined benefit pension scheme
The charge or credit in the income statement in respect of the defined benefit pension scheme comprises the actuarially assessed
current service cost of working employees together with the interest charge on pension liabilities offset by the expected return on pension
scheme assets. As there are no working employees that are members of the defined benefit pension scheme, there are no current
service costs. All charges or credits are allocated to administrative expenses.
The asset or obligation recognised in the balance sheet in respect of the defined benefit pension scheme is the fair value of the scheme’s
assets less the present value of the defined benefit obligation at the balance sheet date.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present
value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality
corporate bonds that have terms to maturity approximating to the terms of the related pension liability.
Cumulative actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised
immediately in other comprehensive income.
The Parent Company share of the defined benefit retirement obligation is based on the proportion of total Group contributions made by
the Parent Company.
Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the income statement on an accruals basis.
140
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
Taxation continued
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. 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 taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition
of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available in the foreseeable future to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based
on tax laws and rates that have been enacted or substantively enacted at the balance sheet date.
The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in
equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is
included in the accounting for the business combination.
liabilities on a net basis.
Current tax and deferred tax for the year
Employee benefits
Defined benefit pension scheme
The charge or credit in the income statement in respect of the defined benefit pension scheme comprises the actuarially assessed
current service cost of working employees together with the interest charge on pension liabilities offset by the expected return on pension
scheme assets. As there are no working employees that are members of the defined benefit pension scheme, there are no current
service costs. All charges or credits are allocated to administrative expenses.
The asset or obligation recognised in the balance sheet in respect of the defined benefit pension scheme is the fair value of the scheme’s
assets less the present value of the defined benefit obligation at the balance sheet date.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present
value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality
corporate bonds that have terms to maturity approximating to the terms of the related pension liability.
Cumulative actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised
immediately in other comprehensive income.
The Parent Company share of the defined benefit retirement obligation is based on the proportion of total Group contributions made by
the Parent Company.
Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the income statement on an accruals basis.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Consolidated Financial Statements requires the Group to make estimates and judgements that affect the application
of policies and reported accounts.
Critical judgements represent key decisions made by management in the application of the Group accounting policies. Where a
significant risk of materially different outcomes exists due to management assumptions or sources of estimation uncertainty, this will
represent a critical accounting estimate. Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results
may differ from these estimates.
The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities are discussed below.
Key sources of estimation uncertainty
In the application of the Group’s accounting policies, the directors are required to make estimations that have a significant impact on
the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and
The following are the critical estimations, that the directors have made in the process of applying the Group’s accounting policies and
that have the most significant effect on the amounts recognised in the Financial Statements.
Revenue recognition
The estimate used in respect of revenue recognition is the methodology used to calculate the EIR. In order to determine the EIR
applicable to loans an estimate must be made of the expected life of each loan and hence the cash flows relating thereto. These
estimates are based on historical data and are reviewed regularly. Based on a 3% variation in the EIR (2021: 3%), it is estimated that the
amounts receivable from customers would be higher/lower by £8.7m (2021: £7.7m). This sensitivity is based on historic fluctuations in EIRs.
Amounts receivable from customers
The Group reviews its portfolio of customer loans and receivables for impairment on a weekly or monthly basis. The Group reviews the
most recent repayments performance to determine whether there is objective evidence which indicates that there has been an adverse
effect on expected future cash flows. For the purposes of assessing the impairment of customer loans and receivables, customers are
categorised into stages based on days past due as this is considered to be the most reliable predictor of future payment performance.
The level of impairment is calculated using historical payment performance to generate both the estimated expected loss and also the
timing of future cash flows for each agreement. The expected loss is calculated using probability of default (PD) and loss given default
(LGD) parameters.
Recurring post model adjustments on amounts receivable from customers
Impairment models are monitored regularly to test their continued capability to predict the timing and quantum of customer repayments
in the context of the recent customer payment performance. The models used typically have a strong predictive capability reflecting the
relatively stable nature of the business and therefore the actual performance does not usually vary significantly from the estimated
performance. The models are ordinarily updated at least twice per year. Where the models are expected to show an increase in the
expected loss or a slowing of the future cashflows in the following 12 months, an adjustment is applied to the models. At 31 December
2022, this adjustment was a reduction in receivables of £11.6m (2021: reduction of £13.6m). This adjustment is included within the other
impairment line in note 17.
Post model overlays (PMOs) on amounts receivable from customers
2022
Home credit
IPF Digital
Group
2021
Home credit
IPF Digital
Group
140
International Personal Finance plc
Annual Report and Financial Statements 2022
Covid-19 PMO
£m
Cost-of-living PMO
£m
Hungary moratorium PMO
£m
Total PMOs
£m
–
–
–
17.5
3.1
20.6
4.3
–
4.3
21.8
3.1
24.9
CV19 PMO
£m
Cost-of-living PMO
£m
Hungary moratorium PMO
£m
Total PMOs
£m
7.8
–
7.8
5.3
1.5
6.8
7.8
–
7.8
20.9
1.5
22.4
141
Financial Statements
Notes to the Financial Statements continued
Key sources of estimation uncertainty continued
High inflation rates associated with the global cost-of-living crisis may reduce customers’ disposable income, which may impact their
ability to make repayments. A full assessment of the impact of the cost-of-living crisis and associated reduction to the disposable income
of customers has been performed and concluded that it is likely to result in increased risks across both the home credit and IPF Digital
businesses. As detailed in the accounting policy for amounts receivable from customers on page 137, these increased risks are not
reflected in the Group’s standard impairment models due to the short-term nature of lending. PMOs have been established and based
on management’s current expectations the impact of these PMOs was to increase impairment provisions at 31 December 2022 by a
further £20.6m (2021: £6.8m). In order to calculate this PMO, country-specific expert knowledge, informed by economic forecast data to
estimate the increase in losses, has been used and resulted in a range of outcomes from £15.4m to £25.8m. This represents
management’s current assessment of a reasonable range in assumptions.
The Hungarian debt moratorium, which initially began in March 2020, ended in December 2022. There remains a small proportion of the
portfolio that has at some point been in the moratorium. Given the age of these loans, PMOs have been applied to the impairment
models in order to calculate the continued risks that are not fully reflected in the standard impairment models. Based on management’s
current expectations, the impact of these PMOs was to increase impairment provisions at 31 December 2022 by £4.3m (2021: £7.8m). In
order to calculate the PMO, the portfolio was segmented by analysis of the most recent payment performance and, using this
information, assumptions were made around expected credit losses. This represents management’s current assessment of a reasonable
outcome from the actual repayment performance on the debt moratorium impacted portfolio.
Polish early settlement rebates
As previously reported, a comprehensive review was conducted in 2020 by UOKiK, the Polish competition and consumer protection
authority, of rebating practices by banks and other consumer credit providers on early loan settlement, including those of the Group’s
Polish businesses. The impact of the resolution of this matter resulted in higher early settlement rebates being payable to customers that
settled their agreements early before the balance sheet date. A number of risks and uncertainties remain, in particular with respect to
future claims volumes relating to historic rebates paid and the nature of any customer contact exercise required. The total amount
provided of £0.6m (2021: £3.3m) represents the Group’s best estimate of the likely future cost of increasing historic customer rebates,
based on its current strategy to achieve resolution. Whilst the volume of claims could differ from the estimates, the Group’s expectation at
this stage is that claims rates are unlikely to be more than 25% higher than the assumed rate.
Claims management charges in Spain
The Group holds provisions in respect of claims management charges in Spain following an increase in incidence of these claims since
2020. The charges were reviewed by reference to the claims incidence experience and average cost of resolution in the Spanish
business. The provision recorded of £4.7m, split £0.6m against receivables and £4.1m in provisions, (2021: £7.1m, split £5.0m against
receivables and £2.1m in provisions) represents the Group’s best estimate of future claims volumes and the cost of their management,
based on current claims management methodology, together with current and future product plans. Whilst the future claims incidence
and cost of management could differ from estimates, the Group’s expectation at this stage is that overall costs are unlikely to be more
than 25% higher than those assumed in the charges.
Investment in subsidiaries
During the year, as a result of the Group net asset position and the market capitalisation of the Company being lower than the carrying
value of the investment in subsidiaries, a review of the recoverable amount of the carrying value of the investment has been performed.
This review entails comparing the investments value to the net present value of latest forecast cash flows from the operating businesses.
This review confirmed that no impairment of the investment is required. A shortfall in profitability compared to current expectations may
result in future adjustments to investments in subsidiary balances.
Tax
Estimations must be exercised in the calculation of the Group’s tax provision, in particular with regard to the existence and extent of
tax risks.
Deferred tax assets arise from timing differences between the accounting and tax treatment of revenue and impairment transactions
and tax losses. Estimations must be made regarding the extent to which timing differences reverse and an assessment must be made of
the extent to which future profits will be generated to absorb tax losses. A shortfall in profitability compared to current expectations may
result in future adjustments to deferred tax asset balances.
142
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
Key sources of estimation uncertainty continued
High inflation rates associated with the global cost-of-living crisis may reduce customers’ disposable income, which may impact their
ability to make repayments. A full assessment of the impact of the cost-of-living crisis and associated reduction to the disposable income
of customers has been performed and concluded that it is likely to result in increased risks across both the home credit and IPF Digital
businesses. As detailed in the accounting policy for amounts receivable from customers on page 137, these increased risks are not
reflected in the Group’s standard impairment models due to the short-term nature of lending. PMOs have been established and based
on management’s current expectations the impact of these PMOs was to increase impairment provisions at 31 December 2022 by a
further £20.6m (2021: £6.8m). In order to calculate this PMO, country-specific expert knowledge, informed by economic forecast data to
estimate the increase in losses, has been used and resulted in a range of outcomes from £15.4m to £25.8m. This represents
management’s current assessment of a reasonable range in assumptions.
The Hungarian debt moratorium, which initially began in March 2020, ended in December 2022. There remains a small proportion of the
portfolio that has at some point been in the moratorium. Given the age of these loans, PMOs have been applied to the impairment
models in order to calculate the continued risks that are not fully reflected in the standard impairment models. Based on management’s
current expectations, the impact of these PMOs was to increase impairment provisions at 31 December 2022 by £4.3m (2021: £7.8m). In
order to calculate the PMO, the portfolio was segmented by analysis of the most recent payment performance and, using this
information, assumptions were made around expected credit losses. This represents management’s current assessment of a reasonable
outcome from the actual repayment performance on the debt moratorium impacted portfolio.
Polish early settlement rebates
As previously reported, a comprehensive review was conducted in 2020 by UOKiK, the Polish competition and consumer protection
authority, of rebating practices by banks and other consumer credit providers on early loan settlement, including those of the Group’s
Polish businesses. The impact of the resolution of this matter resulted in higher early settlement rebates being payable to customers that
settled their agreements early before the balance sheet date. A number of risks and uncertainties remain, in particular with respect to
future claims volumes relating to historic rebates paid and the nature of any customer contact exercise required. The total amount
provided of £0.6m (2021: £3.3m) represents the Group’s best estimate of the likely future cost of increasing historic customer rebates,
based on its current strategy to achieve resolution. Whilst the volume of claims could differ from the estimates, the Group’s expectation at
this stage is that claims rates are unlikely to be more than 25% higher than the assumed rate.
Claims management charges in Spain
The Group holds provisions in respect of claims management charges in Spain following an increase in incidence of these claims since
2020. The charges were reviewed by reference to the claims incidence experience and average cost of resolution in the Spanish
business. The provision recorded of £4.7m, split £0.6m against receivables and £4.1m in provisions, (2021: £7.1m, split £5.0m against
receivables and £2.1m in provisions) represents the Group’s best estimate of future claims volumes and the cost of their management,
based on current claims management methodology, together with current and future product plans. Whilst the future claims incidence
and cost of management could differ from estimates, the Group’s expectation at this stage is that overall costs are unlikely to be more
than 25% higher than those assumed in the charges.
Investment in subsidiaries
During the year, as a result of the Group net asset position and the market capitalisation of the Company being lower than the carrying
value of the investment in subsidiaries, a review of the recoverable amount of the carrying value of the investment has been performed.
This review entails comparing the investments value to the net present value of latest forecast cash flows from the operating businesses.
This review confirmed that no impairment of the investment is required. A shortfall in profitability compared to current expectations may
result in future adjustments to investments in subsidiary balances.
Tax
tax risks.
Estimations must be exercised in the calculation of the Group’s tax provision, in particular with regard to the existence and extent of
Deferred tax assets arise from timing differences between the accounting and tax treatment of revenue and impairment transactions
and tax losses. Estimations must be made regarding the extent to which timing differences reverse and an assessment must be made of
the extent to which future profits will be generated to absorb tax losses. A shortfall in profitability compared to current expectations may
result in future adjustments to deferred tax asset balances.
1. Segment analysis
Group
European home credit
Mexico home credit
IPF Digital
UK costs*
Total
Revenue
Impairment
Profit before taxation
2022
£m
317.5
210.9
117.1
–
645.5
2021
£m
284.7
146.0
118.0
–
2022
£m
5.2
75.5
26.0
–
548.7
106.7
2021
£m
(1.6)
33.8
24.0
–
56.2
2022
£m
65.6
17.7
8.8
(14.7)
77.4
2021
£m
54.5
18.4
8.7
(13.9)
67.7
* Although UK costs are not classified as a separate segment in accordance with IFRS 8 ‘Operating segments’, they are shown separately above in order to provide a reconciliation to
profit before taxation.
Group
European home credit
Mexico home credit
IPF Digital
UK
Total
Group
European home credit
Mexico home credit
IPF Digital
UK
Total
Group
European home credit
Mexico home credit
IPF Digital
UK
Total
Segment assets
Segment liabilities
2022
£m
590.3
255.6
248.4
76.8
1,171.1
2021
£m
511.5
192.8
211.6
83.4
999.3
2022
£m
(348.8)
(124.2)
(123.4)
(129.5)
(725.9)
2021
£m
(305.5)
(86.9)
(91.3)
(148.5)
(632.2)
Expenditure on
intangible assets
Amortisation
2022
£m
–
–
5.0
9.7
14.7
2021
£m
–
–
3.8
6.5
10.3
2022
£m
–
–
4.0
8.6
12.6
2021
£m
–
–
5.6
9.1
14.7
Capital expenditure
Depreciation
2022
£m
2021
£m
2022
£m
2021
£m
7.0
1.8
0.3
–
9.1
2.2
1.1
0.3
1.5
5.1
4.2
1.5
0.3
0.2
6.2
4.0
1.1
0.5
–
5.6
All revenue comprises amounts earned on amounts receivable from customers.
The Group is domiciled in the UK and no revenue is generated in the UK.
The total of non-current assets other than financial instruments and deferred tax assets located in the UK is £23.3m (2021: £25.4m), and
the total of non-current assets located in other countries is £279.7m (2021: £209.3m).
There is no single external customer from which significant revenue is generated.
The segments shown above are the segments for which management information is presented to the Board, which is deemed to be the
Group’s chief operating decision maker.
142
International Personal Finance plc
Annual Report and Financial Statements 2022
143
Financial Statements
Notes to the Financial Statements continued
2. Finance costs
Group
Interest payable on borrowings
Interest payable on lease liabilities
Total finance costs
3. Profit before taxation
Profit before taxation is stated after charging:
Group
Depreciation of property, plant and equipment (note 14)
Depreciation of right-of-use assets (note 15)
(Profit)/loss on disposal of property, plant and equipment
Amortisation of intangible assets (note 12)
Employee costs (note 9)
4. Auditor’s remuneration
During the year, the Group incurred the following costs in respect of services provided by the Group auditor:
Group
Fees payable to the Company auditor for the audit of the Parent Company and Consolidated Financial Statements
Fees payable to the Company auditor and its associates for other services:
– audit of Company’s subsidiaries pursuant to legislation
– other assurance services
Further details on auditor remuneration can be found in the Audit and Risk Committee Report on page 93.
5. Tax expense
Group
Current tax expense/(income):
– current year
– prior year
Total current tax expense
Deferred tax expense/(income) (note 16):
– current year
– prior year
Total deferred tax expense
Pre-exceptional tax expense
Exceptional tax credit (note 10)
Total tax expense
2022
£m
66.5
1.6
68.1
2022
£m
6.2
8.5
(0.1)
12.6
168.4
2022
£m
0.1
1.3
0.2
2022
£m
29.8
(1.8)
28.0
2.0
1.1
3.1
31.1
(10.5)
20.6
2021
£m
52.6
1.4
54.0
2021
£m
5.6
8.4
0.4
14.7
156.9
2021
£m
0.1
0.9
0.1
2021
£m
27.2
(1.5)
25.7
1.9
(1.8)
0.1
25.8
–
25.8
Further information regarding the deferred tax expense is shown in note 16, and primarily relates to timing differences in respect of
revenue and impairment and tax losses.
The pre-exceptional taxation charge on the profit for 2022 is £31.1m representing an effective tax rate for the year of approximately 40%
(2021: an effective tax rate of approximately 38%).
144
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
2. Finance costs
Group
Interest payable on borrowings
Interest payable on lease liabilities
Total finance costs
3. Profit before taxation
Profit before taxation is stated after charging:
Group
Depreciation of property, plant and equipment (note 14)
Depreciation of right-of-use assets (note 15)
(Profit)/loss on disposal of property, plant and equipment
Amortisation of intangible assets (note 12)
Employee costs (note 9)
4. Auditor’s remuneration
5. Tax expense
Current tax expense/(income):
Group
– current year
– prior year
Total current tax expense
– current year
– prior year
Total deferred tax expense
Pre-exceptional tax expense
Exceptional tax credit (note 10)
Total tax expense
Deferred tax expense/(income) (note 16):
During the year, the Group incurred the following costs in respect of services provided by the Group auditor:
Group
Fees payable to the Company auditor for the audit of the Parent Company and Consolidated Financial Statements
Fees payable to the Company auditor and its associates for other services:
– audit of Company’s subsidiaries pursuant to legislation
– other assurance services
Further details on auditor remuneration can be found in the Audit and Risk Committee Report on page 93.
2022
£m
66.5
1.6
68.1
2022
£m
6.2
8.5
(0.1)
12.6
168.4
2022
£m
0.1
1.3
0.2
2022
£m
29.8
(1.8)
28.0
2.0
1.1
3.1
31.1
(10.5)
20.6
2021
£m
52.6
1.4
54.0
2021
£m
5.6
8.4
0.4
14.7
156.9
2021
£m
0.1
0.9
0.1
2021
£m
27.2
(1.5)
25.7
1.9
(1.8)
0.1
25.8
–
25.8
Further information regarding the deferred tax expense is shown in note 16, and primarily relates to timing differences in respect of
revenue and impairment and tax losses.
The pre-exceptional taxation charge on the profit for 2022 is £31.1m representing an effective tax rate for the year of approximately 40%
(2021: an effective tax rate of approximately 38%).
5. Tax expense continued
Group
Deferred tax credit/(charge) on net fair value (losses)/gains – cash flow hedges
Deferred tax credit on actuarial (losses)/gains on retirement benefit asset
Total tax credit/(charge) on other comprehensive income
2022
£m
0.8
0.9
1.7
The rate of tax expense on the profit before taxation for the year ended 31 December 2022 is higher than (2021: higher than) the
standard rate of corporation tax in the UK of 19.0% (2021: 19.0%). The differences are explained as follows:
Group
Profit before taxation
Profit before taxation multiplied by the standard rate of corporation tax in the UK of 19.0% (2021: 19.0%)
Effects of:
– adjustment in respect of prior years
– adjustment in respect of foreign tax rates
– non-deductible bad debt expense
– other expenses not deductible for tax purposes
– change in unrecognised deferred tax assets
– impact of UK rate change on deferred tax asset / liability
Pre-exceptional tax expense
Exceptional tax credit (note 10)
Total tax expense
2022
£m
77.4
14.7
(0.7)
2.6
10.1
1.6
2.9
(0.1)
31.1
(10.5)
20.6
2021
£m
(0.7)
0.1
(0.6)
2021
£m
67.7
12.9
(3.4)
5.7
5.2
(1.3)
5.9
0.8
25.8
–
25.8
The Group is subject to tax audits in respect of the Mexican home credit business (regarding 2017) and in respect of the Polish digital
business (regarding 2019).
6. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit attributable to shareholders of £56.8m (2021: £41.9m) by the weighted
average number of shares in issue during the period of 222.2m (2021: 223.2m) which has been adjusted to exclude the weighted
average number of shares held in treasury and by the employee trust.
For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential
ordinary share options relating to employees of the Group.
The weighted average number of shares used in the basic and diluted EPS calculations can be reconciled as follows:
Group
Used in basic EPS calculation
Dilutive effect of awards
Used in diluted EPS calculation
Basic and diluted EPS are presented below:
Group
Basic EPS
Dilutive effect of awards
Diluted EPS
Basic and diluted pre-exceptional EPS are presented below:
Group
Basic EPS
Exceptional item
Basic pre-exceptional EPS
Dilutive effect of awards
Diluted pre-exceptional EPS
144
International Personal Finance plc
Annual Report and Financial Statements 2022
2022
£m
222.2
11.8
234.0
2021
£m
223.2
12.1
235.3
2022
pence
2021
pence
25.6
(1.3)
24.3
18.8
(1.0)
17.8
2022
pence
2021
pence
25.6
(4.8)
20.8
(1.0)
19.8
18.8
-
18.8
(1.0)
17.8
145
Financial Statements
Notes to the Financial Statements continued
7. Dividends
Group and Company
Interim dividend of 2.7 pence per share (2021: interim dividend of 2.2 pence per share)
Final 2021 dividend of 5.8 pence per share (2021 : final 2020 dividend of nil pence per share)
2022
£m
6.0
12.9
18.9
2021
£m
4.9
–
4.9
Based on the leadership’s successful execution of our growth strategy, the Board is pleased to declare a final dividend of 6.5 pence per
share, bringing the full-year dividend to 9.2 pence per share (2021: full-year dividend 8.0 pence per share). Subject to shareholder
approval, the final dividend will be paid on 5 May 2023 to shareholders on the register at the close of business on 11 April 2023. The
shares will be marked ex-dividend on 6 April 2023.
8. Remuneration of key management personnel
The key management personnel (as defined by IAS 24 ‘Related party disclosures’) of the Group are deemed to be the executive and
non-executive directors of IPF and the members of the Senior Leadership Team.
Short-term employee benefits
Post-employment benefits
Share-based payments
Total
2022
£m
3.7
0.1
0.5
4.3
2021
£m
3.8
0.1
0.1
4.0
Short-term employee benefits comprise salary/fees and benefits earned in the year.
Post-employment benefits represent the sum of contributions into the Group’s stakeholder pension scheme and personal pension
arrangements.
For gains arising on executive directors’ share options see page 117.
Disclosures in respect of the Group’s directors are included in the Directors’ Remuneration Report.
9. Employee information
The average full-time equivalent of people employed by the Group (including executive directors) was as follows:
Group
Full-time*
Part-time**
2022
Number
2021
Number
6,130
1,302
7,432
5,842
1,465
7,307
* Includes 1,088 customer representatives in Hungary and Romania (2021: includes 770 customer representatives in Hungary and Romania).
** Includes 1,154 customer representatives in Hungary and Romania (2021: includes 1,285 customer representatives in Hungary and Romania).
Agents are self-employed other than in Hungary and Romania where they are required by legislation to be employed.
The average number of employees by category was as follows:
Group
Operations
Administration
Head office and loss prevention
Group employment costs for all employees (including executive directors) were as follows:
Group
Gross wages and salaries
Social security costs
Pension charge – defined contribution schemes (note 27)
Pension credit – defined benefit schemes (note 27)
Share-based payment charge (note 28)
Total
146
2022
Number
2021
Number
4,492
395
2,545
7,432
2022
£m
145.5
20.0
0.8
(0.1)
2.2
4,330
441
2,536
7,307
2021
£m
137.4
19.1
0.7
(0.1)
(0.2)
168.4
156.9
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
7. Dividends
Group and Company
Interim dividend of 2.7 pence per share (2021: interim dividend of 2.2 pence per share)
Final 2021 dividend of 5.8 pence per share (2021 : final 2020 dividend of nil pence per share)
Based on the leadership’s successful execution of our growth strategy, the Board is pleased to declare a final dividend of 6.5 pence per
share, bringing the full-year dividend to 9.2 pence per share (2021: full-year dividend 8.0 pence per share). Subject to shareholder
approval, the final dividend will be paid on 5 May 2023 to shareholders on the register at the close of business on 11 April 2023. The
shares will be marked ex-dividend on 6 April 2023.
8. Remuneration of key management personnel
The key management personnel (as defined by IAS 24 ‘Related party disclosures’) of the Group are deemed to be the executive and
non-executive directors of IPF and the members of the Senior Leadership Team.
Short-term employee benefits comprise salary/fees and benefits earned in the year.
Post-employment benefits represent the sum of contributions into the Group’s stakeholder pension scheme and personal pension
arrangements.
For gains arising on executive directors’ share options see page 117.
Disclosures in respect of the Group’s directors are included in the Directors’ Remuneration Report.
9. Employee information
The average full-time equivalent of people employed by the Group (including executive directors) was as follows:
* Includes 1,088 customer representatives in Hungary and Romania (2021: includes 770 customer representatives in Hungary and Romania).
** Includes 1,154 customer representatives in Hungary and Romania (2021: includes 1,285 customer representatives in Hungary and Romania).
Agents are self-employed other than in Hungary and Romania where they are required by legislation to be employed.
The average number of employees by category was as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
Total
Group
Full-time*
Part-time**
Group
Operations
Administration
Head office and loss prevention
2022
£m
6.0
12.9
18.9
2021
£m
4.9
–
4.9
2022
£m
3.7
0.1
0.5
4.3
2021
£m
3.8
0.1
0.1
4.0
2022
Number
2021
Number
6,130
1,302
7,432
5,842
1,465
7,307
2022
Number
2021
Number
4,492
395
2,545
7,432
2022
£m
145.5
20.0
0.8
(0.1)
2.2
4,330
441
2,536
7,307
2021
£m
137.4
19.1
0.7
(0.1)
(0.2)
168.4
156.9
Group employment costs for all employees (including executive directors) were as follows:
Group
Gross wages and salaries
Social security costs
Pension charge – defined contribution schemes (note 27)
Pension credit – defined benefit schemes (note 27)
Share-based payment charge (note 28)
Total
146
10. Exceptional tax items
The 2022 income statement includes a net exceptional tax gain of £10.5m (2021: £nil) which comprises the following items:
Group
Benefit of Polish Supreme Administrative Court Decision
Decision of the General Court of the EU on State Aid
Temporary Hungarian extra profit special tax
Exceptional tax items
Further information relating to the exceptional tax items is shown on page 34.
11. Goodwill
Group
Net book value
At 1 January
Exchange adjustments
At 31 December
2022
£m
30.9
(15.3)
(5.1)
10.5
2021
£m
24.4
(1.5)
22.9
2022
£m
22.9
1.3
24.2
Goodwill is tested annually for impairment or more frequently if there are indications that goodwill might be impaired. The recoverable
amount is determined from a value in use calculation, based on the expected cash flows resulting from the legacy MCB business’
outstanding customer receivables and taking into account the collect out of the Finnish business. The key assumptions applied in the
value in use calculation relate to the discount rates and the cash flow forecasts used. The rate used to discount the forecast cash flows is
12% (2021: 10%) and would need to increase to 14% for the goodwill balance to be impaired; the cash flow forecasts arise over a 4 year
period and would need to be 17% lower than currently estimated for the goodwill balance to be impaired.
12. Intangible assets
Group
Net book value
At 1 January
Additions
Amortisation
Exchange adjustments
At 31 December
Analysed as:
– cost
– amortisation
At 31 December
2022
£m
25.2
14.7
(12.6)
0.6
27.9
2021
£m
30.2
10.3
(14.7)
(0.6)
25.2
142.2
(114.3)
27.9
126.2
(101.0)
25.2
Intangible assets comprise computer software and are a combination of self-developed and purchased assets. All purchased assets
have had further capitalised development on them, meaning it is not possible to disaggregate fully between the relevant
intangible categories.
The Company has no intangible assets.
International Personal Finance plc
Annual Report and Financial Statements 2022
147
Financial Statements
Notes to the Financial Statements continued
13. Investment in subsidiaries
Company
Investment in subsidiaries
Share-based payment adjustment
Total investment in subsidiaries
2022
£m
712.5
19.8
732.3
2021
£m
712.5
18.9
731.4
The company acquired the international businesses of the Provident Financial plc Group on 16 July 2007 by issuing one company share
to the shareholders of Provident Financial plc for each Provident Financial plc share held by them. The fair value of the consideration
issued in exchange for the investment in these international businesses was £663.6m and this amount was therefore capitalised as a cost
of investment. On 6 February 2015, the Group acquired 100% of the issued share capital of MCB Finance Group plc (MCB) for a cash
consideration of £23.2m. Subsequent to this, further investments of £25.7m have been made in these acquired businesses.
£19.8m (2021: £18.9m) has been added to the cost of investment representing the fair value of the share-based payment awards over
the company’s shares made to employees of subsidiary companies of the company. Corresponding credits are taken to reserves.
During the year, as a result of the Group net asset position and the market capitalisation of the Company being lower than the carrying
value of the investment in subsidiaries, a review has been carried out of the recoverable amount of the carrying value of the investment.
This review entailed comparing the investments value to the net present value of latest forecast cash flows from the operating businesses.
The cash flow forecasts are based on the most recent financial budgets approved by the Board. The rate used to discount the forecast
cash flows was 12% (2021: 10%). This review confirmed that no impairment of the investment is required.
The subsidiary companies of IPF plc, which are 100% owned by the Group and included in these Consolidated Financial Statements, are
detailed below:
Subsidiary company
Avalist Credit Secure, S.L.
Compañía Estelar Poniente, S.A. de C.V.
División Estratégica Central, S.A. de C.V.
Estrategias Divisionales Céntricas, S.A. de C.V.
Estrategias Sureñas de Avanzada, S.A. de C.V.
International Credit Insurance Limited
International Personal Finance Digital Spain S.A.U.
International Personal Finance Investments Limited
IPF Ceská republica s.r.o
IPF Development (2003) Limited
IPF Digital AS
IPF Digital Australia Pty Limited
IPF Digital Finland Oy
IPF Digital Group Limited
IPF Digital Latvia, SIA
IPF Digital Lietuva, UAB
IPF Digital Mexico S.A de C.V
IPF Financial Services Limited
IPF Financing Limited
IPF Guernsey (2) Limited
IPF Holdings Limited
IPF International Limited
IPF Investments Polska sp. z o.o.
IPF Management Unlimited Company
IPF Nordic Limited
IPF Polska sp. z o.o.
La Regional Operaciones Centrales, S.A. de C.V.
La Tapatía Operaciones de Avanzada, S.A. de C.V.
Metropolitana Estrella de Operaciones, S.A. de C.V.
Operadora Regiomontana de Estrategias Integrales, S.A. de C.V.
PF (Netherlands) B.V.
Provident Agent De Asigurae srl
Provident Financial Romania IFN S.A.
Provident Financial s.r.o.
Provident Financial Zrt.
Provident Mexico S.A. de C.V.
Provident Polska S.A.
Provident Polska sp. z o.o.
Provident Servicios de Agencia S.A. de C.V.
Provident Servicios S.A. de C.V.
Country of incorporation and operation
Spain
Mexico
Mexico
Mexico
Mexico
Guernsey
Spain
United Kingdom
Czech Republic
United Kingdom
Estonia
Australia
Finland
United Kingdom
Latvia
Lithuania
Mexico
United Kingdom
United Kingdom
Guernsey
United Kingdom
United Kingdom
Poland
Ireland
United Kingdom
Poland
Mexico
Mexico
Mexico
Mexico
Netherlands
Romania
Romania
Czech Republic
Hungary
Mexico
Poland
Poland
Mexico
Mexico
Principal activity
Provision of services
Provision of services (agents)
Holding company
Provision of services (agents)
Provision of services (agents)
Provision of services
Digital credit
Holding company
Non-trading
Provision of services
Digital credit/provision of services
Digital credit
Digital credit
Holding company
Digital credit
Digital credit
Digital credit
Provision of services
Provision of services
Dormant
Holding company
Provision of services
Provision of services
Provision of services
Provision of services
Digital credit
Holding Company
Provision of services (agents)
Provision of services (agents)
Provision of services (agents)
Provision of services
Provision of services
Home credit
Home credit
Home credit
Home credit
Home credit
Non-trading
Provision of services
Provision of services
All UK subsidiaries are registered at the same registered office as the Company, and this address is shown on the back cover of this
Annual Report and Financial Statements. All subsidiaries are tax resident in their country of incorporation except for International Credit
Insurance Limited and IPF Management Unlimited Company which are tax resident in the UK.
148
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
13. Investment in subsidiaries
Company
Investment in subsidiaries
Share-based payment adjustment
Total investment in subsidiaries
2022
£m
712.5
19.8
732.3
2021
£m
712.5
18.9
731.4
The company acquired the international businesses of the Provident Financial plc Group on 16 July 2007 by issuing one company share
to the shareholders of Provident Financial plc for each Provident Financial plc share held by them. The fair value of the consideration
issued in exchange for the investment in these international businesses was £663.6m and this amount was therefore capitalised as a cost
of investment. On 6 February 2015, the Group acquired 100% of the issued share capital of MCB Finance Group plc (MCB) for a cash
consideration of £23.2m. Subsequent to this, further investments of £25.7m have been made in these acquired businesses.
£19.8m (2021: £18.9m) has been added to the cost of investment representing the fair value of the share-based payment awards over
the company’s shares made to employees of subsidiary companies of the company. Corresponding credits are taken to reserves.
During the year, as a result of the Group net asset position and the market capitalisation of the Company being lower than the carrying
value of the investment in subsidiaries, a review has been carried out of the recoverable amount of the carrying value of the investment.
This review entailed comparing the investments value to the net present value of latest forecast cash flows from the operating businesses.
The cash flow forecasts are based on the most recent financial budgets approved by the Board. The rate used to discount the forecast
cash flows was 12% (2021: 10%). This review confirmed that no impairment of the investment is required.
The subsidiary companies of IPF plc, which are 100% owned by the Group and included in these Consolidated Financial Statements, are
Country of incorporation and operation
detailed below:
Subsidiary company
Avalist Credit Secure, S.L.
Compañía Estelar Poniente, S.A. de C.V.
División Estratégica Central, S.A. de C.V.
Estrategias Divisionales Céntricas, S.A. de C.V.
Estrategias Sureñas de Avanzada, S.A. de C.V.
International Credit Insurance Limited
International Personal Finance Digital Spain S.A.U.
International Personal Finance Investments Limited
IPF Ceská republica s.r.o
IPF Development (2003) Limited
IPF Digital AS
IPF Digital Australia Pty Limited
IPF Digital Finland Oy
IPF Digital Group Limited
IPF Digital Latvia, SIA
IPF Digital Lietuva, UAB
IPF Digital Mexico S.A de C.V
IPF Financial Services Limited
IPF Financing Limited
IPF Guernsey (2) Limited
IPF Holdings Limited
IPF International Limited
IPF Investments Polska sp. z o.o.
IPF Management Unlimited Company
IPF Nordic Limited
IPF Polska sp. z o.o.
La Regional Operaciones Centrales, S.A. de C.V.
La Tapatía Operaciones de Avanzada, S.A. de C.V.
Metropolitana Estrella de Operaciones, S.A. de C.V.
Operadora Regiomontana de Estrategias Integrales, S.A. de C.V.
PF (Netherlands) B.V.
Provident Agent De Asigurae srl
Provident Financial Romania IFN S.A.
Provident Financial s.r.o.
Provident Financial Zrt.
Provident Mexico S.A. de C.V.
Provident Polska S.A.
Provident Polska sp. z o.o.
Provident Servicios de Agencia S.A. de C.V.
Provident Servicios S.A. de C.V.
Estonia
Digital credit/provision of services
Spain
Mexico
Mexico
Mexico
Mexico
Guernsey
Spain
United Kingdom
Czech Republic
United Kingdom
United Kingdom
Australia
Finland
Latvia
Lithuania
Mexico
United Kingdom
United Kingdom
Guernsey
United Kingdom
United Kingdom
United Kingdom
Poland
Ireland
Poland
Mexico
Mexico
Mexico
Mexico
Netherlands
Romania
Romania
Czech Republic
Hungary
Mexico
Poland
Poland
Mexico
Mexico
Principal activity
Provision of services
Provision of services (agents)
Holding company
Provision of services (agents)
Provision of services (agents)
Provision of services
Digital credit
Holding company
Non-trading
Provision of services
Digital credit
Digital credit
Holding company
Digital credit
Digital credit
Digital credit
Provision of services
Provision of services
Dormant
Holding company
Provision of services
Provision of services
Provision of services
Provision of services
Digital credit
Holding Company
Provision of services (agents)
Provision of services (agents)
Provision of services (agents)
Provision of services
Provision of services
Home credit
Home credit
Home credit
Home credit
Home credit
Non-trading
Provision of services
Provision of services
All UK subsidiaries are registered at the same registered office as the Company, and this address is shown on the back cover of this
Annual Report and Financial Statements. All subsidiaries are tax resident in their country of incorporation except for International Credit
Insurance Limited and IPF Management Unlimited Company which are tax resident in the UK.
14. Property, plant and equipment
Group
Cost
At 1 January 2021
Exchange adjustments
Additions
Disposals
At 31 December 2021
Depreciation
At 1 January 2021
Exchange adjustments
Charge to the income statement
Disposals
At 31 December 2021
Net book value at 31 December 2021
Group
Cost
At 1 January 2022
Exchange adjustments
Additions
Disposals
At 31 December 2022
Depreciation
At 1 January 2022
Exchange adjustments
Charge to the income statement
Disposals
At 31 December 2022
Net book value at 31 December 2022
Computer
equipment
£m
Fixtures and
fittings
£m
Motor
vehicles
£m
81.0
(1.9)
3.0
(2.8)
79.3
23.8
(0.9)
2.1
(2.1)
22.9
(70.7)
(19.3)
1.5
(3.8)
2.6
(70.4)
8.9
0.8
(1.7)
2.0
(18.2)
4.7
1.7
(0.1)
–
(1.1)
0.5
(1.1)
0.1
(0.1)
0.8
(0.3)
0.2
Computer
equipment
£m
Fixtures and
fittings
£m
Motor
vehicles
£m
79.3
2.9
5.3
(4.4)
83.1
22.9
1.8
3.8
(2.9)
25.6
0.5
–
–
(0.4)
0.1
Total
£m
106.5
(2.9)
5.1
(6.0)
102.7
(91.1)
2.4
(5.6)
5.4
(88.9)
13.8
Total
£m
102.7
4.7
9.1
(7.7)
108.8
(70.4)
(18.2)
(0.3)
(88.9)
(2.6)
(4.1)
4.5
(72.6)
10.5
(1.3)
(2.1)
2.8
(18.8)
6.8
–
–
0.2
(0.1)
–
(3.9)
(6.2)
7.5
(91.5)
17.3
The Company has property, plant and equipment with a cost of £2.4m (2021: £2.4m); depreciation of £1.1m (2021: £1.0m); and a net
book value of £1.3m (2021: £1.4m). All of these assets are computer equipment and Head Office fixtures and fittings.
148
International Personal Finance plc
Annual Report and Financial Statements 2022
149
Financial Statements
Notes to the Financial Statements continued
15. Right-of-use assets and lease liabilities
The movement in the right-of-use assets is as follows:
Net book value at 1 January 2021
Exchange adjustments
Additions
Modifications
Depreciation
Net book value at 31 December 2021
Net book value at 1 January 2022
Exchange adjustments
Additions
Modifications
Depreciation
Net book value at 31 December 2022
The amounts recognised in profit and loss are as follows:
Group
Depreciation on right-of-use assets
Interest expense on lease liabilities
Expense relating to short term leases
The movement in the lease liability in the period is as follows:
Lease liability at 1 January
Exchange adjustments
Additions
Interest
Lease payments
Lease liability at 31 December
Current liabilities
Non-current liabilities:
– between one and five years
– greater than five years
Lease liability at 31 December
Motor vehicles
£m
Properties
£m
Equipment
£m
Group
£m
6.9
(0.4)
2.4
0.4
(3.6)
5.7
10.5
(0.3)
5.9
0.6
(4.8)
11.9
0.1
–
–
–
–
0.1
17.5
(0.7)
8.3
1.0
(8.4)
17.7
Motor vehicles
£m
Properties
£m
Equipment
£m
Group
£m
5.7
0.6
3.8
(0.5)
(3.9)
5.7
11.9
0.8
5.0
0.5
(4.6)
13.6
0.1
–
–
(0.1)
–
–
2022
£m
8.5
1.6
1.2
11.3
2022
£m
18.7
1.6
8.7
1.6
(9.2)
21.4
7.2
12.2
2.0
14.2
21.4
17.7
1.4
8.8
(0.1)
(8.5)
19.3
2021
£m
8.4
1.4
1.2
11.0
2021
£m
19.2
(0.8)
8.8
1.4
(9.9)
18.7
6.4
10.6
1.7
12.3
18.7
Lease liabilities are measured at the present value of the remaining lease payments, discounted using the rate implicit in the lease, or if
that rate cannot be readily determined, at the lessee’s incremental borrowing rate. The weighted average lessee’s incremental
borrowing rate applied to the lease liabilities at 31 December 2022 was 8.9% (2021: 7.2%).
The total cash outflow in the year in respect of lease contracts was £9.4m (2021: £10.3m).
The Company has one lease as at 31 December 2022 (2021: one lease) in respect of the UK head office premises, with a lease liability of
£2.7m (2021: £2.8m).
150
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
Net book value at 1 January 2021
Exchange adjustments
Additions
Modifications
Depreciation
Net book value at 31 December 2021
Net book value at 1 January 2022
Exchange adjustments
Additions
Modifications
Depreciation
Net book value at 31 December 2022
Group
Depreciation on right-of-use assets
Interest expense on lease liabilities
Expense relating to short term leases
Lease liability at 1 January
Exchange adjustments
Additions
Interest
Lease payments
Lease liability at 31 December
Current liabilities
Non-current liabilities:
– between one and five years
– greater than five years
Lease liability at 31 December
The amounts recognised in profit and loss are as follows:
The movement in the lease liability in the period is as follows:
£m
6.9
(0.4)
2.4
0.4
(3.6)
5.7
£m
5.7
0.6
3.8
(0.5)
(3.9)
5.7
£m
10.5
(0.3)
5.9
0.6
(4.8)
11.9
£m
11.9
0.8
5.0
0.5
(4.6)
13.6
Motor vehicles
Properties
Equipment
£m
0.1
–
–
–
–
0.1
£m
0.1
–
–
–
–
(0.1)
2022
£m
8.5
1.6
1.2
11.3
2022
£m
18.7
1.6
8.7
1.6
(9.2)
21.4
7.2
12.2
2.0
14.2
21.4
£m
17.5
(0.7)
8.3
1.0
(8.4)
17.7
Group
£m
17.7
1.4
8.8
(0.1)
(8.5)
19.3
2021
£m
8.4
1.4
1.2
11.0
2021
£m
19.2
(0.8)
8.8
1.4
(9.9)
18.7
6.4
10.6
1.7
12.3
18.7
Lease liabilities are measured at the present value of the remaining lease payments, discounted using the rate implicit in the lease, or if
that rate cannot be readily determined, at the lessee’s incremental borrowing rate. The weighted average lessee’s incremental
borrowing rate applied to the lease liabilities at 31 December 2022 was 8.9% (2021: 7.2%).
The total cash outflow in the year in respect of lease contracts was £9.4m (2021: £10.3m).
The Company has one lease as at 31 December 2022 (2021: one lease) in respect of the UK head office premises, with a lease liability of
£2.7m (2021: £2.8m).
15. Right-of-use assets and lease liabilities
The movement in the right-of-use assets is as follows:
Motor vehicles
Properties
Equipment
Group
16. Deferred tax
Deferred tax is calculated in full on temporary differences under the balance sheet liability method using the appropriate tax rate for the
jurisdiction in which the temporary difference arises. The movement in the deferred tax balance during the year can be analysed
as follows:
At 1 January
Exchange adjustments
Tax charge to the income statement
Tax credit/(charge) on other comprehensive (expense)/income
At 31 December
Group
Company
2022
£m
116.8
14.1
–
1.7
2021
£m
121.9
(4.4)
(0.1)
(0.6)
132.6
116.8
2022
£m
(0.7)
–
(0.2)
0.9
–
2021
£m
(0.2)
–
(0.6)
0.1
(0.7)
The UK corporation tax rate was 19% throughout 2022. The Finance Act 2021, which was substantively enacted on 2 May 2021, included
an amending provision to increase the UK corporation tax rate to 25% with effect from 1 April 2023. Accordingly, UK deferred tax assets
and liabilities at 31 December 2022 have been measured with reference to these rates.
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so.
An analysis of the deferred tax assets and liabilities is set out below:
Deferred tax assets
Deferred tax liabilities
At 31 December
At 1 January 2021
Exchange adjustments
Tax credit/(charge) to the income statement
Tax (charge)/credit on items taken directly to equity
At 31 December 2021
At 1 January 2022
Exchange adjustments
Tax (charge)/credit to the income statement
Tax credit on items taken directly to equity
At 31 December 2022
Group
Company
2022
£m
138.5
(5.9)
132.6
2021
£m
124.7
(7.9)
116.8
2022
£m
0.5
(0.5)
–
Group
Revenue
and
impairment
differences
£m
Other
temporary
differences
£m
95.3
(4.0)
(15.4)
–
75.9
75.9
7.0
16.0
–
98.9
0.8
0.1
(2.8)
(0.6)
(2.5)
(2.5)
0.8
1.6
1.7
1.6
Losses
£m
25.8
(0.5)
18.1
–
43.4
43.4
6.3
(17.6)
–
32.1
Company
Retirement
benefit
obligations
£m
Other
temporary
differences
£m
(0.7)
–
(0.6)
0.1
(1.2)
(1.2)
–
(0.2)
0.9
(0.5)
0.5
–
–
–
0.5
0.5
–
–
–
0.5
Total
£m
121.9
(4.4)
(0.1)
(0.6)
116.8
116.8
14.1
–
1.7
132.6
2021
£m
0.5
(1.2)
(0.7)
Total
£m
(0.2)
–
(0.6)
0.1
(0.7)
(0.7)
–
(0.2)
0.9
–
Deferred tax assets have been recognised in respect of tax losses and other temporary timing differences (principally relating to
recognition of revenue and impairment) to the extent that it is probable that these assets will be utilised against future taxable profits.
The recoverability of deferred tax assets is supported by the expected level of future profits in the countries concerned.
At 31 December 2022, the Group has unused tax losses of £212.3m (2021: £218.2m) available for offset against future profits. A deferred
tax asset has been recognised in respect of £109.1m (2021: £149.7m) of these losses where profit projections indicate the existence of
sufficient taxable profits to support the recognition of the asset. The recognition for 2022 was based on the forecast profits contained in
the Group’s five year business plan approved by the Board in December 2022. See information on Going Concern on page 37 for more
details regarding the business plan. No deferred tax has been recognised in respect of the remaining £103.2m (2021: £68.5m) as it is not
considered probable that there will be future taxable profits available against which these losses can be offset. None of the unrecognised
losses are subject to an expiry date.
150
International Personal Finance plc
Annual Report and Financial Statements 2022
151
Financial Statements
Notes to the Financial Statements continued
16. Deferred tax continued
Dividends received from overseas subsidiaries are largely exempt from UK tax but may be subject to dividend withholding taxes levied
by certain overseas tax jurisdictions in which the Group’s subsidiaries operate (currently the Czech Republic and Romania). The gross
temporary differences of those subsidiaries affected by such potential withholding taxes is approximately £32.0m (2021: £26.0m).
A deferred tax liability of approximately £0.8m (2021: £0.4m) has been recognised on the unremitted earnings of those subsidiaries
affected by such potential withholding taxes only to the extent that the Group is anticipating dividends to be distributed by those
subsidiaries in the foreseeable future. No deferred tax liability is recognised on remaining temporary differences of approximately £22.0m
(2021: £19.0m) as the Group is able to control the timings of the reversal of these temporary differences and it is probable that they will
not reverse in the foreseeable future.
17. Amounts receivable from customers
Group
Amounts receivable from customers comprise:
– amounts due within one year
– amounts due in more than one year
Total amounts recoverable from customers
2022
£m
656.6
212.2
868.8
2021
£m
566.6
150.2
716.8
All lending is in the local currency of the country in which the loan is issued. The currency profile of amounts receivable from customers is
as follows:
Group
Polish zloty
Czech crown
Euro
Hungarian forint
Mexican peso
Romanian leu
Australian dollar
Total
2022
£m
278.9
56.1
90.5
125.4
188.7
89.1
40.1
868.8
2021
£m
247.6
48.7
87.8
101.7
133.3
69.8
27.9
716.8
Amounts receivable from customers are stated at amortised cost and calculated in accordance with the Group’s accounting policies.
Depending on the risks associated with each loan, they are categorised into three stages where stage 3 is the highest risk.
Determining an increase in credit risk since initial recognition
IFRS 9 has the following recognition criteria:
– Stage 1: Requires the recognition of 12 month expected credit losses (the expected credit losses from default events that are expected
within 12 months of the reporting date) if credit risk has not significantly increased since initial recognition.
– Stage 2: Lifetime expected credit losses for financial instruments for which the credit risk has increased significantly since initial
recognition.
– Stage 3: Credit impaired.
When determining whether the risk of default has increased significantly since initial recognition the Group considers both quantitative
and qualitative information based on the Group’s historical experience.
The approach to identifying significant increases in credit risk is consistent across the Group’s products. In addition, as a backstop, the
Group considers that a significant increase in credit risk occurs when an asset is more than 30 days past due.
Financial instruments are moved back to stage 1 once they no longer meet the criteria for a significant increase in credit risk.
Definition of default and credit impaired assets
The Group defines a financial instrument as in default, which is fully aligned with the definition of credit-impaired, when it meets one or
more of the following criteria:
– Quantitative criteria: the customer is more than 90 days past due on their contractual payments in home credit and 60 days past due
on their contractual payments in IPF Digital.
– Qualitative criteria: indication that there is a measurable movement in the estimated future cash flows from a group of financial assets.
For example, if prospective legislative changes are considered to impact the repayments performance of customers.
The default definition has been applied consistently to model the PD, and LGD throughout the Group’s expected credit loss calculations.
An instrument is considered to no longer be in default (i.e. to have recovered) when it no longer meets any of the default criteria.
152
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
not reverse in the foreseeable future.
17. Amounts receivable from customers
Group
Amounts receivable from customers comprise:
– amounts due within one year
– amounts due in more than one year
Total amounts recoverable from customers
as follows:
Group
Polish zloty
Czech crown
Euro
Hungarian forint
Mexican peso
Romanian leu
Australian dollar
Total
16. Deferred tax continued
Dividends received from overseas subsidiaries are largely exempt from UK tax but may be subject to dividend withholding taxes levied
by certain overseas tax jurisdictions in which the Group’s subsidiaries operate (currently the Czech Republic and Romania). The gross
temporary differences of those subsidiaries affected by such potential withholding taxes is approximately £32.0m (2021: £26.0m).
A deferred tax liability of approximately £0.8m (2021: £0.4m) has been recognised on the unremitted earnings of those subsidiaries
affected by such potential withholding taxes only to the extent that the Group is anticipating dividends to be distributed by those
subsidiaries in the foreseeable future. No deferred tax liability is recognised on remaining temporary differences of approximately £22.0m
(2021: £19.0m) as the Group is able to control the timings of the reversal of these temporary differences and it is probable that they will
All lending is in the local currency of the country in which the loan is issued. The currency profile of amounts receivable from customers is
2022
£m
656.6
212.2
868.8
2022
£m
278.9
56.1
90.5
125.4
188.7
89.1
40.1
868.8
2021
£m
566.6
150.2
716.8
2021
£m
247.6
48.7
87.8
101.7
133.3
69.8
27.9
716.8
Amounts receivable from customers are stated at amortised cost and calculated in accordance with the Group’s accounting policies.
Depending on the risks associated with each loan, they are categorised into three stages where stage 3 is the highest risk.
Determining an increase in credit risk since initial recognition
IFRS 9 has the following recognition criteria:
– Stage 1: Requires the recognition of 12 month expected credit losses (the expected credit losses from default events that are expected
within 12 months of the reporting date) if credit risk has not significantly increased since initial recognition.
– Stage 2: Lifetime expected credit losses for financial instruments for which the credit risk has increased significantly since initial
recognition.
– Stage 3: Credit impaired.
When determining whether the risk of default has increased significantly since initial recognition the Group considers both quantitative
and qualitative information based on the Group’s historical experience.
The approach to identifying significant increases in credit risk is consistent across the Group’s products. In addition, as a backstop, the
Group considers that a significant increase in credit risk occurs when an asset is more than 30 days past due.
Financial instruments are moved back to stage 1 once they no longer meet the criteria for a significant increase in credit risk.
Definition of default and credit impaired assets
more of the following criteria:
on their contractual payments in IPF Digital.
The Group defines a financial instrument as in default, which is fully aligned with the definition of credit-impaired, when it meets one or
– Quantitative criteria: the customer is more than 90 days past due on their contractual payments in home credit and 60 days past due
– Qualitative criteria: indication that there is a measurable movement in the estimated future cash flows from a group of financial assets.
For example, if prospective legislative changes are considered to impact the repayments performance of customers.
The default definition has been applied consistently to model the PD, and LGD throughout the Group’s expected credit loss calculations.
An instrument is considered to no longer be in default (i.e. to have recovered) when it no longer meets any of the default criteria.
17. Amounts receivable from customers continued
Write-offs
A financial instrument is written off (in full or in part) when the Group judges there to be no reasonable expectation that the instrument
can be recovered (in full or in part). This is typically the case when the Group determines that the customer is not able to generate
sufficient cash flows to repay the amounts subject to the write-off. This assessment is performed at the individual instrument level. The
related impairment loss allowance is also written off once all the necessary procedures have been completed and the loss amount has
crystallised. Financial instruments that are written off could still be subject to recovery activities and subsequent recoveries of amounts
previously written off decrease the amount of impairment losses recorded in the income statement.
We have not disclosed amounts written off, including those still subject to recovery activities, separately in the receivables by stage as our
impairment models do not analyse default performance in this manner.
The table below shows the amount of the net receivables in each stage at 31 December:
2022
2021
Stage 1
£m
Stage 2
£m
Stage 3
£m
Total net
Receivables
£m
439.7
193.7
633.4
78.9
9.4
88.3
140.9
6.2
147.1
659.5
209.3
868.8
Stage 1
£m
360.3
159.8
520.1
Stage 2
£m
Stage 3
£m
Total net
Receivables
£m
57.9
8.6
66.5
125.3
4.9
130.2
543.5
173.3
716.8
Home credit
IPF Digital
Group
Gross carrying amount and loss allowance
The amounts receivable from customers includes a provision for the loss allowance, which relates to the expected credit losses on each
agreement. The gross carrying amount is the present value of the portfolio before the loss allowance provision is deducted. The gross
carrying amount less the loss allowance is equal to the net receivables.
2022
Stage 1
£m
782.0
(148.6)
633.4
Stage 2
£m
161.8
(73.5)
88.3
Stage 3
£m
422.8
(275.7)
147.1
Total net
Receivables
£m
1,366.6
(497.8)
868.8
Stage 1
£m
649.7
(129.6)
520.1
2021
Stage 2
£m
124.1
(57.6)
66.5
Stage 3
£m
379.0
(248.8)
130.2
Total net
Receivables
£m
1,152.8
(436.0)
716.8
Gross carrying amount
Loss allowance
Net receivables
Gross carrying amount
The changes in gross carrying amount recognised for the period is impacted by a variety of factors:
– Customer lending in the period;
– Transfers between the three stages due to changes in the risk associated with each loan;
– Revenue recognised within the period;
– Recoveries from receivables; and
– Other movements to gross carrying amount and foreign exchange retranslations.
Loss allowance
The changes to the loss allowance recognised for the period is impacted by a variety of factors:
– Total impairment charge for the period, which comprises the following:
– Loss allowance on customer lending;
– Transfers between the three stages due to changes in the risk associated with each loan;
– Changes in risk parameters (PDs, and LGDs) in the period arising from the regular refresh of the inputs into the expected loss model;
and
– Other impairment impacts including the impact of movements in days past due within each stage, impairment impact of write-offs
and post field write-off collections.
– Recoveries from receivables not included within impairment; and
– Other movements to the loss allowance and foreign exchange retranslations.
152
International Personal Finance plc
Annual Report and Financial Statements 2022
153
Financial Statements
Notes to the Financial Statements continued
17. Amounts receivable from customers continued
The following tables explain the changes for home credit in the gross carrying amount, the loss allowance and net receivables between
the beginning of the year and the end of the year:
2022
2021
Stage 1
£m
Stage 2
£m
Stage 3
£m
Gross carrying amount – Home credit
Opening gross carrying amount at 1 January
Customer lending
Transfers between stages:
- From stage 1
- From stage 2
- From stage 3
Revenue
Recoveries
Stage 1
£m
Stage 2
£m
Stage 3
£m
457.2
894.4
(311.6)
(327.6)
6.8
9.2
327.1
107.9
342.6
–
78.2
144.7
(67.6)
1.1
69.1
–
233.4
182.9
60.8
(10.3)
132.2
Total
£m
907.7
894.4
–
–
–
–
528.4
(982.3)
(133.2)
(380.7)
(1,496.2)
Other movements
169.4
24.4
62.3
256.1
Closing gross carrying amount at
31 December
554.2
146.4
389.8
1,090.4
457.2
107.9
342.6
907.7
(366.4)
(1,229.8)
65.6
23.3
2022
2021
Stage 1
£m
Stage 2
£m
Stage 3
£m
Total
£m
Stage 1
£m
Stage 2
£m
Stage 3
£m
(50.0)
(217.3)
(364.2)
(50.9)
(260.4)
Loss allowance – Home credit
Opening loss allowance at 1 January
Loss allowance on customer lending
Transfers between stages:
- From stage 1
- From stage 2
- From stage 3
Change in risk parameters
Other impairment
Impairment
Recoveries
Other movements
Net receivables – Home credit
Opening net receivables at 1 January
Customer lending
Transfers between stages:
- From stage 1
- From stage 2
- From stage 3
Revenue
Impairment
Recoveries
Other movements
Closing net receivables at 31 December
(96.9)
(99.1)
63.0
70.5
(2.3)
(5.2)
0.2
(12.0)
(47.9)
44.6
(14.3)
–
(18.3)
(44.3)
26.3
(0.3)
–
(8.7)
(27.0)
19.7
(10.2)
(67.5)
360.3
894.4
(311.6)
(327.6)
6.8
9.2
327.1
(47.9)
(937.7)
155.1
439.7
57.9
–
78.2
144.7
(67.6)
1.1
69.1
(27.0)
(113.5)
14.2
78.9
–
(99.1)
(44.7)
(26.2)
(24.0)
5.5
0.5
38.4
(5.8)
4.0
(29.8)
–
–
–
–
0.7
17.7
(80.7)
68.3
(54.3)
Total
£m
543.5
894.4
–
–
–
–
528.4
(80.7)
125.3
–
233.4
182.9
60.8
(10.3)
132.2
(5.8)
(376.7)
(1,427.9)
32.5
140.9
201.8
659.5
Closing loss allowance at 31 December
(114.5)
(248.9)
(430.9)
(96.9)
(50.0)
(217.3)
(364.2)
2022
2021
Stage 1
£m
Stage 2
£m
Stage 3
£m
Stage 1
£m
Stage 2
£m
Stage 3
£m
385.2
793.4
(201.5)
(220.3)
5.3
13.5
269.3
(765.8)
(23.4)
101.9
–
69.7
102.7
(34.0)
1.0
52.8
(97.6)
(18.9)
(96.5)
(90.7)
39.1
48.9
(1.7)
(8.1)
1.9
34.1
–
(20.5)
(32.9)
12.8
(0.4)
(0.1)
4.1
(15.6)
(16.5)
5.8
9.4
7.8
9.6
288.7
793.4
(201.5)
(220.3)
5.3
13.5
269.3
(15.6)
(760.0)
(14.0)
360.3
51.0
–
69.7
102.7
(34.0)
1.0
52.8
(16.5)
(89.8)
(9.3)
57.9
Total
£m
890.1
793.4
–
–
–
–
430.7
Total
£m
(407.8)
(90.7)
–
–
–
–
1.8
56.7
(32.2)
76.2
(0.4)
Total
£m
482.3
793.4
–
–
–
–
430.7
(32.2)
403.0
–
131.8
117.6
28.7
(14.5)
108.6
–
(18.6)
(16.0)
(11.1)
8.5
–
18.5
(0.1)
62.6
(19.4)
142.6
–
131.8
117.6
28.7
(14.5)
108.6
(0.1)
(303.8)
(1,153.6)
46.2
125.3
22.9
543.5
154
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
17. Amounts receivable from customers continued
17. Amounts receivable from customers continued
The following tables explain the changes for home credit in the gross carrying amount, the loss allowance and net receivables between
the beginning of the year and the end of the year:
The following tables explain the changes for IPF Digital in the gross carrying amount, the loss allowance and net receivables between the
beginning of the year and the end of the year:
2022
2021
2022
2021
Customer lending
Transfers between stages:
- From stage 1
- From stage 2
- From stage 3
Revenue
Recoveries
Gross carrying amount – Home credit
Stage 1
Stage 2
£m
Stage 3
£m
Stage 1
£m
Stage 2
£m
Stage 3
£m
Opening gross carrying amount at 1 January
107.9
342.6
Other movements
169.4
24.4
62.3
256.1
(982.3)
(133.2)
(380.7)
(1,496.2)
Closing gross carrying amount at
31 December
554.2
146.4
389.8
1,090.4
457.2
107.9
342.6
907.7
430.7
(366.4)
(1,229.8)
65.6
23.3
Loss allowance – Home credit
Stage 1
Stage 2
£m
Stage 3
£m
Total
£m
Stage 1
£m
Stage 2
£m
Stage 3
£m
Opening loss allowance at 1 January
(50.0)
(217.3)
(364.2)
(50.9)
(260.4)
2022
2021
Loss allowance on customer lending
Transfers between stages:
–
(99.1)
£m
457.2
894.4
(311.6)
(327.6)
6.8
9.2
327.1
£m
(96.9)
(99.1)
63.0
70.5
(2.3)
(5.2)
0.2
(12.0)
(47.9)
44.6
(14.3)
£m
360.3
894.4
(311.6)
(327.6)
6.8
9.2
327.1
(47.9)
(937.7)
155.1
439.7
–
78.2
144.7
(67.6)
1.1
69.1
–
233.4
182.9
60.8
(10.3)
132.2
–
(18.3)
(44.3)
26.3
(0.3)
–
(8.7)
(27.0)
19.7
(10.2)
(67.5)
£m
57.9
–
78.2
144.7
(67.6)
1.1
69.1
(27.0)
(113.5)
14.2
78.9
(44.7)
(26.2)
(24.0)
5.5
0.5
38.4
(5.8)
4.0
(29.8)
125.3
–
233.4
182.9
60.8
(10.3)
132.2
(5.8)
32.5
140.9
Total
£m
907.7
894.4
528.4
–
–
–
–
–
–
–
–
–
–
–
–
0.7
17.7
(80.7)
68.3
(54.3)
Total
£m
543.5
894.4
528.4
(80.7)
201.8
659.5
385.2
793.4
(201.5)
(220.3)
5.3
13.5
269.3
(765.8)
(23.4)
(96.5)
(90.7)
39.1
48.9
(1.7)
(8.1)
1.9
34.1
5.8
9.4
Stage 1
£m
288.7
793.4
(201.5)
(220.3)
5.3
13.5
269.3
(15.6)
(760.0)
(14.0)
360.3
101.9
–
69.7
102.7
(34.0)
1.0
52.8
(97.6)
(18.9)
–
(20.5)
(32.9)
12.8
(0.4)
(0.1)
4.1
7.8
9.6
£m
51.0
–
69.7
102.7
(34.0)
1.0
52.8
(16.5)
(89.8)
(9.3)
57.9
(15.6)
(16.5)
Total
£m
890.1
793.4
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
(407.8)
(90.7)
1.8
56.7
(32.2)
76.2
(0.4)
Total
£m
482.3
793.4
430.7
(32.2)
22.9
543.5
403.0
–
131.8
117.6
28.7
(14.5)
108.6
–
(18.6)
(16.0)
(11.1)
8.5
–
18.5
(0.1)
62.6
(19.4)
142.6
–
131.8
117.6
28.7
(14.5)
108.6
(0.1)
46.2
125.3
2022
Stage 1
Stage 2
Stage 3
£m
2021
Stage 2
Stage 3
£m
(376.7)
(1,427.9)
(303.8)
(1,153.6)
- From stage 1
- From stage 2
- From stage 3
Change in risk parameters
Other impairment
Impairment
Recoveries
Other movements
Net receivables – Home credit
Opening net receivables at 1 January
Customer lending
Transfers between stages:
- From stage 1
- From stage 2
- From stage 3
Revenue
Impairment
Recoveries
Other movements
Closing net receivables at 31 December
Closing loss allowance at 31 December
(114.5)
(248.9)
(430.9)
(96.9)
(50.0)
(217.3)
(364.2)
Gross carrying amount – IPF Digital
Opening gross carrying amount at
1 January
Customer lending
Transfers between stages:
- From stage 1
- From stage 2
- From stage 3
Revenue
Recoveries
Other movements
Closing gross carrying amount
at 31 December
Stage 1
£m
Stage 2
£m
Stage 3
£m
192.5
232.0
(37.5)
(83.9)
44.2
2.2
105.1
(283.2)
18.9
16.2
–
(0.9)
82.5
(84.7)
1.3
8.1
(8.2)
0.2
36.4
–
38.4
1.4
40.5
(3.5)
3.9
(48.6)
2.9
Total
£m
245.1
232.0
–
–
–
–
117.1
(340.0)
22.0
Stage 1
£m
Stage 2
£m
Stage 3
£m
216.1
188.7
(33.3)
(82.3)
46.2
2.8
105.7
(267.6)
(17.1)
23.2
–
(4.6)
78.6
(84.6)
1.4
8.3
(9.0)
(1.7)
53.1
–
37.9
3.7
38.4
(4.2)
4.0
(58.5)
(0.1)
Total
£m
292.4
188.7
–
–
–
–
118.0
(335.1)
(18.9)
227.8
15.4
33.0
276.2
192.5
16.2
36.4
245.1
Loss allowance – IPF Digital
Opening loss allowance at 1 January
Loss allowance on customer lending
Transfers between stages:
- From stage 1
- From stage 2
- From stage 3
Change in risk parameters
Other impairment
Impairment
Recoveries
Other movements
Closing loss allowance at 31 December
Net receivables – IPF Digital
Opening net receivables at 1 January
Customer lending
Transfers between stages:
- From stage 1
- From stage 2
- From stage 3
Revenue
Impairment
Recoveries
Other movements
Closing net receivables at 31 December
2022
2021
Stage 1
£m
Stage 2
£m
Stage 3
£m
(32.7)
(27.6)
(6.3)
9.7
(14.1)
(1.9)
3.9
17.1
(12.9)
–
11.5
(34.1)
(7.6)
–
27.6
(9.5)
37.9
(0.8)
0.7
(36.0)
(7.7)
–
9.3
(6.0)
(31.5)
–
(21.3)
(0.2)
(23.8)
2.7
1.3
14.6
(5.4)
29.8
(19.7)
(26.8)
Total
£m
(71.8)
(27.6)
–
–
–
–
5.9
(4.3)
(26.0)
29.8
1.1
(66.9)
Stage 1
£m
Stage 2
£m
Stage 3
£m
(38.3)
(24.7)
(8.3)
11.7
(17.9)
(2.1)
2.9
19.6
(10.5)
–
16.1
(32.7)
(16.1)
–
30.2
(11.3)
42.4
(0.9)
1.6
(39.3)
(7.5)
–
16.0
(7.6)
(51.2)
–
(21.9)
(0.4)
(24.5)
3.0
0.1
15.8
(6.0)
40.0
(14.3)
(31.5)
2022
2021
Stage 1
£m
Stage 2
£m
Stage 3
£m
159.8
232.0
(37.5)
(83.9)
44.2
2.2
105.1
(12.9)
(283.2)
30.4
193.7
8.6
–
(0.9)
82.5
(84.7)
1.3
8.1
(7.7)
(8.2)
9.5
9.4
4.9
–
38.4
1.4
40.5
(3.5)
3.9
(5.4)
(18.8)
(16.8)
6.2
Total
£m
173.3
232.0
–
–
–
–
117.1
(26.0)
(310.2)
23.1
209.3
Stage 1
£m
Stage 2
£m
Stage 3
£m
177.8
188.7
(33.3)
(82.3)
46.2
2.8
105.7
(10.5)
(267.6)
(1.0)
159.8
7.1
–
(4.6)
78.6
(84.6)
1.4
8.3
(7.5)
(9.0)
14.3
8.6
1.9
–
37.9
3.7
38.4
(4.2)
4.0
(6.0)
(18.5)
(14.4)
4.9
Total
£m
(105.6)
(24.7)
–
–
–
–
4.6
(3.9)
(24.0)
40.0
17.8
(71.8)
Total
£m
186.8
188.7
–
–
–
–
118.0
(24.0)
(295.1)
(1.1)
173.3
154
International Personal Finance plc
Annual Report and Financial Statements 2022
155
Financial Statements
Notes to the Financial Statements continued
17. Amounts receivable from customers continued
Impairment as a percentage of gross carrying amount for each geographical segment is shown below:
Group
European home credit
Mexico home credit
IPF Digital
2022
%
0.7
31.6
10.1
2021
%
(0.3)
18.9
9.4
The carrying value of amounts receivable from customers that would have been impaired had their terms not been renegotiated is £nil
(2021: £nil).
Amounts receivable from customers are held at amortised cost and are equal to the expected future cash flows receivable discounted
at the average EIR of 99% (2021: 93%). All amounts receivable from customers are at fixed interest rates. The average period to maturity of
the amounts receivable from customers is 13.0 months (2021: 12.3 months).
No collateral is held in respect of any customer receivables.
Management monitor credit quality using two key metrics: impairment as a percentage of gross carrying amount and gross cash loss
(GCL) development. Commentary on impairment as a percentage of gross carrying amount is set out in the operational review at both
Group and segment level. GCL represents the expected total value of contractual cash flows that will not be repaid and will ultimately be
written off for any loan or group of loans. Until repayments on any group of receivables are complete, the GCL forecast is a composite of
actual and expected cash flows. This represents a leading-edge measure of credit quality with forecasts based on the actual
performance of previous lending.
The Company has no amounts receivable from customers (2021: £nil).
18. Cash and cash equivalents
Cash at bank and in hand
The currency profile of cash and cash equivalents is as follows:
Group
Company
2022
£m
50.7
2021
£m
41.7
2022
£m
5.0
Group
Company
2021
£m
4.4
2021
£m
4.0
–
–
0.4
–
–
–
–
2022
£m
4.5
16.5
1.1
12.9
1.4
11.9
1.9
0.5
50.7
2021
£m
3.9
11.4
2.9
9.9
1.7
8.1
2.7
1.1
2022
£m
4.6
-
-
0.4
-
-
-
-
41.7
5.0
4.4
Group
Company
2022
£m
7.4
8.8
–
16.2
2021
£m
6.8
7.2
–
14.0
2022
£m
-
0.2
527.4
527.6
2021
£m
–
0.1
555.4
555.5
GBP sterling
Polish zloty
Czech crown
Euro
Hungarian forint
Mexican peso
Romanian leu
Australian dollar
Total
19. Other receivables
Other receivables
Prepayments
Amounts due from Group undertakings
Total
No balance within other receivables is impaired.
Amounts due from Group undertakings are unsecured and due for repayment in less than one year.
156
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
Group
European home credit
Mexico home credit
IPF Digital
(2021: £nil).
Amounts receivable from customers are held at amortised cost and are equal to the expected future cash flows receivable discounted
at the average EIR of 99% (2021: 93%). All amounts receivable from customers are at fixed interest rates. The average period to maturity of
the amounts receivable from customers is 13.0 months (2021: 12.3 months).
No collateral is held in respect of any customer receivables.
Management monitor credit quality using two key metrics: impairment as a percentage of gross carrying amount and gross cash loss
(GCL) development. Commentary on impairment as a percentage of gross carrying amount is set out in the operational review at both
Group and segment level. GCL represents the expected total value of contractual cash flows that will not be repaid and will ultimately be
written off for any loan or group of loans. Until repayments on any group of receivables are complete, the GCL forecast is a composite of
actual and expected cash flows. This represents a leading-edge measure of credit quality with forecasts based on the actual
performance of previous lending.
The Company has no amounts receivable from customers (2021: £nil).
18. Cash and cash equivalents
Cash at bank and in hand
The currency profile of cash and cash equivalents is as follows:
GBP sterling
Polish zloty
Czech crown
Euro
Hungarian forint
Mexican peso
Romanian leu
Australian dollar
Total
19. Other receivables
Other receivables
Prepayments
Total
Amounts due from Group undertakings
No balance within other receivables is impaired.
Amounts due from Group undertakings are unsecured and due for repayment in less than one year.
Group
Company
2022
£m
50.7
2021
£m
41.7
2022
£m
5.0
2021
£m
4.4
2021
£m
4.0
–
–
–
–
–
–
2021
£m
–
0.1
555.4
555.5
0.4
0.4
2022
£m
4.5
16.5
1.1
12.9
1.4
11.9
1.9
0.5
50.7
2022
£m
7.4
8.8
–
16.2
2021
£m
3.9
11.4
2.9
9.9
1.7
8.1
2.7
1.1
2021
£m
6.8
7.2
–
14.0
2022
£m
4.6
-
-
-
-
-
-
2022
£m
-
0.2
527.4
527.6
41.7
5.0
4.4
Group
Company
17. Amounts receivable from customers continued
20. Trade and other payables
Impairment as a percentage of gross carrying amount for each geographical segment is shown below:
The carrying value of amounts receivable from customers that would have been impaired had their terms not been renegotiated is £nil
Total
2022
%
0.7
31.6
10.1
2021
%
(0.3)
18.9
9.4
Trade payables
Other payables including taxation and social security
Accruals
Amounts due to Group undertakings
Group
Company
2022
£m
15.5
53.1
53.6
–
2021
£m
10.8
44.0
58.0
–
122.2
112.8
2022
£m
0.6
0.4
13.5
357.8
372.3
Amounts due to Group undertakings are unsecured and due for repayment in less than one year.
21. Borrowing facilities and borrowings
The Group and Company’s borrowings are as follows:
Borrowings
Bank borrowings
Bonds
Total
The Group’s external bonds comprise the following:
Bond
Euro bond - €341.2m
Swedish krona bond - 450.0m
Retail bond - £40.5m
Retail bond - £40.2m
Group
Company
2022
£m
2021
£m
135.1
413.7
548.8
75.8
395.8
471.6
Coupon %
9.750
Three–month STIBOR plus 700 basis points
7.750
12.000
2022
£m
–
413.7
413.7
Maturity
date
2025
2024
2023
2027
Group
Company
Less: unamortised arrangement fees and issue discount
Total
2021
£m
–
0.3
11.9
371.2
383.4
2021
£m
–
395.8
395.8
2022
£m
302.6
35.8
40.5
40.2
419.1
(5.4)
413.7
The Swedish Krona 450m (£35.8m) bond is a floating rate bond. The external bank borrowings of the Group are at a combination of
floating and fixed rates.
The maturity of the Group and Company’s external bond and external bank borrowings is as follows:
Borrowings
Repayable:
– in less than one year
– between one and two years
– between two and five years
Total
Group
Company
2022
£m
2021
£m
2022
£m
2021
£m
71.8
57.1
419.9
548.8
3.1
87.4
381.1
471.6
40.5
35.8
337.4
413.7
–
77.2
318.6
395.8
The average period to maturity of the Group’s external bonds and committed external borrowing facilities is 2.5 years (2021: 2.9 years).
156
International Personal Finance plc
Annual Report and Financial Statements 2022
157
Financial Statements
Notes to the Financial Statements continued
21. Borrowing facilities and borrowings continued
The currency exposure on external borrowings is as follows:
Sterling
Polish zloty
Czech crown
Euro
Hungarian forint
Romanian leu
Mexican peso
Swedish krona
Total
Group
Company
2022
£m
79.5
20.5
19.6
298.4
79.4
5.9
9.7
35.8
548.8
2021
£m
77.2
0.8
–
2022
£m
79.5
-
-
2021
£m
77.2
–
–
281.7
298.4
281.7
71.6
3.4
-
36.9
471.6
-
-
-
–
–
–
35.8
413.7
36.9
395.8
The maturity of the Group and Company’s external bond and external bank facilities is as follows:
Bond and bank facilities available
Repayable:
– on demand
– in less than one year
– between one and two years
– between two and five years
Total
The undrawn external bank facilities at 31 December were as follows:
Expiring within one year
Expiring between one and two years
Expiring in more than two years
Total
Group
Company
2022
£m
2021
£m
2022
£m
2021
£m
31.6
84.7
57.4
437.3
611.0
28.8
29.1
124.1
392.8
574.8
9.8
46.2
35.8
367.2
459.0
Group
Company
2022
£m
44.5
0.3
12.0
56.8
2021
£m
54.8
35.8
6.2
96.8
2022
£m
15.5
-
24.4
39.9
9.7
5.5
90.3
324.1
429.6
2021
£m
15.2
12.2
–
27.4
Undrawn external facilities above do not include unamortised arrangement fees and issue discount.
22. Risks arising from financial instruments
Risk management
Treasury related risks
The Board approves treasury policies and the treasury function manages the day-to-day operations. The Board delegates certain
responsibilities to the Treasury Committee. The Treasury Committee is empowered to take decisions within that delegated authority.
Treasury activities and compliance with treasury policies are reported to the Board on a regular basis and are subject to periodic
independent reviews and audits, both internal and external. Treasury policies are designed to manage the main financial risks faced by
the Group in relation to funding and liquidity risk; interest rate risk; currency risk; and counterparty risk. This is to ensure that the Group is
properly funded; that interest rate and currency risk are managed within set limits; and that financial counterparties are of appropriate
credit quality. Policies also set out the specific instruments that can be used for risk management.
The treasury function enters into derivative transactions, principally interest rate swaps, currency swaps and forward currency
contracts. The purpose of these transactions is to manage the interest rate and currency risks arising from the Group’s underlying
business operations. No transactions of a speculative nature are undertaken and written options may only be used when matched
by purchased options.
158
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
21. Borrowing facilities and borrowings continued
The currency exposure on external borrowings is as follows:
Sterling
Polish zloty
Czech crown
Euro
Hungarian forint
Romanian leu
Mexican peso
Swedish krona
Total
Bond and bank facilities available
Repayable:
– on demand
– in less than one year
– between one and two years
– between two and five years
Total
The maturity of the Group and Company’s external bond and external bank facilities is as follows:
Group
Company
281.7
298.4
281.7
2022
£m
79.5
2021
£m
77.2
-
-
-
-
-
–
–
–
–
–
35.8
413.7
36.9
395.8
Group
Company
2022
£m
2021
£m
2022
£m
2021
£m
2022
£m
79.5
20.5
19.6
298.4
79.4
5.9
9.7
35.8
548.8
31.6
84.7
57.4
437.3
611.0
2022
£m
44.5
0.3
12.0
56.8
2021
£m
77.2
0.8
–
71.6
3.4
-
36.9
471.6
28.8
29.1
124.1
392.8
574.8
2021
£m
54.8
35.8
6.2
96.8
9.8
46.2
35.8
367.2
459.0
2022
£m
15.5
-
24.4
39.9
9.7
5.5
90.3
324.1
429.6
2021
£m
15.2
12.2
–
27.4
Group
Company
The undrawn external bank facilities at 31 December were as follows:
Expiring within one year
Expiring between one and two years
Expiring in more than two years
Total
22. Risks arising from financial instruments
Risk management
Treasury related risks
Undrawn external facilities above do not include unamortised arrangement fees and issue discount.
The Board approves treasury policies and the treasury function manages the day-to-day operations. The Board delegates certain
responsibilities to the Treasury Committee. The Treasury Committee is empowered to take decisions within that delegated authority.
Treasury activities and compliance with treasury policies are reported to the Board on a regular basis and are subject to periodic
independent reviews and audits, both internal and external. Treasury policies are designed to manage the main financial risks faced by
the Group in relation to funding and liquidity risk; interest rate risk; currency risk; and counterparty risk. This is to ensure that the Group is
properly funded; that interest rate and currency risk are managed within set limits; and that financial counterparties are of appropriate
credit quality. Policies also set out the specific instruments that can be used for risk management.
The treasury function enters into derivative transactions, principally interest rate swaps, currency swaps and forward currency
contracts. The purpose of these transactions is to manage the interest rate and currency risks arising from the Group’s underlying
business operations. No transactions of a speculative nature are undertaken and written options may only be used when matched
by purchased options.
22. Risks arising from financial instruments continued
Liquidity risk
The Group is subject to the risk that it will not have sufficient borrowing facilities to fund its existing business and its future plans for growth.
The short-term nature of the Group’s business means that the majority of amounts receivable from customers are receivable within twelve
months with an average period to maturity of around thirteen months. The risk of not having sufficient liquid resources is therefore low.
The treasury policy adopted by the Group serves to reduce this risk further by setting a specific policy parameter that there are sufficient
committed debt facilities to cover forecast borrowings plus an appropriate level of operational headroom on a rolling basis. Further, the
aim is to ensure that there is a balanced refinancing profile; that there is diversification of debt funding sources; that there is no over-
reliance on a single or small group of lenders; and that debt facilities and hedging capacity are sufficient for the currency requirements
of each country. At 31 December 2022, the Group’s bonds and committed borrowing facilities had an average period to maturity of 2.5
years (2021: 2.9 years).
As shown in note 21, total undrawn facilities as at 31 December 2022 were £56.8m (2021: £96.8m).
A maturity analysis of gross borrowings included in the balance sheet is presented in note 21. A maturity analysis of bonds, bank
borrowings and overdrafts outstanding at the balance sheet date by non-discounted contractual cash flow, including expected interest
payments, is shown below:
Not later than six months
Later than six months and not later than one year
Later than one year and not later than two years
Later than two years and not later than five years
Total
Group
Company
2022
£m
21.8
91.1
109.3
450.5
672.7
2021
£m
20.1
23.7
125.2
446.7
615.7
2022
£m
191.9
59.3
255.1
375.7
882.0
2021
£m
240.6
33.6
247.6
377.9
899.7
The analysis above includes the contractual cash flow for borrowings and the total amount of interest payable over the life of the loan.
Where borrowings are subject to a floating interest rate, an estimate of interest payable is taken. The rate is derived from interest rate yield
curves at the balance sheet date.
In line with paragraph 39(a) of IFRS 7, the maturity table for the Company also includes amounts payable to Group companies of
£358.5m (2021: £371.2m).
The following analysis shows the gross non-discounted contractual cash flows in respect of foreign currency contract derivative assets
and liabilities which are all designated as cash flow hedges:
Group
Not later than one month
Later than one month and not later than six months
Later than six months and not later than one year
Later than one year and not later than two years
Total
Company
Not later than one month
Later than one month and not later than six months
Later than six months and not later than one year
Total
2022
2021
Outflow
£m
Inflow
£m
Outflow
£m
250.5
114.4
7.9
3.3
249.2
114.4
7.4
3.0
376.1
374.0
189.2
182.0
17.1
-
388.3
Inflow
£m
185.7
174.9
16.7
-
377.3
2022
2021
Outflow
£m
Inflow
£m
Outflow
£m
Inflow
£m
19.8
0.7
0.4
20.9
19.7
0.7
0.4
20.8
4.3
0.6
0.4
5.3
4.2
0.6
0.4
5.2
When the amount payable or receivable is not fixed, the amount disclosed has been determined with reference to the projected interest
rates as illustrated by the interest rate yield curves existing at the balance sheet date.
158
International Personal Finance plc
Annual Report and Financial Statements 2022
159
Financial Statements
Notes to the Financial Statements continued
22. Risks arising from financial instruments continued
A maturity analysis of the Group’s receivables and borrowing facilities as at 31 December is presented below:
Group
2021
Less than one year
Later than one year
Total
2022
Less than one year
Later than one year
Total
Receivables
£m
Percentage
of total
%
Borrowing
facilities
£m
Percentage
of total
%
566.6
150.2
716.8
656.6
212.2
868.8
79.0
21.0
100.0
75.6
24.4
100.0
57.9
516.9
574.8
116.3
494.7
611.0
10.1
89.9
100.0
19.0
81.0
100.0
This demonstrates the short-term nature of the amounts receivable from customers which contrasts with the longer-term nature of the
Group’s committed funding facilities.
Amounts receivable from customers
Risk management policies in respect of amounts receivable from customers are discussed in the credit risk section within this note, and in
note 17.
Interest rate risk
The Group has an exposure to interest rate risk arising on changes in interest rates in each of its countries of operation and, therefore,
seeks to limit this net exposure. This is achieved by the use of techniques to fix interest costs, including fixed rate funding (predominantly
longer-term bond funding); forward currency contracts used for non-functional currency funding; bank borrowing loan draw-down
periods; and interest rate hedging instruments. These techniques are used to hedge the interest costs on a proportion of borrowings
over a certain period of time, up to five years.
Interest costs are a relatively low proportion of the Group’s revenue (10.5% in 2022; 9.8% in 2021) and therefore the risk of a material
impact on profitability arising from a change in interest rates is low. If interest rates across all markets increased by 200 basis points this
would have the following impact, net of existing hedging arrangements.
Group
Reduction in profit before taxation
This sensitivity analysis is based on the following assumptions:
2022
£m
1.7
2021
£m
0.4
– the change in the market interest rate occurs in all countries where the Group has borrowings and/or derivative financial instruments;
– where financial liabilities are subject to fixed interest rates or have their interest rate fixed by hedging instruments it is assumed that
there is no impact from a change in interest rates; and
– changes in market interest rate affect the fair value of derivative financial instruments.
Currency risk
The Group is subject to three types of currency risk: net asset exposure; cash flow exposure; and income statement exposure.
Net asset exposure
The majority of the Group’s net assets are denominated in currencies other than sterling. The balance sheet is reported in sterling and
this means that there is a risk that a fluctuation in foreign exchange rates will have a material impact on the net assets of the Group.
The impact in 2022 is an increase in net assets of £41.8m (2021: reduction of £37.6m). The Group aims to minimise the value of net
assets denominated in each foreign currency by funding overseas receivables with borrowings in local currency, where possible.
Cash flow exposure
The Group is subject to currency risk in respect of future cash flows which are denominated in foreign currency. The policy of the Group
is to hedge a large proportion of this currency risk in respect of cash flows which are expected to arise in the following 12 months. Where
forward foreign exchange contracts have been entered into, they are designated as cash flow hedges on specific future transactions.
Income statement exposure
As with net assets, the majority of the Group’s profit is denominated in currencies other than sterling but translated into sterling for
reporting purposes. The result for the period is translated into sterling at the average exchange rate. A risk therefore arises that a
fluctuation in the exchange rates in the countries in which the Group operates will have a material impact on the consolidated
result for the period.
160
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
Group
2021
Total
2022
Total
Less than one year
Later than one year
Less than one year
Later than one year
Group’s committed funding facilities.
Amounts receivable from customers
note 17.
Interest rate risk
Percentage
Borrowing
Percentage
Receivables
of total
facilities
of total
£m
%
£m
%
566.6
150.2
716.8
656.6
212.2
868.8
79.0
21.0
100.0
75.6
24.4
100.0
57.9
516.9
574.8
116.3
494.7
611.0
10.1
89.9
100.0
19.0
81.0
100.0
This demonstrates the short-term nature of the amounts receivable from customers which contrasts with the longer-term nature of the
Risk management policies in respect of amounts receivable from customers are discussed in the credit risk section within this note, and in
The Group has an exposure to interest rate risk arising on changes in interest rates in each of its countries of operation and, therefore,
seeks to limit this net exposure. This is achieved by the use of techniques to fix interest costs, including fixed rate funding (predominantly
longer-term bond funding); forward currency contracts used for non-functional currency funding; bank borrowing loan draw-down
periods; and interest rate hedging instruments. These techniques are used to hedge the interest costs on a proportion of borrowings
over a certain period of time, up to five years.
Interest costs are a relatively low proportion of the Group’s revenue (10.5% in 2022; 9.8% in 2021) and therefore the risk of a material
impact on profitability arising from a change in interest rates is low. If interest rates across all markets increased by 200 basis points this
would have the following impact, net of existing hedging arrangements.
Group
Reduction in profit before taxation
This sensitivity analysis is based on the following assumptions:
– the change in the market interest rate occurs in all countries where the Group has borrowings and/or derivative financial instruments;
– where financial liabilities are subject to fixed interest rates or have their interest rate fixed by hedging instruments it is assumed that
there is no impact from a change in interest rates; and
– changes in market interest rate affect the fair value of derivative financial instruments.
The Group is subject to three types of currency risk: net asset exposure; cash flow exposure; and income statement exposure.
The majority of the Group’s net assets are denominated in currencies other than sterling. The balance sheet is reported in sterling and
this means that there is a risk that a fluctuation in foreign exchange rates will have a material impact on the net assets of the Group.
The impact in 2022 is an increase in net assets of £41.8m (2021: reduction of £37.6m). The Group aims to minimise the value of net
assets denominated in each foreign currency by funding overseas receivables with borrowings in local currency, where possible.
Currency risk
Net asset exposure
Cash flow exposure
The Group is subject to currency risk in respect of future cash flows which are denominated in foreign currency. The policy of the Group
is to hedge a large proportion of this currency risk in respect of cash flows which are expected to arise in the following 12 months. Where
forward foreign exchange contracts have been entered into, they are designated as cash flow hedges on specific future transactions.
Income statement exposure
result for the period.
As with net assets, the majority of the Group’s profit is denominated in currencies other than sterling but translated into sterling for
reporting purposes. The result for the period is translated into sterling at the average exchange rate. A risk therefore arises that a
fluctuation in the exchange rates in the countries in which the Group operates will have a material impact on the consolidated
22. Risks arising from financial instruments continued
22. Risks arising from financial instruments continued
A maturity analysis of the Group’s receivables and borrowing facilities as at 31 December is presented below:
The following sensitivity analysis demonstrates the impact on equity of a 5% strengthening or weakening of sterling against all exchange
rates for the countries in which the Group operates:
Group
Change in reserves
Change in profit before taxation
2022
£m
4.3
7.1
2021
£m
4.4
7.0
This sensitivity analysis is based on the following assumptions:
– there is a 5% strengthening/weakening of sterling against all currencies in which the Group operates (Polish zloty, Czech crown, euro,
Hungarian forint, Mexican peso, Romanian leu, and Australian dollar); and
– there is no impact on retained earnings or equity arising from those items which are naturally hedged (where the currency asset is
exactly equal to the currency liability).
Counterparty risk
The Group is subject to counterparty risk in respect of the cash and cash equivalents held on deposit with banks; and foreign currency
and derivative financial instruments.
The Group only deposits cash, and only undertakes currency and derivative transactions, generally with highly rated banks and sets strict
limits in respect of the amount of exposure to any one institution. Institutions with lower credit ratings can only be used as approved, or
delegated for approval, by the Board.
No collateral or credit enhancements are held in respect of any financial assets. The maximum exposure to counterparty risk is as follows:
Group
Cash and cash equivalents
Derivative financial assets
Total
2022
£m
50.7
4.5
55.2
2021
£m
41.7
0.7
42.4
2022
£m
1.7
2021
£m
0.4
The table above represents a worst case scenario of the counterparty risk that the Group is exposed to at the year end. An analysis of the
cash and cash equivalents by geographical segment is presented in note 18.
Cash and cash equivalents and derivative financial instruments are neither past due nor impaired. Credit quality of these assets is good
and the cash and cash equivalents are with bank counterparties in accordance with the limits set out in our treasury policies, to ensure
the risk of loss is minimised.
Credit risk
The Group is subject to credit risk in respect of amounts receivable from customers.
Amounts receivable from customers
The Group lends small amounts over short-term periods to a large and diverse group of customers across the countries in which it
operates. Nevertheless, the Group is subject to a risk of material unexpected credit losses in respect of amounts receivable from
customers. This risk is minimised by the use of credit scoring techniques which are designed to ensure the Group lends only to those
customers who are considered to be able to afford the repayments. The amount loaned to each customer and the repayment period
agreed are dependent upon the risk category the customer is assigned to as part of the credit scoring process. The level of expected
future losses is generated on a weekly or monthly basis by business line and geographical segment. These outputs are reviewed by
management to ensure that appropriate action can be taken if results differ from management expectations.
Group
Amounts receivable from customers
2022
£m
868.8
2021
£m
716.8
The table above represents the maximum exposure to credit risk of the Group at the year end. Further analysis of the amounts receivable
from customers is presented in note 17.
Capital risk
The Group is subject to the risk that its capital structure will not be sufficient to support the growth of the business. The Group is not
required to hold regulatory capital.
The Group aims to maintain appropriate capital to ensure that it has a strong balance sheet but at the same time is providing a good
return on equity to its shareholders. The Group’s long-term aim is to ensure that the capital structure results in an optimal ratio of debt and
equity finance. The Financial review on page 30 includes information on the Group’s Financial model which covers the Group’s capital
structure strategy.
160
International Personal Finance plc
Annual Report and Financial Statements 2022
161
Financial Statements
Notes to the Financial Statements continued
22. Risks arising from financial instruments continued
Capital is monitored by considering the ratio of equity to receivables and the gearing ratio. The equity of the Group and these ratios are
shown below:
Group
Receivables
Borrowings
Other net assets
Equity
Equity as % of receivables
Gearing
2022
£m
868.8
(548.8)
125.2
445.2
51.2%
1.2
2021
£m
716.8
(471.6)
121.9
367.1
51.2%
1.3
The Group has a target equity to receivables rate of 40%. At 31 December 2022, the equity to receivables rate was 51.2% (2021: 51.2%).
Additional capital is currently being held to support strong receivables growth post Covid-19, the rebuilding of Group returns and the
Group’s progressive dividend policy.
Following the implementation of temporary amendments to the Group’s debt funding covenants, we continue to operate with significant
headroom on the key financial covenants, further details are included on page 36.
23. Derivative financial instruments
The Group’s derivative assets and liabilities that were measured at fair value at 31 December are as follows:
Group
Assets
Foreign currency contracts
Total
Group
Liabilities
Foreign currency contracts
Total
Company
Liabilities
Foreign currency contracts
Total
2022
£m
4.5
4.5
2022
£m
4.6
4.6
2022
£m
0.1
0.1
2021
£m
0.7
0.7
2021
£m
7.6
7.6
2021
£m
0.1
0.1
The fair value of derivative financial instruments has been calculated by discounting expected future cash flows using interest rate yield
curves and forward foreign exchange rates prevailing at 31 December.
Cash flow hedges
The Group uses foreign currency contracts (cash flow hedges) to hedge those foreign currency cash flows that are highly probable to
occur within 12 months of the balance sheet date and interest rate swaps (cash flow hedges) to hedge those interest cash flows that are
expected to occur within two years of the balance sheet date. The effect on the income statement will also be within these periods. An
amount of £2.3m has been charged to equity for the Group in the period in respect of cash flow hedges (2021: £1.4m credited to equity),
Company: £0.1m charged to equity (2021: £nil).
162
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
shown below:
Group
Receivables
Borrowings
Other net assets
Equity
Equity as % of receivables
Gearing
Foreign currency contracts
Group
Assets
Total
Group
Liabilities
Total
Company
Liabilities
Total
Foreign currency contracts
Foreign currency contracts
Cash flow hedges
The Group has a target equity to receivables rate of 40%. At 31 December 2022, the equity to receivables rate was 51.2% (2021: 51.2%).
Additional capital is currently being held to support strong receivables growth post Covid-19, the rebuilding of Group returns and the
Group’s progressive dividend policy.
Following the implementation of temporary amendments to the Group’s debt funding covenants, we continue to operate with significant
headroom on the key financial covenants, further details are included on page 36.
23. Derivative financial instruments
The Group’s derivative assets and liabilities that were measured at fair value at 31 December are as follows:
2022
£m
868.8
(548.8)
125.2
445.2
51.2%
1.2
2021
£m
716.8
(471.6)
121.9
367.1
51.2%
1.3
2022
£m
4.5
4.5
2022
£m
4.6
4.6
2022
£m
0.1
0.1
2021
£m
0.7
0.7
2021
£m
7.6
7.6
2021
£m
0.1
0.1
22. Risks arising from financial instruments continued
23. Derivative financial instruments continued
Capital is monitored by considering the ratio of equity to receivables and the gearing ratio. The equity of the Group and these ratios are
The following table shows the notional maturity profile of outstanding cash flow hedges:
Group
As at 31 December 2021
Foreign currency contracts
Cash flow hedges
As at 31 December 2022
Foreign currency contracts
Cash flow hedges
Company
As at 31 December 2021
Foreign currency contracts
Cash flow hedges
As at 31 December 2022
Foreign currency contracts
Cash flow hedges
Repayable
up to one
year
£m
In more than
one year but
less than two
years
£m
388.3
388.3
372.8
372.8
–
–
3.3
3.3
Repayable
up to one
year
£m
In more than
one year but
less than two
years
£m
5.3
5.3
20.9
20.9
–
–
–
–
The Group and the company had held no interest rate swaps at 31 December 2022 (2021: nil).
24. Analysis of financial assets and financial liabilities
Financial assets
An analysis of Group financial assets is presented below:
2022
2021
The fair value of derivative financial instruments has been calculated by discounting expected future cash flows using interest rate yield
curves and forward foreign exchange rates prevailing at 31 December.
The Group uses foreign currency contracts (cash flow hedges) to hedge those foreign currency cash flows that are highly probable to
occur within 12 months of the balance sheet date and interest rate swaps (cash flow hedges) to hedge those interest cash flows that are
expected to occur within two years of the balance sheet date. The effect on the income statement will also be within these periods. An
amount of £2.3m has been charged to equity for the Group in the period in respect of cash flow hedges (2021: £1.4m credited to equity),
Company: £0.1m charged to equity (2021: £nil).
Group
Amounts receivable from customers
Derivative financial instruments
Cash and cash equivalents
Other receivables
Total
Financial liabilities
An analysis of Group financial liabilities is presented below:
Group
Bonds
Bank borrowings
Derivative financial instruments
Trade and other payables
Provision for liabilities and charges
Total
162
International Personal Finance plc
Annual Report and Financial Statements 2022
2022
2021
Financial
liabilities at
amortised
cost
£m
Derivatives
used for
hedging
£m
413.7
135.1
–
122.2
4.7
675.7
–
–
4.6
–
–
4.6
Financial
liabilities at
amortised
cost
£m
Derivatives
used for
hedging
£m
395.8
75.8
–
112.8
5.4
589.8
–
–
7.6
–
–
7.6
Total
£m
413.7
135.1
4.6
122.2
4.7
680.3
Financial
assets at
amortised
cost
£m
Derivatives
used for
hedging
£m
716.8
–
41.7
14.0
772.5
–
0.7
–
–
0.7
Financial
assets at
amortised
cost
£m
Derivatives
used for
hedging
£m
Total
£m
868.8
4.5
50.7
16.2
868.8
–
50.7
16.2
935.7
–
4.5
–
–
4.5
940.2
Total
£m
388.3
388.3
376.1
376.1
Total
£m
5.3
5.3
20.9
20.9
Total
£m
716.8
0.7
41.7
14.0
773.2
Total
£m
395.8
75.8
7.6
112.8
5.4
597.4
163
Financial Statements
Notes to the Financial Statements continued
25. Fair values of financial assets and liabilities
IFRS 13 requires disclosure of fair value measurements of derivative financial instruments by level of the following fair value measurement
hierarchy:
– quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
– inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2); and
– inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
With the exception of derivatives, which are held at fair value, amounts receivable from customers, and bonds, the carrying value of all
other financial assets and liabilities (which are short-term in nature) is considered to be a reasonable approximation of their fair value.
Details of the significant assumptions made in determining the fair value of amounts receivable from customers and bonds are included
below, along with the fair value of other Group assets and liabilities.
The fair value and carrying value of the financial assets and liabilities of the Group are set out below:
At 31 December 2021
Financial assets
Amounts receivable from customers
Derivative financial instruments
Cash and cash equivalents
Other receivables
Financial liabilities
Bonds
Bank borrowings
Derivative financial instruments
Trade and other payables
Provision for liabilities and charges
At 31 December 2022
Financial assets
Amounts receivable from customers
Derivative financial instruments
Cash and cash equivalents
Other receivables
Financial liabilities
Bonds
Bank borrowings
Derivative financial instruments
Trade and other payables
Provision for liabilities and charges
Fair values
Carrying
value
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
716.8
0.7
41.7
14.0
773.2
395.8
75.8
7.6
112.8
5.4
597.4
–
–
41.7
–
41.7
419.9
75.8
–
–
–
495.7
–
0.7
–
–
0.7
–
–
7.6
–
–
7.6
938.4
938.4
–
–
14.0
952.4
–
–
–
112.8
5.4
118.2
0.7
41.7
14.0
994.8
419.9
75.8
7.6
112.8
5.4
621.5
Fair values
Carrying
value
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
868.8
4.5
50.7
16.2
940.2
413.7
135.1
4.6
122.2
4.7
680.3
–
–
50.7
–
50.7
358.2
135.1
–
–
–
493.3
–
4.5
–
–
1,111.2
1,111.2
–
–
16.2
4.5
50.7
16.2
4.5
1,127.4
1,182.6
–
–
4.6
–
–
4.6
–
–
–
122.2
4.7
126.9
358.2
135.1
4.6
122.2
4.7
624.8
164
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
At 31 December 2021
Financial assets
Amounts receivable from customers
Derivative financial instruments
Cash and cash equivalents
Other receivables
Financial liabilities
Bonds
Bank borrowings
Derivative financial instruments
Trade and other payables
Provision for liabilities and charges
At 31 December 2022
Financial assets
Amounts receivable from customers
Derivative financial instruments
Cash and cash equivalents
Other receivables
Financial liabilities
Bonds
Bank borrowings
Derivative financial instruments
Trade and other payables
Provision for liabilities and charges
25. Fair values of financial assets and liabilities
25. Fair values of financial assets and liabilities continued
IFRS 13 requires disclosure of fair value measurements of derivative financial instruments by level of the following fair value measurement
The fair value and carrying value of the financial assets and liabilities of the Company are set out below:
hierarchy:
– quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
– inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2); and
– inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
With the exception of derivatives, which are held at fair value, amounts receivable from customers, and bonds, the carrying value of all
other financial assets and liabilities (which are short-term in nature) is considered to be a reasonable approximation of their fair value.
Details of the significant assumptions made in determining the fair value of amounts receivable from customers and bonds are included
below, along with the fair value of other Group assets and liabilities.
The fair value and carrying value of the financial assets and liabilities of the Group are set out below:
Fair values
Carrying
value
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
938.4
938.4
14.0
952.4
–
–
–
–
–
112.8
5.4
118.2
0.7
41.7
14.0
994.8
419.9
75.8
7.6
112.8
5.4
621.5
716.8
0.7
41.7
14.0
773.2
395.8
75.8
7.6
112.8
5.4
597.4
868.8
4.5
50.7
16.2
940.2
413.7
135.1
4.6
122.2
4.7
680.3
–
–
–
41.7
41.7
419.9
75.8
495.7
50.7
50.7
358.2
135.1
–
–
–
–
–
–
–
–
–
Fair values
Carrying
value
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
1,111.2
1,111.2
–
–
16.2
4.5
50.7
16.2
4.5
1,127.4
1,182.6
–
–
–
122.2
4.7
126.9
358.2
135.1
4.6
122.2
4.7
624.8
493.3
4.6
0.7
–
–
–
0.7
7.6
–
–
–
–
7.6
4.5
–
–
–
4.6
–
–
–
–
At 31 December 2021
Financial assets
Cash and cash equivalents
Other receivables
Financial liabilities
Bonds
Trade and other payables
At 31 December 2022
Financial assets
Cash and cash equivalents
Other receivables
Financial liabilities
Bonds
Derivative financial instruments
Trade and other payables
Fair values
Carrying
value
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
4.4
555.5
559.9
395.8
383.4
779.2
4.4
–
4.4
419.9
–
419.9
–
–
–
–
–
–
–
555.5
555.5
–
383.4
383.4
4.4
555.5
559.9
419.9
383.4
803.3
Fair values
Carrying
value
£m
Level 1
£m
Level 2
£m
Level 3
£m
Total fair
value
£m
5.0
527.6
532.6
413.7
0.1
372.3
786.1
5.0
–
5.0
358.2
–
–
358.2
–
–
–
–
0.1
–
0.1
–
527.6
527.6
–
–
372.3
372.3
5.0
527.6
532.6
358.2
0.1
372.3
730.6
The fair value of amounts receivable from customers has been derived by discounting expected future cash flows (as used to
calculate the carrying value of amounts due from customers), net of repayment costs, at the Group’s weighted average cost of capital
which is estimated to be 12% (2021: 10%) which is assumed to be a proxy for the discount rate that a market participant would use to
price the asset.
Under IFRS 13 ‘Fair value measurement’, receivables are classed as level 3 as their fair value is calculated using future cash flows that are
unobservable inputs.
The fair value of the bonds has been calculated by reference to their market value where market prices are available.
The carrying value of bank borrowings is deemed to be a good approximation of their fair value. Bank borrowings can be repaid within
six months if the Group decides not to roll over for further periods up to the contractual repayment date. The impact of discounting would
therefore be negligible.
Derivative financial instruments are held at fair value which is equal to the expected future cash flows arising as a result of the
derivative transaction.
For other financial assets and liabilities, which are all short-term in nature, the carrying value is a reasonable approximation of their
fair value.
26. Provisions
The Group receives claims brought by or on behalf of current and former customers in connection with its past conduct. Where
significant, provisions are held against the costs expected to be incurred in relation to these matters. Customer redress provisions of
£4.7m represent the Group’s best estimate of the costs that are expected to be incurred in relation to early settlement rebates in Poland
(2022: £0.6m; 2021: £3.3m) and claims management charges incurred in Spain (2022: £4.1m; 2021: £2.1m). All claims are expected to
be settled within 12 months of the balance sheet date. Further details are included on page 142.
164
International Personal Finance plc
Annual Report and Financial Statements 2022
165
Financial Statements
Notes to the Financial Statements continued
27. Retirement benefit asset/obligation
Pension schemes – defined benefit
With effect from 1 March 2010, the Group’s defined benefit pension scheme was closed to further accrual of defined benefit obligations.
Scheme assets are stated at fair value as at 31 December 2022. The major assumptions used by the actuary were:
Group and Company
Price inflation (‘CPI’)
Rate of increase to pensions in payment
Discount rate
2022
%
2.6
3.1
5.0
2021
%
2.7
3.3
1.8
The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current
investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date.
Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets.
The mortality assumptions are based on standard tables which allow for future mortality improvements. Different assumptions are used for
different groups of members. Most members have not yet retired. On average, we expect a male retiring in the future at age 65 to live for
a further 26 years. On average, we expect a female retiring in the future at age 65 to live for a further 28 years. If life expectancies had
been assumed to be one year greater for all members, the defined benefit asset would reduce by approximately £0.8m.
If the discount rate was 50 basis points higher/(lower), the defined benefit asset would increase by £1.9m/(decrease by £2.2m).
If the price inflation rate was 25 basis points higher/(lower), the defined benefit asset would decrease by £0.7m/(increase by £0.6m).
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit asset, as it is unlikely that
the changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
The amounts recognised in the balance sheet are as follows:
Group and Company
Diversified growth funds
Corporate bonds
Liability driven investments
Other
Total fair value of scheme assets
Present value of funded defined benefit obligations
Net asset recognised in the balance sheet
The amounts recognised in the income statement are as follows:
Group and Company
Interest cost
Expected return on scheme assets
Net credit recognised in the income statement
The net credit is included within administrative expenses.
Movements in the fair value of scheme assets were as follows:
Group and Company
Fair value of scheme assets at 1 January
Expected return on scheme assets
Actuarial loss on scheme assets
Contributions by the Group
Net benefits paid out
Fair value of scheme assets at 31 December
2022
£m
4.6
14.5
11.7
0.1
30.9
(28.8)
2.1
2022
£m
0.8
(0.9)
(0.1)
2022
£m
51.3
0.9
(21.3)
0.9
(0.9)
30.9
2021
£m
7.9
20.2
23.1
0.1
51.3
(46.4)
4.9
2021
£m
0.7
(0.8)
(0.1)
2021
£m
52.2
0.8
(1.6)
0.9
(1.0)
51.3
The Group expects to make a contribution of £nil (2021: £0.9m) to the deferred benefit pension scheme in the year ending 31 December
2023. The Group has now completed all payments pursuant to a recovery plan agreed with the scheme Trustee.
166
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
27. Retirement benefit asset/obligation
Pension schemes – defined benefit
Group and Company
Price inflation (‘CPI’)
Rate of increase to pensions in payment
Discount rate
With effect from 1 March 2010, the Group’s defined benefit pension scheme was closed to further accrual of defined benefit obligations.
Scheme assets are stated at fair value as at 31 December 2022. The major assumptions used by the actuary were:
The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current
investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date.
Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets.
The mortality assumptions are based on standard tables which allow for future mortality improvements. Different assumptions are used for
different groups of members. Most members have not yet retired. On average, we expect a male retiring in the future at age 65 to live for
a further 26 years. On average, we expect a female retiring in the future at age 65 to live for a further 28 years. If life expectancies had
been assumed to be one year greater for all members, the defined benefit asset would reduce by approximately £0.8m.
If the discount rate was 50 basis points higher/(lower), the defined benefit asset would increase by £1.9m/(decrease by £2.2m).
If the price inflation rate was 25 basis points higher/(lower), the defined benefit asset would decrease by £0.7m/(increase by £0.6m).
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit asset, as it is unlikely that
the changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
The amounts recognised in the balance sheet are as follows:
Group and Company
Diversified growth funds
Corporate bonds
Liability driven investments
Other
Total fair value of scheme assets
Present value of funded defined benefit obligations
Net asset recognised in the balance sheet
The amounts recognised in the income statement are as follows:
Group and Company
Interest cost
Expected return on scheme assets
Net credit recognised in the income statement
The net credit is included within administrative expenses.
Movements in the fair value of scheme assets were as follows:
Group and Company
Fair value of scheme assets at 1 January
Expected return on scheme assets
Actuarial loss on scheme assets
Contributions by the Group
Net benefits paid out
Fair value of scheme assets at 31 December
2022
£m
4.6
14.5
11.7
0.1
30.9
(28.8)
2.1
2022
£m
0.8
(0.9)
(0.1)
2022
£m
51.3
0.9
(21.3)
0.9
(0.9)
30.9
2021
£m
7.9
20.2
23.1
0.1
51.3
(46.4)
4.9
2021
£m
0.7
(0.8)
(0.1)
2021
£m
52.2
0.8
(1.6)
0.9
(1.0)
51.3
The Group expects to make a contribution of £nil (2021: £0.9m) to the deferred benefit pension scheme in the year ending 31 December
2023. The Group has now completed all payments pursuant to a recovery plan agreed with the scheme Trustee.
27. Retirement benefit asset/obligation continued
Movements in the present value of the defined benefit obligation were as follows:
2022
%
2.6
3.1
5.0
2021
%
2.7
3.3
1.8
Group and Company
Defined benefit obligation at 1 January
Interest cost
Actuarial gain on scheme liabilities
Net benefits paid out
Defined benefit obligation at 31 December
2022
£m
(46.4)
(0.8)
17.5
0.9
2021
£m
(48.8)
(0.7)
2.1
1.0
(28.8)
(46.4)
The weighted average duration of the defined benefit asset is 16 years (2021: 21 years).
The actual return on scheme assets compared to the expected return is as follows:
Group and Company
Expected return on scheme assets
Actuarial loss on scheme assets
Actual loss on scheme assets
2022
£m
0.9
(21.3)
(20.4)
Actuarial gains and losses have been recognised through the statement of comprehensive income (‘SOCI’) in the period in which
they occur.
An analysis of the amounts recognised in the SOCI is as follows:
2021
£m
0.8
(1.6)
(0.8)
2021
£m
(1.6)
2.1
0.5
(16.7)
2022
£m
(21.3)
17.5
(3.8)
(20.5)
2022
2021
2020*
2019*
2018*
(21.3)
(68.9)
(2.4)
(8.3)
(1.6)
(3.1)
6.7
12.8
1.7
3.7
–
–
4.4
9.6
–
–
(2.2)
(5.3)
–
–
Group and Company
Actuarial loss on scheme assets
Actuarial gain on scheme liabilities
Total (loss)/gain recognised in the SOCI in the year
Cumulative amount of losses recognised in the SOCI
The history of experience adjustments are as follows:
Group and Company
Actuarial (losses)/gains on scheme assets:
– amount (£m)
– percentage of scheme assets (%)
Experience (losses)/gains on scheme liabilities:
– amount (£m)
– percentage of scheme liabilities (%)
* As required under IAS 19.
Pension schemes – defined contribution
The defined benefit pension scheme is no longer open to further accrual. All eligible UK employees are invited to join stakeholder pension
schemes into which the Group contributes between 8% and 20% of members’ pensionable earnings, provided the employee contributes
a minimum of 5%. The assets of the scheme are held separately from those of the Group. The pension charge in the income statement
represents contributions payable by the Group in respect of the scheme and amounted to £0.8m for the year ended 31 December 2022
(2021: £0.7m). £0.1m contributions were payable to the scheme at the year end (2021: £nil).
166
International Personal Finance plc
Annual Report and Financial Statements 2022
167
Financial Statements
Notes to the Financial Statements continued
28. Share-based payments
The Group currently operates five categories of share schemes: The International Personal Finance plc Performance Share Plan
(the Performance Share Plan); The International Personal Finance plc Approved Company Share Option Plan (the CSOP); The
International Personal Finance plc Employee Savings-Related Share Option Scheme (the SAYE scheme); The International Personal
Finance plc Deferred Share Plan (the Deferred Share Plan); and The International Personal Finance plc Discretionary Award Plan (the
Discretionary Award Plan). A number of awards have been granted under these schemes during the period under review. No awards
have been granted under the CSOP or the Discretionary Award Plan in 2022.
Options granted under the Performance Share Plans and CSOPs may be subject to a total shareholder return (TSR) performance target
and/or EPS growth; net revenue growth; customer numbers growth; customer representative turnover; and earnings before interest and
tax (EBIT) performance targets. The income statement charge in respect of the Performance Share Plan and the CSOP has been
calculated using both a Monte Carlo simulation (for TSR) and Black-Scholes model (for the other non-market related conditions) as these
schemes include performance targets. There are no performance conditions associated with the Discretionary Award Plan and,
therefore, the income statement charge in respect of this scheme is calculated using the share price at the date of grant.
The income statement charge in respect of the SAYE scheme is calculated using a Monte Carlo simulation model, although, no TSR
targets are assigned. The Deferred Share Plan comprises deferred awards with matching awards. From the 2018 scheme onwards, the
Deferred Share Plan does not have matching awards. There are no additional performance criteria attached to the deferred awards,
therefore, the income statement charge is calculated using the actual share price at the date the award is granted. The matching
awards are subject to the same criteria as the Performance Share Plan.
The total income statement charge in respect of these share-based payments in 2022 was £2.2m (2021: credit of £0.2m).
The fair value per award granted and the assumptions used in the calculation of the share-based payment charge are as follows:
Group and Company
Grant date
Share price at award date
Base price for TSR
Exercise price
Vesting period (years)
Expected volatility
Award life (years)
Expected life (years)
Risk-free rate
Expected dividends expressed as a dividend yield
Deferred portion
TSR threshold
TSR maximum target
EPS threshold
EPS maximum target
Net revenue threshold
Net revenue maximum target
Fair value per award (£)
SAYE
Scheme
26/8/22
1.01
n/a
0.75
3 and 5
63.5%
Up to 5
Up to 5
2.60%
8.29%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Performance
Share Plan*
Deferred
Share Plan
9/3/22
9/3/22
0.90
0.80
Nil
3
70.0%
3
3
1.53%
8.29%
n/a
30.0%
60.0%
60.3p
82.9p
5.7%
11.4%
0.90
n/a
n/a
3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0.46 – 0.49
0.47 – 0.70
* Performance conditions only apply for the Executive Directors and Senior Leadership Team schemes.
No exercise price is payable in respect of any awards made under the Performance Share Plan, Discretionary Award Plan or the Deferred
Share Plan. The risk-free rate of return is the yield on zero coupon UK government bonds with a remaining term equal to the expected life
of the award.
Further detail in respect of the Performance Share Plans, CSOPs, Deferred Share Plans, SAYE schemes and Discretionary Award Plans is
provided in the Corporate Governance Report.
168
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
28. Share-based payments
The Group currently operates five categories of share schemes: The International Personal Finance plc Performance Share Plan
(the Performance Share Plan); The International Personal Finance plc Approved Company Share Option Plan (the CSOP); The
International Personal Finance plc Employee Savings-Related Share Option Scheme (the SAYE scheme); The International Personal
Finance plc Deferred Share Plan (the Deferred Share Plan); and The International Personal Finance plc Discretionary Award Plan (the
Discretionary Award Plan). A number of awards have been granted under these schemes during the period under review. No awards
have been granted under the CSOP or the Discretionary Award Plan in 2022.
Options granted under the Performance Share Plans and CSOPs may be subject to a total shareholder return (TSR) performance target
and/or EPS growth; net revenue growth; customer numbers growth; customer representative turnover; and earnings before interest and
tax (EBIT) performance targets. The income statement charge in respect of the Performance Share Plan and the CSOP has been
calculated using both a Monte Carlo simulation (for TSR) and Black-Scholes model (for the other non-market related conditions) as these
schemes include performance targets. There are no performance conditions associated with the Discretionary Award Plan and,
therefore, the income statement charge in respect of this scheme is calculated using the share price at the date of grant.
The income statement charge in respect of the SAYE scheme is calculated using a Monte Carlo simulation model, although, no TSR
targets are assigned. The Deferred Share Plan comprises deferred awards with matching awards. From the 2018 scheme onwards, the
Deferred Share Plan does not have matching awards. There are no additional performance criteria attached to the deferred awards,
therefore, the income statement charge is calculated using the actual share price at the date the award is granted. The matching
awards are subject to the same criteria as the Performance Share Plan.
The total income statement charge in respect of these share-based payments in 2022 was £2.2m (2021: credit of £0.2m).
The fair value per award granted and the assumptions used in the calculation of the share-based payment charge are as follows:
Group and Company
Grant date
Share price at award date
Base price for TSR
Exercise price
Vesting period (years)
Expected volatility
Award life (years)
Expected life (years)
Risk-free rate
Deferred portion
TSR threshold
TSR maximum target
EPS threshold
EPS maximum target
Net revenue threshold
Net revenue maximum target
Fair value per award (£)
Expected dividends expressed as a dividend yield
SAYE
Scheme
26/8/22
1.01
n/a
0.75
3 and 5
63.5%
Up to 5
Up to 5
2.60%
8.29%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0.90
0.80
Nil
3
70.0%
3
3
1.53%
8.29%
n/a
30.0%
60.0%
60.3p
82.9p
5.7%
11.4%
0.90
n/a
n/a
3
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
* Performance conditions only apply for the Executive Directors and Senior Leadership Team schemes.
No exercise price is payable in respect of any awards made under the Performance Share Plan, Discretionary Award Plan or the Deferred
Share Plan. The risk-free rate of return is the yield on zero coupon UK government bonds with a remaining term equal to the expected life
of the award.
Further detail in respect of the Performance Share Plans, CSOPs, Deferred Share Plans, SAYE schemes and Discretionary Award Plans is
provided in the Corporate Governance Report.
0.46 – 0.49
0.47 – 0.70
Performance
Share Plan*
Deferred
Share Plan
9/3/22
9/3/22
Exercised
Outstanding at
31 December
2022
28. Share-based payments continued
The movements in awards during the year for the Group are outlined in the table below:
SAYE
schemes
CSOPs
Deferred
Share Plans
Performance
Share Plans
Discretionary
Award Plans
Weighted
average
exercise
price
Weighted
average
exercise
price
Number
Weighted
average
exercise
price
Weighted
average
exercise
price
Number
Group
Number
Outstanding at
1 January 2021
Granted
958,399
229,536
Expired/lapsed
(163,297)
Exercised
Outstanding at
31 December 2021
Outstanding at
1 January 2022
Granted
1,024,638
974,128
Expired/lapsed
(250,370)
–
–
Weighted
average
exercise
price
0.93
1.11
1.15
–
Number
10,927
–
(2,270)
–
4.30
3,222,861
–
5.26
–
–
(61,540)
(824,594)
1,024,638
0.94
8,657
4.05
2,336,727
0.94
0.75
0.99
–
8,657
4.05
2,336,727
–
–
–
–
–
–
1,103,152
–
(1,045,164)
1,748,396
0.82
8,657
4.05
2,394,715
Number
7,579,068
4,133,773
(3,705,148)
(584,570)
–
–
–
–
909,523
838,491
(25,999)
(348,277)
7,423,123
–
1,373,738
7,423,123
3,330,378
(4,038,611)
(163,972)
– 1,373,738
–
–
–
–
(236,278)
–
6,550,918
–
1,137,460
–
–
–
–
–
–
–
–
–
–
Share awards outstanding at 31 December 2022 had exercise prices of £0.75 – £5.26 (2021: £0.86 – £5.26) and a weighted average
remaining contractual life of 8.4 years (2021: 8.2 years).
The movements in awards during the year for the Company are outlined in the table below:
SAYE
schemes
CSOPs
Deferred
Share Plans
Performance
Share Plans
Discretionary
Award Plans
Company
Number
Weighted
average
exercise
price
Weighted
average
exercise
price
Weighted
average
exercise
price
Number
Outstanding at
1 January 2021
Granted
Expired/lapsed
Exercised
Outstanding at
31 December 2021
639,315
132,699
(93,187)
–
0.91
1.11
1.10
–
Number
5,896
–
(2,000)
–
5.01
1,198,728
–
5.26
–
–
(30,774)
(348,761)
678,827
0.93
3,896
4.87
819,193
Outstanding at
1 January 2022
Granted
678,827
659,200
Expired/lapsed
(156,902)
0.93
0.75
0.97
–
3,896
4.87
–
–
–
–
–
–
819,193
625,186
–
(387,150)
–
Exercised
Outstanding at
31 December
2022
1,181,125
0.81
3,896
4.87
1,057,229
Weighted
average
exercise
price
–
–
–
–
Number
3,183,077
2,091,986
(1,693,137)
(299,629)
Number
–
655,521
–
–
3,282,297
–
655,521
3,282,297
1,904,076
(1,661,520)
(7,929)
–
–
–
–
655,521
–
(66,116)
–
3,516,924
–
589,405
Weighted
average
exercise
price
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Share awards outstanding at 31 December 2022 had exercise prices of £0.75 – £5.26 (2021: £0.86 – £5.26) and a weighted average
remaining contractual life of 8.6 years (2021: 8.1 years).
168
International Personal Finance plc
Annual Report and Financial Statements 2022
169
Financial Statements
Notes to the Financial Statements continued
29. Share capital
Company
234,244,437 authorised, issued and fully-paid up shares at a nominal value of 10 pence
The Company has one class of ordinary shares which carry no right to fixed income.
2022
£m
23.4
2021
£m
23.4
The own share reserve represents the cost of shares in the company purchased from the market, which can be used to satisfy options
under the Group’s share options schemes (see note 28). The number of ordinary shares held in treasury and by the employee trust at 31
December 2022 was 11,654,312 (2021: 12,463,982). During 2022, the employee trust acquired 351,154 shares at an average price of
£1.13 (2021: 1,000,000 acquired at an average price of £1.34) and the treasury trust acquired nil shares (2021: 1,673,203 shares at a price
of £1.54 following completion of a share buyback in connection with the Company’s withdrawal of it’s ordinary shares from trading on
the Warsaw Stock Exchange).
30. Reconciliation of profit/(loss) after taxation to cash generated from operating activities
Group
Company
Profit/(loss) after taxation from operations
Adjusted for:
– tax charge
– finance costs
– finance income
– share-based payment charge/(credit) (note 28)
– depreciation of property, plant and equipment (note 14)
– (profit)/loss on disposal of property, plant and equipment (note 14)
– amortisation of intangible assets (note 12)
– depreciation of right-of-use assets (note 15)
– short term and low value lease costs (note 15)
Changes in operating assets and liabilities:
– increase in amounts receivable from customers
– decrease/(increase) in other receivables
– (decrease)/increase in trade and other payables
– change in provisions
– change in retirement benefit asset
– (decrease)/increase in derivative financial instrument liabilities
Cash generated from operating activities
31. Capital commitments
Group
Capital expenditure commitments contracted with third parties but not provided for at 31 December
The Company has no commitments as at 31 December 2022 (2021: £nil).
2022
£m
56.8
20.6
68.1
–
2.2
6.2
(0.1)
12.6
8.5
1.2
(115.7)
13.2
(3.8)
(0.9)
(1.0)
(9.1)
58.8
2021
£m
41.9
25.8
54.0
–
(0.2)
5.6
0.4
14.7
8.4
1.2
(88.4)
(3.7)
26.7
(13.2)
(1.0)
2.1
74.3
2022
£m
(16.5)
1.7
71.6
(45.6)
1.1
0.1
–
–
0.3
–
–
29.2
(10.3)
–
(1.0)
(0.1)
30.5
2022
£m
4.5
2021
£m
(48.2)
1.5
73.3
(40.1)
(0.2)
0.1
–
–
0.1
–
–
29.1
(8.2)
–
(1.0)
0.2
6.6
2021
£m
8.6
170
International Personal Finance plc
Financial Statements
Notes to the Financial Statements continued
29. Share capital
Company
234,244,437 authorised, issued and fully-paid up shares at a nominal value of 10 pence
The Company has one class of ordinary shares which carry no right to fixed income.
The own share reserve represents the cost of shares in the company purchased from the market, which can be used to satisfy options
under the Group’s share options schemes (see note 28). The number of ordinary shares held in treasury and by the employee trust at 31
December 2022 was 11,654,312 (2021: 12,463,982). During 2022, the employee trust acquired 351,154 shares at an average price of
£1.13 (2021: 1,000,000 acquired at an average price of £1.34) and the treasury trust acquired nil shares (2021: 1,673,203 shares at a price
of £1.54 following completion of a share buyback in connection with the Company’s withdrawal of it’s ordinary shares from trading on
the Warsaw Stock Exchange).
30. Reconciliation of profit/(loss) after taxation to cash generated from operating activities
Group
Company
Profit/(loss) after taxation from operations
Adjusted for:
– tax charge
– finance costs
– finance income
– share-based payment charge/(credit) (note 28)
– depreciation of property, plant and equipment (note 14)
– (profit)/loss on disposal of property, plant and equipment (note 14)
– amortisation of intangible assets (note 12)
– depreciation of right-of-use assets (note 15)
– short term and low value lease costs (note 15)
Changes in operating assets and liabilities:
– increase in amounts receivable from customers
– decrease/(increase) in other receivables
– (decrease)/increase in trade and other payables
– change in provisions
– change in retirement benefit asset
– (decrease)/increase in derivative financial instrument liabilities
Cash generated from operating activities
31. Capital commitments
Group
Capital expenditure commitments contracted with third parties but not provided for at 31 December
The Company has no commitments as at 31 December 2022 (2021: £nil).
2022
£m
56.8
20.6
68.1
–
2.2
6.2
(0.1)
12.6
8.5
1.2
(115.7)
13.2
(3.8)
(0.9)
(1.0)
(9.1)
58.8
2021
£m
41.9
25.8
54.0
–
(0.2)
5.6
0.4
14.7
8.4
1.2
(88.4)
(3.7)
26.7
(13.2)
(1.0)
2.1
74.3
0.3
0.1
2022
£m
(16.5)
1.7
71.6
(45.6)
1.1
0.1
–
–
–
–
–
29.2
(10.3)
(1.0)
(0.1)
30.5
2022
£m
4.5
2021
£m
(48.2)
1.5
73.3
(40.1)
(0.2)
0.1
–
–
–
–
–
29.1
(8.2)
(1.0)
0.2
6.6
2021
£m
8.6
32. Contingent liabilities
2022
£m
23.4
2021
£m
23.4
The Company has a contingent liability for guarantees given in respect of the borrowings of certain other Group companies to a
maximum of £134.8m (2021: £161.3m). At 31 December 2022, the fixed and floating rate borrowings under these facilities amounted to
£180.2m (2021: £89.2m). The directors do not expect any loss to arise. These guarantees are defined as financial guarantees under IFRS 9
and their fair value at 31 December 2022 was £nil (2021: £nil).
33. Related party transactions
The company has various transactions with other companies in the Group. Details of these transactions along with any balances
outstanding are shown below:
Company
Europe
Mexico
Other UK companies
2022
2021
Recharge
of costs
£m
Interest
charge
£m
Outstanding
balance
£m
Recharge
of costs
£m
Interest
charge
£m
Outstanding
balance
£m
0.1
–
5.0
5.1
–
9.1
(2.7)
6.4
26.7
82.3
60.6
169.6
0.1
–
6.6
6.7
–
6.8
1.6
8.4
37.3
55.7
91.2
184.2
The outstanding balance represents the gross intercompany balance receivable by the Company.
The Group’s only related party transactions are remuneration of key management personnel as disclosed in note 8.
170
International Personal Finance plc
Annual Report and Financial Statements 2022
171
Financial Statements
Alternative performance measures
This Annual Report and Financial Statements provides alternative performance measures (APMs) which are not defined or specified
under the requirements of International Financial Reporting Standards. We believe these APMs provide readers with important additional
information on our business. To support this we have included a reconciliation of the APMs we use, where relevant, and a glossary
indicating the APMs that we use, an explanation of how they are calculated and why we use them.
Closest
equivalent
statutory measure
Reconciling items
to statutory measure Definition and purpose
None
Not applicable
APM
Income statement
measures
Customer lending growth
at constant exchange
rates (%)
Closing net receivables
growth at constant
exchange rates (%)
None
Not applicable
Revenue growth at
constant exchange rates
(%)
None
Not applicable
Revenue yield (%)
None
Not applicable
Impairment rate (%)
None
Not applicable
Cost-income ratio (%)
None
Not applicable
Pre-exceptional profit
before tax (£m)
Pre-exceptional earnings
per share (pence)
Profit before tax
Exceptional items
Earnings per share
Exceptional items
Customer lending is the principal value of loans advanced to customers and is
an important measure of the level of lending in the business. Customer lending
growth is the period-on-period change in this metric which is calculated by
retranslating the previous year’s customer lending at the average actual
exchange rates used in the current financial year. This ensures that the measure
is presented having eliminated the effects of exchange rate fluctuations on the
period-on-period reported results (constant exchange rates).
Closing net receivables growth is the period-on-period change in closing net
receivables which is calculated by retranslating the previous year’s closing net
receivables at the closing actual exchange rate used in the current financial
year. This ensures that the measure is presented having eliminated the effects of
exchange rate fluctuations on the period-on-period reported results (constant
exchange rates).
The period-on-period change in revenue which is calculated by retranslating the
previous year’s revenue at the average actual exchange rates used in the
current financial year. This measure is presented as a means of eliminating the
effects of exchange rate fluctuations on the period-on-period reported results
(constant exchange rates).
Revenue yield is reported revenue divided by average gross receivables (before
impairment provision) and is an indicator of the return being generated from
average gross receivables. This measure is reported on a rolling annual basis
(annualised).
Impairment rate is reported impairment divided by average gross receivables
(before impairment provision) and represents a measure of credit quality that is
used across the business. This measure is reported on a rolling annual basis
(annualised).
The cost-income ratio is costs, including customer representatives commission,
excluding interest expense divided by reported revenue. This measure is reported
on a rolling annual basis (annualised). This is useful for comparing cost efficiency
across markets.
Profit before tax and exceptional items. This is considered to be an important
measure where exceptional items distort the operating performance of the
business.
Earnings per share before the impact of exceptional items. This is considered to
be an important measure where exceptional items distort the operating
performance of the business.
172
International Personal Finance plc
Financial Statements
Income statement
measures
at constant exchange
rates (%)
growth at constant
exchange rates (%)
constant exchange rates
(%)
Alternative performance measures
This Annual Report and Financial Statements provides alternative performance measures (APMs) which are not defined or specified
under the requirements of International Financial Reporting Standards. We believe these APMs provide readers with important additional
information on our business. To support this we have included a reconciliation of the APMs we use, where relevant, and a glossary
indicating the APMs that we use, an explanation of how they are calculated and why we use them.
APM
statutory measure
to statutory measure Definition and purpose
Closest
equivalent
Reconciling items
Customer lending growth
None
Not applicable
Customer lending is the principal value of loans advanced to customers and is
Closing net receivables
None
Not applicable
Closing net receivables growth is the period-on-period change in closing net
an important measure of the level of lending in the business. Customer lending
growth is the period-on-period change in this metric which is calculated by
retranslating the previous year’s customer lending at the average actual
exchange rates used in the current financial year. This ensures that the measure
is presented having eliminated the effects of exchange rate fluctuations on the
period-on-period reported results (constant exchange rates).
receivables which is calculated by retranslating the previous year’s closing net
receivables at the closing actual exchange rate used in the current financial
year. This ensures that the measure is presented having eliminated the effects of
exchange rate fluctuations on the period-on-period reported results (constant
exchange rates).
previous year’s revenue at the average actual exchange rates used in the
current financial year. This measure is presented as a means of eliminating the
effects of exchange rate fluctuations on the period-on-period reported results
(constant exchange rates).
impairment provision) and is an indicator of the return being generated from
average gross receivables. This measure is reported on a rolling annual basis
Revenue growth at
None
Not applicable
The period-on-period change in revenue which is calculated by retranslating the
Revenue yield (%)
None
Not applicable
Revenue yield is reported revenue divided by average gross receivables (before
Impairment rate (%)
None
Not applicable
Impairment rate is reported impairment divided by average gross receivables
(before impairment provision) and represents a measure of credit quality that is
used across the business. This measure is reported on a rolling annual basis
Cost-income ratio (%)
None
Not applicable
The cost-income ratio is costs, including customer representatives commission,
excluding interest expense divided by reported revenue. This measure is reported
on a rolling annual basis (annualised). This is useful for comparing cost efficiency
Pre-exceptional profit
Profit before tax
Exceptional items
Profit before tax and exceptional items. This is considered to be an important
before tax (£m)
measure where exceptional items distort the operating performance of the
Pre-exceptional earnings
Earnings per share
Exceptional items
Earnings per share before the impact of exceptional items. This is considered to
per share (pence)
be an important measure where exceptional items distort the operating
performance of the business.
(annualised).
(annualised).
across markets.
business.
Closest
equivalent
statutory measure
Reconciling items
to statutory measure Definition and purpose
APM
Balance sheet and
returns measures
Gross receivables (£m)
None
Not applicable
Gross receivables is the same definition as gross carrying amount as per note 17.
Impairment coverage
ratio (%)
None
Not applicable
Expected loss allowance divided by gross carrying amount (before impairment
provision).
Pre-exceptional return on
equity (ROE) (%)
Pre-exceptional required
return on equity (RORE)
(%)
None
None
Equity to receivables ratio
(%)
None
Not applicable
Not applicable
Calculated as pre-exceptional profit after tax divided by average opening and
closing equity. It is used as a measure of overall shareholder returns.
Calculated as pre-exceptional profit after tax divided by required equity of 40% of
average net receivables. It is used as a measure of overall shareholder returns.
Not applicable
Total equity divided by amounts receivable from customers. This is a measure
of balance sheet strength.
Headroom (£m)
Undrawn external
bank facilities
Not applicable
Calculated as the sum of undrawn external bank facilities and non-operational
cash.
Net debt (£m)
None
Not applicable
Borrowings less cash.
Other measures
Customers
None
Not applicable
Customer retention (%)
None
Not applicable
Employees and Customer
representatives
Employee
information
Not applicable
Customer representatives
and employee retention
(%)
None
Not applicable
Customers that are being served by our agents or through our money transfer
product in the home credit business and customers that are not in default in our
digital business.
The proportion of customers that are retained for their third or subsequent loan.
Our ability to retain customers is central to achieving our strategy and is an
indicator of the quality of our customer service. We do not retain customers who
have a poor payment history as it can create a continuing impairment risk and
runs counter to our responsible lending commitments.
Customer representatives are self-employed individuals who represent the Group’s
subsidiaries and are engaged under civil contracts with the exception of Hungary
and Romania where they are employees engaged under employment contracts
due to local regulatory reasons.
This measure represents the proportion of our employees and customer
representatives that have been working for or representing the Group for more
than 12 months. Experienced people help us to achieve and sustain strong
customer relationships and a high quality service, both of which are central to
achieving good customer retention. Good customer representative and employee
retention also helps reduce costs of recruitment and training, enabling more
investment in people development.
172
International Personal Finance plc
Annual Report and Financial Statements 2022
173
Financial Statements
Alternative performance measures continued
Constant exchange rate reconciliations
The year-on-year change in profit and loss accounts is calculated by retranslating the 2021 profit and loss account at the average actual
exchange rates used in the current year.
2022
£m
Customers (000)
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Costs
Profit/(loss) before tax
2021 performance at 2021 average foreign exchange rates
£m
Customers (000)
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Costs
Profit/(loss) before tax
Foreign exchange movements
£m
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Costs
2021 performance at 2022 average exchange rates
£m
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Costs
European
home credit
Mexico
home credit
IPF Digital Central costs
784
501.0
637.0
317.5
(5.2)
312.3
(42.8)
(203.9)
65.6
696
158.5
257.4
210.9
(75.5)
135.4
(9.9)
(107.8)
17.7
253
209.3
232.0
117.1
(26.0)
91.1
(15.3)
(67.0)
8.8
-
-
-
-
-
-
(0.1)
(14.6)
(14.7)
Group
1,733
868.8
1,126.4
645.5
(106.7)
538.8
(68.1)
(393.3)
77.4
European
home credit
Mexico
home credit
IPF Digital Central costs
Group
810
425.9
599.2
284.7
1.6
286.3
(34.0)
(197.8)
54.5
654
117.6
194.2
146.0
(33.8)
112.2
(6.6)
(87.2)
18.4
263
173.3
188.7
118.0
(24.0)
94.0
(13.3)
(72.0)
8.7
–
–
–
–
–
–
(0.1)
(13.8)
(13.9)
1,727
716.8
982.1
548.7
(56.2)
492.5
(54.0)
(370.8)
67.7
European
home credit
Mexico
home credit
IPF Digital Central costs
Group
12.2
(19.7)
(8.2)
(0.4)
(8.6)
1.2
5.0
(2.4)
21.2
26.1
19.6
(5.6)
14.0
(0.9)
(10.2)
2.9
10.4
2.2
0.7
(0.4)
0.3
-
(0.8)
(0.5)
-
-
-
-
-
-
-
-
43.8
8.6
12.1
(6.4)
5.7
0.3
(6.0)
-
European
home credit
Mexico
home credit
IPF Digital Central costs
Group
438.1
579.5
276.5
1.2
277.7
(32.8)
(192.8)
138.8
220.3
165.6
(39.4)
126.2
(7.5)
(97.4)
183.7
190.9
118.7
(24.4)
94.3
(13.3)
(72.8)
-
-
-
-
-
(0.1)
(13.8)
760.6
990.7
560.8
(62.6)
498.2
(53.7)
(376.8)
174
International Personal Finance plc
Financial Statements
Alternative performance measures continued
2021 performance at 2021 average foreign exchange rates
European
Mexico
home credit
home credit
IPF Digital Central costs
Group
2022
£m
Customers (000)
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Costs
Profit/(loss) before tax
£m
Customers (000)
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Costs
Profit/(loss) before tax
£m
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Costs
£m
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Costs
European
Mexico
home credit
home credit
IPF Digital Central costs
784
501.0
637.0
317.5
(5.2)
312.3
(42.8)
(203.9)
65.6
810
425.9
599.2
284.7
1.6
286.3
(34.0)
(197.8)
54.5
12.2
(19.7)
(8.2)
(0.4)
(8.6)
1.2
5.0
(2.4)
438.1
579.5
276.5
1.2
277.7
(32.8)
(192.8)
696
158.5
257.4
210.9
(75.5)
135.4
(9.9)
(107.8)
17.7
654
117.6
194.2
146.0
(33.8)
112.2
(6.6)
(87.2)
18.4
21.2
26.1
19.6
(5.6)
14.0
(0.9)
(10.2)
2.9
138.8
220.3
165.6
(39.4)
126.2
(7.5)
(97.4)
253
209.3
232.0
117.1
(26.0)
91.1
(15.3)
(67.0)
8.8
263
173.3
188.7
118.0
(24.0)
94.0
(13.3)
(72.0)
8.7
10.4
2.2
0.7
(0.4)
0.3
-
(0.8)
(0.5)
183.7
190.9
118.7
(24.4)
94.3
(13.3)
(72.8)
(0.1)
(14.6)
(14.7)
(0.1)
(13.8)
(13.9)
-
-
-
-
-
-
–
–
–
–
–
–
-
-
-
-
-
-
-
-
-
-
-
-
-
(0.1)
(13.8)
Group
1,733
868.8
1,126.4
645.5
(106.7)
538.8
(68.1)
(393.3)
77.4
1,727
716.8
982.1
548.7
(56.2)
492.5
(54.0)
(370.8)
67.7
43.8
8.6
12.1
(6.4)
5.7
0.3
(6.0)
-
760.6
990.7
560.8
(62.6)
498.2
(53.7)
(376.8)
Foreign exchange movements
European
Mexico
home credit
home credit
IPF Digital Central costs
Group
2021 performance at 2022 average exchange rates
European
Mexico
home credit
home credit
IPF Digital Central costs
Group
Constant exchange rate reconciliations
exchange rates used in the current year.
The year-on-year change in profit and loss accounts is calculated by retranslating the 2021 profit and loss account at the average actual
Year-on-year movement at constant exchange rates
Closing receivables
Customer lending
Revenue
Impairment
Net revenue
Interest expense
Other costs
European
home credit
Mexico
home credit
IPF Digital Central costs
14.4%
9.9%
14.8%
(533.3%)
12.5%
(30.5%)
(5.8%)
14.2%
16.8%
27.4%
(91.6%)
7.3%
(32.0%)
(10.7%)
13.9%
21.5%
(1.3%)
(6.6%)
(3.4%)
(15.0%)
8.0%
-
-
-
-
-
-
(5.8%)
Pre-exceptional return on equity (ROE)
Pre-exceptional ROE is calculated as pre-exceptional profit after tax divided by average pre-exceptional equity:
Equity (net assets)
Exceptional items
Pre-exceptional equity
Average pre-exceptional equity
Profit after tax
Exceptional items
Pre-exceptional profit after tax
Pre-exceptional ROE
2022
£m
445.2
(10.5)
434.7
400.9
56.8
(10.5)
46.3
11.5%
2021
£m
367.1
-
367.1
368.8
41.9
-
41.9
11.4%
Pre-exceptional return on required equity (RORE)
Pre-exceptional RORE is calculated as pre-exceptional profit after tax divided by required equity of 40% of average net receivables:
2022
Closing net receivables 2022
Closing net receivables 2021
Average net receivables
Equity (net assets) at 40%
Pre-exceptional profit before tax
Tax at 40%
Pre-exceptional profit after tax
Pre-exceptional RORE
2021
Closing net receivables 2021
Closing net receivables 2020
Average net receivables
Equity (net assets) at 40%
Pre-exceptional profit before tax
Tax at 38%
Pre-exceptional profit after tax
Pre-exceptional RORE
European
home credit
£m
Mexico
home credit
£m
IPF Digital
£m
501.0
425.9
463.4
185.4
65.6
(26.2)
39.4
21.3%
158.5
117.6
138.1
55.2
17.7
(7.1)
10.6
19.2%
209.3
173.3
191.3
76.5
8.8
(3.5)
5.3
6.9%
European
home credit
£m
Mexico
home credit
£m
IPF Digital
£m
425.9
389.5
407.7
163.1
54.5
(20.7)
33.8
20.7%
117.6
92.8
105.2
42.1
18.4
(7.0)
11.4
27.1%
173.3
186.8
180.1
72.0
8.7
(3.3)
5.4
7.5%
Group
14.2%
13.7%
15.1%
(70.4%)
8.1%
(26.8%)
(4.4%)
2020
£m
370.5
-
370.5
Group
£m
868.8
716.8
792.8
317.1
77.4
(31.1)
46.3
14.6%
Group
£m
716.8
669.1
693.0
277.2
67.7
(25.8)
41.9
15.1%
174
International Personal Finance plc
Annual Report and Financial Statements 2022
175
Financial Statements
Alternative performance measures continued
Average gross receivables
European home credit
Mexico home credit
IPF Digital
Group
Impairment coverage ratio
Impairment coverage ratio is calculated as loss allowance divided by closing gross receivables:
Closing gross receivables
Loss allowance
Closing net receivables
Impairment coverage ratio
2022
£m
747.5
239.0
258.0
2021
£m
708.1
179.0
254.2
1,244.5
1,141.3
2022
£m
1,366.6
(497.8)
868.8
36.4%
2021
£m
1,152.8
(436.0)
716.8
37.8%
176
International Personal Finance plc
Financial Statements
Alternative performance measures continued
Shareholder information
Average gross receivables
European home credit
Mexico home credit
IPF Digital
Group
Impairment coverage ratio
Closing gross receivables
Loss allowance
Closing net receivables
Impairment coverage ratio
Impairment coverage ratio is calculated as loss allowance divided by closing gross receivables:
2022
£m
747.5
239.0
258.0
2021
£m
708.1
179.0
254.2
1,244.5
1,141.3
2022
£m
1,366.6
(497.8)
868.8
36.4%
2021
£m
1,152.8
(436.0)
716.8
37.8%
Financial calendar for 2023
1 March
Announcement of 2022 full-year results
Email:
enquiries@linkgroup.co.uk
6 April
11 April
14 April
27 April
5 May
1 August
31 August
Ex-dividend date for final dividend
Record date for final dividend
DRIP cut-off date
2023 AGM
Payment of 2022 final dividend
Announcement of 2023 half-year results
Ex-dividend date of interim dividend
1 September
Record date for interim dividend
8 September
DRIP cut-off date
29 September
Payment of 2023 interim dividend
Dividend history
Details of previous dividend payments can be found on our
website at www.ipfin.co.uk
pence
Ex-date
Pay date
Type
2.7
5.8
2.2
01/09/2022
30/09/2022
Interim
07/04/2021
06/05/2022
Final
02/09/2021
01/10/2021
Interim
Year
2022
2021
2021
Dividends
Dividends can be paid directly into a shareholder’s bank or
building society account. This ensures secure delivery and
means that cleared funds are received on the payment date.
For shareholders who are resident outside the UK, dividend
payments are made by Link’s International Payment Service
and are paid in local currency. The Company offers a dividend
reinvestment plan (DRIP). A DRIP is a convenient and easy way
to build a shareholding by using cash dividends to buy
additional shares rather than receiving a cheque or having
your bank account credited with cash. To receive more
information, change your preferred dividend payment
method, or if you would like to participate in the DRIP,
please contact the Company’s registrar, Link Group
(see below details).
Registrar
Queries relating to your shareholdings including transfers,
dividend payments/reinvestments, lost share certificates,
duplicate accounts and amending personal details should
be addressed to the Company’s registrar:
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Telephone:
0371 664 0300 (calls are charged at the standard geographic
rate and will vary by provider). If you are calling from outside
the UK please call +44 (0)371 644 0300 (calls outside the UK will
be charged at the applicable international rate).
Lines are open between 09:00 and 17:30, Monday to Friday,
excluding public holidays in England and Wales.
Website:
www.linkgroup.com
Go paperless
Shareholders can register for electronic communications
by visiting the website at www.myipfshares.com.
Why receive information this way?
– Online access to personal shareholding information
– Ability to manage shareholding and personal details
proactively
– Receive documents faster
– Helps save paper
– Savings on printing and delivery costs.
To register, shareholders will need their investor code, which
is printed on correspondence received from Link Group. This
service will require a user ID and password to be provided
on registration.
ShareGift
If you have a small shareholding in International
Personal Finance plc and it would be
uneconomical to sell the shares, you may wish
to donate them to ShareGift (registered charity no. 1052686),
which is an independent charity. ShareGift can amalgamate
small shareholdings in order to sell the shares and pass the
proceeds on to other charities. More information is available
at www.sharegift.org or telephone 020 7930 3737.
Cautionary statement
The purpose of this report is to provide information to the
members of the Company. It has been prepared for, and
only for, the members of the Company, as a body, and no
other persons. The Company, its directors and employees,
customer representatives or advisors do not accept or
assume responsibility to any other person to whom this
document is shown or into whose hands it may come and
any such responsibility or liability is expressly disclaimed.
The Annual Report and Financial Statements contains certain
forward-looking statements with respect to the operations,
performance and financial condition of the Group. By their
nature, these statements involve uncertainty since future
events and circumstances can cause results and
developments to differ materially from those anticipated. The
forward-looking statements reflect knowledge and information
available at the date of preparation of the Annual Report
and Financial Statements and the Company undertakes no
obligation to update these forward-looking statements (other
than to the extent required by legislation and the Listing Rules
and the Disclosure and Transparency Rules of the Financial
Conduct Authority). Nothing in this year’s Annual Report and
Financial Statements should be construed as a profit forecast.
176
International Personal Finance plc
Annual Report and Financial Statements 2022
177
MIX Paper from responsible sources
FSC® C022913
This report is printed on paper certified in accordance
with the FSC® (Forest Stewardship Council®) and is
recyclable and acid-free.
Pureprint Ltd is FSC certified and ISO 14001 certified
showing that it is committed to all round excellence
and improving environmental performance is an
important part of this strategy.
Pureprint Ltd aims to reduce at source the effect its
operations have on the environment and is committed
to continual improvement, prevention of pollution and
compliance with any legislation of industry standards.
Pureprint Ltd is a Carbon / Neutral® Printing Company.
Designed and produced by Black Sun Plc
www.blacksunplc.com
MIX Paper from responsible sources
FSC® C022913
This report is printed on paper certified in accordance
with the FSC® (Forest Stewardship Council®) and is
recyclable and acid-free.
Pureprint Ltd is FSC certified and ISO 14001 certified
showing that it is committed to all round excellence
and improving environmental performance is an
important part of this strategy.
Pureprint Ltd aims to reduce at source the effect its
operations have on the environment and is committed
to continual improvement, prevention of pollution and
compliance with any legislation of industry standards.
Pureprint Ltd is a Carbon / Neutral® Printing Company.
Designed and produced by Black Sun Plc
www.blacksunplc.com
International Personal Finance plc
26 Whitehall Road
Leeds
LS12 1BE
Telephone: +44 (0)113 539 5466
Email: investors.mailbox@ipfin.co.uk
Website: www.ipfin.co.uk
Registered in England and Wales
Company number: 6018973