Manx Financial Group PLC | Annual Financial Statements 2024 Annual Financial Statements 2024 Putting people first Contents Strategic report 4 Chair’s Statement 10 Business Model and Strategy 13 Environmental, Social and Governance Report 20 Risk Management Corporate Governance 27 Corporate Governance Report 34 Directors, Officers and Advisers 37 Group Audit, Risk and Compliance Committee 40 Remuneration Committee Report 43 Directors’ Report Financial Statements 46 Statement of Directors’ Responsibilities 47 Independent Auditor’s Report 54 Consolidated Statement of Profit or Loss and Other Comprehensive Income 56 Company Statement of Profit or Loss and Other Comprehensive Income 57 Consolidated Statement of Financial Position 58 Company Statement of Financial Position 59 Consolidated and Company Statements of Changes in Equity 60 Consolidated Statement of Cash Flows 62 Company Statement of Cash Flows 63 Notes to the Consolidated and Company Financial Statements Integrity through independence and service 2024: The year at a glance Remaining focused on investing in resilient profitable sectors with high potential for growth MFG PLC reported a record performance in 2024, while making significant strides on its strategic journey, including acquiring the remaining 49.9% of Payment Assist Limited. Financial highlights Non-financial highlights Advances +2.68% 2024 £372.4m 2023 £362.7m Return on equity +3.20% 2024 23.8% 2023 20.6% Balance sheet growth +3.55% 2023 £480.7m Cost income ratio -1.90% 2023 43.3% Profit before tax +41.02% 2024 £9.9m 2023 £7.0m Basic EPS (pence)+49.67% 2024 6.87p 2023 4.59p 2024 £497.8m 2024 41.4% 1. Started using our UK banking licence 2. Completed the acquisition of the remaining 49.9% of Payment Assist Limited 3. Completed the strategic acquisition of a UK IFA to support the Group’s access into Wealth Management and General Insurance markets in 2025 4. Commenced the process to consider the Republic of Ireland’s accessing Buy now pay later market Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 1 Who we are An independent banking and financial services group founded in 1935, domiciled in the Isle of Man Our Main Operating Subsidiaries Manx Financial Group PLC (“Company” or “MFG”) is an AIM-listed company (LSE: MFX.L) which has subsidiaries (together referred to as “Group”) offering a suite of financial services to retail and commercial customers, both in the Isle of Man and the UK. MFG’s strategy is to combine organic growth with strategic acquisition to further augment the range of services it offers and to gain greater market share in its preferred markets. The Group’s main subsidiaries are: • Conister Bank Limited • Conister Finance & Leasing Ltd • MFX Limited • Payment Assist Limited • Blue Star Business Solutions Limited • Edgewater Associates Limited • Ninkasi Rentals & Finance Limited • The Business Lending Exchange Limited • CAM Wealth Group Limited Conister Bank Limited (“Bank”) is a licenced independent bank, regulated by the Isle of Man Financial Services Authority (“FSA”) and the UK’s Prudential Regulatory Authority (“PRA”) and the UK’s Financial Conduct Authority (“FCA”). The Bank provides a variety of financial products and services, including savings accounts, asset financing, personal loans, loans to small and medium sized enterprises, block discounting and other specialist secured credit facilities to the Isle of Man and the UK consumer and business sectors. Conister Finance & Leasing Ltd (“CFL”) is a subsidiary of the Bank. It is a credit broker providing hire purchase (“HP”) and leasing finance facilities in the UK. CFL is regulated by the FCA in the UK and registered as a designated business by the FSA in the Isle of Man. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 2 Payment Assist Limited (“PAL”) since 2013 has been the UK’s leading automotive repair point- of-sale finance provider and offers diversified lending including insured products and retail. PAL is regulated by FCA. MFX Limited (“MFX”) provides access to competitive foreign exchange and international payment processing facilities. MFX’s target customers are corporates and private clients who have a foreign exchange and international payment requirement via their foreign exchange providers. Edgewater Associates Limited (“EAL”) is one of the largest firm of Independent Financial Advisors (“IFA”) in the Isle of Man and is regulated by the FSA. EAL provides a bespoke and personal service including pension and investment advice and general insurance broking to Isle of Man residents and to the Group’s business and personal customers and advises on assets in excess of £325 million. Ninkasi Rentals & Finance Limited (“NRFL”) provides equipment finance and rental products to UK based craft and micro-breweries and is now the Country’s largest lessor of fermentation tanks to this sector. The Business Lending Exchange Limited (“BLX”) was acquired as part of the Group’s strategy to increase its access to underserved UK credit markets. BLX is regulated by the FCA in the UK and primarily lends to start-up companies and small businesses which require asset backed finance. Blue Star Business Solutions Limited (“BBSL”) since 2007, BBSL has supported thousands of UK small and medium sized businesses by acting as a finance broker providing asset finance and commercial loans. CAM Wealth Group Limited was founded in February 2023 to deliver bespoke financial solutions to diverse clientele. Established with a vision to provide unbiased, transparent and client-centric advisory services. In January 2025 CAM Wealth Group Ltd became a wholly owned subsidiary of Manx Financial Group PLC. This acquisition gives us the opportunity to enhance service offerings to our existing client base, achieve sustainable growth in the financial advisory market and maximise opportunities within the broader group. This exciting development also means that CAM Wealth Group will initiate and utilise our General Insurance permissions. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 3 Who we are continued Chair’s Statement “I am pleased to report another record set of results for the Group. Profit before tax for the year increased by £2.9 million to £9.9 million - a gain of 41%” Jim Mellon Executive Chair Introduction I am pleased to report another record set of results for the Group. Profit before tax for the year increased by £2.9 million to £9.9 million (2023: £7.0 million) – a gain of 41.0%. This delivered a 49.7% growth in basic earnings per share to 6.87 pence (2023: 4.59 pence) with profit attributable to shareholders of £8.1 million (2023: £5.3 million). Turning to the balance sheet, loans and advances to customers increased to £372.4 million (2023: £362.6 million) and total assets rose to £497.8 million (2023: £480.7 million). Return on equity increased by 3.2% to 23.8% (2023: 20.6%). Further detail on the financial performance of the Group’s subsidiaries is contained in the Operating Subsidiary Review section below. As a result, the Board will recommend returning 10.0% of the Group’s profit available to shareholders in the form of cash and/or shares. This year the total dividend available for payment is £0.810 million (2023: £0.529 million). Thus, the amount recommended for shareholder approval will be 0.6768 pence per share (2023: 0.4553 pence per share), a 48.6% uplift, as we continue to reward our loyal shareholders. The material increases in operating income, profit before tax, earnings per share and return on equity have been achieved against a background of subdued economic activity in the Isle of Man and UK and is a testament to the resilience of our growth strategy. Our strategy is set and refined by making the best possible use of our sources of competitive advantage. Chief among these is the strong and stable liquidity base provided by our loyal depositor customers on the Isle of Man and now also in the UK. This has allowed us to carefully grow our loan book to small and medium sized enterprises (SME) which gives us valuable visibility of the issues SME face in securing financing as well as gaps in the market for niche products overlooked by our much larger peers. Our knowledge of the SME sector has enabled us to build a portfolio of valuable subsidiaries – from start-ups to selective and accretive acquisitions – which are creating significant value for shareholders. Our Isle of Man customer base is more diverse than that of the UK, with both SME and retail customers being served. During the year, we have continued to enhance and develop new products and entered the mortgage market for the first time in Conister Bank Limited’s 90‑year history. We continue to be a market leader in our home territory as we strategically grow both our lending and deposit balances. This strong set of results demonstrates our ability to grow our portfolio and improve earnings through prudently increasing our lending activities supported by our access to significant deposit markets. Operating Subsidiary Review The Group’s operating subsidiaries continued to make progress during the year by executing their growth strategy, including launching new products and accessing new markets, all underpinned by Conister Bank Limited’s stable access to liquidity and each operating unit’s drive to deliver excellent customer service. The figures below are as reported in each entities’ statutory accounts and are before the adjustments and eliminations undertaken to complete the Group consolidated statutory accounts. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 4 Payment Assist Limited 2024 £’000 2023 £’000 Movement % Gross profit 10,049.7 9,762.4 +2.9 Operating profit 4,718.3 2,662.9 +77.2 Operating expense (327.0) (300.0) +9.0 Profit before tax 4,391.3 2,362.9 +85.8 Equity 3,370.9 1,785.7 +88.8 Payment Assist Limited nearly doubled its profitability to £4.4 million in the period due to improved customer acquisition (now with more than 100,000 active customers), together with improved yields and a significant one-off release of provisions following the full integration within the Group and an enhancement to expected credit loss modelling and arrears management actions. Operating costs which include impairments, were carefully managed to ensure there was no deterioration as the lending book continued to grow. The remaining minority interest in this company was acquired in September 2024, and with the Group now wholly owning this subsidiary, the entire profit of the company from 2025 onwards will be attributable to our shareholders, further supporting the dividend growth we hope to continue to deliver. Conister Bank Limited 2024 £’000 2023 £’000 Movement % Gross profit 12,578.3 12,766.0 -1.5 Operating profit 17,329.3 14,927.0 +16.1 Operating expense (15,449.2) (12,434.3) +24.2 Profit before tax 1,880.1 2,492.7 -24.6 Equity 45,893.9 41,498.1 +10.6 Conister Bank Limited continues to provide the Group access to competitive and reliable liquidity from which other subsidiaries benefit. As a result, total assets increased to £474.1 million whilst profitability reduced to £1.9 million. The major contribution towards the increase in operating expenses was loan impairment provisioning by £1.6 million, caused in part by the direct funding of the Payment Assist portfolio and increase in administration expenses by £1.9 million, caused by the continued investment in setting up the UK Branch and setting aside a £0.2 million provision for discretionary commission schemes. The Bank remains very liquid, increasing cash and cash equivalents and debt securities by £6.4 million to £91.1 million (2023: £84.7 million). Focus remains on shorter term lending, which allows a one-year deposit to be used multiple times and therefore driving improved liquidity efficiencies. Despite this focus on shorter term lending, loans and advances still increased by £6.0 million to £366.1 million (2023: £360.1 million) with deposits from both our UK and Isle of Man licenses increasing by £14.8 million to £405.2 million (2023: £390.4 million). Total assets for the Bank have reached a record high of £474.1 million (2023: £451.8 million). Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 5 Chair’s Statement continued Profitability increased by 9.8% to £0.7 million. The business operates at a 71.5% net profit margin due to its lean operational structure. All operating expenses are invested in our staff to ensure that the FX division provides high levels of care to our customers. The available equity in the company is regularly distributed to the Group, further enhancing returns to the wider Group. Our FX broker continues to perform well in the current economic environment and requires very little overhead to support. The team will seek to expand their customer base with a complementary offering during 2025. Profitability reduced slightly to £0.64m due to increased provisioning seen within this financial year, £0.4 million. This was offset by the growth in the loan book, with total assets increasing by 7.9% to £7.6 million, generating higher interest returns, 25.4% increase to £2.0 million and thereby nullifying the adverse impact from credit impairments. Our lending businesses operate within separate credit markets which provides resilience to the Group through their diversity. The Business Lending Exchange Limited operates in the credit broker introduced sub-prime market in which our management team has extensive history. This business has the opportunity to grow substantially in this economic environment. MFX Limited 2024 £’000 2023 £’000 Movement % Gross profit 1,040.3 1,048.5 -0.8 Operating profit n/a n/a n/a Operating expense (296.0) (370.9) -20.0 Profit before tax 743.7 677.6 +9.8 Equity 300.9 257.2 +17.0 The Business Lending Exchange Limited 2024 £’000 2023 £’000 Movement % Gross profit 2,041.1 1,628.0 +25.4 Operating profit 1,592.1 1,321.0 +20.5 Operating expense (954.2) (639.8) +49.1 Profit before tax 637.9 681.2 -6.4 Equity 1,087.3 1,023.6 +6.2 Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 6 Chair’s Statement continued Manx Ventures Limited continues to expand its investment holdings held within the Group and this led to £1.1 million of dividend receipts in the period. Currently, Manx Ventures Limited holds shares and options in six financial services companies, with another one added post year-end (CAM Wealth) and holds three more investments in other financial services companies with warrants to acquire a greater shareholding as these companies grow. Manx Ventures Limited continues to seek acquisition opportunities that will continue to expand the Group’s customer base, much like Payment Assist Limited, which has clearly benefitted the Group since take‑on. It is the company’s intention to continue to invest in financial services companies, generating dividends and investment income. This business was restructured in September 2023 and so the year under review was the first full year post its re-structure. Ultimately, this led to £0.4 million savings in operating expenses whilst delivering on the same level of turnover seen in the year before. Thus, improvement has been achieved through operational efficiencies without any detriment to the high levels of service given to our clients. Further organic growth is anticipated in 2025, and further accretive acquisitions are being sought. Edgewater Associates Limited 2024 £’000 2023 £’000 Movement % Gross profit n/a n/a n/a Operating profit 2,047.8 2,034.3 +0.7 Operating expense (1,660.0) (2,069.9) -19.8 Profit before tax 387.8 (35.6) +1,189.3 Equity 1,236.3 1,298.6 -4.8 Manx Ventures Limited 2024 £’000 2023 £’000 Movement % Gross profit 1,507.4 916.2 +64.5 Operating profit 1,497.5 737.5 +103.1 Operating expense (17.9) (194.9) -90.8 Profit before tax 1,515.4 932.4 +62.5 Equity 1,774.3 258.9 +585.3 Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 7 Chair’s Statement continued Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 8 Chair’s Statement continued Key Objectives The change in UK Government in May 2024 has led to an increase in public borrowing and business taxation which has resulted in interest rates remaining higher for longer and inflation remaining stubbornly higher than the Bank of England’s 2.0% target. Despite this, I remain cautiously optimistic in the robustness of both the Isle of Man and the UK economy and believe we will move to a more normalised interest rate and inflation rate environment over the next 24 months. During this period, our key objective will continue to be to safely grow shareholder value. Thus, our strategic focus remains unchanged, namely to: • Provide the highest quality of service throughout our operations to all customers, ensuring that their treatment is both fair and appropriate; • Continue adopting a pro-active strategy to managing risk, including credit and climate risk, within a structured and compliant manner; • Concentrate on developing our core business by considered acquisitions, increasing prudential lending, and augmenting the range of financial services we offer; • Prudently progress the implementation of our IT infrastructure to better service the operational requirements of a growing Group without the requirement for a disproportionate increase in headcount and other associated operational costs; • Continue to develop our Treasury management to improve the return on the liability side of our balance sheet; and • Manage our balance sheet to exceed the regulatory requirements for capital adequacy. To continue to grow shareholder value, we will deploy our regulatory capital in its most efficient manner by taking advantage of the opportunities this economic and regulatory environment brings. We will continue to focus on the SME sector with our Structured Finance offering, and on the consumer sector with market leading, technologically driven, shorter term lending products. This organic growth will be supported by our non-dilutive acquisition strategy. Further details of our strategic objectives will be found in the Corporate Governance Report on page 27, together with our observance on the QCA Code requirements. Environmental, Social and Corporate Governance The Board plays a key role in supporting and challenging the Group’s long-term strategic planning. This includes the responsibility to provide effective governance and a rigorous assessment of all risks, including climate. The addition of new subsidiary, Payment Assist Limited, within in the operational boundary has contributed to significant increases in absolute scope 1 (+77%) and scope 2 (+37%) emissions in 2024. It now accounts for over 25% of the Group’s total building-energy consumption and total scope 1 and 2 footprint and is also a key driver behind the increases in electricity and gas consumption. The Group’s carbon footprint for 2024 will be restated in 2025 (in line with the criteria included within the restated Green House Gas Protocol Corporate Standard), when a more complete set of scope 1 and 2 primary activity data has been obtained for Payment Assist Limited. In relative terms, however, the Group’s carbon intensity ratios show less impact, with scope 1 and 2 emissions per Full Time Employee at around 5% lower compared to 2023. For further details on this issue, please refer to our Environmental, Social and Governance report on page 11. Outlook The Group made significant progress in 2024 towards delivering its key objectives, while maintaining a prudent approach to growth. This was achieved despite the much-discussed challenging economic environments across the world. But this environment will drive opportunities, for example, in the short‑term lending space for short-term loans, such as Buy Now Pay Later, premium finance and overdrafts. This short‑term loan sector, normally with a term of between four and 12 months, is taking market share from the traditional credit card market due to its little to no interest charge and its longer repayment period. Your Group has subsidiaries, such as Payment Assist Limited (the leading UK Buy Now Pay Later lender to the automotive industry), Conister Bank Limited and The Business Lending Exchange Limited, who are well placed to serve these markets. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 9 Chair’s Statement continued The Group will not be immune from the findings of the Supreme Court on discretionary commission payments whose judgement is due to be released in July 2025 after which the FCA will announce what remediation lenders will be required to undertake. However, the Board believe that our exposure is limited. At the year-end Conister Bank Limited and its auditors assessed the position as currently known and set aside £0.2 million to remedy the position. I will be able to provide a more detailed report on this topic in my 2025 Interim statement. Also, the Group continues to develop its offering to acquire market share in underserved credit markets in both the UK and the Isle of Man, and in new jurisdictions. To this end, the Group has commenced a project to obtain a consumer credit licence in the Republic of Ireland which, longer term, will be helpful in passporting to other credit markets within the EU as the Group expands its reach. Board Changes Having loyally served the shareholders for 18 years, Alan Clarke has decided to retire from his positions as a non-executive director of both Manx Financial Group PLC and Conister Bank Limited, and the Chair of our Audit, Risk & Compliance Committee and the Chair of our Remuneration Committee. I wish to take this opportunity to thank Alan on behalf of the directors, shareholders and, in particular, myself for all his loyal support and advice over the years and to wish him well in whatever he decides to undertake in his next chapter of life. The Next Chairs for the Remuneration Committee and the Audit, Risk & Committee will be communicated at the upcoming AGM. Thank You Our people are at the heart of our success. On behalf of the Board, I would like to thank all of our staff for their efforts to exceed customer expectations and continuing to deliver value for our loyal shareholders. Jim Mellon Executive Chair 24 June 2025 Business Model and Strategy MFG has subsidiaries engaged in a suite of financial services based in the Isle of Man and the UK. These companies offer financial services to both retail and commercial customers. MFG’s strategy is to grow organically and through strategic acquisition to further augment the range of services it offers and gain market share in sectors in which it has proven experience. A summary of the strategic objectives for each principal subsidiary is set out below. Conister Bank Limited (“Bank”) The Bank’s Board of Directors has set strategic objectives, aligned to its strategic plan. These objectives provide the framework for setting risk appetite statements and tolerances for all material risks. The strategic objectives set are: • Maintain capital adequacy; • Deliver stable earnings growth; • Secure stable and efficient access to funding and liquidity; • Treat customers fairly with the highest service standard possible • Maintain stakeholder confidence; and • Progress its Environmental Social and Governance (“ESG”) strategy. These strategic objectives provide the link between the Bank’s strategic planning and its risk management framework, using risk appetite statements, measures and tolerances, to control risk on a day-to-day basis and are reviewed at-least annually and approved by the Bank’s Board. Key in considering the Bank’s judgement of appetites is its assessment of its regulatory environment both in the Isle of Man (“IOM”) and the UK; the IOM and UK deposit markets; access to regulatory capital; the IOM and UK credit markets; the suitability of its product range; concentrations of advances and historic arrears. The aim is to deliver controlled growth, by providing adequate returns with strong credit profiles. Having considered the above in light of the difficult economic conditions in the UK, and less so in the IOM plus the wars in Europe and the Middle East, drawing on both internal and external resources, the Bank continues to believe the credit markets in which it operates will deliver growth with liquidity sourced from its Balance Sheet; its IOM deposit base and the UK retail deposit market. This growth will be achieved through the organic expansion of existing products through acquisition. This strategy can be analysed by the geographical area the Bank operates within, namely the IOM and the UK. The Bank is proud of its heritage and remains heavily IOM centric but recognises that, as its UK loan book grows, it will need to create a more substantial UK presence to manage and grow this aspect of its business. Contributing to this UK growth was the application for, and approval to take retail deposits in the UK. Sourcing reliable funding underpins the Bank’s growth objectives. The Bank’s strategy in this area is to secure a diversified, low-cost suite of liquidity alternatives to draw upon in order to support its lending strategy. The IOM deposit market remains a key source of liquidity which the Bank accesses through its fixed‑term deposit and notice account products. The Bank’s UK deposit taking licence also plays a significant part in the Bank’s growth strategy. The Bank recognises that it has an opportunity to increase its market share because of the reduction in competition experienced in this market and / or by increasing interest rates. As such, the Bank believes that it has sufficient reliable alternatives to be confident that it can raise the necessary deposits when required. The Bank’s acquisition strategy is to increase market share in sectors within which it already operates or to gain access to a desirable market through an existing reputable, profitable operator. Regarding the former, the Bank continues to enjoy a positive lending experience within the structured finance and UK credit broker market and currently has circa £366 million (2023: £360 million) of net loans outstanding. The Bank’s decision in 2022 to include Environmental, Social, and Corporate Governance (“ESG”) within its strategic objectives has seen great progress made. The Bank’s Sustainability Report setting out its material ESG issues and objectives, work completed and ESG performance can be found on the Bank’s website, www.conisterbank.co.im. The Group now has a plan to expand its ESG reporting to cover all of its operating subsidiaries. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 10 Business Model and Strategy continued In 2023, the Group engaged with its external consultants who assisted the Group with formulating its ESG goals. The Group’s external consultants were instrumental in rebasing its target to realistic measures and expressed in clearly defined amounts. See the ESG report for more details. MFX Limited (“MFX”) The strategic objectives of MFX are: • To be the first choice for international payments and foreign exchange of corporations in the IOM; • To maintain, develop and strengthen existing relationships; • To increase the number of referrals to their foreign exchange business partners with a view of onboarding new accounts. MFX target customers are corporates and private clients who have a foreign exchange and international payment requirement. The IOM offers a diversified range of industries and sectors. For the next 12 months MFX will concentrate its efforts in developing new business opportunities both in the IOM and in other jurisdictions. MFX can negotiate upfront agreed foreign exchange margins and ensure price transparency, underpinning the professional relationship it provides. The international payment fees offer competitive value compared with local high street banks. Payment Assist Limited (“PAL”) PAL provides the option for customers to spread the cost of ad-hoc expenses over monthly instalments through a range of fee free, interest-free or interest‑bearing products. The Group acquired an initial 50.1% of PAL in May 2022 and the acquisition of the remaining 49.9% was announced on 16 September 2024. The strategy is to build and develop the business by continuing to be the largest finance provider in the UK automotive after-market, whilst diversifying into related markets, offering both short term and longer-term finance. This expansion will be executed on a selective basis with business partners who share our values for the highest level of customer service. Blue Star Business Solutions Limited (“BBSL”) The strategic objectives of BBSL are to continue to grow its direct model to niche suppliers whilst growing its traditional pipeline to allow it to migrate to its ordinary course of business as these schemes conclude. BBSL will expand its panel of alternative funders, apart from the Bank, to place loans to further maximise its sources of revenue. Finally, BBSL will continue to develop its sales force to allow greater market penetration. Edgewater Associates Limited (“EAL”) EAL is regulated by the Isle of Man Financial Services Authority (“FSA”). Its strategic objectives are to: • Provide superior service to its client base; • Increase assets under advice; and • Grow and develop its staff skill set. EAL is a full-service IFA practice with a diverse mix of clients requiring a broad range of products and solutions covering: • Newly qualified professionals - protection, savings, school fees; • Established clients - wealth management, retirement planning; and • General insurance clients - home, travel, commercial and specialist. Whilst EAL continues to grow and develop its standard business model, it is always open to new opportunities. It remains nimble and ready to move in line with economic and regulatory changes as they arise. Its team remains current with industry standards and trends. It retains an appetite for growth, either through additional acquisition opportunities that may arise, or via organic growth from existing clients and business partners with whom it has built strong relationships. Diversification opportunities are encouraged and pursued, including the successful programme to develop bespoke Employee Benefit Group Schemes. These incorporate staff pensions (including pension freedom), protection, private medical, and death in service cover. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 11 EAL trains talented people to progress into rounded, professionally qualified advisers who can fit within succession planning opportunities. To supplement this, it also recruits quality experienced advisers and para-planners who can further enhance its team. Ninkasi Rentals & Finance Limited (“Ninkasi”) This business remains well positioned to gain additional market share through its unique equipment leasing options for the brewing industry. In addition, Ninkasi is considering expanding its coverage to include Europe, either by a direct distribution strategy, or in partnership with a complementary business. Further, Ninkasi will manage its utilisation demand through the acquisition of additional fermentation tanks as well as expanding into Europe with its traditional well-proven products. Ninkasi is extending its product range to include Cuban capture machines and to utilize existing fermentation tanks for other industries. The Business Lending Exchange Limited (“BLX”) BLX will continue to grow their loan book prudently in existing markets through the UK credit broker network, utilising existing market to offer attractive asset-backed products in a customer focused way, to ensure the best possible customer outcome. Business Model and Strategy continued Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 12 The following provides an overview of MFG’s group‑level operational carbon footprint Jan-Dec 2024 and supporting information including: • Calculation methodology and reporting boundaries. • MFG’s carbon footprint 2024. • Carbon footprint 2024 compared to prior years. • Assessment of key changes, performance and impact areas as the business-context evolves. • 2025 focus areas. Method summary • Scope 1-3 emissions and data have been assessed in accordance with the methods and standards described in the GHG Protocol Corporate Value Chain (Scope 3) Standard and ISO 14064-1:2018 Greenhouse gases Part 1: Specification with guidance at the organisation level for quantification and reporting of greenhouse gas emissions and removals. • Unless otherwise stated all scope 1-3 carbon emissions have been calculated data using DESNZ/DEFRA 2024 (Jul-24-25 publication) Conversion factors for company reporting of greenhouse gas emissions. • New Reporting Entity FY2024: Payment Assist Limited (PAL) is consolidated into the operational boundary for the first time, with MFG having taken full operational control of the entity in 2024 (January to December inclusive). • Data for scope 1 natural gas and refrigerants and scope 2 electricity for PAL have been estimated based on Energy Performance Certificate (EPC) information, UK energy benchmarked (REEB 2023) and BRE data for refrigerant use/leakage in offices. • Emissions from scope 1 refrigerants for all offices have been estimated. • All estimation methodologies and data-sources used are detailed in the footprint technical report. • Data from third parties such as our travel co-ordinator has been validated for completeness. • Flight distances have been have verified (using the great circle method); flight emissions include radiative forcing (RF) in line with UK government recommendations and the GHG protocol. Scope 3, Category 1: Purchased Goods & Services (PG&S) 2024 emissions have been assessed using P&L ledger data on the type and value of goods and services, applying relevant EEIO GHG emission factors. However, this category is excluded from the 2024 report due to high estimation uncertainty and limited granularity in publicly available EEIO factors1. This dataset is being refined and these emissions will be reported in due course. Organisational Boundary The operational control approach is used to consolidate MFG’s organisational boundary in each reporting year. This reflects the company’s ability to implement carbon and environmental policies and measures within the group of eight operating entities shown below. MFG’s footprint is assessed on the basis of having effective operational control and the ability to influence, monitor and manage climate risks and actions to mitigate them. MFG entity Business entity code Location Conister Bank CBL Douglas, IoM Edgewater EAL Douglas, IoM MFX MFX Douglas, IoM Conister Finance & Leasing CFL Basingstoke, UK Bluestar Leasing BST Basingstoke, UK Manx Collections MCL Manchester, UK The Business Lending Exchange BLX Peterborough, UK Payment Assist* PAL Leicestershire, UK * Included in the organisational boundary for the first time in the FY2024 footprint. 1 Official Statistics: UK and England’s carbon footprint to 2021 https://www.gov.uk/government/statistics/uks-carbon-footprint. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 13 Environmental, Social and Governance Report MFG Emissions Boundary The emissions boundary defines the specific GHG sources included in MFG’s scope 1-3 footprint. Defining the boundary requires an assessment of the applicability and relevance of each scope 3 source to MFG’s operations – and which sources should be prioritized in GHG measurement, reporting, target-setting and reduction planning. This is an ongoing process aligned with company growth, changing external factors and as GHG emissions sources and their impacts move into focus. MFGs operational boundary has been assessed in accordance with the GHG Protocol Corporate Standard and ISO 14064-1 methodologies. OUT OF SCOPE Purchased electricity SCOPE 2 – INDIRECT EMISSIONS Category 3 – Fuel- and energy-related activities Category 5 – Waste generated in operations Category 6 – Business travel Category 7 – Employee commuting (WFH only) SCOPE 3 – INDIRECT EMISSIONS Relevant to MFG Cat 1: Purchased Goods & Services Cat 2: Capital goods Cat 7: Employee commuting Cat 15: Investments Not relevant to MFG Cat 9: Downstream transportation & distribution Cat 10: Processing of sold products Cat 4: Upstream transportation & distribution Cat 8: Upstream leased assets Cat 11: Use of sold products Cat 12: End-of-life treatment of sold products Cat 13: Downstream leased assets Fuel (stationary) combustion – natural gas Fugitive emissions (refrigerant leaks from office air-conditioning systems) SCOPE 1 – DIRECT EMISSIONS MFG (2024) Emissions Reporting Boundary Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 14 Environmental, Social and Governance Report continued MFG Total GHG Carbon Footprint 2024 MFG 2024 group operational carbon footprint amounts to 142.41 tonnes CO2 equivalent: Emission Sources Total Emissions (tCO2e) 2024 Scope 1 Emissions Stationary combustion 11.45 Mobile combustion - Fugitive and process emissions 4.87 Subtotal 16.32 Location-Based Scope 2 Emissions Electricity 61.78 Heat/Steam/Cooling - Subtotal 61.78 Market-Based Scope 2 Emissions Electricity 61.78 Heat/Steam/Cooling - Subtotal 61.78 Total Scope 1 and Location-Based Scope 2 Emissions 78.10 Total Scope 1 and Market-Based Scope 2 Emissions 78.10 Scope 3 Emissions Fuel and Energy Activities 15.21 Waste (operational) 2.99 Business Travel 45.65 Employee commuting (remote working only) 0.47 Subtotal 64.32 Grand Total (location-based) 142.41 Emissions intensity (tCO2e per £1m revenue) Scope 1 and 2 emissions 1.29 Scope 1-3 emissions 2.36 Emissions intensity (tCO2e per FTE) Scope 1 and 2 emissions 0.42 Scope 1-3 emissions 0.76 Total energy use (MWh) Electricity 298 Natural gas 63 Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 15 Environmental, Social and Governance Report continued MFG Scope 1, 2 and 3 Emissions (tCO2e) FY2024 Scope 3 Emissions Per Source 2024 (tCO2e) MFG Entities Scope 1 and 2 Emissions Intensity (tCO2e) Per £1m Revenue and Per FTE FY2024 tCO2e, 78.10 tCO2e, 61.78 tCO2e, 16.32 0.00 20.00 40.00 60.00 80.00 100.00 Scope 2 Emissions Scope 1 & 2 Emissions tCO2e, 64.31 Scope 3 Emissions Scope 1 Emissions 0 2 4 6 8 10 PAL BLX MCL BST CFL MFX EAL CBL 0.46 2.26 0.64 1.52 0.28 Scope 1 and 2 Emissions per £1m Revenue Scope 1 and 2 Emissions per FTE 0.59 0.58 0.79 0.61 0.35 0.24 0.67 6.33 8.18 5.71 6.12 Fuel and Energy Activities 24.0% Waste (operational) 5.0% Business Travel 71.0% Employee commuting (remote working only) 0.5% Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 16 Environmental, Social and Governance Report continued Total Scopes 1 & 2 and Scope 3 Emissions (tCO2e) Per MFG Entity 2024 Total Scope 1+2 and Scope 3 Emissions (tCO2e) 2024 and 2023 Scope 3 Emissions Per Source (tCO2e) 2024 and 2023 0 5 10 15 20 25 MFG (entity) PAL BLX MCL BST CFL MFX EAL CBL 17.24 2.33 1.42 0.67 21.51 22.61 1.37 0.69 15.94 8.81 4.27 0.56 0.65 9.41 12.96 14.19 4.26 3.51 Scope 1 and 2 Emissions Scope 3 Emissions 0 20 40 60 80 100 Total Scope 1 and Location-Based Scope 2 Emissions Total Scope 3 Emissions tCO2e 2024 tCO2e 2023 78.10 54.18 87.12 64.31 0 10 20 30 40 50 60 70 Fuel and Energy Activities Waste (operational) Business Travel Employee commuting (remote working only) tCO2e 2024 tCO2e 2023 15.21 13.80 2.99 1.00 0.00 6.12 66.02 44.65 * Note the individual business entity MFG is not included here. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 17 Environmental, Social and Governance Report continued MFG Carbon Footprint 2023-2024 Comparison Emission Sources Total Emissions (tCO2e) 2024 Total Emissions (tCO2e) 2023 Change 2023-24 (%) Scope 1 Emissions Stationary combustion 11.45 5.28 +116.80% Mobile combustion – – – Fugitive and process emissions 4.87 3.95 +23.39% Subtotal 16.32 9.23 +76.83% Location-Based Scope 2 Emissions Electricity 61.78 44.95 +37.44% Heat/Steam/Cooling – – – Subtotal 61.78 44.95 +37.44% Market-Based Scope 2 Emissions Electricity 61.78 44.95 +37.44% Heat/Steam/Cooling – – – Subtotal 61.78 44.95 +37.44% Total Scope 1 and Location-Based Scope 2 Emissions 78.10 54.18 +44.15% Total Scope 1 and Market-Based Scope 2 Emissions 78.10 54.18 +44.15% Scope 3 Emissions Fuel and Energy Activities 15.21 13.80 +10.21% Waste (operational) 2.99 1.18 +153.62% Business Travel 45.65 66.02 -30.86% Employee commuting (remote working only) 0.47 6.12 -92.36% Subtotal 64.31 87.12 -26.18% Grand Total (location-based) 142.41 141.28 +0.80% Emissions intensity (tCO2e per £1m revenue) Scope 1 and 2 emissions 1.29 1.02 +27.24% Scope 1-3 emissions 2.36 2.65 -11.02% Emissions intensity (tCO2e per FTE) Scope 1 and 2 emissions 0.42 0.44 -5.08% Scope 1-3 emissions 0.76 1.15 -33.78% Total energy use (MWh) Electricity 298 217 +37.50% Natural gas 63 29 +115.81% Analysis/Narrative Scope 1 and 2 Emissions - Impact of PAL • The addition of new subsidiary PAL within in the operational boundary has contributed to significant increases in absolute scope 1 (+77%) and scope 2 (+37%) emissions in 2024. It now accounts for over 25% of MFG’s total building-energy consumption and total scope 1-2 footprint and is a key driver behind the increases in electricity and gas consumption shown in the reporting table and Chart 4. • MFG’s carbon footprint will be restated in 2025 (in line with the GHG Protocol Corporate Standard restatement criteria) when a more complete set of scope 1 and 2 primary activity data has been obtained for PAL. • In relative terms, however, MFG’s carbon intensity ratios show less impact, with scope 1 and 2 emissions per FTE around 5% lower compared to 2023. Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 18 Environmental, Social and Governance Report continued Scope 3 Business Travel • Emissions from business travel decreased by 31% in 2024, primarily due to a significant reduction in business flights (all recorded flights in 2024 were UK-domestic). • Additionally, there was a substantial decline in ‘grey fleet’ vehicle use and mileage between 2023 and 2024, contributing further to the reduction in travel-related emissions. Scope 3 Employee Commuting • Emissions associated with homeworking saw a >90% reduction (approx.5 tCO2e), reflecting the rapidly evolving working patterns since 2022-23. Looking Ahead • Establish a robust primary dataset for PAL’s scope 1-3 emissions. • Ongoing refinement of emissions data management, with an aim to include emissions from scope 3 purchased goods and services. • Optimising the categorisation and management of accounting/business data to enhance footprint accuracy, reduce data-handling errors, and minimise time and costs associated with data cleaning and validation. Carbon reduction target (2024-2030) Emission scope 2024 tCO2e 2030 target tCO2e Variance 2024-2030 % Scope 1 + 2 emissions 78.10 27.5 -64.79% Scope 3 emissions 64.31 42.4 -34.07% Total footprint 142.41 69.9 -50.92% An absolute emissions target may become increasingly challenging to maintain due to business expansion and rising operational demands. To ensure a more meaningful and scalable approach to emissions management, we are considering a shift towards a carbon intensity-based target. MFG currently reports carbon intensity ratios based on revenue and employees (summarised below); a hybrid approach using both metrics could offer greater, more meaningful insights for the business and its climate impacts as MFG continues to grow. Metric Best For Key Strength Key Weakness Revenue (£m per tCO2e) Growth-focused, high-revenue companies Scales with financial performance Affected by market fluctuations FTE (employees per tCO2e) Service-based, labour-intensive businesses Tied to workforce growth and energy use Ignores revenue efficiency Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 19 Environmental, Social and Governance Report continued Risk management overview Effective risk management is crucial to MFG’s sustainability. The MFG Board of Directors (“Board”) is ultimately accountable for the effective governance of risk management. The Board maintains its oversight and responsibilities in terms of the three lines risk governance model as set out below. Determining the Group’s risk tolerance and appetite through enterprise risk management is a key element of MFG’s corporate governance framework. It is primarily designed to assist the Group in enhancing its corporate governance and intended to reinforce the key elements of Quoted Companies Alliance (“QCA Code”) corporate governance principles, adopted by the Group. A fundamental principle contained in the Code, is for effective risk management: MFG requires each of its lending subsidiaries to have in place a Risk Management Framework (“RMF”) to support the implementation of some of the principles of MFG’s governance framework. The RMFs support the Board and senior management in fulfilling their respective duties in relation to the sustainable operation of the business. This includes the integration of ESG in the business – see page 11. The risk management frameworks are supported by policies, processes and activities relating to the taking, management and reporting of risk. Management and accountability The Group Audit, Risk and Compliance Committee (“GARCC”) is operated at a Group level. GARCC membership comprises of three experienced Independent Non‑executive Directors, two of which are qualified accountants. Only members of the GARCC have the right to attend GARCC meetings to ensure its independence. However, other individuals representing Executive Management, Risk, Compliance and Internal/External Audit are invited by the Chair of the GARCC to attend all or part of any meeting as and when appropriate. The main objectives of the GARCC are to review operations and ensure that they are conducted to the highest possible standards. This is accomplished by providing an independent objective assurance function specifically for, but not limited to: Internal Controls and Risk Management Systems; Whistleblowing and Fraud; Risk, Compliance; Internal /External Audit. GARCC provides oversight of compliance with all legislation, regulation, and applicable codes of practice in the jurisdictions that MFG conducts business; and reviews policies, procedures and processes to effectively identify, quantify and manage all material risks and to advise on best practice. RMF The following overview of the key governance components that make up the MFG system of governance illustrates the crucial role of the RMF: RMF - Culture The risk culture, which forms part of MFG’s overall culture, encompasses the tone at the top of the organisation and a set of shared attitudes, values, behaviours, and practices that characterise how individuals at MFG consider risk in their day‑to‑day business activities. Analysis of previous incidents and ongoing assessment ensure continuous improvement in the management of risk. All individuals are trained to understand the importance of effective risk management and ensure that risks associated with their role are appropriately understood, managed and reported. Individuals at all levels communicate risk related insights in a timely, transparent, and honest manner. This culture is driven from the top by the Board and Executive Management through how they communicate, make decisions, and motivate the business. Managers and leaders ensure that in all their actions and behaviours they continually reinforce the culture that the effective management of risk is critical to MFG’s success and that every individual plays a role in the management of risk. RMF - Appetite Risk appetites are set at subsidiary level and determine the maximum amount of risk that it is prepared to accept in the pursuit of delivering business objectives. The risk appetite considers all the risks detailed under “Principal risks”‑ on page 20 and is reviewed annually, and, as the operating environment changes, it is constantly measured against stated appetite to take appropriate action. RMF - Risk identification, measurement, and control Having a robust understanding of the risks to which the business is exposed is crucial to ensure that all material risks are appropriately monitored, managed, and reported on. An understanding of risk is developed through the identification, assessment and, where appropriate, measurement of risks to which the business is exposed. These processes are performed as part of strategy setting, strategy execution and day‑to‑day operations and are referred to as risk and control assessments. The subsidiaries’ respective Risk teams provide tools to aid managers and individuals in developing an understanding of risk within their respective business responsibilities. Risk Management Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 20 The risk and control assessment process of understanding risk and reviewing the adequacy and effectiveness of related controls and risk mitigation approaches is performed on a regular basis, as a minimum annually, and is reported to and governed by: • A high‑level assessment to identify the principal risks enabling work to progress in a focused manner in completing risk and control assessments, to build a key control monitoring program; • Management Committees, including a review of roles and responsibilities, ensure that all material risks are captured and formally considered prior to presentation to the GARCC and the respective subsidiary Board; • Procedures within the framework ensure that the relevant Management Committee is accountable for the policies that support their risk, and to reduce the workload for the GARCC and the Board(s), enabling them to focus on overseeing and challenging the RMF; and • Boards approve risk appetite statements, and the design of an underlying risk appetite measures framework, to be owned and monitored by the relevant Management Committee. RMF - Three Lines model and key assurance functions As part of its overall governance framework, MFG has adopted best practice monitoring and control mechanisms by implementing the three lines governance and combined assurance model. Thus the responsibility for governance and oversight is allocated throughout the organisation according to the three lines principles. This governance model is regarded as international best practice for ensuring good governance (including governance within risk and capital management) across an organisation. The emphasis is placed on ownership, responsibility, independence, assurance, communication, oversight, and transparency in governance. The term ‘key assurance function’ refers to a properly authorised function, whether in the form of a person, unit, or department, serving as a control or ‘checks and balances’ function from a governance perspective, and which carries out such activities. These functions typically are second- and third-line functions. First line The first line e.g., business management is primarily accountable for the day‑to‑day risk origination and management in accordance with risk policy and strategy. This includes identifying, assessing risks, and implementing responses. Second line The second line is responsible for the development and maintenance of the frameworks and over-arching policies. The second line provides oversight of, and challenge to, the first line and drives the implementation of the frameworks and policies. Third line The third line is the independent assurance function providing overall assurance to the Board on governance, risk management, and internal controls. The third line comprises of internal audit, external audit, and other independent assurance providers. The third line is completely independent from the management of the day‑to‑day business activities and reports to the GARCC. The external audit firm confirms its independence to GARCC on a six-monthly basis. RMF - MFG assurance functions MFG has effective systems of risk management and internal control. The tasks, processes and obligations of the key assurance functions are transparent and clearly defined, with regular exchange of information between the functions. Each of the functions is structured to ensure that it has the necessary authority, independence, resources, expertise and access to the Board or respective subsidiary Boards, and all relevant employees and information to exercise its authority. The assurance departments within MFG include: • Risk management function; • Compliance function; and • Internal Audit function. The departmental head of each of these key functions possesses the necessary skills, experience and knowledge required for the specific positions they exercise and meet all suitability and ‘fit and proper’ requirements. Written guidelines for these functions are in place, and compliance with them is assured on a regular basis. All of the key independent functions have a direct reporting line to the GARCC and/or the Board. RMF - Internal Capital Adequacy Assessment Process (“ICAAP”) Overview ICAAP is a key strategic and risk management tool for the Bank. It is a key component of the Bank’s planning process during the short and medium‑term. The Bank’s lead regulator, the FSA, requires the Bank to establish and maintain an ongoing internal adequacy assessment process which is appropriate to the nature and scale of its business; it reviews that process annually and evidences that review. Risk Management continued Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 21 Methodology The Bank’s ICAAP process is as follows: Formulation of the Bank’s strategy and budget Strategic plans are prepared annually for the forthcoming year, which consider the Bank’s risk appetite, key market sectors to target, products to leverage / introduce, headcount, operational and capital investment required. Risk assessment The Bank’s Executive Team will liaise with the Risk and Compliance department to determine the material risks in the Bank based on incidents and breaches, Internal Audit reports, Risk report findings and Compliance report findings and issues raised at the GARCC, Bank Board and Management Committee meetings. Stress testing and reverse stress testing The Finance department uses Bank of England market assumptions for stress testing and stress five‑year forecasts to identify any capital deficiencies. Reverse stress testing is also used based on the assumption that the Bank ceases to trade, coupled with a run‑off scenario to determine the capital distribution. Reverse stress testing is used to explore the vulnerabilities to extreme adverse events in the Bank’s strategy and plans that might cause the business to fail, in order to facilitate contingency planning. Stress testing includes an assessment of double leverage between MFG and the Bank. Calculation of capital requirement and buffers Following the setting of strategy, risk assessment and stress tests, the Bank will then calculate its capital requirements by considering the following areas: • Pillar I – The calculation is based on the minimum regulatory requirement under Pillar I of 10.0% of risk weighted assets for material risks; • Pillar II – Assessment of any additional business risks not covered by the minimum Pillar I requirement, plus an assessment of Pillar II risks based upon the current material risk assessment and stress tests, to determine whether any additional capital buffers are deemed appropriate; • Pillar III – Pillar III establishes measures to make better use of market discipline. Pillar III applies only at the top consolidated level of a banking group and is therefore generally not considered to be applicable to IOM incorporated banks as per FSA ICAAP guidance; and • Buffers – The Bank assesses its position against industry standards for regulatory buffers and calculates its position based on its overall exposures to different jurisdictions. Review, challenge and adoption of the ICAAP The ICAAP is prepared by the Finance department and reviewed by the Risk and Compliance departments, the Bank’s Executive Team, Risk Management Committee, GARCC, Internal Audit and the External Auditor. It is used to measure and benchmark the Bank’s risk appetite and to forecast capital usage under both stressed and normal conditions. The ICAAP is challenged at all stages of the review process and presented to the Bank’s Board by GARCC for approval prior to being submitted to the FSA. The elements within the ICAAP model are regularly reviewed and updated throughout the year by Finance and referred to the GARCC and the Bank’s Board if required. ICAAP Results The Bank has completed its ICAAP testing for 2023 in compliance with regulatory requirements. Despite the severity of the risk scenarios modelled, the Bank satisfied the capital and leverage requirements for the purpose of the stress test. Principal risks As a result of the RMF, identified on page 18, the Group has exposure to the following key risks: • Strategic; • Credit risk including counterparty credit; • Operational; • Conduct; • Liquidity; • Interest rate; • Regulatory; and • Reputation. The Group has considered the above key risks that it faces and the mitigating controls against those risks: Strategic risk Strategic risk is the risk to the Group’s revenue and operational costs as set within the budget and the medium‑term plans arising through sub‑optimal implementation of the strategic plan due to either internal or external factors faced by its subsidiaries. Risk Management continued Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 22 Controls and mitigation The Group controls and mitigates this risk via a number of measures: • Subsidiaries generally commence their formal planning process in September for the forthcoming year, to inform the budget submitted to the boards throughout the Group for approval. In reality, the planning process is continuous and responsive to change in the internal and external environment; • Barriers to delivering the strategic plan, and changes to planned activity are captured in the various subsidiary ‘Managing Directors’ Reports’ which are submitted to their respective boards and then ultimately reported to the Group Board at each Board meeting. The reports take account of input from the Group Executive Directors and current financial performance versus budget and seek to highlight strategic responses for the relevant subsidiary; • Key strategic projects are managed under formal project governance with progress of key projects tracked, and communicated and discussed at regular project meetings; and • The impact of limited capital, liquidity, operational capacity, and regulator restriction on the achievement of strategy is captured by the planning process, with exceptional items dealt with under the relevant risk category, where the impact on risk appetite and mitigating actions will be formally recorded. Credit risk including counterparty credit risk Credit risk is defined as the risk that counterparties fail to fulfil their contractual obligations. A material decline in credit quality, or the failure of a counterparty, could result in higher levels of arrears and ultimately in increased provisions and write‑offs, which impacts upon profitability, potentially eroding the capital position for the Group’s subsidiaries. Controls and mitigations applied • Delegated authorities: The Group operates to a schedule of delegated lending authorisation limits linked to an individual underwriter’s knowledge and experience. Above an individual’s limit, credit committees made up of experienced senior staff make collective sanctioning decisions. • Distribution strategy: The Group actively monitors and controls the credit risk of all business undertaken to ensure that it is treating customers fairly and as a safeguard against the failure of any business relationship. Mitigation of counterparty credit risk in outsourced models is supported through the maintenance, where appropriate, of cash reserves and loss pools to fund any buy‑back indemnity. Comprehensive due diligence processes are also performed; • Monitoring of credit quality exposure: The Group reports on its credit risk exposures via an internal grading methodology that assigns exposures to one of three grades based upon the probability of default at product and distribution channel level. This allows for better monitoring of credit quality and impairment of its current book as well as forecasting and stress testing on a more accurate basis; • Concentration risk: To protect against the unintentional build‑up of exposures where deterioration could materially impact the Group’s sustainability and profitability. The Group seeks to maintain a diverse portfolio of products across a variety of geographical regions, customers, sectors, and asset classes. This diversity protects the Group against any deterioration in a particular geographical region, the economic environment, commercial sector etc; Operational risk Operational risk is the risk of loss resulting from human error, inadequate or failed internal processes or controls, system failure, improper conduct, fraud, or external events. It is closely linked to Regulatory risk – see below. The principal operational risks for the Group arise from the following areas: • Resilience of the IT environment: The IT environment is under constant review to ensure operational continuity. The Group’s IT Steering Committee (“ITSCO”) identifies and implements efficiencies to enable enhanced customer service through the provision of additional facilities and products, and to automate manual tasks wherever possible to minimise the potential for human error. ITSCO also reviews and monitors current service standards, highlighting any deficiencies and mitigates accordingly. There are a number of exception reports and scheduled tasks on a daily basis to ensure that any controls within the IT systems are being reported on adequately; and • Third Party administration services: The key operational controls ensure that partners are fulfilling their legal and regulatory obligations in accordance with their service‑level agreement with the Group. The Group has an outsourcing policy to ensure obligations are monitored and met. Internal reviews and audits are conducted on counterparties to ensure terms agreed are being adhered to. Risk Management continued Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 23 Controls and mitigation • Adherence to internal limits and approval processes through: – Delegated authorities: The Group operates to a schedule of delegated authorisation limits and payment approval limits, linked to an individual’s knowledge and experience; – Segregation of duties: There is appropriate segregation between those authorising transactions and those executing them, with four eyes principles in place where required; – Exception reporting: Daily reporting ensures that any regulatory and internal limits are reviewed regularly by the appropriate Management team; • Onboarding: A comprehensive on‑boarding process is in place for new outsourced partners in the IOM and UK; • Due diligence checks: The operational risk from the Group’s third‑party administrators is mitigated by a comprehensive due diligence process which includes a comprehensive take‑on appraisal and a full review of the partner’s policies, procedures and financial stability; • Key Operational Controls: Key controls are monitored through a combination of management oversight, Risk and/or Compliance monitoring and Internal Audit reviews; • New Business Policy and Process: New business and material business change is outlined in a formal policy, which requires that a sequence of assessment and approval is followed. This ensures that all relevant input is included, and material risks considered; and • Exception reports: Exception reporting allows the Group to identify weaknesses in processes and controls which in turn allows for adequate training and the bolstering of systems and processes. Conduct risk The Group is exposed to conduct risk through its operations and interactions with consumers, either directly or through third parties. Controls and mitigation The Group has policies to ensure adherence to conduct related regulatory standards and to promote continual focus on good customer outcomes. Appropriate policies also govern where good conduct is contracted to third parties, either directly or through distribution chains. In all cases, compliance with standards is appropriately monitored through the collection and assessment of relevant data, partner attestation, and onsite audits where appropriate. General conduct principles including the Consumer Duty, and Treating Customers Fairly (TCF) principles, are embedded across the Group’s activities. Liquidity risk Financial institutions are subject to liquidity risk as an inherent part of their business. Liquidity risk is the risk that the Group may not hold sufficient liquid funds meaning it would be unable to meet its contractual liabilities as they fall due. Liquidity risk arises where the Group, through its subsidiaries, has contractual credit obligations that can be placed under stress during times of illiquidity. Should this ever occur, the Group could access the capital markets. In addition, it has built a core portfolio of liquid assets or buffers as additional sources of liquidity that can be utilised during such times. Controls and mitigation Overall, the Group’s liquidity profile is resistant to stress as the Group: • Has a positively matched funding profile and does not engage in maturity transformation. This means that on a cumulative mismatch position, the Group is forecast to be able to meet all liabilities as they fall due; • Maintains an adequate liquidity buffer; and • Has no exposure to the interbank lending market. The Group’s liquidity position is monitored daily against internal and external agreed limits. The Group also has a Liquidity Contingency Plan which lays out the controls in place around potential liquidity disruption events and pre-emptive actions to be taken. Interest rate risk Interest rate risk refers to the current or prospective risk to the Bank’s capital and earnings arising from adverse movements in interest rates that affect the Bank’s banking book positions. The principal potential interest rate risk that the Group is exposed to is the risk that the Bank’s fixed interest rate and term profile of its deposit base differs from the fixed interest rate and term profile of its asset base. Interest rate risk is monitored closely. Risk Management continued Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 24 Controls and mitigation • Funding profile: Interest rate risk for the Group is not deemed to be material currently due to the Bank’s positively matched funding profile. In a rising interest rate environment, due to the nature of the Group’s products and its matched funded profile, it should be able to change the Bank’s lending rate to match any corresponding change in its cost of funds; • The Bank matches its deposit taking to its funding requirements to the greatest extent possible; • The maturity profile of the Bank’s loan book through staged repayments means interest risk is difficult to hedge effectively so the Bank does not currently hedge against this risk, and is not exposed to any additional market interest rate risk in this respect; and • Funding cost: The Group would be exposed to potential risk if the Bank’s cost of funds, which is linked to the cost of retail deposits, and ultimately the UK banks’ base rate, was to increase and it was unable, due to a competitive lending environment, to raise its lending rate correspondingly. The Group’s three‑year plan allows for an increase in its cost of funds, but the Group accepts that these assumptions may not reflect the timing of any interest rate rise or the quantum of any increase. Regulatory risk Regulatory risk is the risk of material breach of regulation. The risk of regulatory breach arises through a failure to identify, assess, and apply applicable regulation; or a failure to adhere to the applicable regulation as applied. The Group holds, via the Bank, a Class 1 (1) Banking Licence in the IOM and is accordingly regulated by the Financial Services Authority (“FSA”) and (since October 2023) a UK deposit taking licence with the Prudential Regulatory Authority (“PRA”). The Bank also holds permissions with the UK’s Financial Conduct Authority (“FCA”) pertaining to regulated credit activities, and other specified regulated products and services in the UK. The Group also holds, via EWA, an IOM Class 2 licence to conduct investment business and is licenced as a general insurance intermediary, both regulated by the FSA. Other regulated entities in the Group are PAL, BLX and MCL principally for Consumer Credit and Debt Collection. The risk of regulatory breach arises through a failure to identify, assess, and apply applicable regulation; or a failure to adhere to the applicable regulation as applied. Monitoring and complying with the requirements of existing regulation across numerous regulatory bodies, along with the rapid pace and volume of regulatory change is a key risk. The risk is compounded due to the size of the Group. Controls and mitigation The Group remains well placed to meet the regulatory challenges that bring change to the macro environment. Regulatory risks continue to be mitigated by themed and ad‑hoc compliance monitoring reviews which are driven using a risk‑based approach to ensure resource is directed to areas of potential material risk. The monitoring plan is approved annually by the GARCC. Monitoring reviews are supplemented by ongoing staff training and guidance. Wherever possible, legislative, and regulatory requirements are built into relevant administration systems, with appropriate monitoring and exception reporting processes in place to monitor compliance. The Group maintains a watching brief on the regulatory environment and, as active members of a number of IOM and UK trade bodies, it receives additional regulatory updates and guidance on proposed legislative and regulatory issues. Upstream regulatory changes are tracked and assessed for impact by the Compliance Department and material items reported to the GARCC. Reputation risk Reputation risk is the risk of loss resulting from damages to the Group’s reputation, in lost revenue or increased costs, or destruction of Shareholder value. Controls and mitigation The Group mitigates this risk by ensuring that its key risks are identified and managed, with an impact assessment of any potential or actual issues considering the impact to the Group’s reputation. The Group actively seeks to minimise the occurrence of events or issues which could give rise to loss or negative feedback, and actively manages the impact should issues occur. Risk Management continued Strategic report | Manx Financial Group PLC | Annual Financial Statements 2024 25 Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 26 Corporate Governance In this section 27 Corporate Governance Report 34 Directors, Officers and Advisers 37 Group Audit, Risk and Compliance Committee 40 Remuneration Committee Report 43 Directors’ Report Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 26 Corporate governance report The Board is committed to best practice in corporate governance. Directors have agreed to comply with the provisions of the QCA Governance Code (“QCA Code”) to the extent which is appropriate to its nature and scale of operations and aims to be fully compliant in 2026. QCA Principle 1: Establish a purpose, strategy and business model which promotes long- term value for shareholders The immediate strategy and business operations of the Group are set out in the Strategic Report. The Group’s strategy and business model and amendments thereto, are developed by the Chief Executive Officer (“CEO”) with his senior management team and approved by the Board. The management team, led by the CEO, is responsible for implementing the strategy and managing the business at an operational level. The Group’s overall strategic objective is to grow organically and through strategic acquisitions to further augment the range of services it offers and gain its presence in markets in which it has proven experience. The Group has a balanced portfolio of regulated and unregulated operations, all of which are managed on a risk‑based and prudential approach. The principal activities include: deposit taking; lending to consumer and commercial markets in the IOM and the UK; the provision of dedicated financial advice, especially in the areas of pensions and general insurance; and foreign currency and payment services. The Group has adopted a portfolio approach to its strategic assets and is not dependent on one particular platform technology. The Directors believe that this approach helps to mitigate any concentration risk. The Group operates in some heavily regulated sectors, and this is reflected in the emphasis on compliance and the provision of excellent customer service. In executing the Group’s strategy and operational plans, management will typically confront a range of day‑to‑day challenges associated with risks and uncertainties and will seek to deploy the identified mitigation steps to manage these risks as they manifest themselves. QCA Principle 2: Promote a corporate culture that is based on ethical values and behaviours The Board seeks to maintain the highest standards of integrity and probity in the conduct of the Group’s operations. These values are enshrined in the written policies and working practices adopted by all employees in the Group. An open culture is encouraged within the Group, with staff feedback sought on a regular basis and this includes surveys and workshops. The senior management team review the results and provide communications to staff regarding progress to address any concerns that may arise, escalating any key deviations in culture to Board level as necessary. The Group is committed to providing a safe environment for its staff and all other parties for which the Group has a legal or moral responsibility in this area. This is enshrined in the Group’s health and safety policy. QCA Principle 3: Seek to understand and meet shareholder needs and expectations The Group, via the Chair, Vice-Chair and CEO, seeks to maintain a regular dialogue with both existing and potential new shareholders to communicate the Group’s strategy, financial performance and governance strategies and to understand the needs and expectations of shareholders. Beyond the Annual General Meeting(“AGM”), the Chair, Vice-Chair and CEO and, where appropriate, other members of the senior management team will meet with investors and analysts to provide them with updates on the Group’s business and to obtain feedback regarding the market’s expectations of the Group. The Group’s investor relations activities encompass dialogue with both institutional and private investors. From time‑to‑time, MFG attends private investor events, providing an opportunity for those investors to meet with representatives from the Group in a more informal setting. The Group also provides reporting on the company’s environmental and social matters to meet with investor needs, as set out under principle 4. Corporate Governance Report Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 27 QCA Principle 4: Take into account wider stakeholder interests, including social and environmental responsibilities and their implications for long-term success The Group is aware of its social and environmental responsibilities and the need to maintain effective working relationships across a range of stakeholder groups. These include not only the Group’s employees, partners, suppliers, regulatory authorities, but also customers, be they depositors, borrowers or those seeking financial advice. The Group’s operations and working methodologies take account of the requirement to balance the needs of all stakeholder groups while maintaining focus on the Board’s primary responsibility to promote the success of the Group for the benefit of its members as a whole. • Customers – are at the heart of the business, and the Group operates with a shared vision and set of values. These values instill a sense of how all staff form a part of the customer journey. Feedback is encouraged at all points of contact; it is proactively enacted upon by the Executive and Management of the operational subsidiary that forms the Group as it aids the identification of process system and product enhancements; • Shareholders – where appropriate shareholder feedback is discussed at the Board, with any actions agreed being tracked to completion by the Company Secretary. Shareholders have an opportunity to raise questions to the Board, in person, at the AGM. Beyond the AGM, the CEO and Vice Chair addresses and communicates with shareholders to discuss their concerns where appropriate. Additionally, together with the Group Finance Director, the CEO delivers an online presentation of the financial statements and interim results where questions can be raised, and this presentation is also accessible on the Group’s website; • Employees – the Group collates employee feedback on an annual basis, engages employees via workshops, with all outputs analysed and visibly addressed by the Executives of the operational subsidiaries that form the Group; with the aim being to build an engaged, committed and enthusiastic workforce. The Group is also committed to conducting its business with honesty and integrity and fosters a culture of openness. Culture is recognised within the recruitment process and strengthened via training, performance management, reward, and ongoing engagement with employees. As part of the Group’s commitment to its culture of openness it has an established whistleblowing policy and framework in situ, which is supported by training to highlight that any genuine concerns may be raised without reprisal; • Partners and suppliers – the Executive and Management regularly meet with and seek input from our partners and suppliers to ensure the needs of all parties are understood to achieve continued excellent working relations; • Regulators – the Group adheres to AIM regulations with guidance from its Nominated Adviser (“NOMAD”), ensuring transparency and integrity. The Board actively engages with its NOMAD to ensure it is meeting its regulatory obligations and maintain investor confidence; and; • Community and the environment ‑ The Board recognises its critical role in overseeing the company’s approach to ESG and understands the impact this has on the communities in which it operates, and the environment – including those related to climate change. To this end, the Group is committed to integrating these considerations into its strategy, risk management framework and business model. The Group is guided by the QCA Code recommendations on the integration of ESG, and by doing so we aim to ensure the Group not only meets its regulatory obligations but also positively contributes toward the broader community and environment. The ESG report (Environmental Social and Governance Report), which can be found on page 11, and was produced in conjunction with external advisers (EQCarbon) identifies materiality, performance KRIs and future targets to help us build a reporting framework across organisations, resilient and sustainable future for the Group and all its stakeholders. This is further supported by the Bank, which is now into its fourth year of responding to ESG integration and provides the model that other Group subsidiaries are following. As our ESG strategy matures we will seek to put into place a mechanism to gauge feedback. QCA Principle 5: Embed effective risk management, considering both opportunities and threats, throughout the organisation The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness by a series of committees, overseen by the GARCC, and such controls are reviewed by Internal Audit. The internal controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. Corporate Governance Report continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 28 Through the activities of the GARCC, which meets at least six times per year, the effectiveness of these internal controls is formally reviewed four times per year. GARCC also annually considers External Auditor independence, and their reappointment is elected at the AGM. Further information is detailed within the Risk Management Report. A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The Group’s results, and comparison to budget, are reported to the Board monthly. The Group maintains appropriate insurance cover in respect of actions taken against the Directors because of their roles, as well as against material loss or claims against the Group. The insured values and type of cover are comprehensively reviewed on at least an annual basis. The senior executives meet regularly to consider new risks and opportunities for presentation to the Group, making recommendations to the GARCC and or the Board as appropriate. The Directors consider they are provided with all necessary information to assess the Company’s position, performance, business model and strategy. Further information can be found in the Directors Report, Strategic Report, Risk Management Report, Environmental Social and Governance Report and individual committee reports. QCA Principle 6: Establish and maintain the board as a well-functioning, balanced team led by the chair The role of the Board The Board is collectively responsible for the long‑term success of the organisation. Its principal function is to determine the strategy and policies of the Group within an effective control framework which enables risk to be assessed and managed. The Governance Framework is reviewed to ensure it remains fit for purpose on an annual basis and is approved by the Board. The Board ensures that the necessary financial and human resources are in place for the Group to meet its objectives and that business and management performances are reviewed. Furthermore, the Board ensures that the Group operates within its constitution, relevant legislation and regulation and that proper accounting records and effective systems of business control are established, maintained, documented, and audited. There are at least four formal Board meetings each year. All Board members have the benefit, at the Group’s expense, of liability insurance in respect of their responsibilities as Directors and have access to independent legal or other professional advice if required. The Board has a formal schedule of matters which are reserved for its consideration, and it has established three committees to consider specific issues in greater detail, being the GARCC, the Remuneration Committee and the Nomination Committee. The Terms of Reference for each of these Committees are published on the Group’s website www.mfg.im. There is a clear separation of the roles of CEO and Executive Chair. Chair The Chair is responsible for leading the Board, ensuring its effectiveness in all aspects of its role, promoting a culture of openness of debate, and communicating with the Group’s members on behalf of the Board. The Chair sets the direction of the Board by facilitating the effective contribution of Non‑executive Directors and ensuring constructive relations between Executive and Non‑executive Directors. The Chair also ensures that Directors receive accurate, timely and clear information. This fosters a positive corporate governance culture throughout the Group. CEO The CEO is responsible for managing the Group’s business and operations within the parameters set by the Board. Non-executive Directors The Non‑executive Directors are responsible for bringing independent judgement to the discussions held by the Board, using their breadth of experience, and understanding of the business. Their key responsibilities are to constructively challenge and contribute to strategic proposals, and to monitor performance, resources, and standards of conduct, compliance, and control, whilst providing support to executive management in developing the Group. The Board considers that all the Non-executive Directors are of sufficient competence and calibre to add strength and objectivity to their activities, and bring considerable experience in regulatory, financial, and operational development within the financial services sector in both the IOM and the UK. Corporate Governance Report continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 29 The Directors’ biographies are set out on page 32. The Board regularly reviews the composition of the Board to ensure that it has the necessary breadth and depth of skills to support the ongoing development of the Group. Directors’ service contracts or appointment letters make provision for a Director to seek personal advice in furtherance of his or her duties and responsibilities, normally via the Company Secretary. The Board currently comprises four Non-executive Directors and four Executive Directors. The Group has chosen not to appoint a Senior Independent Director (“SID”) as it already has an effective leadership structure including a Chair, Vice Chair, a CEO and a Board with a great degree of expertise. Additionally, as a smaller company it is also believed to be unnecessary and could complicate the existing board dynamics. The Board is responsible to the shareholders for the proper management of the Group and meets at least four times a year to set the overall direction and strategy of the Group, to review operational and financial performance, and to advise on management appointments. All key operational and investment decisions are subject to Board approval. The Board considers itself to be sufficiently independent. The QCA Code suggests that a board should have at least two independent non-executive directors. The Board considers three Non-executive Directors namely Alan Clarke (Chair of the GARCC) Gregory Jones and John Spellman, are independent under the QCA Code’s guidance for determining such independence due to the fact they are free from any business or other relationship that could materially interfere with their ability to act in the best interests of the company. This includes not having been an employee of the Group within the last five years, not having a material business relationship with the Group, and not having close family ties with any of the company’s advisers, directors, or senior employees. Non-executive Directors receive their fees in the form of a basic cash emolument. The CEO and Finance Director are the only Directors who hold Restricted Stock Units (“RSUs”) or options over the Group’s shares. The number and terms are found on page 42. The RSUs or option grant concerned are not deemed to be significant, either for the individual Executive Director or in aggregate. The current remuneration structure for the Board’s Non-executive Directors is deemed to be proportionate and is not linked to performance related pay. Before their appointment, Non-executive Directors must confirm their ability to dedicate sufficient time to their responsibilities. They are expected to attend regular quarterly board meetings, as well as unscheduled ad- hoc meetings. Preparing for these meetings involves reviewing extensive board packs, which demands commitment that is stipulated in their service agreement. Each Director also commits to seeking approval from the Chair prior to assuming additional external roles when there is a perceived or actual conflict of interest. Our current board composition does not fully align with the QCA Code 2023 diversity principles. Whilst it is acknowledged by the Board that it lacks sufficient gender diversity, the board includes members from different nationalities, educational, and professional backgrounds. However, it looks to ensure individual perspectives from the directors add value to discussions and ensure there is sufficiently wide- ranging and business relevant input, to deliver the best decision-making process in the context of the company’s business model, geographic footprint, and forward-looking strategy. Appointments to the Board are made on merit, with due regard to the benefits of diversity. Within this context, the paramount objective is the selection of the best candidate, irrespective of background, and it is the view of the Board that establishing quotas or targets for the diversity of the Board is not appropriate at this time. However, the Board remains committed to diversity being a key factor in its selection process. Corporate Governance Report continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 30 Board and committee attendance The number of formal scheduled Board and Committee meetings held and attended by Directors during the year was as follows: Board GARCC REMCO NOMCO Jim Mellon 6 - - 4 Denham Eke 7 - - 4 Douglas Grant 7 - - 4 James Smeed 6 - - 4 Gregory Bailey 3 - - - Alan Clarke 6 8 9 3 Gregory Jones 6 8 9 3 John Spellman 7 7 - 4 Unable to attend due to tax reasons Gregory Bailey 2 – – 1 QCA Principle 7: Maintain appropriate governance structures and ensure that individually and collectively the directors have the necessary up-to-date experience, skills and capabilities The Board has an established GARCC, Remuneration Committee and Nomination Committee with formally delegated duties and responsibilities and these are set out in the relevant Terms of Reference, which are reviewed on an annual basis. Group Audit, Risk and Compliance Committee (“GARCC”) The GARCC meets at least six times each year and comprises of three Independent Non‑executive Directors, currently Alan Clarke (Chair), Gregory Jones and John Spellman. Representatives from Compliance and Risk, the Internal and External Auditor and executive management attend by invitation. Its role is to be responsible for reviewing the integrity of the financial statements and the balance of information disclosed in the accompanying Directors’ Report, to review the effectiveness of internal controls and risk management systems, to monitor and review the effectiveness of the Internal Audit function and to consider and recommend to the Board (for approval by the members) the appointment or re‑appointment of the External Auditor. The GARCC reviews and monitors the External Auditor’s objectivity, competence, effectiveness, and independence, ensuring that if it or its associates are invited to undertake non‑audit work it will not compromise auditor objectivity and independence. Group Remuneration Committee (“REMCO”) The REMCO meets at least twice a year and currently comprises of two Independent Non‑executive Directors, currently Alan Clarke (Chair), and Gregory Jones, with the Executive Directors and external advisers attending by invitation where appropriate. It is responsible, amongst other matters, for determining the remuneration of the Executive Directors, the Company Secretary, and other members of management. Committee members do not take part in discussions concerning their own remuneration. The Chair and CEO determine Non‑executive Director fees. Group Nomination Committee (“NOMCO”) The NOMCO is comprised of the whole Board. It is chaired by the Chair of the Board and is responsible for making recommendations to the Board on matters relating to the composition of the Board, including Executive and Non‑executive Director succession planning, the appointment of new Directors and re‑election of existing Directors. Additionally, the following management committee is also established: Group IT Steering Committee (“ITSCO”) The ITSCO is a Group management committee composed of experienced Executives and Senior Management, who are responsible for directing, reviewing, and approving IT strategic plans and overseeing major IT initiatives. Its key responsibilities include aligning IT strategy with business goals, appraising major technology projects, recommending technology strategies to the Board, monitoring IT security systems, cooperating with the GARCC on internal controls, providing guidance on emerging technology trends, and reviewing key IT policies annually. The committee ensures IT priorities support the Group’s overall strategy and operational resilience. The Board considers that due to its size no further sub-committees are required at present. Corporate Governance Report continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 31 Corporate Governance Report continued Appointments to the Board The principal purpose of the NOMCO is to undertake an assessment of the balance of skills, experience, independence and knowledge on the Board and subsidiary boards against the requirements of the business, with a view to determining whether any shortages exist. Having completed the assessment, the Committee makes recommendations to the Board accordingly. All Group Director appointments must be approved by the Company’s NOMAD, as required under the AIM Rules, before they are appointed to the Group Board. The Corporate Governance Manual also contains a schedule of matters specifically reserved for Board decision or approval and sets out the Company’s share dealing code and its public interest disclosure (“whistleblowing”) policy and procedures. Directors keep their skillset up to date by attending professional development courses tailored to their needs as well as by participating in regular workshops and industry conferences. These activities enable them to stay informed about industry changes, new regulations and to engage within professional networks. As part of the annual board evaluation, directors are asked to identify their individual skills development requirements and to identify where there are any gaps in knowledge on the board. The results are then reviewed by the Chair and discussed by both the NOMCO and the Board and any agreed action taken. The Chair, in conjunction with the Company Secretary, ensures that the Directors’ knowledge is kept up to date on key issues and developments pertaining to the Group, its operational environment and to the Directors’ responsibilities as members of the Board. During the year, Directors receive updates from the Company Secretary and various internal and external advisers on a number of regulatory and corporate governance matters including sustainability. QCA Principle 8: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement. The Board has an internal process for evaluation of its own performance, that of its committees and individual Directors, including the Chair. This process is conducted annually and last took place in October 2024, with no substantive recommendations arising. The Board have committed to a review of the assessment criteria which shall be completed prior to the next cycle. The Board shall consider supplementing this process periodically by an external independent third-party evaluation during 2025. The Board utilises the results of the evaluation process when considering the adequacy of the composition of the Board and for succession planning. Annually, the NOMCO review the skills, experience, capabilities, and background required for directors and senior management to support the company’s development, provided to them via the succession planning report, to make reasoned recommendations to the Board. In addition, all new appointments are determined by the Board after an evaluation to ensure the appointee will add value based on recommendation from the NOMCO. Upon appointment, new appointees follow a structured induction programme to help them integrate into their roles. QCA Principle 9: Establish a remuneration policy which is supportive of long-term value creation and the company’s purpose, strategy, and culture. The Group has a remuneration policy that guides the REMCO in decision-making, considering the Group’s risk appetite, alignment with long-term strategic objectives, and industry best practices. Furthermore, the policy aims to provide sustained and long-term value creation for shareholders. It also strives to be fair and provide equal opportunities to all Executive Directors, employees, temporary staff, and non-executive Directors, while focusing on sound and effective risk management. The REMCO consults with other board committees as necessary to determine incentive targets and appraise performance. Our remuneration structure is designed to align with and support the company’s purpose, business model, strategy, and culture. The Group offers a balanced remuneration package that reflects the staff’s position within the Group and professional activity, as well as market practices. This approach considers any conflicts of interest and the impact on the underlying customer, which the Group believes is crucial due to the direct link with shareholder interests. Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 32 Corporate Governance Report continued QCA Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other key stakeholders. The Group places a high priority on maintaining regular communications with its various stakeholder groups and strives to ensure that all communications concerning the Group’s activities are clear, fair, and accurate. The MFG’s website is regularly updated, to provide the latest information and stakeholders can register to be receive alerts when new announcements, presentations and events details are posted online. Details they were addressed by the board are detailed within the Chair’s report. Notices of General Meetings of the Company can be found at: https://www.mfg.im/investor-centre/AIM Rule 26. The results of voting on all resolutions in future general meetings will continue to be posted to the Group’s website, including any actions to be taken because of resolutions for which votes against have been received from at least 20 per cent of independent shareholders. Shareholders have an open line of communication with the Group, so they can express their views and gain a better understanding of the company’s operations, governance, and strategic direction. Board members take a proactive approach in their duties, actively engaging with all stakeholders. The board can effectively address concerns, share insights, and align the company’s strategic goals with the expectations and needs of its stakeholders. With these communication structures in place, we foster a stronger relationship with our stakeholders and reinforce our commitment to transparency and accountability. This approach not only enhances trust and collaboration but also supports the long-term success and sustainability of the company. Approval This report was approved by the Board on 24 June 2025 and signed on its behalf by: Jim Mellon Executive Chair 24 June 2025 Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 33 Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 34 Directors, Officers and Advisers Jim Mellon (68)‡ Executive Chair Denham Eke (73)‡ Executive Vice Chair Douglas Grant (60)‡ Chief Executive Officer James Smeed (41)‡ Group Finance Director Jim Mellon is a well‑known and successful entrepreneur, author and economic commentator, starting his career in fund management and now includes biopharma, clean food, property, mining and information technology amongst his many investments. He holds directorships in a number of companies, both quoted and unquoted, including the chair of Juvenescence Limited, non-executive director of Portage Biotech Inc, a NASDAQ-traded drug development company and the executive chair of Agronomics Limited. He, together with Burnbrae Group Limited, of which he is the beneficial owner, hold a 18.49% shareholding of Manx Financial Group PLC. He is the founder, principal shareholder and chair of the Regent Pacific Group Limited, quoted on the Hong Kong Stock Exchange. Denham Eke is the Managing Director of Burnbrae Group Limited, a private international asset management company. He began his career in stockbroking with Sheppards & Chase before moving into corporate planning for Hogg Robinson plc, a major multinational insurance broker. He is a director of many years standing of both public and private companies involved in the financial services, property, mining, clean food and manufacturing sectors. Douglas Grant has over 40 years’ experience working in finance, initially with Scottish Power, before moving to the industrial sector to work with ICI and then Allenwest. Prior to joining Manx Financial Group PLC, he was finance director of various UK and Isle of Man private sector companies and has extensive capital markets experience. He is a professionally qualified banker with an executive MBA. James Smeed has over 20 years’ financial services experience, having started his career with KPMG in audit and assisting in transaction services. He joined the Group in August 2012 as Group Head of Finance and was appointed to the Bank’s Board as Finance Director in 2017. He is both a Chartered Accountant and a Chartered Tax Adviser and Treasurer of the Isle of Man Bankers Association. Appointment Appointed to the Board on 2 November 2007 and Executive Chair on 12 February 2009. Appointment Appointed to the Board on 2 November 2007 and Executive Vice Chair on 3 November 2021. Appointment Appointed to the Board on 14 January 2010 and Chief Executive Officer on 3 November 2021. Appointment Appointed to the Board as Group Finance Director on 3 November 2021. Executive Directors Legend * Member of the Audit, Risk and Compliance Committee † Member of the Remuneration Committee ‡ Member of the Nominations Committee Directors, Officers and Advisers continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 35 Non-executive Directors Alan Clarke (74)‡†* Independent Non-executive Director Gregory Bailey (69)‡ Non-executive Director John Spellman (58)‡* Independent Non‑executive Director Gregory Jones (66)‡†* Independent Non-executive Director Alan Clarke is a chartered accountant and former senior partner of Ernst & Young during which time he worked closely with HSBC offshore operations in both the Channel Islands and the Isle of Man. Currently, he specialises in corporate finance and strategic consultancy, advising a variety of both listed and private companies. He holds several non- executive directorships and is a past President of ICAEW Manchester. Gregory Bailey, founded Palantir Group Inc which made successful investments in bio- tech company start- ups and financings, and is co-founder and currently executive chair of Juvenescence Ltd, non-executive director of Portage Biotech Inc, a NASDAQ-traded drug development company and non‑executive director of NYSE traded Biohaven Ltd. He is also founder and chair of Chelsea Avondale, a property and casualty insurance and founder and chair of Culminant Reinsurance. Along with comprehensive experience in finance and healthcare, he has served on many public company boards and brings to the Group an extensive involvement in corporate governance. John Spellman is both a qualified accountant and banker. He spent his early years in banking, fund management and accountancy, specialising in various parts of offshore industry before being appointed managing director of Clerical Medical Offshore. He transferred to the UK as chief operating officer within Clerical Medical Financial Services before being appointed managing director of HBoS Financial Services. He has worked with and created a number of successful businesses and has wide experience liaising with government regulators. He has held approved status with the Isle of Man FSA in various roles and has acted as strategic advisor to the Isle of Man government, specialising in finance and foreign direct investment for over 11 years. He is Chair of IOM Children’s Centre. Gregory Jones was called to the UK Bar in 1982 and subsequently joined KPMG Isle of Man where he spent 29 years before retiring in October 2019 as Head of Tax. He currently provides tax advice for a leading Isle of Man based firm of advocates and is a director of a local Corporate Service Provider. He is a member of the Chartered Institute of Taxation. Appointment Appointed to the Board on 2 November 2007. He is Chair of the Audit, Risk and Compliance Committee and Chair of the Remuneration Committee. Appointment Appointed to the Board on 7 February 2018. Appointment Appointed to the Board on 4 May 2020. He is Chair of Conister Bank Limited. Appointment Appointed to the Board 3 November 2021. Registered Office Clarendon House Victoria Street, Douglas, Isle of Man IM1 2LN Registered Agent CW Corporate Services Limited Bank Chambers, 15-19 Athol Street Douglas, Isle of Man IM1 1LB Legal Advisers As to Isle of Man law Long & Co Limited Eyreton, Quarterbridge Road Douglas, IM2 3RF As to English law Hill Dickinson LLP The Broadgate Tower, 20 Primrose Street London EC21 2EW Independent Auditor KPMG Audit LLC Heritage Court, 41 Athol Street Douglas, Isle of Man IM1 1LA Principal Banker National Westminster Bank plc 250 Bishopsgate London EC2M 4AA Consulting Actuaries PricewaterhouseCoopers LLC Sixty Circular Road Isle of Man Douglas Isle of Man IM1 1SA Pension Administrators Boal & Co Ltd Marquis House Isle of Man Business Park Douglas Isle of Man IM2 2QZ Nominated Advisor and Broker Beaumont Cornish Building 3 Chiswick Park 566 Chiswick High Road London W4 5YA Registrar Computershare Investor Services (Jersey) Limited 13 Castle Street, St Helier, Jersey JE1 1ES Presentation of Annual Report and Accounts Presented here are the Annual Report and Accounts of Manx Financial Group PLC. Company Information The Annual and Interim Reports, along with other supplementary information of interest to Shareholders, are included on its website. The address of the website is www.mfg.im which includes investor relations information and contact details. Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 36 Lesley Crossley (57) Company Secretary Lesley Crossley is a Fellow of The Chartered Governance Institute (UK & Ireland) and an Associate of the Chartered Insurance Institute. Lesley has over 35 years of wide‑ranging experience in the financial services industry both in the UK and the Isle of Man and has held the position of Company Secretary with a number of Isle of Man, UK and international companies. Appointment Re‑appointed as the Company Secretary on 2 September 2019 after re‑joining the Group. She also held the position from September 2008 to June 2018. Company Secretary Advisers Directors, Officers and Advisers continued Group Audit, Risk and Compliance Committee Dear Shareholders I am pleased to set out below an account of the GARCC’s role and activities during 2024 and up to the date of publication of this Annual Report. Membership Members of the GARCC are appointed by the Board, on the recommendation of the Nomination Committee, in consultation with the Chair of the Committee. The Committee shall be made up of at least 2 members. All members of the Committee shall be Non‑executive Directors and at least one of whom shall have recent and relevant financial experience with a professional qualification from one of the professional accountancy bodies. The Chair of the Board shall not be a member of the Committee. Appointments to the Committee shall be for a period of up to 3‑years, which may be extended by the Board for a further 3‑year period (or, in exceptional circumstances, two further 3‑year periods), provided the Director remains independent. The Board may approve annual extensions to any Director who has served 3 consecutive terms. The Board shall appoint the Chair of the Committee who shall be a Non‑executive Director. In the absence of the Chair of the Committee and / or an appointed deputy, the remaining members present shall elect one of them to chair the meeting. The Committee shall meet at least six times a year. Of these, two will be held to review the annual and interim financial statements. Outside of the formal meeting programme, the Chair of the Committee will maintain a dialogue with key individuals involved in the Company’s governance. Members Appointed Number of meetings attended Alan Clarke (Chair) 2 February 2008 8 Gregory Jones 3 November 2021 8 John Spellman 4 May 2020 7 Only members of the Committee have the right to attend Committee meetings. However other individuals may be invited by the Chair of the Committee to attend all or part of any meeting as and when appropriate. The GARCC holds separate meetings with Internal Audit, Risk and Compliance and our External Auditor, KPMG Audit LLC. The Chair of the Board, the Executive Directors and management may be invited to meetings of the GARCC but are excluded from the separate meetings held between the GARCC and the External Auditor. Execution of functions The GARCC has executed its duties and responsibilities during the year in accordance with its terms of reference as it relates to auditor independence, assisting the Board in its evaluation of its control environment and internal controls including information systems and accounting practices. During the year under review, the Committee considered among other matters, the following: Financial reporting and annual financial statements: • Considered the annual financial statements with the External Auditor, Executive Directors and management and reviewed the appropriateness of significant judgements, estimates and accounting policies; • Reviewed and recommended to the Board for adoption: – Unaudited condensed interim results for the period‑ended 30 June 2024: – The Bank’s ICAAP for 2023; – Audited MFG PLC Group and subsidiary annual financial statements for the year‑ended 31 December 2024; and • Discussed any significant and unusual accounting matters including key audit matters identified by the External Auditor. External audit: • Monitored and assessed the independence of the External Auditor based on reports received and inquiries made into work performed; • Determined the nature and extent of non‑audit services performed by the External Auditor; • Reviewed and assessed the significance of non‑audit fees compared to audit fees; • Reviewed and agreed the external audit plan in advance for the year‑end audit which set out the scope of audit, significant risks, areas of audit focus and audit timetable; • Received a presentation from the External Auditor on the findings from their execution of the audit plan; and • Satisfied itself as to the experience and independence of the engagement partner. Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 37 Internal audit: • Reviewed and approved the Internal Audit plan; • Reviewed Internal Audit’s findings including the design and operating effectiveness of the internal control environment and control activities; and • Reviewed Internal Audit’s findings on the adequacy and reliability of management information. Risk and compliance: • Assessed the effectiveness of the Group Risk and Compliance function; • Reviewed the Group Risk and Compliance department findings on the effectiveness of the Group’s regulatory controls; • Recommended a revision of the Risk and Compliance policies for Board approval; and • Recommended a revision of the Internal Capital Adequacy Assessment Process for Board approval. It is noted with good corporate governance, an audit tender process should regularly be conducted. With this in mind, the GARCC has commenced an audit tender process. Firms outside the Big 4 have been invited to take part in this process so long as they have sufficient resources and expertise to merit their inclusion. There are no anticipated conflicts of interest noted at this time and should any arise, they will be mitigated appropriately. External Auditor’s independence KPMG Audit LLC has been the Group’s external auditor since 2007. Consideration was given to the non‑audit work performed by the External Auditor. The ratio of non‑audit fees to audit fees for the year was 0.1 to 1 (2023: 0.05 to 1). Non‑audit services related to tax advisory services. Services were performed by a separate team to the audit team to safeguard against the self‑review threat to independence. The GARCC obtained assurance from the External Auditor that internal governance processes within KPMG Audit LLC support and demonstrate its claim of independence. This assurance was provided through the receipt of an ISA (UK) 260 letter. The GARCC is satisfied with the independence of KPMG Audit LLC. External Auditor’s reappointment The GARCC is responsible for recommending to the Board the reappointment of the Group’s External Auditor which, in turn, will make a recommendation to it’s Shareholders. Group Audit, Risk and Compliance Committee continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 38 Key accounting matters The GARCC considered key accounting matters in relation to the Group’s financial statements and disclosures. The primary areas in relation to 2024 and how they were addressed are detailed below: Key accounting matter GARCC response Loan impairment – wholesale funding and individual finance agreements The entity is required by the financial reporting framework to calculate impairment using the expected credit loss model. Impairment is measured on an instrument‑by‑instrument basis except where instruments are grouped, for impairment to be measured on a collective basis under the expected credit loss model. Loan impairment provisions reflect estimates of the amount and timing of future recoveries which require an assessment of matters such as future economic conditions and the value of collateral. Estimates, by their nature, give rise to a higher risk of material misstatement due to error or fraud. The effect of these matters is that, as part of the External Auditor’s risk assessment, they determined that the impairment provision has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than their materiality for the financial statements as a whole, and possibly many times that amount. The GARCC satisfied itself that the internal control environment and control activities are appropriately designed and implemented. This was supported by review of Internal and External Audit reports and findings. The GARCC reviewed reports from management on the application of IFRS 9 requirements and key changes to internal processes and controls. The GARCC reviewed the key assumptions used by management such as Loss Given Default, Loss Rates, Probability of Default on a quarterly basis. Recoverability of Parent Company’s subordinated loans to and investment in subsidiaries The carrying value of the Parent Company’s investment in subsidiaries and loans and amounts due from Group undertakings represents 96% (2023: 97.0%) of the Parent Company’s total assets. The assessment of carrying value is not at a high risk of significant misstatement or subject to significant judgement as the carrying value is supported by the audited net asset value of the subsidiaries. However, due to its materiality in the context of the MFG financial statements, the External Auditor considered this to be the area that had the greatest effect on their audit of the Company. The GARCC is satisfied that the going concern assessment over the Group provides sufficient assurance over the recoverability of the Company’s subordinated loans and investment in subsidiaries. The GARCC has complied with and discharged its responsibilities as set out in its Terms of Reference. Alan Clarke Chair 24 June 2025 Group Audit, Risk and Compliance Committee continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 39 Dear Shareholders On behalf of the Board, I am pleased to present the Remuneration Committee Report for the year ended 31 December 2024. Membership Members of the Remuneration Committee (“REMCO”) are appointed by the Board, on the recommendation of the Nomination Committee in consultation with the Chair of the Committee. The Committee shall be made up of at least 2 members. All members of the Committee shall be Non‑executive Directors. The Chair of the Board shall not be a member of the Committee. Appointments to the Committee shall be for a period of up to 3‑years, which may be extended by the Board for a further 3‑year period (or, in exceptional circumstances, two further 3‑year periods), provided the Director remains independent. The Board may approve annual extensions to any Director who has served 3 consecutive terms. The Board shall appoint the Chair of the Committee who shall be a Non‑executive Director. In the absence of the Chair of the Committee and / or an appointed deputy, the remaining members present shall elect one of them to chair the meeting. The Committee shall meet at least twice a year and at such other times as the Chair of the Committee shall require. Membership Appointed Number of meetings attended Alan Clarke (Chair) 13 February 2009 9 Greg Jones 8 November 2021 9 Only members of the Committee have the right to attend Committee meetings. However, other individuals may be invited by the Chair of the Committee to attend all or part of any meeting as and when appropriate. Areas of focus for 2025 During the year, the Committee considered the following: • Reviewed the overall pay of Executive Directors; • Reviewed the non‑contractual discretionary annual performance related pay scheme for Group staff; • Reviewed and approved the provision of RSUs to Group staff; • Reviewed and approved all new Group staff appointments where gross basic salary exceeded £75,000; and • Reviewed and approved all changes to terms and conditions of staff where gross basic salary exceeded £75,000. Remuneration policy The Group’s Remuneration Policy reflects the Group’s business strategy and objectives as well as sustained and long‑term value creation for Shareholders. In addition, the policy aims to be fair and provide equality of opportunity, ensuring that: • the Group is able to attract, develop and retain high‑performing and motivated employees in the competitive local IOM and wider UK markets; • employees are offered a competitive remuneration package to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contribution to the success of the Group; • it reflects the Group’s culture and values; and • there is full transparency of the Group’s Remuneration Policy. In line with the Board’s approach, which reflects that adopted within other comparable organisations, the Group’s Remuneration Policy provides for the reward of Executive Directors through salaries and other benefits. Remuneration Committee Report Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 40 Executive Directors’ Emoluments The remuneration for Executive Directors reflects their responsibilities. It comprises basic salary, performance related bonus when this is considered appropriate, and various benefits detailed below. As with staff generally, whose salaries are subject to annual reviews, basic salaries payable to Executive Directors are reviewed each year with reference to jobs carrying similar responsibilities in comparable financial organisations, market conditions generally and local employment competition in view of the Group’s geographical position. The Group operates a non‑contractual discretionary annual performance related pay scheme based on the trading performance of the Group and the individual employee’s performance assessed for the period under review in a manner which promotes sound risk management and does not promote excessive risk taking. The non‑contractual discretionary annual performance related pay scheme may be paid in one year but that does not confer any entitlement in future years. Performance assessments are conducted annually to determine the performance rating of each employee’s achievements against a mix of targets set and agreed at the beginning of each year between the employee and their manager. No incentives are paid to employees or executives where the performance rating reflects below an agreed expected level for the role employed. The non‑contractual discretionary annual performance related pay scheme may be disbursed as a cash payment through payroll, share based instruments including RSUs and / or options. An element of deferment to align the interests of the employee to the longer term performance of the Group may also be included. EAL’s Financial Advisors are salaried, and commission is calculated on a pre‑agreed percentage over target which is typically set at between 2 to 3 times annual gross salary depending on the size of the Financial Advisor’s client base and their historical performance. Each Financial Advisor is set objectives at the beginning of the year including a 100% pass in all compliance requirements. Where indemnified commission is paid and the underlying client policy lapses and the commission is clawed back then this is reviewed by an Executive Director in order to monitor trends and is then clawed back from the relevant Financial Advisor. Where the Group operates contractually guaranteed performance related pay, the contractual conditions must be approved by the REMCO. Executive Directors’ contractual terms In keeping with current recommended practice, the standard term for Executive Director appointments, which have a contractual notice period, is 6 months. Non-executive Directors’ remuneration Non‑executive Directors do not receive any benefits other than their fees and travelling expenses for which they are reimbursed. The level of fees payable to Non‑executive Directors is assessed using benchmarks from a group of comparable financial organisations. The procedure for determining Director remuneration The REMCO, comprising two Non‑executive Directors, is responsible for setting the remuneration of the Executive Directors. Committee members do not take part in discussions concerning their own remuneration. The basic Non‑executive Director fee is set by the Group Chair and CEO. The Chair of the Committee reports at the Board meeting following a committee meeting. Implementation report It is the view of the Committee that Directors’ remuneration awarded across the Group for the year has been in accordance with the Group’s stated Remuneration Policy and, on behalf of the Committee I recommend that you endorse this Group report. An analysis of Directors’ emoluments is as follows: Remuneration Committee Report continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 41 Directors’ emoluments Remuneration/ Fees £ Performance Related Pay £ Pension £ 2024 Total £ 2023 Total £ Executives Jim Mellon 55,300 - - 55,300 53,725 Denham Eke 66,360 - - 66,360 53,725 Douglas Grant 303,850 97,000 30,385 431,235 385,429 James Smeed 189,583 34,000 18,958 242,541 208,739 615,093 131,000 49,343 795,436 701,618 Non-executives Gregory Bailey 28,200 - - 28,200 27,000 Alan Clarke 60,817 - - 60,817 54,708 Gregory Jones 60,440 - - 60,440 46,667 John Spellman 94,125 - - 94,125 91,400 243,582 - - 243,582 219,775 Aggregate emoluments 858,675 131,000 49,343 1,039,018 921,393 1 Denham Eke’s remuneration is paid to Burnbrae Limited Approval This report was approved by the Board of Directors on 24 June 2025 and signed on its behalf by: Alan Clarke Chair of the Remuneration Committee 24 June 2025 Remuneration Committee Report continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 42 The Directors present their annual report and the audited financial statements for the year ended 31 December 2024. Principal regulated activities The principal activities of the Group are the provision of asset and personal finance, investing activities, foreign exchange brokerage services and wealth management. The Bank, a wholly owned subsidiary of the Company, holds an IOM Class 1(1) deposit taking licence and UK deposit taking licence. Deposits made with the Bank are covered by the Isle of Man Depositors’ Compensation Scheme contained in the Banking Business (Compensation of Depositors) Regulations 1991 and the UK FSCS. The Bank and CFL are authorised by the FCA to conduct brokerage services. EAL is authorised by the FSA under section 7 of the Financial Services Act 2008 to conduct investment business as a Class 2, sub‑classes (3), (6) and (7) licence holder. Results and dividends The Group profit before tax for the year was £9,932,000 (2023: £7,043,000). On 25 April 2024, MFG declared a dividend of £530,000 (2023: £433,000) which could either be taken up in cash or new ordinary shares. On 19 June 2024 1,013,821 new shares (2023: 418,993 new shares) were admitted to the Alternative Investment Market (“AIM”) at 19 pence per share (2023: 21.8974 pence per share), at a total cost of £193,000. Douglas Grant was issued with 29,775 scrip shares at a price of 19 pence per share for a total of £5,657. On 16 July 2024, Douglas Grant and James Smeed, exercised their options and were issued with 925,000 and 175,000 New Ordinary Shares of no par value respectively at nil cost. In addition, on 27 October 2024, Douglas Grant exercised his option and was issued with 150,000 New Ordinary Shares of no par value at nil cost. The proposed transfers to and from reserves are as set out in the Statement of Changes in Equity on page 59. Going Concern The Group has recognised a profit for the year after taxation of £8,548,000 (2023: £6,140,000). As at the year ended 31 December 2024, the Bank had a total capital ratio of 17.0% (2023: 15.9%) which exceeded the regulatory minimum requirement of 15.29% (2023: 15.29%). The Group has also considered its Internal Capital Adequacy Assessment Process (ICAAP) to assess its future capital and liquidity requirements. Based on these factors, management has a reasonable expectation that the Group has and will continue to have adequate resources to continue in operational existence for a period of at least 12 months from approval of the financial statements. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements. Share capital The authorised and issued share capital of the Company are set out in note 29 to the financial statements. Significant shareholdings The number of shares held and the percentage of the total issued capital which that number represented as of 19 June 2025 are: Number % of issued capital Lynchwood Nominees Limited1 23,316,734 19.48 Jim Mellon2 22,139,374 18.49 Gregory Bailey3 18,346,827 15.33 Island Farms Limited 6,960,000 5.81 Interactive Investor Services Nominees Limited 5,460,202 4.56 Rene Nominees (IOM) Limited 4,302,740 3.59 Rock (Nominees) Limited 4,059,975 3.59 Directors and Directors’ share interests The number of shares held by the current Directors is as follows: Number 19/06/2024 Number 31/12/24 Number 31/12/23 Jim Mellon2 22,139,374 22,139,374 21,748,214 Gregory Bailey 18,346,827 18,346,827 18,022,674 Douglas Grant 2,347,904 2,347,904 1,243,129 James Smeed 175,000 175,000 – Alan Clarke 57,335 55,335 55,994 1 Lynchwood Nominees Limited holds 17,039,623 Ordinary Shares in trust for Aeternitas Imperium Privatstiftung. 2 Burnbrae Limited holds 19,811,392 Ordinary Shares. Burnbrae Limited is 100% beneficially owned by Jim Mellon. Denham Eke, Executive Vice‑Chair of MFG is also a director of Burnbrae Limited. Vidacos Nominees Limited also holds 2,327,982 Ordinary Shares in trust for Jim Mellon. 3 Vidacos Nominees Limited holds 18,346,827, Ordinary Shares in trust for Gregory Bailey. Directors’ Report Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 43 The number of share options or RSUs held by the current Directors is as follows: Number 19/06/2025 Number 31/12/23 Douglas Grant 850,000 1,925,000 James Smeed 300,000 475,000 Directors’ liability insurance The Group maintains insurance cover for Directors’ potential liability. Fixed and intangible assets The movement in fixed and intangible assets during the year are set out in notes 22 and 23 respectively to the financial statements. Staff At 31 December 2024, there were 191 members of staff (2023: 193), of whom 9 were part‑time (2023: 16). Investment in subsidiaries Investments in the Company’s subsidiaries are disclosed in note 31 to the financial statements. Auditor KPMG Audit LLC, being eligible, has expressed its willingness to continue in office. On behalf of the Board J Mellon Executive Chair 24 June 2025 Directors’ Report continued Corporate Governance | Manx Financial Group PLC | Annual Financial Statements 2024 44 Financial Statements In this section 46 Statement of Directors’ Responsibilities 47 Independent Auditor’s Report 54 Consolidated Statement of Profit or Loss and Other Comprehensive Income 56 Company Statement of Profit or Loss and Other Comprehensive Income 57 Consolidated Statement of Financial Position 58 Company Statement of Financial Position 59 Consolidated and Company Statements of Changes in Equity 60 Consolidated Statement of Cash Flows 62 Company Statement of Cash Flows 63 Notes to the Consolidated and Company Financial Statements 45 Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under the AIM Rules of the London Stock Exchange, they are required to prepare the Group financial statements in accordance with UK-adopted international accounting standards and applicable law and they have elected to prepare the Parent Company financial statements on the same basis. 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 Parent Company and of the Group’s profit or loss for that period. In preparing each of the Group and Parent Company financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable, relevant and relevant and reliable; • state whether they have been prepared in accordance with UK-adopted international accounting standards; • assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and • use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations or have no realistic alternative but to do so. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Isle of Man Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report and a Directors’ Report that complies with that law and those regulations. 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. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 46 Independent Auditor’s Report, to the Members of Manx Financial Group plc Our opinion is unmodified We have audited the consolidated financial statements and company financial statements of Manx Financial Group PLC (the “Company”) and its subsidiaries (together, the “Group”), which comprise the consolidated and company statement of financial position as at 31 December 2024, the consolidated and company statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising material accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements and company financial statements: • give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2024 and of the Group’s and of the Company’s profit for the year then ended; • have been properly prepared in accordance with UK-adopted international accounting standards; and • have been properly prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company and Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Key audit matters: our assessment of the risks of material misstatement Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements and company financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the consolidated financial statements and company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We continue to perform procedures over the carrying value of goodwill. However, given the level of profitability of the subsidiary entities to which goodwill relates, we have not assessed the carrying value of goodwill as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our report this year. In arriving at our audit opinion above, the key audit matters were as follows: 47 Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 Key audit matter The risk Our response Impairment allowance in respect of loans and advances to customers - Wholesale Funding Loans and advances to customers - being Wholesale Funding arrangements, Block Discounting facilities and Vehicle Stocking plan agreements included in note 20 for loans and advances to customers. £66,410,000; (2023:£70,996,000) Impairment allowance £nil; (2023: £nil) Expense for the year £nil; (2023: £nil) Refer to page 34 of the Audit, Risk and Compliance Committee Report (“ARCC”), note 4 (Use of Judgements and Estimates - Assumptions and Estimation Uncertainties), note 7(A) (Credit Risk), note 13 (Impairment on Loans and Advances to Customers), note 20 (Loans and Advances to customers), note 43(B) (Financial Risk Management - Credit Risk) and note 45(I)(vi) (Accounting Policy for Impairment of Financial Instruments). Basis: The entity is required by the financial reporting framework to calculate impairment using the expected credit loss model. Impairment is measured on an instrument by instrument basis except where instruments are grouped, for impairment to be measured on a collective basis under the expected credit loss model. Wholesale Funding comprises Block Finance, Wholesale Funding Agreements and Vehicle Stocking Plans. These books comprise individually significant loan balances and are in the nature of a secured business loan. The security is principally an underlying pool of loans or other identifiable collateral. Loan impairment allowances reflect estimates of the amount and timing of future recoveries which require an assessment of matters such as future economic conditions and the value of collateral. Risk: Estimates, by their nature, give rise to a higher risk of material misstatement due to error or fraud. The effect of these matters is that, as part of our risk assessment, we determined that the impairment allowances has a high degree of estimation uncertainty, including increased uncertainty from the persistently volatile environment caused by inflation and interest rate pressure, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. Our audit procedures included: Internal Controls: Understood the design and implementation of controls in respect of the origination and monitoring of Wholesale Funding loans, including borrower due diligence. Understood the design and implementation of controls in respect of the Group’s loan impairment process such as the timely recognition of impairment allowances, the completeness and accuracy of reports used in the loan impairment process and review processes over the calculation of impairment allowances. Challenging managements’ assumptions and inputs: We tested whether management’s conclusion that no impairment allowances are required as appropriate. This included challenging the Group’s own assessment, taking account of such factors as: amount of arrears; compliance with covenant requirements, evaluating collateral, and evaluating the financial standing of the business – by inspecting latest available accounts. For a sample of wholesale funding arrangement exposures, we inspected the legal agreements and other relevant documentation to confirm the legal right to the collateral, as well as assessed the reasonableness of the value of collateral used in management’s assessment of expected credit losses. Assessing disclosures: We assessed the adequacy of the Group’s disclosures about the degree of estimation uncertainty involved at arriving at the impairment allowance in accordance with the relevant financial reporting framework and specific circumstances of the Group. Independent Auditor’s Report, to the Members of Manx Financial Group plc continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 48 Key audit matter The risk Our response Impairment of loans and advances to customers - individual Finance Agreements Loans and advances to customers - being loan facilities other for Wholesale Funding included in note 20 for loans and advances to customers. £305,948,000; (2023: £291,657,000) Impairment allowance £2,212,000; (2023: £19,615,000) Expense for the year £1,752,000; (2023: 4,135,000) Refer to page 35 of the ARCC Report, note 4 (Use of Judgements and Estimates - Assumptions and Estimation Uncertainties), note 7(A) (Credit Risk), note 13 (Impairment on Loans and Advances to Customers), note 20 (Loans and Advances to customers), note 43(B) (Financial Risk Management - Credit Risk) and note 45(I)(vi) (Accounting Policy for Impairment of Financial Instruments). Basis: The entity is required by the financial reporting framework to calculate impairment using the expected credit loss model. Impairment is measured on an instrument by instrument basis except where instruments are grouped, for impairment to be measured on a collective basis under the expected credit loss model. Individual Finance Agreements include hire purchase finance leases and unsecured loans to individuals and companies. Any security is typically the specific assets financed. Loan impairment allowances reflect estimates of the amount and timing of future recoveries which require an assessment of matters such as future economic conditions. Risk: Estimates, by their nature, give rise to a higher risk of material misstatement due to error or fraud. The effect of these matters is that, as part of our risk assessment, we determined that the impairment allowance has a high degree of estimation uncertainty, including increased uncertainty from the persistently volatile environment caused by higher interest rate pressure, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount. Our audit procedures included: Internal Controls: Understood the design and implementation of controls in respect of the origination and approval of loans, including borrower due diligence. Understood the design and implementation of controls in respect of the Group’s loan impairment process such as the timely recognition of impairment allowance, the completeness and accuracy of reports used in the loan impairment process and review processes over the calculation of collective and specific impairment allowances for credit impaired facilities. Assessed management’s process for determining forward looking factors and macroeconomic variables into the loan impairment process. Use of KPMG Specialists: We involved KPMG specialists to examine the methodology and assumptions of the Group’s expected credit loss model and its compliance with the requirements of accounting standards. This included examining the macro-economic variables and scenarios used in the determination of the expected credit loss allowance. Challenging’ assumptions and inputs: We agreed the specific impairment allowance for credit impaired facilities included in the financial statements to the Group’s allowance schedule and vouched that this schedule was correctly extracted from the loans and advances system, including the arrears information. We tested a sample of specific impairment allowances for credit impaired facilities. This included challenging the assessment of the specific impairment allowance, taking into account such factors as: the number of repayments in arrears; the known whereabouts of the borrower and of the assets under finance; and the amounts received under agreed repayment plans, where scheduled repayments under the original agreement are no longer being met. Independent Auditor’s Report, to the Members of Manx Financial Group plc continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 49 Key audit matter The risk Our response Where applicable, we inspected a sample of security documentation and evaluated the reasonableness of the value of the collateral to supporting documentation. Assessing observable inputs: We challenged the inputs used in collective impairment models by comparison to default and recovery experience across each of the loan finance categories, as well as challenging the macro-economic variables used in the determination of the expected credit loss allowance. Assessing disclosures: We assessed the adequacy of the Group’s disclosures about the degree of estimation uncertainty involved at arriving at the impairment allowance in accordance with the relevant financial reporting framework and specific circumstances of the Group. Recoverability of Parent Company’s subordinated loans to and investment in subsidiaries Investment in subsidiaries £31,097,000; (2022: £28,097,000) Loans and amounts due from Group undertakings £28,649,000; (2023: £24,922,000) Refer to page 35 of the ARCC report, note 35 (Loans and amounts due from group undertakings) and note 45(C) (v) (Separate Financial Statements of the Company). Basis: The carrying value of the Parent Company’s investment in subsidiaries and loans and amounts due from Group undertakings represents 95% (2023: 97%) of the Parent Company’s total assets. Risk: The assessment of carrying value is not at a high risk of significant misstatement or subject to significant judgement as the carrying value is supported by the audited net asset value of the subsidiaries. However, due to its materiality in the context of the Parent Company financial statements, this is considered to be the area that had the greatest effect on our overall Parent Company audit. Our audit procedures included: Test of detail: Assessed whether there were indicators of impairment which would mean that a formal impairment test is required. Compared the carrying amount of 100% of the Parent Company’s investments in subsidiaries and loans and amounts due from Group undertakings with the relevant subsidiaries’ and Group undertaking’s audited statement of financial position to identify whether their financial position supported the carrying amount of the Parent Company’s investments in those subsidiaries and loans and amounts due from Group undertakings. Assessed whether those subsidiaries and Group undertakings have historically been profit-making and evaluating budgeted forecasts in line with our knowledge of the respective subsidiaries and the current economic conditions in which those subsidiaries operate. Independent Auditor’s Report, to the Members of Manx Financial Group plc continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 50 Our application of materiality and an overview of the scope of our audit Materiality for the consolidated financial statements as a whole was set at £370,000 (2023: £351,000), determined with reference to a benchmark of group profit before tax of £7,411,000, of which it represents approximately 5% (2023: 5%). Materiality for the company financial statements as a whole was set at £98,000, determined with reference to the allocated group materiality as above, of which it represents approximately 26% of group materiality. In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the consolidated financial statements as a whole. Performance materiality for the group was set at 65% (2023: 75%) of materiality for the consolidated financial statements as a whole, which equates to £240,000 (2023: 263,000) for the Group and £74,000 for the Company. We applied this percentage in our determination of performance materiality because we identified factors indicating an elevated level of risk for the consolidated financial statements. We reported to the Audit, Risk and Compliance Committee any corrected or uncorrected identified misstatements exceeding £18,500 (2023: £17,500) for the Group and £4,900 for the Company, in addition to other identified misstatements that warranted reporting on qualitative grounds. Our audit of the Group was undertaken to the materiality level specified above, which has informed our identification of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above. An audit for group reporting purposes was performed by a component auditor at one reporting component in the United Kingdom, Ninkasi Rentals & Finance Limited (“NFRL”), which represents 1% (2023: 1%) of the Group’s assets. The group audit team performed the audit of the rest of the group, including the audit of the parent company. The component audit undertaken for group reporting purposes at the reporting component was performed to materiality levels set by the group audit team of £47,000 (2023: £45,000). Accordingly these group procedures covered 2.5% of total group revenue, and 1% of total group assets. Detailed audit instructions were sent to the auditor of NFRL. These instructions covered the significant audit areas that should be covered by the audit (which included the relevant risks of material misstatement detailed above) and set out the information required to be reported back to the group audit team. We also inspected the work performed by the component auditor for the purposes of the Group audit and evaluated the appropriateness of the conclusions drawn from the audit evidence obtained and consistency with communicated findings. Going concern The directors have prepared the consolidated financial statements and company financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group and the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of the consolidated financial statements and company financial statements (the “going concern period”). In our evaluation of the directors’ conclusions, we considered the inherent risks to the Group and the Company’s business model and analysed how those risks might affect the Group and the Company’s financial resources or ability to continue operations over the going concern period. The risks that we considered most likely to affect the Group and the Company’s financial resources or ability to continue operations over this period were: • the availability of capital to meet operating costs and other financial commitments; • the recoverability of financial assets subject to credit risks as a result of the financially volatile environment caused by higher interest rate pressures. We considered whether these risks could plausibly affect the liquidity in the going concern period by comparing severe, but plausible downside scenarios that could arise from these risks individually and collectively against the level of available financial resources indicated by the Company’s financial forecasts. We considered whether the going concern disclosure in the director’s report to the financial statements gives a full and accurate description of the directors’ assessment of going concern. Independent Auditor’s Report, to the Members of Manx Financial Group plc continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 51 Our conclusions based on this work: • we consider that the directors’ use of the going concern basis of accounting in the preparation of the consolidated financial statements and company financial statements is appropriate; • we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Company’s ability to continue as a going concern for the going concern period; and • we found the going concern disclosure in the notes to the consolidated financial statements to be acceptable. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group and the Company will continue in operation. Fraud and breaches of laws and regulations – ability to detect Identifying and responding to risks of material misstatement due to fraud To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included: • enquiring of management as to the Group’s policies and procedures to prevent and detect fraud as well as enquiring whether management have knowledge of any actual, suspected or alleged fraud; • reading minutes of meetings of those charged with governance; and • using analytical procedures to identify any unusual or unexpected relationships. As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because the Group’s revenue streams are simple in nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management. We did not identify any additional fraud risks. We performed procedures including • Identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to supporting documentation; and • incorporating an element of unpredictability in our audit procedures. Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations We identified areas of laws and regulations that could reasonably be expected to have a material effect on the consolidated financial statements and company financial statements from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the Group’s regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding compliance with laws and regulations. As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures for complying with regulatory requirements. The Group is subject to laws and regulations that directly affect the consolidated financial statements including financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. The Group is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the consolidated financial statements and company financial statements, for instance through the imposition of fines or litigation or impacts on the Group and the Company’s ability to operate. We identified financial services regulation as being the area most likely to have such an effect, recognising the regulated nature of the Group’s activities and its legal form. Auditing standards limit the required audit procedures to identify non- compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach. Context of the ability of the audit to detect fraud or breaches of law or regulation Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the consolidated financial statements and company financial statements , even Independent Auditor’s Report, to the Members of Manx Financial Group plc continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 52 though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the consolidated financial statements and company financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report but does not include the consolidated financial statements and company financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements and company financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements and company financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements and company financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. 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. Respective responsibilities Directors’ responsibilities As explained more fully in their statement set out on Page 40, the directors are responsible for: the preparation of the consolidated financial statements and company financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of consolidated financial statements and company financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and 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 they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and company financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements and company financial statements. A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/ auditorsresponsibilities. The purpose of this report and restrictions on its use by persons other than the Company’s members, as a body This report is made solely to the Company’s members, as a body, in accordance with section 80(C) 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. KPMG Audit LLC Chartered Accountants Heritage Court 41 Athol Street Douglas Isle of Man IM1 1LA 24 June 2025 Independent Auditor’s Report, to the Members of Manx Financial Group plc continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 53 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December Notes 2024 £000 2023 £000 Interest revenue calculated using the effective interest method 55,930 46,891 Interest expense (23,139) (14,530) Net interest income 9 32,791 32,361 Fee and commission income 10 3,923 3,997 Fee and commission expense 10 (7,181) (7,327) Net trading income 29,533 29,031 Other operating income 585 364 Gain on financial instruments 19 18 195 Realised gain on debt securities 18 4,266 1,893 Operating income 34,402 31,483 Personnel expenses 11 (12,495) (12,170) Other expenses 12 (9,053) (6,627) Provision for impairment on loans and advances to customers 13 (1,752) (4,135) Depreciation 22 (949) (825) Amortisation and impairment of intangibles 23 (340) (683) Share of profit of equity accounted investees, net of tax 30 119 - Profit before tax payable 14 9,932 7,043 Income tax expense 15 (1,384) (903) Profit for the year 8,548 6,140 The notes on pages 63 to 114 form part of these financial statements. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 54 Consolidated Statement of Profit or Loss and other Comprehensive Income continued For the year ended 31 December Notes 2024 £000 2023 £000 Profit for the year 8,548 6,140 Other comprehensive income: Items that will be reclassified to profit or loss Unrealised (loss)/gain on debt securities 18 (395) 324 Related tax 40 (32) Items that will never be reclassified to profit or loss Actuarial gain on defined benefit pension scheme taken to equity 28 67 29 Related tax (7) (3) Other comprehensive (loss)/gain, net of tax (295) 318 Total comprehensive income for the period attributable to owners 8,253 6,458 Profit attributable to: Owners of the Company 8,102 5,288 Non-controlling interests 32 446 852 8,548 6,140 Total comprehensive income attributable to: Owners of the Company 7,807 5,606 Non-controlling interests 32 446 852 8,253 6,458 Earnings per share – Profit for the year Basic earnings per share (pence) 16 6.87 4.59 Diluted earnings per share (pence) 16 5.39 3.51 Earnings per share – Total comprehensive income for the year Basic earnings per share (pence) 16 6.62 4.86 Diluted earnings per share (pence) 16 5.20 3.71 The notes on pages 63 to 114 form part of these financial statements. The Directors believe that all results derive from continuing activities. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 55 Company Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December Notes 2024 £000 2023 £000 Interest income calculated using the effective interest method 998 862 Interest expense (89) - Dividend income 450 1,200 Other income 700 584 Operating income 2,059 2,646 Personnel expenses 11 (40) (62) Administration expenses (74) (61) Depreciation expense 22 (128) (63) Amortisation expense 23 (2) (57) Profit before tax payable 1,815 2,403 Tax payable - - Profit for the year 1,815 2,403 Total comprehensive income for the year 1,815 2,403 The notes on pages 63 to 114 form part of these financial statements. The Directors believe that all results derive from continuing activities. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 56 Consolidated Statement of Financial Position As at 31 December Notes 2024 £000 2023 £000 Assets Cash and cash equivalents 17 16,199 12,107 Debt securities 18 79,140 76,129 Equity held at Fair Value Through Profit or Loss 33 154 138 Loans and advances to customers 20 372,358 362,653 Trade and other receivables 21 7,312 8,227 Property, plant and equipment 22 6,433 6,410 Intangible assets 23 5,301 4,268 Investment in associates 30 317 197 Goodwill 34 10,576 10,576 Total assets 497,790 480,705 Liabilities Deposits from customers 24 405,166 390,421 Creditors and accrued charges 25 9,679 14,409 Deferred consideration 26 - 20 Loan notes 27 45,292 39,317 Pension liability 28 46 162 Deferred tax liability 15 294 392 Total liabilities 460,477 444,721 Equity Called up share capital 29 19,626 19,384 Profit and loss account 17,632 15,544 Revaluation reserve 22 - 15 Non-controlling interest 32 55 1,041 Total equity 37,313 35,984 Total liabilities and equity 497,790 480,705 The financial statements were approved by the Board of Directors on 24 June 2025 and signed on its behalf by: Jim Mellon Denham Eke Douglas Grant Executive Chair Executive Vice-Chair Chief Executive Officer The notes on pages 63 to 114 form part of these financial statements. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 57 Company Statement of Financial Position As at 31 December Notes 2024 £000 2023 £000 Assets Cash and cash equivalents 17 718 373 Trade and other receivables 21 130 123 Amounts due from Group undertakings 35 14,421 10,694 Property, plant and equipment 22 87 139 Intangible assets 23 1,983 861 Investment in subsidiaries 31 31,097 28,097 Subordinated loans 35 14,228 14,228 Total assets 62,664 54,515 Liabilities Creditors and accrued charges 25 1,603 544 Amounts due to Group undertakings 35 – 608 Loan notes 27 45,292 39,317 Total liabilities 46,895 40,469 Equity Called up share capital 29 19,626 19,384 Profit and loss account (3,857) (5,338) Total equity 15,769 14,046 Total liabilities and equity 62,664 54,515 The notes on pages 63 to 114 form part of these financial statements. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 58 Consolidated and Company Statements of Changes in Equity Attributable to owners of the Company Group Share capital £000 Profit and loss account £000 Revaluation reserve £000 Total £000 Non- controlling interests £000 Total equity £000 Balance as at 1 January 2023 19,195 10,371 15 29,581 189 29,770 Profit for the year - 5,288 - 5,288 852 6,140 Other comprehensive income - 318 - 318 - 318 Transactions with owners Dividends declared (see note 29) - (342) - (342) - (433) Scrip dividend shares (see note 29) 91 (91) - – - 91 Share issue (see note 29) 98 - - 98 - 98 Balance as at 31 December 2023 19,384 15,544 15 34,943 1,041 35,984 Profit for the year - 8,102 - 8,102 446 8,548 Other comprehensive income - (295) - (295) - (295) Transactions with owners Dividend declared (see note 29) - (337) - (337) (1,817) (2,154) Scrip dividend shares (see note 29) 193 (193) - – - – Share options exercised (see note 29) 49 – – 49 – 49 Share-based payment expense (see notes 16 and 29) – 196 - 196 - 196 Revaluation loss – – (15) (15) - (15) Acquisition of NCI net without change of control – (5,385) - (5,385) 385 (5,000) Balance as at 31 December 2024 19,626 17,632 – 37,258 55 37,313 Company Share capital £000 Profit and loss account £000 Total equity £000 Balance as at 1 January 2023 19,195 (7,308) 11,887 Profit for the year - 2,403 2,403 Transactions with owners Issue of share issue (see note 29) 98 - 98 Dividends declared (see note 29) – (342) (342) Scrip dividend shares (see note 29) 91 (91) – Balance as at 31 December 2023 19,384 (5,338) 14,046 Profit for the year - 1,815 1,815 Transaction with owners Dividend declared (see note 29) - (337) (337) Scrip dividend shares (see note 29) 193 (193) – Share options exercised (see note 29) 49 - 49 Share-based payment expense (see notes 16 and 29) – 196 196 Balance as at 31 December 2024 19,626 (3,857) 15,769 The notes on pages 63 to 114 form part of these financial statements. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 59 Consolidated Statement of Cash Flows For the year ended 31 December Notes 2024 £000 2023 £000 Reconciliation of profit before taxation to operating cash flows Profit before tax 9,932 7,043 Adjustments for: Depreciation 22 949 825 Amortisation of intangibles 23 340 683 Impairment of loans and advances to customers 13 1,752 4,135 Net interest income (35,614) (34,726) Realised gains on debt securities (4,266) (1,893) Share of profit of Equity Accountant Investees (119) – Lease interest 132 93 Contingent consideration interest expense 6(ii) - 4 Pension charge included in personnel expenses 28 8 11 Gain on financial instruments 19 (18) (195) (26,904) (24,020) Changes in: Trade and other receivables 21 915 (4,016) Creditors and accrued charges 25 (5,432) 1,953 Net cash flow from trading activities (31,421) (26,083) Changes in: Loans and advances to customers 20 (13,691) (75,590) Deposits from customers 24 16,818 88,116 Pension contribution 28 (57) (57) Cash used in operating activities (28,351) (13,614) The notes on pages 63 to 114 form part of these financial statements. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 60 Consolidated Statement of Cash Flows continued For the year ended 31 December Notes 2024 £000 2023 £000 CASH FLOW STATEMENT Cash from operating activities Cash used in operating activities (28,351) (13,614) Interest received 58,164 47,168 Interest paid (22,389) (14,059) Income taxes paid (1,095) (1,337) Net cash from operating activities 6,329 18,158 Cash flows from investing activities Acquisition of property, plant and equipment, excluding right-of-use assets 22 (228) (1,280) Acquisition of intangible assets 23 (1,373) (2,248) Proceeds from sale of property, plant and equipment 22 - 759 Purchase of debt securities (860) (33,237) Deferred consideration on acquisition of subsidiary 6(ii),26 (20) (67) Net cash used in investing activities (2,481) (36,073) Cash flows from financing activities Receipt of loan notes 27 5,975 7,985 Acquisition of non-controlling interest 34 (5,000) - Payment of lease liabilities 37 (443) (349) Dividend paid 29 (337) (342) Proceeds from issue of share 29 49 98 Net cash from financing activities 244 7,392 Net increase / (decrease) in cash and cash equivalents 4,092 (10,523) Cash and cash equivalents at 1 January 12,107 22,630 Cash and cash equivalents at 31 December 16,199 12,107 The notes on pages 63 to 114 form part of these financial statements. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 61 Company Statement of Cash Flows For the year ended 31 December Notes 2024 £000 2023 £000 Reconciliation of profit before taxation to operating cash flows Profit before tax 1,815 2,403 Adjustments for: Depreciation 22 128 63 Amortisation 23 2 57 Interest income (998) (862) RSU expense taken to reserves 196 – Dividend income (450) (1,200) 693 461 Changes in: Amounts due from group undertakings 35 (3,727) (787) Trade and other receivables 21 (7) 439 Creditors and accrued charges 25 1,206 312 Amounts due to Group undertakings (608) 486 Cash (used in) /from operating activities (2,443) 911 CASH FLOW STATEMENT Cash from operating activities Cash (used in) / from operating activities (2,443) 911 Interest received 998 862 Dividends received 450 1,200 Net cash (used in) / from operating activities (995) 2,973 Cash flows from investing activities Acquisition of property, plant and equipment 22 (76) (1) Acquisition of intangible assets 23 (1,123) (893) Issue of subordinated loans - (6,500) Increase in investment in group undertakings (3,000) (4,500) Net cash used in investing activities (4,199) (11,894) Cash flows from financing activities Proceeds from issue of loan notes 27 5,975 7,985 Payment of finance lease liabilities 37 (148) (117) Proceeds from issue of shares 29 49 98 Dividend paid 29 (337) (433) Net cash from financing activities 5,539 7,533 Net increase / (decrease) in cash and cash equivalents 345 (1,388) Cash and cash equivalents at 1 January 373 1,761 Cash and cash equivalents at 31 December 718 373 The notes on pages 63 to 114 form part of these financial statements. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 62 Notes to the Consolidated and Company Financial Statements For the year ended 31 December 2024 1. Reporting entity Manx Financial Group PLC (“Company”) is a company incorporated in the Isle of Man. The Company’s registered office is at Clarendon House, Victoria Street, Douglas, Isle of Man, IM1 2LN. The consolidated financial statements of the Company for the year ended 31 December 2024 comprise the Company and its subsidiaries (“Group”) including Conister Bank Limited (the “Bank”). The Group is primarily involved in the provision of financial services. The Company’s financial statements are the separate financial statements of the Company. 2. Basis of accounting The consolidated and the separate financial statements of the Company have been prepared in accordance with international accounting standards in accordance with UK-adopted international accounting standards (“UK-adopted IFRS” or “IFRSs”), on a going concern basis as disclosed in the Directors’ Report. 3. Functional and presentation currency These financial statements are presented in pounds sterling, which is the Company’s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. All subsidiaries of the Group have pounds sterling as their functional currency. 4. Use of judgements and estimates The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. 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 and in any future periods affected. Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties at year-end that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes: • Note 45(G)(vi) and Note 7(A) – key assumptions of Expected Credit Loss (“ECL”) allowance for loans and advances to customers and assessment of impairment allowances where loans are in default or arrears. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 63 Notes to the Consolidated and Company Financial Statements continued 5. Financial instruments – Classification For description of how the Group classifies financial assets and liabilities, see note 45(G)(ii). The following table provides reconciliation between line items in the statement of financial position and categories of financial instruments. Group 31 December 2024 Designated as at FVTPL £000 FVOCI – debt instruments £000 Amortised cost £000 Total carrying amount £000 Cash and cash equivalents – – 16,199 16,199 Debt securities – 79,140 – 79,140 Equity held at Fair Value Through Profit or Loss 154 – – 154 Loans and advances to customers – – 372,358 372,358 Trade and other receivables – – 7,312 7,312 Total financial assets 154 79,140 395,869 475,163 Deposits from customers – – 405,166 405,166 Creditor and accrued charges – – 9,679 9,679 Loan notes – – 45,292 45,292 Total financial liabilities – – 460,137 460,137 Group 31 December 2023 Designated as at FVTPL £000 FVOCI – debt instruments £000 Amortised cost £000 Total carrying amount £000 Cash and cash equivalents – – 12,107 12,107 Debt securities – 76,129 – 76,129 Equity held at Fair Value Through Profit or Loss 138 – – 138 Loans and advances to customers – – 362,653 362,653 Trade and other receivables – – 8,227 8,227 Total financial assets 138 76,129 382,987 459,254 Deposits from customers – – 390,421 390,421 Creditor and accrued charges – – 14,409 14,409 Deferred consideration 20 – – 20 Loan notes – – 39,317 39,317 Total financial liabilities 20 – 444,147 444,167 At 31 December 2024 and 31 December 2023, all financial instruments were carried at amortised cost in the separate financial statements. Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 64 6. Financial instruments – Fair values For description of the Group’s fair value measurement accounting policy, see note 44(G)(v). The following table shows the carrying amounts and fair values of Group financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Carrying amount Fair value 31 December 2024 Total £000 Level 1 £000 Level 2 £000 Level 3 £000 Total £000 Financial assets measured at fair value Debt securities 79,140 – 79,140 – 79,140 Equity held at Fair Value Through Profit or Loss 154 – – 154 154 79,294 – 79,140 154 79,294 Carrying amount Fair value 31 December 2023 Total £000 Level 1 £000 Level 2 £000 Level 3 £000 Total £000 Financial assets measured at fair value Debt securities 76,129 – 76,129 – 76,129 Equity held at Fair Value Through Profit or Loss 138 – – 138 138 76,267 – 76,129 138 76,267 All Company financial assets and liabilities carrying amounts are reasonable approximation of fair value. Measurement of fair values i. Valuation techniques and significant unobservable inputs Type Valuation technique Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement Debt securities Market comparison / discounted cash flow: The fair value is estimated considering a net present value calculated using discount rates derived from quoted yields of securities with similar maturity and credit rating that are traded in active markets. Not applicable. Not applicable. Equities at Fair Value Through Profit or Loss Net asset value Expected net cash flows derived from the entity The estimated fair value would increase (decrease) if the expected cash flows were higher (lower). Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 65 ii. Level 3 recurring fair values Reconciliation of Level 3 fair values The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values. 2024 £000 2023 £000 Balance at 1 January 20 262 Finance costs 0 4 Net change in fair value (unrealised) – (179) 20 87 Payment (note 26) (20) (67) Balance at 31 December – 20 Sensitivity analysis For the fair value of contingent consideration, reasonably possible changes at the reporting date to one of the significant unobservable inputs, holding other inputs constant would have the following effects. Profit or loss 31 December 2024 Increase £000 Decrease £000 Expected cash flows (10.0% movement) – – Risk-adjusted discount rate (1.0% movement) – – Profit or loss 31 December 2023 Increase £000 Decrease £000 Expected cash flows (10.0% movement) 2 (2) Risk-adjusted discount rate (1.0% movement) – – Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 66 7. Financial risk review Risk management This note presents information about the Group’s exposure to financial risks and the Group’s management of capital. For information on the Group and Company’s financial risk management framework, see note 43. A. Group Credit risk For definition of credit risk and information on how credit risk is mitigated by the Group, see note 43. i. Credit quality analysis Loans and advances to customers Explanation of the terms ‘Stage 1’, ‘Stage 2’ and ‘Stage 3’ is included in note 44(G)(vi). An analysis of the credit risk on loans and advances to customers is as follows: 2024 2023 Group Stage 1 £000 Stage 2 £000 Stage 3 £000 Total £000 Stage 1 £000 Stage 2 £000 Stage 3 £000 Total £000 Grade A 327,561 3,968 – 331,529 341,953 – – 341,953 Grade B – 19,836 5,932 25,768 – 7,822 3,700 11,522 Grade C – 5 35,268 35,273 – 2 28,791 28,793 Gross value 327,561 23,809 41,200 392,570 341,953 7,824 32,491 382,268 Allowance for impairment (688) (36) (19,488) (20,212) (184) (6) (19,425) (19,615) Carrying value 326,873 23,773 21,712 372,358 341,769 7,818 13,066 362,653 Loans are graded A to C depending on the level of risk. Grade A relates to agreements with the lowest risk, Grade B with medium risk and Grade C relates to agreements with the highest of risk. The following table sets out information about the overdue status of loans and advances to customers in Stage 1, 2 and 3: 2024 2023 Group 31 December Stage 1 £000 Stage 2 £000 Stage 3 £000 Total £000 Stage 1 £000 Stage 2 £000 Stage 3 £000 Total £000 Current 314,542 – – 314,542 333,740 – – 333,740 Overdue < 30 days 13,019 – – 13,019 8,213 – – 8,213 Overdue > 30 days – 19,851 45,158 65,009 – 7,824 32,491 40,315 327,561 19,851 45,158 392,570 341,953 7,824 32,491 382,268 For Stage 3 loans and advances, the Bank holds collateral with a value of £11,982,000 (2023: £13,410,000) representing security cover of 66.0% (2023: 66.0%). Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 67 Debt securities, cash and cash equivalents The following table sets out the credit quality of liquid assets: Group 2024 £000 2023 £000 Government bonds and treasury bills Rated A to A+ 79,140 76,129 Cash and cash equivalents Rated A to A+ 16,199 12,107 Trade and other receivables Unrated 7,312 8,227 102,651 96,463 The analysis has been based on Standard & Poor’s ratings. The above debt securities, cash and cash equivalents are considered to be Stage 1 as there is no evidence of significant deterioration in credit quality and hence no material expected credit loss allowance is observed. ii. Collateral and other credit enhancements The Group holds collateral in the form of the underlying assets (typically private and commercial vehicles, plant and machinery) to loan arrangements as security for HP, finances leases, vehicle stocking plans, block discounting, wholesale funding arrangements, integrated wholesale funding arrangements and secured commercial loan balances, which are sub-categories of loans and advances to customers. In addition, the Group will take debentures, mortgages, personal and corporate guarantees, fixed and floating charges on specific assets such as cash and shares. The terms of enforcing such security can only occur on default, and when realised can only be used to settle the amount of debt and related collection fees. On occasion the Bank may realise a surplus if the defaulting party loses title to the underlying security as part of enforcement. In addition, the commission share schemes have an element of capital indemnified. As at 31 December 2024, 28.7% of loans and advances had an element of capital indemnification (2023: 13.0%). At the time of granting credit within the sub-categories listed above, the loan balances due are secured over the underlying assets held as collateral. At the time of granting credit within the sub-categories listed above, the loan balances due are secured over the underlying assets held as collateral (see note 20 for further details). Collateral is valued at the time of borrowing, and is not individually valued at each reporting date but fair value groups of similar collateral are considered as part of the impairment testing model. For portfolios where the Group has never had a default in its history or has robust credit enhancements such as credit insurance or default indemnities for the entire portfolio, then no IFRS 9 provision is made. At 2024 year-end, 31.0% had such credit enhancements (2023: 28.0%). Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 68 The following table sets out the principal types of collateral held against different types of financial assets. Group 2024 % 2023 % Principal type of collateral held HP balances 100 100 Property and equipment Finance lease balances 100 100 Property and equipment Unsecured personal loans – – None Vehicle stocking plans 100 100 Motor vehicles Wholesale funding arrangements 100 100 Floating charges over corporate assets Block discounting 100 100 Floating charges over corporate assets Secured commercial loans 100 100 Floating charges over corporate assets Secured personal loans 100 100 Property Government backed loans 70 – 100 70 – 100 Government guarantee Property secured 100 100 Property There have been no significant changes in the quality of collateral as a result of a deterioration or changes to the Group’s collateral policies during the reporting period. iii. Amounts arising from ECL Inputs, assumptions and techniques used for estimating impairment See accounting policy in note 45(G)(vi). Significant increase in credit risk When determining whether the risk of default on a financial instrument has increased significantly since initial recognition, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and expert credit assessment and including forward looking information. • A Significant Increase in Credit Risk (“SICR”) is always deemed to occur when the borrower is 30 days past due on its contractual payments. If the Group becomes aware ahead of this time of non-compliance or financial difficulties of the borrower, such as loss of employment, avoiding contact with the Group then a SICR has also deemed to occur. • A receivable is always deemed to be in default and credit-impaired when the borrower is 90 days past due on its contractual payments or earlier if the Group becomes aware of severe financial difficulties such as bankruptcy, individual voluntary arrangements, abscond or disappearance, fraudulent activity or other similar events. Credit risk grades The Group allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of default and applying experienced credit judgement. Credit risk grades are defined using qualitative and quantitative factors that are indicative of risk of default. These factors vary depending on the nature of the exposure and the type of borrower. Credit risk grades are defined and calibrated such that the risk of default occurring increases exponentially as the credit risk grade deteriorates. Loans are graded A to C depending on the level of risk. Grade A relates to agreements with the lowest risk, Grade B with medium risk and Grade C relates to agreements with the highest of risk. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 69 Each exposure is allocated to a credit risk grade on initial recognition based on available information about the borrower. Exposures are subject to ongoing monitoring, which may result in an exposure being moved to a different credit risk grade. The monitoring typically involves the use of the following data: Corporate exposures Retail exposures All exposures Information obtained during periodic review of customer files – e.g. audited financial statements, management accounts, budgets and projections. Examples of areas of particular focus are: gross profit margins, financial leverage ratios, debt service coverage, compliance with covenants Internally collected data on customer behaviour – e.g. repayment behaviour Payment record – this includes overdue status as well as a range of variables about payment ratios Data from credit reference agencies Affordability matrix Requests for and granting of forbearance External data from credit reference agencies, including industry-standard credit scores Existing forecast changes in business, financial and economic conditions Definition of default The Group considers a financial asset to be in default when: • the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); • the borrower is more than 90 days past due on any material credit obligation to the Group; or • it is becoming probable that the borrower will restructure the asset as a result of bankruptcy due to the borrower’s inability to pay its credit obligations. In assessing whether a borrower is in default, the Group considers indicators that are: • qualitative: e.g. breaches of covenant; • quantitative: e.g. overdue status and non-payment on another obligation of the same issuer to the Group; and • based on data developed internally and obtained from external sources. Inputs into the assessment of whether a financial instrument is in default and their significant may vary over time to reflect changes in circumstances. The definition of default largely aligns with that applied by the Group for regulatory capital purposes. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 70 Incorporation of forward-looking information The Group incorporates forward looking information into the measurement of ECL. The Group has identified and documented key drivers of credit risk and credit losses within its financial instruments and using an analysis of historical data, has estimated the relationship between macroeconomic variables and credit risk and credit losses. The key drivers for credit risk for corporate, retail and wholesale portfolios include gross domestic product (GDP) growth, unemployment rates and consumer price index (CPI) inflation. The Group estimates each key driver for credit risk over the active forecast period of three years. The table below lists the UK macroeconomic assumption used in the base scenarios over the three-year forecast period: 31 December 2024 2025 2026 2027 GDP growth rate 2.0 1.0 1.3 CPI inflation 4.2 2.4 1.8 Unemployment rate 4.8 4.9 4.9 31 December 2023 2024 2025 2026 GDP growth rate 0.5 1.0 1.3 CPI inflation 4.2 2.4 1.8 Unemployment rate 4.8 4.9 4.9 Predicted relationships between the key indicators and default and loss rates on various portfolios of financial assets have been developed based on analysing historical data over the past 8 years. iv. Concentration of credit risk Geographical Lending is restricted to individuals and entities with Isle of Man, UK or Channel Islands addresses. Segmental The Bank is exposed to credit risk with regard to customer loan accounts, comprising HP and finance lease balances, unsecured personal loans, secured commercial loans, block discounting, vehicle stocking plan loans and wholesale funding agreements. In addition, the Bank lends via significant introducers into the UK. There was one introducer that accounted for more than 14% of the Bank’s total lending portfolio at the end of 31 December 2024 (2023: 20.0%). Advances to a single counterparty is restricted to 25% of the Bank’s Large Exposure Capital Buffer (LECB) in line with FSA direction. B. Group Liquidity risk For the definition of liquidity risk and information on how liquidity risk is managed by the Group, see note 43. i. Exposure to liquidity risk The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers and short-term funding. The Group aims to maintain the ratio at no less than 13.7% compared to FSA requirement of not less than 10%. For this purpose, net liquid assets includes cash and cash equivalents and investment-grade debt securities for which there is an active and liquid market. Details of the reported Group ratio of net liquid assets to deposits from customers at the reporting date and during the reporting year were as follows: 2024 2023 At 31 December 24.0% 23.0% Average for the year 23.0% 19.0% Maximum for the year 27.0% 23.0% Minimum for the year 20.0% 15.0% Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 71 ii. Maturity analysis for financial liabilities and financial assets The table below shows the Group’s financial liabilities classified by their earliest possible contractual maturity, on an undiscounted basis including interest due at the end of the deposit term. Based on historical data, the Group’s expected actual cash flow from these items varies from this analysis due to the expected re-investment of maturing customer deposits. Residual contractual maturities of financial liabilities as at the reporting date (undiscounted): 31 December 2024 Sight- 8 days £000 >8 days - 1 month £000 >1 month - 3 months £000 >3 months - 6 months £000 >6 months - 1 year £000 >1 year - 3 years £000 >3 years - 5 years £000 >5 years £000 Total £000 Deposits 9,016 13,010 44,111 97,353 166,118 79,123 16,561 – 425,292 Other liabilities 71 204 8,073 4,246 13,657 24,402 9,719 340 60,712 Total liabilities 9,087 13,214 52,184 101,599 179,775 103,525 26,280 340 486,004 31 December 2023 Sight- 8 days £000 >8 days - 1 month £000 >1 month - 3 months £000 >3 months - 6 months £000 >6 months - 1 year £000 >1 year - 3 years £000 >3 years - 5 years £000 >5 years £000 Total £000 Deposits 17,261 13,767 29,718 77,801 122,719 125,205 24,076 – 410,547 Other liabilities 55 257 1,407 6,395 18,997 18,188 13,108 554 58,961 Total liabilities 17,316 14,024 31,125 84,196 141,716 143,393 37,184 554 469,508 The table below shows the carrying amount of the Group’s assets and liabilities by their expected maturities. Expected maturity of assets and liabilities at the reporting date: 31 December 2024 Sight- 8 days £000 >8 days - 1 month £000 >1 month - 3 months £000 >3 months - 6 months £000 >6 months - 1 year £000 >1 year - 3 years £000 >3 years - 5 years £000 >5 years £000 Total £000 Assets Cash 16,199 – – – – – – – 16,199 Debt securities 4,997 16,461 47,624 – 4,993 – 5,065 – 79,140 Loans and advances 21,559 35,642 45,541 48,415 57,042 125,667 37,316 1,176 372,358 Other assets 154 – – – 9,063 – 4,682 16,194 30,093 Total assets 42,909 52,103 93,165 48,415 71,098 125,667 47,063 17,370 497,790 Liabilities Deposits 8,639 11,993 41,477 93,949 161,428 72,352 15,328 – 405,166 Other liabilities – – 7,600 3,597 12,427 22,002 9,345 340 55,311 Total liabilities 8,639 11,993 49,077 97,546 173,855 94,354 24,673 340 460,477 31 December 2023 Sight- 8 days £000 >8 days - 1 month £000 >1 month - 3 months £000 >3 months - 6 months £000 >6 months - 1 year £000 >1 year - 3 years £000 >3 years - 5 years £000 >5 years £000 Total £000 Assets Cash 12,107 – – – – – – – 12,107 Debt securities 3,499 7,976 28,275 36,379 – – – – 76,129 Loans and advances 17,720 23,854 41,805 42,293 54,800 131,666 49,445 1,070 362,653 Other assets 180 – – – 9,580 – 5,057 14,999 29,816 Total assets 33,506 31,830 70,080 78,672 64,380 131,666 54,502 16,069 480,705 Liabilities Deposits 16,884 12,750 27,084 74,397 118,029 118,434 22,843 – 390,421 Other liabilities – 100 1,000 5,800 18,421 16,160 12,265 554 54,300 Total liabilities 16,884 12,850 28,084 80,197 136,450 134,594 35,108 554 444,721 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 72 Company All the Company’s assets (excluding Investment in subsidiaries, Property, plant and equipment, Intangible assets, Investment in subsidiaries and Subordinated loans) are due within one year. The Subordinated loans are due in more than five years. All the Company’s creditors (excluding Loan notes) are due within one year. The maturity profile £16 million of loan notes are due within one year, £27 million within 3 years and £2 million within five years. iii. Liquidity reserves The following table sets out the components of the Group’s liquidity reserves: 2024 Carrying amount £000 2024 Fair value £000 2023 Carrying amount £000 2023 Fair value £000 Balances with other banks 16,199 16,199 12,107 12,107 Unencumbered debt securities 79,140 79,140 76,129 76,129 Total liquidity reserves 95,339 95,339 88,236 88,236 C. Group Market risk For the definition of market risk and information on how the Group manages the market risks of trading and non‑trading portfolios, see note 43. The following table sets out the allocation of assets and liabilities subject to market risk between trading and non- trading portfolios: Market risk measure 31 December 2024 Carrying amount £000 Trading portfolios £000 Non-trading portfolios £000 Assets subject to market risk Debt securities 79,140 – 79,140 Equity held at Fair Value Through Profit or Loss 154 – 154 Total 79,294 79,294 Market risk measure 31 December 2023 Carrying amount £000 Trading portfolios £000 Non-trading portfolios £000 Assets subject to market risk Debt securities 76,129 – 76,129 Equity held at Fair Value Through Profit or Loss 138 – 138 Total 76,267 – 76,267 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 73 i. Exposure to interest rate risk The following tables present the interest rate mismatch position between assets and liabilities over the respective maturity dates. The maturity dates are presented on a worst-case basis, with assets being recorded at their latest maturity and deposits from customers at their earliest. 31 December 2024 Sight- 1 month £000 >1 month - 3 months £000 >3 months - 6 months £000 >6 months - 1 year £000 >1 year - 3 years £000 >3 years - 5 years £000 >5 years £000 Non- Interest Bearing £000 Total £000 Assets Cash & cash equivalents 16,199 – – – – – – – 16,199 Debt securities 21,458 47,624 – 4,993 – 5,065 – – 79,140 Loans and advances to customers 57,201 45,541 48,415 57,042 125,667 37,316 1,176 – 372,358 Other assets – – – – – – – 30,093 30,093 Total assets 94,858 93,165 48,415 62,035 125,667 42,381 1,176 30,093 497,790 Liabilities Deposits from customers 20,632 41,477 93,949 161,428 72,352 15,328 – – 405,166 Other liabilities – 7,600 3,597 4,540 22,002 9,345 46 8,181 55,311 Total liabilities 20,632 49,077 97,546 165,968 94,354 24,673 46 8,181 460,477 Interest rate sensitivity gap 74,226 44,088 (49,131) (103,933) 31,313 17,708 1,130 21,912 37,313 Cumulative 74,226 118,314 69,183 (34,750) (3,437) 14,271 15,401 37,313 31 December 2023 Sight- 1 month £000 >1 month - 3 months £000 >3 months - 6 months £000 >6 months - 1 year £000 >1 year - 3 years £000 >3 years - 5 years £000 >5 years £000 Non- Interest Bearing £000 Total £000 Assets Cash & cash equivalents 12,107 – – – – – – – 12,107 Debt securities 11,475 28,275 36,379 – – – – – 76,129 Loans and advances to customers 41,574 41,805 42,293 54,800 131,666 49,445 1,070 – 362,653 Other assets – – – – – – – 29,816 29,816 Total assets 65,156 70,080 78,672 54,800 131,666 49,445 1,070 29,816 480,705 Liabilities Deposits from customers 29,634 27,084 74,397 118,029 118,434 22,843 – – 390,421 Other liabilities 100 1,000 5,800 5,370 16,160 12,265 162 13,443 54,300 Total liabilities 29,734 28,084 80,197 123,399 134,594 35,108 162 13,443 444,721 Interest rate sensitivity gap 35,422 41,996 (1,525) (68,599) (2,928) 14,337 908 16,373 35,984 Cumulative 35,422 77,418 75,893 7,294 4,366 18,703 19,611 35,984 – Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 74 The Bank monitors the impact of changes in interest rates on interest rate mismatch positions using a method consistent with the FSA required reporting standard. The methodology applies weightings to the net interest rate sensitivity gap in order to quantify the impact of an adverse change in interest rates of 2% per annum (2023: 2.0%). The following tables set out the estimated total impact of such a change based on the mismatch at the reporting date: 31 December 2024 Sight- 1 month £000 >1 month - 3 months £000 >3 months - 6 months £000 >6 months - 1 year £000 >1 year - 3 years £000 >3 years - 5 years £000 >5 years £000 Non- Interest Bearing £000 Total £000 Interest rate sensitivity gap 74,226 44,088 (49,131) (103,933) 31,313 17,708 1,130 21,912 37,313 Weighting - 0.003 0.007 0.014 0.027 0.054 0.115 - - - 132 (344) (1,455) 845 956 130 - 264 31 December 2023 Sight- 1 month £000 >1 month - 3 months £000 >3 months - 6 months £000 >6 months - 1 year £000 >1 year - 3 years £000 >3 years - 5 years £000 >5 years £000 Non- Interest Bearing £000 Total £000 Interest rate sensitivity gap 35,422 41,996 (1,525) (68,599) (2,928) 14,337 908 16,373 35,984 Weighting 0.000 0.003 0.007 0.014 0.027 0.054 0.115 – – – 126 (11) (960) (79) 774 104 – (46) The interest rate profile of the Group’s interest-bearing financial instruments as reported to the management of the Group is as follows; 2024 £000 2023 £000 Fixed-rate instruments Financial assets 467,697 450,889 Financial liabilities 452,296 431,278 15,401 19,611 The Group does not account for any fixed-rate financial assets or liabilities at FVTPL. A change of 1% in interest rates would have increased or decreased equity by £306,000 (2023: £280,000). This analysis assumes that all other variables, in particular foreign currency rates, remain constant. D. Group Capital Management i. Regulatory capital MFG and its subsidiaries maintain sufficient capital stock to cover risks inherent in their principal operating activities. The lead regulator of the Group’s wholly owned subsidiary, the Bank, is the FSA. The FSA sets and monitors capital requirements for the Bank. The Bank maintains a capital base to meet the capital adequacy requirements of the FSA. There have been no changes to its approach to capital management from the prior year. The Bank’s regulatory capital consists of the following elements. • Common Equity Tier 1 (“CET1”) capital, which includes ordinary share capital, retained earnings and reserves after adjustment for deductions for goodwill, intangible assets and intercompany receivable. • Tier 2 capital, which includes collective impairment allowances up to the level set by the FSA, subordinated loan liabilities and gains on financial instruments carried at fair value. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 75 The Bank’s Tier 1 and Total Capital regulatory ratios stood at 12.50% (2023: 11.52%) and 17.00% (2023: 15.90%) respectively as at 31 December 2024. The Bank complied with all capital requirements externally imposed on it in the year with minimum Tier 1 and Overall Capital ratio of 8.73% (2023: 8.73%) and 15.29% (2023: 15.29%) respectively. The FSA’s approach to the measurement of capital adequacy is primarily based on monitoring the relationship of the capital resources requirement to available capital resources. The FSA sets individual capital guidance (“ICG”) for the Bank in excess of the minimum capital resources requirement. A key input to the ICG setting process is the Bank’s internal capital adequacy assessment process (“ICAAP”). The Bank is also regulated by the FCA in the UK for credit and brokerage related activities. Further details of the Bank’s management of capital are described in the Risk Management Report on page 15. ii. Capital allocation Management uses regulatory capital ratios to monitor its capital base. The allocation of capital between specific operations and activities is, to a large extent, driven by optimisation of the return achieved on the capital allocated. The amount of capital allocated to each operation or activity is based primarily on regulatory capital requirements. E. Company Financial Risk Review i. Credit risk The Company is exposed to credit risk primarily from deposits with banks and from its financing activities of Group entities. These balances include Trade and other receivables, Amounts due from Group undertakings, Investment in subsidiaries and Subordinated loans. Cash balances are held with institutions with a credit rating of A to A+. The Group’s primary credit exposure is to the Bank. The Investment in subsidiary and subordinated loan balance counterparties are disclosed in Notes 31 and 35 respectively. Amounts due from Group undertakings relate to balances advanced to the Group’s subsidiary (MVL) for the acquisition of other subsidiaries including PAL, BBSL, BLX and NRF. The Group manages its credit risk by ensuring that sufficient resources are allocated to credit management and capital allocation and using reputable financial institutions to hold its cash balances. ii. Liquidity risk The value and term of short-term assets are monitored against those of the Company’s liabilities. The Company maintains sufficient liquid assets to meet liabilities as they fall due either by retaining Interest income from the Subordinated loan, Dividend income from subsidiary companies or raising funds through the issue of Loan notes. Amounts due to / from Group undertakings are unsecured, interest-free and repayable on demand. The capital on subordinated loan notes is repayable to the Company in more than 5 years. £16.0m (2023:£12.3m) of loan notes are repayable within one year. iii. Market risk The Company does not have exposure to foreign exchange risk as transactions are made in, and balances held in Sterling. The Company has both interest-bearing assets and liabilities. In order to manage interest rate risk, the Companies Subordinated loans and Loan notes are charged exclusively at fixed rates. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 76 8. Operating segments Segmental information is presented in respect of the Group’s business segments. The Directors consider that the Group currently operates in one geographic segment comprising of the Isle of Man, UK and Channel Islands. The primary format, business segments, is based on the Group’s management and internal reporting structure. The Directors consider that the Group operates in three (2023: three) product orientated segments in addition to its investing activities: Asset and Personal Finance (including provision of HP contracts, finance leases, personal loans, commercial loans, block discounting, vehicle stocking plans and wholesale funding agreements); Edgewater Associates Limited (provision of financial advice); and MFX Limited (provision of foreign currency transaction services). For the year ended 31 December 2024 Asset and Personal Finance £000 Edgewater Associates £000 MFX Limited £000 Investing Activities £000 Total £000 Interest revenue calculated using the effective interest method 55,930 – – – 55,930 Interest expense (23,044) – – (95) (23,139) Net interest income 32,886 – – (95) 32,791 Components of Net Trading Income (6,341) 2,048 1,035 – (3,258) Net trading income 26,545 2,048 1,035 (95) 29,533 Components of Operating Income 4,818 11 5 35 4,869 Operating Income 31,363 2,059 1,040 (60) 34,402 Depreciation (715) (23) (1) (210) (949) Amortisation and impairment of intangibles (256) (78) (4) (2) (340) Share of profit of equity accounted investees, net of tax 119 – – – 119 All other expenses (20,586) (1,570) (1,020) (124) (23,300) Profit / (loss) before tax payable 9,925 388 15 (396) 9,932 Capital expenditure 401 1 – 1,199 1,601 Total assets 446,771 1,614 310 49,095 497,790 Total liabilities 428,540 377 9 31,551 460,477 For the year ended 31 December 2023 Asset and Personal Finance £000 Edgewater Associates £000 MFX Limited £000 Investing Activities £000 Total £000 Interest revenue calculated using the effective interest method 45,356 – – – 45,356 Other interest income 1,535 – – – 1,535 Interest expense (14,538) – – 8 (14,530) Net interest income 32,353 – – 8 32,361 Components of Net Trading Income (6,410) 2,032 1,048 – (3,330) Net trading income 25,943 2,032 1,048 8 29,031 Components of Operating Income 2,450 2 - - 2,452 Operating Income 28,393 2,034 1,048 8 31,483 Depreciation (739) (22) (1) (63) (825) Amortisation and impairment of intangibles (545) (76) (5) (57) (683) Share of profit of equity accounted investees, net of tax – – – – – All other expenses (20,294) (1,972) (364) (302) (22,932) Profit / (loss) before tax payable 6,815 (36) 678 (414) 7,043 Capital expenditure 2,627 6 – 895 3,528 Total assets 438,916 1,578 267 39,944 480,705 Total liabilities 418,794 279 10 25,638 444,721 All revenues are earned from the entity’s one geographic segment. All non-current assets are located in the entity’s one geographic segment. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 77 9. Net interest income 2024 £000 2023 £000 Interest income Loans and advances to customers 55,930 45,356 Total interest income calculated using the effective interest method 55,930 45,356 Operating lease income - 1,535 Total interest income 55,930 46,891 Interest expense Deposits from customers (20,184) (12,072) Loan note interest (2,823) (2,361) Lease liability (132) (93) Contingent consideration: interest expense – (4) Total interest expense (23,139) (14,530) Net interest income 32,791 32,361 10. Net fee and commission income In the following table, fee and commission income from contracts with customers in the scope of IFRS 15 – Revenue from Contracts with Customers is disaggregated by major type of services. The table includes a reconciliation of the disaggregated fee and commission income with the Group’s reportable segments. See note 45D regarding revenue recognition. 2024 £000 2023 £000 Major service lines Independent financial advice income 2,048 2,032 Foreign exchange trading income 1,035 1,049 Asset and personal finance: Brokerage services income 267 421 Debt collection 573 495 Fee and commission income 3,923 3,997 Fee and commission expense (7,181) (7,327) Net fee and commission income (3,258) (3,330) Fee and commission expense relates to commission paid to Brokerages which introduce new business to the Bank. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 78 11. Personnel expenses Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Staff gross salaries (9,309) (9,060) – – Executive Directors’ remuneration (615) (569) – – Non-executive Directors’ fees (244) (259) (40) (62) Executive Directors’ pensions (49) (45) – – Executive Directors’ performance related pay (131) (99) – – Staff pension costs (545) (537) – – National insurance and payroll taxes (1,050) (1,134) – – Staff training and recruitment costs (300) (354) – – Equity Settled Restricted Stock Units – key management personnel (206) (67) – – Equity Settled Restricted Stock Units – employees (46) (46) – – (12,495) (12,170) (40) (62) The Company’s personnel expenses consist exclusively of Directors remuneration and fees for services rendered to the Company. 12. Other expenses 2024 £000 2023 £000 Professional and legal fees (2,478) (1,586) Marketing costs (429) (452) IT costs (1,987) (1,534) Establishment costs (655) (635) Communication costs (326) (177) Travel costs (283) (319) Bank charges (1,394) (936) Insurance (321) (338) Irrecoverable VAT (492) (383) Other costs (688) (267) (9,053) (6,627) 13. Impairment on loans and advances to customers The charge in respect of allowances for impairment comprises, excluding loss allowances on financial assets managed on a collective basis. 2024 £000 2023 £000 Impairment allowances made (4,076) (6,998) Release of allowances previously made 3,771 2,837 (305) (4,161) Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 79 The credit in respect of allowances for impairment on financial assets managed on a collective basis comprises: 2024 £000 2023 £000 Collective impairment allowances made (1,475) (656) Release of allowances previously made 28 682 Total charge for allowances for impairment on financial assets managed on a collective basis (1,447) 26 Total charge for allowances for impairment (1,752) (4,135) 14. Profit before tax payable The profit before tax payable for the year is stated after charging: Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Fees payable to the Company’s auditor for the audit of the Group’s financial statements (92) (85) 59 (58) Other fees payable to the Company’s auditor: – (4) – – Audit of the Company’s subsidiary undertakings (280) (221) – – Other assurance service fees (7) (10) – – Other services – tax compliance (4) (4) – – Pension cost defined benefit scheme (8) (11) – – Expenses relating to short-term leases and low value assets (92) (81) – – 15. Income tax expense Group 2024 £000 2023 £000 Current tax expense (1,482) Current year (899) (1,482) (899) Deferred tax expense Origination and reversal of temporary differences 98 (4) Tax expense (1,384) (903) Group % 2024 £000 % 2023 £000 Reconciliation of effective tax rate Profit before tax 9,932 7,043 Tax using the Bank’s domestic tax rate (10.0) (993) (10.0) (704) Effect of tax rates in foreign jurisdictions (7.1) (702) (5.9) (416) Origination and reversal of temporary differences in deferred tax 1.0 98 3.1 217 Tax exempt income 2.2 213 – – Non-deductible expenses – – – – Tax expense (13.9) (1,384) (12.8) (903) The main rate of corporation tax in the Isle of Man is 0.0% (2023: 0.0%). However, the profits of the Group’s Isle of Man banking activities are taxed at 10.0% (2023: 10.0%). The profits of the Group’s subsidiaries that are subject to UK corporation tax are taxed at a rate of 25% (2023: 25.0%). The Company is subject to 0.0% tax. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 80 The value of tax losses carried forward reduced to nil and there is now a temporary difference related to accelerated capital allowances resulting in a £294,000 liability (2023: £392,000 liability). This resulted in a reversal of an expense of £98,000 (2023: £4,000 expense) to the Consolidated Income Statement. 16. Earnings per share 2024 2023 Profit for the year attributable to owners of the Company £8,101,700 £5,288,000 Weighted average number of Ordinary Shares in issue (basic) 117,923,558 115,330,589 Basic earnings per share (pence) 6.87 4.59 Diluted earnings per share (pence) 5.39 3.51 Total comprehensive income for the year attributable to owners of the Company £7,807,000 £5,606,000 Weighted average number of Ordinary Shares in issue (basic) 117,923,558 115,330,589 Basic earnings per share (pence) 6.62 4.86 Diluted earnings per share (pence) 5.20 3.71 The basic earnings per share calculation is based upon the profit for the year after taxation and the weighted average of the number of shares in issue throughout the year. As at: 2024 2023 Reconciliation of weighted average number of Ordinary Shares in issue between basic and diluted Weighted average number of Ordinary Shares (basic) 117,923,558 115,330,589 Number of shares issued if all convertible loan notes were exchanged for equity 35,138,889 37,916,667 Dilutive element of share options if exercised 399,352 2,460,929 Weighted average number of Ordinary Shares (diluted) 153,461,799 155,708,185 Reconciliation of profit for the year between basic and diluted Profit for the year (basic) £8,101,700 £5,288,000 Interest expense saved if all convertible loan notes were exchanged for equity £171,415 £171,415 Profit for the year (diluted) £8,273,115 £5,459,415 The diluted earnings per share calculation assumes that all convertible loan notes and share options have been converted / exercised at the beginning of the year where they are dilutive. As at: 2024 2023 Reconciliation of total comprehensive income for the year between basic and diluted Total comprehensive income for the year (basic) £7,807,000 £5,606,000 Interest expense saved if all convertible loan notes were exchanged for equity £171,415 £171,415 Total comprehensive income for the year (diluted) £7,978,415 £5,777,415 The weighted average number of ordinary shares and earnings per share have been adjusted retrospectively. 17. Cash and cash equivalents Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Cash at bank and in hand 16,199 12,107 718 373 Fixed deposit (less than 90 days) – – – – 16,199 12,107 718 373 Cash at bank includes an amount of £nil (2023: £1,653,000) representing receipts which are in the course of transmission. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 81 18. Debt securities Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Financial assets at fair value through other comprehensive income: UK Government treasury bills 79,140 76,129 – – 79,140 76,129 – – UK Government Treasury Bills are stated at fair value and unrealised changes in the fair value are reflected in other comprehensive income. There were realised gains of £4,266,000 (2023: £1,893,000) and unrealised loss of £395,000 (2023: £324,000 unrealised gain) during the year. 19. Financial assets Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Financial assets at FVOCI: Gain on deferred consideration (See note 6(ii)) – 179 – – Gain on equity instrument 18 16 – – 18 195 – – 20. Loans and advances to customers 2024 2023 Group Gross Amount £000 Impairment Allowance £000 Carrying Value £000 Gross Amount £000 Impairment Allowance £000 Carrying Value £000 HP balances 115,403 (4,503) 110,900 119,533 (4,143) 115,390 Finance lease balances 23,163 (3,033) 20,130 24,878 (3,050) 21,828 Unsecured personal loans 119,209 (10,936) 108,273 88,647 (10,833) 77,814 Vehicle stocking plans 1,714 – 1,714 1,973 – 1,973 Wholesale funding arrangements 23,851 – 23,851 21,503 – 21,503 Block discounting 40,845 – 40,845 47,520 – 47,520 Secured commercial loans 30,940 (575) 30,365 25,788 (516) 25,272 Secured personal loans 901 – 901 1,075 – 1,075 Government backed loans 25,760 (1,165) 24,595 41,283 (1,073) 40,210 Property secured 10,784 - 10,784 10,068 – 10,068 392,570 (20,212) 372,358 382,268 (19,615) 362,653 Collateral is held in the form of underlying assets for HP, finance leases, vehicles stocking plans, block discounting, secured commercial and personal loans and wholesale funding arrangements. Allowance for impairment 2024 £000 2023 £000 Balance at 1 January 19,426 15,962 Allowance for impairment made 4,076 6,998 Release of allowances previously made (3,771) (2,837) Write-offs (1,155) (697) Balance at 31 December 18,576 19,426 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 82 Collective allowance for impairment 2024 £000 2023 £000 Balance at 1 January 189 215 Collective allowance for impairment made 1,475 656 Release of allowances previously made (28) (682) Balance at 31 December 1,636 189 Total allowances for impairment 20,212 19,615 The following table provides an explanation of how significant changes in the gross carrying amount of financial instruments during the period contributed to changes in loss allowance: 2024 £000 2023 £000 Loans and advances to customers Unsecured personal loans originated during the period 5,138 5,551 The contractual amount outstanding on financial assets that were written off during the reporting period and are still subject to enforcement activity are £nil (2023: £nil). Advances on preferential terms are available to all Directors, management and staff. As at 31 December 2024 £2,211,000 (2023: £1,699,794) had been lent on this basis. In the Group’s ordinary course of business, advances may be made to Shareholders, but all such advances are made on normal commercial terms (see note 36). At the end of the current financial year 12 loan exposures (2023: 8) exceeded 10.0% of the capital base of the Bank: Exposure Outstanding Balance 2024 £000 Outstanding Balance 2023 £000 Facility Limit 2024 £000 Facility Limit 2023 £000 Block discounting facility 40,845 47,520 83,700 78,088 Wholesale funding agreement 23,851 21,503 26,330 26,005 HP and finance lease receivables Loans and advances to customers include the following HP and finance lease receivables: 2024 £000 2023 £000 Less than one year 84,500 72,372 Between one and five years 67,875 72,039 Gross investment in HP and finance lease receivables 152,375 144,411 The investment in HP and finance lease receivables net of unearned income comprises: 2024 £000 2023 £000 Less than one year 77,007 68,767 Between one and five years 61,559 68,451 Net investment in HP and finance lease receivables 138,566 137,218 21. Trade and other receivables Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Other debtors 6,649 7,730 1 – Prepayments 663 497 129 123 7,312 8,227 130 123 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 83 22. Property, plant and equipment and right-of-use assets Group Buildings and Leasehold Improvements £000 IT Equipment £000 Furniture and Equipment £000 Motor Vehicles1 £000 Right-of-use assets £000 Total £000 Cost As at 1 January 2024 838 730 5,893 217 1,960 9,638 Revaluation (30) - - - - (30) Recognition of Right-of-use asset - - - - 836 836 Additions – 8 181 39 - 228 Disposals (393) (679) (1,158) (58) (136) (2,424) Reclassification - 390 (390) – – - As at 31 December 2024 415 449 4,526 198 2,660 8,248 Accumulated depreciation As at 1 January 2024 483 553 1,489 96 607 3,228 Charge for year 38 466 60 9 376 949 Disposals (393) (679) (1,158) (58) (74) (2,362) As at 31 December 2024 128 340 391 47 909 1,815 Carrying value at 31 December 2024 287 109 4,135 151 1,751 6,433 Carrying value at 31 December 2023 355 177 4,404 121 1,353 6,410 1 Included in motor vehicles are operating leases with the Group as lessor. Depreciation on leasing assets was £nil (2023: £nil). Buildings with an original cost of £144,000 were revalued by independent valuers Vospers Limited to £175,000 on the basis of market value as at 15 September 2021. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm’s length terms for similar properties. During the year ended 31 December 2024, an offer to buy the building at £140,000 was received hence a revaluation loss of £35,000 has been recorded of which £15,000 has been offset against existing reserves and £20,000 included in administration expenses. Company Leasehold Improvements £000 IT Equipment £000 Furniture and Equipment £000 Right-of-use assets £000 Total £000 Cost As at 1 January 2024 234 21 18 424 697 Additions – – – 76 76 As at 31 December 2024 234 21 18 500 773 Accumulated depreciation As at 1 January 2024 234 7 13 304 558 Charge for year – – 1 127 128 As at 31 December 2024 234 7 14 431 686 Carrying value at 31 December 2024 – 14 4 69 87 Carrying value at 31 December 2023 – 14 5 120 139 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 84 23. Intangible assets Group Customer Contracts £000 Intellectual Property Rights £000 IT Software and Website Development £000 Total £000 Cost As at 1 January 2024 2,937 2,002 4,033 8,972 Additions - 72 1,301 1,373 As at 31 December 2024 2,937 2,074 5,334 10,345 Accumulated amortisation As at 1 January 2024 1,375 741 2,588 4,704 Charge for year 95 132 113 340 As at 31 December 2024 1,470 873 2,701 5,044 Carrying value at 31 December 2024 1,467 1,201 2,635 5,301 Carrying value at 31 December 2023 1,562 1,261 1,445 4,268 Company IT Software and Website Development £000 Total £000 Cost As at 1 January 2024 925 925 Additions 1,123 1,123 As at 31 December 2024 2,048 2,048 Accumulated amortisation As at 1 January 2024 63 63 Charge for year 2 2 As at 31 December 2024 65 65 Carrying value at 31 December 2024 1,983 1,983 Carrying value at 31 December 2023 862 862 24. Deposits from customers 2024 £000 2023 £000 Retail customers: term deposits 386,526 377,899 Corporate customers: term deposits 18,640 12,522 405,166 390,421 25. Creditors and accrued charges Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Other creditors and accruals 7,032 12,623 1,541 453 Commission creditors 333 174 – – Lease liability 1,792 1,358 62 91 Taxation creditors 522 254 – – 9,679 14,409 1,603 544 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 85 26. Deferred consideration Deferred consideration relates to contingent payments due to the sellers on the acquisition of BBSL and BLX respectively. On the acquisition of BLX on 11 October 2021, the Group agreed that a further conditional consideration of up to £483,663 is payable to the sellers in addition to the cash consideration paid. The total amount payable is contingent on the recovery of certain loans and advances found to be in default at acquisition. The fair value on acquisition date was determined to be £387,000. The Group made a payment of £20,000 (2023: £67,000) to the sellers during the period. The contingency period has ended and there are no additional payments due as at 31 December 2024. 2024 £000 2023 £000 BLX – 20 – 20 27. Loan notes Group Company Notes 2024 £000 2023 £000 2024 £000 2023 £000 Related parties J Mellon JM 1,750 1,750 1,750 1,750 Burnbrae Limited BL 3,200 3,200 3,200 3,200 Culminant Reinsurance Ltd CR 1,000 1,000 1,000 1,000 John Spellman JS 400 – 400 – Ian Morley IM 250 – 250 – Alan Clarke AC 100 – 100 – 6,700 5,950 6,700 5,950 Unrelated parties UP 38,592 33,367 38,592 33,367 45,292 39,317 45,292 39,317 JM - Two loans, one loan of £1,250,000 maturing on 26 February 2025 with interest payable of 5.4% per annum, convertible to ordinary shares of the Company at a rate of 9.0 pence, one of £500,000 maturing on 31 July 2027, paying interest of 7.5% per annum and convertible to ordinary shares of the Company at a rate of 8.0 pence. The above loan with initial maturity of 26 February 2025 has been renewed with interest payable of 7.5% and a new maturity date of 26 February 2030. BL - Three loans, one of £1,200,000 maturing on 31 July 2027, paying interest of 7.5% per annum, convertible to ordinary shares of the Company at a rate of 8.0 pence, one of £1,000,000 maturing 25 February 2025, paying interest of 5.4% per annum, and one of £1,000,000 maturing 28 September 2025 paying interest of 6.0% per annum. Jim Mellon is the beneficial owner of BL and Denham Eke is also a director. The above loan with initial maturity of 25 February 2025 has been renewed with interest payable of 7.5% and a new maturity date of 25 February 2030. CR - One loan consisting of £1,000,000 maturing on 12 October 2025, paying interest of 6.0% per annum. Greg Bailey, a director, is the beneficial owner of CR. JS - One loan consisting of £400,000 maturing on 3 May 2029, paying interest of 8.5% per annum. IM - One loan consisting of £250,000 maturing on 3 June 2026, paying interest of 8.0% per annum. AC - Two loans consisting of £100,000 maturing on 6 May 2025, paying interest of 7.75% per annum. UP – Fifty-four loans (2023: Forty), the earliest maturity date was 3 February 2025, and the latest maturity is 23 August 2029. The average interest payable is 6.71% (2023: 5.87%) With respect to the convertible loans, the interest rate applied was deemed by the Directors to be equivalent to the market rate at the time with no conversion option. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 86 28. Pension liability The Conister Trust Pension and Life Assurance Scheme (“Scheme”) operated by the Bank is a funded defined benefit arrangement which provides retirement benefits based on final pensionable salary. The Scheme is closed to new entrants and the last active member of the Scheme left pensionable service in 2011. The Scheme is approved in the Isle of Man by the Assessor of Income Tax under the Income Tax (Retirement Benefit Schemes) Act 1978 and must comply with the relevant legislation. In addition, it is registered as an authorised scheme with the FSA in the Isle of Man under the Retirement Benefits Scheme Act 2000. The Scheme is subject to regulation by the FSA but there is no minimum funding regime in the Isle of Man. The Scheme is governed by two corporate trustees, Conister Bank Limited and Boal & Co (Pensions) Limited. The trustees are responsible for the Scheme’s investment policy and for the exercise of discretionary powers in respect of the Scheme’s benefits. Exposure to risk The Company is exposed to the risk that additional contributions will be required in order to fund the Scheme as a result of poor experience. Some of the key factors that could lead to shortfalls are: • investment performance – the return achieved on the Scheme’s assets may be lower than expected; and • mortality – members could live longer than foreseen. This would mean that benefits are paid for longer than expected, increasing the value of the related liabilities. In order to assess the sensitivity of the Scheme’s pension liability to these risks, sensitivity analysis have been carried out. Each sensitivity analysis is based on changing one of the assumptions used in the calculations, with no change in the other assumptions. The same method has been applied as was used to calculate the original pension liability and the results are presented in comparison to that liability. It should be noted that in practice it is unlikely that one assumption will change without a movement in the other assumptions; there may also be some correlation between some of these assumptions. It should also be noted that the value placed on the liabilities does not change on a straight-line basis when one of the assumptions is changed. For example, a 2.0% change in an assumption will not necessarily produce twice the effect on the liabilities of a 1.0% change. Exposure to risk No changes have been made to the method or to the assumptions stress-tested for these sensitivity analyses compared to the previous period. The investment strategy of the Scheme has been set with regard to the liability profile of the Scheme. However, there are no explicit asset-liability matching strategies in place. Restriction of assets No adjustments have been made to the statement of financial position items as a result of the requirements of IFRIC 14 – IAS 19: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, issued by IASB’s International Financial Reporting Interpretations Committee. Scheme amendments There have not been any past service costs or settlements in the financial year ending 31 December 2024 (2023: none). Funding policy The funding method employed to calculate the value of previously accrued benefits is the Projected Unit Method. Following the cessation of accrual of benefits when the last active member left service in 2011, regular future service contributions to the Scheme are no longer required. However, additional contributions will still be required to cover any shortfalls that might arise following each funding valuation. The most recent triennial full actuarial valuation was carried out at 31 March 2022, which showed that the market value of the Scheme’s assets was £1,432,000 representing 65.2% of the benefits that had accrued to members, after allowing for expected future increases in earnings. As required by IAS 19: Employee Benefits, this valuation has been updated by the actuary as at 31 December 2024. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 87 The amounts recognised in the Consolidated Statement of Financial Position are as follows: Total underfunding in funded plans recognised as a liability 2024 £000 2023 £000 Fair value of plan assets 1,361 1,359 Present value of funded obligations (1,407) (1,521) (46) (162) Movement in the liability for defined benefit obligations 2024 £000 2023 £000 Opening defined benefit obligations at 1 January 1,521 1,526 Benefits paid by the plan (80) (77) Interest on obligations 71 74 Actuarial gain (105) (2) Liability for defined benefit obligations at 31 December 1,407 1,521 Movement in plan assets 2024 £000 2023 £000 Opening fair value of plan assets at 1 January 1,359 1,289 Interest on plan assets 63 63 Contribution by employer 57 57 Return on plan assets (38) 27 Benefits paid (80) (77) Closing fair value of plan assets at 31 December 1,361 1,359 Expense recognised in income statement 2024 £000 2023 £000 Net interest cost recognised in the statement of profit and loss 8 11 Actuarial gain / (loss) recognised in other comprehensive income 2024 £000 2023 £000 Return on plan assets (38) 27 Actuarial gain on defined benefit obligations 105 2 67 29 Plan assets consist of the following 2024 % 2023 % Equity securities 44 45 Corporate bonds 18 20 Government bonds 27 28 Cash 6 2 Other 5 5 100 100 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 88 The actuarial assumptions used to calculate Scheme liabilities under IAS19 are as follows: 2024 % 2023 % Rate of increase in pension in payment: Service from 6 April 1997 to 13 September 2005 3.1 3.1 Service from 14 September 2005 2.1 2.1 Rate of increase in deferred pensions 5.0 5.0 Discount rate applied to scheme liabilities 5.7 5.0 Inflation 5.0 3.2 Life expectancy 2024 2023 Current pensioner aged 65 (male) 21.2 21.3 Current pensioner aged 65 (female) 23.8 23.8 Future pensioner aged 65 in 10 years (male) 21.7 21.8 Future pensioner aged 65 in 10 years (female) 24.5 24.5 The assumptions used by the actuary are best estimates chosen from a range of possible assumptions, which due to the timescale covered, may not necessarily be borne out in practice. Sensitivity analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below. 2024 2023 Effect in £’000 Increase Decrease Increase Decrease Discount rate (0.5% movement) (70) 77 (76) 84 Inflation rate (0.5% movement) 18 (17) 20 (18) Life expectancy (1 year movement) 53 (53) 58 (58) 29. Called up share capital Ordinary shares of no par value available for issue Number At 31 December 2024 233,388,000 At 31 December 2023 200,200,000 Issued and fully paid: Ordinary shares of no par value Number £000 At 31 December 2024 119,715,757 19,626 At 31 December 2023 116,191,936 19,384 A. Analysis of changes in financing during the year Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Balance at 1 January 60,059 52,141 58,792 50,735 Issue of loan notes 5,975 7,985 5,975 7,985 Issue of shares via scrip dividend 193 91 193 91 Issue of shares 49 98 49 98 Payment of lease liabilities (433) (256) (148) (117) Balance at 31 December 65,843 60,059 64,861 58,792 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 89 The 2024 Group closing balance is represented by £19,626,000 share capital (2023: £19,384,000), £42,292,000 of loan notes (2023: £39,317,000) and £1,085,000 lease liability (2023: £1,358,000). The 2024 Company closing balance is represented by £19,626,000 share capital (2023: £19,384,000), £42,292,000 of loan notes (2023: £39,317,000) and £62,000 lease liability (2023: £91,000). B. Dividends On 25 April 2024, MFG declared a dividend of £530,000 (2023: £433,000) which could either be taken up in cash or new ordinary shares. 1,013,821 new shares (2023: 418,993 new shares) were admitted to the Alternative Investment Market (“AIM”) at 19 pence per share (2023: 21.8974 pence per share), at a total cost of £193,000 (2023: £91,000). C. Convertible loans There are three convertible loans totalling £2,950,000 (2023: £2,950,000) (refer to note 27). D. Share options and Restricted Stock Units On 5 July 2022, 27 October 2022 29 November 2023 and 16 December 2024 MFG granted Restricted Stock Units (“RSUs”) under its 2022 RSU Plan. The Group has issued, in total, RSUs over 4,887,500 ordinary shares representing 4.08% of the issued share capital of the Group, including 2,400,000 to certain directors and 2,487,500 to certain employees. The RSUs issued before 2024 have a 2-year term while those issued in 2024 will have a 3-year term and are subject to certain vesting conditions based upon an overall growth in profitability. Any RSUs granted will fall away should the recipient leave employment before the 2-year or 3-year term expires. Should the individual vesting conditions be satisfied at the end of the term, the stock will be exercised at nil cost. The Group directors who received RSUs are as follows: • Douglas Grant, Group Chief Executive Officer, was issued 1,925,000 RSUs. On 14 November 2024, he transferred 1,631,138 Ordinary Shares of no par value in the Company held in his own name to the Doonhamer Personal Pension Scheme at 15.0p per share. The Doonhamer Personal Pension Scheme is a Self-Invested Personal Pension of which Douglas Grant is the sole member and beneficiary. Following this transfer, the total number of Ordinary Shares held by Mr Grant remains at 2,347,904, representing 1.96% of the issued ordinary share capital of the Company; • James Smeed, Group Finance Director, was issued 475,000 RSUs. On 16 July 2024, Douglas Grant and James Smeed exercised their options and were issued with 925,000 and 175,000 New Ordinary Shares of no par value respectively at nil cost. The terms and conditions of the grants are as follows: and will be settled by the physical delivery of shares. Grant date/employees entitled Number of Units Contractual life of options RSUs granted to key employees at 5 July 2022 1,020,000 2 years RSUs granted to directors at 5 July 2022 1,100,000 2 years RSUs granted to key employees at 27 October 2022 165,000 2 years RSUs granted to directors at 27 October 2022 150,000 2 years RSUs granted to directors at 29 November 2023 1,150,000 2 years RSUs granted to key employees at 29 November 2023 1,102,500 2 years RSUs granted to key employees at 16 December 2024 200,000 3 years Total RSUs 4,887,500 Lapsed RSUs (425,000) Exercised (2,160,000) Remaining RSUs 2,302,500 The fair value of employee services received in return for restricted stock units granted is based on the fair value of them measured using the Black-Scholes formula. Service related and non-market performance conditions were not taken into account in measuring fair value. The inputs used in measuring the fair values at the grant of the equity-settled restricted stock unit payment plans were as follows. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 90 Fair value of restricted stock units and assumptions Grant at 5 July 2022 Grant at 27 October 2022 Grant at 29 November 2023 Share price at grant date 8.5 pence 14.0 pence 17.5 pence Exercise price nil nil nil Expected volatility * ^ 55.14% 107.71% 638.12% Expected life (weighted average) 2 years 2 years 2 years Risk-free interest rate (based on government bonds) * ^ 1.65% 3.15% 4.43% Forfeiture rate 0.00% 0.00% 0.00% Fair value at grant date 8.5 pence 14.0 pence 17.5 pence ^ Based on past 3 years * Annual rates The expected volatility is based on both historical average share price volatility and implied volatility derived from traded options over the group’s ordinary shares of maturity similar to those of the employee options. The charge for the year for share options granted was £163,000 (2023: £113,000). The fair value of services received in return for share options granted is based on the fair value of share options granted, measured using a binomial probability model with the following inputs for each award: On 26 April 2024, a Group employee exercised options over 350,000 ordinary shares of no par value in the Company at an exercise price of 14 pence for an aggregate consideration of £49,000. Of the 1,750,000 share options issued, nil (31 December 2023: 350,000) remain outstanding. 23 June 2014 Fair value at date of grant £0.08 Share price at date of grant £0.14 Exercise price £0.14 Expected volatility 55.0% Option life 3 Risk-free interest rate (based on government bonds) 0.5% Forfeiture rate 33.3% 30. List of associates Set out below is a list of associates of the Group: Group 2024 £000 Group 2023 £000 Payitmonthly Ltd (“PIML”) 260 155 Lesley Stephen & Co Limited (“LSC”) 57 42 317 197 In August 2018, 30% of the share capital of PIML was acquired for £90,000 consideration. The Group’s resulting share of the associate’s total comprehensive income during the year was £119,000 (2023: £nil). As part of the Bank providing loan finance to LSC, on 29 June 2023 the Group acquired 10% of its issued share capital for nil consideration. The receipt of the issued share capital is considered to be linked to the loan facilities financed and therefore its term and interest rate implicit in the finance agreement have been used as the basis to discount the fair value of the gratis shares issued. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 91 The Group possesses the capacity to engage in policy-making processes within LSC through its right to designate an individual to attend all board meetings as an observer. Via its representative, the Group also holds the ability to introduce topics for discussion on the agenda, although it does not have voting rights in this regard. Moreover, the Group has introduced constraints on LSC’s board, effectively preventing specified significant actions from being taken without the Group’s consent. The fair value of the financial instrument received has been determined as £42,000 at initial recognition based on the proportionate share of the net asset value of LSC. As part of the transaction, the Group has been granted two warrants to acquire further shares. The first warrant is for 10% of the share capital and the second warrant is for a further 10% of the share capital. The two warrants are exercisable dependent upon the profit before tax achieved by LSC relative to target profit before tax for the relevant financial period. The fair value of the two warrants has been determined to be nil due to the significant uncertainty that exists at acquisition date of achieving such targets. For these reasons, the financial instrument is accounted for as an Associate in accordance with IAS 28. The Group’s resulting share of the associate’s total comprehensive income during the year was £nil (2023: £nil). 31. List of subsidiaries Set out below is a list of direct subsidiaries of the Group: Carrying value of investments Nature of Business 31 December 2024 % Holding Date of Incorporation 2024 £000 2023 £000 Conister Bank Limited Asset and Personal Finance 100 05/12/1935 29,092 26,092 Edgewater Associates Limited Wealth Management 100 24/12/1996 2,005 2,005 TransSend Holdings Limited Holding Company 100 05/11/2007 – – Manx Ventures Limited Holding Company 100 15/05/2009 – – 31,097 28,097 All subsidiaries are incorporated in the Isle of Man. Set out below is a list of indirect significant subsidiaries of the Group: Carrying value of investments Nature of business Principal place of business Country of incorporation % Holding Cost of investment 2024 £000 Cost of investment 2023 £000 Conister Finance & Leasing Limited Asset and Personal Finance UK IOM 100.0% 1 1 MFX Limited Foreign exchange advisory IOM IOM 100.0% 1 1 Payment Assist Limited Point of Sale Lender UK UK 100.0% 9,244 4,244 Blue Star Leasing Limited SME Asset Finance UK UK 100.0% 2,275 2,275 Ninkasi Rentals & Finance Limited SME Asset Finance UK UK 90.0% 1,275 1,275 The Business Lending Exchange Limited ME Asset Lender UK UK 100.0% 2,186 2,186 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 92 32. Non-controlling interests in subsidiaries The following table summarises the information about the Group’s subsidiary that has material NCI, before any intra-group eliminations. 31 December 2024 £’000 NRF Total NCI percentage 10% Cash and cash equivalents 309 Loans and advances to customers – Trade and other receivables 1,863 Property, plant and equipment 3,725 Intangible assets 12 Loans and borrowings (547) Creditors and accrued charges (4,569) Deferred tax (244) Net assets 549 Carrying amount of NCI 55 55 Revenue 1,539 Profit 20 OCI – Total comprehensive income 20 Profit allocated to NCI 2 2 OCI allocated to NCI – – Operating activities cashflows 40 Investing activities cashflows (151) Financing activities cashflows Net (decrease) in cashflows (111) In September 2024, the Group acquired the remaining 49.9% interest in PAL, increasing its ownership to 100%. The movement in NCI in relation to the acquisition is explained below. 2024 £000 2023 £000 NCI brought forward (49.9%) 987 – Pre-acquisition profits in the year 445 – Dividends paid (1,817) – (385) – Carrying amount of NCI acquired (385) – Consideration paid to NCI (5,000) – Decrease in equity attributable to owners of the Company (5,385) – Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 93 31 December 2023 £’000 PAL NRF Total NCI percentage 49.9% 10% Cash and cash equivalents 1,249 369 Loans and advances to customers 15,965 – Trade and other receivables 1,013 1,133 Property, plant and equipment – 4,275 Intangible assets 380 23 Loans and borrowings (4,036) (145) Creditors and accrued charges (12,593) (4,884) Deferred tax – (232) Net assets 1,978 539 Carrying amount of NCI 987 54 1,041 Revenue 10,822 1,478 Profit 1,700 42 OCI – – Total comprehensive income 1,700 42 Profit allocated to NCI 848 4 852 OCI allocated to NCI – – – Operating activities cashflows 973 339 Investing activities cashflows (185) (151) Financing activities cashflows (2,122) – Net (decrease) / increase in cashflows (1,334) 188 33. Financial Instruments Rivers Finance Group PLC (“RFG”) On 9 June 2021, the Group acquired 10% of the issued share capital of RFG for nil consideration. The receipt of the issued share capital is considered to be a commitment fee receivable by the Group in order to originate loan facilities in aggregate not exceeding £6,250,000 to RFG. The commitment fee is an integral part of the effective interest rate of the associated loan facilities issued to RFG. The Group is not considered to have a significant influence over RFG as it holds less than a 20% shareholding and is not considered to participate in the policy making decisions of the entity. The 10% shareholding has thus been classified as a financial instrument. The Group continues to obtain information necessary to measure the fair value of the shares obtained. The fair value of the financial instrument received has been determined as £154,000 (2023: £138,000) based on the proportionate share of the net asset value of RFG. As part of the transaction, the Group has been granted two warrants to acquire further shares. The first warrant is for 5% of the share capital and the second warrant is for a further 5% of the share capital. The two warrants are exercisable dependent upon the Group’s banking subsidiary, the Bank, contracting with RFG, for a larger facility. The fair value of the two warrants has been determined to be nil due to the significant uncertainty that exists at acquisition date and the period end in issuing a further debt facility. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 94 34. Goodwill Cash generating unit Group 2024 £000 Group 2023 £000 Company 2024 £000 Company 2023 £000 PAL (see below) 4,456 4,456 4,456 4,456 EAL 1,649 1,649 1,649 1,649 BLX 1,908 1,908 1,908 1,908 BBSL 1,390 1,390 1,390 1,390 NRFL 678 678 678 678 Manx Collections Limited (“MCL”) 454 454 454 454 Three Spires Insurance Services Limited (“Three Spires”) 41 41 41 41 10,576 10,576 10,576 10,576 Management has determined that a reasonably possible change in the key assumptions would not result in the carrying amount to exceed the recoverable amount of the following CGU’s and accordingly no impairment of goodwill. Payment Assist Limited (“PAL”) On 16 May 2022, the Group (through MVL) announced that it entered into an agreement to acquire 50.1% of the shares and voting interests in UK focused, point of sale lender PAL for a total consideration of £4.244 million payable in cash. The acquisition was completed in September 2022. On 16 September 2024, Manx Ventures Limited (“MVL”) brought forward the acquisition of the remaining 49.9% of Payment Assist Limited (“PAL”) for a consideration of £5 million. MVL now owns 100% of PAL and its results have been fully consolidated in these financial statements. The carrying amount of PAL’s net assets in the Group’s consolidated financial statements on the date of acquisition was £1.6m. General The key assumptions used in the estimation of the recoverable amount are set out in this note. The recoverable amount of the CGUs discussed in this note were each based on value in use. The values assigned to key assumptions represents management’s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources. The estimated recoverable amount in relation to the goodwill generated on the purchase of PAL is based on 10-year forecast cash flow projections and then discounted using a 15.3% (2023: 14.0%) discount factor. The sensitivity of the analysis was tested using additional discount factors of up to 20.0% on single interest income growth rates. The estimated recoverable amount in relation to the EAL CGU (including also goodwill generated on acquisition of EAL) is based on 10-year forecast cash flow projections using a 2.0% annual increment and then discounted using a 13% (2023: 13.9%) discount factor. The sensitivity of the analysis was tested using additional discount factors of 15.0% and 20.0% on stable profit levels. An impairment loss on EAL goodwill of £200,000 was recognised in 2022. The estimated recoverable amount in relation to the goodwill generated on the purchase of BLX is based on 10-year forecast cash flow projections using a 0% annual increment and then discounted using a 15.3% (2023: 14.2%) discount factor. The sensitivity of the analysis was tested using additional discount factors of up to 20.0% on single interest income growth rates. The estimated recoverable amount in relation to the goodwill generated on the purchase of BBSL is based on 10-year forecast cash flow projections using a 2% annual increment, with a terminal value calculated using a 2.0% growth rate of net income and then discounted using a 15.3% (2023: 14.2%) discount factor. The sensitivity of the analysis was tested using additional discount factors of up to 20.0% on single interest income growth rates. The estimated recoverable amount in relation to the goodwill generated on the purchase of NRFL is based on 10-year forecast cash flow projections using a 0% annual increment and then discounted using a 15.3% (2023: 14.2%) discount factor. The sensitivity of the analysis was tested using additional discount factors of up to 20.0%. On the basis of the above reviews no impairment to goodwill has been made in the current year. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 95 The estimated recoverable amount in relation to the goodwill generated on the purchase of MCL is based on 10-year forecast cash flow projection using a 2.0% annual increment and then discounted using a 15.3% (2023: 14.2%) discount factor. The sensitivity of the analysis was tested using additional discount factors up to 20.0%. The goodwill generated on the purchase of Three Spires has been reviewed at the current year end and is considered adequate given its income streams referred to EAL. Based on the above no impairment to goodwill has been made in the current year. 35. Loans and amounts due from Group undertakings Amounts due from and to Group undertakings Amounts due from and to Group undertakings relate to intra-group transactions and are unsecured, interest-free and repayable on demand. The amounts will be settled either through cash or net settlement. Subordinated loans MFG has issued several subordinated loans as part of its equity funding into the Bank and EAL. Creation Maturity Interest rate % p.a. 2024 £000 2023 £000 Conister Bank Limited 11 February 2014 11 February 2034 7.0 500 500 27 May 2014 27 May 2034 7.0 500 500 9 July 2014 9 July 2034 7.0 500 500 17 September 2014 17 September 2026 7.0 400 400 22 July 2013 22 July 2033 7.0 1,000 1,000 25 October 2013 22 October 2033 7.0 1,000 1,000 23 September 2016 23 September 2036 7.0 1,100 1,100 14 June 2017 14 June 2037 7.0 450 450 12 June 2018 12 June 2038 7.0 2,000 2,000 23 March 2023 23 March 2043 7.0 6,500 6,500 Edgewater Associates Limited 21 February 2017 21 February 2027 7.0 150 150 14 May 2017 14 May 2027 7.0 128 128 14,228 14,228 36. Related party transactions Cash deposits During the year, the Bank held cash on deposit on behalf of Jim Mellon (Executive Chair of MFG) and Douglas Grant (Group CEO). Total deposits amounted to £36,280 (2023: £4,502) and £24,898 respectively, at normal commercial interest rates in accordance with the standard rates offered by the Bank. Key management remuneration including Executive Directors 2024 £000 2023 £000 Remuneration – executive Directors 615 558 Remuneration – non-executive Directors 243 219 Performance Related Pay 131 99 Pension 49 45 Equity Settled Restricted Stock Units (see note 11) 113 67 1,151 988 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 96 Employment benefits include gross salaries, performance related pay, employer defined contributions and restricted stock units (See note 29D). At 31 December 2024, Douglas Grant had three amortising loans outstanding to Conister Bank Limited with capital outstanding of £285,072 (2023: £315,524). The maximum original term of the three loans is 61 months and the average interest is 2.57% (2023: 2.57%). James Smeed had an amortising loan outstanding to Conister Bank with capital outstanding of £nil (2023: £10,847). The original term of the loan is 49 months, and the average interest is 3.01% (2023: 3.01%). No impairment is held in respect of these amounts. Intercompany recharges Various intercompany recharges are made during the course of the year as a result of the Bank settling debts in other Group companies. Loan advance to PIML At 31 December 2024, £5,000,000 (2023: £2,677,000) had been advanced to PIML and interest is charged at commercial rates. No impairment is held in respect of these amounts. This loan facility is repayable in cash. Loan advance to Lesley Stephen & Co Limited (“LSC”) A total £11 million loan facility is available to LSC to provide the finance required to expand its operations. Interest is charged at commercial rates. At 31 December 2024, £10,783,914 (2023: £10 million) had been advanced to LSC. As part of a finance arrangement between the Bank and LSC, Manx Ventures Limited (“MVL”) (a related entity) acquired a 10% shareholding in LSC This loan facility is repayable in cash. Subordinated loans The Company has advanced £13,950,000 (2023: £13,950,000) of subordinated loans to the Bank and £278,000 (2023: £278,000) to EAL as at 31 December 2024. See note 35 for more details. 37. Leases A. Leases as lessee The Group leases the head office building in the Isle of Man. The lease’s term is 10 years with an option to renew the lease after that date. Lease payments are renegotiated every 10 years to reflect market rentals. The Group leases an office unit in the United Kingdom and IT equipment with contract terms of 2 to 3 years. These leases are short-term and / or low-value items. The Group has elected not to recognise right-of- use assets and lease liabilities for these leases. Information about leases for which the Group is a lessee is presented below. i. Right-of-use assets Right-of-use assets related to leased properties that do not meet the definition of investment property are presented as property, plant and equipment. Group Land and Buildings £000 Total £000 Cost As at 1 January 2024 1,960 1,960 Additions 836 836 Disposals (136) (136) As at 31 December 2024 2,660 2,660 Accumulated depreciation As at 1 January 2024 607 607 Charge for the year 376 376 Disposals (74) (74) As at 31 December 2024 909 909 Carrying value at 31 December 2024 1,751 1,751 Carrying value at 31 December 2023 1,353 1,353 Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 97 ii. Amounts recognised in profit or loss Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Interest on lease liabilities 132 93 17 – Depreciation expense 351 222 126 60 Expenses relating to short-term leases and low-value assets 81 81 – – iii. Amounts recognised in statement of cash flows Group Company 2024 £000 2023 £000 2024 £000 2023 £000 Interest paid 132 93 17 – Capital paid 311 256 131 117 Total cash outflow for leases 443 349 148 117 38. Regulators Certain Group subsidiaries are regulated by the FSA and the FCA as detailed below. The Bank and EAL are regulated by the FSA under a Class 1(1) - Deposit Taking licence and Class 2 - Investment Business licence respectively. The Bank is also regulated by the UK’s Prudential Regulatory Authority (“PRA”) and the UK’s Financial Conduct Authority (“FCA”). 39. Contingent liabilities The Bank is required to be a member of the Isle of Man Government Depositors’ Compensation Scheme which was introduced by the Isle of Man Government under the Banking Business (Compensation of Depositors) Regulations 1991 and creates a liability on the Bank to participate in the compensation of depositors should it be activated. The possibility of an outflow of resources embodying economic benefits for all other contingent liabilities of the Group are considered remote and thus do not require separate disclosure. 40. Provision for Discretionary Commission Arrangements Following the Financial Conduct Authority’s (FCA) Motor Market review in 2019 which resulted in a change in rules in January 2021, the Group has to date received a small number of complaints in respect of motor finance commissions and is actively engaging stakeholders in its assessment of these complaints. The Group believes that its historical practices were compliant with the law and regulations in place at the time and is willing to cooperate with FCA through its industry review. However, the Group recognises that costs could arise in the event the FCA concludes there has been industry wide misconduct and customer loss that requires redress. In response to this, the Group has recognised a provision of £202,920 as best estimate of the expenditure required at 31 December 2024. In establishing the provision estimate, the Group has made various considerations to address uncertainties around a number of key assumptions. The assumptions include commission models, potential levels of complaints, validity of the complaints and uphold rate of similar cases by the Financial Ombudsman Service. The ultimate financial impact could be materially different as a result of uncertainty surrounding the assumptions and will therefore be monitored and updated as new information becomes available. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 98 41. Non-IFRS measures Non-IFRS measures included in the financial statements include the following: Measure Description Net trading income Net trading income represents net interest income and contributions from non-interest income activities. Operating income Operating income represents net trading income, other operating income and gains or losses on financial instruments. 42. Subsequent events There were no subsequent events occurring after 31 December 2024. 43. Financial risk management A. Introduction and overview The Group has exposure to the following risks from financial instruments: • credit risk; • liquidity risk; • market risk; and • operational risk. Risk management framework The Board has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board has established the GARCC, which is responsible for approving and monitoring Group risk management policies. The GARCC is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the GARCC. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, though its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. B. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s loans and advances to customers and investment debt securities. Credit risk includes counterparty, concentration, underwriting and credit mitigation risks. Management of credit risk The Bank’s Board of Directors created the Credit Committee which is responsible for managing credit risk, including the following: • Formulating credit policies in consultation with business units, covering collateral requirements, credit assessments, risk grading and reporting, documentary and legal procedures, and compliance with regulatory and statutory requirements; • Establishing the authorisation structure for the approval and renewal of credit facilities. Authorisation limits are allocated in line with credit policy; • Reviewing and assessing credit risk: The Credit Committee assesses all credit exposures in excess of designated limits before facilities are committed to customers. Renewals and reviews of facilities are subject to the same review process. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 99 Notes to the Consolidated and Company Financial Statements continued • Limiting concentrations of exposures to counterparties, geographies and industries, by issuer, credit rating band, market liquidity and country (for debt securities); • Developing and maintaining risk gradings to categorise exposures according to the degree of risk of default. The current risk grading consists of 3 grades reflecting varying degrees of risk of default; • Developing and maintaining the Group’s process for measuring ECL: This includes processes for: • initial approval, regular validation and back-testing of the models used; • determining and monitoring significant increase in credit risk; and • the incorporation of forward-looking information; and • Reviewing compliance with agreed exposure limits. Regular reports on the credit quality of portfolios are provided to the Credit Committee which may require corrective action to be taken. C. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk arises from mismatches in the timing and amounts of cash flows, which is inherent to the Group’s operations and investments. Management of liquidity risk The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have enough liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The key elements of the Group’s liquidity strategy are as follows: • Funding base: offering six-months to five-year fixed term deposit structure with no early redemption option. This means the Bank is not subject to optionality risk where customers redeem fixed rate products where there may be a better rate available within the market; • Funding profile: the Bank has a matched funding profile and does not engage in maturity transformation which means that on a cumulative mismatch position the Bank is forecast to be able to meet all liabilities as they fall due; • Monitoring maturity mismatches, behavioural characteristics of the Group’s financial assets and financial liabilities, and the extent to which the Group’s assets are encumbered and so not available as potential collateral for obtaining funding; • Liquidity buffer: the Bank maintains a liquidity buffer of 10.0% of its deposit liabilities, with strict short-term mismatch limits of 0.0% for sight to three months and -5.0% for sight to six months. This ensures that the Bank is able to withstand any short-term liquidity shock; and • Interbank market: the Bank has no exposure to the interbank lending market. The Bank has no reliance on liquidity via the wholesale markets. In turn, if market conditions meant access to the wholesale funding was constrained as per the 2008 credit crisis, this would have no foreseeable effect on the Bank. The Bank’s liquidity position is monitored daily against internal and external limits agreed with the FSA and according to the Bank’s Liquidity Policy. The Bank also has a Liquidity Contingency Policy and Liquidity Contingency Committee in the event of a liquidity crisis or potential liquidity disruption event occurring. The Treasury department receives information from other business units regarding the liquidity profile of their financial assets and financial liabilities and details of other projected cash flows arising from projected future business. Treasury then maintains a portfolio of short-term liquid assets, largely made up of short-term liquid investment securities, loans and advances to banks and other inter-bank facilities, to ensure that sufficient liquidity is maintained within the Group as a whole. Regular liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. The scenarios are developed considering both Group-specific events and market-related events (e.g. prolonged market illiquidity). Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 100 D. Market risk Market risk is the risk that of changes in market prices; e.g. interest rates, equity prices, foreign exchange rates and credit spreads (not relating to changes in the obligor’s / issuer’s credit standing), will affect the Group’s income or value of its holdings of financial instruments. The objective of the Group’s market risk management is to manage and control market risk exposures within acceptable parameters to ensure the Group’s solvency while optimising the return on risk. Management of market risks Overall authority for market risk is vested in the Assets and Liabilities Committee (“ALCO”) which sets up limits for each type of risk. Group finance is responsible for the development of risk management policies (subject to review and approval by the ALCO) and for the day-to-day review of their implementation. Foreign exchange risk The Bank is not subject to foreign exchange risks and its business is conducted in pounds sterling. Equity risk The Group has investment in associates which are carried at cost adjusted for the Group’s share of net asset value. The Bank has access to these accounts. The Bank’s exposure to market risk is not considered significant given the low carrying amount of the investment. The Group does not hold any investments in listed equities. Interest rate risk The principal potential interest rate risk that the Bank is exposed to is the risk that the fixed interest rate and term profile of its deposit base differs materially from the fixed interest rate and term profile of its asset base, or basis and term structure risk. Additional interest rate risk may arise for banks where (a) customers are able to react to market sensitivity and redeem fixed rate products and (b) where a bank has taken out interest rate derivate hedges especially against longer-term interest rate risk, where the hedge moves against the bank. However, neither of these risks apply to the Bank. Any interest rate risk assumed by the Bank will arise from a reduction in interest rates, in a rising environment due to the nature of the Bank’s products and its matched funded profile. The Bank should be able to increase its lending rate to match any corresponding rise in its cost of funds, notwithstanding its inability to vary rates on its existing loan book. The Bank attempts to efficiently match its deposit taking to its funding requirements. E. Operational risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks – e.g. those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Group’s operations. Management of operational risk The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputation with overall cost effectiveness and innovation. In all cases, Group policy requires compliance with all applicable legal and regulatory requirements. The Group has developed standards for the management of operational risk in the following areas: • Business continuity planning; • Requirements for appropriate segregation of duties, including the independent authorisation of transactions; • Requirements for the reconciliation and monitoring of transactions; • Compliance with regulatory and other legal requirements; • Documentation of controls and procedures; Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 101 • Periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified; • Requirements for the reporting of operational losses and proposed remedial action; • Development of contingency plans; • Training and professional development; • Ethical and business standards; • Information technology and cyber risks; and • Risk mitigation, including insurance where this is cost-effective. Compliance with Group standards is supported by a programme of periodic reviews undertaken by Internal Audit. The results of Internal Audit reviews are reported to the GARCC. 44. Basis of measurement The financial statements are prepared on a historical cost basis, except for the following material items: Items Measurement basis FVTPL – Trading asset Fair value FVOCI – Debt securities Fair value Land and buildings Fair value Deferred consideration Fair value Net defined benefit liability Fair value of plan assets less the present value of the defined benefit obligation 45. Material accounting policies A. New currently effective requirements The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2024: • Lease Liability in a Sale and Leaseback – Amendments to IFRS 16 Leases • Classification of liabilities as Current or Non-Current and Non-current Liabilities with Covenants – Amendments to IAS 1 Presentation of Financial Statements • Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures – Supplier Finance Arrangements No significant changes followed the implementation of these standards and amendments. B. Forthcoming requirements The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. New standards and amendments to standards, not yet effective: • Amendments to IAS 1 – Lack of Exchangeability. • Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFS 7 • Annual improvements to IFRS Accounting Standards – Volume 11 • IFRS 18 Presentation and Disclosure in Financial Statements Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 102 The Group has assessed and is still assessing the impact of these amendments on the Group Financial Statements. The Group has consistently applied the following accounting policies to all periods presented in these financial statements. Set out below is an index of the material accounting policies, the details of which are available on the pages that follow: Ref. Note description No. A. Basis of consolidation of subsidiaries and separate financial statements of the Company 100 B. Interest in equity accounted investees 101 C. Interest 101 D. Fee and commission income 101 E. Leases 102 F. Income tax 103 G. Financial assets and financial liabilities 104 H. Cash and cash equivalents 108 I. Loans and advances 108 J. Property, plant and equipment 108 K. Intangibles assets and goodwill 109 L. Impairment of non-financial assets 109 M. Employee benefits 110 N. Share capital and reserves 111 O. Earnings per share (“EPS”) 111 P. Segmental reporting 111 A. Basis of consolidation of subsidiaries and separate financial statements of the Company i. Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group. Any contingent consideration is measured at fair value at the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. ii. Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity if it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity. The Group reassesses whether it has control if there are changes to one or more of the elements of control. This includes circumstances in which protective rights held (e.g. those resulting from a lending relationship) become substantive and lead to the Group having power over an investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. iii. Non-controlling interests (“NCI”) NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. iv. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 103 v. Separate financial statements of the Company In the separate financial statements of the Company, interests in subsidiaries, associates and joint ventures are accounted for at cost less impairment. B. Interests in equity accounted investees The Group’s interests in equity accounted investees may comprise interests in associates and joint ventures. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Interests in associates and joint ventures are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and OCI of equity accounted investees, until the date on which significant influence or joint control ceases. C. Interest Interest income and expense are recognised in profit or loss using the effective interest method. i. Effective interest rate The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts of the financial instrument to the gross carrying amount of the financial asset or amortised cost of the financial liability. When calculating the effective interest rate for financial assets, the Group estimates future cash flows considering all contractual terms of the financial instruments, including origination fees, loan incentives, broker fees payable, estimated early repayment charges, balloon payments and all other premiums and discounts. It also includes direct incremental transaction costs related to the acquisition or issue of the financial instrument. The calculation does not consider future credit losses. ii. Amortised cost and gross carrying amount The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any expected credit loss allowance. iii. Calculation of interest income and expense In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the net carrying amount of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis. D. Fee and commission income The Group generates fee and commission income through provision of independent financial advice, insurance brokerage agency, introducer of foreign exchange services and commissions from brokering business finance for small and medium sized enterprises. Independent financial advice and insurance brokerage agency Income represents commission arising on services and premiums relating to policies and other investment products committed during the year, as well as renewal commissions having arisen on services and premiums relating to policies and other investment products committed during the year and previous years and effective at the reporting date. Income is recognised on the date that policies are submitted to product providers with an appropriate discount Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 104 being applied for policies not completed. As a way to estimate what is due at the year-end, a “not proceeded with” rate of 10.0% for pipeline life insurance products and 0.0% for non-life insurance pipeline is assumed. Renewal commissions are estimated by taking the historical amount written pro-rata to 3 months. Other income other than that directly related to the loans is recognised over the period for which service has been provided or on completion of an act to which the fee relates. E. Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. i. As a lessee At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non-lease components and as a result, accounts for the lease and non-lease components as a single lease component. The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and the type of the asset leased. Lease payments included in the measurement of the lease liability comprise the following: • Fixed payments, including in-substance fixed payments; • Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; • Amounts expected to be payable under a residual value guarantee; and • The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in‑substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 105 The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and equipment’ and lease liabilities in ‘loans and borrowings’ in the statement of financial position. Short-term leases and leases of low-value assets The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. ii. As a lessor At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. When the Group acts as a lessor, it determines at lease inception whether each lease is a finance or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset. Finance leases and HP contracts When assets are subject to a finance lease or HP contract, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. HP and lease income is recognised over the term of the contract or lease reflecting a constant periodic rate of return on the net investment in the contract or lease. Initial direct costs, which may include commissions and legal fees directly attributable to negotiating and arranging the contract or lease, are included in the measurement of the net investment of the contract or lease at inception. Operating leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss and other comprehensive income on a straight-line basis over the period of the lease. F. Income tax Current and deferred taxation Current taxation relates to the estimated corporation tax payable in the current financial year. Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill and temporary differences related to investments in subsidiaries and associates to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future. Deferred taxation is determined using tax rates, and laws that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax is realised. Deferred taxation assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. G. Financial assets and financial liabilities i. Recognition and initial measurement The Group initially recognises loans and advances, deposits, debt securities issued and subordinated liabilities on the date on which they are originated. All other financial instruments, including regular-way purchases and sales of financial assets are recognised on the trade date, which is the date on which the Group becomes party to the contractual provisions of the instrument. A financial asset or financial liability is measured initially at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 106 ii. Classification Financial assets On initial recognition, a financial asset is classified as measured at amortised cost, FVOCI or FVTPL. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: • The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (“SPPI”). A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as FVTPL: • The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI. On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis. All other financial assets are classified as measured at FVTPL. In addition, on initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Business model assessment The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information provided to management. Assessment of whether contractual cash flows are solely payments of principal and interest For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin. In assessing whether the contractual cash flows are SPPI, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. Financial liabilities The Group classifies its financial liabilities, other than financial guarantees and loan commitments, as measured at amortised cost. iii. Derecognition Financial assets The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 107 On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in profit or loss. Financial liabilities The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. iv. Offsetting Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS, or for gains and losses arising from a group of similar transactions such as in the Group’s trading activity. v. Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at the date. The fair value of a liability reflects its non‑performance risk. The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. The Group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the measurements: • Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments; • Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data; and • Level 3: inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments. The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, the Group determines fair values using other valuation techniques. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. vi. Impairment A financial instrument that is not credit-impaired on initial recognition is classified in ‘Stage 1’ and has its credit risk continuously monitored by the Group. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 108 If a SICR since initial recognition is identified, the financial instrument is moved to ‘Stage 2’ but is not yet deemed to be credit impaired. • An SICR is always deemed to occur when the borrower is 30 days past due on its contractual payments. If the Group becomes aware ahead of this time of non-compliance or financial difficulties of the borrower, such as loss of employment, avoiding contact with the Group then an SICR has also deemed to occur; and • A receivable is always deemed to be in default and credit-impaired when the borrower is 90 days past due on its contractual payments or earlier if the Group becomes aware of severe financial difficulties such as bankruptcy, individual voluntary arrangement, abscond or disappearance, fraudulent activity and other similar events. If the financial instrument is credit-impaired, the financial instrument is then moved to ‘Stage 3’. Financial instruments in Stage 3 have their ECL measured based on expected credit losses on a lifetime basis. Loss allowances for lease receivables are always measured at an amount equal to lifetime ECL. 12-month ECL are the portion of ECL that result from default events on a financial instrument that are possible within the 12 months after the reporting date. Financial instruments for which a 12-month ECL is recognised are referred to as ‘Stage 1 financial instruments’. Lifetime ECL are the ECL that result from all possible default events over the expected life of a financial instrument. Financial instruments for which a lifetime ECL is recognised but which are not credit-impaired are referred to as ‘Stage 2 financial instruments’. Measurement of ECL After a detailed review, the Group devised and implemented an impairment methodology in light of the IFRS 9 requirements outlined above noting the following: • The Group has identified and documented key drivers of credit risk and credit losses its financial instruments and using an analysis of historical data has estimated the relationship between macroeconomic variables and credit risk and credit losses; • The ECL is derived by reviewing the Group’s loss rate and loss given default over the past 8 years by product and geographical segment; and • If the Group holds objective evidence through specifically assessing a credit-impaired receivable and believes it will go on to completely recover the debt due to the collateral held and cooperation with the borrower, then no IFRS 9 provision is made. ECL are probability-weighted estimates of credit losses. They are measured as follows: • Financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive); • Financial assets that are credit-impaired at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows; and • Undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the Group if the commitment is drawn down and the cash flows that the Group expects to receive. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 109 Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt financial assets carried at FVOCI, and finance lease receivables are credit-impaired (referred to as ‘Stage 3 financial assets’). A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable date: • Significant financial difficulty of the borrower or issuer; • A breach of contract such as a default or past due event; • The restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise; • It is becoming probable that the borrower will enter bankruptcy or another type of financial reorganisation; or • The disappearance of an active market for a security because of financial difficulties. A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced significantly and there are no other indicators of impairment. In addition, a retail loan that is overdue for 90 days or more is considered credit-impaired even when the regulatory definition of default is different. In assessing of whether an investment in sovereign debt is credit impaired, the Group considers the following factors: • The market’s assessment of creditworthiness as reflected in the bond yields; • The rating agencies’ assessments of creditworthiness; • The country’s ability to access the capital markets for new debt issuance; • The probability of debt being restructured, resulting in holders suffering losses through voluntary or mandatory debt forgiveness; and • The international support mechanisms in place to provide the necessary support as ‘lender of last resort’ to that country, as well as the intention, reflected in public statements, of governments and agencies to use those mechanisms. This includes an assessment of the depth of those mechanisms and, irrespective of the political intent, whether there is the capacity to fulfil the required criteria. Presentation of allowance for ECL in the statement of financial position Loss allowances for ECL are presented in the statement of financial position as follows: • Financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets; • Loan commitments: generally, as a provision; and • Debt instruments measured at FVOCI: no loss allowance is recognised in the statement of financial position because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed and is recognised in the fair value reserve. Write-off Loans and debt securities are written off (either partially or in full) when there is no reasonable expectation of recovering a financial asset in its entirety or a portion thereof. This is generally the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is carried out at the individual asset level. Recoveries of amounts previously written off are included in ‘impairment losses on financial instruments’ in the statement of profit or loss and OCI. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 110 Financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due. H. Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents comprise cash and deposit balances with an original maturity date of three months or less. I. Loans and advances Loans and advances’ captions in the statement of financial position include: • Loans and advances measured at amortised cost (see note 44 (G)). They are initially measured at fair value plus incremental direct transaction costs, and subsequently at their amortised cost using the effective interest method; and • Finance lease receivables (see note 44 (E)). J. Property, plant and equipment Items of property, plant and equipment are stated at historical cost less accumulated depreciation (see below). Historical cost includes expenditure that is directly attributable to the acquisition of the items. Buildings are carried at a revalued amount, being fair value at the date of revaluation, less subsequent depreciation and impairment. If an asset’s carrying amount is increased as a result of a revaluation, the increase shall be recognised in other comprehensive income and accumulated in equity under the heading of revaluation surplus. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. If an asset’s carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss. However, the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus. The assets’ residual values and useful economic lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items of property, plant and equipment. Depreciation and amortisation Assets are depreciated or amortised on a straight-line basis, so as to write off the book value over their estimated useful lives. The estimated useful lives of property, plant and equipment and intangibles are as follows: Property, plant and equipment Leasehold improvements to expiration of the lease IT equipment 4 - 5 years Motor vehicles 2 - 5 years Furniture and equipment 4 - 10 years Plant and machinery 5 - 20 years Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 111 K. Intangible assets and goodwill i. Goodwill Goodwill that arises on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. ii. Software Software acquired by the Group is measured at cost less accumulated amortisation and any accumulated impairment losses. Expenditure on internally developed software is recognised as an asset when the Group is able to demonstrate: that the product is technically feasible, its intention and ability to complete the development and use the software in a manner that will generate future economic benefits, and that it can reliably measure the costs to complete the development. The capitalised costs of internally developed software include all costs directly attributable to developing the software and capitalised borrowing costs, and are amortised over its useful life. Internally developed software is stated at capitalised cost, less accumulated amortisation and any accumulated impairment losses. Software is amortised on a straight-line basis in profit or loss over its estimated useful life, from the date on which it is available for use. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. iii. Other Intangible assets that are acquired by an entity and having finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets with indefinite useful lives that are acquired or built are carried at cost less accumulated impairment losses. Intangible assets with indefinite useful lives are not amortised but instead are subject to impairment testing at least annually. The useful lives of intangibles are as follows: Customer contracts and lists to expiration of the agreement Intellectual property rights 4 years - indefinite Website development costs indefinite IT Software and website development costs 5 years Included in intellectual property rights is capitalised costs for acquiring a UK Banking licence. The banking licence is assumed to have an indefinite life as there is no foreseeable limit to the period over which the asset is expected to generate benefits for the business. Costs related to obtaining this asset are held at cost and are not being amortised. L. Impairment of non-financial assets At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Goodwill and indefinite useful life intangible assets are tested annually for impairment. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that is largely independent of the cash inflows of other assets or Cash Generating Units (“CGUs”). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less cost to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 112 The Group’s corporate assets do not generate separate cash inflows and are used by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGUs to which the corporate assets are located. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. M. Employee benefits i. Long-term employee benefits Pension obligations The Group has pension obligations arising from both defined benefit and defined contribution pension plans. A defined contribution pension plan is one under which the Group pays fixed contributions into a separate fund and has no legal or constructive obligations to pay further contributions. Defined benefit pension plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and remuneration. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss. The statement of financial position records as an asset or liability as appropriate, the difference between the market value of the plan assets and the present value of the accrued plan liabilities. The defined benefit pension plan obligation is calculated by independent actuaries using the projected unit credit method and a discount rate based on the yield on high quality rated corporate bonds. The Group’s defined contribution pension obligations arise from contributions paid to a Group personal pension plan, an ex gratia pension plan, employee personal pension plans and employee co-operative insurance plans. For these pension plans, the amounts charged to the income statement represent the contributions payable during the year. ii. Share-based compensation The Group maintains a share option programme which allows certain Group employees to acquire shares of the Group. The change in the fair value of options granted is recognised as an employee expense with a corresponding change in equity. The fair value of the options is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. At each reporting date, the Group revises its estimate of the number of options that are expected to vest and recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The fair value is estimated using a proprietary binomial probability model. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 113 N. Share capital and reserves Share issue costs Incremental costs that are directly attributable to the issue of an equity instrument are deducted from the initial measurement of the equity instruments. O. Earnings per share (“EPS”) The Group presents basic and diluted EPS data for its Ordinary Shares. Basic EPS is calculated by dividing the profit or loss that is attributable to ordinary Shareholders of MFG by the weighted-average number of Ordinary Shares outstanding during the period. Diluted EPS is determined by adjusting profit or loss that is attributable to Ordinary Shareholders and the weighted-average number of Ordinary Shares outstanding for the effects of all dilutive potential Ordinary Shares, which comprise share options granted to employees. P. Segmental reporting A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group’s primary format for segmental reporting is based on business segments. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses relating to transactions with any of the Group’s other components, whose operating results are regularly reviewed by the CEO who is the chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results reported to the CEO include items that are directly attributable to a segment as well as those that can be allocated on a reasonable basis. Notes to the Consolidated and Company Financial Statements continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 114 Shareholder Notes Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 115 Appendix: Glossary of terms ALCO Assets and Liabilities Committee BBSL Blue Star Business Solutions Limited BL Burnbrae Limited BLX The Business Lending Exchange Limited Bank Conister Bank Limited Bank’s Board The Bank’s Board of Directors BOE Bank of England CEO Chief Executive Officer CET1 Common Equity Tier 1 CFL Conister Finance & Leasing Ltd CGU Cash Generating Unit CODM Chief Operating Decision Maker Company Manx Financial Group PLC EAL Edgewater Associates Limited ECF ECF Asset finance PLC ECL Expected Credit Loss ESG Environmental, Social and Governance EPS Earnings Per Share FCA UK Financial Conduct Authority Fraud risks Risk of Material Misstatement Due to Fraud FSA Isle of Man Financial Services Authority FVOCI Fair Value Through Other Comprehensive Income FVTPL Fair Value Through Profit or Loss GARCC Group Audit, Risk and Compliance Committee Group Comprise the Company and its subsidiaries HP Hire Purchase IAS International Accounting Standard ICAAP Internal Capital Adequacy Assessment Process ICG Individual Capital Guidance IFA Independent Financial Advisors IFRIC International Financial Reporting Interpretations Committee IFRS International Financial Reporting Standards Interim financial statements Condensed consolidated interim financial statements IOM Isle of Man ISA International Standards of Auditing JM Jim Mellon Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 116 LSE London Stock Exchange MCL Manx Collections Limited MFG Manx Financial Group PLC MFX Manx FX Limited MFX.L Manx Financial Group PLC ticker symbol on the LSE MVL Manx Ventures Limited (previously Bradburn Limited) NOMCO Group Nomination Committee NRFL Ninkasi Rentals & Finance Limited (previously Beer Swaps Limited) OCI Other Comprehensive Income PAL Payment Assist Limited PIML Payitmonthly Limited QCA Quoted Companies Alliance REMCO Group Remuneration Committee RFG Rivers Finance Group Plc RMF Risk Management Framework Scheme The Conister Trust Pension and Life Assurance Scheme SICR Significant Increase in Credit Risk SPPI Solely Payments of Principal and Interest SR Southern Rock Insurance Company Limited Subsidiaries MFG’s subsidiaries being Bank, BBSL, BLX, CFL, ECF, EAL, MFX, MVL, NRFL, PAL TCF Treating Customers Fairly Three Spires Three Spires Insurance Services Limited UK United Kingdom UP Unrelated parties Appendix: Glossary of terms continued Financial Statements | Manx Financial Group PLC | Annual Financial Statements 2024 117 Designed and printed by: perivan.com Clarendon House Victoria Street Douglas Isle of Man IM1 2LN Tel: (01624) 694694 Fax: (01624) 624278 www.mfg.im