THIS
ANNOUNCEMENT CONTAINS INSIDE INFORMATION WITHIN THE MEANING OF THE
UK MARKET ABUSE REGULATION.
31 July
2024
International Personal Finance
plc
Half-year financial report for the six
months ended 30 June 2024
Principal activity
International Personal Finance is
helping to build a better world through financial inclusion by
providing affordable credit products and insurance services to
underserved consumers across nine markets.
STRONG OPERATIONAL AND FINANCIAL
PERFORMANCE
Key
highlights
|
Strong
first-half financial performance enabling increased returns to
shareholders
|
|
·
Pre-exceptional profit before tax of
£47.3m1 (H1-23: £37.8m), up 25% on H1-23 and ahead of
our 2024 internal plans.
|
|
· Interim dividend
of 3.4p (H1-23: 3.1p), an increase of 9.7%, in line with our policy
of paying 33% of the prior year full dividend per share at the
interim.
|
|
·
Excess capital to be returned to shareholders in
the form of a share buyback programme of up to £15m.
|
|
|
|
Strong demand
for credit and an excellent operational performance builds growth
momentum
|
|
·
Good demand for our broad range of financial
products resulted in customer lending, excluding Poland, growing
7%2 year-on-year, with improving momentum in the second
quarter.
|
|
·
Receivables, excluding Poland, showed strong
year-on-year growth of 12%2, with all divisions
performing well.
|
|
·
Customer lending and receivables in Poland
reduced by 7%2 and 28%2 respectively, in line
with our plans and total Poland receivables of £187m are now
stabilising.
|
|
·
Exceptional customer repayment performance and
excellent credit quality, delivering an impairment rate of 10.5%
(H1-23: 11.4%).
|
|
|
|
Major
refinancing strengthens funding position to support future
growth
|
|
·
Successfully refinanced our €341m Eurobond in
June, extending the debt maturity profile to 2029, as well as
leading to a rating upgrade from Fitch Ratings to BB.
|
|
·
Significant headroom on undrawn funding facilities and non-operational cash
balances of £179m to fund the Group's
plans through to the end of 2025.
|
|
·
Equity to receivables ratio of 56% (H1-23: 52%)
underpins the Group's growth plans, progressive dividend policy and
the share buyback programme.
|
|
|
|
Excellent
progress against our Next Gen strategy to take advantage of
substantial long-term growth opportunities
|
|
·
Over 180,000 credit cards now issued in Poland,
with the product demonstrating valuable utility for
customers.
|
|
·
Continued growth in our geographic footprint in
Mexico with a new branch opening in Mexicali.
|
|
·
Retail partnership credit now available in 450
stores in Romania.
|
|
·
Mobile wallet customers in IPF Digital increased
by over 50% to 85,000 in the first half.
|
|
|
|
Outlook
|
|
·
Confidence in delivering an acceleration in
growth through the remainder of the year.
|
|
·
Expect full year pre-exceptional profit before
tax of between £78m and £82m for 2024, ahead of current market
expectations3.
|
|
Group key
statistics
|
H1-24
|
H1-23
|
YOY
change
|
|
|
Customer numbers (000s)
|
1,656
|
1,718
|
(3.6%)
|
|
|
Customer lending (£m)
|
597.4
|
578.8
|
3.2%2
|
|
|
Average gross receivables (£m)
|
1,369.9
|
1,343.2
|
(0.1%)2
|
|
|
Closing net receivables (£m)
|
864.4
|
893.1
|
(0.4%)2
|
|
|
Pre-exceptional PBT
(£m)1
|
47.3
|
37.8
|
25.1%
|
|
|
Statutory PBT (£m)
|
36.5
|
37.8
|
(3.4%)
|
|
|
Pre-exceptional EPS
(pence)1,4
|
12.6p
|
10.2p
|
23.5%
|
|
|
Interim dividend per share (pence)
|
3.4p
|
3.1p
|
9.7%
|
|
1 Prior to an exceptional
charge of £10.8m in 2024 (see note 8 for
details).
2 At constant exchange rates
(CER).
3 Market expectations based
on consensus pre-exceptional profit before tax for 2024 of £71.4m
at 30 July 2024.
4 Prior to an exceptional tax
charge of £4.0m in 2023 (see note 8 for details).
Gerard Ryan, Chief Executive Officer at IPF
commented:
"I am delighted to announce very strong financial and
operational progress for IPF in the first half of the year.
Executing on our Next Gen strategy has delivered good growth
momentum, exceptional customer repayment performance and
pre-exceptional profit before tax of £47.3m, ahead of our 2024
internal financial plan. The successful refinancing
of our €341m Eurobond, which attracted very good demand and over
150 investors, ensures that we have a strong funding position to
support our ambitious growth plans.
As a result of the excellent first half results, our strong
balance sheet and positive growth prospects, we have announced an
increase in the interim dividend of 9.7% to 3.4 pence per share, in
line with our progressive dividend policy, together with
a share
buyback programme of £15m, improving the efficiency of our balance
sheet.
We continue to see substantial demand for our broadening
portfolio of credit and insurance services from underserved
consumers and we are confident that there are further attractive
growth opportunities as we continue to execute on our strategy. I
would like to say thank you to all my hard-working colleagues whose
commitment ensures we continue to increase financial inclusion for
our customers in all our markets."
Alternative
performance measures
This half-year financial report provides
alternative performance measures (APMs) which are not defined or
specified under the requirements of International Financial
Reporting Standards. We believe these APMs provide stakeholders
with important additional information on our business. To support
this, we have included an accounting policy note on APMs in the
notes to this financial report, a glossary indicating the APMs that
we use, an explanation of how they are calculated and how we use
them, and a reconciliation of the APMs we use to a statutory
measure, where relevant.
Investor
relations and media contact:
|
Rachel Moran - Investor Relations
|
+44 (0)7760 167637
|
|
Georgia Dunn - Deputy Company Secretary
|
+44 (0)7584 615230
|
Investor and
analyst webcast
International Personal Finance will host a
webcast of its 2024 half-year results presentation at 09.00hrs
(BST) today - Wednesday 31 July, which can be accessed
here.
A copy of this statement can be found on our
website at www.ipfin.co.uk.
Legal Entity Identifier:
213800II1O44IRKUZB59
Chief
Executive Officer's review
Group
performance
I am very pleased to report another strong
financial and operational performance in the first half of the
year, with all our divisions performing well. Our relentless focus
on delivering for our customers through executing our Next Gen
strategy, together with strong operational discipline, has
delivered pre-exceptional profit before tax of £47.3m, up 25%
(£9.5m) on the 2023 half-year result, and ahead of our 2024
internal financial plan.
Consumer appetite for our
broadening range of credit products and insurance services remains
good despite cost-of-living pressures and a
challenging economic landscape. Serving our customers
with affordable products that suit their needs resulted in customer
lending growth, excluding Poland, of 7% (at CER) year-on-year, with
improving momentum as the first half progressed.
Closing net receivables ended the first half
at £864m, broadly in line with June last year (at CER). However,
excluding Poland, the rest of the business delivered strong
receivables growth of 12% with good performances by each division.
In line with our expectations, receivables in our home credit and
digital businesses in Poland saw a year-on-year reduction of 28% to
£187m as we adapt to tighter regulatory rate caps and affordability
rules. In Poland, the reduction in receivables in our home credit
business is now beginning to stabilise and we saw receivables
growth in our digital business in June. Customer numbers across the
Group increased by 2% to 1.7 million, excluding the impact of the
transition in Poland where, as expected, customer numbers declined
by 21%.
We continue to make very good progress towards
our medium-term key performance targets for revenue yield and
impairment. The Group's annualised revenue yield
strengthened by 1.2ppts to 55.4% year on
year and is now very close to our target range of 56% to 58%.
Customer repayment performance was excellent in the first half of
the year and the annualised impairment rate of 10.5% (H1-23:
11.4%) was better than expected and some
way better than our target of 14% to 16%. With
excellent credit quality across all our
divisions, we are well positioned to accelerate growth through the
second half of the year.
We continue to maintain a strict focus on cost
optimisation and efficiencies while investing in growth. The
Group's annualised cost-income ratio at the half year was 59.0%,
1.6ppts higher than last year, wholly due to the decrease in
receivables in Poland as well as the introduction of the lower rate
cap earlier this year. Excluding the Poland home credit business,
the Group's cost-income ratio has reduced from 57.3% in June last
year to 54.7% at the end of the first half. We expect the Group's
ratio to continue to improve as we deliver increased growth and
continue to execute on our cost-efficiency programme.
Our financial model underpins our purpose to
build a better world through financial inclusion and at the half
year, the annualised pre-exceptional return on required equity
(RoRE) improved to 16.2% (H1-23: 14.7%), within our target range
for the Group of 15% to 20%. The improvement was accomplished as a
result of strong performances by Mexico and a 5.3ppt improvement in
the returns delivered by IPF Digital as we rebuild scale. We expect
the Group's rate of return to moderate to below the Group's target
range in the second half of the year as we increase the rate of
receivables growth and the full impact of the credit card
re-pricing in Poland flows through the business.
The Group continues to have a very
well-capitalised balance sheet and our funding position was further
strengthened with the very successful refinancing of our €341m
Eurobond in June which, together with further bank funding secured
during the period, resulted in significant headroom of £179m on our
debt facilities at the end of June. The successful refinancing led
to an upgrade in our credit rating from Fitch ratings to BB and has
also allowed us to repay the £35m Nordic bonds in July, three
months ahead of maturity. Our funding position and headroom
supports our growth plans through to the end of
2025.
The strong first-half performance
fully supports a 9.7% increase in the interim dividend to 3.4p
(H1-23: 3.1p) per share, in line with our stated dividend policy of
paying 33% of the prior year full dividend in the first
half.
The Group has a very strong
capital position with an equity to receivables ratio of 56% at
June, compared with our target of 40%. After assessing
the Group's current trading performance, cash generation and future
growth plans, the Board has determined that a buyback of shares of
up to £15m will increase capital efficiency whilst ensuring that
the balance sheet remains strong to enable the Group to pursue its
growth strategy and progressive dividend policy.
The half-year financial result includes two
exceptional items relating to a £5.0m restructuring of
the field force in our Polish business in March and £5.8m of costs
associated with refinancing the Group's Eurobond. Statutory profit
before tax in the first half was therefore £36.5m (H1-23:
£37.8m).
Full details of the Group financial
performance are detailed in the financial review
section.
Purpose and
strategy
We play a vital role in society by
providing access to affordable credit products and insurance
services to people who are often excluded from day-to-day financial
services by banks and other lenders. We
currently serve 1.7 million customers in nine countries, and we
have a clear ambition to grow our business to 2.5 million customers
as we deliver on our purpose of building a
better world through financial inclusion.
In March 2024, we outlined our refreshed Next
Gen strategy to underpin the Group's future growth and success. The
three strategic priorities of our Next Gen strategy are as
follows:
1. Next Gen financial
inclusion
We aim to increase our reach to appeal to more
consumers by expanding our geographic footprint, increasing our
product range and growing the number of channels through which
customers can access our offers:
· Credit cards
- We have now issued 180,000 credit cards
in Poland, up from 130,000 at December, and at the end of June
145,000 of these customers remain active. We continue to be very
encouraged by the increasing use of the cards in retail outlets and
on-line, demonstrating the value customers see in the
product. Supported by a requirement for
all drawdowns on the card to be repaid over the following twelve
months, the credit performance of the card portfolio remains
consistent with instalment loans. Importantly, repaying balances
over twelve months prevents persistent debt which can be a feature
of credit cards. Based on our experience to date, we see good
potential to take our credit card offering to other markets in the
future.
· Expansion in
Mexico - We continued to expand our
geographical footprint in Mexico with a new branch opening in June
in Mexicali, northern Mexico. Our two
branches in Tijuana and Tampico, which we opened at the end of 2022
and early 2023 respectively, are performing well and in line with
our plan.
· Building distribution
channels through strategic partnerships -
We continued to expand our
retail partnership credit offering which provides finance for
consumers at the point of purchase. This is now available at 450
stores in Romania with further expansion planned in the second half
of the year. Our tests of this distribution channel in
Mexico are also gaining traction.
· Growing mobile wallet in
IPF Digital - We have recently
enhanced the mobile wallet through the introduction of a digital
credit health monitor which uses a combination of internal and
external factors to help customers better manage their credit
profiles and behaviours. We now have 85,000 customers using mobile
wallet, up from 53,000 at the end of 2023, which represents nearly
40% of the customers we serve through our digital division. We
expect this proportion to continue to increase at pace as we
continue the roll-out in Mexico and look to introduce the product
in other markets.
2. Next Gen
organisation
We are becoming a smarter, more efficient
organisation that makes a positive impact on society:
· Process
efficiency - We have continued to
refine our organisation structure to deliver greater process
standardisation across European home credit which in turn will make
us more effective and efficient.
· Improving ESG ratings
- MSCI upgraded IPF's ESG rating to
AA and we maintained our inclusion in the FTSE4Good Index with
improved scores in the social and governance categories.
· Volunteering success
- Around 2,500 colleagues took part
in our annual Volunteer and Financial inclusion month in May,
supporting 250,000 beneficiaries and raising c.£85,000 in
donations.
·
Awards
- We have been recognised in
Hungary with an Outstanding Customer Service award, received the
Fair to Women Best of 2024 award in Poland and, for the fifth year
in a row, ranked in the Index of Responsible Companies in Mexico
which showcases organisations with the best environmental, social
and governance (ESG) strategies.
3. Next Gen technology and data
We are investing in the capabilities required
to become a data-driven and technology-enabled partner for our
customers:
·
Mexico app
rollout - During the first half of
the year, we tested a new mobile app in Mexico home credit to
enable customers to better manage their accounts on a mobile
device. The app has proved very popular in the regions where it was
piloted, and we have quickly moved to nationwide
rollout.
·
Integration of
AI into customer service -
We have successfully deployed a pilot of AI in
some of our home credit businesses to improve customer experience
across several touchpoints including on-boarding, complaints and
staff training, and we expect to explore further opportunities to
improve our customer experience using AI in the coming
months.
Regulatory
update
There have been no material changes to the
regulatory framework since our first quarter trading update issued
in early May.
(i)
Poland
From 1 January 2024, the, KNF began
supervising all non-bank financial institutions in Poland,
including our home credit and digital businesses in this market,
and we continue to actively engage with the KNF as they assess our
application for a full payment institution licence which will
enable our Polish home credit business to issue a greater volume of
credit cards. To remain within the limits of our current licence,
during the second quarter we moderated the volumes of new credit
cards being issued and focused more on instalment loan
lending.
We are very pleased with the progress made by
our Polish business in transitioning to the new regulatory
requirements for consumer lending. The receivables book in our home
credit business is beginning to stabilise whilst growth returned to
our digital business in June. We will continue to adapt our product
set, focus on returning the business to scale whilst maintaining a
strong focus on cost efficiency to ensure the business delivers the
Group's target returns of between 15% and 20%. We expect this to
take two years to complete.
(ii) Romania
As reported in our 2023 full-year
results statement, new regulation for a price cap on consumer
lending has long been discussed in Romania which caps the amount
charged at 100% for loans below €5,000 and at 25% APR for loans
greater than €5,000. All of our lending in Romania is below €5,000.
The draft law is now with the President of Romania to
sign. We expect the law to come into force in November 2024. As
previously reported, we do not expect the impact on the Group to be
material.
Dividend
Reflecting the continued strong
performance of the Group and our strategy to realise the long-term growth
potential of the business, the Board is pleased to declare a 9.7%
increase in the interim dividend to 3.4p per share (H1-23: 3.1p).
This is in line with our progressive dividend policy which sets the
interim dividend at 33% of the prior year's full dividend
payment. The interim dividend will be paid on 27 September
2024 to shareholders on the register at the close of business on 30
August 2024. The shares will be marked ex-dividend on 29 August
2024.
Share
buyback
The Group's financial model is to deliver a
target RoRE of between 15% and 20%, which supports a minimum
dividend payout ratio of 40%, funds receivable growth of up to 10%
per annum, whilst maintaining an equity to receivables ratio at
40%. This financial framework ensures that capital is only
allocated where it can deliver appropriate returns to shareholders
whilst also balancing the needs of all our stakeholders.
As a result of the Group's strong trading and
financial performance over the last two years together with
favourable foreign exchange movements over that period, the Group
balance sheet has continued to strengthen and the equity to
receivables ratio stands at 56% at the end of June compared with
our target of 40%.
After assessing the Group's current trading
performance, cash generation and future growth plans, the Board
believes that a share buyback of up to £15m will increase capital
efficiency whilst ensuring that the balance sheet remains strong,
enabling the Group to pursue its growth strategy and progressive
dividend policy.
Further details of the share buyback programme
are set out in a separate announcement.
Outlook
Our aim is to provide underserved consumers
with access to simple, personal and affordable credit and insurance
services to help support and protect them and their families. There
is strong demand for affordable credit within our target
demographic, and looking forward we will continue to implement our
Next Gen strategy to extend financial inclusion by offering more
product choices to consumers within our existing markets as well as
expanding our geographic reach in Mexico.
We delivered a strong financial performance in
the first half of 2024, building on the solid foundation built
through 2022 and 2023. Customer satisfaction is high, lending
growth continues to gain momentum and credit quality is excellent,
all of which provide us with confidence for delivering an
acceleration in growth through the remainder of the
year.
We expect our Polish business to continue to
stabilise in the second half before regrowing towards the end of
the year. The impact from the recent repricing of credit cards is
expected to reduce profit delivered by our Polish business in the
second half which, together with accelerated receivables growth in
the remainder of the Group, is expected to result in second half
profit for the Group being lower than first half profit.
Notwithstanding this dynamic, we expect full year pre-exceptional
profit before tax of between £78m and £82m for 2024, which is ahead
of current market expectations*.
We have a very robust funding position,
significantly enhanced by our successful refinancing of the Group's
Eurobond, and our well capitalised balance sheet supports our
ambitious growth plans, our progressive dividend policy and the
share buyback programme announced today.
* Market expectations based
on consensus pre-exceptional profit before tax for 2024 of £71.4m
at 30 July 2024.
Financial
review
Group
Building on the strong momentum in
2023 and, with our Next Gen strategy embedded across the business,
we have delivered a very strong financial performance in the first
six months of 2024. Profit before tax and exceptional costs of
£47.3m increased by 25.1% year-on-year and is ahead of our internal
plans. The outperformance was primarily driven by consistently
strong customer repayment behaviour in all markets which resulted
in a favourable impairment performance, including a reduction in
the cost-of-living provision of £5m in the first half.
The half-year financial result includes two
exceptional items relating to a £5.0m restructuring of
the field force in our Polish business in March and £5.8m of costs
associated with the successful refinancing the Group's €341m
Eurobond in June. As a result, the Group's statutory profit before
tax was £36.5m in the first six months of the year (H1-23:
£37.8m).
Consistent with the change in
management responsibility from the end of 2023, the nascent digital
lending business in the Czech Republic, which was previously
reported as part of European home credit, is now included in the
results of IPF Digital. All comparatives have been amended
accordingly and are presented on a like-for-like basis. The Czech
Republic digital business contributed a loss of £1.5m in the first
half of 2023 and a loss of £2.6m for 2023 as a whole. An analysis
of the first half divisional results is shown below (H1-23
restated):
|
|
H1-24
£m
|
H1-23
£m
|
Change
£m
|
Change
%
|
|
European home credit
|
29.8
|
31.8
|
(2.0)
|
(6.3%)
|
|
Mexico home credit
|
17.7
|
11.4
|
6.3
|
55.3%
|
|
IPF Digital
|
7.2
|
2.6
|
4.6
|
176.9%
|
|
Central costs
|
(7.4)
|
(8.0)
|
0.6
|
7.5%
|
|
Pre-exceptional
profit before taxation
|
47.3
|
37.8
|
9.5
|
25.1%
|
|
Exceptional items
|
(10.8)
|
-
|
(10.8)
|
n/a
|
|
Profit before
taxation
|
36.5
|
37.8
|
(1.3)
|
(3.4%)
|
The detailed income statement of the Group,
together with associated KPIs, is set out below:
|
|
H1-24
£m
|
H1-23
£m
|
Change
£m
|
Change
%
|
Change at
CER
%
|
|
Customer numbers (000s)
|
1,656
|
1,718
|
(62)
|
(3.6%)
|
(3.6%)
|
|
Customer lending
|
597.4
|
578.8
|
18.6
|
3.2%
|
3.2%
|
|
Average gross receivables
|
1,369.9
|
1,343.2
|
26.7
|
2.0%
|
(0.1%)
|
|
Closing net receivables
|
864.4
|
893.1
|
(28.7)
|
(3.2%)
|
(0.4%)
|
|
|
|
|
|
|
|
|
Revenue
|
371.7
|
380.0
|
(8.3)
|
(2.2%)
|
(2.7%)
|
|
Impairment
|
(64.3)
|
(89.2)
|
24.9
|
27.9%
|
29.1%
|
|
Revenue less impairment
|
307.4
|
290.8
|
16.6
|
5.7%
|
5.5%
|
|
Costs
|
(225.4)
|
(215.1)
|
(10.3)
|
(4.8%)
|
(4.3%)
|
|
Interest expense
|
(34.7)
|
(37.9)
|
3.2
|
8.4%
|
8.4%
|
|
Pre-exceptional
profit before taxation
|
47.3
|
37.8
|
9.5
|
25.1%
|
|
|
Exceptional items
|
(10.8)
|
-
|
(10.8)
|
n/a
|
|
|
Profit before
taxation
|
36.5
|
37.8
|
(1.3)
|
(3.4%)
|
|
|
|
|
|
|
|
|
|
Annualised revenue yield
|
55.4%
|
54.2%
|
1.2ppts
|
|
|
|
Annualised impairment rate
|
10.5%
|
11.4%
|
0.9ppts
|
|
|
|
Annualised cost-income ratio
|
59.0%
|
57.4%
|
(1.6)ppts
|
|
|
|
Pre-exceptional EPS-1
|
12.6p
|
10.2p
|
2.4p
|
|
|
|
Annualised pre-exceptional
RoE-1
|
12.1%
|
11.3%
|
0.8ppts
|
|
|
|
Annualised pre-exceptional
RoRE1,2
|
16.2%
|
14.7%
|
1.5ppts
|
|
|
1 Prior to an exceptional
charge of £10.8m (see note 8) in 2024, and an exceptional tax
charge of £4.0m in 2023 (see note 8).
2 Based on required equity to
receivables of 40%.
Reported Group lending grew by 3% (at CER) in
the first half. Excluding Poland, customer lending increased by 7%
with momentum continuing to build through the period as
demonstrated by the 9% increase in second quarter lending. Lending
in Poland reduced by 7% in the first half but, after a reduction of
21% in first quarter lending, delivered 10% growth in the second
quarter.
Group closing net receivables were broadly
flat year-on-year at £864m. Excluding Poland, year on year closing
net receivables growth was strong at 12% (at CER), driven by
particularly good lending performances in Mexico home credit, IPF
Digital, and our home credit operations in Hungary and
Romania. Poland receivables reduced 28% year-on-year
to £187m, but we expect to show only a modest year-on-year
reduction by the end of the year as the transition of the business
progresses.
Customer numbers increased by 2%, excluding
the impact of the transition in Poland where customer numbers
declined by 21%. As a result of the increased momentum in Group
lending activities, and the stabilisation of our Polish businesses
during the second half, we expect the rate of customer number
growth to improve by the end of 2024.
Delivery of our financial model is underpinned
by a stringent focus on revenue yield, impairment rate and the
cost-income ratio, and we continued to make very good progress
towards our medium-term targets.
Notwithstanding the impact of a
lower revenue yield in Poland, the Group's annualised
revenue yield strengthened by 1.2ppts to 55.4% year on year
reflecting an increase in the mix of receivables
in Mexico, Romania, Hungary and the Czech Republic which carry a
higher yield. We expect the Group revenue yield to continue to
increase into our target range of between 56% and 58% in the medium
term as these countries continue to grow and represent a higher
proportion of the Group's receivables portfolio.
Despite the increased costs of living being
experienced by our customers, our responsible approach to granting
credit together with strong operational discipline delivered an
excellent customer repayment performance in all our markets during
the first half of the year. As a result,
we reduced our cost-of-living provision by £5m in the period, and
the Group's annualised impairment rate for the first half of 10.5%
(H1-23: 11.4%) was better than our internal plans. This improved
credit quality led to a modest reduction in the Group's impairment
coverage ratio from 36.3% at December 2023 to 34.7% at June 2024,
albeit this is still higher than the pre-Covid-19 level of 33.5% at
the end of 2019. With excellent credit
quality across all our divisions, we are well positioned to
accelerate growth through the second half of the year.
We continue to maintain a strict focus on
efficiency and cost control. The Group's cost-income ratio at 59.0%
is 1.6ppts higher year on year due wholly to the reduction in
revenue in Poland. Excluding the Poland home credit business, the
Group's cost-income ratio has reduced from 57.3% in June last year
to 54.7% at the end of the first half. We expect the Group's ratio
to continue to improve as we deliver increased growth, build scale
and continue to execute on our cost efficiency programme, moving to
our target range of 49% to 51% in the medium
term.
The annualised pre-exceptional RoRE improved
to 16.2% (H1-23: 14.7%) in the first half of the year, reflecting
growth in returns in Mexico home credit and IPF Digital as we build
scale. We expect returns to moderate in the second
half of the year as the impact of re-pricing the credit card
portfolio in Poland has a larger impact on European home credit
returns compared with the first half of the year. The
Group's annualised pre-exceptional RoE, based on actual equity, was
12.1% at the end of the first half (H1-23: 11.3%).
Pre-exceptional EPS of 12.6p per share showed
strong growth of 23.5% (H1-23: 10.2p). Reported EPS of 8.8p per
share (H1-23: 8.4p) showed an increase of 4.8% after taking account
of the post-tax impact of exceptional items.
Divisional
performance
European home
credit
|
|
H1-24
£m
|
H1-23
£m
|
Change
£m
|
Change
%
|
Change at
CER
%
|
|
Customer numbers (000s)
|
717
|
779
|
(62)
|
(8.0%)
|
(8.0%)
|
|
Customer lending
|
315.4
|
310.9
|
4.5
|
1.4%
|
2.6%
|
|
Average gross receivables
|
744.8
|
784.7
|
(39.9)
|
(5.1%)
|
(6.5%)
|
|
Closing net receivables
|
444.0
|
499.1
|
(55.1)
|
(11.0%)
|
(8.5%)
|
|
|
|
|
|
|
|
|
Revenue
|
166.0
|
190.4
|
(24.4)
|
(12.8%)
|
(12.1%)
|
|
Impairment
|
(5.7)
|
(25.0)
|
19.3
|
77.2%
|
77.4%
|
|
Revenue less impairment
|
160.3
|
165.4
|
(5.1)
|
(3.1%)
|
(2.1%)
|
|
Costs
|
(112.1)
|
(109.9)
|
(2.2)
|
(2.0%)
|
(2.8%)
|
|
Interest expense
|
(18.4)
|
(23.7)
|
5.3
|
22.4%
|
22.0%
|
|
Pre-exceptional
profit before taxation
|
29.8
|
31.8
|
(2.0)
|
(6.3%)
|
|
|
|
|
|
|
|
|
|
Annualised revenue yield
|
47.2%
|
45.6%
|
1.6ppts
|
|
|
|
Annualised impairment rate
|
2.2%
|
3.4%
|
1.2ppts
|
|
|
|
Annualised cost-income ratio
|
64.7%
|
59.8%
|
(4.9)ppts
|
|
|
|
Annualised pre-exceptional
RoRE1
|
21.3%
|
22.6%
|
(1.3)ppts
|
|
|
1
Prior to an
exceptional charge of £5.0m (see note 8) in 2024, and an
exceptional tax charge of £4.0m in 2023 (see note
8).
Our European home credit division delivered
another good operational and financial performance in the first
half of the year, reporting pre-exceptional profit before tax of
£29.8m (H1-23: £31.8m), a modest reduction on last year due wholly
to the impact of implementing the reduced credit card cap in
Poland. The first half result was better than our original plans,
due in the main to very strong customer repayment
behaviour.
There remains good consumer demand for our
broad range of products in Europe and lending growth continued to
improve as the first half progressed. Excluding Poland, the
combined lending growth in Romania, Hungary and the Czech Republic
in the first half was 8% (at CER), with first quarter growth of 6%
increasing to 9% in the second quarter.
Lending in Poland reduced by 5% (at CER) in
the period, recovering from a year-on-year contraction of 20% in
the first quarter to growth of 13% in quarter two. The growth in
the second quarter reflected a much higher proportion of instalment
loans as we balance our lending to remain within the parameters of
our current small payment institution licence.
Closing net receivables at £444m represent a
year-on-year reduction of 8.5%, with Hungary, Romania and the Czech
Republic delivering combined growth of 9.1% (at CER) whilst Poland
reduced by 30% (at CER) to £150m. The contraction in Poland's home
credit receivables is now slowing and we expect the business to
begin to regrow towards the end of the year.
Hungary, Romania and the Czech Republic
delivered customer growth of 2% in the first half whilst Poland
reduced by 20%, leading to an overall reduction of 8% in the
period. There is now good momentum in building customer numbers in
European home credit as a whole.
The annualised revenue yield
strengthened by 1.6ppts year-on-year to 47.2% reflecting the impact
of management actions taken to strengthen returns, including
reduced promotional activity and modest price increases.
However, the yield has seen a modest reduction of 0.2 ppts since
December 2023 due to the re-pricing of credit cards in
Poland.
Customer repayment performance was
very strong in all our European home credit markets and credit
quality is excellent. There has been no discernible impact from the
higher costs of living arising from increased inflation rates
through 2022 and 2023 and, therefore, the cost-of-living provision
has been reduced by £3m. Overall, the annualised impairment rate
improved by 1.2ppts year on year to 2.2%, well ahead of our
original plans. We continue to expect the
medium-term impairment rate to rise to between 8% and
10%.
Despite ongoing wage pressures, the cost base
of European home credit increased by only 2.8% in the first half of
the year, reflecting the ongoing cost efficiency programme within
the Group. The annualised cost-income ratio increased from 59.8% at
June 2023 to 64.7% as a result of the reduction in revenue in
Poland. As part of the transition of our Polish business, we
undertook a restructuring of the field force in the first half and
an exceptional cost of £5m has been reflected in the first half
results as a result.
The annualised pre-exceptional
RoRE for European home credit decreased modestly by 1.3ppts to
21.3% (H1-23: 22.6%), notwithstanding the financial impacts of the
transition in Poland, and this was a lower reduction than
originally expected due to the strong impairment performance in the
first half. We anticipate full year returns for the division will
moderate to below 20% as the impact of the credit card re-pricing
in Poland will be greater in the second half of the year. We
anticipate a growth in returns in 2025, supported by receivables
growth and ongoing cost efficiency.
Our European home credit business
remains the bedrock of our Group returns with more than 700,000
customers and, importantly, continues to offer good growth
opportunities. We are making good progress with the transition in
Poland, growing our new digital and retail partnership offerings in
Romania and working to attract new customers in all four markets
across the division. We will also continue
to drive more efficient processes and deliver greater synergies
across our four countries, including through the deployment of
technology and sharing of best practice and resource.
Mexico home credit
|
|
H1-24
£m
|
H1-23
£m
|
Change
£m
|
Change
%
|
Change at
CER
%
|
|
Customer numbers (000s)
|
710
|
700
|
10
|
1.4%
|
1.4%
|
|
Customer lending
|
156.0
|
142.9
|
13.1
|
9.2%
|
5.8%
|
|
Average gross receivables
|
319.1
|
274.8
|
44.3
|
16.1%
|
10.0%
|
|
Closing net receivables
|
183.0
|
176.1
|
6.9
|
3.9%
|
9.0%
|
|
|
|
|
|
|
|
|
Revenue
|
139.9
|
125.4
|
14.5
|
11.6%
|
8.2%
|
|
Impairment
|
(44.7)
|
(44.0)
|
(0.7)
|
(1.6%)
|
1.5%
|
|
Revenue less impairment
|
95.2
|
81.4
|
13.8
|
17.0%
|
13.5%
|
|
Costs
|
(70.1)
|
(64.1)
|
(6.0)
|
(9.4%)
|
(6.1%)
|
|
Interest expense
|
(7.4)
|
(5.9)
|
(1.5)
|
(25.4%)
|
(23.3%)
|
|
Reported profit
before taxation
|
17.7
|
11.4
|
6.3
|
55.3%
|
|
|
|
|
|
|
|
|
|
Annualised revenue yield
|
86.5%
|
88.5%
|
(2.0)ppts
|
|
|
|
Annualised impairment rate
|
30.5%
|
32.2%
|
1.7ppts
|
|
|
|
Annualised cost-income ratio
|
49.1%
|
50.0%
|
0.9ppts
|
|
|
|
Annualised RoRE
|
24.9%
|
20.5%
|
4.4ppts
|
|
|
|
|
|
|
|
|
|
Mexico home credit delivered a very strong
financial performance in the first half of the year, reporting a
55.3% (£6.3m) increase in profit before tax to £17.7m.
The continued impact of our geographic
expansion strategy, together with good consumer demand, supported a
5.8% (at CER) increase in customer lending in the first half of the
year, up from 4% delivered in the first quarter. The
ongoing actions to improve performance in the two underperforming
regions of Mexico City and Sureste (c.20% of the business) continue
to gain traction, and we expect lending growth for the year as a
whole to increase to our target range of between 8% and 10%.
Customer numbers grew by 1.4% to 710,000.
Closing net receivables grew by 9.0% (at CER)
to £183m delivering an 8.2% (at CER) increase in revenue in the
first half. The annualised revenue yield reduced
marginally from 88.5% to 86.5% driven by a modest increase in the
mix of slightly longer, lower yielding products for existing
customers.
A key focus for our team in Mexico has been to
improve the impairment rate towards our target level of 30%
following the increase to 32.3% reported at December 2023. As a
result of focused management action, write-off volumes have
reduced, and repayment performance has been robust. Together with a
reduction in the cost-of-living provision from £3m to £2m, this has
resulted in the annualised impairment rate improving
by 1.8ppts since the year end to 30.5% which is a very pleasing
result and a key driver of improved returns.
Despite the continued investment in geographic
expansion, costs have been tightly controlled and together with the
increase in revenue, the annualised cost-income ratio improved by
0.9 ppts to 49.1% and is at the lower end of our target range of
49% to 51%.
Interest costs increased by 23.3% (at CER),
driven by a 10% (at CER) increase in average gross receivables
reflecting the increasing costs of funding the Mexican
business.
Notwithstanding the increase in interest
costs, the improvement in impairment rate together with continued
cost efficiency resulted in Mexico home credit delivering an
annualised RoRE of 24.9% (H1-23: 20.5%).
Mexico home credit represents a significant
growth market for the Group, forming a key part of our Next Gen
strategy, and we are very pleased with its continuing strong
financial performance and growth momentum. We will continue our
expansion strategy to reach more new customers and focus on
delivering sustainable, quality growth to ensure consistent
returns.
IPF
Digital
|
|
H1-24
£m
|
H1-23
£m
|
Change
£m
|
Change
%
|
Change at
CER
%
|
|
Customer numbers (000s)
|
229
|
239
|
(10)
|
(4.2%)
|
(4.2%)
|
|
Customer lending
|
126.0
|
125.0
|
1.0
|
0.8%
|
1.5%
|
|
Average gross receivables
|
306.0
|
283.7
|
22.3
|
7.9%
|
7.5%
|
|
Closing net receivables
|
237.4
|
217.9
|
19.5
|
8.9%
|
10.4%
|
|
|
|
|
|
|
|
|
Revenue
|
65.8
|
64.2
|
1.6
|
2.5%
|
2.8%
|
|
Impairment
|
(13.9)
|
(20.2)
|
6.3
|
31.2%
|
30.8%
|
|
Revenue less impairment
|
51.9
|
44.0
|
7.9
|
18.0%
|
18.2%
|
|
Costs
|
(35.9)
|
(33.1)
|
(2.8)
|
(8.5%)
|
(8.8%)
|
|
Interest expense
|
(8.8)
|
(8.3)
|
(0.5)
|
(6.0%)
|
(6.0%)
|
|
Reported profit
before taxation
|
7.2
|
2.6
|
4.6
|
176.9%
|
|
|
|
|
|
|
|
|
|
Annualised revenue yield
|
42.9%
|
44.8%
|
(1.9)ppts
|
|
|
|
Annualised impairment rate
|
10.0%
|
13.2%
|
3.2ppts
|
|
|
|
Annualised cost-income ratio
|
53.4%
|
53.3%
|
(0.1)ppts
|
|
|
|
Annualised RoRE
|
8.5%
|
3.1%
|
5.4ppts
|
|
|
IPF Digital delivered an improved financial
performance as we build scale across the business. Profit before
tax increased by £4.6m to £7.2m (H1-23: £2.6m), with all countries
delivering an improved performance, particularly Poland which is
now returning to growth.
There is growing customer demand for fully
remote credit offerings and as a result, customer lending saw
year-on-year growth of 7% (at CER), excluding Poland. Growth in the
first quarter was around 4% (at CER) against a strong comparative
last year, and we saw the expected acceleration in growth to 10%
(at CER) in the second quarter, with all markets delivering
improved momentum. Lending in Poland reduced by 18% (at CER) in the
period, improving from a contraction of 28% (CER) in the first
quarter. For the division as a whole, customer lending in the first
half increased year on year by 2% and, based on the strong momentum
in all our markets, we expect this rate to increase to between 10%
and 15% for the year as a whole.
Customer numbers reduced by 4.2% to 229,000
due wholly to a 23% contraction in Poland. Customer numbers in
Poland have now stabilised at just under 50,000 and we expect to
see growth through the second half of the year. Excluding Poland,
customer numbers increased by 5%.
We continued to execute our growth strategy to
rebuild receivables to gain scale and deliver our target returns,
which resulted in closing net receivables growth of
10% to £237m (at CER). Mexico and Australia were the stand-out
performers with growth of 20% whilst our Baltic markets also
performed well delivering 14% growth. Our nascent digital business
in the Czech Republic, which was transferred from the management of
European home credit to IPF Digital at the end of 2023, grew its
receivables by 50% from £6m to £9m. Closing net receivables in
Poland reduced by 17% to £37m, but delivered modest growth in the
second quarter.
The annualised revenue yield in
IPF Digital reduced by 1.9 ppts to 42.9% reflecting the impact of a
combination of factors including the flow-through of reduced rate
caps in Latvia and Poland, both of which were lowered at the end of
2022, as well as in Estonia which is recalculated biannually. These
adverse variances have been offset partly by the growth in Mexico
which has a higher revenue yield.
Customers continue to repay very
well in all our digital operations and portfolio quality is very
good. Together with a reduction in the cost-of-living provision
from £3m to £2m in the first half, this has resulted in the
annualised impairment rate showing a year-on-year reduction of
3.2ppts to 10.0%.
Whilst we remain highly focused on managing
costs tightly, we also continue to invest in marketing and
technology to attract new customers and build scale which is
delivering increased lending momentum as demonstrated in the second
quarter. As a result, costs increased by 8.8% (at CER) in the first
half of the year. The increased investment together with the
reduction in the revenue yield has meant that the annualised
cost-income ratio remained broadly unchanged year on year at 53.4%.
We expect the cost-income ratio to improve as we continue to grow
and benefit from economies of scale. As a fully digital business,
we are targeting a cost-income ratio of around 45% once the
business reaches full scale.
The actions we are taking to build scale
together with the strong impairment performance resulted in IPF
Digital's annualised RoRE strengthening by 5.4 ppts to 8.5% year on
year. Whilst IPF Digital has lower scale than we would wish
following Covid-19 and the closure of Finland and Spain, there are
strong organic growth opportunities in our existing markets,
particularly Mexico, Australia, the Czech Republic and Poland. We
will also continue to consider inorganic opportunities to deliver
scale and increase returns. Our aim is for IPF Digital to deliver
an RoRE at the lower end of the Group's target returns in
2026.
IPF Digital represents a significant long-term
growth opportunity for the Group. We will continue to extend our
mobile wallet offerings in Mexico and the Baltic countries as well
as expand the test of providing point-of-sale revolving credit
facilities through our new Pay Later product in Mexico. We are
pleased with the progress of our newest business in the Czech
Republic, and the growth and product economics now being delivered
in Australia. We have strong foundations in place to deliver faster
growth in the second half of the year and beyond.
Taxation
The pre-exceptional tax charge on the profit
for the first half has been based on an expected tax rate for the
full year of approximately 40% (H1-23: 40%).
An exceptional tax credit of £2.1m has been
reflected in the first half in respect of the total exceptional
costs of £10.8m in connection with the refinancing of the Group's
Eurobond (£5.8m) and the reorganisation of the field infrastructure
in the Polish home credit business (£5.0m).
In 2022 and 2023, exceptional tax charges of
£5.1m and £4.0m respectively were reflected in relation to a
two-year temporary "extra profit special tax" in Hungary. We noted
in the 2023 annual report that the temporary tax had been extended
for an additional year and, therefore, a further £2m exceptional
tax charge was expected to arise in 2024. We now understand that
the tax is to be extended further and, consequently, the "extra
profit special tax" now forms part of our normal tax
charge.
Funding and
balance sheet
We continue to have a very strong balance
sheet and have extended our debt maturity profile materially in the
first half of the year.
In June, we successfully refinanced the
Group's Eurobond well ahead of its maturity in November 2025. The
transaction was structured as a tender offer of the old bond at a
price of €1,015 per €1,000 of bonds held and a new issuance
of €341m of five and a half year
bonds at an issue price of 99.493% and a coupon of
10.75%. There was very strong demand for the new notes, resulting
in them being oversubscribed multiple times during marketing and
over 150 investors participating in the final transaction. This
allowed us to tighten the margin over the benchmark German bund
from 1,070bps on the old bonds to 830bps on the new
bonds. We redeemed €274m of the old bonds
(80.5%) and €67m
remain outstanding and will mature in November 2025. Tender costs
of £4.1m together with a £1.7m write-off of unamortised fees in
respect of the old bonds, resulted in an exceptional cost of
£5.8m.
We also secured £23m of bank facilities in the
first half of the year and a further £28m in July of which £15m was
new or increased facilities. We continue to have very strong and
supportive relationships with eighteen lending banks across our
businesses.
The successful refinancing of the Eurobond and
bank extension process resulted in the Group having total debt
facilities of £679m at the end of June, consisting of £483m of
bonds and £196m of bank facilities. Total borrowings amounted to
£553m and headroom, consisting of undrawn facilities and
non-operational cash balances, amounted to £179m. As a result, the
Group redeemed the SEK 450m (c.£35m) of Nordic bonds in July, some
three months in advance of their original maturity date. The
average maturity profile of the Group's debt facilities now stands
at 3.3 years, up from 2.0 years at December 2023. Approximately
£470m of the Group's debt funding now matures beyond 2025. The
Group's current funding and cash generation supports the Group's
growth plans through to the end of 2025.
Our blended cost of funding in the first half
was 13.7%, modestly lower than 14.0% in the first half of last
year. This was due to a reduction in interest rates across our
markets as well as a lower cost of hedging as interest
differentials narrowed. Approximately 30% of our debt
facilities are at variable rates compared with 20% of our revenues,
which are subject to interest-linked rate caps. We expect the
funding rate for the year as a whole to increase modestly,
reflecting the refinancing of the Eurobond at a headline rate
100bps higher than the old bond.
Following the Eurobond refinancing, Fitch
Ratings upgraded our long-term credit rating to BB from BB- Outlook
Stable. Our credit rating from Moody's Investment Services remained
unchanged at Ba3 (Outlook Stable).
At the end of June, the Group's equity to
receivables ratio was 56% (H1-23: 52%), compared with our target of
40%. After experiencing two years of foreign exchange gains which
resulted in the ratio increasing progressively to 59% through to
the end of the first quarter, we saw a 300bps reduction in the
second quarter reflecting accelerated receivables growth, the
payment of the 2023 final dividend and foreign exchange losses of
£23m in June 2024, primarily due to the weakening of the Mexican
Peso. Our strong capital position supports the £15m share buyback
announced today as well as the Group's ambitious growth plans and
progressive dividend policy through to the point at which we are
delivering our target returns and operating in line with our
financial model. We expect this to be in 2026.
The Group's gearing ratio was 1.2 times
(H1-23: 1.2 times) at the end of the first half, comfortably within
our covenant limit of 3.75 times, and our interest cover covenant
was 2.7 times (H1-23: 2.2 times), compared with our covenant limit
of 2.0 times.
Financial statements
Consolidated
income statement
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months
ended
|
Six
months
ended
|
Year
ended
|
|
|
|
30 June
2024
|
30
June
2023
|
31
December 2023
|
|
|
Notes
|
£m
|
£m
|
£m
|
|
Revenue
|
3
|
371.7
|
380.0
|
767.8
|
|
Impairment
|
3
|
(64.3)
|
(89.2)
|
(169.4)
|
|
Revenue less impairment
|
|
307.4
|
290.8
|
598.4
|
|
|
|
|
|
|
|
Interest expense
|
4
|
(34.7)
|
(37.9)
|
(76.9)
|
|
Other operating costs
|
|
(68.5)
|
(62.2)
|
(128.7)
|
|
Administrative expenses
|
|
(156.9)
|
(152.9)
|
(308.9)
|
|
|
|
(260.1)
|
(253.0)
|
(514.5)
|
|
|
|
|
|
|
|
Pre-exceptional profit before taxation
|
3
|
47.3
|
37.8
|
83.9
|
|
Exceptional items
|
8
|
(10.8)
|
-
|
-
|
|
Profit before taxation
|
|
36.5
|
37.8
|
83.9
|
|
Pre-exceptional tax
(expense)/income
|
|
|
|
|
|
- UK
|
|
-
|
-
|
0.7
|
|
- Overseas
|
|
(18.9)
|
(15.1)
|
(32.6)
|
|
Pre-exceptional tax
expense
|
5
|
(18.9)
|
(15.1)
|
(31.9)
|
|
Exceptional tax
income/(expense)
|
8
|
2.1
|
(4.0)
|
(4.0)
|
|
Total tax expense
|
|
(16.8)
|
(19.1)
|
(35.9)
|
|
Profit after taxation attributable to equity
shareholders
|
|
19.7
|
18.7
|
48.0
|
The notes to the financial information are an
integral part of these condensed consolidated interim financial
statements.
Earnings per
share - statutory
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
Six months ended
|
Six months
ended
|
Year
ended
|
|
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
Notes
|
pence
|
pence
|
pence
|
|
Basic
|
6
|
8.8
|
8.4
|
21.5
|
|
Diluted
|
6
|
8.3
|
8.0
|
20.2
|
Earnings per
share - pre-exceptional items
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
Six months ended
|
Six months
ended
|
Year
ended
|
|
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
|
pence
|
pence
|
pence
|
|
Basic
|
|
12.6
|
10.2
|
23.2
|
|
Diluted
|
|
11.9
|
9.7
|
21.9
|
Dividend per
share
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
Six months ended
|
Six months
ended
|
Year
ended
|
|
|
|
30 June
2023
|
30 June
2023
|
31 December
2023
|
|
|
Notes
|
pence
|
pence
|
pence
|
|
Interim dividend
|
7
|
3.4
|
3.1
|
3.1
|
|
Final dividend
|
7
|
-
|
-
|
7.2
|
|
Total
dividend
|
|
3.4
|
3.1
|
10.3
|
Dividends
paid
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
Six months ended
|
Six months
ended
|
Year
ended
|
|
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
Notes
|
£m
|
£m
|
£m
|
|
Interim dividend of 3.4 pence
(2023: interim dividend of 3.1 pence) per
share
|
7
|
-
|
-
|
6.9
|
|
Final 2023 dividend of 7.2
pence
(2023: final 2022 dividend of 6.5 pence) per
share
|
7
|
16.2
|
14.6
|
14.6
|
|
Total dividends
paid
|
|
16.2
|
14.6
|
21.5
|
Consolidated
statement of comprehensive income
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months ended
30 June 2024
|
Six months
ended
30 June
2023
|
Year
ended
31 December
2023
|
|
|
£m
|
£m
|
£m
|
|
Profit after
taxation attributable to equity shareholders
|
19.7
|
18.7
|
48.0
|
|
Other
comprehensive (expense)/income
|
|
|
|
|
Items that may
subsequently be reclassified to income statement
|
|
|
|
|
Exchange (losses)/gains on foreign currency
translations
|
(25.6)
|
12.7
|
22.8
|
|
Net fair value gains/(losses) - cash flow
hedges
|
0.9
|
(0.8)
|
0.1
|
|
Items that
will not subsequently be reclassified to income
statement
|
|
|
|
|
Actuarial (losses)/gains on retirement benefit
asset
|
(1.3)
|
(1.2)
|
3.9
|
|
Tax credit/(charge) on items that will not be
reclassified
|
0.3
|
0.3
|
(1.0)
|
|
Other
comprehensive (expense)/income net of taxation
|
(25.7)
|
11.0
|
25.8
|
|
Total
comprehensive (expense)/income for the period attributable to
equity shareholders
|
(6.0)
|
29.7
|
73.8
|
Consolidated
balance sheet
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
Notes
|
£m
|
£m
|
£m
|
|
Assets
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Goodwill
|
9
|
23.1
|
23.4
|
23.6
|
|
Intangible assets
|
10
|
33.4
|
28.7
|
32.3
|
|
Property, plant and equipment
|
11
|
13.8
|
16.1
|
16.0
|
|
Right-of-use assets
|
12
|
19.9
|
19.4
|
21.7
|
|
Amounts receivable from customers
|
14
|
239.2
|
201.5
|
203.3
|
|
Deferred tax assets
|
13
|
125.9
|
144.9
|
131.7
|
|
Retirement benefit asset
|
17
|
4.9
|
0.9
|
6.1
|
|
|
|
460.2
|
434.9
|
434.7
|
|
Current assets
|
|
|
|
|
|
Amounts receivable from customers
|
14
|
625.2
|
691.6
|
689.6
|
|
Derivative financial instruments
|
|
5.1
|
1.0
|
2.9
|
|
Cash and cash equivalents
|
|
86.5
|
28.2
|
42.5
|
|
Other receivables
|
|
16.5
|
16.2
|
16.0
|
|
Current tax assets
|
|
3.3
|
1.6
|
3.3
|
|
|
|
736.6
|
738.6
|
754.3
|
|
Total
assets
|
3
|
1,196.8
|
1,173.5
|
1,189.0
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Borrowings
|
16
|
(54.1)
|
(59.5)
|
(52.2)
|
|
Derivative financial instruments
|
|
(2.7)
|
(12.9)
|
(4.4)
|
|
Trade and other payables
|
|
(123.3)
|
(129.5)
|
(132.9)
|
|
Provisions for liabilities and
charges
|
15
|
(3.9)
|
(3.4)
|
-
|
|
Lease liabilities
|
12
|
(8.9)
|
(8.1)
|
(8.3)
|
|
Current tax liabilities
|
|
(12.9)
|
(14.5)
|
(7.3)
|
|
|
|
(205.8)
|
(227.9)
|
(205.1)
|
|
Non-current
liabilities
|
|
|
|
|
|
Deferred tax liabilities
|
|
(7.1)
|
(5.9)
|
(7.1)
|
|
Lease liabilities
|
12
|
(13.1)
|
(13.3)
|
(15.3)
|
|
Borrowings
|
16
|
(490.4)
|
(463.5)
|
(459.6)
|
|
|
|
(510.6)
|
(482.7)
|
(482.0)
|
|
Total
liabilities
|
3
|
(716.4)
|
(710.6)
|
(687.1)
|
|
Net
assets
|
|
480.4
|
462.9
|
501.9
|
|
Equity
attributable to owners of the Parent
|
|
|
|
|
Called-up share capital
|
|
23.4
|
23.4
|
23.4
|
|
Other reserve
|
|
(22.5)
|
(22.5)
|
(22.5)
|
|
Foreign exchange reserve
|
|
6.4
|
21.9
|
32.0
|
|
Hedging reserve
|
|
1.1
|
(0.7)
|
0.2
|
|
Own shares
|
|
(26.0)
|
(36.9)
|
(36.7)
|
|
Capital redemption reserve
|
|
2.3
|
2.3
|
2.3
|
|
Retained earnings
|
|
495.7
|
475.4
|
503.2
|
|
Total
equity
|
|
480.4
|
462.9
|
501.9
|
Consolidated
statement of changes in equity
|
|
Unaudited
|
|
|
Called-up share
capital
£m
|
Other
reserve
£m
|
*Other
reserves
£m
|
Retained
earnings
£m
|
Total
equity
£m
|
|
At 1 January 2023
|
23.4
|
(22.5)
|
(31.7)
|
476.0
|
445.2
|
|
Comprehensive income
|
|
|
|
|
|
|
Profit after taxation for the
period
|
-
|
-
|
-
|
18.7
|
18.7
|
|
Other
comprehensive income/(expense)
|
|
|
|
|
|
|
Exchange gains on foreign currency translation
(note 20)
|
-
|
-
|
12.7
|
-
|
12.7
|
|
Net fair value losses - cash flow
hedges
|
-
|
-
|
(0.8)
|
-
|
(0.8)
|
|
Actuarial loss on retirement benefit
asset
|
-
|
-
|
-
|
(1.2)
|
(1.2)
|
|
Tax credit on other comprehensive
income
|
-
|
-
|
-
|
0.3
|
0.3
|
|
Total other comprehensive
income/(expense)
|
-
|
-
|
11.9
|
(0.9)
|
11.0
|
|
Total comprehensive income for the
period
|
-
|
-
|
11.9
|
17.8
|
29.7
|
|
Transactions
with owners
|
|
|
|
|
|
|
Share-based payment adjustment to
reserves
|
-
|
-
|
-
|
2.9
|
2.9
|
|
Purchase of own shares
|
-
|
-
|
(0.3)
|
-
|
(0.3)
|
|
Shares granted from treasury and employee
trust
|
-
|
-
|
6.7
|
(6.7)
|
-
|
|
Dividends paid to Company
shareholders
|
-
|
-
|
-
|
(14.6)
|
(14.6)
|
|
At 30 June 2023
|
23.4
|
(22.5)
|
(13.4)
|
475.4
|
462.9
|
|
|
Audited
|
|
At 1 January 2023
|
23.4
|
(22.5)
|
(31.7)
|
476.0
|
445.2
|
|
Comprehensive income:
|
|
|
|
|
|
|
Profit after taxation for the year
|
-
|
-
|
-
|
48.0
|
48.0
|
|
Other
comprehensive income/(expense):
|
|
|
|
|
|
|
Exchange gains on foreign currency translation
(note 20)
|
-
|
-
|
22.8
|
-
|
22.8
|
|
Net fair value gains - cash flow
hedges
|
-
|
-
|
0.1
|
-
|
0.1
|
|
Actuarial gain on retirement benefit
obligation
|
-
|
-
|
-
|
3.9
|
3.9
|
|
Tax charge on other comprehensive
expense
|
-
|
-
|
-
|
(1.0)
|
(1.0)
|
|
Total other comprehensive income
|
-
|
-
|
22.9
|
2.9
|
25.8
|
|
Total comprehensive income for the
year
|
-
|
-
|
22.9
|
50.9
|
73.8
|
|
Transactions with owners:
|
|
|
|
|
|
|
Deferred tax on share-based payment
transactions
|
-
|
-
|
-
|
0.5
|
0.5
|
|
Share-based payment adjustment to
reserves
|
-
|
-
|
-
|
4.3
|
4.3
|
|
Shares acquired by employee trust
|
-
|
-
|
(0.4)
|
-
|
(0.4)
|
|
Shares granted from treasury and employee
trust
|
-
|
-
|
7.0
|
(7.0)
|
-
|
|
Dividends paid to Company
shareholders
|
-
|
-
|
-
|
(21.5)
|
(21.5)
|
|
At 31 December 2023
|
23.4
|
(22.5)
|
(2.2)
|
503.2
|
501.9
|
Consolidated
statement of changes in equity (continued)
|
|
Unaudited
|
|
|
Called-up share
capital
£m
|
Other
reserve
£m
|
*Other
reserves
£m
|
Retained
earnings
£m
|
Total
equity
£m
|
|
At 1 January
2024
|
23.4
|
(22.5)
|
(2.2)
|
503.2
|
501.9
|
|
Comprehensive income
|
|
|
|
|
|
|
Profit after taxation for the
period
|
-
|
-
|
-
|
19.7
|
19.7
|
|
Other
comprehensive (expense)/income
|
|
|
|
|
|
|
Exchange losses on foreign currency
translation (note 20)
|
-
|
-
|
(25.6)
|
-
|
(25.6)
|
|
Net fair value gains - cash flow
hedges
|
-
|
-
|
0.9
|
-
|
0.9
|
|
Actuarial loss on retirement benefit
asset
|
-
|
-
|
-
|
(1.3)
|
(1.3)
|
|
Tax credit on other comprehensive
income
|
-
|
-
|
-
|
0.3
|
0.3
|
|
Total other comprehensive expense
|
-
|
-
|
(24.7)
|
(1.0)
|
(25.7)
|
|
Total comprehensive (expense)/income for the
period
|
-
|
-
|
(24.7)
|
18.7
|
(6.0)
|
|
Transactions
with owners
|
|
|
|
|
|
|
Share-based payment adjustment to
reserves
|
-
|
-
|
-
|
2.1
|
2.1
|
|
Purchase of own shares
|
-
|
-
|
(1.4)
|
-
|
(1.4)
|
|
Shares granted from treasury and employee
trust
|
-
|
-
|
12.1
|
(12.1)
|
-
|
|
Dividends paid to Company
shareholders
|
-
|
-
|
-
|
(16.2)
|
(16.2)
|
|
At 30 June
2024
|
23.4
|
(22.5)
|
(16.2)
|
495.7
|
480.4
|
* Includes foreign exchange reserve, hedging
reserve, own shares and capital redemption reserve.
Consolidated cash flow statement
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
Six months ended
30 June
2024
|
Six months
ended
30 June
2023
|
Year
ended
31
December
2023
|
|
|
Notes
|
£m
|
£m
|
£m
|
|
Cash flows from
operating activities
|
|
|
|
|
|
Cash generated from
operating activities
|
19
|
71.6
|
85.1
|
193.4
|
|
Finance costs
paid
Finance income
received
|
|
(33.2)
0.7
|
(23.3)
-
|
(74.5)
-
|
|
Income tax paid
|
|
(11.5)
|
(22.6)
|
(33.1)
|
|
Net cash
generated from operating activities
|
|
27.6
|
39.2
|
85.8
|
|
|
|
|
|
|
|
Cash flows used
in investing activities
|
|
|
|
|
|
Purchases of intangible
assets
|
10
|
(7.4)
|
(7.5)
|
(17.9)
|
|
Purchases of property,
plant and equipment
|
11
|
(1.7)
|
(1.6)
|
(4.7)
|
|
Net cash used
in investing activities
|
|
(9.1)
|
(9.1)
|
(22.6)
|
|
Net cash
generated from operating and investing activities
|
|
18.5
|
30.1
|
63.2
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Proceeds from
borrowings
|
|
295.0
|
11.9
|
48.1
|
|
Repayment of
borrowings
|
|
(244.6)
|
(44.9)
|
(87.3)
|
|
Principal elements of lease
payments
|
12
|
(5.9)
|
(5.7)
|
(12.0)
|
|
Shares acquired by employee
trust
|
|
(1.4)
|
(0.3)
|
(0.4)
|
|
Dividends paid to equity
shareholders
|
|
(16.2)
|
(14.6)
|
(21.5)
|
|
Cash received on share
options exercised
|
|
-
|
0.3
|
0.4
|
|
Net cash
generated from/(used in) financing activities
|
|
26.9
|
(53.3)
|
(72.7)
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents
|
|
45.4
|
(23.2)
|
(9.5)
|
|
Cash and cash equivalents at beginning of
period
|
|
42.5
|
50.7
|
50.7
|
|
Exchange (losses)/gains on cash and cash
equivalents
|
|
(1.4)
|
0.7
|
1.3
|
|
Cash and cash
equivalents at end of period
|
|
86.5
|
28.2
|
42.5
|
Notes to the
condensed consolidated interim financial
statements
1. Basis
of preparation
These unaudited condensed consolidated interim
financial statements for the six months ended 30 June 2024 have
been prepared in accordance with the Disclosure and Transparency
Rules (DTR) of the Financial Conduct Authority and with IAS 34
'Interim Financial Reporting' as adopted by the United Kingdom.
These condensed consolidated interim financial statements should be
read in conjunction with the Annual Report and Financial Statements
('the Financial Statements') for the year ended 31 December 2023,
which have been prepared in accordance with International Financial
Reporting Standards (IFRSs) and those parts of the Companies Act
2006 applicable to companies reporting under IFRS. These condensed
consolidated interim financial statements were approved for release
on 31 July 2024.
These condensed consolidated interim financial
statements do not comprise statutory accounts within the meaning of
Section 434 of the Companies Act 2006. The Financial
Statements for the year ended 31 December 2023 were approved by the
Board on 14 March 2024 and delivered to the Registrar of Companies.
The Financial Statements contained an unqualified audit report and
did not include an emphasis of matter paragraph or any statement
under Section 498 of the Companies Act 2006. The Financial
Statements are available on the Group's website
(www.ipfin.co.uk).
The accounting policies applied to prepare
these condensed consolidated interim financial statements are
consistent with those applied to the most recent full year
Financial Statements for the year ended 31 December
2023.
We operate a formal risk management process,
the details of which are set out on page 78 of the Financial
Statements for the year ended 31 December 2023. Details of our
principal risks can be found on pages 80 to 83 of the Financial
Statements.
The risks assessed in preparing these
condensed consolidated interim financial statements are consistent
with those assessed in the most recent full year Financial
Statements for the year ended 31 December 2023.
Board
members
As at 30 June 2024, the Group's Board members
were as follows:
|
Stuart Sinclair
|
Chairman
|
|
Gerard Ryan
|
Executive Director
and Chief Executive Officer
|
|
Gary Thompson
|
Executive Director
and Chief Financial Officer
|
|
Katrina Cliffe
|
Senior independent
non-executive director
|
|
Deborah Davis
|
Independent
non-executive director
|
|
Richard Holmes
|
Independent
non-executive director
|
|
Aileen Wallace
|
Independent
non-executive director
|
Going
concern
In considering whether the Group is a going
concern, the Board has taken into account the Group's financial
forecasts and its principal risks (with particular reference to
funding, liquidity and regulatory risks). The forecasts have been
prepared for the two years to 31 December 2025 and include
projected profit and loss, balance sheet, cashflows, borrowings,
headroom against debt facilities and funding requirements. These
forecasts represent the best estimate of the businesses
performance, and in particular the evolution of customer lending
and repayments cash flows as well as management's best assumption
regarding the renewal/extension of maturing financing
facilities.
The financial forecasts have been stress
tested in a range of downside scenarios to assess the impact on
future profitability, funding requirements and covenant compliance.
The scenarios reflect the crystallisation of the Group's principal
risks (with particular reference to funding, liquidity and
regulatory risks). Consideration has also been given to multiple
risks crystallising concurrently and the availability of mitigating
actions that could be taken to reduce the impact of the identified
risks. In addition, we examined a reverse stress test on the
financial forecasts to assess the extent to which a recession would
need to impact our operational performance in order to breach a
covenant. This showed that net revenue would need to deteriorate
significantly from the financial forecast and the Directors have a
reasonable expectation that it is unlikely to deteriorate to this
extent.
At 30 June 2024, the Group had £179m of
non-operational cash and headroom against its debt facilities
(comprising a range of bonds and bank facilities), which have a
weighted average maturity of 3.3 years. Total debt facilities as at
30 June 2024 amounted to £679m of which £72m (excluding £34m of
uncommitted loans, which do not require extension) is due for
renewal over the following 12 months. A combination of these debt
facilities, the embedded business flexibility in respect of cash
generation and a successful track record of accessing funding from
debt capital markets over a long period (including periods with
challenging macroeconomic conditions and a changing regulatory
environment), are expected to meet the Group's funding requirements
for the foreseeable future (12 months from the date of approval of
this report). Taking these factors into account, together with
regulatory risks set out on page 80 of the 2023 Annual Report and
Financial Statements, the Board has a reasonable expectation that
the Group has adequate resources to continue in operation for the
foreseeable future. For this reason, the Board has adopted the
going concern basis in preparing the Report.
The following amendments to
standards are mandatory for the first time for the financial year
beginning 1 January 2024 but do not have any material impact on the
Group:
· Amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments: 'Disclosures: Supplier Finance
Arrangements'
· Amendments to IFRS 16 Leases: 'Lease Liability in a Sale and
Leaseback'
· Amendments to IAS 1 Presentation of Financial Statements:
Non-current Liabilities with Covenants
The following standards,
interpretations and amendments to existing standards are not yet
effective and have not been early adopted by the Group:
· IFRS
S1 'General Requirements for Disclosure of Sustainability-related
Financial Information'
· IFRS
S2 'Climate-related Disclosures'
· Amendments to IAS 21 'The Effects of Changes in Foreign
Exchange Rate: Lack of Exchangeability'
· IFRS
18 'Presentation and Disclosure in Financial Statements'
· IFRS
19 'Subsidiaries without Public Accountability:
Disclosures'
· Amendments to IFRS 9 Financial Instruments and IFRS 7
Financial Instruments: 'Disclosures: Classification and Measurement
of Financial Instruments'
Exceptional
items
Exceptional items are items that are unusual
because of their size, nature or incidence and which the directors
consider should be disclosed separately to enable a full
understanding of the Group's underlying results.
Critical accounting judgements
and key sources of estimation uncertainty
The preparation of condensed consolidated
interim financial statements requires the Group to make estimates
and judgements that affect the application of policies and reported
accounts.
Critical judgements represent key decisions
made by management in the application of the Group accounting
policies. Where a significant risk of materially different outcomes
exists due to management assumptions or sources of estimation
uncertainty, this will represent a critical accounting estimate.
Estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. Actual results may differ from these
estimates.
The estimates and judgements which have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities are discussed below.
Key sources of estimation
uncertainty
In the application of the Group's accounting
policies, the directors are required to make estimations that have
a significant impact on the amounts recognised and to make
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future
periods.
The following are the critical estimations,
that the directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in these condensed consolidated interim
financial statements.
Revenue recognition
The estimate used in respect of revenue
recognition is the methodology used to calculate the effective
interest rate (EIR). In order to determine the EIR applicable to
loans an estimate must be made of the expected life of each loan
and hence the cash flows relating thereto. These estimates are
based on historical data and are reviewed regularly.
Amounts
receivable from customers
The Group reviews its portfolio of customer
loans and receivables for impairment on a weekly or monthly basis.
The Group reviews the most recent customer repayment performance to
determine whether there is objective evidence which indicates that
there has been an adverse effect on expected future cash flows. For
the purposes of assessing the impairment of customer loans and
receivables, customers are categorised into stages based on days
past due as this is considered to be the most reliable predictor of
future payment performance. The level of impairment is calculated
using historical payment performance to generate both the estimated
expected loss and also the timing of future cash flows for each
agreement. The expected loss is calculated using probability of
default (PD) and loss given default (LGD) parameters.
Impairment models are monitored regularly to
test their continued capability to predict the timing and quantum
of customer repayments in the context of the recent customer
payment performance. The models used typically have a strong
predictive capability reflecting the relatively stable nature of
the business and therefore the actual performance does not usually
vary significantly from the estimated performance. The models are
ordinarily updated at least twice per year. Where we expect the
models to show an increase in the expected loss or a slowing of the
future cashflows in the following 12 months, we apply an adjustment
to the models. At 30 June 2024, this adjustment was a reduction in
receivables of £15.7m (30 June 2023: reduction of £12.5m; 31
December 2023: reduction of £9.0m).
Post model overlays (PMOs) on
amounts receivable from customers
|
|
Unaudited
30 June
2024
£m
|
Unaudited
30
June
2023
£m
|
Audited
31
December 2023
£m
|
|
Home credit
|
9.3
|
20.6
|
20.0
|
|
IPF Digital
|
2.1
|
3.1
|
3.2
|
|
Total
|
11.4
|
23.7
|
23.2
|
To date there has been no discernible impact
on customer repayments as a result of the cost-of-living crisis.
Inflation rates have continued to decrease however, prices remain
significantly higher than pre-crisis. There is also an additional
risk that governments could increase taxes following an increase in
government debt driven by the support packages that were provided
prior to elections in some markets. As a result, there remains a
risk that the cost-of-living crisis will have a significant adverse
impact on our customers' disposable income and therefore their
ability to make repayments. Due to the resilience of our customers
to date, the impact is expected to be lower than previously
anticipated. The PMO related to the cost-of-living at 30 June 2024
is £10.0m (30 June 2023: £20.8m; 31 December 2023: £15.1m). In
order to calculate this PMO, country-specific expert knowledge,
informed by economic forecast data to estimate the increase in
losses, has been used. This represents management's current
assessment of a reasonable outcome from the cost-of-living
crisis.
The Hungarian debt moratorium, which initially
began in March 2020, ended in December 2022. There remains a small
proportion of the portfolio that has at some point been in the
moratorium. Given the age of these loans, PMOs have been applied to
the impairment models in order to calculate the continued risks
that are not fully reflected in the standard impairment models.
Based on management's current expectations, the impact of these
PMOs was to increase impairment provisions at 30 June 2024 to £1.4m
(30 June 2023: £2.9m; 31 December 2023: £2.1m). In order to
calculate the PMO, the portfolio was segmented by analysis of the
most recent payment performance and, using this information,
assumptions were made around expected credit losses. This
represents management's current assessment of a reasonable outcome
from the actual repayment performance on the debt moratorium
impacted portfolio.
Tax
Estimations must be exercised in the
calculation of the Group's tax provision, in particular with regard
to the existence and extent of tax risks.
Deferred tax assets arise from timing
differences between the accounting and tax treatment of revenue and
impairment transactions and tax losses. Estimations must be
made regarding the extent to which timing differences reverse and
an assessment must be made of the extent to which future profits
will be generated to absorb tax losses. A shortfall in
profitability compared to current expectations may result in future
adjustments to deferred tax asset balances.
Alternative
performance measures
In reporting financial information, the Group
presents alternative performance measures, 'APMs' which are not
defined or specified under the requirements of IFRS.
The Group believes that these APMs, which are
not considered to be a substitute for or superior to IFRS measures,
provide stakeholders with additional helpful information on the
performance of the business. The APMs are consistent with how the
business performance is planned and reported within the internal
management reporting to the Board.
Each of the APMs used by the Group is set out
in the APM section of this report including explanations of how
they are calculated and how they can be reconciled to a statutory
measure where relevant.
The Group reports percentage change figures
for all performance measures, other than profit or loss before
taxation and earnings per share, after restating prior year figures
at a constant exchange rate. The constant exchange rate, which is
an APM, retranslates the previous year measures at the average
actual periodic exchange rates used in the current financial year.
These measures are presented as a means of eliminating the effects
of exchange rate fluctuations on the year-on-year reported
results.
The Group makes certain adjustments to the
statutory measures in order to derive APMs where relevant. The
Group's policy is to exclude items that are considered to be
significant in both nature and/or quantum and where treatment as an
adjusted item provides stakeholders with additional useful
information to assess the year-on-year trading performance of the
Group.
2.
Related parties
The Group has not entered into any material
transactions with related parties in the first six months of the
year.
3.
Segment analysis
Consistent with the change in
management responsibility from the end of 2023, the nascent digital
lending business in the Czech Republic, which was previously
reported as part of European home credit, is now included in the
results of IPF Digital. All comparatives have been amended
accordingly and are presented on a like-for-like basis.
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months
ended
|
Six
months
ended
|
Year
ended
|
|
|
30 June
2024
|
30 June
2023
(Restated)
|
31 December
2023
(Restated)
|
|
|
£m
|
£m
|
£m
|
|
Revenue
|
|
|
|
|
European home credit
|
166.0
|
190.4
|
375.9
|
|
Mexico home credit
|
139.9
|
125.4
|
261.6
|
|
IPF Digital
|
65.8
|
64.2
|
130.3
|
|
Revenue
|
371.7
|
380.0
|
767.8
|
|
Impairment
|
|
|
|
|
European home credit
|
5.7
|
25.0
|
35.6
|
|
Mexico home credit
|
44.7
|
44.0
|
96.7
|
|
IPF Digital
|
13.9
|
20.2
|
37.1
|
|
Impairment
|
64.3
|
89.2
|
169.4
|
|
Pre-exceptional profit before
taxation
|
|
|
|
|
European home credit
|
29.8
|
31.8
|
67.7
|
|
Mexico home credit
|
17.7
|
11.4
|
23.1
|
|
IPF Digital
|
7.2
|
2.6
|
8.1
|
|
UK costs1
|
(7.4)
|
(8.0)
|
(15.0)
|
|
Pre-exceptional profit before
taxation
|
47.3
|
37.8
|
83.9
|
|
Segment
assets
|
|
|
|
|
European home credit
|
522.8
|
585.2
|
558.7
|
|
Mexico home credit
|
287.2
|
276.4
|
291.2
|
|
IPF Digital
|
270.3
|
255.1
|
260.3
|
|
UK2
|
116.5
|
56.8
|
78.8
|
|
Total
|
1,196.8
|
1,173.5
|
1,189.0
|
|
Segment
liabilities
|
|
|
|
|
European home credit
|
251.9
|
321.0
|
289.6
|
|
Mexico home credit
|
113.9
|
126.4
|
134.3
|
|
IPF Digital
|
145.3
|
128.8
|
132.2
|
|
UK2
|
205.3
|
134.4
|
131.0
|
|
Total
|
716.4
|
710.6
|
687.1
|
1 Although UK costs
are not classified as a separate segment in accordance with IFRS 8
'Operating Segments', they are shown separately in order to provide
a reconciliation to other operating costs; administrative expenses
and profit before taxation.
2 Although the UK is
not classified as a separate segment in accordance with IFRS 8
'Operating Segments', it is shown separately above in order to
provide a reconciliation to consolidated total assets and
liabilities.
4. Interest
expense
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months
ended
30 June
2024
|
Six
months
ended
30 June
2023
|
Year
ended
31
December
2023
|
|
|
£m
|
£m
|
£m
|
|
Interest payable on borrowings
|
34.2
|
36.9
|
74.8
|
|
Interest payable on lease liabilities
|
1.2
|
1.0
|
2.1
|
|
Interest income
|
(0.7)
|
-
|
-
|
|
Interest
expense
|
34.7
|
37.9
|
76.9
|
5. Tax
expense
The pre-exceptional taxation charge on the
profit for the first six months of the year of £18.9m (30 June
2023: £15.1m), has been based on an expected effective tax rate for
2024 of 40% (30 June 2023: 40%).
Post-exceptional tax credits of £2.1m (30 June
2023: £4.0m tax charge) have been recognised on the exceptional
items of £10.8m (see note 8 for further details).
The Group is subject to tax audits in respect
of the Mexican home credit business (regarding 2017) and the
Mexican digital business (regarding 2019).
6.
Earnings per share
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months
ended
|
Six
months
ended
|
Year
ended
|
|
|
30 June
2024
|
30 June
2023
|
31
December
2023
|
|
|
pence
|
pence
|
pence
|
|
Basic EPS
|
8.8
|
8.4
|
21.5
|
|
Dilutive effect of awards
|
(0.5)
|
(0.4)
|
(1.3)
|
|
Diluted
EPS
|
8.3
|
8.0
|
20.2
|
Basic earnings per share (EPS) for 30 June
2024 is calculated by dividing the profit attributable to
shareholders of £19.7m (30 June 2023: £18.7m; 31 December 2023:
£48.0m) by the weighted average number of shares in issue during
the period of 224.9m which has been adjusted to exclude the
weighted average number of shares held in treasury and by the
employee trust (30 June 2023: 223.4m; 31 December 2023:
223.7m).
For diluted EPS for 30 June 2024, the weighted
average number of shares has been adjusted to 238.1m (six months
ended 30 June 2023: 235.2m; 31 December 2023: 237.5m) to assume
conversion of all dilutive potential ordinary share options
relating to employees of the Group.
7.
Dividends
Reflecting the continued strong
performance of the Group and our strategy to realise the long-term
growth potential of the business, the Board is pleased to declare a
9.7% increase in the interim dividend to 3.4 pence per share (30
June 2023: 3.1 pence). This is in line with our progressive
dividend policy which sets the interim dividend payment at 33% of
the prior year's full dividend payment. The interim dividend
will be paid on 27 September 2024 to shareholders on the register
at the close of business on 30 August 2024. The shares will be
marked ex-dividend on 29 August 2024.
8.
Exceptional items
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months ended
30 June
2024
|
Six months
ended
30 June
2023
|
Year
ended
31
December
2023
|
|
|
£m
|
£m
|
£m
|
|
Eurobond refinance costs
|
(5.8)
|
-
|
-
|
|
Poland restructuring costs
|
(5.0)
|
-
|
-
|
|
Exceptional items pre-tax
|
(10.8)
|
-
|
-
|
|
|
|
|
|
|
Tax credit on Eurobond refinance
costs
|
1.1
|
-
|
-
|
|
Tax credit on Poland restructuring
costs
|
1.0
|
-
|
-
|
|
Temporary Hungarian extra profit special
tax
|
-
|
(4.0)
|
(4.0)
|
|
Exceptional items tax credit/(charge)
|
2.1
|
(4.0)
|
(4.0)
|
|
Exceptional
items post-tax
|
(8.7)
|
(4.0)
|
(4.0)
|
A pre-tax exceptional cost of
£5.0m has been recognised, reflecting the costs associated with the
removal of c.200 roles from the Polish field force as part of the
implementation of the Improved Business Model (IBM). As at 30 June
2024, £1.1m of the cost had been paid to colleagues who have now
left the business with £3.9m remaining outstanding for those where
settlements have not yet been reached, this has been reflected as a
provision at 30 June 2024, see note 15 for further details. A tax
credit of £1.0m has been recognized on this restructuring
cost.
An exceptional cost of £5.8m has
been recognized, associated with the successful refinancing of the
Eurobond. The costs comprise £4.1m of tender costs, and £1.7m
of unamortised arrangement fees on the old Eurobond. A tax credit of £1.1m
has been recognised on these costs.
9.
Goodwill
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Net book value at start of period
|
23.6
|
24.2
|
24.2
|
|
Exchange adjustments
|
(0.5)
|
(0.8)
|
(0.6)
|
|
Net book value
at end of period
|
23.1
|
23.4
|
23.6
|
Goodwill is tested annually for impairment or
more frequently if there are indications that goodwill might be
impaired. The recoverable amount is determined from a value in use
calculation, based on the expected cash flows resulting from the
legacy MCB business' outstanding customer receivables and taking
into account the collect out of the Finnish business. The key
assumptions used in the value in use calculation relate to the
discount rates and cash flows used. The rate used to discount the
forecast cash flows is 13% (30 June 2023: 13%; 31 December 2023:
13%) and would need to increase to 15% for the goodwill balance to
be impaired; the cashflow forecasts arise over a 1-4 year period
and would need to be 17% lower than currently estimated for the
goodwill balance to be impaired.
10.
Intangible assets
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Net book value at start of period
|
32.3
|
27.9
|
27.9
|
|
Additions
|
7.4
|
7.5
|
17.9
|
|
Impairment
|
-
|
-
|
(0.2)
|
|
Amortisation
|
(6.0)
|
(6.3)
|
(13.1)
|
|
Exchange adjustments
|
(0.3)
|
(0.4)
|
(0.2)
|
|
Net book value
at end of period
|
33.4
|
28.7
|
32.3
|
Intangible assets comprise computer software
and are a mixture of self-developed and purchased assets. All
purchased assets have had further capitalised development on them,
meaning it is not possible to disaggregate fully between the
relevant intangible categories.
11.
Property, plant and equipment
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Net book value at start of period
|
16.0
|
17.3
|
17.3
|
|
Exchange adjustments
|
(0.7)
|
0.4
|
0.6
|
|
Additions
|
1.7
|
1.6
|
4.7
|
|
Disposals
|
-
|
-
|
(0.1)
|
|
Depreciation
|
(3.2)
|
(3.2)
|
(6.5)
|
|
Net book value
at end of period
|
13.8
|
16.1
|
16.0
|
As at 30 June 2024, the Group had £7.0m of
capital expenditure commitments with third parties that were not
provided for (30 June 2023: £4.7m; 31 December 2023:
£6.7m).
12.
Right-of-use assets and lease liabilities
The recognised right-of-use assets relate to
the following types of assets:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Properties
|
9.7
|
12.4
|
11.0
|
|
Motor vehicles
|
10.2
|
7.0
|
10.7
|
|
Total
right-of-use assets
|
19.9
|
19.4
|
21.7
|
The movement in the right-of-use assets in the
period is as follows:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Net book value at start of period
|
21.7
|
19.3
|
19.3
|
|
Exchange adjustments
|
(0.9)
|
0.8
|
0.9
|
|
Additions
|
4.0
|
3.9
|
9.8
|
|
Modifications
|
-
|
-
|
1.4
|
|
Depreciation
|
(4.9)
|
(4.6)
|
(9.7)
|
|
Net book value
at end of period
|
19.9
|
19.4
|
21.7
|
The movement in lease liabilities in the
period is as follows:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Lease liabilities at start of period
|
23.6
|
21.4
|
21.4
|
|
Exchange adjustments
|
(0.9)
|
0.8
|
0.9
|
|
Additions
|
4.0
|
3.9
|
11.2
|
|
Interest
|
1.2
|
1.0
|
2.1
|
|
Lease payments
|
(5.9)
|
(5.7)
|
(12.0)
|
|
Lease
liabilities at end of period
|
22.0
|
21.4
|
23.6
|
Analysed as:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Current
|
8.9
|
8.1
|
8.3
|
|
|
|
|
|
|
Non-current:
|
|
|
|
|
- between one and five years
|
11.9
|
11.8
|
13.7
|
|
- greater than five years
|
1.2
|
1.5
|
1.6
|
|
|
13.1
|
13.3
|
15.3
|
|
|
|
|
|
|
Lease
liabilities at end of period
|
22.0
|
21.4
|
23.6
|
13. Deferred
tax assets
Deferred tax assets have been recognised in
respect of tax losses and other temporary timing differences
(principally relating to recognition of revenue and impairment) to
the extent that it is probable that these assets will be utilised
against future taxable profits.
On 20 June 2023, the United Kingdom
government's legislation applying the Pillar Two income tax rules
became substantively enacted, effective from 1 January 2024.
Under the legislation the parent company will be required to pay in
the United Kingdom top-up tax on profits of subsidiaries that are
taxed at an effective tax rate of less than 15% (as calculated
under the rules). A system of simplified safe harbours will
apply for a transitional period of up to three years.
The Group has performed an impact assessment
using a combination of historic and forecast financial data and
concludes that no material Pillar Two top-up tax liabilities are
expected to arise. However, given the uncertainty regarding
forecast financial data and the potential for changes in the tax
environment in the markets in which the Group operates, the actual
impact that the Pillar Two legislation will have in the future may
differ. The Group is continuing to assess the impact of the
Pillar Two income taxes legislation on its future financial
performance.
14.
Amounts receivable from customers
Amounts receivable from customers
comprise:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Amounts due within one year
|
625.2
|
691.6
|
689.6
|
|
Amounts due in more than one year
|
239.2
|
201.5
|
203.3
|
|
Total
receivables
|
864.4
|
893.1
|
892.9
|
All lending is in the local currency of the
country in which the loan is issued. The currency profile of
amounts receivable from customers is as follows:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Polish zloty
|
187.2
|
257.4
|
219.7
|
|
Czech crown
|
53.0
|
55.0
|
53.3
|
|
Euro*
|
100.7
|
90.1
|
98.1
|
|
Hungarian forint
|
140.8
|
143.2
|
141.2
|
|
Romanian leu
|
108.8
|
93.9
|
107.0
|
|
Mexican peso
|
226.6
|
213.5
|
229.0
|
|
Australian dollar
|
47.3
|
40.0
|
44.6
|
|
Total
receivables
|
864.4
|
893.1
|
892.9
|
*Includes receivables in Estonia, Latvia,
Lithuania (Spain and Finland in 30 June 2023 only).
Amounts receivable from customers are held at
amortised cost and are equal to the expected future cash flows
receivable discounted at the average effective EIR of 101.6% (30
June 2023: 100.1%; 31 December 2023: 101.0%). All amounts
receivable from customers are at fixed interest rates. The average
period to maturity of the amounts receivable from customers is 13.1
months (30 June 2023: 12.7 months; 31 December 2023: 13.2
months).
Determining an increase in credit
risk since initial recognition
IFRS 9 has the following
recognition criteria:
·
Stage 1 : requires the recognition of 12 month
expected credit losses (the expected credit losses from
default events that are expected within 12 months
of the reporting date) if credit risk has not significantly
increased since initial recognition.
· Stage 2 : lifetime expected credit losses for financial
instruments for which the credit risk has increased significantly
since initial recognition.
·
Stage 3 : credit impaired.
When determining whether the risk of default
has increased significantly since initial recognition the Group
considers both quantitative and qualitative information based on
the Group's historical experience.
The approach to identifying significant
increases in credit risk is consistent across the Group's products.
In addition, as a backstop, the Group considers that a significant
increase in credit risk occurs when an asset is more than 30 days
past due.
Financial instruments are moved back to stage
1 once they no longer meet the criteria for a significant increase
in credit risk.
Definition of default and credit
impaired assets
The Group defines a financial instrument as in
default, which is fully-aligned with the definition of
credit-impaired, when it meets one or more of the following
criteria:
·
Quantitative criteria: the customer is more than
90 days past due on their contractual payments in home credit and
60 days past due on their contractual payments in IPF
Digital.
·
Qualitative criteria: indication that there is a
measurable movement in the estimated future cash flows from a group
of financial assets. For example, if prospective legislative
changes are considered to impact the collections performance of
customers.
The default definition has been applied
consistently to model the PD, exposure at default (EAD) and LGD
throughout the Group's expected credit loss
calculations.
An instrument is considered to no longer be in
default (i.e. to have cured) when it no longer meets any of the
default criteria.
The breakdown of receivables by stage is as
follows:
|
30 June
2024
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total net receivables
£m
|
|
Home credit
|
432.3
|
59.8
|
134.9
|
627.0
|
|
IPF Digital
|
221.7
|
9.9
|
5.8
|
237.4
|
|
Group
|
654.0
|
69.7
|
140.7
|
864.4
|
|
30 June 2023
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total net
receivables
£m
|
|
Home credit
|
440.8
|
81.1
|
153.3
|
675.2
|
|
IPF Digital
|
202.3
|
9.0
|
6.6
|
217.9
|
|
Group
|
643.1
|
90.1
|
159.9
|
893.1
|
|
31 December 2023
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total net
receivables
£m
|
|
Home credit
|
436.8
|
74.4
|
151.3
|
662.5
|
|
IPF Digital
|
213.6
|
10.3
|
6.5
|
230.4
|
|
Group
|
650.4
|
84.7
|
157.8
|
892.9
|
The Group has one class of loan receivable and
no collateral is held in respect of any customer
receivables.
Gross
carrying amount and loss allowance
The amounts receivable from customers includes
a provision for the loss allowance, which relates to the expected
credit losses on each agreement. The gross carrying amount is the
present value of the portfolio before the loss allowance provision
is deducted. The gross carrying amount less the loss allowance is
equal to the net receivables.
|
30 June
2024
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total net receivables
£m
|
|
Gross carrying amount
|
788.0
|
134.9
|
400.5
|
1,323.4
|
|
Loss allowance
|
(134.0)
|
(65.2)
|
(259.8)
|
(459.0)
|
|
Group
|
654.0
|
69.7
|
140.7
|
864.4
|
|
Stage allocation
|
60%
|
10%
|
30%
|
100%
|
|
Coverage ratio
|
17%
|
48%
|
65%
|
35%
|
|
30 June 2023
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total net
receivables
£m
|
|
Gross carrying amount
|
795.8
|
169.0
|
442.6
|
1,407.4
|
|
Loss allowance
|
(152.7)
|
(78.9)
|
(282.7)
|
(514.3)
|
|
Group
|
643.1
|
90.1
|
159.9
|
893.1
|
|
Stage allocation
|
57%
|
12%
|
31%
|
100%
|
|
Coverage ratio
|
19%
|
47%
|
64%
|
37%
|
|
31 December 2023
|
Stage 1
£m
|
Stage 2
£m
|
Stage 3
£m
|
Total net
receivables
£m
|
|
Gross carrying amount
|
799.7
|
159.5
|
441.9
|
1,401.1
|
|
Loss allowance
|
(149.3)
|
(74.8)
|
(284.1)
|
(508.2)
|
|
Group
|
650.4
|
84.7
|
157.8
|
892.9
|
|
Stage allocation
|
57%
|
11%
|
32%
|
100%
|
|
Coverage ratio
|
19%
|
47%
|
64%
|
36%
|
15. Provisions
for liabilities and charges
The Group had £3.9m payable to employees
outstanding at 30 June 2024 relating to the exceptional item (see
note 8) following the restructure exercise in Poland during the
first half of the year.
Customer redress provisions of £3.4m were held
at 30 June 2023 representing the Group's best estimate of the costs
that were expected to be incurred in relation to early settlement
rebates in Poland and claims management charges incurred in
Spain.
16.
Borrowing facilities and borrowings
The maturity of the Group's bond and bank
borrowings is as follows:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Repayable
|
|
|
|
|
- in less than one year
|
54.1
|
59.5
|
52.2
|
|
|
|
|
|
|
- between one and two years
|
75.8
|
65.0
|
330.5
|
|
- between two and five years
|
414.6
|
398.5
|
129.1
|
|
|
490.4
|
463.5
|
459.6
|
|
|
|
|
|
|
Total
borrowings
|
544.5
|
523.0
|
511.8
|
|
|
|
|
|
Borrowings are stated net of deferred debt
issuance costs of £8.7m (30 June 2023: £4.8m; 31 December 2023:
£4.7m).
The maturity of the Group's bond and bank
facilities is as follows:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Repayable
|
|
|
|
|
- on demand
|
34.0
|
32.5
|
32.6
|
|
- in less than one year
|
71.8
|
87.5
|
65.4
|
|
- between one and two years
|
115.9
|
70.6
|
364.6
|
|
- between two and five years
|
168.5
|
418.8
|
166.1
|
|
- greater than five years
|
288.5
|
-
|
-
|
|
Total
facilities
|
678.7
|
609.4
|
628.7
|
The undrawn external bank facilities are as
follows:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Expiring within one year
|
51.7
|
60.3
|
45.8
|
|
Expiring between one and two years
|
39.7
|
4.5
|
31.1
|
|
Expiring in more than two years
|
34.1
|
16.8
|
35.3
|
|
Total
|
125.5
|
81.6
|
112.2
|
Undrawn external facilities above do not
include unamortised arrangement fees.
The average period to maturity of the Group's
external bonds and committed external borrowings is 3.3 years (30
June 2023: 2.1 years; 31 December 2023: 2.0 years).
The Group complied with its covenants at 30
June 2024. Each covenant calculation has been made in
accordance with the terms of the relevant funding
documentation.
17.
Retirement benefit asset
The amounts recognised in the balance sheet in
respect of the retirement benefit asset are as follows:
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Diversified growth funds
|
0.9
|
4.7
|
1.6
|
|
Corporate bonds
|
8.3
|
11.0
|
7.6
|
|
Equities
|
0.7
|
-
|
0.9
|
|
Liability driven investments
|
18.0
|
12.5
|
19.7
|
|
Other
|
0.4
|
0.7
|
0.6
|
|
Total fair value of scheme assets
|
28.3
|
28.9
|
30.4
|
|
Present value of funded defined benefit
obligations
|
(23.4)
|
(28.0)
|
(24.3)
|
|
Net asset
recognised in the balance sheet
|
4.9
|
0.9
|
6.1
|
The credit recognised in the income statement
in respect of defined benefit pension costs is £0.1m (June 2023:
£nil: 31 December 2023: £0.1m).
18. Fair
values of financial assets and liabilities
IFRS 13 requires disclosure of fair value
measurements of financial instruments by level of the following
fair value measurement hierarchy:
|
·
|
quoted prices (unadjusted) in active markets
for identical assets or liabilities (level 1);
|
|
·
|
inputs other than quoted prices included
within level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is,
derived from prices) (level 2); and
|
|
·
|
inputs for the asset or liability that are not
based on observable market data (that is, unobservable inputs)
(level 3).
|
The fair value of derivative financial
instruments has been calculated by discounting expected future cash
flows using interest rate yield curves and forward foreign exchange
rates prevailing at the relevant period end.
In 2023 and 2024, there has been no change in
classification of financial assets as a result of a change in
purpose or use of these assets.
Except as detailed in the following table, the
carrying value of financial assets and liabilities recorded at
amortised cost, which are all short-term in nature, are a
reasonable approximation of their fair value:
|
|
Carrying value
|
Fair value
|
|
|
Unaudited
30 June
2024
£m
|
Unaudited
30 June
2023
£m
|
Audited
31
December
2023
£m
|
Unaudited
30 June
2024
£m
|
Unaudited
30 June
2023
£m
|
Audited
31
December
2023
£m
|
|
Financial
assets
|
|
|
|
|
|
|
|
Amounts receivable from customers
|
864.4
|
893.1
|
892.9
|
1,129.9
|
1,122.8
|
1,139.3
|
|
|
864.4
|
893.1
|
892.9
|
1,129.9
|
1,122.8
|
1,139.3
|
|
Financial
liabilities
|
|
|
|
|
|
|
|
Bonds
|
474.0
|
408.7
|
428.2
|
490.2
|
373.1
|
420.8
|
|
Bank borrowings
|
70.5
|
114.3
|
83.6
|
70.5
|
114.3
|
83.6
|
|
|
544.5
|
523.0
|
511.8
|
560.7
|
487.4
|
504.4
|
The fair value of amounts receivable from
customers has been derived by discounting expected future cash
flows (as used to calculate the carrying value of amounts due from
customers), net of customer representative repayment costs, at the
Group's weighted average cost of capital which we estimate to be
13% (30 June 2023: 13%; 31 December 2023: 13%) which is assumed to
be a proxy for the discount rate that a market participant would
use to price the asset.
The fair value of the bonds has been
calculated by reference to their market value.
The carrying value of bank borrowings is
deemed to be a good approximation of their fair value. Bank
borrowings can be repaid within six months if the Group decides not
to roll over for further periods up to the contractual repayment
date. The impact of discounting would therefore, be
negligible. This methodology has been used consistently for
all periods.
19.
Reconciliation of profit after taxation to cash generated from
operating activities
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
Six months ended
|
Six months
ended
|
Year
ended
|
|
|
30 June
2024
|
30 June
2023
|
31 December
2023
|
|
|
£m
|
£m
|
£m
|
|
Profit after taxation from operations
|
19.7
|
18.7
|
48.0
|
|
Adjusted
for
|
|
|
|
|
Tax
charge
|
16.8
|
19.1
|
35.9
|
|
Finance costs
|
35.4
|
37.9
|
76.9
|
|
Finance income
|
(0.7)
|
-
|
-
|
|
Share-based payment charge
|
1.1
|
1.4
|
2.7
|
|
Amortisation of intangible assets (note 10)
|
6.0
|
6.3
|
13.1
|
|
Impairment of intangible assets (note 10)
|
-
|
-
|
0.2
|
|
Loss on
disposal of property, plant and equipment
|
-
|
-
|
0.1
|
|
Depreciation of property, plant and equipment (note 11)
|
3.2
|
3.2
|
6.5
|
|
Depreciation of right-of-use assets (note 12)
|
4.9
|
4.6
|
9.7
|
|
Short term and low value lease
costs
|
0.4
|
0.9
|
1.7
|
|
Changes in
operating assets and liabilities
|
|
|
|
|
Amounts receivable from customers
|
(5.7)
|
(8.3)
|
(3.8)
|
|
Other receivables
|
(5.2)
|
1.0
|
0.9
|
|
Trade and other payables
|
(5.1)
|
(9.5)
|
4.8
|
|
Provision for liabilities and
charges
|
3.9
|
(1.2)
|
(4.7)
|
|
Retirement benefit asset
|
(0.1)
|
-
|
(0.1)
|
|
Derivative financial instruments
|
(3.0)
|
11.0
|
1.5
|
|
Cash generated
from operating activities
|
71.6
|
85.1
|
193.4
|
20.
Foreign exchange rates
The table below shows the average exchange
rates for the relevant reporting periods and closing exchange rates
at the relevant period
ends.
|
|
Average
H1
2024
|
Closing
June
2024
|
Average
H1
2023
|
Closing
June
2023
|
Average
Year
2023
|
Closing
December
2023
|
|
Polish zloty
|
5.1
|
5.1
|
5.3
|
5.2
|
5.2
|
5.0
|
|
Czech crown
|
29.2
|
29.4
|
27.1
|
27.5
|
27.9
|
28.5
|
|
Euro
|
1.2
|
1.2
|
1.1
|
1.2
|
1.1
|
1.2
|
|
Hungarian forint
|
457.0
|
468.0
|
433.2
|
430.0
|
437.3
|
441.3
|
|
Romanian leu
|
5.8
|
5.9
|
5.7
|
5.8
|
5.7
|
5.7
|
|
Mexican peso
|
21.7
|
22.8
|
22.2
|
21.8
|
21.9
|
21.5
|
|
Australian dollar
|
1.9
|
1.9
|
1.8
|
1.9
|
1.9
|
1.9
|
The £25.6m exchange loss on foreign currency
translations shown within the consolidated statement of
comprehensive income arises on retranslation of net assets
denominated in currencies other than sterling, due to the change in
foreign exchange rates against sterling between December 2023 and
June 2024 shown in the table above.
21. Post
balance sheet events
Following the successful refinancing of the
Group's Eurobond, SEK 450m (c.£35m) of Nordic bonds were redeemed
in July, some three months in advance of their original maturity
date.
22.
Contingent Liabilities
In the course of its business the Group is
subject to complaints and threatened or actual legal proceedings
(including class or group action claims) brought by or on behalf of
current or former employees, customer representatives, customers,
investors or other third parties. This extends to legal and
regulatory challenges and investigations (including relevant
consumer bodies) combined with tax authorities taking a view that
is different to the view the Group has taken on the tax treatment
in its tax returns. Where material, such matters are periodically
reassessed, with the assistance of external professional advisers
where appropriate, to determine the likelihood of the Group
incurring a liability. In those instances where it is concluded
that it is more likely than not that a payment will be made, a
provision is established based on management's best estimate of the
amount required at the relevant balance sheet date. In some cases,
it may not be possible to form a view, for example because the
facts are unclear or because further time is needed to assess
properly the merits of the case, and no provisions are held in
relation to such matters. In these circumstances, specific
disclosure in relation to a contingent liability will be made where
material. However, the Group does not currently expect the final
outcome of any such case to have a material adverse effect on its
financial position, operations or cash flows.
Responsibility
statement
The following statement is given by each of
the directors: namely; Stuart Sinclair, Chairman; Gerard Ryan,
Chief Executive Officer; Gary Thompson, Chief Financial Officer;
Katrina Cliffe, Senior independent non-executive director; Deborah
Davis, non-executive director; Richard Holmes, non-executive
director; and Aileen Wallace, non-executive director.
The directors confirm that to the best of
their knowledge:
|
·
|
the condensed consolidated interim financial
statements, which have been prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the issuer, or the undertakings included in the consolidation as
a whole as required by DTR 4.2.4R;
|
|
·
|
the half-year financial report includes a fair
review of the information required by DTR 4.2.7 (indication of
important events during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
|
|
·
|
the half-year financial report includes a fair
review of the information required by DTR 4.2.8 (disclosure of
related parties' transactions and changes therein).
|
Alternative
performance measures (APMs)
This half-year financial report provides APMs which
are not defined or specified under the requirements of
International Financial Reporting Standards. We believe these APMs
provide readers with important additional information on our
business. To support this we have included a reconciliation of the
APMs we use, where relevant, and a glossary indicating the APMs
that we use, an explanation of how they are calculated and why we
use them.
|
APM
|
Closest equivalent
statutory measure
|
Reconciling items to
statutory measure
|
Definition and purpose
|
|
Income statement measures
|
|
|
|
Customer lending growth at constant
exchange rates (%)
|
None
|
Not applicable
|
Customer lending is the principal
value of loans advanced to customers and is an important measure of
the level of lending in the business. Customer lending growth is
the period-on-period change in this metric which is calculated by
retranslating the previous half-year's customer lending at the
average actual exchange rates used in the current financial year.
This ensures that the measure is presented having eliminated the
effects of exchange rate fluctuations on the period-on-period
reported results.
|
|
Revenue growth at
constant exchange
rates (%)
|
None
|
Not applicable
|
The period-on-period change in
revenue which is calculated by retranslating the previous
half-year's revenue at the average actual exchange rates used in
the current financial year. This measure is presented as a means of
eliminating the effects of exchange rate fluctuations on the
period-on-period reported results.
|
|
Revenue yield (%)
|
None
|
Not applicable
|
Revenue yield is reported revenue
divided by average gross receivables (before impairment provision)
and is an indicator of the return being generated from average
gross receivables. This is reported on a rolling annual basis
(annualised).
|
|
Impairment rate (%)
|
None
|
Not applicable
|
Impairment as a percentage of
average gross receivables (before impairment provision). This is
reported on a rolling annual basis (annualised).
|
|
Cost-income ratio (%)
|
None
|
Not applicable
|
The cost-income ratio is costs,
including customer representatives' commission, excluding interest
expense, divided by reported revenue. This measure is reported on a
rolling annual basis (annualised). This is useful for comparing
performance across markets.
|
|
APM
|
Closest equivalent
statutory measure
|
Reconciling items to
statutory measure
|
Definition and purpose
|
|
Balance sheet and returns measures
|
|
Equity to receivables ratio
(%)
|
None
|
Not applicable
|
Total equity divided by amounts
receivable from customers, this is a measure of balance sheet
strength and the Group targets a ratio of around 40%.
|
|
Headroom (£m)
|
Undrawn
external bank
facilities
|
None
|
Calculated as the sum of undrawn
external bank facilities and non-operational cash.
|
|
Net debt (£m)
|
None
|
Not applicable
|
Borrowings less cash.
|
|
Gross receivables (£m)
|
None
|
Not applicable
|
Gross receivables is the same
definition as gross carrying amount.
|
|
Impairment coverage ratio
(%)
|
None
|
Not applicable
|
Expected loss allowance divided by
gross receivables (before impairment provision).
|
|
Pre-exceptional RoE (%)
|
None
|
Not applicable
|
Return on equity (RoE) calculated
as rolling annual pre-exceptional profit after tax divided by
average net assets over the same period.
|
|
Pre-exceptional RoRE (%)
|
None
|
Not applicable
|
Return on required equity (RoRE)
is calculated as rolling annual pre-exceptional profit after tax
divided by required equity of 40% of average net
receivables.
|
|
Other measures
|
|
|
|
|
Customers
|
None
|
Not applicable
|
Customers that are being served by
our customer representatives or through our money transfer product
in the home credit business and customers that are not in default
in our digital business.
|
Constant exchange
rate reconciliations
The period-on-period change in pre-exceptional
profit and loss accounts is calculated by retranslating the 2023
half-year's profit and loss account at the average actual exchange
rates used in the current year.
|
H1
2024
|
|
|
|
|
|
|
|
£m
|
European home
credit
|
Mexico home
credit
|
IPF
Digital
|
Central
costs
|
Group
|
|
|
Customer numbers (000s)
|
717
|
710
|
229
|
-
|
1,656
|
|
|
Customer lending
|
315.4
|
156.0
|
126.0
|
-
|
597.4
|
|
|
Average gross receivables
|
744.8
|
319.1
|
306.0
|
-
|
1,369.9
|
|
|
Closing net receivables
|
444.0
|
183.0
|
237.4
|
-
|
864.4
|
|
|
Revenue
|
166.0
|
139.9
|
65.8
|
-
|
371.7
|
|
|
Impairment
|
(5.7)
|
(44.7)
|
(13.9)
|
-
|
(64.3)
|
|
|
Revenue less impairment
|
160.3
|
95.2
|
51.9
|
-
|
307.4
|
|
|
Costs
|
(112.1)
|
(70.1)
|
(35.9)
|
(7.3)
|
(225.4)
|
|
|
Interest expense
|
(18.4)
|
(7.4)
|
(8.8)
|
(0.1)
|
(34.7)
|
|
|
Profit before tax
|
29.8
|
17.7
|
7.2
|
(7.4)
|
47.3
|
|
|
|
|
|
|
|
|
|
|
H1
2023 performance, at average H1 2023 foreign exchange
rates
|
|
£m
|
European
home credit
|
Mexico
home credit
|
IPF
Digital
|
Central
costs
|
Group
|
|
|
Customer numbers (000s)
|
779
|
700
|
239
|
-
|
1,718
|
|
|
Customer lending
|
310.9
|
142.9
|
125.0
|
-
|
578.8
|
|
|
Average gross receivables
|
784.7
|
274.8
|
283.7
|
-
|
1,343.2
|
|
|
Closing net receivables
|
499.1
|
176.1
|
217.9
|
-
|
893.1
|
|
|
Revenue
|
190.4
|
125.4
|
64.2
|
-
|
380.0
|
|
|
Impairment
|
(25.0)
|
(44.0)
|
(20.2)
|
-
|
(89.2)
|
|
|
Revenue less impairment
|
165.4
|
81.4
|
44.0
|
-
|
290.8
|
|
|
Costs
|
(109.9)
|
(64.1)
|
(33.1)
|
(8.0)
|
(215.1)
|
|
|
Interest expense
|
(23.7)
|
(5.9)
|
(8.3)
|
-
|
(37.9)
|
|
|
Profit before tax
|
31.8
|
11.4
|
2.6
|
(8.0)
|
37.8
|
|
|
Foreign exchange movements
|
|
£m
|
European
home credit
|
Mexico
home credit
|
IPF
Digital
|
Central
costs
|
Group
|
|
|
Customer numbers (000s)
|
-
|
-
|
-
|
-
|
-
|
|
|
Customer lending
|
(3.6)
|
4.5
|
(0.9)
|
-
|
-
|
|
|
Average gross receivables
|
11.7
|
15.4
|
0.9
|
-
|
28.0
|
|
|
Closing net receivables
|
(14.0)
|
(8.2)
|
(2.9)
|
-
|
(25.1)
|
|
|
Revenue
|
(1.5)
|
3.9
|
(0.2)
|
-
|
2.2
|
|
|
Impairment
|
(0.2)
|
(1.4)
|
0.1
|
-
|
(1.5)
|
|
|
Revenue less impairment
|
(1.7)
|
2.5
|
(0.1)
|
-
|
0.7
|
|
|
Costs
|
0.9
|
(2.0)
|
0.1
|
-
|
(1.0)
|
|
|
Interest expense
|
0.1
|
(0.1)
|
-
|
-
|
-
|
|
|
Profit before tax
|
(0.7)
|
0.4
|
-
|
-
|
(0.3)
|
|
|
H1
2023 performance, at average H1 2024 foreign exchange
rates
|
|
£m
|
European
home credit
|
Mexico
home credit
|
IPF
Digital
|
Central
costs
|
Group
|
|
|
Customer numbers (000s)
|
779
|
700
|
239
|
-
|
1,718
|
|
|
Customer lending
|
307.3
|
147.4
|
124.1
|
-
|
578.8
|
|
|
Average gross receivables
|
796.4
|
290.2
|
284.6
|
-
|
1,371.2
|
|
|
Closing net receivables
|
485.1
|
167.9
|
215.0
|
-
|
868.0
|
|
|
Revenue
|
188.9
|
129.3
|
64.0
|
-
|
382.2
|
|
|
Impairment
|
(25.2)
|
(45.4)
|
(20.1)
|
-
|
(90.7)
|
|
|
Revenue less impairment
|
163.7
|
83.9
|
43.9
|
-
|
291.5
|
|
|
Costs
|
(109.0)
|
(66.1)
|
(33.0)
|
(8.0)
|
(216.1)
|
|
|
Interest expense
|
(23.6)
|
(6.0)
|
(8.3)
|
-
|
(37.9)
|
|
|
Year-on-year movement at constant exchange
rates
|
|
%
|
European
home credit
|
Mexico
home credit
|
IPF
Digital
|
Central
costs
|
Group
|
|
|
Customer numbers (000s)
|
(8.0%)
|
1.4%
|
(4.2%)
|
-
|
(3.6%)
|
|
|
Customer lending
|
2.6%
|
5.8%
|
1.5%
|
-
|
3.2%
|
|
|
Average gross receivables
|
(6.5%)
|
10.0%
|
7.5%
|
-
|
(0.1%)
|
|
|
Closing net receivables
|
(8.5%)
|
9.0%
|
10.4%
|
-
|
(0.4%)
|
|
|
Revenue
|
(12.1%)
|
8.2%
|
2.8%
|
-
|
(2.7%)
|
|
|
Impairment
|
77.4%
|
1.5%
|
30.8%
|
-
|
29.1%
|
|
|
Revenue less impairment
|
(2.1%)
|
13.5%
|
18.2%
|
-
|
5.5%
|
|
|
Costs
|
(2.8%)
|
(6.1%)
|
(8.8%)
|
8.8%
|
(4.3%)
|
|
|
Interest expense
|
22.0%
|
(23.3%)
|
(6.0%)
|
-
|
8.4%
|
|
Balance sheet and
returns measures
Average gross receivables (before impairment
provisions) are used in the revenue yield and impairment rate
calculations.
|
Average Gross Receivables
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
European home credit
|
744.8
|
784.7
|
791.1
|
|
Mexico home credit
|
319.1
|
274.8
|
299.4
|
|
IPF Digital
|
306.0
|
283.7
|
298.4
|
|
Group
|
1,369.9
|
1,343.2
|
1,388.9
|
The impairment coverage ratio is calculated as
loss allowance divided by gross carrying amount.
|
Impairment coverage ratio
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Closing gross carrying amount
|
1,323.4
|
1,407.4
|
1,401.1
|
|
Loss allowance
|
(459.0)
|
(514.3)
|
(508.2)
|
|
Closing net receivables
|
864.4
|
893.1
|
892.9
|
|
Impairment
coverage ratio
|
34.7%
|
36.5%
|
36.3%
|
Pre-exceptional return on equity (RoE) is
calculated as rolling annual pre-exceptional profit divided by
pre-exceptional equity.
|
Pre-exceptional RoE 30 June
2024
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2024
|
2023
|
2023
|
|
|
£m
|
£m
|
£m
|
|
Equity (net assets)
|
480.4
|
462.9
|
501.9
|
|
Exceptional items
|
8.7
|
4.0
|
4.0
|
|
Pre-exceptional equity
|
489.1
|
466.9
|
505.9
|
|
Average pre-exceptional equity
|
478.0
|
430.1
|
470.3
|
|
Profit after tax
|
19.7
|
18.7
|
48.0
|
|
Exceptional items
|
8.7
|
4.0
|
4.0
|
|
Pre-exceptional profit
|
28.4
|
22.7
|
52.0
|
|
Pre-exceptional profit 12 months to 30 June
2024
|
57.7
|
|
-
|
|
Pre-exceptional
RoE
|
12.1%
|
|
11.1%
|
|
Pre-exceptional RoE 30 June
2023
|
Unaudited
|
Unaudited
|
Audited
|
|
|
30 June
|
30 June
|
31
December
|
|
|
2023
|
2022
|
2022
|
|
|
£m
|
£m
|
£m
|
|
Equity (net assets)
|
462.9
|
403.8
|
445.2
|
|
Exceptional items
|
4.0
|
(10.5)
|
(10.5)
|
|
Pre-exceptional equity
|
466.9
|
393.3
|
434.7
|
|
Average pre-exceptional equity
|
430.1
|
378.2
|
400.9
|
|
Profit after tax
|
18.7
|
30.8
|
56.8
|
|
Exceptional items
|
4.0
|
(10.5)
|
(10.5)
|
|
Pre-exceptional profit
|
22.7
|
20.3
|
46.3
|
|
Pre-exceptional profit 12 months to 30 June
2023
|
48.7
|
|
-
|
|
Pre-exceptional RoE
|
11.3%
|
|
11.5%
|
Pre-exceptional return on required equity (RoRE)
is calculated as rolling annual pre-exceptional profit divided by
required equity of 40% of average net receivables.
|
Pre-exceptional RoRE 30 June
2024
|
European home
credit
|
Mexico
home
credit
|
IPF
Digital
|
Group
|
|
|
£m
|
£m
|
£m
|
£m
|
|
Closing net receivables H1 2023
|
499.1
|
176.1
|
217.9
|
893.1
|
|
Closing net receivables H1 2024
|
444.0
|
183.0
|
237.4
|
864.4
|
|
Average net receivables
|
471.5
|
179.6
|
227.7
|
878.8
|
|
Equity (net assets) at 40%
|
188.6
|
71.8
|
91.1
|
351.5
|
|
|
|
|
|
|
|
Pre-exceptional profit before tax:
|
|
|
|
|
|
FY 2023
|
67.7
|
23.1
|
8.1
|
83.9
|
|
Exclude H1 2023
|
(31.8)
|
(11.4)
|
(2.6)
|
(37.8)
|
|
H2 2023
|
35.9
|
11.7
|
5.5
|
46.1
|
|
H1 2024
|
29.8
|
17.7
|
7.2
|
47.3
|
|
12 MO to H1 2024
|
65.7
|
29.4
|
12.7
|
93.4
|
|
Tax at 40% H1 2024 (38% H2 2023)
|
(25.5)
|
(11.5)
|
(5.0)
|
(36.4)
|
|
Pre-exceptional profit after tax
|
40.2
|
17.9
|
7.7
|
57.0
|
|
Pre-exceptional
RoRE
|
21.3%
|
24.9%
|
8.5%
|
16.2%
|
|
Pre-exceptional RoRE 30 June
2023
|
European home
credit
|
Mexico
home
credit
|
IPF
Digital
|
Group
|
|
|
£m
|
£m
|
£m
|
£m
|
|
Closing net receivables H1 2022
|
438.6
|
140.8
|
190.5
|
769.9
|
|
Closing net receivables H1 2023
|
499.1
|
176.1
|
217.9
|
893.1
|
|
Average net receivables
|
468.8
|
158.5
|
204.2
|
831.5
|
|
Equity (net assets) at 40%
|
187.5
|
63.4
|
81.7
|
332.6
|
|
|
|
|
|
|
|
Pre-exceptional profit before tax:
|
|
|
|
|
|
FY 2022
|
69.9
|
17.7
|
4.5
|
77.4
|
|
Exclude H1 2022
|
(31.1)
|
(7.4)
|
(3.0)
|
(33.8)
|
|
H2 2022
|
38.8
|
10.3
|
1.5
|
43.6
|
|
H1 2023
|
31.8
|
11.4
|
2.6
|
37.8
|
|
12 MO to H1 2023
|
70.6
|
21.7
|
4.1
|
81.4
|
|
Tax at 40%
|
(28.2)
|
(8.7)
|
(1.6)
|
(32.6)
|
|
Pre-exceptional profit after tax
|
42.4
|
13.0
|
2.5
|
48.8
|
|
Pre-exceptional RoRE
|
22.6%
|
20.5%
|
3.1%
|
14.7%
|
|
Pre-exceptional RoRE 2023
|
European home
credit
|
Mexico
home
credit
|
IPF
Digital
|
Group
|
|
|
£m
|
£m
|
£m
|
£m
|
|
Closing net receivables 2023
|
475.4
|
187.1
|
230.4
|
892.9
|
|
Closing net receivables 2022
|
496.3
|
158.5
|
214.0
|
868.8
|
|
Average net receivables
|
485.8
|
172.8
|
222.2
|
880.8
|
|
Equity (net assets) at 40%
|
194.3
|
69.1
|
88.9
|
352.3
|
|
|
|
|
|
|
|
Pre-exceptional profit before tax
|
67.7
|
23.1
|
8.1
|
83.9
|
|
Tax at 38%
|
(25.7)
|
(8.8)
|
(3.1)
|
(31.9)
|
|
Pre-exceptional profit after tax
|
42.0
|
14.3
|
5.0
|
52.0
|
|
Pre-exceptional RoRE
|
21.6%
|
20.7%
|
5.6%
|
14.8%
|
INDEPENDENT
REVIEW REPORT TO INTERNATIONAL PERSONAL FINANCE
PLC
Conclusion
We have been engaged by the group to review
the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 which
comprise the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated
balance sheet, the consolidated statement of changes in equity, the
consolidated cash flow statement and related notes. We have read
the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
Based on our review, nothing has come to our
attention that causes us to believe that the condensed set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2024 is not prepared, in all material
respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for
conclusion
We conducted our review in accordance with
International Standard on Review Engagements (UK) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued for use in the United Kingdom. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial
statements of the group are prepared in accordance with UK adopted
IASs. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
UK adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusions
relating to going concern
Based on our review procedures, which are less
extensive than those performed in an audit as described in the
Basis for conclusion section of this report, nothing has come to
our attention to suggest that management have inappropriately
adopted the going concern basis of accounting or that management
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410, however
future events or conditions may cause the group to cease to
continue as a going concern.
Responsibilities of
directors
The directors are responsible for preparing
the half-yearly financial report in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
In preparing the half-yearly financial report,
the directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Auditor's
responsibilities for the review of financial
information
In reviewing the half-yearly report, we are
responsible for expressing to the group a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our conclusion, including our Conclusions relating to going
concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report.
Use of our
report
This report is made solely to the company's
directors, as a body, in accordance with the terms of our
engagement letter dated 8 May 2024. Our review has been
undertaken so that we might state to the company's directors those
matters we have agreed to state to them in a reviewer'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 directors as a body, for our work, for
this report, or for the conclusions we have formed.
PKF
Littlejohn LLP
Statutory
Auditor
31 July
2024
15 Westferry
Circus
Canary
Wharf
London E14
4HD
Notes
This report has been prepared to provide
additional information to shareholders to assess the Group's
strategies and the potential for those strategies to succeed. The
report should not be relied on by any other party or for any other
purpose. The report contains certain forward-looking statements.
These statements are made by the directors in good faith based on
the information available to them up to the time of their approval
of this report, but such statements should be treated with caution
due to the inherent uncertainties, including both economic and
business risk factors, as well as any forward-looking information.
Percentage change figures for all performance measures, other than
profit before taxation and earnings per share, unless otherwise
stated, are quoted after restating prior year figures at a constant
exchange rate (CER) for the period to present the performance
variance.