REG-Funding Circle Holdings plc Funding Circle plc: Full Year 2025 Results
Today 07:02
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Funding Circle Holdings plc (FCH)
Funding Circle plc: Full Year 2025 Results
05-March-2026 / 07:00 GMT/BST
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Funding Circle Holdings plc
Full Year 2025 Results
FY 2026 REVENUE GUIDANCE ACHIEVED A YEAR EARLY
UPGRADED FY 2026 GUIDANCE & ATTRACTIVE NEW MEDIUM-TERM TARGETS
Funding Circle Holdings plc (“Funding Circle” or the “Group”) today announces
results for the twelve months ended 31 December 2025.
Lisa Jacobs, Funding Circle CEO, commented:
"We delivered a standout performance in 2025, exceeding our expectations and hitting
our 2026 revenue guidance a year early, and we supported more SMEs than ever before.
Strong growth in the credit we extended led to revenue growth of 28% to £204m and
profit before tax increasing to £20m, demonstrating the strong operating leverage
and profitability of our platform.
“We’ve successfully executed against our strategy to deepen our engagement with SMEs
and expand our multi-product offering, enabling us to meet more of our customers’
needs. We now interact with a customer once every 38 seconds, putting us at the
heart of their businesses as a trusted financial partner. Our 15 years of
proprietary data and technology expertise are the foundation of our competitive
advantage, allowing us to deliver a superior customer experience.
“Looking ahead, we see a significant opportunity to further grow our share of the
SME finance market. Our confidence in the strength and scalability of our platform
is reflected in the attractive new medium-term targets we are setting today. By
becoming a more meaningful partner to our customers, we aim to not only grow our
business but to support the next phase of growth across the UK’s SME economy."
Group FY 2025 FY 2024
£m £m
Credit extended1 2,453 1,899
Assets under Management2 2,961 2,833
Revenue3 204.3 160.1
Profit before taxation (before exceptional items) 20.3 3.4
Profit before taxation (after exceptional items) 20.3 0.8
Profit for the year (after exceptional items) 46.0 8.6
Unrestricted Cash4 100.9 150.5
Financial Highlights
• Group Revenue: Increased 28% to £204.3m (2024: £160.1m), achieving 2026 revenue
guidance a year early.
• Profitability: Significant 6x growth in Profit Before Tax (PBT) to £20.3m, up
from £3.4m pre-exceptionals and £0.8m post exceptionals in 2024 demonstrating
the business’ operating leverage. Profit for the year (after exceptional items)
of £46.0m (2024: £8.6m).
• Credit Extended: Increased 29% to £2,453m (2024: £1,899m).
• Assets under Management (AuM): Increased to £2,961m (2024: £2,833m).
• Active customers: Increased 10% to 52.7k (2024: 47.9k).
Business Unit Performance
Term Loans
• Originations: Grew 16% to £1,638m (2024: £1,407m) driven by product innovation
and borrower demand.
• AuM: Increased to £2,755m (2024: £2,714m) as new lending outpaced the repayment
of legacy Covid-19 government-guaranteed loans.
• Profitability: PBT increased to £32.2m (2024: £19.0m before exceptional items),
reflecting strong operating leverage which led to margins improving to 19.2%
(2024: 13.3%).
• Robust and attractive returns through the cycle: Annualised net returns to
institutional investors continued to be ~5% above cost of capital, resulting in
continued investor demand with £2.2bn in committed forward flows.
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1. Credit extended includes Term Loan originations and FlexiPay and Cashback card
transactions.
2. Assets under Management (“AuM”) is the total value of term loan principal and
interest due from borrowers and drawn lines of credit and Cashback card spend
balances (excluding defaulted balances) previously referred to as Loans under
Management and balances outstanding.
3. Net income is also referred to as “Revenue”.
4. Unrestricted cash refers to total cash less cash that is restricted in use.
FlexiPay & Card
• Transactions: Strong momentum with transactions growing 66% to £815m (2024:
£492m), reflecting good customer engagement and roll-out of new features. >80%
revenue from prior cohorts.
• AuM: Increased 73% to £206m (2024: £119m) as a result of new and repeat usage
from customers.
• Performance: Continued progress toward profitability with a reduced loss before
tax of £11.9m (2024: £15.6m loss before exceptional items). Expected credit
losses remain in line with our expectations.
Capital Allocation & Cash
Unrestricted cash remained healthy at £100.9m (2024: £150.5m) following proactive
deployment aligned to our capital allocation framework:
• Deliver: Group cash generative; Term Loan profits successfully funded continued
FlexiPay investment.
• Invest: R&D for development of new shorter-term loan product within our Term
Loans business, which has resulted in an institutional investor onboarded in
January 2026 to fund future originations. The existing shorter-term loan
portfolio was sold in line with its carrying value.
• Distribute: A third share buyback of up to £25m was announced in 2025. Combined
with earlier programmes, £64m has been returned to shareholders across 2024 and
2025, with £11m remaining. In 2025 specifically, £30m was deployed for buybacks
and £9m for the employee benefit trust.
Operational & Strategic Progress
• Powerful data driving risk discrimination: Our AI-powered credit models are 3x
better at discriminating risk than traditional bureau scores. 15 years of
proprietary data including 10 billion data points feeds our model development,
deepens the competitive moat around the business, and enables us to say "yes" to
more businesses.
• Differentiated technology: Our instant decision technology enhances the customer
experience and our platform allows for fast product development and new feature
launches.
• High customer satisfaction & strong brand awareness: With an NPS (Term Loans) of
79 and Trustpilot score of 4.6, our brand reputation drives consideration
amongst our target market of 80%.
• Strong track record and funding pipeline: Our capital-light platform is built
for scale. We have delivered consistent and robust loan returns to our
institutional funders, with whom we have long-standing arrangements and £2.2bn
of future forward flow capacity in place.
• Multi-product capabilities: We have diversified and expanded our product suite
beyond our longer-term loan offering, with c.50% of our credit extended in H2
2025 coming from other products. Nearly 70% of our FlexiPay revenue comes from
our existing Term Loan customers, as we deepen engagement and capture a larger
share of our customers’ financing needs. We are also attracting new audiences to
the Funding Circle ecosystem. 50% of our Card customers are new to Funding
Circle and our new shorter-term lending product has unlocked previously untapped
segments of the SME market.
• Engaged and talented team: Our mission-led culture is a differentiator. We
achieved a record engagement of 74% in 2025 and our teams received 11 industry
awards, including the NACFB Unsecured Lender of the Year for the seventh
consecutive year.
• Meaningful impact: In 2025, lending through Funding Circle supported over
117,000 jobs and contributed £7.9bn to UK GDP. Every £1 million of lending
through our platform contributed £2.7 million to GDP, 39 jobs and £700,000 in
tax revenue.
Looking ahead
Our strategic priorities are focused on customer-led profitable growth:
• Get to yes: Get the right product to the right business, through credit
excellence and product improvements.
• Expand our audience: Target new segments; deepen and expand our distribution
channels.
• Scale our products: Capitalise on the large market opportunity by focusing on
refining and scaling our products to drive growth and margin expansion.
• Build a seamless lifetime customer experience: Deliver an exceptional experience
throughout our customers’ lifetime journey with our expanded product set, as
their trusted financial partner.
These will deliver customer-led top-line growth and increased profit within our
current product set over the coming years, while enabling the next phase of
longer-term growth with continued investment in our product and technology
capabilities. We are building powerful insights into our customers that provide a
strong platform for growth beyond our existing product set as we become our
customers’ trusted financial partner.
Guidance
We have upgraded our FY26 guidance having achieved our previous revenue target a
year early. We are also establishing new medium-term targets through to FY29:
Period Growth Profit
FY26 Guidance Upgraded to revenue of c.£235m PBT of at least £35m
Medium term (FY29) Revenue of c.£300m–£350m PBT margins of low to mid-20s (%)
Analyst presentation
Management will host a presentation and conference call for institutional investors
and analysts at 9:30am UK time (GMT), on Thursday 5 March 2026.
To watch and listen to the webcast, with the opportunity to submit written
questions, please use 1 2 this link to register and gain access to the event.
For conference call access, please dial +44 33 0551 0200 or +1 786 697 3501 Quote
‘Funding Circle FY25’ when prompted by the operator.
An on-demand replay and transcript will also be available on the Funding Circle
website following the presentation.
For further details:
Funding Circle Holdings plc 3 ir@fundingcircle.com
4 press@fundingcircle.com
Lisa Jacobs, Chief Executive Officer
Tony Nicol, Chief Financial Officer
Headland Consultancy
Stephen Malthouse and Jack Gault (+44 20 3805 4822)
Forward looking statements and other important information:
This document contains forward looking statements, which are statements that are not
historical facts and that reflect Funding Circle’s beliefs and expectations with
respect to future events and financial and operational performance. These forward
looking statements involve known and unknown risks, uncertainties, assumptions,
estimates and other factors, which may be beyond the control of Funding Circle and
which may cause actual results or performance to differ materially from those
expressed or implied from such forward looking statements. Nothing contained within
this document is or should be relied upon as a warranty, promise or representation,
express or implied, as to the future performance of Funding Circle or its business.
Any historical information contained in this statistical information is not
indicative of future performance.
The information contained in this document is provided as of the dates shown.
Nothing in this document should be construed as legal, tax, investment, financial,
or accounting advice, or solicitation for or an offer to invest in Funding Circle.
About us:
Funding Circle (LSE: FCH) is the UK’s leading SME finance platform. Since 2010, we
have extended more than £17bn in credit to over 125,000 UK businesses, helping them
power the economy and their communities.
By combining proprietary AI-powered credit models with a human touch, we provide a
seamless experience that allows SMEs to borrow, pay later, and spend through a
single ecosystem. For institutional investors, Funding Circle offers access to an
attractive, underserved asset class through a platform built on deep data and a
proven track record of robust returns.
Business Review
It has been a standout year for Funding Circle. We supported more small businesses
than ever before, grew revenue 28% to £204 million, achieving our medium-term
revenue target a year ahead of schedule, grew profit before tax (“PBT”) to over £20
million and achieved record Circler engagement.
In 2024, we launched our plan to become a simpler, leaner, and UK-focused
multi-product business, and, after two years of strong execution, we are realising
the benefits. Our performance was driven by new product innovation and strong
demand, underpinned by the power of our proprietary data and technology and
capital-light business model.
Our position as the UK’s leading SME finance platform is stronger than ever. We are
serving a large and underserved market, enabling businesses to borrow, pay later,
and spend, delivering a superior customer experience and attractive returns to our
platform investors. And, we’re still just getting started.
Business finance that backs small businesses
For 15 years, we have backed the small businesses that keep the UK economy moving.
We have extended c.£17 billion of credit to over 125,000 UK businesses.
We’re passionate about what we do - the businesses we support are the restaurants,
popcorn makers, furniture manufacturers and flooring suppliers. They sit at the
heart of local communities, driving growth and creating jobs and it’s an honour to
play a small but important part in their stories.
In 2025, lending through Funding Circle supported 117,000 jobs, £7.9 billion in GDP
contribution and £2.2 billion in tax receipts. We once again lent to businesses in
every one of the country’s 650 constituencies, powering tens of thousands of SMEs.
As we have diversified our product set, it has been pleasing to see the impact, we
now offer over ten different products, we have a customer transaction every 38
seconds (vs every half an hour in 2021), and in H2 last year, 50% of our credit
extended came from outside our core term loan products.
We remain capital-light with a robust balance sheet. We are continuing to return
value to shareholders through share buybacks, having purchased 17% of our initial
share capital since March 2024, while maintaining a strong cash position to support
growth.
Strategic progress: borrow, pay later, spend
Over the last few years, we have executed against our multi-product strategy,
driving an expanded customer set, an increased share of wallet and deeper customer
engagement. Today, we are a more important part of our customers’ lives.
We are executing against our four strategic pillars to drive profitable growth:
1. Get to ‘Yes’: Expanding our product offering, improving our customer service and
our credit segmentation to get to ‘Yes’ for more businesses. This year we
reorganised our sales teams to better serve customers’ financial holistic needs,
launched a shorter-term loan product, and further expanded our Marketplace
partnerships to support those we cannot fund directly.
2. Expand our audience: Through new distribution channels and product sets, we are
broadening the range of customers we can serve and attract. Our Cashback card is
bringing new customers into the Funding Circle ecosystem. We continue to invest in
our existing direct and intermediated distribution channels and our new partnership
with TNT Sports, building on our existing partnership with Gallagher PREM Rugby,
will also put Funding Circle in front of new SME audiences.
3. Scale our product offering: We are driving our newer products, FlexiPay and
Cashback card, towards scale and profitability. We have made good progress building
out product features to offer more flexibility for customers.
4. Build a seamless lifetime customer experience: We are serving our customers
across a broader set of needs and by solving more problems for our customers, we are
laying the foundations for long-term relationships as their trusted financial
partner.
Our technology and data advantage
When we speak to our customers, they want fast and easy access to credit with a
human touch. In a small business, the owners are the operators, the marketers and
the financiers. We provide a six minute application form, instant decisions for 73%
of applicants, and funding in as little as 24 hours. This drives strong satisfaction
with an NPS (Term Loans) of 79 and lets customers focus on what they do best,
running their businesses.
We can do this thanks to our data and technology, which delivers a competitive
advantage. Our AI-powered risk models are trained with our proprietary data on
hundreds of thousands of loans and transactions alongside public data sources,
discriminating risk three times better than bureau scores alone.
We continue to invest in our technology and data stack. Gen AI forms part of this as
we evolve into an AI-native organisation. We are leveraging AI to improve customer
experience and productivity - from better understanding customer sentiment and
serving customers faster, to speeding up product development. We are deploying Gen
AI thoughtfully and safely with a ‘human in the loop’ approach.
People and culture
Our results and strategic progress are all testament to the hard work of our
Circlers. It is their passion, commitment and dedication that means we continue to
help more SMEs thrive. We achieved a record employee engagement score of 74% in
2025.
This year, we launched our new ‘People Pact’ reflecting our collective commitment to
be all in and ‘On a Mission’ every day to back small businesses, to grow fast, to
belong together, to build better, and to be different. At Funding Circle we are on a
mission that really matters and ultimately reaps rewards for our Circlers, our
customers, our investors and shareholders, and our business.
Looking ahead
We are excited by the potential that we have to continue to become our customers’
trusted financial partner. We enter 2026 with a clear platform for growth as we
become a more meaningful part of our customers’ lives, serving more of their needs
and capturing a larger share of their financing, to fuel even more SME success
stories across the UK.
Financial review
Outperforming expectations and delivering growing PBT
Overview of the year ended 31 December 2025
We are pleased to report that the Group delivered strong revenue and sustainable
profit growth in 2025, demonstrating continued scalability following the move to
profitability in 2024. This performance was driven by growth across Term Loans (a
longer-term financial product offering) and FlexiPay (a shorter-term line of credit
product) which also incorporates the Cashback card (launched in H2 2024),
demonstrating the strength of our expanded product suite in meeting the diverse
financing needs of SMEs. FlexiPay and the Cashback card are presented as one
segment.
While these two business segments are at different stages of maturity, product
innovation has remained a driver for both. In our more established Term Loans
business, we have successfully expanded our product range to include our
shorter-term loan offering. Simultaneously, in our high growth FlexiPay segment, we
have continued to iterate on features to deepen customer engagement.
Credit extended Assets under
(Originations and Transactions) Management
31 December 31 December
FY 2025 FY 2024
2025 2024
£m £m
£m £m
Continuing operations
Term Loans 1,638 1,407 2,755 2,714
FlexiPay 815 492 206 119
Total 2,453 1,899 2,961 2,833
Overall, credit extended grew by 29% to £2.5 billion, with significant growth for
Term Loans and FlexiPay. Assets under management grew to £3.0 billion with credit
performance in line with management expectations.
Strong credit extended translated into revenue growth of 28% to £204.3 million
(2024: £160.1 million), achieving our 2026 revenue guidance a year earlier than
expected. The Group made a profit before tax of £20.3 million (2024: profit before
tax of £3.4 million before exceptional items, profit before tax of £0.8 million
after exceptional items).
Segmental highlights1 31 December 2025 31 December 20242
Continuing operations Continuing operations
Term Term
FlexiPay Total FlexiPay Total
Loans Loans
£m £m £m £m
£m £m
Transaction fees 105.8 1.2 107.0 84.7 0.6 85.3
Servicing fees 35.9 — 35.9 37.5 — 37.5
Interest income 5.6 44.6 50.2 8.3 22.6 30.9
Other fees 5.0 0.1 5.1 5.1 0.1 5.2
Operating income 152.3 45.9 198.2 135.6 23.3 158.9
Investment income 24.3 — 24.3 2.8 — 2.8
Total income 176.6 45.9 222.5 138.4 23.3 161.7
Fair value (losses)/gains (6.7) — (6.7) 4.2 — 4.2
Cost of funds (2.5) (9.0) (11.5) — (5.8) (5.8)
Net income (“revenue”) 167.4 36.9 204.3 142.6 17.5 160.1
Profit/(loss) before tax
(before exceptional 32.2 (11.9) 20.3 19.0 (15.6) 3.4
items)
Exceptional items — — — (2.3) (0.3) (2.6)
Profit/(loss) before tax 32.2 (11.9) 20.3 16.7 (15.9) 0.8
1. The Group primarily uses profit before tax in its resource allocation and
decision making and has therefore discontinued disclosing Adjusted EBITDA as an
additional non-GAAP measure.
2. The segmental results of the discontinued US business for 2024 are not presented
above.
Term Loans
Term Loans originations increased by 16% to £1,638 million (2024: £1,407 million).
Growth was driven by product innovation and increased borrower demand, with a
particularly strong Q4 2025.
We continue to look at ways to provide access to finance for SMEs. Alongside our
principal longer-term financial product, we met business needs through a range of
other products:
• We expanded our loan proposition with a shorter-term loan (6 to 24-month terms).
To support the launch, whilst we tested and iterated this product, we funded it
through our balance sheet in line with our capital allocation policy. It was
funded through the same leveraged warehouse as FlexiPay. The product expansion
has been a success and we onboarded an institutional investor, Waterfall Asset
Management, in January 2026 to fund the product going forward. We also sold the
shorter-term loan portfolio to that investor in line with the value it was
carried at.
• We continued to participate in the government’s Growth Guarantee Scheme (“GGS”)
which enabled us to provide finance to SMEs at a lower cost than we would
otherwise be able to.
• We have also continued to grow originations through our Marketplace network of
third-party finance providers. This allows us to support even more SMEs with
access to a wider range of financing options.
Under our off-balance-sheet funding model, Term Loans are funded through agreements
with institutional investors. During 2025, we signed five forward flow arrangements
with investors and we have c.£2.2bn future funding in place including the
institutional funders we onboarded for shorter-term loans earlier this year (31
December 2024: c.£2.1 billion).
Assets under Management (“AuM”) started to grow again and reached £2.8 billion, as
new lending outpaced the amortisation of the legacy Covid-19 government-guaranteed
loans. As at 31 December 2025, the legacy Covid-19 loans represented c.8% of total
AuM (31 December 2024: 27%).
The Term Loans business delivered revenue of £167.4 million, growing 17% (2024:
£142.6 million). This growth came principally from originations and successful
scaling of our shorter-term loan offering. The income from shorter-term loans is
presented within investment income as we earned interest whilst the loans were
on-balance-sheet. Going forward this will move to a fee-based model where we earn an
upfront transaction fee and a servicing fee in line with our other Term Loans
products.
Profit before tax was £32.2 million, up from £19.0 million in 2024 (£16.7 million in
2024 after exceptional items). PBT margin increased to 19.2% (2024: 13.3%; 2024:
11.7% after exceptional items), showing the strong efficiency and scalability of our
established platform business.
FlexiPay and Cashback card
Our line of credit product, FlexiPay, has demonstrated significant growth to date
and we continue to invest in it. FlexiPay includes a line of credit product and a
Cashback card.
Transactions grew by 66% to £815 million (2024: £492 million), driven by customer
growth and new features, increasing customer engagement. We also continue to scale
Cashback card, launched in H2 2024. Active accounts increased by 56% to nearly
20,000 in 2025, driving transaction growth. AuM grew to £206 million at 31 December
2025 (2024: £119 million), following transaction and active account growth.
Revenue for FlexiPay was £36.9 million in 2025, increasing from £17.5 million in
2024, primarily due to interest income growth. This was driven by a rise in
transactions and fee growth. The average fee for each drawdown grew to 7.3% (2024:
5.8%), reflecting a longer average repayment period after offering wider repayment
terms during 2024 of 1, 3, 6, 9 or 12 months.
The FlexiPay segment has two primary products – FlexiPay, a line of credit and a
Cashback card. The line of credit offers the instant ability to settle invoices or
withdraw cash via bank transfer or the FlexiPay card. A one-off drawdown fee is
charged, with repayment spread over 1-12 months. There is no additional interest. On
our Cashback card, when a customer transacts, an interchange fee of 1.75% is earned
alongside interest on any revolving balances. The product offers customers 2%
cashback in the first six months, followed by 1% thereafter.
FlexiPay is funded through Funding Circle’s invested capital and a senior debt
facility with Citi. The lines of credit are part of Funding Circle’s balance sheet.
The interest payable on this facility is shown in “cost of funds” and is based on
SONIA plus a margin. This facility is currently £240 million with the ability to
upsize further and is due for renewal in April 2026. This facility now only funds
FlexiPay, however during 2025 the facility also funded our shorter-term loans and
was £291 million at 31 December 2025, prior to an institutional investor being
onboarded for future shorter-term loan funding.
Loss before tax was £11.9 million (2024: loss before tax of £15.9 million after
exceptional items, loss before tax of £15.6 million after exceptional items), with
continued investment to support product momentum. Marketing costs and expected
credit losses are recognised upfront, creating an initial “j-curve” effect. However,
given the recurring nature of these products, we expect to generate repeat revenues
that drive long-term profitability. Over 80% of the 2025 revenues came from
customers onboarded pre-2025 and earlier cohorts are now cash generative.
31 December 31 December
31 December 2024 31 December 2024
2025 2024
Before Exceptional
exceptional Total
Profit and loss items
items
£m
£m
£m £m
Transaction fees 107.0 85.3 — 85.3
Servicing fees 35.9 37.5 — 37.5
Interest income 50.2 30.9 — 30.9
Other fees 5.1 5.2 — 5.2
Operating income 198.2 158.9 — 158.9
Investment income 24.3 2.8 — 2.8
Total income 222.5 161.7 — 161.7
Fair value (losses)/gains (6.7) 4.2 — 4.2
Cost of funds (11.5) (5.8) — (5.8)
Net income (“revenue”) 204.3 160.1 — 160.1
Expected credit loss
charge (18.3)
(8.6) — (8.6)
(68.4)
People costs (68.1) (2.3) (70.4)
Marketing costs (62.0) (45.6) — (45.6)
Depreciation,
amortisation and (11.1) (13.2) (0.3) (13.5)
impairment
Other costs (24.2) (21.2) — (21.2)
Operating expenses (165.7) (148.1) (2.6) (150.7)
Profit/(loss) before tax
from continuing 20.3 3.4 (2.6) 0.8
operations
Operating income includes transaction fees, servicing fees, interest income from
loans held at amortised cost, interest on cash balances and other fees and was
£198.2 million (2024: £158.9 million).
• Transaction fees, representing fees earned on originations, increased to £107.0
million (2024: £85.3 million), driven by originations growth as the business
continued to expand its Term Loans offering to more segments of the market.
Average yields in the Term Loans business improved to 6.5% (2024: 6.0%) driven
by product mix.
• Servicing fees, representing income for servicing AuM, were £35.9 million (2024:
£37.5 million). The fees move in line with AuM and although year-end AuM grew
slightly compared to 2024, total servicing fees were lower as a result of a
lower average AuM during the year. We expect AuM to continue to grow in 2026 now
that new lending has outpaced legacy amortisation. Servicing yields remain
similar to 2024 levels.
• Interest income includes:
i. FlexiPay interest income which is a fee charged on transactions and spread
over a number of months, in line with borrower repayments. It has increased
to £42.9 million (2024: £21.3 million), driven by transaction levels and the
average fees on transactions which were 7.3% in the year (2024: 5.8%) due to
longer average payment terms.
ii. Interest earned on cash and cash equivalents decreased to £6.8 million
(2024: £9.2 million). This interest applies to the Group’s unrestricted
cash as well as restricted cash drawn from the Citi facility in
anticipation of future drawdowns. The interest earned on cash has decreased
in line with the unrestricted cash balance decrease, driven primarily by
share buybacks and investment in our shorter-term loan offering where we
temporarily held loans on balance sheet while we tested and iterated the
product. We have since sold these loans to an institutional investor.
• Other fees arose principally from collection fees we recovered on defaulted
loans.
Investment income represents the income on loans held on balance sheet at fair
value. It increased to £24.3 million (2024: £2.8 million), driven by the
shorter-term loan product which we held on balance sheet and received interest
income on during the investment phase before selling the loans post-year-end.
Net income (“revenue”), defined as total income after fair value adjustments and
cost of funds, was £204.3 million (2024: £160.1 million). The fair value loss in the
year of £6.7 million (2024: £4.2 million gain) related primarily to fair value
movements on the shorter-term loan products held on balance sheet. Since year-end,
we have sold these loans to an institutional investor, in line with the value at
which they were held.
The fair value gain in 2024 related to certain investments in trusts and
co-investments which were sold earlier than originally anticipated thereby
accelerating the receipt of future cash flows, which were valued at a discount.
Expected credit losses principally relate to the IFRS 9 charge for FlexiPay where we
account for actual and future expected credit losses from SMEs defaulting on their
lines of credit. This has increased to £18.3 million (2024: £8.6 million), mainly
driven by growth in FlexiPay AuM.
Operating expenses: At an overall level, operating expenses increased compared with
2024.
However, costs remain actively and tightly managed with a 12% increase in expenses
before exceptional items compared to a 28% growth in revenue.
The primary drivers of cost growth were the variable expenses associated with
marketing and variable salary costs driven by the financial outperformance during
the year. Marketing costs increased to £62.0 million.
The remaining costs increased by 1%.
People costs (including contractors) represent the Group’s largest ongoing operating
cost and include salary-related costs plus share-based payments.
Total people costs of £68.4 million were broadly flat (2024: £68.1 million before
exceptional items) with inflation and new hires offset by the reduction in
share-based payments. The average salary per head increased by 11% driven by the
variable costs including sales team commissions and Group bonus levels. Year-end
headcount increase was driven by volume-related roles and investment in product
development.
The share-based payment charge for the year, included in people costs, was £5.9
million (2024: £7.8 million), the reduction was largely driven by a large share
price increase in 2024 which increased the national insurance costs associated with
the awards in that year.
31 December 31 December
Change
Continuing operations 2025 2024
%
£m £m
Salary costs 71.3 69.3 3
Less capitalised development spend (“CDS”) (8.8) (9.0) (2)
Salary costs net of CDS 62.5 60.3 4
Share-based payments 5.9 7.8 (24)
Total people costs 68.4 68.1 —
Average headcount (incl. contractors) 739 788 (6)
Year-end headcount (incl. contractors) 778 726 7
Marketing costs comprise performance marketing (direct mail and online), brand spend
and broker commission payments. Marketing costs increased in the year to £62.0
million (2024: £45.6 million). This was in line with growth in credit extended,
together with an increase in the mix of broker commissions which has a higher cost
per acquisition compared to performance marketing. Additionally, we continued
sponsorship of PREM Rugby and launched a business partnership with TNT Sports.
Depreciation, amortisation and impairment costs of £11.1 million (2024: £13.2
million before exceptional items) largely represent the amortisation of the cost of
our capitalised technology development and the depreciation of right-of-use assets
related to our office lease. The reduction is driven by some legacy technology
assets reaching the end of their amortised life during 2025.
Other operating costs consist of loan processing costs, data and technology,
professional fees and employee and office-related costs. Revenue growth drove an
increase in the variable element of these costs, alongside inflation.
Balance sheet and investments
The Group’s net equity was £228.4 million at 31 December 2025 (31 December 2024:
£216.5 million). This increase reflects the profit generated and recognition of
deferred tax assets, partially offset by share buybacks. A deferred tax asset of
£23.6 million on brought forward losses has been recognised at 31 December 2025 as
the Group becomes increasingly profitable, and it is probable that there will be
future taxable profits to offset previous losses. A further £2.5 million has been
recognised in relation to RDEC tax credits to offset tax payable. The recognition of
a deferred tax asset results in a tax credit increasing the profit for the year and
resulting in a higher earnings per share (“EPS”) figure compared to the position if
the deferred tax asset had not been recognised. Note 9 provides further detail of
the impact of deferred tax on EPS.
The majority of the Group’s balance sheet is represented by cash and invested
capital as shown below. The invested capital is in certain SME loans, either
directly or historically through investment vehicles, and in the FlexiPay lines of
credit.
Operating Investment business
business
31 31
Term CBILS/ December December
Loans FlexiPay
Shorter-term RLS/GGS 2025 2024
business £m loans co-investments
Total Total
£m £m £m
£m £m
SME loans and lines
2.1 172.9 120.4 12.3 307.7 118.8
of credit
Cash and cash
equivalents
Unrestricted 100.8 0.1 — — 100.9 150.5
Restricted — 41.9 5.9 3.7 51.5 37.1
Other — 10.1 (1.8) — 8.3 6.3
assets/(liabilities)
Borrowings — (168.8) (98.5) — (267.3) (101.9)
Cash and net
102.9 56.2 26.0 16.0 201.1 210.8
investments
Other assets 65.7 — — — 65.7 45.3
Other liabilities (34.7) — — (3.7) (38.4) (39.6)
Equity 133.9 56.2 26.0 12.3 228.4 216.5
The table below provides a summation of Funding Circle’s net invested capital in
products and vehicles:
31 December 31 December
Investment in product/vehicles 2025 2024
£m £m
1. CBILS/RLS/GGS co-investments1 12 18
2. Shorter-term loans1 26 —
3. Other — 2
Net invested 38 20
FlexiPay1 56 34
Total net invested capital 94 54
1. The vehicles through which the funding and lending are generated are set up to
be bankruptcy remote
CBILS/RLS/GGS co-investments – as part of our historical participation in the CBILS
and RLS government-guaranteed loan schemes and our ongoing involvement in GGS, we
were required to co-invest c.1% alongside institutional investors.
Shorter-term loans – this relates to our shorter-term loan offering which we
launched during 2025 as part of our Term Loans business with terms from 6 to 24
months. Whilst the product was tested and iterated, we funded it using our balance
sheet, through the same leveraged warehouse as FlexiPay, in line with our capital
allocation framework. The loans were treated as held for sale and therefore
accounted for at fair value.
Cash flow
At 31 December 2025, the Group’s total cash position was £152.4 million (31 December
2024: £187.6 million).
Of the total cash balance, £100.9 million (31 December 2024: £150.5 million) is
unrestricted in its use with £51.5 million (31 December 2024: £37.1 million) being
restricted. Restricted cash relates to cash held in the senior debt facility with
Citi together with amounts owed to the British Business Bank (“BBB”) for guarantee
fees collected from institutional investors under the participation of the CBILS,
RLS and GGS schemes.
Total movements in unrestricted cash during 2025 have principally been driven by:
i. trading performance;
ii. ongoing investment in FlexiPay lines of credit and shorter-term loan product
with external bank debt;
iii. monetisation of on-balance-sheet SME loans as they have continued to pay down;
and
iv. purchase of shares as part of the share buyback programme.
Unrestricted free cash flow, which is an alternative performance measure, has
significantly improved year-on-year and is positive, driven by the profitability of
the business.
Unrestricted free cash flow represents the net cash flows from operating activities
less the cost of purchasing intangible assets, property, plant and equipment and
lease payments. It excludes the investment vehicle financing and funding cash flows
together with FlexiPay lines of credit, Cashback card and shorter-term loan product.
This excludes restricted cash and cash flows. The Directors view this as a key
liquidity measure and it is the net amount of cash used or generated to operate and
develop the Group’s platform each year.
The table below shows how the Group’s cash has been utilised:
2025 2024
£m £m
Profit before tax from continuing operations 20.3 0.8
Depreciation, amortisation, impairment and modification gains 11.1 13.2
Purchase of tangible and intangible assets and payment of lease (11.4) (13.6)
liabilities
Exceptional items — 0.3
Share-based payments and social security costs 5.0 7.2
Fair value adjustments 6.7 (4.2)
Working capital/other (0.9) (0.1)
Unrestricted free cash flow 30.8 3.6
Net movement in trusts, co-investments and SME loans at amortised cost 7.6 12.3
Net movement in lines of credit (net of borrowings) (22.2) (15.7)
Net movement in loans at fair value through profit and loss (net of (27.6) 3.6
bonds)
Share buyback/purchase of own shares (39.2) (33.7)
Net proceeds from sale of US business — 30.6
Other (distribution from associates and proceeds from exercise of 1.0 1.4
share options)
Movement in the year (49.6) 2.1
Cash and cash equivalents at the beginning of the year 150.5 148.4
Cash and cash equivalents at the end of the year 100.9 150.5
Share buybacks and share purchases
In May 2025, we announced our third share buyback programme, for up to £25 million,
which is currently ongoing. This follows two earlier share buyback programmes
announced in 2024 which returned £50 million to shareholders. Of this total of £75
million, c.£64 million has been purchased through 2024 and 2025 leaving up to c.£11
million remaining.
In the year to 31 December 2025, 23.0 million shares were bought back and cancelled
(2024: 33.5 million shares) for consideration of £27.6 million (2024: £33.7 million)
inclusive of fees and expenses under the programme representing c.7% (2024: c.9%) of
the called-up share capital at the start of the year.
Additionally, the Group bought back 2.3 million shares that were not cancelled and
were held in treasury for cancellation or to be used to satisfy share awards. The
consideration was £3.0 million inclusive of fees and expenses, representing 0.7% of
the called-up share capital at the start of the year.
A further 7.7 million of ordinary shares were purchased by the EBT for consideration
of £8.6 million (2024: £nil) for the purposes of satisfying employee share option
plans.
Subsequent events - sale of shorter-term loan assets
The shorter-term loans held by the Group were held at a fair value of £120.4 million
at 31 December 2025 (2024: £nil). Since the year-end, an agreement was signed to
sell the loans to a third party, alongside the signing of a forward flow agreement
for the go forward origination of the product.
The loans were sold with an economic cut-off date of 31 December 2025, for an amount
materially aligned with their fair value at the balance sheet date resulting in net
invested capital of £26 million being monetised and a post-sale unrestricted cash of
£126.9 million.
Of the £126.9 million, there remains up to c.£11 million usage for the ongoing
buyback programme and management holds an operational cash buffer of c.£40 million.
We are not regulated like a bank with regulatory capital, but we hold a stress
buffer for operational purposes. This leaves c.£76 million of future deployable
cash.
The below table illustrates the post-balance-sheet impact of the sale as if applied
to 31 December 2025 with the loans sold, related borrowings repaid and the net
unrestricted cash available for use in the operating business.
Proforma 31 December
balance sheet
post sale impact1 2025
£m £m
SME loans and lines of credit 187.3 307.7
Cash and cash equivalents
Unrestricted 126.9 100.9
Restricted 45.6 51.5
Other assets/(liabilities) 10.1 8.3
Borrowings (168.8) (267.3)
Cash and net investments 201.1 201.1
Other assets 65.7 65.7
Other liabilities (38.4) (38.4)
Equity 228.4 228.4
1. Proforma balance sheet as at 31 December 2025 post the impact of sale of
shorter-term loans post year-end.
Principal risks and uncertainties
The principal risks and uncertainties for the Group are as follows:
Strategic risk
Strategic risk is defined as the failure to plan or build a sustainable, diversified
and profitable business.
i) Strategy execution
Risk that we are unable to effectively deliver the strategy selected due to
inadequate investment, prioritisation, organisational design or execution or fails
to monitor the achievements of strategic objectives. This would result in the
business not meeting key objectives, impacting our competitive advantage.
ii) Environmental, social and governance risk
Environment, social and/or governance events or circumstances could cause an actual
or potential material negative impact on our financial performance or reputation.
Funding and finance risk
Funding and finance risk relates to the potential for adverse impacts on the Group’s
ability to source and maintain sufficient capital to support the origination of SME
financial products, and also the potential for adverse impacts on the Group’s
financial position, performance, or reputation arising from various sources,
including inadequate liquidity, operational failures affecting financial data,
errors in accounting and reporting, deviations from strategic financial goals, and
issues related to the balance sheet structure and asset management.
i. Funding risk
Risk that demand from borrowers for credit cannot be met by institutional investors
providing the funding. This risk varies with the economic attractiveness of Funding
Circle products as an investment, the level of diversification of funding sources
and the level of resilience of these funding sources and their returns through
economic cycles.
ii. Corporate liquidity
The risk that balance sheet funded investments lose value or cannot be exited at
viable prices, and that liabilities cannot be met timely or cost effectively.
Regulatory, reputation and conduct risk
Regulatory, reputation and conduct risk relates to activities that detract from our
goal of being a trusted and reputable company with products, services and processes
designed for customer success and delivered in a way that will not cause customer
detriment or regulatory censure. Legal Risk is also included within this principal
risk, which includes, but is not limited to, exposure to fines, penalties, or
punitive damages resulting from supervisory actions, as well as private settlements.
i) Conduct risk
Failure to satisfactorily deliver fair customer outcomes leading to regulatory
censure, and reputation damage.
ii) Regulatory risk
The risk of changing regulations which impact our operations, or our business
practices do not align to regulatory expectation leading to customer detriment,
reputation damage and regulatory censure.
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal
processes, people, and systems or from external events. This definition includes
operational failures resulting from the use of AI systems, such as flawed model
outputs leading to poor business decisions, process automation failures, inadequate
‘human-in-the-loop’ oversight, or fraud losses resulting from AI enabled attacks.
i. Process risk
Failure to originate and service loans in line with our internal policies, investor
guidelines and third party loan guarantees (e.g. BBB) may result in us repurchasing
loans from investors. The risk of an operational incident could impact the ability
to originate new loans or the ability to service loans through collections from
borrowers and return of money to investors.
ii) Financial crime
Risk of regulatory breach, financial loss or reputational damage arising from a
failure to adequately manage or prevent money laundering, terrorist financing,
bribery and corruption, or to comply with sanctions regulations.
a) Fraud Risk
Fraud risk is the threat of external unauthorised activities, including fraud
committed by borrowers, investors, or related parties. Fraud risk also includes
the risk of internal fraud by employees against the organisation, its customers, or
third/ fourth parties for personal gain.
iii) Change Risk
The risk arising from the inability to manage business changes in a timely and
controlled manner. This includes large and complex change programmes as well as
small and incremental enhancements, including product changes.
iv) People Risk
Failure to plan appropriately may lead to loss of subject matter expertise and may
have a detrimental impact to business resilience. Employees do not have the right
level of training and skills to match job requirements leading to poor deliverable
outcomes. Includes key person reliance.
Credit risk
Credit risk is the risk of financial loss should any borrower fail to fulfil their
contractual repayment obligations. Credit risk management is the sum of activities
necessary to deliver a risk profile at the portfolio level in line with Funding
Circle management’s expectations, in terms of net loss rate, risk-adjusted rate of
return and volatility through economic cycles. This includes management of potential
risks from AI and machine learning (‘‘ML’’) models integrated in the credit risk
assessment.
i. Credit risk
a. Borrower acquisition
Credit performance and returns of new loans can deviate from expectations due to
several factors: changes in credit quality of incoming applications, calibration of
risk models or strategy parameters, and control gaps in processing loan
applications..
b. Portfolio management
Credit performance and returns of existing portfolio can deviate from expectations
due to several factors: deterioration of credit environment, increased competition
driving higher prepayment rates, effectiveness of portfolio monitoring, collections
and recoveries. Such risks, unmitigated, could impair Funding Circle’s capabilities
to source funding for new loans at reasonable terms, and be adverse to the financial
performance of the Company.
Technology risk
Technology risk refers to the potential negative consequences that can arise from
the use or implementation of technology, including hardware, software, and data
management systems. Technology risks can arise from a variety of sources, including
hardware failures, software bugs, cyber attacks, data breaches, user errors, and
security vulnerabilities specific to AI systems.
i. Technology resilience
Failure of the technology platform could have a material adverse impact on our
business, results of operations, financial condition or prospects.
ii) Cybersecurity
The risk of unauthorised access to IT systems and data, including as a result of a
cyber attack, which threatens the confidentiality, integrity, and availability of
data and/or systems.
Emerging Risks
i) New technology risk
Including AI and cybersecurity
ii) Economic and geopolitical risks
Including financial instability, disruptions in trade and supply chains and
political and social fragmentation.
iii) Exogenous risks
Including climate related risks/ global shocks (pandemics, wars, etc.)
Consolidated statement of comprehensive income
for the year ended 31 December 2025
31 December 31 December 31 December 31 December
2024
2025 2024 2024
Exceptional
Before
Note Items1
exceptional
items
£m
£m £m £m
Transaction fees 107.0 85.3 — 85.3
Servicing fees 35.9 37.5 — 37.5
Interest income2 50.2 30.9 — 30.9
Other fees 5.1 5.2 — 5.2
Operating income 198.2 158.9 — 158.9
Investment income 24.3 2.8 — 2.8
Total income 222.5 161.7 — 161.7
Fair value (losses)/gains (6.7) 4.2 — 4.2
Cost of funds (11.5) (5.8) — (5.8)
Net income3 5 204.3 160.1 — 160.1
Expected credit loss charge 3, 14, (18.3) (8.6) — (8.6)
15, 17
People costs 4, 6, 7 (68.4) (68.1) (2.3) (70.4)
Marketing costs 6 (62.0) (45.6) — (45.6)
Depreciation, amortisation 4, 5, (11.1) (13.2) (0.3) (13.5)
and impairment 6, 10
Other costs 6 (24.2) (21.2) — (21.2)
Operating expenses 6 (165.7) (148.1) (2.6) (150.7)
Profit/(loss) before 5 20.3 3.4 (2.6) 0.8
taxation
Income tax credit/(charge) 8 25.7 (0.5) — (0.5)
Profit/(loss) for the year 46.0 2.9 (2.6) 0.3
from continuing operations
(Loss)/profit for the year — (10.2) 18.5 8.3
from discontinued operations
Profit/(loss) for the year 46.0 (7.3) 15.9 8.6
Other comprehensive expense
Items that may be
reclassified subsequently to
profit and loss:
Exchange differences on
translation of foreign — (8.9)
operations – discontinued (0.2) (8.7)
operations
Total comprehensive
income/(expense) for the 46.0 (7.5) 7.2 (0.3)
year
Total comprehensive
income/(expense)
attributable to:
Owners of the Parent
Income/(expense) from 46.0 2.9 (2.6) 0.3
continuing operations
(Expense)/income from — (10.4) 9.8 (0.6)
discontinued operations
Total comprehensive
income/(expense) 46.0 (0.3)
attributable to the owners (7.5) 7.2
of the Parent
Earnings per share
Basic earnings per share 9 14.6p 0.8p 0.1p
from continuing operations
Diluted earnings per share 9 14.0p 0.8p 0.1p
from continuing operations
Basic (loss)/earnings per
share from discontinued 9 — (3.0)p 2.4p
operations
Diluted (loss)/earnings per
share from discontinued 9 — (3.0)p 2.2p
operations
Basic total earnings/(loss) 9 14.6p (2.1)p 2.5p
per share
Diluted total
earnings/(loss) per share 9 14.0p (2.1)p 2.3p
from all operations
1. Exceptional items are detailed in note 4.
2. Interest income recognised on assets held at amortised cost under the effective
interest rate method and £5.1 million (2024: £7.7 million) on money market funds
held at fair value through profit and loss.
3. Net income is also referred to as “revenue”.
The notes form part of these financial statements.
Consolidated balance sheet
as at 31 December 2025
31 December 31 December
Note 2025 2024
£m £m
Non-current assets
Intangible assets 10 21.3 21.2
Property, plant and equipment 7.9 9.6
Investment in associates — 0.6
Investment in trusts and co-investments 11, 15 11.9 17.8
Deferred tax asset 8 26.1 —
SME loans held at amortised cost 11, 15 1.2 1.4
68.4 50.6
Current assets
SME loans held at amortised cost 11, 15 0.9 0.7
SME loans held at fair value through profit and loss 11, 15 120.8 1.2
Lines of credit 11, 15 172.9 97.1
Trade and other receivables 12 20.5 20.8
Cash and cash equivalents 16 152.4 187.6
467.5 307.4
Total assets 535.9 358.0
Current liabilities
Trade and other payables 13 30.8 27.8
Bank borrowings 15, 16 267.3 101.9
Short-term provisions and other liabilities 14, 17 2.5 3.6
Lease liabilities 16 1.8 1.8
302.4 135.1
Non-current liabilities
Long-term provisions and other liabilities 14 0.6 0.6
Lease liabilities 16 4.5 5.8
Total liabilities 307.5 141.5
Equity
Share capital 0.3 0.3
Share premium account 0.5 0.1
Foreign exchange reserve 5.3 5.3
Share options reserve 21.1 20.6
Retained earnings 201.2 190.2
Total equity 228.4 216.5
Total equity and liabilities 535.9 358.0
The financial statements were approved by the Board and authorised for issue on 05
March 2026. They were signed on behalf of the Board by:
Tony Nicol
Director
Company registration number 07123934
The notes form part of these financial statements.
Consolidated statement of changes in equity
for the year ended 31 December 2025
Share Foreign Share
Share Retained Total
premium exchange options
capital earnings/ equity
Note account reserve reserve (accumulated
£m losses) £m
£m £m £m
£m
Balance at 1 January 2024 0.4 293.1 14.2 24.0 (84.9) 246.8
Profit for the year — — — — 8.6 8.6
Other comprehensive
expense
Exchange differences on
translation of foreign — — (8.9) — — (8.9)
operations
Total comprehensive — — (8.9) — 8.6 (0.3)
(expense)/income
Transactions with owners
Transfer of share option — — — (6.6) 6.6 —
costs
Buyback of own shares 2 (0.1) — — — (33.6) (33.7)
Capital reduction 2 — (293.5) — — 293.5 —
Issue of share
capital/exercise of share — 0.5 — — — 0.5
options
Employee share schemes –
value of employee services — — — 3.2 — 3.2
Balance at 31 December 0.3 0.1 5.3 20.6 190.2 216.5
2024
Profit for the year — — — — 46.0 46.0
Other comprehensive income
Exchange differences on
translation of foreign — — — — — —
operations
Total comprehensive income — — — — 46.0 46.0
Transactions with owners
Transfer of share option — — — (4.2) 4.2 —
costs
Buyback of own shares 2 — — — — (30.6) (30.6)
Purchase of own shares by
Employee Benefit Trust 2 — — — — (8.6) (8.6)
(“EBT”)
Issue of share
capital/exercise of share — 0.4 — — — 0.4
options
Employee share schemes –
value of employee services — — — 4.7 — 4.7
Balance at 31 December 0.3 0.5 5.3 21.1 201.2 228.4
2025
The notes form part of these financial statements.
Consolidated statement of cash flows
for the year ended 31 December 2025
31 December 31 December
Note 2025 2024
£m £m
Net cash outflow from operating activities 16 (33.8) (67.4)
Investing activities
Purchase of intangible assets 10 (8.9) (9.0)
Purchase of property, plant and equipment (0.6) (2.9)
Originations/purchase of SME loans held at amortised 15 (2.4) (0.2)
cost
Proceeds from sale of SME loans held at amortised cost 15 0.7 —
Cash receipts from SME loans held at amortised cost 15 1.9 3.0
Originations/purchase of SME loans held at fair value 15 (180.6) —
through profit and loss
Cash receipts from SME loans held at fair value through 15 51.8 13.5
profit and loss
Proceeds from sale of SME loans held at fair value 15 3.9 —
through profit and loss
Investment in trusts and co-investments 15 (0.8) (4.1)
Cash receipts from investments in trusts and 15 8.2 14.6
co-investments
Redemption in associates 0.6 0.9
Proceeds from sale of subsidiary 4 — 32.6
Direct costs of selling subsidiary — (2.0)
Cash disposed of on sale of subsidiary 4 — (23.1)
Net cash (outflow)/inflow from investing activities (126.2) 23.3
Financing activities
Proceeds from bank borrowings 16 176.8 52.6
Repayment of bank borrowings 16 (11.4) (6.0)
Proceeds from the exercise of share options 0.4 0.5
Purchase of own shares by EBT 2 (8.6) —
Buyback of own shares 2 (30.6) (33.7)
Proceeds from subleases — 0.4
Payment of lease liabilities 16 (1.9) (3.6)
Net cash inflow from financing activities 124.7 10.2
Net decrease in cash and cash equivalents (35.3) (33.9)
Cash and cash equivalents at the beginning of the year 187.6 221.4
Effect of foreign exchange rate changes 0.1 0.1
Cash and cash equivalents at the end of the year 16 152.4 187.6
The notes form part of these financial statements.
Cash flows from discontinued operations are not shown above.
Notes forming part of the consolidated financial statements
for the year ended 31 December 2025
1. Basis of accounting
The consolidated financial statements are prepared under the historical cost basis
except for certain financial instruments that are carried at fair value through
profit and loss (“FVTPL”).
2. Basis of preparation
The financial statements included in this preliminary announcement have been
prepared in accordance with the Disclosure and Transparency Rules of the UK
Financial Conduct Authority, and the principles of UK-adopted international
accounting standards, but do not comply with the full disclosure requirements of
these standards. The financial information for the year ended 31 December 2024 is
derived from the statutory financial statements for that year which have been
delivered to the Registrar of Companies. The auditor reported on those financial
statements: their report was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under s498(2) or (3) of the
Companies Act 2006.
The financial information contained in this announcement does not constitute the
statutory financial statements of the Group as at and for the year ended 31 December
2025, but is derived from those financial statements, which have been prepared in
accordance with UK-adopted international accounting standards. The financial
statements themselves have been approved by the Board of Directors and reported on
by the auditor and will be delivered to the Registrar of Companies in due course.
Going concern
The Group made a total comprehensive income of £46.0 million during the year ended
31 December 2025 (2024: expense of £0.3 million). As at 31 December 2025, the Group
had net assets of £228.4 million (2024: £216.5 million). This includes £152.4
million of cash and cash equivalents (2024: £187.6 million), of which £51.5 million
(2024: £37.1 million) is held for specific purposes and is restricted in use. Within
the net assets, the Group holds £94.5 million (2024: £53.5 million) of invested
capital, some of which is capable of being monetised if liquidity needs arise.
The financial statements are prepared on a going concern basis as the Directors are
satisfied that the Group has the resources to continue in business for the
foreseeable future (which has been taken as at least 12 months from the date of
approval of the financial statements).
The Group has prepared detailed cash flow forecasts for the next 15 months to 30
June 2027.
The base case scenario assumes:
• the economic environment remains as is with no improvement or deterioration in the
macro environment forecast;
• growth in shorter-term loans;
• growth in Cashback card alongside FlexiPay lines of credit;
• the Group continues to fund the lines of credit through its balance sheet along
with the senior banking facility;
• shorter-term loans are expected to be funded in the same way until December 2025
when we expect to sell the assets and switch to operating under a platform model;
• costs are controlled with any growth driven by marketing, expected credit losses
(“ECL”) and cost of funds. Remaining costs grow but predominantly through inflation.
Strict control of headcount, with limited increases;
• the current share buyback programme concludes in April 2026 with no additional
buyback or dividend assumed; and
• corporation tax begins to be paid in 2026 alongside utilising brought forward tax
losses.
Management prepared a severe but plausible downside scenario in which:
• further macroeconomic volatility continues through the period with elevated
inflation and interest rates reducing originations as borrower demand for loans at
higher interest rates reduces and investor funding appetite reduces;
• a downside scenario is applied to Term Loans, loans under management resulting in
reduced servicing fees;
• a downside scenario applied to the on-balance sheet lines of credit results in
reduced net interest margins with higher cost of funds; and
• an operational event occurs, such as impacts on critical suppliers and lower
corporate cash levels resulting in lost revenues and cash outlays.
The severe but plausible downside scenario results in a maximum cash outflow of £40
million, which is the minimum level of unrestricted cash and cash equivalents the
Group will hold at all times (referred to as “management’s stress buffer”).
Management has reviewed its limited regulatory capital requirements. In the downside
scenario, the risk of capital requirement breach is considered remote. The Group
does not currently rely on committed or uncommitted borrowing facilities, with the
exception of a facility for the purpose of originating FlexiPay lines of credit (and
initially shorter-term loans), and does not have undrawn committed borrowing
facilities available to the wider Group.
The Directors have made enquiries of management and considered budgets and cash flow
forecasts for the Group and have, at the time of approving these financial
statements, a reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future,
specifically assessed for the 15 months to 30 June 2027.
Significant changes in the current reporting year
The financial position and performance of the Group were affected by the following
events and transactions during the year ended 31 December 2025:
i) Expansion into shorter-term loans product
In April 2025, the Group expanded into a shorter-term loan product, offering fixed
rate interest term loans between 6 and 24-month terms. Loans with terms over 12
months are subject to an origination fee in line with our other Term Loan products,
while those with terms of 12 months or less are not subject to origination fees.
The shorter-term loans generally charge higher rates of interest than FC’s
equivalent longer-term loans, but provide more flexibility with penalty-free
prepayments and in some cases no origination fees.
Through 2025 shorter-term loans were financed through the same leveraged warehouse
used to fund the FlexiPay and Cashback card product, Kanaloa 2 Limited (“K2”). The
interest and fees related to the senior borrowing facility used to fund the loans is
presented under “cost of funds” in the condensed consolidated statement of
comprehensive income.
The intention with the shorter-term loan product is to initially build up the
product on balance sheet to an appropriate level of scale whilst in an R&D phase.
This enables us to iterate and evolve the product, before selling the loans to a
third party investor and originating new loans under a platform strategy going
forward. As we intended to sell these loans they were measured at fair value
through profit and loss and presented under “SME loans held at fair value through
profit and loss” on the consolidated balance sheet. Interest income and fair value
gains or losses follow the existing accounting policy and presentation for SME loans
held at fair value through profit and loss and are presented within the Term Loans
segment of the business in note 5.
The shorter-term loans held by the Group were sold in January 2026 subsequent to the
balance sheet date. Details are included in note 18.
ii) Share buyback programme extension and purchase of own shares
The share buyback programme which was launched in 2024 was further extended in May
2025 to buy and cancel up to a further £25 million of shares in order to return
value to shareholders. The nominal cost of the shares cancelled reduces the Group’s
share capital with an equal increase in the capital redemption reserve. The full
cost of the buyback inclusive of stamp duty and broker fees is debited to retained
earnings. In the year to 31 December 2025, 23.0 million shares (2024: 33.5 million)
were purchased and cancelled for consideration of £27.6 million (2024: £33.7
million) inclusive of fees and expenses under the programme. Additionally, the Group
bought back 2.3 million shares (2024: nil) which were not cancelled and were held in
treasury for consideration of £3.0 million (2024: £nil).
Additionally, the Group purchased 7.7 million shares (2024: nil) for £8.6 million
(2024: £nil) during the year ended 31 December 2025, which were not cancelled and
are held for the purpose of satisfying the exercise of employee share options.
iii) Recognition of deferred tax asset (notes 8 and 9)
Deferred tax assets should be recognised for all deductible temporary differences
and tax losses to the extent that it is probable that taxable profit will be
available against which the deductible temporary difference or tax losses can be
utilised. The UK business is in, and is forecast to remain in, a taxable profit
making position, and as a result past losses are anticipated to be utilised against
these taxable profits resulting in the recognition of a deferred tax asset. There
remains risk and uncertainty as to the amount and timing of forecast taxable profits
and so the future profits are probability weighted in the calculation of the
deferred tax asset. The recognition of the asset results in a credit to the income
tax line of the consolidated statement of comprehensive income of £26.1 million.
This results in a higher profit for the year and earnings per share result for the
year compared to the results had the deferred tax asset not been recognised. The
recognition of the deferred tax asset has not been classified as an exceptional
item; however, to highlight the impact of first time recognition of the asset we
have added a disclosure of earnings per share excluding the recognition of deferred
tax in note 9.
3. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated financial statements requires the Group to make
estimates and judgements that affect the application of policies and reported
amounts. 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 key source of estimation uncertainty.
Estimates and judgements are continually evaluated and are based on experience and
other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Although these estimates are based on
management’s best knowledge of the amount, event or actions, actual results
ultimately may differ from those estimates.
The significant judgements and estimates applied by the Group in the financial
statements have been applied on a consistent basis with the financial statements for
the comparative year to 31 December 2024, except for the ECL where the model
methodology has been refined (see note 15).
Critical judgements
Loans originated through the platform
The Group originates SME loans through its platform which have been funded primarily
by banks, asset managers, other institutional investors, funds, national entities,
retail investors or by usage of its own capital. Judgement is required to determine
whether these loans should be recognised on the Group’s balance sheet. Where the
Group, its subsidiaries or SPVs which it consolidates have legal and beneficial
ownership to the title of those SME loans, they are recognised on the Group’s
balance sheet. Where this is not the case, the loans are not recognised at the point
of origination.
Key sources of estimation uncertainty
The following are the key sources of estimation uncertainty that the Directors have
identified in the process of applying the Group’s accounting policies and have the
most significant effect on the amounts recognised in the financial statements.
Expected credit loss impairment of FlexiPay lines of credit (notes 14, 15 and 17)
At 31 December 2025, the Group held £205.1 million of drawn FlexiPay lines of credit
and £446.7 million of undrawn lines of credit, gross of expected credit loss
impairment allowances (2024: £110.0 million drawn and £278.7 million undrawn).
While other financial assets of the Group are held at amortised cost, the FlexiPay
lines of credit are the most sensitive to estimation uncertainty due to the higher
balance outstanding and more limited historical data.
An expected credit loss impairment allowance is held against the lines of credit of
£34.7 million (£32.2 million related to drawn lines of credit and £2.5 million
related to undrawn) (2024: £15.6 million split, £12.9 million drawn and £2.7 million
undrawn).
The Group estimates the expected credit loss allowance following IFRS 9 through
modelling the exposure at default based on observed trends related to the overall
line of credit facility and the proportion drawn at the time of default. The
probability of default is estimated utilising observed trends and combining these
with forward-looking information including different macroeconomic scenarios which
are probability weighted. The loss given default is driven by assumptions regarding
the level of recoveries collected after defaults occur.
The area most sensitive to estimation uncertainty is the probability of default
(“PD”) related to stage 1 and 2 lines of credit which is modelled based on observed
trends and adjusted using probability-weighted forward-looking scenarios. Currently
a baseline scenario, upside scenario and downside scenario are utilised which are
probability weighted as outlined below, which provide a blended stage 1 and 2
average probability of default of 9.0%.
If 100% probability weighting was to be applied to each scenario, the weighted PD
related to stage 1 and 2 lines of credit and the expected credit loss impairment
provision would change as follows:
100%
ECL scenario weighting to ECL £ Change in
scenario average PD
compared to
blended scenario Change in
% ECL compared
to blended
Scenario Average PD scenario £
weighting % %
Base case 70% 100% 8.8% 34.5 (0.2)% (0.2)
Upside 15% 100% 6.0% 29.6 (3.0)% (5.1)
Downside 15% 100% 12.4% 40.9 3.4% 6.2
Blended
weighted 100% 100% 9.0% 34.7 — —
scenarios
The above reflects the impact of both drawn and undrawn elements of the ECL
impairment allowance.
The loss given default (“LGD”) of the expected credit loss impairment allowance is
estimated based on observation of the blended portfolio recoveries to date on
defaulted lines of credit projected out into the future using an average 83.6% LGD.
While the LGD expectation is based on the trajectory of recoveries to date, the
lifetime LGD may differ from the estimated amount. A 500 bps increase/decrease in
the estimated lifetime LGD would increase/decrease the expected credit loss
impairment allowance by £0.9 million/£(0.9) million. It is considered that the above
sensitivities represent the range of reasonably possible outcomes in relation to the
LGD on FlexiPay lines of credit.
SME loans held at fair value through profit and loss (note 15)
At 31 December 2025, the carrying value of the Group’s financial instrument assets
held at fair value was £217.8 million (2024: £155.9 million).
In accordance with IFRS 13 Fair Value Measurement, the Group categorises financial
instruments carried on the consolidated balance sheet at fair value using a
three-level hierarchy. Financial instruments categorised as level 1 are valued using
quoted market prices and therefore there is minimal estimation applied in
determining fair value. However, the fair value of financial instruments categorised
as level 2 and, in particular, level 3 is determined using valuation estimation
techniques including discounted cash flow analysis and valuation models. The most
significant estimation is with respect to discount rates and default rates.
SME loans held at fair value through profit and loss are the assets most sensitive
to estimation uncertainty, and within this, the shorter-term loan product is the
area which is materially sensitive to estimation uncertainty. A sensitivity to only
the shorter term loan product inputs is shown given other SME loans held at fair
value through profit and loss are not considered materially sensitive to estimation
uncertainty, nor are any other financial assets held at fair value through profit
and loss.
Fair value Relationship of
unobservable inputs to fair value
Description £m Unobservable input Inputs
120.4
Shorter-term Lifetime 16.6%
loans cumulative default A change in the lifetime
rate as % of cumulative default rate by
original +590/-470 bps would
decrease/increase fair value by
£(11.2) million/£8.5 million
respectively.
The above sensitivities represent management’s estimate of the reasonably possible
range of outcomes and as a result the fair value of the assets could materially
diverge from management’s estimate.
Fair value Relationship of
unobservable inputs to fair value
Description £m Unobservable input Inputs
Shorter-term 120.4 Risk-adjusted 22.4%
loans discount rate
A change in the discount rates by
+/-200 bps would decrease/increase
fair value by £(1.2) million/£1.2
million respectively.
It is considered that the range of reasonably possible outcomes in relation to the
discount rate used could be +/-200 bps and as a result the fair value of the assets
could diverge from management’s estimate.
The sensitivity in expected lifetime cumulative defaults and sensitivity of the
credit risk element of the risk-adjusted discount rate are most meaningful when
viewed independently of each other.
As disclosed in note 18, subsequent to the year ended 31 December 2025, the assets
were sold in January 2026 for a price materially in line with the fair value at the
balance sheet date, and concurrently a forward flow agreement was signed related to
ongoing shorter-term loan originations.
Estimation of deferred tax asset value (note 8)
During the year the Group recognised a total deferred tax asset of £26.1 million
related to the UK business for the first time. This comprised £23.6 million in
relation to carried forward losses for which the recognition and valuation
incorporated significant judgements and estimates, and a further £2.5 million in
relation to RDEC Step 2 credits. In order to support the recognition of the
deferred tax asset, modelling was undertaken to assess the level of forecast profits
which were probability weighted. This is a significant estimate, while the
forecasting period used for determining the probable profits is a significant
judgement.
The Board-approved five-year medium-term plan (“MTP”), which is also used in the
assessment of Group viability, forms the basis of the forecast taxable profits, and
has been extended for one year, using a 2% long-term growth rate assumption. The
MTP forecasts anticipate continued growth in revenues and profits. Judgement is
used in assessing elements of the forecasts that contain elements of uncertainty.
Probability weightings are applied in order to reflect the degree of uncertainty,
which increases as forecasts extend further into the future. There is estimation
uncertainty related to the management forecasts and the probabilities applied to
them and judgement applied in the selection of the six year forecast period. As a
result, the DTA is sensitive to forecasting assumptions, and the actual utilisation
of the deferred tax asset may vary from the timing and quantum expected. The
judgements and estimates will be assessed on an ongoing basis.
The £26.1 million total deferred tax asset represents a recognition of c.73% of the
brought forward loss position, and a recognition of 100% of the RDEC Step 2 credits.
If taxable forecast profits reduced by 25% this would result in a £6.0 million
reduction of the total deferred tax asset to £20.1 million, or a utilisation of
c.55% of the carried forward loss position, with no impact on the RDEC Step 2
credits which remain £2.5 million.
If the period of forecasting were reduced by 1 year, the DTA would reduce by £1.5
million.
If the baseline forecast profits were fully achieved then a deferred tax asset of
£34.7 million (£32.2 million in relation to the carried forward losses and £2.5
million related to RDEC Step 2 credits) would have been recognised in full by 2030.
4. Exceptional items
The Group reflects its underlying financial results in the “before exceptional
items” column of the consolidated statement of comprehensive income in order to
provide a clear and consistent view of trading performance.
In the previous year, as part of its ongoing commitment to profitability, the Group
launched a redundancy and cost efficiency programme during the year. This process
will result in a simpler, leaner and better positioned UK-focused operation. This
resulted in redundancy costs of £2.3 million and impairment of capitalised
development spend intangible assets of £0.3 million which were treated as
exceptional items.
The Group disposed of its investment in the US business on 1 July 2024, as detailed
below which were treated as exceptional items related to discontinued operations.
31 December
2024
£m
Consideration received:
Cash consideration at prevailing exchange rate 32.6
Net assets disposed on (including cash and cash equivalents of £23.1 (22.2)
million)
Gross gain on sale 10.4
Direct transaction costs for legal, advisory and other costs (2.3)
Net impact of (early vesting)/lapsing US share options 1.7
Other disposal-related costs (0.6)
Gain on sale 9.8
Reclassification of foreign currency translation reserve 8.7
Total gain as a result of disposal after reclassification of foreign 18.5
currency translation reserve
5. Segmental information
IFRS 8 Operating Segments requires the Group to determine its operating segments
based on information which is used internally for decision making. Based on the
internal reporting information and management structures within the Group, it has
been determined that there are two continuing business and in the comparative period
one discontinued US business operating segments. Reporting on this basis is reviewed
by the Executive Committee (“ExCo”), which is the chief operating decision maker
(“CODM”). The ExCo is made up of the Executive Directors and other senior management
and is responsible for the strategic decision making of the Group. Reporting
segments are identified by the required reporting information determined by the CODM
which tends to be grouped by geography in the comparative period or by products with
similar characteristics. The Term Loans segment comprises the Term Loan products
along with shorter-term loans, which have similar features of containing fixed Term
Loans and similar revenue streams and costs. The FlexiPay segment contains our line
of credit products including Cashback card and generally contains our newer product
innovations and more flexible lending products.
The ExCo measures the performance of each segment primarily by reference to profit
before tax. Additionally, the ExCo utilises a non-GAAP measure, profit before tax
(before exceptional items), which is defined as profit/loss for the year before
taxation and excluding the impact of exceptional items. Profit before tax (before
exceptional items) is a measure of Group performance as it allows better
comparability of the underlying performance of the business. The segment reporting
excludes the impact of the Group’s transfer pricing arrangements as this is not
information presented to, or used by, the CODM in decision making or the allocation
of resources. The segment results include an allocation of central and shared costs
which are allocated on the basis of budgeted revenue generation between the
segments.
31 December 2025 31 December 20241
Continuing operations Continuing operations
Term Loans FlexiPay Total Term Loans FlexiPay Total
£m £m £m £m £m £m
Transaction fees 105.8 1.2 107.0 84.7 0.6 85.3
Servicing fees 35.9 — 35.9 37.5 — 37.5
Interest income 5.6 44.6 50.2 8.3 22.6 30.9
Other fees 5.0 0.1 5.1 5.1 0.1 5.2
Operating income 152.3 45.9 198.2 135.6 23.3 158.9
Investment income 24.3 — 24.3 2.8 — 2.8
Total income 176.6 45.9 222.5 138.4 23.3 161.7
Fair value (losses)/gains (6.7) — (6.7) 4.2 — 4.2
Cost of funds (2.5) (9.0) (11.5) — (5.8) (5.8)
Net income (“revenue”) 167.4 36.9 204.3 142.6 17.5 160.1
Profit/(loss) before tax 32.2 (11.9) 20.3 16.7 (15.9) 0.8
Depreciation, amortisation impairment and (8.5) (2.6) (11.1) (11.4) (1.8) (13.2)
modification gains
Exceptional items — — — (2.3) (0.3) (2.6)
Expected credit loss credit/(charge) 0.9 (19.2) (18.3) 0.2 (8.8) (8.6)
1. The segmental results of the US business are not presented above.
6. Operating expenses
Before
31 December Exceptional 31 December
exceptional
Note 2025 items1 2024
items
£m £m £m
£m
Continuing operations
Depreciation 2.3 3.0 — 3.0
Amortisation 10 8.7 9.8 — 9.8
Impairment of intangibles 4, 10 0.1 0.8 0.3 1.1
Modification gains — (0.4) — (0.4)
Employment costs (including 4, 7 68.4 68.1 2.3 70.4
contractors)
Marketing costs (excluding 62.0 45.6 — 45.6
employment costs)
Data and technology 8.0 7.2 — 7.2
Other expenses 16.2 14.0 — 14.0
Total operating expenses from
continuing operations 165.7 150.7
148.1 2.6
1. See note 4 for details on exceptional items.
7. Employees
The average monthly number of employees (including Directors) during the year was:
2025 2024
Number Number
Continuing operations
Term Loans 600 628
FlexiPay 83 88
Other 2 5
Total continuing operations 685 721
Discontinued operations1
US — 106
Total discontinued operations — 106
Total 685 827
In addition to the employees above, the average monthly number of contractors during
the year was 54 (2024: 80), of which nil (2024: 13) related to the US1.
1. Average monthly numbers are calculated over 12 months and for the 2024 US
discontinued operations include six months following the sale of the US business
where the employee number was nil.
Employment costs (including Directors’ emoluments) during the year were:
31 December 31 December
2025
2024
Before
Total exceptional Exceptional Total
Continuing operations items1
£m items1 £m
£m
£m
Wages and salaries 57.4 56.0 — 56.0
Social security costs 7.1 6.3 — 6.3
Pension costs 2.1 2.1 — 2.1
Share-based payments 5.9 7.8 — 7.8
Exceptional costs — — 2.3 2.3
72.5 72.2 2.3 74.5
Contractor costs 4.7 4.9 — 4.9
Less: capitalised development costs (8.8) (9.0) — (9.0)
Employment costs net of capitalised 68.4 68.1 2.3 70.4
development costs
1. See note 4 for details of exceptional items.
8. Income tax (credit)/charge
The Group is subject to all taxes applicable to a commercial company in its
countries of operation. The UK (losses)/profits of the Company are subject to UK
income tax at the standard corporation tax rate of 25% (2024: 25%).
31 December 31 December
2025 2024
£m £m
Current tax
Continuing operations
UK
Current tax on profits/(losses) for the year 0.4 0.5
0.4 0.5
Total current tax charge from continuing operations 0.4 0.5
Discontinued operations
US
Current tax on (losses)/profits for the year — 0.1
Total current tax charge from discontinued operations — 0.1
Total current tax charge 0.4 0.6
Deferred tax
Continuing operations
UK
Deferred tax on profits/(losses) for the year (26.1) —
(26.1) —
Total deferred tax credit from continuing operations (26.1) —
Total deferred tax credit (26.1) —
Total tax (credit)/charge (25.7) 0.6
The above current tax charge represents the expected tax on the Research and
Development Expenditure Credit (“RDEC”) receivable for 2025.
In the prior year, the current tax charge represents the tax liability on the
Group’s taxable profit, including US state taxes from 1 January 2024 to the date of
disposal of the US business, and the amount of tax deducted from the RDEC receivable
for 2024.
Based on the Group’s current financial projections, the estimate of the deferred tax
asset in respect of the losses arising in the UK was £23.6 million at 31 December
2025 (31 December 2024: £nil). The deferred tax asset in respect of the RDEC Step 2
credits was £2.5 million at 31 December 2025 (31 December 2024: £nil).
The US business at 31 December 2024 is represented as discontinued operations.
The Group (credit)/charge for the year can be reconciled to the profit before tax
shown per the consolidated statement of comprehensive income as follows.
Factors affecting the tax (credit)/charge for the year
31 December 31 December
2025 2024
£m £m
Profit before taxation for the Group 20.3 9.2
Taxation on profit at 25.0% (2024: 25.0%) 5.1 2.3
Effects of:
Research and development — 0.4
Foreign tax rates — 0.1
Non-taxable/non-deductible expenses — 0.3
Unrecognised timing differences 0.2 (0.1)
Unrecognised tax losses accumulated 0.4 1.1
Deferred tax assets recognised (26.1) —
Patent box (5.3) —
Impairment charge — (3.5)
Total tax (credit)/charge (25.7) 0.6
Total tax (credit)/charge from continuing operations (25.7) 0.5
Total tax charge from discontinued operations — 0.1
There was no tax charge/(credit) in the current or prior year related to exchange
differences on translation of foreign operations in other comprehensive income or
the recycling of these into profit and loss.
The Group is taxed at different rates depending on the country in which the profits
arise.
The key applicable tax rate for 2025 includes the UK at 25%. For the prior year, the
key applicable tax rates include the UK at 25% and the US 21%. The effective tax
rate for the year was -126.45% (2024: 4.87%).
Patent box
The Group applied to register a patent with the Patent Office in 2022, in relation
to the decisioning model of the Global Platform for Originations. This patent was
granted in January 2025, and the Term Loan, and shorter-term loan income streams of
the business should qualify for patent box treatment for UK corporation tax. This
means that profits relating to the patented technology will be subject to
corporation tax at 10% rather than the statutory rate of 25%.
This mechanism works by the Group receiving extra tax deductions against taxable
profit in relation to a proportion of profits allocated to the patent. As 2025 is
the first year that the patent is registered, the Group will also be able to claim
patent box deductions in the 2025 corporation tax return for 2023 and 2024, as well
as for 2025. The tax value of the deduction in 2025 (for three years) is £5.3
million (2024: £nil). From 2026, the Group will annually receive one year’s worth of
deductions.
Deferred tax asset
31 December 31 December
2025 2024
£m £m
Carry forward losses (UK) 23.6 —
RDEC Step 2 credits 2.5 —
Recognised deferred tax 26.1 —
A deferred tax asset of £26.1 million has been recognised, of which £23.6 million
relates to the brought forward losses and £2.5 million relates to RDEC Step 2
credits.
The Group has unused tax losses of £128.7 million (2024: £125.0 million) that are
available for offset against future taxable profits, and there is no expiry date for
the unused profits. Recognition of the deferred tax asset on losses is dependent on
the existence of future taxable profits. The company has made taxable profits in
2025, before patent box deductions. It is expected that the Group will continue to
make profits in the future and start using the carried forward losses for the first
time in 2026. The £23.6 million has been recognised in relation to £94.2 million of
the losses.
The £23.6 million recognised deferred tax asset in respect of losses represents a
recognition of c73% of the carried forward loss position.
The judgements and assumptions used in the estimated recognition of the deferred tax
asset are disclosed within note 3. It is expected that £3.9 million of the deferred
tax asset in relation to losses will be utilised within the next 12 months and the
remaining £19.7 million of the deferred tax asset will be recovered after 12 months.
A deferred tax asset of £2.5 million has been recognised on RDEC Step 2 credits. It
is expected that all of the deferred tax asset in relation to the RDEC Step 2
credits will be utilised within the next 12 months.
Unrecognised deferred tax
31 December 31 December
2025 2024
£m £m
Property, plant and equipment 8.5 6.9
Carry forward losses 34.5 125.0
Deferred stock options 22.7 22.5
RDEC Step 2 credits — 8.0
Other 0.6 0.2
Unrecognised deferred tax1 66.3 162.6
1. Balances presented in the table above are gross timing differences and are not
tax effected.
The Group has an unrecognised deferred tax asset value of £16.6 million (2024: £40.7
million). This asset comprises £8.6 million (2024: £31.3 million) for carried
forward losses, £5.7 million (2024: £5.6 million) of deferred share options
deductions and £2.3 million (2024: £1.8 million) of other short term timing
differences. In the prior year there was £2.0 million of unrecognised deferred tax
assets in relation to RDEC Step 2 credits which was fully recognised in 2025. There
is no expiry date for the unrecognised deferred tax assets.
9. Earnings/(loss) per share
Basic earnings/(loss) per share amounts are calculated by dividing the profit/(loss)
for the year attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares outstanding during the year.
For diluted earnings/(loss) per share, the weighted average number of ordinary
shares in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The dilutive potential ordinary shares include those share options granted
to employees under the Group’s share-based compensation schemes which do not have an
exercise price or where the exercise price is less than the average market price of
the Company’s ordinary shares during the year.
Where loss per share is presented, there is no difference in the weighted average
number of shares used in the calculation of basic and diluted loss per share as the
effect of all potentially dilutive shares outstanding was anti-dilutive.
The following table reflects the profit/(loss) and share data used in the basic and
diluted earnings/(loss) per share computations:
31 December
31 December 31 December 2024
2025 2024 Before
Earnings per share from continuing operations
Total Total exceptional
£m £m items
£m
Profit for the year from continuing operations 46.0 0.3 2.9
Basic weighted average number of ordinary shares 314.6 342.4 342.4
in issue (million)
Basic earnings per share from continuing 14.6p 0.1p 0.8p
operations
Profit for the year from continuing operations 46.0 0.3 2.9
Diluted weighted average number of ordinary 328.6 382.2 382.2
shares in issue (million)
Diluted earnings per share from continuing 14.0p 0.1p 0.8p
operations
31 December
31 December 31 December 2024
Earnings/(loss) per share from discontinued 2025 2024 Before
operations
Total Total exceptional
£m £m items
£m
Profit/(loss) for the year from discontinued — 8.3 (10.2)
operations
Basic weighted average number of ordinary shares 314.6 342.4 342.4
in issue (million)
Basic earnings/(loss) per share from — 2.4p (3.0)p
discontinued operations
Profit/(loss) for the year from discontinued — 8.3 (10.2)
operations
Diluted weighted average number of ordinary 328.6 382.2 342.4
shares in issue (million)
Diluted earnings/(loss) per share from — 2.2p (3.0)p
discontinued operations
31 December
31 December 31 December 2024
2025 2024 Before
Earnings/(loss) per share from all operations
Total Total exceptional
£m £m items
£m
Profit/(loss) for the year 46.0 8.6 (7.3)
Basic weighted average number of ordinary shares 314.6 342.4 342.4
in issue (million)
Basic total earnings/(loss) per share 14.6p 2.5p (2.1)p
Profit/(loss) for the year 46.0 8.6 (7.3)
Diluted weighted average number of ordinary 328.6 382.2 342.4
shares in issue (million)
Diluted total earnings/(loss) per share 14.0p 2.3p (2.1)p
Adjusted view of earnings per share from continuing operations excluding the
recognition of deferred tax asset
During the year ended 31 December 2025, the Group recognised a deferred tax asset of
£26.1 million for the first time that resulted in a material tax credit in the year,
which increased profit for the year and resulted in a higher earnings per share
figure. While the recognition of deferred tax is not considered an exceptional item
for the purposes of the consolidated statement of comprehensive income, it is
considered that an adjusted view of earnings per share from continuing operations
excluding the recognition of deferred tax and exceptional items is useful to users
of the financial statements to allow a more direct comparison of underlying
performance.
31 December 31 December
2025 2024
Adjusted earnings per share from continuing
operations Adjusted Before exceptional items
Total Total
£m £m
Profit for the year from continuing operations 46.0 0.3
Less impact of deferred tax (26.1) —
Less exceptional items — 2.6
Adjusted profit for the year from continuing 19.9 2.9
operations
Basic weighted average number of ordinary 314.6 342.4
shares in issue (million)
Basic adjusted earnings per share from 6.3p 0.8p
continuing operations
Profit for the year from continuing operations 46.0 0.3
Less impact of deferred tax (26.1) —
Less exceptional items — 2.6
Adjusted profit for the year from continuing 19.9 2.9
operations
Diluted weighted average number of ordinary 328.6 382.2
shares in issue (million)
Diluted adjusted earnings per share from 6.1p 0.8p
continuing operations
10. Intangible assets
Capitalised
Computer Other
development Total
software intangibles
costs £m
£m £m
£m
Cost
At 1 January 2024 61.2 0.4 1.2 62.8
Exchange differences 0.2 — (0.1) 0.1
Additions 9.0 — — 9.0
Disposals (4.4) (0.3) — (4.7)
Derecognition of assets of discontinued (15.7) — — (15.7)
operations
At 31 December 2024 50.3 0.1 1.1 51.5
At 1 January 2025 50.3 0.1 1.1 51.5
Exchange differences — — 0.1 0.1
Additions 8.8 0.1 — 8.9
Disposals (3.4) — — (3.4)
Derecognition of assets of discontinued — — — —
operations
At 31 December 2025 55.7 0.2 1.2 57.1
Accumulated amortisation
At 1 January 2024 38.4 0.2 1.2 39.8
Exchange differences 0.1 — (0.1) —
Charge for the year 9.7 0.1 — 9.8
Impairment (exceptional item) 0.3 — — 0.3
Impairment 0.7 0.1 — 0.8
Disposals (4.4) (0.3) — (4.7)
Derecognition of assets of discontinued (15.7) — — (15.7)
operations
At 31 December 2024 29.1 0.1 1.1 30.3
At 1 January 2025 29.1 0.1 1.1 30.3
Exchange differences — — 0.1 0.1
Charge for the year 8.7 — — 8.7
Impairment 0.1 — — 0.1
Disposals (3.4) — — (3.4)
At 31 December 2025 34.5 0.1 1.2 35.8
Carrying amount
At 31 December 2025 21.2 0.1 — 21.3
At 31 December 2024 21.2 — — 21.2
During the year ended 31 December 2025 £nil (2024: £0.3 million) of intangible
assets were impaired in the FlexiPay Business Unit related to projects discontinued
as a result of the simplification of the Group. These were treated as an exceptional
item (see note 4). A further £0.8 million of intangibles were impaired in 2024
related to capitalised development spend and software no longer in use.
11. SME loans and lines of credit
31 December 31 December
2025 2024
£m £m
Non-current
SME loans – amortised cost 1.2 1.4
Investment in trusts and co-investments – FVTPL 11.9 17.8
Total non-current 13.1 19.2
Current
SME loans – amortised cost 0.9 0.7
Lines of credit – amortised cost1 172.9 97.1
SME loans – FVTPL 120.8 1.2
Total current 294.6 99.0
Total 307.7 118.2
1. Included in lines of credit is £24.0 million (2024: £7.2 million) related to
Cashback card balances net of ECL impairment.
12. Trade and other receivables
31 December 31 December
2025 2024
£m £m
Trade receivables 0.2 0.4
Other receivables 6.7 4.2
Tax-related receivables 3.7 4.8
Prepayments 4.7 4.7
Accrued income 4.3 5.8
Rent and other deposits 0.9 0.9
Current trade and other receivables 20.5 20.8
The maximum exposure to credit risk at the reporting date is the carrying value of
each class of receivables described earlier.
No trade receivables were overdue or impaired.
Included in rent and other deposits are £0.9 million of rental deposits (2024: £0.9
million) in respect of the Group’s property leases which expire over the next five
years.
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
13. Trade and other payables
31 December 31 December
2025 2024
£m £m
Trade payables 0.8 1.8
Other taxes and social security costs 7.5 7.0
Other creditors1 5.9 6.5
Accruals and deferred income 16.6 12.5
30.8 27.8
1. Other creditors includes £3.7 million (2024: £4.4 million) due to the British
Business Bank (“BBB”), primarily related to scheme lender fees collected from
investors associated with government-guaranteed products.
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
14. Provisions and other liabilities
ECL on
Loan undrawn
Dilapidation Restructuring1 Total
repurchase lines of
£m £m credit £m
£m
and other2
£m
At 1 January 2024 1.1 0.1 — 1.4 2.6
Additional — — 2.3 2.2 4.5
provision/liability
Amount utilised (0.3) (0.1) (2.3) — (2.7)
Amount reversed (0.2) — — — (0.2)
At 31 December 2024 0.6 — — 3.6 4.2
Additional — — — — —
provision/liability
Amount utilised — — — (0.9) (0.9)
Amount reversed — — — (0.2) (0.2)
At 31 December 2025 0.6 — — 2.5 3.1
1. The restructuring provision relates to the simplification and streamlining of
the Group and has been treated as an exceptional item. See note 4.
2. ECL on undrawn lines of credit and other provisions includes provisions for
operational buybacks of £nil (2024: £0.9 million) and £2.5 million (2024: £2.7
million) of expected credit loss impairment allowance related to undrawn FlexiPay
lines of credit. See notes 15 and 17.
31 December 31 December
2025 2024
£m £m
Current provisions and other liabilities 2.5 3.6
Non-current provisions and other liabilities 0.6 0.6
3.1 4.2
The dilapidation provision represents an estimated cost for dismantling the
customisation of offices and restoring the leasehold premises to its original state
at the end of the tenancy period. The provision is expected to be utilised by 2030.
15. Financial risk management
The Board of Directors has overall responsibility for the establishment and
oversight of the Group’s risk management framework.
The risk management policies are established to identify and analyse the risks faced
by the Group, to set appropriate risk limits and controls and to monitor risks and
ensure any limits are adhered to. The Group’s activities are reviewed regularly and
potential risks are considered.
Risk factors
The Group has exposure to the following risks from its use of financial instruments:
• credit risk;
• liquidity risk; and
• market risk (including foreign exchange risk, interest rate risk and other price
risk).
Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
• SME loans;
• investments in trusts and co-investments;
• lines of credit;
• trade and other receivables;
• cash and cash equivalents;
• trade and other payables;
• bank borrowings; and
• lease liabilities.
Categorisation of financial assets and financial liabilities
The tables show the carrying amounts of financial assets and financial liabilities
by category of financial instrument as at 31 December 2025:
31 December 2025 31 December 2024
Fair value Fair value
through Amortised through Amortised
Total Total
profit cost profit cost
£m £m
and loss £m and loss £m
£m £m
Assets
SME loans held at — 2.1 2.1 — 2.1 2.1
amortised cost
SME loans held at fair
value through profit and 120.8 — 120.8 1.2 — 1.2
loss
Lines of credit — 172.9 172.9 — 97.1 97.1
Investment in trusts and 11.9 — 11.9 17.8 — 17.8
co-investments
Trade and other 0.3 11.8 12.1 0.6 10.7 11.3
receivables1
Cash and cash 84.8 67.6 152.4 136.3 51.3 187.6
equivalents1
217.8 254.4 472.2 155.9 161.2 317.1
Liabilities
Trade and other payables — (6.7) (6.7) — (8.3) (8.3)
Bank borrowings — (267.3) (267.3) — (101.9) (101.9)
Lease liabilities — (6.3) (6.3) — (7.6) (7.6)
— (280.3) (280.3) — (117.8) (117.8)
1. Cash and cash equivalents held at fair value relate to money market funds, and
trade and other receivables held at fair value through profit and loss relate to
accrued interest on money market funds.
Financial instruments measured at amortised cost
Financial instruments measured at amortised cost, rather than fair value, include
cash and cash equivalents, trade and other receivables, SME loans held at amortised
cost, FlexiPay lines of credit, bank borrowings, lease liabilities and trade and
other payables. Due to their nature, the carrying value of each of the above
financial instruments approximates to their fair value.
Financial instruments measured at fair value
IFRS 13 requires certain disclosures which require the classification of financial
assets and financial liabilities measured at fair value using a fair value hierarchy
that reflects the significance of the inputs used in making the fair value
measurement.
Disclosure of fair value measurements by level is according to the following fair
value measurement hierarchy:
• level 1 inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date;
• level 2 inputs are inputs other than quoted prices included within level 1 that
are observable for the assets or liabilities, either directly or indirectly; and
• level 3 inputs are unobservable inputs for the assets or liabilities.
The fair value of financial instruments that are not traded in an active market (for
example, investments in SME loans) is determined by using valuation techniques.
These valuation techniques maximise the use of observable market data where it is
available and rely as little as possible on entity-specific estimates. If all
significant inputs required to fair value an instrument are observable, the
instrument is included in level 2. If one or more of the significant inputs are not
based on observable market data, the instrument is included in level 3. An
assessment that the level applied to financial instruments is appropriate and
whether a transfer between levels is required is undertaken at the end of each
accounting period. There were no transfers between levels during the year or prior
year.
The Finance department of the Group performs the valuations of items required for
financial reporting purposes, including level 3 fair values, which predominantly
utilise discounted cash flow methodology utilising default recovery and prepayment
curves to derive cash flow projections derived from the Group’s Risk team in
combination with a market-driven discount rate. This team reports to the Chief
Financial Officer (“CFO”). Discussions of valuation processes and results are held
regularly at Balance Sheet and Valuation Committee meetings along with regular
updates provided to the Audit Committee.
Fair value measurement using
31 December 2025 31 December 2024
Quoted Quoted
prices Significant Significant prices Significant Significant
in observable unobservable in observable unobservable
active active
inputs inputs inputs inputs
markets markets
(level 2) (level 3) (level 2) (level 3)
(level (level
1) £m £m 1) £m £m
£m £m
Financial assets
SME loans held
at fair value — 120.8 — — 1.2
through profit —
and loss
Trade and other 0.3 — — 0.6 — —
receivables
Investment in
trusts and — — 11.9 — — 17.8
co-investments
Cash and cash 84.8 — — 136.3 — —
equivalents
85.1 — 132.7 136.9 — 19.0
The fair value of all SME loans held at fair value has been estimated by discounting
future cash flows of the loans using discount rates that reflect the changes in
market interest rates and observed market conditions at the reporting date. The
estimated fair value and carrying amount of the SME loans held at fair value through
profit and loss was £120.8 million at 31 December 2025 (2024: £1.2 million). The
growth in the balance was predominantly driven by investment in the shorter-term
loans product.
Investment in trusts and co-investments represents the Group’s investment in the
trusts and other vehicles used to fund CBILS, RLS, GGS and certain commercial loans
and is measured at fair value through profit and loss. The government-owned British
Business Bank will guarantee up to 80% of the balance of CBILS loans in the event of
default (and between 70% and 80% of RLS loans and 70% for GGS loans). The estimated
fair value and carrying amount of the investment in trusts and co-investments was
£11.9 million at 31 December 2025 (2024: £17.8 million).
The most relevant significant unobservable inputs relate to the default rate
estimate and discount rates applied to the fair value calculation, details of which
are set out in note 3 for those with material estimation uncertainty.
Since 31 December 2024, the forward-looking assumptions related to estimating fair
value have been marginally updated to incorporate forecast UK GDP and risk-free rate
alongside unemployment. The base case scenario, outlined later in the note under
“Key changes to macro scenarios used in 2025”, is utilised for projecting cash
flows; however, the scenario change has not materially impacted the fair value of
loans.
There have additionally been decreases in discount rates used to discount the
estimated cash flows in the period, primarily driven by decreases in the risk-free
rate, due to central bank interest rates falling and expectations of rate cuts
priced into swaps. Many of the investments in leveraged investment in trust
structures have experienced a reduction in discount rates due to deleveraging of the
vehicles as senior lenders’ debt have been paid down. The repayment of senior debt
and the passage of time has additionally led to fair value gains, as a result of the
discount unwind, as projected future cash flows of the investments which tend to be
backloaded in the structure become nearer in time to the balance sheet date. This,
in turn, has led to a higher relative estimation of fair value in the period.
The Group has continued to invest in the shorter-term loan product over the year
ended 31 December 2025 which represents the majority of the SME loans held at fair
value through profit and loss at 31 December 2025. As the earlier cohorts of these
loans have seasoned and expected defaults have occurred this creates a fair value
loss in the year.
The result of the various factors outlined above is a £6.7 million net fair value
loss during the year (2024: £6.4 million gain), primarily driven by the shorter-term
loan investment offset by discount unwind on investment in trusts and
co-investments.
Sensitivities to unobservable assumptions in the valuation of SME loans and money
market funds within cash and cash equivalents are not disclosed as reasonably
possible changes in the current assumptions inclusive of default rates, discount
rates and recovery rates would not be expected to result in material changes in the
carrying values, with the exception of shorter-term loan assets where a sensitivity
to discount rates and default rates is disclosed in note 3.
Fair value movements on SME loans held at fair value through profit and loss and
investments in trusts and co-investments are recognised through the consolidated
statement of comprehensive income in “fair value (losses)/gains”.
The majority of additions of SME loans held at fair value through profit and loss in
the period relate to the origination of loans under the shorter-term loan product,
which are being temporarily originated on the Group’s balance sheet with the
intention of selling them at a later date and originations thereafter operating
under a platform model.
A reconciliation of the movement in level 3 financial instruments is shown as
follows:
SME loans
Investment in
held at fair
trusts and
value through
co-investments
profit and loss
£m
£m
Balance at 1 January 2024 18.6 25.2
Additions — 4.1
Repayments (13.5) (14.6)
Net gain on the change in fair value of financial 2.6 3.8
instruments at fair value through profit or loss
Other non-cash movements (0.7) —
Disposal of discontinued operations (5.8) (0.7)
Balance at 31 December 2024 1.2 17.8
Accrual of interest 2.9 —
Additions 180.6 0.8
Repayments (51.8) (8.2)
Net (loss)/gain on the change in fair value of
financial instruments at fair value through profit or (8.2) 1.5
loss
Sale of loans (3.9) —
Balance at 31 December 2025 120.8 11.9
Financial risk factors
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty
to a financial instrument fails to meet its contractual obligations and arises
principally from the Group’s receivables from customers and cash and cash
equivalents held at banks.
The Group’s maximum exposure to credit risk by class of financial asset is as
follows:
31 December 31 December
2025 2024
£m £m
Non-current
SME loans held at amortised cost 1.2 1.4
Investment in trusts and co-investments 11.9 17.8
Current
SME loans held at amortised cost 0.9 0.7
SME loans held at fair value through profit and loss 120.8 1.2
Lines of credit 172.9 97.1
Trade and other receivables:
– Trade receivables 0.2 0.4
– Other receivables 6.7 4.2
– Accrued income 4.3 5.8
– Rent and other deposits 0.9 0.9
Cash and cash equivalents 152.4 187.6
Total gross credit risk exposure 472.2 317.1
Less bank borrowings1 (267.3) (101.9)
Total net credit risk exposure 204.9 215.2
1. Bank borrowings are related to the FlexiPay and shorter-term loan warehouse.
An expected credit loss allowance related to undrawn lines of credit on the FlexiPay
product of £2.5 million (2024: £2.7 million) is held within provisions and other
liabilities. The Group’s maximum exposure to credit risk on the undrawn lines of
credit if they were all to be fully drawn would be £446.7 million (2024: £278.7
million). The Group has the ability to freeze, reduce or withdraw lines of credit as
a way of managing associated credit risk.
Credit risk associates with SME loans held at amortised cost and lines of credit
Under IFRS 9, the Group is required to provide for loans measured at amortised cost
under the expected credit loss (“ECL”) model. The impairment related to each loan is
based on the ECLs associated with the probability of default of that loan in the
next 12 months unless there has been a significant increase in credit risk of that
loan since origination. The below factors are used in estimating the impairment:
Factor Description
The Group has developed PD models tailored to each Term
Loan or line of credit product to assess the likelihood
of default within the next 12 months and over the
Probability of default lifetime. The models estimate PD based on factors
(“PD”) including the latest payment behaviour of the customers,
commercial, consumer, financial and commercial credit
data sharing (“CCDS”) data points and observed historical
trends. The PD model also includes an estimate of the
expected future macroeconomic effect.
The Group has developed an EAD model for line of credit
products to assess the likely exposure at default. The
Exposure at default model calculates estimates of EAD based upon the latest
(“EAD”) payment behaviour of the customer, the credit limit
utilisation, and projecting expected utilisation at
default based on observed historical trends.
The Group has developed LGD models tailored to each Term
Loan or line of credit product to assess the likely
Loss given default (“LGD”) financial loss given an account defaults. The models
calculate estimates of LGD based on historical data on
observed recoveries against defaulted accounts.
Discount rate The Group uses account-level effective interest rate
which is calculated based on line of credit amount or
loan amount, interest and fees, expected repayments
including prepayments and term.
Model changes since 31 December 2024
The Group has refined its ECL model methodology since 31 December 2024. The key
changes are as outlined below. The overall impact of the model methodology updates
on a like-for-like basis with the previous methodology is not material to the
overall ECL figure; however, it results in a larger proportion of balances in stage
2 compared to stage 1 but with a lower PD.
Model component Change since 31 December 2024
The PD is now calculated using a model which takes a number
of input variables derived from commercial, consumer,
financial and behavioural sources of data, which have been
observed to correlate with a default. These inputs are
combined to determine a PD curve for each borrower, with
PD 12-month PD utilised for stage 1 and lifetime PD for stage
2. The marginal PDs are used to calculate an ECL in each
respective forward-looking period. Previously PD was
determined using models that utilised the latest payment
behaviour of customers and observed historical trends to
project defaults.
The definition of significant increase in credit risk
(“SICR”) used by the Group has been updated to reference the
relative change in the risk score between origination and
Significant increase in the balance sheet date. Previously SICR was defined as
credit risk including any account which was overdue or frozen. This
change results in a higher proportion of accounts moving to
stage 2 prior to becoming late or defaulting, relative to
the previous methodology utilised. The backstop of 30 days
past due remains in place.
The EAD methodology has been refined to take account of
analysis of the EAD based on more granular utilisation bands
EAD for stage 1 and stage 2. This approach has resulted in more
accurate EAD prediction when back tested against actual
results across portfolios compared to the less granular
credit conversion factor approach used previously.
The assumptions behind LGD used for FlexiPay have previously
been based on the extrapolation of limited actual recovery
data given the relatively small levels of defaults on the
portfolio to date. The approach has been refined to
LGD supplement data limitations with substantial Term Loan
recovery information, in light of a shared recovery process
between the products at a borrower level and as many
FlexiPay borrowers also have Term Loan products, leading to
an improved basis for projecting the LGD until more FlexiPay
data becomes available in future.
The Group’s macro scenarios previously incorporated just
unemployment as a forecast variable to take account of
forward-looking information. The Group now utilises UK
Macro scenarios unemployment rates, the risk-free rate and GDP as the
selected forecast variables, with historically observed
coefficients between these variables to predict
insolvencies, instead of solely using unemployment rates
previously. Further details are provided later in this note.
Definitions
The Group utilises the following definitions and assumptions when calculating the
ECL on assets:
Component Definition/assumption
The Group assumes there has been a significant increase in
credit risk if the probability of default indexed to the
Significant increase in risk score of the borrower has increased over given
credit risk thresholds since origination and the balance sheet date. A
backstop is applied for any outstanding amounts on the loan
investment which exceed 30 days, in line with the rebuttable
presumption per IFRS 9.
We estimate PD, EAD and LGD for the duration of the lifetime
Forecast period of the Term Loan or line of credit. Term Loans utilise the
contractual term of the Term Loan. For lines of credit, the
duration of the lifetime is estimated to be five years.
The Group defines a default, classified within
non-performing, as a loan investment with any outstanding
amounts exceeding 90 days past their due date, which
reflects the point at which the loan is considered to be
credit impaired. In some circumstances where loans are
bought back by the Group, the financial asset associated
with the purchase meets the definition of purchased or
originated credit impaired (“POCI”); this element of the
Definition of default impairment is therefore based on lifetime ECLs.
Lines of credit utilises the same default definition and
probability of default under IFRS 9; however, they are
assessed based on 12-month probability of default at the
overall available line of credit level, estimating the
expected utilisation of the line of credit at the estimated
point of default. The expected credit loss impairment
associated with undrawn lines of credit is disclosed within
other liabilities in note 14.
SME loans held at amortised cost also include loans which have been bought back from
investors with the intention of collecting contractual cash flows.
Lines of credit comprise £172.9 million (2024: £97.1 million) of drawn amounts
through the FlexiPay product net of expected credit loss impairment.
The gross principal value plus accrued interest of SME loans held at amortised cost
is £4.0 million (2024: £11.3 million) and drawn lines of credit is £205.1 million
(2024: £110.0 million), totalling £209.1 million (2024: £121.3 million), and an
allowance for expected credit losses of £1.9 million (2024: £9.2 million) and £32.2
million (2024: £12.9 million) respectively, totalling £34.1 million (2024: £22.1
million), is held against these loans and drawn lines of credit as detailed below.
An impairment charge of £18.5 million (2024: impairment charge of £7.0 million) was
recognised through the statement of comprehensive income in the year to 31 December
2025 within expected credit loss charge in the consolidated statement of
comprehensive income related to drawn lines of credit and SME loans held at
amortised cost.
Additionally, an expected credit loss impairment credit relating to undrawn FlexiPay
lines of credit of £0.2 million (31 December 2024: £1.3 million charge) and an
expected credit loss impairment charge related to operational buybacks of £nil
(2024: £0.4 million) were recognised as detailed in notes 14 and 17.
The Group bands each loan investment at origination using an internal risk rating
and assesses credit losses on a collective portfolio basis by product. Credit risk
grades are not reported to management on an ongoing basis and the only
borrower-specific information that is produced and used is past due status. There is
no significant concentration of credit risk to specific industries or geographical
regions.
Stage 1 Stage 2 Stage 3
Reconciliation of opening to POCI Total
closing gross carrying Performing Underperforming Non-performing
amounts £m £m
£m £m £m
At 1 January 2024 55.8 2.0 4.3 14.7 76.8
New lending and purchased 467.2 — — — 467.2
assets
Exchange differences — — (0.1) (0.3) (0.4)
Loans transferred between (14.5) 7.3 7.2 — —
stages
Loans repaid (407.7) (6.1) (0.7) (0.8) (415.3)
Written off loans — — — (0.3) (0.3)
Derecognition of assets of (1.7) — (0.3) (4.7) (6.7)
discontinued operations
At 31 December 2024 99.1 3.2 10.4 8.6 121.3
New lending and purchased 778.6 0.8 — 0.9 780.3
assets
Exchange differences — — — 0.3 0.3
Change in SICR definition (7.2) 7.2 — — —
Loans transferred between (25.9) 15.1 10.8 — —
stages
Sale of loans — — — (4.6) (4.6)
Loans repaid (680.0) (3.4) (0.4) (0.3) (684.1)
Written off loans — — (0.4) (3.7) (4.1)
At 31 December 2025 164.6 22.9 20.4 1.2 209.1
Stage 1 Stage 2 Stage 3
POCI:
Reconciliation Performing: Underperforming: Non-performing: Total
of opening to Lifetime ECL
closing ECL 12-month Lifetime ECL Lifetime ECL £m
ECL £m
£m £m
£m
At 1 January 1.6 1.0 3.7 13.8 20.1
2024
Impairment
against new
lending and 12.7 — — — 12.7
purchased
assets
Exchange — — (0.1) (0.3) (0.4)
differences
Impairment
against loans (0.2) 3.9 7.1 — 10.8
transferred
between stages
Loans repaid (11.2) (3.3) (0.4) (0.7) (15.6)
Impairment
provision
derecognised — — — (0.3) (0.3)
related to
written off
loans
Change in
probability of
default or loss (0.1) (0.2) (0.8) 0.6 (0.5)
given default
assumptions
Derecognition
of impairment
associated with — — (0.1) (4.6) (4.7)
assets of
discontinued
operations
At 31 December 2.8 1.4 9.4 8.5 22.1
2024
Impairment
against new
lending and 21.7 — — 0.6 22.3
purchased
assets
Exchange — — — 0.3 0.3
differences
Change in SICR (0.2) 3.3 — — 3.1
definition
Impairment
against loans (0.7) 6.9 8.5 — 14.7
transferred
between stages
Loans repaid (19.1) (1.5) (0.3) (0.2) (21.1)
Impairment
provision
derecognised — — (0.3) (3.8) (4.1)
related to
written off
loans
Sale of loans — — — (4.6) (4.6)
Change in
probability of
default or loss 3.6 (5.3) 2.9 0.2 1.4
given default
assumptions
At 31 December 8.1 4.8 20.2 34.1
2025 1.0
The total amount of undiscounted ECLs at initial recognition on financial assets
initially recognised during the year which are categorised as POCI assets was £nil
(2024: £nil).
Gross lines
of credit
Expected Basis for and Provision
credit for Net
recognition of SME loans carrying
loss held expected
coverage expected credit amount
at credit loss
% loss impairment amortised £m
£m
cost
£m
At 31 December 2024
Stage 1 – Performing 2.8 12-month ECL 99.1 (2.8) 96.3
Stage 2 – 43.8 Lifetime ECL 3.2 (1.4) 1.8
Underperforming
Stage 3 – 90.4 Lifetime ECL 10.4 (9.4) 1.0
Non-performing
POCI 98.8 Lifetime ECL 8.6 (8.5) 0.1
Total 121.3 (22.1) 99.2
At 31 December 2025
Stage 1 – Performing 4.9 12-month ECL 164.6 (8.1) 156.5
Stage 2 – 21.0 Lifetime ECL 22.9 (4.8) 18.1
Underperforming
Stage 3 – 99.0 Lifetime ECL 20.4 (20.2) 0.2
Non-performing
POCI 83.3 Lifetime ECL 1.2 (1.0) 0.2
Total 209.1 (34.1) 175.0
Expected Basis for Gross Provision
credit lines for Net
recognition of carrying
Of which is drawn FlexiPay loss of expected
lines of credit coverage expected credit credit amount
credit loss
% loss impairment £m £m
£m
At 31 December 2024
Stage 1 – Performing 2.8 12-month ECL 97.0 (2.7) 94.3
Stage 2 – Underperforming 43.8 Lifetime ECL 3.2 (1.4) 1.8
Stage 3 – Non-performing 89.8 Lifetime ECL 9.8 (8.8) 1.0
POCI — Lifetime ECL — — —
Total 110.0 (12.9) 97.1
At 31 December 2025
Stage 1 – Performing 4.9 12-month ECL 162.6 (8.0) 154.6
Stage 2 – Underperforming 21.0 Lifetime ECL 22.9 (4.8) 18.1
Stage 3 – Non-performing 99.0 Lifetime ECL 19.6 (19.4) 0.2
POCI — Lifetime ECL — — —
Total 205.1 (32.2) 172.9
The Risk and Finance functions of the Group monitor the performance of the FlexiPay
lines of credit and SME loans held at amortised cost and calculate the ECL estimate
required for financial reporting purposes. These teams report to the Chief Financial
Officer (“CFO”) and Chief Risk Officer (“CRO”). Discussions of estimates, processes
and results are held regularly at Balance Sheet and Valuation Committee meetings
along with regular updates provided to the Audit Committee.
The allowance for expected credit losses requires estimation to assess individual
loans or when applying statistical models for collective assessments based on the
Group’s past experience of historical delinquencies and loss trends, as well as
forward-looking information in the form of macroeconomic scenarios governed by a
Balance Sheet and Valuation Committee, which obtains macroeconomic forecasts such as
changes in interest rates, GDP, risk-free rates, unemployment and inflation which
are considered for incorporation into scenarios and probability weighted. These
scenarios are utilised to derive an adjustment to the PD projections, to reflect the
impact of forward-looking information on the underlying PD projections established
from historical experience.
Key changes to macro scenarios used in 2025
UK-specific forecast data is obtained from a third party economics provider. A
number of data points were obtained and considered by Funding Circle including GDP,
real estate prices, risk-free rates, and unemployment rates, among others. The Group
now utilises UK unemployment, the risk-free rate and GDP as the selected forecast
variables, with historically observed coefficients between these variables providing
improved predictive value of insolvency under statistical modelling techniques
compared to unemployment alone which was used previously. The Group previously also
utilised upside, downside and baseline projections from the economics provider for
each macro variable input. The Group updated its approach to use baseline
projections of macro variable inputs from the economics provider, and internally
generate two additional scenarios utilising a cyclicality index (“CI”) approach
which is a measure of where the economy sits within the credit cycle at a given
point in time. The base case macro variable input forecasts from the economics
provider are used to derive a forecast of CI relative to CI at the balance sheet
date. The two additional scenarios are determined by selecting different confidence
intervals or severities from the historical CI distribution.
Previously the three scenarios were weighted 30% downside, 60% baseline and 10%
upside. The probability weighting attributed to the scenarios at 31 December 2025
has been updated to reflect the CI over the projected life of the product.
Information related to the macroeconomic drivers utilised in creating the base case
scenario and the probability weightings attributed to the scenarios is illustrated
below.
Macroeconomic drivers (average for the 2026 2027
forecast year) ECL scenario 2028 2029 2030
% %
% % %
Unemployment rates Base case 5.0 4.8 4.5 4.4 4.2
Risk-free rate Base case 3.5 3.0 2.8 2.5 2.5
GDP YoY Base case 1.0 1.4 1.5 1.5 1.5
Unemployment is forecast to peak at 5.1% due to the hike in employers’ NICs and the
National Living Wage, before gradually recovering towards a long-run level of c.4%.
The risk-free rate is expected to reduce as base rates are cut gradually.
GDP growth in the near term incorporates fiscal loosening announced in the 2025 UK
government budget and the front loading of some capital spending, before reverting
to a long-run average of c.1.5%.
Probability weighting applied at Probability weighting applied at
ECL scenario 31 December 2025 31 December 2024
% %
Base case 70 60
Upside 15 10
Downside 15 30
A sensitivity to these assumptions on the estimated ECL is disclosed within note 3.
16. Notes to the consolidated statement of cash flows
Cash outflow from operating activities
31 December 31 December
2025 2024
£m £m
Profit before taxation
Continuing operations 20.3 0.8
Discontinued operations — 8.4
Total operations 20.3 9.2
Adjustments for:
Depreciation of property, plant and equipment 2.3 3.2
Amortisation of intangible assets 8.7 9.8
Modification gain — (0.4)
Impairment of property, plant and equipment, intangible 0.1 0.9
assets, ROU assets and investment in sublease
Impairment of intangibles (exceptional item) — 0.3
Interest payable 0.6 0.8
Non-cash employee benefits expense – share-based payments
and associated 5.0 8.1
social security costs
Fair value adjustments 6.7 (6.4)
Movement in loan repurchase liability — (0.1)
Movement in other provisions (1.1) 1.7
Share of gains of associates — —
ECL impairment 18.3 8.7
Profit on sale of the US subsidiary (exceptional item) — (9.8)
Recycling of foreign exchange reserve on sale of subsidiary — (8.7)
(exceptional item)
Other non-cash movements 1.4 (0.2)
Changes in working capital
Movement in trade and other receivables (11.4) (3.1)
Movement in trade and other payables 2.5 (26.6)
Tax received/(paid) 2.1 (0.1)
Originations of lines of credit (771.4) (467.0)
Cash receipts from lines of credit 682.1 412.3
Net cash outflow from operating activities (33.8) (67.4)
Cash and cash equivalents
31 December 31 December
2025 2024
£m £m
Cash and cash equivalents 152.4 187.6
The cash and cash equivalents balance is made up of cash and money market funds. The
carrying amount of these assets is approximately equal to their fair value. Included
within cash and cash equivalents above is a total of £51.5 million (2024: £37.1
million) in cash which is restricted in use. Of this, £3.7 million (2024: £5.0
million) of cash is held which is restricted in use to repaying investors in CBILS
and RLS loans and paying CBILS and RLS-related costs to the UK government. A further
£47.8 million (2024: £32.1 million) of cash is held which is restricted for use in
the FlexiPay warehouse.
At 31 December 2025, money market funds totalled £84.8 million (2024: £136.3
million).
Analysis of changes in liabilities from financing activities
Derecognition
Other of liabilities 31
1 January Exchange non-cash December
Cash flow related to
2024 movements movements 2024
£m discontinued
£m £m £m £m
operations
£m
Bank borrowings (56.9) (46.6) — — 1.6 (101.9)
Lease liabilities (12.6) 3.6 (0.3) (5.8) 7.5 (7.6)
Liabilities from (69.5) (43.0) (0.3) (5.8) 9.1 (109.5)
financing activities
Derecognition
Other of liabilities 31
1 January Exchange non-cash December
Cash flow related to
2025 movements movements 2025
£m discontinued
£m £m £m £m
operations
£m
Bank borrowings (101.9) (165.4) — — — (267.3)
Lease liabilities (7.6) 1.9 — (0.6) — (6.3)
Liabilities from (109.5) (163.5) — (0.6) — (273.6)
financing activities
17. Contingent liabilities and commitments
As part of the ongoing business, the Group has operational requirements with its
investors. At any point in time, it is possible that a particular investor may
expect the Group to purchase their loan in the event of a breach of representation
or warranty, operational errors or control issues or where agreed eligibility
criteria have not been complied with. Where a loan is purchased it is presented
within SME loans held at amortised cost on the face of the consolidated balance
sheet and held at amortised cost under IFRS 9.
In common with other businesses, the Group is involved from time to time in disputes
in the ordinary course of business. There are no active cases expected to have a
material adverse financial impact on the Group.
The Group has commitments related to undrawn amounts on issued FlexiPay lines of
credit. At 31 December 2025, there were undrawn commitments of £446.7 million (2024:
£278.7 million). An expected credit loss impairment allowance is held within other
provisions by the Group of £2.5 million (2024: £2.7 million) in relation to the
estimated credit losses the Group may be exposed to on these undrawn lines of
credit.
18. Subsequent events
Sale of shorter-term loans and signing of forward flow agreement
The shorter-term loans held by the Group were held at a fair value of £120.4 million
at 31 December 2025 (2024: £nil). Subsequent to the balance sheet date, in January
2026 an agreement was signed to sell the loans to a third party, alongside the
signing of a forward flow agreement for the go forward origination of the product by
the third party via the platform model.
The loans were sold with an economic cut-off date of 31 December 2025, for an amount
materially aligned with their fair value at the balance sheet date. The sale of the
loans is not considered an adjusting balance sheet event as the contract was not
signed nor certain as of that date.
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ISIN: GB00BG0TPX62
Category Code: FR
TIDM: FCH
LEI Code: 2138003EK6UAINBBUS19
Sequence No.: 420018
EQS News ID: 2286042
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