REG - Intnl Personal Fin - 2024 Final Results and Accounts
26/02/2025 07:00
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RNS Number : 4273Y International Personal Finance Plc 26 February 2025
26 February 2025
International Personal Finance plc
Full-year financial report for the year ended 31 December 2024
Principal activity
International Personal Finance is helping to build a better world through
financial inclusion by providing affordable credit products and insurance
services to underserved consumers across nine markets.
Profits ahead of guidance and full-year dividend up 11.1%
Positive outlook for 2025; further share buyback
Key highlights
Strong financial performance delivered in 2024 and increased returns to
shareholders
· Pre-exceptional profit before tax of £85.2m(1) (2023: £83.9m), ahead
of our guidance provided with the interim results(2).
· Record profit from Mexico home credit and IPF Digital's Mexico and
Australia operations as well as record lending volumes in Hungary.
· Proposed increase of 11.1% in the final dividend to 8.0p per share
(2023: 7.2p), resulting in full-year dividend growth of 10.7% to 11.4p per
share (2023: 10.3p).
· Following successful completion of the £15m share buyback programme
in the second half of 2024, the Group announces its intention to commence a
further share buyback programme of up to £15m which is expected to be
completed by the third quarter.
Robust credit demand and exceptional operational execution driving growth
momentum
· Robust demand for our increasingly diverse product range drove 9%
year-on-year customer lending growth.
· Growth of 7%(3) in closing net receivables with IPF Digital being the
standout performer at 18%(3) and our Polish operations returning to growth in
the final quarter.
· Excellent customer repayment performance and strong credit quality
resulted in an improvement in the impairment rate to 9.6% (2023: 12.2%), well
ahead of target.
Strong balance sheet and funding position will support future growth and
returns
· Nearly £400m of funding secured in 2024, including the successful
refinancing of the Eurobond.
· Significant headroom on undrawn funding facilities and non-operational
cash balances of £138m to fund the Group's plans through to the end of 2025.
· Equity to receivables ratio of 54% (2023: 56%) underpins the Group's
plans to accelerate growth and the pace of change whilst maintaining a
progressive dividend policy.
Good progress with our Next Gen strategy to deliver on long-term growth
opportunities
· Receipt of the full payment institution licence in Poland during the
fourth quarter will accelerate growth in Poland in 2025 - over 200,000 credit
cards now issued in Poland.
· Mexico home credit primed for stronger growth following actions taken
in the two previously underperforming regions and a significant upgrade to a
more flexible and resilient IT infrastructure.
· Mobile wallet customers in IPF Digital topped 115,000, an increase of
over 50% year on year.
· Retail partnership credit available in 700 stores in Romania and 50
online retailers in Mexico as we continue to build out this exciting
proposition.
· Significant opportunities continue to be available to expand our broad
range of products into all of our markets, particularly through credit cards.
Group key statistics FY-24 FY-23 YOY change
Customer numbers (000s) 1,652 1,700 (2.8%)
Customer lending (£m) 1,214.5 1,150.6 9.2%(3)
Closing net receivables (£m) 870.0 892.9 6.8%(3)
Pre-exceptional PBT (£m)(1) 85.2 83.9 1.5%
Statutory PBT (£m) 73.3 83.9 (12.6%)
Pre-exceptional EPS (pence)(1,4) 24.9 23.2 7.3%
Full-year dividend per share (pence) 11.4 10.3 10.7%
(1 ) Prior to an exceptional charge of £11.9m in 2024 (see note 9 for
details).
(2 ) Guidance provided with the interim results was expected full-year
pre-exceptional PBT of between £78m and £82m.
(3 ) At constant exchange rates (CER).
(4 ) Prior to an exceptional tax credit of £17.4m in 2024 and an
exceptional tax charge of £4.0m in 2023 (see note 9 for details).
Gerard Ryan, Chief Executive Officer at IPF commented:
"I am very pleased to report significant progress across our Group in 2024.
The ongoing execution of our Next Gen strategy has delivered good growth, and
we provided over £1bn of credit to those who find it difficult to get finance
from banks. Combined with very strong customer repayment performance, we
delivered a pre-exceptional profit before tax of £85.2m, ahead of the
guidance we provided at the interim results(2). Reflecting the continued
strong performance of the Group and the success of our strategy to realise the
long-term growth potential of the business, the Board is pleased to declare an
11.1% increase in the final dividend to 8.0p, and our intention to commence a
further share buyback programme of up to £15m, improving the efficiency of
our balance sheet.
Beyond these strong financial results, we served our 15 millionth customer in
September, a great sign of our ability and commitment to supporting
underserved communities. My heartfelt thanks go to all our dedicated
colleagues whose hard work ensures we continue to broaden access to fair and
responsible credit across all our markets.
With good growth momentum and a strong balance sheet, we enter 2025 in an
excellent position to accelerate both growth and the pace of change across the
Group. Building on our track record of success, we will maintain our focus on
serving those consumers who need us most and enhancing our customer
experience, while pursuing growth opportunities with discipline and a clear
focus on sustainable returns."
Alternative performance measures
This full-year financial report provides alternative performance measures
(APMs) which are not defined or specified under the requirements of
International Financial Reporting Standards. We believe these APMs provide
stakeholders with important additional information on our business. To support
this, we have included an accounting policy note on APMs in the notes to this
financial report, a glossary indicating the APMs that we use, an explanation
of how they are calculated and how we use them, and a reconciliation of the
APMs we use to a statutory measure, where relevant.
Investor relations and media contact:
Rachel Moran - Investor Relations +44 (0)7760 167637
Marsha Watson - Interim Deputy Company Secretary +44 (0)7707 857286
Investor and analyst webcast
International Personal Finance will host a webcast of its 2024 full-year
results presentation at 09.00hrs (GMT) today - Wednesday 26 February, which
can be accessed here
(https://flyonthewall.videosync.fi/full-year-results-2024) .
A copy of this statement can be found on our website at www.ipfin.co.uk
(http://www.ipfin.co.uk) .
Legal Entity Identifier: 213800II1O44IRKUZB59
Chief Executive Officer's review
Group performance
The Group delivered another very strong operational and financial performance
in 2024, underpinned by excellent credit quality. Our unwavering commitment to
our customers and focused execution of our Next Gen strategy drove a £1.3m
(1.5%) increase in pre-exceptional profit before tax to £85.2m (2023:
£83.9m), despite a £5m year-on-year foreign exchange translation headwind
from weaker currencies, particularly in Mexico and Hungary. Our Mexican home
credit and Australia and Mexico digital businesses all delivered record
profits, whilst in Hungary we delivered record lending volumes. Another
notable milestone was that our home credit and digital businesses in Poland
returned to receivables growth in the final quarter, and having received our
full payment institution licence in November, we are now well set on our
trajectory to regrow the Polish business.
Customer demand for our expanding range of products remained strong in our
markets, demonstrated clearly by the significant milestone of serving our 15
millionth customer during the year. Customer lending grew by 9% (at CER)
year-on-year and receivables grew by 7% (at CER) with European home credit and
IPF Digital both delivering in line with our plans. The only division which
delivered lower than expected growth in the year was Mexico home credit, where
ongoing instability in our front-end lending technology led to our decision to
upgrade our IT infrastructure in the final quarter. This resulted in some
temporary disruption which impacted the rate of growth in this market.
Following successful completion of the upgrade, the business is now back to
delivering year-on-year growth and performing in line with our expectations.
We have strong momentum throughout the Group, and this gives us confidence
that we will deliver an acceleration in growth in 2025 as we continue to
execute against our Next Gen strategy.
Strong repayment performance and excellent credit quality drove a reduction in
the Group's impairment rate from 12.2% to 9.6% and this was a key component in
increasing our pre-exceptional return on required equity (RoRE) by 0.9ppts
year on year to 15.7%, in line with our Group target range of 15% to 20%.
The Group is very well-capitalised, with a strong balance sheet recently
bolstered by the successful refinancing of our €341m Eurobond in June. This,
along with additional £103m of bank funding secured during the year, resulted
in significant headroom of £138m on our debt facilities as at 31 December
2024. Our robust funding position and headroom supports our ambitious growth
plans through to the end of 2025.
The Group's equity to receivables ratio was 54% at December 2024 (2023: 56%)
compared with our target of 40%. As part of our strategy to optimise our
balance sheet, we successfully completed a £15m share buyback programme in
the second half of the year and today announce our intention to commence a
further share buyback programme of up to £15m, which is expected to be
completed by the third quarter.
Our strong 2024 performance fully supports an 11.1% increase in the proposed
final dividend to 8.0p (2023: 7.2p) per share, in line with our progressive
dividend policy. Together with the interim dividend of 3.4p (2023: 3.1p) per
share the total dividend for 2024 has increased by 10.7%.
Full details of the Group financial performance are detailed in the financial
review section.
Purpose and strategy
Our purpose is to build a better world through financial inclusion. With 1.7
million customers across nine countries, we aim to grow this to 2.5 million,
extending access to affordable financial products to support significantly
more underserved consumers.
We have made a strong start to our Next Gen strategy which we launched early
in 2024, with the business aligned on delivering its three core strategic
priorities:
1. Next Gen financial inclusion
We aim to increase our reach to appeal to more consumers by expanding our
geographic footprint, increasing our product range and growing the number of
channels through which customers can access our offers:
· Accelerating credit cards - The granting of a full payment institution
license in Poland in November will enable us to accelerate growth of our
credit card offering in the year ahead. We have now issued over 200,000 credit
cards, up from 130,000 at the end of 2023, with 150,000 active customers who
are using their cards increasingly in stores and on-line. Based on our
experience to date, we are developing plans to expand the proposition into
other European markets which we plan to announce with our 2025 half year
results.
· Expanding in Mexico - We continued to expand our geographic footprint
in this growth market with a new branch opening in Mexicali, northern Mexico
in June. We also plan to open two new branches in 2025, and all our branches
launched in the past two years are performing well.
· Building distribution channels through strategic partnerships - We
expanded our retail credit partnership significantly in 2024, an offering
which provides finance for consumers at the point of purchase. In Romania, we
now offer in-store credit at nearly 700 retail outlets, up from 160 at the end
of 2023. Our test of this distribution channel in Mexico is also gaining
traction and we now offer credit in more than 50 online retailers.
· Growing our mobile wallet in IPF Digital - We enhanced our mobile
wallet with the addition of a digital credit health monitor, which leverages
internal and external data to help customers manage their credit profiles and
behaviours more effectively, and keep their credit score in good standing. The
number of mobile wallet users has more than doubled to over 115,000 in the
past 12 months, and they now represent around half of IPF Digital's customer
base.
2. Next Gen organisation
We are becoming a smarter, more efficient organisation that makes a positive
impact on society:
· Field transformation - We implemented a new structure for our European
home credit division to standardise processes across the four markets, laying
the foundation for unified systems that will simplify our technology estate
and enhance efficiency.
· Supporting our communities - We invested £920,270 in community
support and assisted thousands of people through our global community
investment programme 'Invisibles' which helps people from those segments of
society who struggle to have their needs recognised gain access to financial
services and become visible to influential stakeholders who can provide
practical help.
· Being a great place to work - We received recognition through a
variety of awards demonstrating our commitment to our colleagues, gaining Top
Employer in Poland and Wellbeing Employer of the Year in Romania, in addition
to awards for great customer care and innovation.
3. Next Gen technology and data
We are investing in the capabilities required to become a data-driven and
technology-enabled partner for our customers:
· Customer app rollout - Building on the success of our mobile app in
Poland, we launched an app in Mexico, providing customers with a convenient
and accessible way to manage their finances. By the end of the first quarter
of 2026, the app will be available across all our home credit markets.
· Offering omnichannel touchpoints - In 2024, we expanded our Xenia
customer experience programme into Poland and the Czech Republic, building on
its success in Romania. This is transforming our European home credit
operations, integrating multiple customer touchpoints to provide a unified,
360-degree view of customers.
· Integration of AI - The potential of AI is transformative, and we are
at an early stage in developing its use in lead management and call centre
efficiency, automated affordability checks and AI-driven processes to
integrate data across our different platforms.
In 2025, we will continue with the above activities as well as accelerate the
pace of change as we continue to upgrade and simplify our IT estate to make us
more productive, cost efficient, secure and agile.
Regulatory update
As previously reported, the new total cost of credit cap in Romania came into
force on 11 November 2024. Our Romanian business has adapted its product
offering to customers in accordance with the new cap and we do not expect the
impact to be material to the Group's results.
Following a two-year process, in November 2024, our Polish home credit
business was granted a full payment institution licence from the Polish
financial supervision authority, the Komisja Nadzoru Finansowego. This
represented a significant step forward as the previous licence restricted the
amount of credit our Polish business could issue and now, with the new
licence, we can accelerate growth in Poland.
Our business in the Czech Republic, which is our smallest operation, has
remained our only European market without a rate cap. Earlier this month, a
public consultation document for the adoption of the EU Consumer Credit
Directive 2 (CCD2) contained a proposal for the introduction of a rate cap. We
are working with industry groups to ensure that any rate cap is appropriate
and assists the provision of responsibly provided credit to those in need. The
Group has demonstrated a strong track record in adapting to regulatory
changes, including new rate caps.
The Digital Operations Resilience Act (DORA) took effect from 17 January 2025.
The requirements cover, amongst other things, the management of IT and
security risk, disaster recovery plans and third-party supplier risk. We
introduced the necessary enhancements to our risk and governance process to
meet the requirements of DORA in advance of the deadline.
Dividend
Reflecting the continued strong performance of the Group and our strategy to
realise the long-term growth potential of the business, the Board is pleased
to declare an 11.1% increase in the final dividend to 8.0p per share (2023:
7.2p). This is in line with our progressive dividend policy and brings the
full-year dividend to 11.4p per share (2023: 10.3p), an increase of 10.7%
compared with 2023 and represents a pre-exceptional payout rate of 46% (2023:
44%). Subject to shareholder approval, the 2024 final dividend will be paid on
12 May 2025 to shareholders on the register at the close of business on 11
April 2025. The shares will be marked ex-dividend on 10 April 2025.
Share buyback
The Group's financial model is to deliver a target RoRE of between 15% and
20%, which supports a minimum dividend payout ratio of 40%, funds receivables
growth of up to 10% per annum, whilst maintaining an equity to receivables
ratio at 40%. This financial framework ensures that capital is only allocated
where it can deliver appropriate returns to shareholders whilst also balancing
the needs of all our stakeholders.
As a result of the Group's strong capital position and favourable financial
performance, the Board announced a share buyback programme of £15m with the
half year results in July 2024, which was successfully completed in November.
The Group continues to have a very strong capital position with an equity to
receivables ratio of 54% at December 2024, compared with our target of 40%.
After assessing the Group's current trading performance, cash generation and
future growth plans, the Board announces its intention to commence a further
share buyback programme of up to £15m, which is expected to be completed by
the third quarter. This will promote capital efficiency based on an assessment
of any surplus capital beyond that necessary to deliver future growth and fund
the Group's progressive dividend.
Outlook
Our strong operational and financial performance in 2024, together with our
strong balance sheet, lays the foundation for accelerating the rate of growth
and the pace of change in 2025 as we continue to execute against our Next Gen
strategy.
In Poland, the receipt of the full payment institution licence enables us to
accelerate its return to growth whilst in Mexico home credit, where we have
upgraded our IT systems infrastructure, we anticipate strong demand to fuel
growth and geographic expansion. Following an excellent performance in 2024,
we expect IPF Digital will continue to build scale and deliver further strong
growth in 2025, particularly in the very attractive Mexico and Australia
markets. Additionally, further growth in our divisions will be driven by
broadening our product set, further roll-out of mobile wallet in our digital
markets and increasing our retail credit partnerships.
We will also drive change at a faster pace to enhance our ability to serve
customers and improve operational efficiency. We are investing in technology
to streamline customer journeys through apps and omnichannel touchpoints,
understand how AI will support the business and develop platforms and
processes to deliver efficiencies, enable innovation and support compliance
with all local regulatory requirements.
Building upon our performance in recent years, we are focused on delivering
our ambitious long-term vision to be the leading provider of financial
services to underserved communities around the world, data-driven, technology
enabled and always with the human touch. We are dedicated to turning this
vision into reality, ensuring inclusive financial growth for all.
Financial review
Group
The strong momentum in performance built over the past three years, and now
underpinned by the execution of our Next Gen strategy, resulted in good growth
and exceptional customer repayment behaviour in the year. Pre-exceptional
profit before tax of £85.2m was ahead of the guidance of between £78m and
£82m we provided with the interim results and 1.5% up on last year (2023:
£83.9m), despite an adverse year-on-year impact of £5m due to weaker foreign
exchange rates in our geographies.
The full-year result includes exceptional one-off costs totalling £11.9m,
comprising £6.1m of restructuring costs in European home credit and £5.8m of
costs associated with refinancing the Group's Eurobond in June. Statutory
profit before tax was therefore £73.3m (2023: £83.9m).
An analysis of the 2024 divisional results is shown below (2023 restated*):
FY-24 FY-23 Change Change
£m £m £m %
European home credit* 57.4 67.7 (10.3) (15.2)
Mexico home credit 26.0 23.1 2.9 12.6
IPF Digital* 17.0 8.1 8.9 109.9
Central costs (15.2) (15.0) (0.2) (1.3)
Pre-exceptional profit before taxation 85.2 83.9 1.3 1.5
Exceptional items (11.9) - (11.9) (100.0)
Profit before taxation 73.3 83.9 (10.6) (12.6)
* As part of a change in management responsibility from the end of 2023 and as
reported with the interim results, the nascent digital lending business in the
Czech Republic, which was previously reported as part of European home credit,
is now included in the results of IPF Digital. All comparatives have been
amended accordingly and are presented on a like-for-like basis. The Czech
Republic digital business contributed a loss of £2.6m for 2023.
The detailed income statement of the Group, together with associated KPIs, is
set out below:
Change at CER
FY-24 FY-23 Change Change %
£m £m £m %
Customer numbers (000s) 1,652 1,700 (48) (2.8)
Customer lending 1,214.5 1,150.6 63.9 5.6 9.2
Average gross receivables 1,327.5 1,388.9 (61.4) (4.4) (1.6)
Closing net receivables 870.0 892.9 (22.9) (2.6) 6.8
Revenue 726.3 767.8 (41.5) (5.4) (2.1)
Impairment (127.5) (169.4) 41.9 24.7 21.1
Revenue less impairment 598.8 598.4 0.4 0.1 3.2
Costs (443.2) (437.6) (5.6) (1.3) (4.0)
Interest expense (70.4) (76.9) 6.5 8.5 6.0
Pre-exceptional profit before taxation 85.2 83.9 1.3 1.5
Exceptional items (11.9) - (11.9) (100.0)
Profit before taxation 73.3 83.9 (10.6) (12.6)
Revenue yield 54.7% 55.3% (0.6) ppts
Impairment rate 9.6% 12.2% 2.6 ppts
Cost-income ratio 61.0% 57.0% (4.0) ppts
Pre-exceptional EPS(1) 24.9p 23.2p 7.3%
Pre-exceptional RoE(1) 11.5% 11.1% 0.4 ppts
Pre-exceptional RoRE(1,2) 15.7% 14.8% 0.9 ppts
(1 ) Prior to a pre-tax exceptional charge of £11.9m, and an exceptional
tax credit of £17.4m in 2024 and an exceptional tax charge of £4.0m in 2023
(see note 9 for more details).
(2 ) Based on required equity to receivables of 40%.
Group customer lending grew by 9% (at CER) driven by strong growth in IPF
Digital and European home credit. Mexico delivered relatively modest growth
due to disruption from an IT upgrade in the final quarter but has returned to
expected levels of growth in early 2025.
Group net receivables closed the year up 7% (at CER) to £870.0m (2023:
£892.9m), due particularly to strong growth of 18% in IPF Digital with
European home credit and Mexico home credit delivering low single digits
growth. Whilst receivables in Poland showed a year-on-year reduction of 10%,
both the home credit and digital businesses have now returned to growth and
delivered 6% receivables growth in the final quarter.
Customer numbers grew by 1% to 1.7m, excluding the impact of Poland, where
customer numbers declined by 18%. As noted above, Poland is now returning to
growth and with continued strong momentum from the Group's new products and
channels we anticipate an acceleration in customer growth in 2025.
Delivery of our financial model is underpinned by the revenue yield,
impairment rate and the cost-income ratio, and we continue to maintain a sharp
focus on these key financial levers.
The annualised revenue yield decreased marginally from 55.3% to 54.7% in 2024.
This reflects the impact of the introduction of the rate cap on credit cards
in Poland in the first quarter. Excluding Poland, the revenue yield
strengthened to 57.3%, in line with the Group's target range of 56% to 58%.
Customer repayments continued to be excellent in 2024 despite cost-of-living
pressures on consumers and general global macro-economic instability. Our
strong operational execution, together with a further reduction of £6m (2023:
£5m) in the Group's cost of living provision, supported a 2.6ppt improvement
in the annualised impairment rate to 9.6% (2023: 12.2%). The improved credit
quality has resulted in a reduction in the impairment coverage provision from
36.3% at December 2023 to 32.9% at December 2024. With excellent credit
quality across all our divisions, we are well positioned to accelerate growth
in 2025.
We continue to maintain a strict focus on efficiency and cost control. The
Group's cost-income ratio increased by 4.0 ppts to 61.0% (2023: 57.0%) wholly
due to reduced revenue in Poland. Excluding Poland, the ratio of 55.4% was in
line with 2023 as we invested in growth in the second half of the year as well
as the resources and capability to accelerate change across the Group. Despite
this investment, we remain committed to our medium-term target of 49% to 51%
as we deliver increased growth, build scale and continue to execute on our
cost efficiency programme.
The pre-exceptional RoRE improved by 0.9ppts to 15.7% (2023: 14.8%) as a
result of improved profitability and a reduced tax rate of 35% (2023: 38%). We
expect returns to moderate in 2025 due to strong receivables growth which
results in extra IFRS 9 impairment charges up front and a modest increase in
the tax rate. We expect returns to improve in 2026 before reaching target
returns again in 2027. The Group's pre-exceptional RoE, based on actual
equity, increased to 11.5% (2023: 11.1%).
Pre-exceptional earnings per share (EPS) grew 7.3% to 24.9p per share (2023:
23.2p), reflecting higher profits, a lower tax rate and a reduced number of
shares in issue following successful completion of the £15m share buyback
programme in the second half of the year. Reported EPS of 27.3p per share
(2023: 21.5p) showed a larger increase of 27.0%, due to the impact of pre-tax
exceptional charges of £11.9m being more than offset by an exceptional tax
credit of £17.4m (see note 9 for more details).
Divisional performance
European home credit
Change at
FY-24 FY-23 Change Change CER
£m £m £m % %
Customer numbers (000s) 725 754 (29) (3.8)
Customer lending 662.1 601.7 60.4 10.0 12.6
Average gross receivables 706.0 791.1 (85.1) (10.8) (8.9)
Closing net receivables 459.6 475.4 (15.8) (3.3) 3.0
Revenue 328.2 375.9 (47.7) (12.7) (11.0)
Impairment (8.1) (35.6) 27.5 77.2 77.1
Revenue less impairment 320.1 340.3 (20.2) (5.9) (4.0)
Costs (225.1) (225.2) 0.1 - (1.6)
Interest expense (37.6) (47.4) 9.8 20.7 19.1
Pre-exceptional profit before taxation(1) 57.4 67.7 (10.3) (15.2)
Revenue yield 46.5% 47.5% (1.0) ppts
Impairment rate 1.1% 4.5% 3.4 ppts
Cost-income ratio 68.6% 59.9% (8.7) ppts
Pre-exceptional RoRE(1,2) 19.9% 21.6% (1.7) ppts
(1 ) Prior to a pre-tax exceptional charge of £6.1m and, in respect of
RoRE, an exceptional tax credit of £1.1m in 2024, and an exceptional tax
charge of £4.0m in 2023 (see note 9).
(2 ) Based on required equity to receivables of 40%.
European home credit performed very well in 2024, despite adapting to the new
rate cap on credit cards in Poland which came into force in the first half of
the year. Strong operational execution against our Next Gen strategy delivered
good lending growth whilst maintaining excellent credit quality. The division
reported pre-exceptional profit before tax of £57.4m (2023: £67.7m), down
£10.3m, of which £2m was due to weaker foreign exchange rates in our
European geographies. Excluding the adverse impact of foreign exchange rates,
the result was ahead of the guidance provided with the 2023 full-year results
where we expected a £10m profit impact due to the introduction of the rate
cap on credit cards in Poland.
Consumer demand remained robust and supported the acceleration of customer
lending growth through the year. Hungary, which delivered record lending,
Romania and the Czech Republic collectively delivered lending growth of 12%
(at CER), with momentum increasing from 8% growth in the first half to 17% in
the second half. In Poland, lending trends improved significantly as the year
progressed, recovering from a 5% year-on-year contraction in the first half to
36% growth in the second half (+13% for the year as a whole) and the business
has now fully adapted to the combined impact of the lower rate caps and
enhanced affordability assessments now required. The granting of the full
payment institution licence in November will allow Poland to increase credit
card lending volumes going forward.
Closing net receivables improved by 3% (at CER) to £459.6m (2023: £475.4m).
This reflects strong growth of 13% (at CER) delivered by Hungary, Romania and
the Czech Republic combined, partly offset by Poland's receivables which
reduced by 13% (at CER) year on year. However, after stabilising in the third
quarter, the increased lending volumes in Poland led to a 6% increase in
receivables in the fourth quarter to just over £150m. Overall, with the
strong momentum we are seeing in lending volumes we anticipate European home
credit receivables growth in excess of 15% in 2025.
Customer numbers ended the year at 725,000, representing a year-on-year
reduction of 3.8%. Hungary, Romania and the Czech Republic showed combined
growth of 6% which was more than offset by a 18% reduction in Poland. Now that
Poland has recommenced growth, we expect mid-single digit growth in customer
numbers for European home credit in 2025.
The annualised revenue yield reduced modestly year-on-year by 1.0ppt to 46.5%
(2023: 47.5%), wholly due to the re-pricing of credit cards in Poland. The
yield is expected to remain stable in the year ahead.
The strong financial performance of European home credit was buoyed by
excellent customer repayments across all four markets and a continued strong
debt sale market. As a result of the excellent credit quality, the
cost-of-living provision was reduced by £3.9m in the year and the impairment
rate showed an improvement of 3.4ppts to 1.1% (2023: 4.5%). As the Polish
business regrows in 2025, we expect the impairment rate to increase and then
to normalise into the target range for European home credit of between 8% and
10% in the medium term.
Cost management continues to remain a priority. Due to the reduction in
revenue yield in Poland together with investment in growth, the cost-income
ratio increased from 59.9% in 2023 to 68.6% in 2024. As we maintain our cost
efficiency programme and Poland regains scale, we remain focused on reducing
the cost-income ratio to our target range of between 49% to 51% in the medium
term.
As part of the ongoing transition of the Polish business, a restructuring of
our field and head office organisation resulted in a reduction of 250 roles.
As a result, the 2024 results reflect a one-off exceptional cost of £6.1m
relating to redundancy payments and other associated costs.
As expected, the annualised pre-exceptional RoRE for the division decreased to
19.9% (2023: 21.6%), due to the reduction in profits. We anticipate that
returns will further moderate in 2025 as we accelerate receivables growth
leading to an increase in up front IFRS 9 impairment charges. We then expect
returns to regrow in 2026.
European home credit remains the cornerstone of the Group's profitability and
offers good opportunities for future growth, as demonstrated by the strong
growth momentum in the second half of 2024. The full payment institution
licence in Poland will underpin the acceleration of growth in this market as
we rebuild scale and expand our credit card offering to both existing and new
customers. We will also continue to expand our digital and retail partnership
credit offering in Romania, and focus on customer acquisition and improving
the customer journey across all markets. We are also committed to enhancing
efficiency and unlocking synergies through technology deployment and the
sharing of resources and best practices across the division.
Mexico home credit
Change at
FY-24 FY-23 Change Change CER
£m £m £m % %
Customer numbers (000s) 680 716 (36) (5.0)
Customer lending 289.2 302.8 (13.6) (4.5) 1.4
Average gross receivables 306.9 299.4 7.5 2.5 8.5
Closing net receivables 159.4 187.1 (27.7) (14.8) 3.0
Revenue 263.8 261.6 2.2 0.8 7.1
Impairment (92.4) (96.7) 4.3 4.4 (2.0)
Revenue less impairment 171.4 164.9 6.5 3.9 10.0
Costs (131.0) (129.7) (1.3) (1.0) (6.3)
Interest expense (14.4) (12.1) (2.3) (19.0) (26.3)
Reported profit before taxation 26.0 23.1 2.9 12.6
Revenue yield 85.9% 87.4% (1.5) ppts
Impairment rate 30.1% 32.3% 2.2 ppts
Cost-income ratio 49.6% 49.6% - ppts
RoRE(1) 24.4% 20.7% 3.7 ppts
(1) Based on required equity to receivables of 40%.
( )
Mexico home credit delivered record profit before tax of £26.0m (2023:
£23.1m), underpinned by a return to target impairment levels and strong cost
control. The year-on-year growth in profits of 12.6% was delivered despite an
adverse impact from the weaker Mexican peso which reduced year-on-year profits
by £2m.
While consumer demand for credit remains robust, year-on-year customer lending
growth of 1% (at CER) and a 5% contraction in customer numbers to 680,000 were
lower than our original expectations.
This was wholly due to a 6% year-on-year contraction in lending during the
fourth quarter. Due to ongoing instability in our Provi Digital (the front-end
lending technology used by our customer representatives) and customer app, we
took the decision to upgrade to a more modern and resilient infrastructure to
provide a more stable and secure base to accelerate growth in the future. This
change disrupted our field activities for a period, but we are pleased to
report that the upgraded technology was deployed in mid-January 2025 and the
business has now returned to weekly year-on-year sales growth. With the added
traction from the management actions implemented in the previously
underperforming regions of Mexico City and Sureste, and the weak fourth
quarter comparative, we expect to deliver lending growth in excess of 10% in
2025.
Our geographic expansion strategy continues to progress successfully. Our new
branch opening in June in Mexicali and two branches in Tijuana and Tampico,
which we opened at the end of 2022 and early 2023 respectively, are performing
well and in line with our plan. Together they have attracted more than 17,000
customers to date. We plan to open another two branches in 2025.
Closing net receivables grew by 3% (at CER) to £159.4m, driving a 7% (at CER)
increase in revenue. We expect much faster receivables growth of approximately
15% in 2025. While the revenue yield saw a moderate decline from 87.4% to
85.9%, this reflects the increase in the proportion of lending to existing
good-quality customers compared with new customers as the receivables book
grows. Existing customers tend to be served with higher value, longer duration
loans which have a lower yield, but this is compensated for by better
impairment outcomes.
Improving the impairment rate in Mexico was a key priority in 2024, and our
team successfully achieved a rate in line with the target level of 30%.
Focused actions to enhance the quality of receivables and promote positive
repayment behaviour led to a 2.2ppt year-on-year improvement in the impairment
rate to 30.1% (2023: 32.3%). The improvement in quality also led to a £1.2m
reduction in the cost-of-living provision.
Despite the continued investment in geographic expansion and the investment to
upgrade the IT infrastructure, the cost-income ratio remained in line with
last year at 49.6% and is consistent with our 49% to 51% target range. Costs
remain tightly controlled and we expect to maintain this ratio as we continue
to grow the business.
Interest costs increased by 26.3% (at CER), reflecting both an 8.5% (at CER)
increase in average gross receivables and higher funding costs of the Mexican
business. Despite this increase, and the impact of the disruption in the
fourth quarter, the strong financial fundamentals of Mexico home credit led to
a 3.7ppt improvement in the RoRE to 24.4% (2023: 20.7%).
Mexico home credit represents a significant growth market for the Group and
forms a key part of our Next Gen strategy. Our immediate focus in 2025 is to
accelerate the rate of growth, supported by a more resilient and flexible IT
infrastructure. We are committed to expanding our geographic footprint to
attract more new customers and plan to open a further two new branches during
the year and continue to grow those launched in recent years. We will also
continue to prioritise sustainable, quality growth to deliver consistent and
attractive returns, which has been an underpinning feature of the business
over the last three years.
IPF Digital
Change at
FY-24 FY-23 Change Change CER
£m £m £m % %
Customer numbers (000s) 247 230 17 7.4
Customer lending 263.2 246.1 17.1 6.9 9.9
Average gross receivables 314.6 298.4 16.2 5.4 8.1
Closing net receivables 251.0 230.4 20.6 8.9 17.6
Revenue 134.3 130.3 4.0 3.1 6.1
Impairment (27.0) (37.1) 10.1 27.2 24.2
Revenue less impairment 107.3 93.2 14.1 15.1 17.9
Costs (72.0) (67.8) (4.2) (6.2) (8.1)
Interest expense (18.3) (17.3) (1.0) (5.8) (8.3)
Reported profit before taxation 17.0 8.1 8.9 109.9
Revenue yield 42.7% 43.7% (1.0) ppts
Impairment rate 8.6% 12.4% 3.8 ppts
Cost-income ratio 53.6% 52.0% (1.6) ppts
RoRE(1) 11.4% 5.6% 5.8 ppts
(1) Based on required equity to receivables of 40%.
IPF Digital delivered very strong growth and a significantly improved
financial performance, reporting a £8.9m (110%) increase in profit before tax
to £17.0m (2023: £8.1m), despite a £1m year-on-year impact from weaker
foreign exchange rates, particularly in Mexico. All our markets contributed
improved performances, with Mexico and Australia delivering strong growth and
record profit contributions while Poland successfully transitioned to
operating under a tighter rate cap introduced late in 2023 and returned to
growth during the second half of the year.
Customer demand for fully remote credit offerings continued to increase,
driving year-on-year growth in customer numbers and customer lending of 7% and
10% respectively (both at CER), with strong performances in particular
delivered by Mexico and Australia with 22% and 21% year-on-year growth in
lending respectively. The Czech Republic delivered 15% growth in lending
whilst the more mature markets in the Baltics delivered 3% growth. Poland saw
a return to growth of 20% in the second half of the year following a reduction
of 18% in the first half (-2% for the year as a whole).
Our growth strategy to build receivables and achieve target returns is
delivering good results. Closing net receivables increased by 18% (at CER) to
£251.0m (2023: £230.4m). Mexico, Australia and our emerging digital business
in the Czech Republic were standout performers each delivering growth of more
than 26%, while our more mature markets in the Baltics delivered 13% growth.
In Poland, we are pleased to report that we saw a return to growth of 3% for
the year as a whole, with growth of 6% to £38m being delivered in the last
quarter. In 2025, we expect IPF Digital's overall receivables growth to be
similar to 2024.
The revenue yield reduced modestly by 1ppt to 42.7% (2023: 43.7%), primarily
due to lower rate caps introduced in Latvia and Poland at the end of 2022, as
well as in Estonia which is recalculated biannually. These impacts were
partially offset by the increasing proportion of receivables with a higher
revenue yield in Mexico.
Customers continue to repay very well in all our digital operations and
portfolio quality is very good. Together with a reduction in the
cost-of-living provision of £1.4m, this has resulted in the impairment rate
improving significantly by 3.8 ppts to 8.6% (2023: 12.4%). We anticipate that
the medium-term impairment rate for IPF Digital will settle into the Group's
target range of 14%-16% as Mexico becomes a bigger proportion of the
receivables book.
Operating costs rose by 8.1% (at CER) as we invested in marketing and
technology to drive customer acquisition and build scale. This investment
together with the reduction in the revenue yield resulted in the cost-income
ratio softening by 1.6ppts year on year to 53.6% (2023: 52.0%). We expect the
cost-income ratio to improve toward our long-term target of approximately 45%
for our digital division as we scale and leverage operational efficiencies.
IPF Digital's excellent performance in 2024 resulted in its RoRE strengthening
year on year by 5.8 ppts to 11.4% (2023: 5.6%), reflecting our progress in
building scale and maintaining strong credit quality. IPF Digital represents a
significant long-term growth opportunity for the Group, particularly in Mexico
and Australia. There are very attractive organic growth opportunities as well
as good returns from our broad product set of digital instalment loans,
revolving credit lines, mobile wallet and retail finance products. We will
also consider inorganic opportunities to enhance scale and returns should a
suitable opportunity arise. Based on our growth trajectory, our goal is to
achieve returns at the lower end of our 15% to 20% Group target in 2027.
Taxation
The pre-exceptional taxation charge on the profit for 2024 is £29.8m, which
represents an effective rate for the year of approximately 35% (2023: 38%).
The lower tax rate in 2024 reflects a number of elements, including a
reduction in the disallowable impairment in Poland partly as a result of being
a payments institution as well as the availability of additional tax
allowances on utilisation of brought forward tax losses in Mexico. We now
expect the effective tax rate on an ongoing basis to be approximately 38%,
lower than previous expectations of 40%.
The 2024 results reflect an exceptional tax credit of £17.4m (2023:
exceptional tax charge of £4.0m), which comprises two items:
· In 2022, the Group recorded an exceptional tax charge of £15.2m
following the derecognition of the non-current asset previously held in
respect of the Group's financing company arrangements. This stemmed from the
decision by the General Court of the European Union in June 2022 confirming
the European Commission's earlier decision that the UK's Group Financing
Exemption constituted partial illegal state aid. Following a favourable
judgement of the European Court of Justice in favour of the UK on 19 September
2024, regulations have been issued (in force from 31 December 2024) requiring
HMRC to put taxpayers back in the position they would have been in had the
European Commission's Decision not been issued. Accordingly, the £15.2m
previously derecognised has been reinstated resulting in an exceptional tax
credit of £15.2m. Repayment of the tax is expected during 2025. In
conjunction with the recognition of the exceptional tax credit, the Group has
also included a contingent liability in respect of HMRC's review of the
Group's finance company's compliance with certain conditions under the UK
domestic tax rules to confirm whether the company is eligible for the benefits
of the Group Financing Exemption which were claimed in historic tax returns
(see note 22 to the financial information).
· An exceptional tax credit of £2.2m has been reflected in 2024 in
respect of the total exceptional costs of £11.9m in connection with the
refinancing of the Group's Eurobond (£5.8m) and restructuring in the Polish
home credit business (£6.1m).
In 2022 and 2023, exceptional tax charges of £5.1m and £4.0m respectively
were reflected in relation to a two-year temporary "extra profit special tax"
in Hungary. We noted in the 2023 annual report that the temporary tax had been
extended for an additional year and, therefore, a further £2m exceptional tax
charge was expected to arise in 2024. However, the tax has now been extended
into 2025 and, consequently, the "extra profit special tax" now forms part of
our pre-exceptional tax charge.
Funding and balance sheet
We continue to have a very strong balance sheet and have extended our debt
maturity profile materially in 2024.
As reported at the half year, we successfully refinanced the Group's €341m
Eurobond through a tender offer in June well ahead of its maturity. The bonds
have a coupon of 10.75% and a maturity of five and a half years. We redeemed
€274m of the old bonds with €67m remaining outstanding and maturing in
November 2025. Tender costs of £4.1m together with a £1.7m of unamortised
fees in respect of the old bonds, resulted in an exceptional cost of £5.8m.
The bonds are trading very well in secondary markets with a yield of around
8.5% - 9.0%.
In addition to the Eurobond refinancing, we secured £103m of bank facilities
during the year of which £37m was new or increased facilities. We continue to
have very strong and supportive relationships with 18 lending banks across our
businesses and this is further demonstrated by £20m of facilities already
being refinanced in early 2025.
As reported with our half year results, the Group redeemed the SEK 450m
(c.£35m) of Nordic bonds in July, some three months in advance of their
original maturity date.
The successful refinancing and bank extension process resulted in the Group
having total debt facilities of £657m at the end of December 2024, consisting
of £441m of bonds and £216m of bank facilities. Total borrowings amounted to
£524m and headroom, consisting of undrawn facilities and non-operational cash
balances, amounted to £138m. The average maturity profile of the Group's debt
facilities now stands at 3.0 years, up from 2.0 years at December 2023.
Approximately £490m of the Group's debt funding now matures beyond 2025. The
Group's current funding and cash generation supports the Group's growth plans
through to the end of 2025.
Our blended cost of funding in 2024 was 13.3%, lower than 14.0% in the prior
year. This was due to a reduction in interest rates across our markets as well
as lower costs of hedging as interest differentials narrowed, offset partly by
the headline rate of the new 2029 Eurobond being 100bps higher than the old
2025 bond. Approximately 30% of our debt facilities are at variable rates
compared with 20% of our revenues, which are subject to interest-linked rate
caps. We expect the Group's funding rate to be broadly stable in 2025 as the
higher cost of the 2029 Eurobond is offset by the impact of the downward trend
in interest rates.
Following the successful refinancing of the Eurobond, Fitch upgraded the
Group's long-term credit rating from BB- to BB with the outlook remaining
Stable. Our credit rating from Moody's Investment Services remained unchanged
at Ba3 (Outlook Stable).
At the end of December, the Group's equity to receivables ratio was 54% (2023:
56%), compared with our target of 40%. Despite strong capital generation, we
have seen a 2 ppt reduction in the ratio in 2024 due to the successful
completion of the £15m share buyback programme in the second half of the year
as well as foreign exchange losses of £57m taken to reserves, primarily due
to the weakening of the Mexican Peso (c.20%) and Hungarian forint (c.10%). Our
strong capital position supports: (i) the Group's ambitious growth plans; (ii)
our intention to commence a further share buyback programme of up to £15m;
and (iii) the Group's progressive dividend policy through to the point at
which we are delivering our target returns and operating in line with our
financial model in 2027.
The Group's gearing ratio was 1.2 times (2023: 1.1 times) at the end of the
year, comfortably within our covenant limit of 3.75 times, and our interest
cover covenant was 2.6 times (2023: 2.5 times), compared with our covenant
limit of 2.0 times.
International Personal Finance plc
Consolidated income statement for the year ended 31 December
2024 2023
Notes £m £m
Revenue 4 726.3 767.8
Impairment 4 (127.5) (169.4)
Revenue less impairment 598.8 598.4
Interest expense 5 (70.4) (76.9)
Other operating costs (135.1) (128.7)
Administrative expenses (308.1) (308.9)
Total costs (513.6) (514.5)
Profit before taxation and exceptional items 4 85.2 83.9
Exceptional items 9 (11.9) -
Profit before taxation 73.3 83.9
Tax income/(expense)
- UK 0.2 0.7
- Overseas (30.0) (32.6)
Tax expense before exceptional items 6 (29.8) (31.9)
Exceptional tax income/(expense) 6, 9 17.4 (4.0)
Total tax expense (12.4) (35.9)
Profit after taxation attributable to owners of the Company
60.9 48.0
Earnings per share - statutory
2024 2023
Notes pence Pence
Basic 7 27.3 21.5
Diluted 7 25.9 20.2
Earnings per share - before exceptional items
2024 2023
Notes pence Pence
Basic 7 24.9 23.2
Diluted 7 23.5 21.9
The notes to the financial information are an integral part of this
consolidated financial information.
Consolidated statement of comprehensive income for the year ended 31
December
2024 2023
£m £m
Profit after taxation attributable to owners of the Company 60.9 48.0
Other comprehensive (expense)/income
Items that may subsequently be reclassified to income statement:
Exchange losses/gains on foreign currency translations (57.3) 22.8
Net fair value (losses)/gains - cash flow hedges (0.4) 0.1
Tax credit on items that may be reclassified 0.1 -
Items that will not subsequently be reclassified to income statement:
Actuarial (losses)/gains on retirement benefit obligation (2.0) 3.9
Tax credit/(charge) on items that will not be reclassified 0.5 (1.0)
Other comprehensive (expense)/income net of taxation (59.1) 25.8
Total comprehensive income for the year attributable to owners of the Company
1.8 73.8
The notes to the financial information are an integral part of this
consolidated financial information.
Balance sheet as at 31 December
2024 2023
Notes £m £m
Assets
Non-current assets
Goodwill 10 22.6 23.6
Intangible assets 11 37.1 32.3
Property, plant and equipment 12 14.0 16.0
Right-of-use assets 13 17.7 21.7
Amounts receivable from customers 15 245.6 203.3
Deferred tax assets 14 106.7 131.7
Retirement benefit asset 18 4.4 6.1
448.1 434.7
Current assets
Amounts receivable from customers 15 624.4 689.6
Derivative financial instruments 17 2.6 2.9
Cash and cash equivalents 27.6 42.5
Other receivables 22.9 16.0
Current tax assets 16.1 3.3
693.6 754.3
Total assets 1,141.7 1,189.0
Liabilities
Current liabilities
Borrowings 16 (92.8) (52.2)
Derivative financial instruments 17 (1.6) (4.4)
Trade and other payables (125.1) (132.9)
Provisions for liabilities and charges 19 (2.8) -
Lease liabilities 13 (8.1) (8.3)
Current tax liabilities (6.0) (7.3)
(236.4) (205.1)
Non-current liabilities
Deferred tax liabilities 14 (4.1) (7.1)
Lease liabilities 13 (11.8) (15.3)
Borrowings 16 (423.1) (459.6)
(439.0) (482.0)
Total liabilities (675.4) (687.1)
Net assets 466.3 501.9
Equity attributable to owners of the Company
Called-up share capital 22.5 23.4
Other reserve (22.5) (22.5)
Foreign exchange reserve (25.3) 32.0
Hedging reserve (0.1) 0.2
Own shares (24.9) (36.7)
Capital redemption reserve 3.2 2.3
Retained earnings 513.4 503.2
Total equity 466.3 501.9
The notes to the financial information are an integral part of this
consolidated financial information.
Statement of changes in equity
Called-up share capital
£m Other reserve Other reserves* Retained Total equity
earnings
£m £m £m
£m
At 1 January 2023 23.4 (22.5) (31.7) 476.0 445.2
Comprehensive income:
Profit after taxation for the year - - - 48.0 48.0
Other comprehensive income/(expense):
Exchange gains on foreign currency translation - - 22.8 - 22.8
Net fair value gains - cash flow hedges - - 0.1 - 0.1
Actuarial gain on retirement benefit obligation - - - 3.9 3.9
Tax charge on other comprehensive income - - - (1.0) (1.0)
Total other comprehensive income - - 22.9 2.9 25.8
Total comprehensive income for the year - - 22.9 50.9 73.8
Transactions with owners:
Share-based payment adjustment to reserves - - - 4.3 4.3
Deferred tax on share-based payment transactions - - - 0.5 0.5
Shares acquired by employee trust - - (0.4) - (0.4)
Shares granted from treasury and employee trust - - 7.0 (7.0) -
Dividends paid to Company shareholders - - - (21.5) (21.5)
At 31 December 2023 23.4 (22.5) (2.2) 503.2 501.9
At 1 January 2024 23.4 (22.5) (2.2) 503.2 501.9
Comprehensive income:
Profit after taxation for the year - - - 60.9 60.9
Other comprehensive (expense)/income:
Exchange losses on foreign currency translation - - (57.3) - (57.3)
Net fair value losses - cash flow hedges - - (0.4) - (0.4)
Actuarial losses on retirement benefit obligation - - - (2.0) (2.0)
Tax credit on other comprehensive expense - - 0.1 0.5 0.6
Total other comprehensive expense - - (57.6) (1.5) (59.1)
Total comprehensive (expense)/income for the year - - (57.6) 59.4 1.8
Transactions with owners:
Share-based payment adjustment to reserves - - - 2.9 2.9
Acquisition of own shares (0.9) - 0.9 (15.1) (15.1)
Share acquired by employee trust - - (1.3) - (1.3)
Shares granted from treasury and employee trust - - 13.1 (13.1) -
Dividends paid to Company shareholders - - - (23.9) (23.9)
At 31 December 2024 22.5 (22.5) (47.1) 513.4 466.3
* Includes foreign exchange reserve, hedging reserve, capital redemption
reserve and amounts paid to acquire shares held in treasury and by employee
trust.
Cash flow statement for the year ended 31 December 2024 2023
£m £m
Cash flows from operating activities
Cash generated from operating activities 114.1 193.4
Finance costs paid (72.3) (74.5)
Finance income received 1.3 -
Income tax paid (18.3) (33.1)
Net cash generated from operating activities 24.8 85.8
Cash flows from investing activities
Purchases of intangible assets (17.8) (17.9)
Purchases of property, plant and equipment (6.4) (4.7)
Proceeds from sale of property, plant and equipment 0.1 -
Net cash used in investing activities (24.1) (22.6)
Net cash generated from operating and investing activities 0.7 63.2
Cash flows from financing activities
Proceeds from borrowings 313.2 48.1
Repayment of borrowings (273.5) (87.3)
Principal elements of lease payments (12.2) (12.0)
Acquisition of own shares (15.1) -
Shares acquired by employee trust (1.3) (0.4)
Cash received on share options exercised 0.2 0.4
Dividends paid to Company shareholders (23.9) (21.5)
Net cash used in financing activities (12.6) (72.7)
Net decrease in cash and cash equivalents (11.9) (9.5)
Cash and cash equivalents at beginning of year 42.5 50.7
Exchange (losses)/gains on cash and cash equivalents (3.0) 1.3
Cash and cash equivalents at end of year 27.6 42.5
1. Basis of preparation
The financial information, which comprises the consolidated income statement,
statement of comprehensive income, balance sheet, statement of changes in
equity, cash flow statement and related notes, is derived from the full Group
Financial Statements for the year ended 31 December 2024, which have been
prepared in accordance with International Financial Reporting Standards
('IFRSs') and those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. It does not constitute full Financial Statements within
the meaning of section 434 of the Companies Act 2006.
Statutory Financial Statements for the year ended 31 December 2023 have been
delivered to the Registrar of Companies and those for 2024 will be delivered
following the Company's annual general meeting. The auditor has reported on
those Financial Statements: its reports were unqualified, did not draw
attention to any matters by way of emphasis and did not contain statements
under s498 (2) or (3) of the Companies Act 2006.
The directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period of not less than 12
months from the date of this report. Accordingly, they continue to adopt the
going concern basis in preparing this financial information (see note 24 for
further details).
The accounting policies used in completing this financial information have
been consistently applied in all periods shown. These accounting policies are
detailed in the Group's Financial Statements for the year ended 31 December
2024 which can be found on the Group's website (www.ipfin.co.uk
(http://www.ipfin.co.uk) ).
The following amendments to standards are mandatory for the first time for
the financial year beginning 1 January 2024 but do not have any material
impact on the Group:
· Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: 'Disclosures: Supplier Finance Arrangements'
· Amendments to IFRS 16 Leases: 'Lease Liability in a Sale and
Leaseback'
· Amendments to IAS 1 Presentation of Financial Statements:
Non-current Liabilities with Covenants
The following standards, interpretations and amendments to existing standards
are not yet effective and have not been early adopted by the Group:
· IFRS 18 'Presentation and Disclosure in Financial Statements'
· IFRS 19 'Subsidiaries without Public Accountability: Disclosures'
· Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial
Instruments: 'Disclosures: Classification and Measurement of Financial
Instruments'
Exceptional items
Exceptional items are items that are unusual because of their size, nature or
incidence and which the directors consider should be disclosed separately to
enable a full understanding of the Group's underlying results.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Consolidated Financial Statements requires the Group to
make estimates and judgements that affect the application of policies and
reported accounts.
Critical judgements represent key decisions made by management in the
application of the Group accounting policies. Where a significant risk of
materially different outcomes exists due to management assumptions or sources
of estimation uncertainty, this will represent a critical accounting estimate.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates.
The estimates and judgements which have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities are
discussed below.
Key sources of estimation uncertainty
In the application of the Group's accounting policies, the directors are
required to make estimations that have a significant impact on the amounts
recognised and to make estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The following are the critical estimations, that the directors have made in
the process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the Financial Statements.
Revenue recognition
The estimate used in respect of revenue recognition is the methodology used to
calculate the effective interest rate (EIR). In order to determine the EIR
applicable to loans an estimate must be made of the expected life of each loan
and hence the cash flows relating thereto. These estimates are based on
historical data and are reviewed regularly. Based on a 3% variation in the EIR
(2023: 3%), it is estimated that the amounts receivable from customers would
be higher/lower by £9.6m (2023: £9.7m). This sensitivity is based on
historic fluctuations in EIRs.
Amounts receivable from customers
The Group reviews its portfolio of customer loans and receivables for
impairment on a weekly or monthly basis. The Group reviews the most recent
repayments performance to determine whether there is objective evidence which
indicates that there has been an adverse effect on expected future cash flows.
For the purposes of assessing the impairment of customer loans and
receivables, customers are categorised into stages based on days past due as
this is considered to be the most reliable predictor of future payment
performance. The level of impairment is calculated using historical payment
performance to generate both the estimated expected loss and also the timing
of future cash flows for each agreement. The expected loss is calculated using
probability of default (PD) and loss given default (LGD) parameters.
Recurring post-model overlays on amounts receivable from customers
Impairment models are monitored regularly to test their continued capability
to predict the timing and quantum of customer repayments in the context of the
recent customer payment performance. The models used typically have a strong
predictive capability reflecting the relatively stable nature of the business
and therefore the actual performance does not usually vary significantly from
the estimated performance. The models are ordinarily updated at least twice
per year. Where the models are expected to show an increase in the expected
loss or a slowing of the future cashflows in the following 12 months, an
adjustment is applied to the models. At 31 December 2024, this adjustment was
a reduction in receivables of £7.9m (2023: reduction of £9.0m).
Post model overlays (PMOs) on amounts receivable from customers
2024 Hungary Poland non-interest
Cost-of-living moratorium PMO
PMO PMO £m Total PMOs
£m
£m
£m
Home credit 6.7 1.1 - 7.8
IPF Digital 1.8 - - 1.8
Group 8.5 1.1 - 9.6
2023 Hungary Poland non-interest
Cost-of-living moratorium PMO
PMO PMO £m Total PMOs
£m
£m
£m
Home credit 11.9 2.1 6.0 20.0
IPF Digital 3.2 - - 3.2
Group 15.1 2.1 6.0 23.2
The second half of 2024 and early 2025 has been characterised by global market
volatilities including various elections, notably the US election and
resultant policy of high tariffs, as well as the ongoing wars in Ukraine and
the Middle East. It is likely that these factors will impact customer
repayment behaviour. A full assessment of the impact of the global economic
volatility has been performed and concluded that it is likely to result in
increased risks across both the home credit and IPF Digital businesses. PMOs
have been established and based on management's current expectations the
impact of these PMOs was to increase impairment provisions at 31 December 2024
by a further £8.5m (2023: £15.1m). The reduction in the year reflects strong
credit quality and operational execution as well as an improvement in
inflation rates in the Group's markets. In order to calculate this PMO,
country-specific expert knowledge, informed by economic forecast data to
estimate the increase in losses, has been used. This represents management's
current assessment the impact that the global economic volatility may have on
the Group's customer receivables, however given the levels of uncertainty in
this area, the impact (if any) may be greater or lower than the amount
determined.
The Hungarian debt moratorium, which initially began in March 2020, ended in
December 2022. There remains a small proportion of the portfolio that has at
some point been in the moratorium. Given the age of these loans, PMOs have
been applied to the impairment models in order to calculate the continued
risks that are not fully reflected in the standard impairment models. Based on
management's current expectations, the impact of these PMOs was to increase
impairment provisions at 31 December 2024 by £1.1m (2023: £2.1m). In order
to calculate the PMO, the portfolio was segmented by analysis of the most
recent payment performance and, using this information, assumptions were made
around expected credit losses. This represents management's current assessment
of a reasonable outcome from the actual repayment performance on the debt
moratorium impacted portfolio.
In late February 2024, we received a letter from the KNF issued to all
regulated lenders operating in the Polish credit card market setting out its
current expectations on how charging practices for credit cards should be
subject to limits on non-interest costs, the need to differentiate between
different costs charged by credit card issuers which are subject to caps and
those fees which are not subject to a cap and lastly how issuers should
approach more broadly the question of calculating and assessing fees which are
not subject to specific legal limits. Based on the expectations set out in the
letter, management performed an assessment of the expected future cashflows
from the Polish credit card receivables book at the 31 December 2023 and
determined that a PMO of £6.0m was necessary. This represented management's
best estimate of a reasonable outcome after discounting the expected cashflows
at the original effective interest rate. For the 2024 amounts receivable from
customers, this change in pricing has been built into the underlying
calculation, and hence no PMO is required.
Accounting for credit card receivables
As at December 2024, the Group does not yet have sufficient historical credit
card data in order to fully calculate an expected loss provision for the
credit card receivables portfolio. The credit card receivables portfolio is
behaving similarly to the instalment loan portfolio in Poland, and
consequently some parameters from the instalment loan portfolio have been used
to calculate an expected loss provision and value the credit card receivables
portfolio. Based on a 10% variation in expected loss parameters, it is
estimated that the amounts receivable from customers would be higher/lower by
£1.4m.
Tax
Estimations must be exercised in the calculation of the Group's tax provision,
in particular with regard to the existence and extent of tax risks.
Deferred tax assets arise from timing differences between the accounting and
tax treatment of revenue and impairment transactions and tax losses.
Estimations must be made regarding the extent to which timing differences
reverse and an assessment must be made of the extent to which future profits
will be generated to absorb tax losses. A shortfall in profitability compared
to current expectations may result in future adjustments to deferred tax asset
balances.
Alternative performance measures
In reporting financial information, the Group presents alternative performance
measures (APMs), which are not defined or specified under the requirements of
IFRS.
The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information on the performance of the business. The APMs
are consistent with how the business performance is planned and reported
within the internal management reporting to the Board. Some of these measures
are also used for the purpose of setting remuneration targets.
Each of the APMs, used by the Group are set out on in the APM section of this
report, including explanations of how they are calculated and how they can be
reconciled to a statutory measure where relevant.
The Group reports percentage change figures for all performance measures,
other than profit or loss before taxation and earnings per share, after
restating prior year figures at a constant exchange rate. The constant
exchange rate, which is an APM, retranslates the previous year measures at the
average actual periodic exchange rates used in the current financial year.
These measures are presented as a means of eliminating the effects of exchange
rate fluctuations on the year-on-year reported results.
The Group makes certain adjustments to the statutory measures in order to
derive APMs where relevant. The Group's policy is to exclude items that are
considered to be significant in both nature and/or quantum and where treatment
as an adjusted item provides stakeholders with additional useful information
to assess the year-on-year trading performance of the Group.
2. Principal risks and uncertainties
In accordance with the Companies Act 2006, a description of the principal
risks and uncertainties (and the mitigating factors in place in respect of
these) is included below. Effective management of risks, uncertainties and
opportunities is critical to our business in order to deliver long-term
shareholder value and protect our people, assets and reputation. We manage
risk strategically using the enterprise risk management (ERM) methodology.
This enables us to identify, evaluate, manage, monitor and report on a wide
range of risks, uncertainties and opportunities across the Group in an
integrated way. Risk appetite is a core consideration within our ERM approach
and plays an important role in addressing the Group's key risks effectively.
The way we implement risk management also supports our understanding and
ability to address our capacity to sustain risk over time, ensure risks are
considered in decision-making across the Group and enable the Board to perform
its supervisory role.
Risk environment
↑ Risk environment improving
↔ Risk environment remains stable
↓ Risk environment worsening
1. Credit risk ↔
The risk of the Group suffering financial loss if our customers fail to meet
their contracted repayment obligations; or the Group fails to optimise
profitable business opportunities because of our credit, collection or fraud
strategies and processes.
Impact
Consumer appetite for borrowing remained robust despite the uncertain economic
landscape. Inflation and cost-of-living impacts on affordability improved over
the course of 2024 supporting strong customer repayment behaviour. The
transformation of our business in Poland to offer credit cards has been well
executed and the credit performance remained in line with our expectations.
The granting of a full payment institution licence in Poland will enable
accelerated growth in 2025. Overall, Group credit losses were in line with our
plan for the year. The impairment rate at the end of 2024 was 9.6%, within our
risk appetite and below our target range of 14% to 16%.
How it is managed
- Detailed, regular monitoring of customer repayments to identify
specific issues.
- Detailed analysis and enhancement of our credit scorecards and
Credit Policy to ensure they remain optimal.
- Tightening of lending rules as necessary, to protect customers and the
quality of the portfolio.
- Regular assessment of the external macroeconomic environment,
regulatory landscape and competitor activities.
- Ensuring repayments and arrears management activities remain a key part
of customer representative and field management incentive schemes.
2. Future legal and regulatory development risk (previously regulatory risk)
↔
The risk that the Group suffers loss as a result of new, or a change in,
existing legislation or regulation.
Impact
The second Consumer Credit Directive (CCD II), entered into force in November
2023 and EU member states are required to transpose CCD II into their national
laws by 20 November 2025, with the Directive becoming fully applicable from 20
November 2026. From January 2024, the Komisja Nadzoru Finansowego (KNF)
assumed supervision of all non-bank financial institutions in Poland,
including our home credit and digital businesses in this market. In response
to KNF requirements on credit card pricing, we introduced a new pricing
structure for all new credit cards in March 2024. We also secured a full
payment institution licence in Poland. In November 2024, a total cost of
credit cap came into force in Romania, the impact of which is not expected to
be material on the Group. We strengthened our operational risk management
framework to meet the Digital Operational Resilience Act (DORA) and enhanced
sustainability reporting to meet the requirements of the Corporate
Sustainability Reporting Directive (CSRD).
How it is managed
- Horizon-scanning, monitoring political, legislative and regulatory
developments and risks.
- Engagement with regulators, legislators, politicians and other
stakeholders.
- Active participation in relevant sector associations.
- Contingency plans in place for significant regulatory changes.
3. Funding, liquidity, market and counterparty risk ↑
The risk of insufficient availability of funding, unfavourable pricing, or
that performance is impacted significantly by interest rate or currency
movements, or failure of a banking counterparty.
Impact
Despite an uncertain macroeconomic backdrop, we refinanced the Group's €341m
Eurobond in June 2024, ahead of its maturity in November 2025. This
strengthened the Group's funding position and led to Fitch Ratings upgrading
IPF's credit rating to BB from BB- Outlook Stable. We also have a long-term
rating of Ba3 (Outlook Stable) from Moody's Investor Services. The blended
cost of funding reduced in 2024 as interest rates in our markets fell and
hedging costs decreased as interest differentials narrowed. We expect the
funding rate in 2025 to remain at a similar level. Weaker foreign exchange
rates, particularly the Mexican peso and Hungarian forint, impacted
sterling-denominated returns.
How it is managed
- Board-approved policies require us to maintain a resilient funding
position with a good level of headroom on undrawn bank facilities, appropriate
hedging of market risk, and appropriate limits to counterparty risk.
- Compliance with these policies is monitored on a monthly basis by the
Group's Treasury Committee which is chaired by the Chief Financial Officer.
- The Board receives a comprehensive funding and liquidity overview as
part of the Chief Financial Officer's report.
- The Group's funding and liquidity is managed centrally by the Group
Treasurer and qualified treasury personnel.
- The Group sets cash management controls for operating markets that are
subject to independent annual testing.
4. Reputation risk ↔
Risk of reputational damage due to our methods of operation, ill-informed
comment, malpractice, fines or activities of some of our competition.
Impact
The financial sector remained under scrutiny and faced challenges in the
run-up to elections in several of our markets. We maintain strong
relationships with key stakeholders to enhance their understanding of our
business model, purpose and societal role, as well as how we deliver services
to our customers. We also engage with customers to ensure continued access to
credit and offer repayment support when appropriate. Additionally, we
contribute to best practices in lending by participating in various
associations to support fair treatment of customers across the industry. Our
working practices are subject to tight control and oversight to ensure our
products and services are in line with legislation and customer expectations.
This helps protect the business from unforeseen events that could damage our
reputation. In 2024, we received awards recognising our business as a top
employer, our high standards of customer experience and for being a socially
responsible business.
How it is managed
- Clearly defined corporate values and ethical standards are
communicated throughout the organisation.
- Employees and customer representatives undertake annual ethics
e-learning training.
- Regular monitoring of key reputation drivers both internally and
externally.
- Strong oversight by the senior leadership team on reputation
challenges.
5. Taxation risk ↔
The risk of failure to comply with tax legislation or adoption of an
interpretation of the law which cannot be sustained together with the risk of
a higher future tax burden.
Impact
We continue to monitor EU and OECD developments which might be of application
to the Group on an ongoing basis. 2024 was the first year in which the Group
fell within the OECD's Pillar 2 rules. An assessment has been carried out and
it is expected that the Group will fall within the safe harbour provisions
with respect to all of the territories in which it operates and accordingly no
top-up tax is expected to arise.
For some years the Group had an Irish finance company which benefited from the
Group Financing Exemption contained in the UK's Controlled Foreign Companies
legislation. This legislation was the subject of a State Aid challenge by the
European Commission in April 2019. In September 2024 the European Commission's
Decision was annulled by a judgement of the Court of Justice of the European
Union, and amounts paid under the original State Aid challenge are now
repayable. Accordingly the Group has recognised a repayable amount of £15.2m
in its balance sheet. Further risks associated with the Group's Irish finance
company are set out in note 22.
During 2024, a number of tax audits were open across the Group, and closed
with negligible findings. This includes the long-running Mexican tax audit
relating to 2017. As at the end of 2024, the only open tax audit relates to
the Group's digital business in Mexico, for 2019.
How it is managed
- Tax strategy and policy in place.
- Qualified and experienced tax teams at Group level and in market.
- External advice taken on material tax issues in line with Tax
Policy.
- Binding rulings or clearances are obtained from authorities where
appropriate.
- Appropriate oversight at Board level over taxation matters.
6. Change management risk ↔
The risk that the Group suffers losses or fails to optimise profitable growth
resulting from change initiatives failing to deliver to agreed scope, time,
cost and quality measures, or failing to realise desired benefits.
Impact
Effectively managing change and transformation risk is crucial for minimising
negative financial impacts, maintaining high levels of employee engagement,
and ensuring successful adaptation to evolving business needs. We continue to
manage a large and complex change agenda driven by three key factors:
- regulatory-driven change which can have a significant impact if
not addressed and prioritised;
- migration to 'Next Gen' platforms which mitigates technology
debt and end-of-life risk; and
- business-driven changes reflecting strategic priorities to
improve business performance.
In 2024, we enhanced our benefits realisation framework and further embedded
the Group's change management framework.
How it is managed
- Change management framework and monitoring process in place.
- Appropriate methods and resources used in the delivery of change
programmes.
- Continuous review of change programmes, with strong governance of
all major delivery activity including:
o alignment with Investment Appraisal Policy, owned by the finance function;
and
o a Group change capability being established in 2024, focused on synergy
and consistency across the Group, and agreeing a Group-wide approach for
oversight of change and transformation.
7. Brand and proposition risk ↔
The risk of brand perception deteriorating and failing to respond to market
trends can limit profitable growth.
Impact
There was increased competitive activity in our markets in 2024, however there
were no major new entrants serving our segment of consumers. Banks were more
willing to lend to customers with a positive repayment history and Mexico
remains an active fintech market with many new brands. While there is an
inherent risk of disruptive new business models targeting our consumer
segment, increased regulation creates barriers to entry. In response to the
competitive landscape, and consumers' expectations for quick contact and
online communication channels, we invested in technological, and customer
experience tools and processes, including mobile apps. We also expanded our
retail credit offering in Romania and Mexico, refreshed the Provident brand
and continued investment in our Creditea digital brand.
How it is managed
- Product development committees and processes in place to review
the product development roadmap, manage product risks and develop new
products.
- Product and promotions incorporate adequate risk criteria and
risk assessment protocols.
- Regular monitoring of competitors and their offerings,
advertising and share of voice in our markets.
- Strategic planning and tactical responses on competition
threats.
- Customer engagement and brand tracking surveys.
8. Technology risk ↓
The risk of failure to develop and maintain effective technology solutions.
Impact
A proactive approach to technology risk management is essential for
maintaining the currency and capabilities of the Group in an increasingly
digital landscape. In 2024, we focused on removing software components nearing
technological obsolescence to reduce the Group's potential exposure to a cyber
attack. We completed the replacement of telephony systems in our customer
service centres in European home credit with a modern omnichannel solution. We
also progressed the transition from physically-hosted data centres to a
centralised cloud environment, reducing our digital footprint and, as a
consequence, reducing the risk of potential cyber attack. In Mexico, we
upgraded to a more modern and resilient IT infrastructure to provide a more
stable and secure base to accelerate growth in the future.
How it is managed
- Ongoing reviews of partner services and relationships to ensure
effective operations.
- Enterprise architecture tooling to link apps to underlying software
components.
- Utilisation of vulnerability tools to identify gaps in our IT estate
for both retrospective remediation and proactive testing for new developments.
- Annual review to prioritise technology investment and ensure
appropriateness of the technology estate.
- Appointment of a Chief Information Security Officer.
- Engaging experienced third parties to handle security penetration
testing and security network operations.
9. People risk ↔
The risk that the achievement of the long-term Group strategy and operational
results may be compromised due to insufficient capacity (number) or capability
(quality) in the workforce, or an inability to recruit external talent, retain
key employees, or engage our people effectively.
Impact
The actions taken to align with our Next Gen strategy resulted in some
fluctuations in colleague turnover, but also led to improvements in our
organisational structures and operating processes. Additionally, our employee
value proposition and reward strategy continues to demonstrate our
effectiveness in attracting external talent. In 2024, we deepened our
investment in professional development and remain committed to retaining,
developing, and engaging colleagues to minimise any impact on the customer
experience and the Group's overall performance. Robust processes are in place
to ensure effective succession planning, the identification of key leaders and
personnel, and the planning of their retention and development.
How it is managed
Our HR control environment identifies key people risks and implements controls
to mitigate them, focusing on:
- Monitoring and action: Regularly assessing key people risks and
addressing issues proactively.
- Strategic alignment: Ensuring objectives are aligned with the
Group's strategy.
Our people processes are designed to develop significant strength and depth of
talent across the Group. We also maintain the flexibility to move talent
between countries, reducing our exposure to critical roles being
under-resourced and ensuring continuity in key areas.
10. Information security and cyber risk ↓
The risk that the Group suffers loss, theft or corruption of information
leading to breaches of relevant regulation, loss of reputation, loss of
commercial advantage or other impacts on customers and colleagues. The risk
that Group infrastructure, platforms and applications are compromised or
damaged such that customers and colleagues cannot use or access our products
and services.
Impact
We are updating our information security strategy to strengthen key controls
and further enable timely detection and response to security breaches, as well
as having appropriate recovery arrangements in place. The risk is also highly
dependent on the behaviour of people, technology advancements and our ability
to upgrade end-of-service life IT systems. Globally, the emerging threat of
AI-driven cyber attacks and the increasing sophistication of cyber criminals
pose significant risks. We are strengthening web, cloud and device security,
implementing stricter network access controls, and enhancing colleague
awareness through training. The number of cyber attacks remains substantial
but we continue to defend these and strengthen our controls by implementing
technical upgrades that will help create a more modern and resilient IT
platform.
How it is managed
- Group-wide information security strategy, policy and priorities in
place.
- Board and senior management team oversight and ownership of cyber
security risk.
- Group and local security teams with core security competencies.
- Information security awareness and training conducted regularly.
- Regulatory compliance programmes to comply with emerging EU and
other regulations.
3. Related parties
The Group has not entered into any material transactions with related parties
during the year ended 31 December 2024.
4. Segmental analysis
Geographical segments
2024 2023
£m £m
Revenue
European home credit 328.2 375.9
Mexico home credit 263.8 261.6
IPF Digital 134.3 130.3
Revenue 726.3 767.8
Impairment
European home credit 8.1 35.6
Mexico home credit 92.4 96.7
IPF Digital 27.0 37.1
Impairment 127.5 169.4
Profit before taxation
European home credit 57.4 67.7
Mexico home credit 26.0 23.1
IPF Digital 17.0 8.1
Central costs* (15.2) (15.0)
Profit before taxation 85.2 83.9
*Although central costs are not classified as a separate segment in accordance
with IFRS 8 'Operating segments', they are shown separately above in order
to provide reconciliation to profit before taxation.
2024 2023
£m £m
Segment assets
European home credit 530.3 558.7
Mexico home credit 243.3 291.2
IPF Digital 281.3 260.3
UK 86.8 78.8
Total 1,141.7 1,189.0
Segment liabilities
European home credit (285.5) (289.6)
Mexico home credit (127.3) (134.3)
IPF Digital (195.1) (132.2)
UK (67.5) (131.0)
Total (675.4) (687.1)
4. Segmental analysis (continued)
2024 2023
£m £m
Expenditure on intangible assets (note 11)
European home credit - -
Mexico home credit - -
IPF Digital 5.2 5.4
UK 12.6 12.5
Total 17.8 17.9
2024 2023
£m £m
Amortisation (note 11)
European home credit - -
Mexico home credit - -
IPF Digital 4.3 4.5
UK 8.1 8.6
Total 12.4 13.1
2024 2023
£m £m
Capital expenditure (note 12)
European home credit 1.9 1.3
Mexico home credit 4.0 3.1
IPF Digital 0.3 0.3
UK 0.2 -
Total 6.4 4.7
2024 2023
£m £m
Depreciation (note 12)
European home credit 3.7 3.8
Mexico home credit 2.7 2.0
IPF Digital 0.2 0.3
UK 0.2 0.4
Total 6.8 6.5
5. Interest expense
2024 2023
£m £m
Interest payable on borrowings 69.3 74.8
Interest payable on lease liabilities 2.4 2.1
Interest income (1.3) -
Interest expense 70.4 76.9
6. Tax expense
The pre-exceptional taxation charge on the profit for 2024 is £29.8m, which
represents an effective tax rate for the year of approximately 35% (2023:
38%). The lower tax rate in 2024 reflects a number of elements, including a
reduction in the disallowable impairment in Poland partly as a result of being
a payments institution as well as the availability of additional tax
allowances on utilisation of brought forward tax losses in Mexico. We now
expect the effective tax rate on an ongoing basis to be approximately 38%,
lower than previous expectations of 40%.
The 2024 results reflect an exceptional tax credit of £17.4m (2023:
exceptional tax charge £4.0m). Further information relating to the
exceptional tax items is shown in note 9.
The Group is subject to a tax audit in respect of the Mexican digital business
(regarding 2019).
7. Earnings per share
2024 2023
pence pence
Basic EPS 27.3 21.5
Dilutive effect of awards (1.4) (1.3)
Diluted EPS 25.9 20.2
Basic earnings per share (EPS) is calculated by dividing the profit
attributable to shareholders of £60.9m (2023: £48.0m) by the weighted
average number of shares in issue during the period of 222.8m which has been
adjusted to exclude the weighted average number of shares held in treasury and
by the employee trust (2023: 223.7m).
2024 2023
pence pence
Basic pre-exceptional EPS 24.9 23.2
Dilutive effect of awards (1.4) (1.3)
Diluted pre-exceptional EPS 23.5 21.9
Basic pre-exceptional EPS is calculated by dividing the pre-exceptional profit
attributable to shareholders of £55.4m (2023: £52.0m) by the weighted
average number of shares in issue during the period of 222.8m which has been
adjusted to exclude the weighted average number of shares held in treasury and
by the employee trust (2023: 223.7m).
For diluted EPS the weighted average number of shares has been adjusted to
235.3m (2023: 237.5m) to assume conversion of all dilutive potential ordinary
share options relating to employees of the Group.
8. Dividends
Dividend per share
2024 2023
pence pence
Interim dividend 3.4 3.1
Final proposed dividend 8.0 7.2
Total dividend 11.4 10.3
Dividends paid
2024 2023
£m £m
Interim dividend of 3.4 pence per share (2023: interim dividend of 3.1 pence 7.7 6.9
per share)
Final 2023 dividend of 7.2 pence per share (2023: final 2022 dividend of 6.5 16.2 14.6
pence per share)
Total dividends paid 23.9 21.5
Reflecting the continued strong performance of the Group and our strategy to
realise the long-term growth potential of the business, the Board is pleased
to declare an 11.1% increase in the final dividend to 8.0 pence per share
(2023: 7.2 pence per share). This is in line with our progressive dividend
policy and brings the full-year dividend to 11.4 pence per share (2023: 10.3
pence per share), an increase of 10.7% compared with 2023 and represents a
pre-exceptional payout rate of 46% (2023: 44%). Subject to shareholder
approval, the 2024 final dividend will be paid on 12 May 2025 to shareholders
on the register at the close of business on 11 April 2025. The shares will be
marked ex-dividend on 10 April 2025.
9. Exceptional items
The 2024 income statement includes a net exceptional credit of £5.5m (2023:
exceptional tax loss of £4.0m) which comprises the following items:
2024 2023
£m £m
Eurobond refinance costs (5.8) -
Poland restructuring costs (6.1) -
Exceptional items pre-tax (11.9) -
Tax credit on Eurobond refinance costs 1.1 -
Tax credit on Poland restructuring costs 1.1 -
Decision of the General Court of the EU on State Aid 15.2 -
Temporary Hungarian extra profit special tax - (4.0)
Exceptional tax items 17.4 (4.0)
Exceptional items after tax 5.5 (4.0)
Further information relating to the exceptional tax items is shown in the
Taxation section of this report.
10. Goodwill
2024 2023
£m £m
Net book value at 1 January 23.6 24.2
Exchange adjustments (1.0) (0.6)
Net book value at 31 December 22.6 23.6
Goodwill is tested annually for impairment or more frequently if there are
indications that goodwill might be impaired. The recoverable amount is
determined from a value in use calculation, based on the expected cash flows
resulting from the legacy MCB business' outstanding customer receivables. The
key assumptions applied in the value in use calculation relate to the discount
rates and the cash flow forecasts used. The rate used to discount the forecast
cash flows is 12% (2023: 13%) and would need to increase to 15% for the
goodwill balance to be impaired. The cash flow forecasts arise over a 4 year
period (being the expected life of the legacy MCB business's outstanding
customer receivables) and would need to be 17% lower than currently estimated
for the goodwill balance to be impaired.
11. Intangible assets
2024 2023
£m £m
Net book value at 1 January 32.3 27.9
Additions 17.8 17.9
Impairment - (0.2)
Amortisation (12.4) (13.1)
Exchange adjustments (0.6) (0.2)
Net book value at 31 December 37.1 32.3
Intangible assets comprise computer software and are a mixture of
self-developed and purchased assets. All purchased assets have had further
capitalised development on them, meaning it is not possible to disaggregate
fully between the relevant intangible categories.
12. Property, plant and equipment
2024 2023
£m £m
Net book value at 1 January 16.0 17.3
Exchange adjustments (1.5) 0.6
Additions 6.4 4.7
Disposals (0.1) (0.1)
Depreciation (6.8) (6.5)
Net book value at 31 December 14.0 16.0
As at 31 December 2024, the Group had £5.5m of capital expenditure
commitments contracted with third parties that were not provided for (2023:
£6.7m).
13. Right-of-use assets and lease liabilities
The movement in the right-of-use assets in the period is as follows:
Right-of-use assets
2024 2023
£m £m
Net book value at 1 January 21.7 19.3
Exchange adjustments (2.2) 0.9
Additions 8.3 9.8
Modifications - 1.4
Depreciation (10.1) (9.7)
Net book value at 31 December 17.7 21.7
The recognised right-of-use assets relate to the following types of assets:
2024 2023
£m £m
Properties 8.9 11.0
Motor vehicles 8.8 10.7
Total right-of-use assets 17.7 21.7
The movement in the lease liability in the period is as follows:
Lease liability
2024 2023
£m £m
Lease liability at 1 January 23.6 21.4
Exchange adjustments (2.2) 0.9
Additions 8.3 11.2
Interest 2.4 2.1
Lease payments (12.2) (12.0)
Lease liability at 31 December 19.9 23.6
Analysed as:
Current 8.1 8.3
Non-current:
- between one and five years 11.4 13.7
- greater than five years
0.4
1.6
11.8
15.3
Lease liability at 31 December 19.9 23.6
Lease liabilities are measured at the present value of the remaining lease
payments, discounted using the rate implicit in the lease, or if that rate
cannot be readily determined, at the lessee's incremental borrowing rate. The
weighted average lessee's incremental borrowing rate applied to the lease
liabilities at 31 December 2024 was 9.9% (2023: 10.1%).
The amounts recognised in profit and loss are as follows:
2024 2023
£m £m
Depreciation on right-of-use assets 10.1 9.7
Interest expense on lease liabilities 2.4 2.1
Expense relating to leases of short-term leases 1.4 1.7
Amounts recognised in profit and loss 13.9 13.5
The total cash outflow in the year in respect of lease contracts is £12.2m
(2023: £12.0m).
14. Deferred tax assets
Deferred tax assets have been recognised in respect of tax losses and other
temporary timing differences (principally relating to recognition of revenue
and impairment) to the extent that it is probable that these assets will be
utilised against future taxable profits.
15. Amounts receivable from customers
All lending is in the local currency of the country in which the loan is
issued:
2024 2023
£m £m
Polish zloty 191.6 219.7
Czech crown 54.1 53.3
Euro 105.6 98.1
Hungarian forint 149.2 141.2
Mexican peso 205.6 229.0
Romanian leu 111.8 107.0
Australian dollar 52.1 44.6
Total receivables 870.0 892.9
Amounts receivable from customers are held at amortised cost and are equal to
the expected future cash flows receivable discounted at the average annual
effective interest rate of 99% (2023: 101%). All amounts receivable from
customers are at fixed interest rates. The average period to maturity of the
amounts receivable from customers is 13.5 months (2023: 13.2 months). As at 31
December 2024, in the Polish business, there are £57.1m (2023: £31.9m) of
undrawn granted credit card limits.
Determining an increase in credit risk since initial recognition
IFRS 9 has the following recognition criteria:
· Stage 1: Requires the recognition of 12 month expected credit losses
(the expected credit losses from default events that are expected within 12
months of the reporting date) if credit risk has not significantly increased
since initial recognition.
· Stage 2: Lifetime expected credit losses for financial instruments for
which the credit risk has increased significantly since initial recognition.
· Stage 3: Credit impaired.
When determining whether the risk of default has increased significantly since
initial recognition the Group considers both quantitative and qualitative
information based on the Group's historical experience.
The approach to identifying significant increases in credit risk is consistent
across the Group's products. In addition, as a backstop, the Group considers
that a significant increase in credit risk occurs when an asset is more than
30 days past due.
Financial instruments are moved back to stage 1 once they no longer meet the
criteria for a significant increase in credit risk.
Definition of default and credit impaired assets
The Group defines a financial instrument as in default, which is fully-aligned
with the definition of credit-impaired, when it meets one or more of the
following criteria:
· Quantitative criteria: the customer is more than 90 days past due on
their contractual payments in home credit and 60 days past due on their
contractual payments in IPF Digital.
· Qualitative criteria: indication that there is a measurable movement
in the estimated future cash flows from a group of financial assets. For
example, if prospective legislative changes are considered to impact the
repayments performance of customers.
The default definition has been applied consistently to model the PD, exposure
at default (EAD) and LGD throughout the Group's expected credit loss
calculations.
An instrument is considered to no longer be in default (i.e. to have
recovered) when it no longer meets any of the default criteria.
The breakdown of receivables by stage is as follows:
2024 Stage 1 Stage 2 Stage 3 Total net receivables
£m
£m £m £m
Home credit 443.2 56.7 119.1 619.0
IPF Digital 234.7 10.9 5.4 251.0
Group 677.9 67.6 124.5 870.0
2023 Stage 1 Stage 2 Stage 3 Total net receivables
£m
£m £m £m
Home credit 436.8 74.4 151.3 662.5
IPF Digital 213.6 10.3 6.5 230.4
Group 650.4 84.7 157.8 892.9
The Group has one class of loan receivable and no collateral is held in
respect of any customer receivables.
Gross carrying amount and loss allowance
The amounts receivable from customers includes a provision for the loss
allowance, which relates to the expected credit losses on each agreement. The
gross carrying amount is the present value of the portfolio before the loss
allowance provision is deducted. The gross carrying amount less the loss
allowance is equal to the net receivables.
2024 Stage 1 Stage 2 Stage 3 Total net receivables
£m
£m £m £m
Gross carrying amount 802.0 128.9 366.6 1,297.5
Loss allowance (124.1) (61.3) (242.1) (427.5)
Group 677.9 67.6 124.5 870.0
2023 Stage 1 Stage 2 Stage 3 Total net receivables
£m
£m £m £m
Gross carrying amount 799.7 159.5 441.9 1,401.1
Loss allowance (149.3) (74.8) (284.1) (508.2)
Group 650.4 84.7 157.8 892.9
16. Borrowing facilities and borrowings
The maturity of the Group's external bond and external bank borrowings and
facilities is as follows:
2024 2023
Borrowings Facilities Borrowings Facilities
£m £m £m £m
Repayable:
- in less than one year 92.8 170.3 52.2 98.0
- between one and two years 47.6 78.9 330.5 364.6
- between two and five years 375.5 407.7 129.1 166.1
423.1 486.6 459.6 530.7
Total borrowings 515.9 656.9 511.8 628.7
Total undrawn facilities as at 31 December 2024 were £133.4m (2023:
£112.2m), excluding £7.6m unamortised arrangement fees and issue discount
(2023: £4.7m).
17. Derivative financial instruments
At 31 December 2024 the Group had an asset of £2.6m and a liability of £1.6m
(2023: £2.9m asset and £4.4m liability) in respect of foreign currency
contracts. Foreign currency contracts are in place to hedge foreign currency
cash flows. Where these cash flow hedges are effective, in accordance with
IFRS, movements in their fair value are taken directly to reserves.
18. Retirement benefit asset
The amounts recognised in the balance sheet in respect of the retirement
benefit obligation are as follows:
2024 2023
£m £m
Diversified growth funds 3.1 1.6
Corporate bonds 8.4 7.6
Equities 3.5 0.9
Liability driven investments 10.7 19.7
Other 0.6 0.6
Total fair value of scheme assets 26.3 30.4
Present value of funded defined benefit obligations (21.9) (24.3)
Net asset recognised in the balance sheet 4.4 6.1
The credit recognised in the income statement in respect of defined benefit
pension costs is £0.3m (2023: £0.1m).
19. Provisions for liabilities and charges
The Group has £2.8m payable to employees outstanding at 31 December 2024
relating to the exceptional item (see note 9) following the restructure
exercise in Poland earlier in the year.
20. Fair values of financial assets and liabilities
IFRS 13 requires disclosure of fair value measurements of derivative financial
instruments by level of the following fair value measurement hierarchy:
· Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1);
· Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2); and
· Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
With the exception of derivatives, which are held at fair value, amounts
receivable from customers, and bonds, the carrying value of all other
financial assets and liabilities (which are short-term in nature) is
considered to be a reasonable approximation of their fair value. Details of
the significant assumptions made in determining the fair value of amounts
receivable from customers and bonds are included below, along with the fair
value of other Group assets and liabilities.
Except as detailed in the following table, the carrying value of financial
assets and liabilities recorded at amortised cost, which are all short-term in
nature, are a reasonable approximation of their fair value:
2024 2023
Carrying value Carrying value
Fair value Fair
value
£m £m £m £m
Financial assets
Amounts receivable from customers
1,124.5 870.0 1,139.3 892.9
1,124.5 870.0 1,139.3 892.9
Financial liabilities
Bonds 468.2 433.4 420.8 428.2
Bank borrowings 82.5 82.5 83.6 83.6
550.7 515.9 504.4 511.8
The fair value of amounts receivable from customers has been derived by
discounting expected future cash flows (as used to calculate the carrying
value of amounts due from customers), net of collection costs, at the Group's
weighted average cost of capital which we estimate to be 12% (2023: 13%) which
is assumed to be a proxy for the discount rate that a market participant would
use to price the asset.
Under IFRS 13 'Fair value measurement', receivables are classed as level 3 as
their fair value is calculated using future cash flows that are unobservable
inputs.
The fair value of the bonds has been calculated by reference to their market
value where market prices are available.
The carrying value of bank borrowings is deemed to be a good approximation of
their fair value. Bank borrowings can be repaid within six months if the Group
decides not to roll over for further periods up to the contractual repayment
date. The impact of discounting would therefore be negligible.
Derivative financial instruments are held at fair value which is equal to the
expected future cash flows arising as a result of the derivative transaction.
For other financial assets and liabilities, which are all short-term in
nature, the carrying value is a reasonable approximation of their fair value.
21. Reconciliation of profit after taxation to cash generated from operating
activities
2024 2023
£m £m
Profit after taxation from operations 60.9 48.0
Adjusted for:
Tax charge 12.4 35.9
Finance costs 71.7 76.9
Finance income (1.3) -
Share-based payment charge 1.7 2.7
Depreciation of property, plant and equipment (note 12) 6.8 6.5
Loss on disposal of property, plant and equipment (note 12) - 0.1
Depreciation of right-of-use assets (note 13) 10.1 9.7
Amortisation of intangible assets (note 11) 12.4 13.1
Impairment of intangible assets (note 11) - 0.2
Short term and low value lease costs (note 13) 1.4 1.7
Changes in operating assets and liabilities:
Increase in amounts receivable from customers (58.8) (3.8)
(Increase)/decrease in other receivables (10.4) 0.9
Increase in trade and other payables 7.6 4.8
Change in provisions 2.8 (4.7)
Change in retirement benefit asset (0.3) (0.1)
(Decrease)/increase in derivative financial instrument liabilities (2.9) 1.5
Cash generated from operating activities 114.1 193.4
22. Contingent liabilities
In December 2020 HMRC initiated a review of the Group's finance company's
compliance with certain conditions under the UK domestic tax rules to confirm
whether the company is eligible for the benefits of the Group Financing
Exemption which it has claimed in its historic tax returns. IPF believes that
all conditions have been complied with and have sought legal advice with
regard to the interpretation of the relevant legislative condition. The legal
advice confirmed IPF's view and assessed that, in the event that HMRC were to
take the matter to Tribunal, it is more likely than not that the company would
succeed in defending its position. In the unexpected event that HMRC were to
conclude that the company is not in compliance with the conditions and to
pursue the matter in Tribunal, and won, the amount at stake for all open years
is £8.8 million. It is of note that although HMRC issued a protective
Discovery Assessment with respect to 2016, so far no actual challenge has been
made to the company's filing position and HMRC have simply requested
information.
Other legal actions and regulatory matters
In addition, in the course of its business the Group is subject to other
complaints and threatened or actual legal proceedings (including class or
group action claims) brought by or on behalf of current or former employees,
customer representatives, customers, investors or other third parties. This
extends to legal and regulatory challenges and investigations (including
relevant consumer bodies) combined with tax authorities taking a view that is
different to the view the Group has taken on the tax treatment in its tax
returns. Where material, such matters are periodically reassessed, with the
assistance of external professional advisers where appropriate, to determine
the likelihood of the Group incurring a liability. In those instances where it
is concluded that it is more likely than not that a payment will be made, a
provision is established based on management's best estimate of the amount
required at the relevant balance sheet date. In some cases, it may not be
possible to form a view, for example because the facts are unclear or because
further time is needed to assess properly the merits of the case, and no
provisions are held in relation to such matters. In these circumstances,
specific disclosure in relation to a contingent liability will be made where
material. However, the Group does not currently expect the final outcome of
any such case to have a material adverse effect on its financial position,
operations or cash flows.
23. Average and closing foreign exchange rates
The table below shows the average exchange rates for the relevant reporting
periods and closing exchange rates at the relevant period ends.
Average Closing Average Closing
2024 2024 2023 2023
Polish zloty 5.1 5.2 5.2 5.0
Czech crown 29.6 30.4 27.9 28.5
Euro 1.2 1.2 1.1 1.2
Hungarian forint 466.9 496.9 437.3 441.3
Mexican peso 23.0 26.0 21.9 21.5
Romanian leu 5.9 6.0 5.7 5.7
Australian dollar 1.9 2.0 1.9 1.9
The £57.3m exchange loss (2023: gain of £22.8m) on foreign currency
translations shown within the statement of comprehensive income arises on
retranslation of net assets denominated in currencies other than sterling, due
to the change in foreign exchange rates against sterling between December 2023
and December 2024 shown in the table above.
24. Going concern
In considering whether the Group is a going concern, the Board has taken into
account the Group's 2025 business plan and its principal risks (with
particular reference to macroeconomic and regulatory risks). The forecasts
have been prepared for the two years to 31 December 2026 and include projected
profit and loss, balance sheet, cashflows, borrowings, headroom against debt
facilities and funding requirements. These forecasts represent the best
estimate of the Group's expected performance, and in particular the evolution
of customer lending and repayments cashflows.
The financial forecasts have been stress tested in a range of downside
scenarios to assess the impact on future profitability, funding requirements
and covenant compliance. The scenarios reflect the crystallisation of the
Group's principal risks, with particular reference to macroeconomic and
regulatory risks. Consideration has also been given to multiple risks
crystallising concurrently and the availability of mitigating actions that
could be taken to reduce the impact of the identified risks. In addition, we
examined a reverse stress test on the financial forecasts to assess the extent
to which a macroeconomic scenario would need to impact our operational
performance in order to breach a covenant. This showed that net revenue would
need to deteriorate significantly from the financial forecast and the
Directors have a reasonable expectation that it is unlikely to deteriorate to
this extent.
At 31 December 2024, the Group had £138m of non-operational cash and headroom
against its debt facilities (comprising a range of bonds and bank facilities),
which have a weighted average maturity of 3.0 years. The total debt facilities
as at 31 December 2024 amounted to £657m of which £170m (including £35m
which is uncommitted) is due for renewal over the following 12 months. A
combination of these debt facilities, the embedded business flexibility in
respect of cash generation and a successful track record of accessing funding
from debt capital markets over a long period (including periods with
challenging macroeconomic conditions and a changing regulatory environment,
tested in both 2020 and 2022), are expected to meet the Group's funding
requirements for the foreseeable future (12 months from the date of approval
of this report). Taking these factors into account, together with regulatory
risks set out in note 2, the Board has a reasonable expectation that the Group
has adequate resources to continue in operation for the foreseeable future.
For this reason, the Board has adopted the going concern basis in preparing
this full-year financial report.
Responsibility statement
This statement is given pursuant to Rule 4 of the Disclosure Guidance and
Transparency Rules.
It is given by each of the directors as at the date of this report, namely:
Stuart Sinclair, Chair; Gerard Ryan, Chief Executive Officer; Gary Thompson,
Chief Financial Officer; Katrina Cliffe, Senior independent non-executive
director; Deborah Davis, non-executive director; Richard Holmes, non-executive
director and Aileen Wallace, non-executive director.
To the best of each director's knowledge:
a) the financial information, prepared in accordance with the
IFRSs, give a true and fair view of the assets, liabilities, financial
position and profit of the Company and the undertakings included in the
consolidation taken as a whole; and
b) the management report contained in this report includes a fair
review of the development and performance of the business and the position of
the Company and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and uncertainties
that they face.
Alternative performance measures
This financial report provides alternative performance measures (APMs) which
are not defined or specified under the requirements of International Financial
Reporting Standards. We believe these APMs provide readers with important
additional information on our business. To support this we have included a
reconciliation of the APMs we use, where relevant, and a glossary indicating
the APMs that we use, an explanation of how they are calculated and why we use
them.
APM Closest equivalent Reconciling items to Definition and purpose
statutory measure statutory measure
Income statement measures
Customer lending growth at constant exchange rates (%) None Not applicable Customer lending is the principal value of loans advanced to customers and is
an important measure of the level of lending in the business. Customer lending
growth is the period-on-period change in this metric which is calculated by
retranslating the previous year's customer lending at the average actual
exchange rates used in the current financial year. This ensures that the
measure is presented having eliminated the effects of exchange rate
fluctuations on the period-on-period reported results.
Closing net receivables growth at constant exchange rates (%) None Not applicable Closing net receivables growth is the period-on-period change in closing net
receivables which is calculated by retranslating the previous year's closing
net receivables at the closing actual exchange rate used in the current
financial year. This ensures that the measure is presented having eliminated
the effects of exchange rate fluctuations on the period-on-period reported
results.
Revenue growth at None Not applicable The period-on-period change in revenue which is calculated by retranslating
the previous year's revenue at the average actual exchange rates used in the
constant exchange current financial year. This measure is presented as a means of eliminating
the effects of exchange rate fluctuations on the period-on-period reported
rates (%) results.
Revenue yield (%) None Not applicable Revenue yield is reported revenue divided by average gross receivables (before
impairment provision) and is an indicator of the return being generated from
average gross receivables.
Impairment rate (%) None Not applicable Impairment as a percentage of average gross receivables (before impairment
provision) and represents a measure of credit quality that is used across the
business.
Cost-income ratio (%) None Not applicable The cost-income ratio is costs, including customer representatives'
commission, excluding interest expense, divided by reported revenue. This is
useful for comparing performance across markets.
Alternative performance measures (continued)
APM Closest equivalent Reconciling items to Definition and purpose
statutory measure statutory measure
Balance sheet and returns measures
Equity to receivables ratio (%) None Not applicable Total equity divided by amounts receivable from customers. This is a measure
of balance sheet strength and the Group targets a ratio of around 40%.
Headroom (£m) Undrawn Not applicable Calculated as the sum of undrawn external bank facilities and non-operational
cash.
external bank
facilities
Net debt (£m) None Not applicable Borrowings less cash.
Gross receivables (£m) Net customer receivables Not applicable Gross receivables is the same definition as gross carrying amount as per note
15.
Impairment coverage ratio None Not applicable Expected loss allowance divided by gross receivables (before impairment
provision).
Pre-exceptional RoE (%) None Not applicable Return on equity (RoE) calculated as annual pre-exceptional profit after tax
divided by average net assets over the same period.
Pre-exceptional RoRE (%) None Not applicable Return on required equity (RoRE) is calculated as annual pre-exceptional
profit after tax divided by required equity of 40% of average net receivables.
Other measures
Customers None Not applicable Customers that are being served by our customer representatives or through our
money transfer product in the home credit business and customers that are not
in default in our digital business.
Constant exchange rate reconciliations
2024
£m European home credit Mexico IPF Digital Central costs Group
home credit
Customers (000) 725 680 247 - 1,652
Average gross receivables 706.0 306.9 314.6 - 1,327.5
Closing net receivables 459.6 159.4 251.0 - 870.0
Customer lending 662.1 289.2 263.2 - 1,214.5
Revenue 328.2 263.8 134.3 - 726.3
Impairment (8.1) (92.4) (27.0) - (127.5)
Net revenue 320.1 171.4 107.3 - 598.8
Interest expense (37.6) (14.4) (18.3) (0.1) (70.4)
Costs (225.1) (131.0) (72.0) (15.1) (443.2)
Profit/(loss) before tax 57.4 26.0 17.0 (15.2) 85.2
2023 performance, at 2023 average foreign exchange rates
£m European home credit Mexico home credit IPF Digital Central costs Group
Customers (000) 754 716 230 - 1,700
Average gross receivables 791.1 299.4 298.4 - 1,388.9
Closing net receivables 475.4 187.1 230.4 - 892.9
Customer lending 601.7 302.8 246.1 - 1,150.6
Revenue 375.9 261.6 130.3 - 767.8
Impairment (35.6) (96.7) (37.1) - (169.4)
Net revenue 340.3 164.9 93.2 - 598.4
Interest expense (47.4) (12.1) (17.3) (0.1) (76.9)
Costs (225.2) (129.7) (67.8) (14.9) (437.6)
Profit/(loss) before tax 67.7 23.1 8.1 (15.0) 83.9
Foreign exchange movements
£m European home credit Mexico home credit IPF Digital Central costs Group
Average gross receivables (16.1) (16.6) (7.3) - (40.0)
Closing net receivables (29.3) (32.3) (16.9) - (78.5)
Customer lending (13.6) (17.7) (6.7) - (38.0)
Revenue (7.2) (15.2) (3.7) - (26.1)
Impairment 0.2 6.1 1.5 - 7.8
Net revenue (7.0) (9.1) (2.2) - (18.3)
Interest expense 0.9 0.7 0.4 - 2.0
Costs 3.7 6.5 1.2 - 11.4
(2.4) (1.9) (0.6) - (4.9)
Constant exchange rate reconciliations (continued)
2023 performance, restated at 2024 average foreign exchange rates
£m European home credit Mexico IPF Digital Central costs Group
home credit
Average gross receivables 775.0 282.8 291.1 - 1,348.9
Closing net receivables 446.1 154.8 213.5 - 814.4
Customer lending 588.1 285.1 239.4 - 1,112.6
Revenue 368.7 246.4 126.6 - 741.7
Impairment (35.4) (90.6) (35.6) - (161.6)
Net revenue 333.3 155.8 91.0 - 580.1
Interest expense (46.5) (11.4) (16.9) (0.1) (74.9)
Costs (221.5) (123.2) (66.6) (14.9) (426.2)
Year-on-year movement at constant exchange rates
European home credit Mexico IPF Digital Central costs Group
home credit
Average gross receivables (8.9%) 8.5% 8.1% - (1.6%)
Closing net receivables 3.0% 3.0% 17.6% - 6.8%
Customer lending 12.6% 1.4% 9.9% - 9.2%
Revenue (11.0%) 7.1% 6.1% - (2.1%)
Impairment 77.1% (2.0%) 24.2% - 21.1%
Net revenue (4.0%) 10.0% 17.9% - 3.2%
Interest expense 19.1% (26.3%) (8.3%) - 6.0%
Costs (1.6%) (6.3%) (8.1%) (1.3%) (4.0%)
Balance sheet and returns measures
Average gross receivables (before impairment provisions) are used in the
revenue yield and impairment rate calculations.
Average gross receivables
2024 2023
£m £m
European home credit 706.0 791.1
Mexico home credit 306.9 299.4
IPF Digital 314.6 298.4
Group 1,327.5 1,388.9
The impairment coverage ratio is calculated as loss allowance divided by gross
carrying amount.
Impairment coverage ratio
2024 2023
£m £m
Closing gross carrying amount 1,297.5 1,401.1
Loss allowance (427.5) (508.2)
Closing net receivables 870.0 892.9
Impairment coverage ratio 32.9% 36.3%
Pre-exceptional return on equity (RoE) is calculated as annual pre-exceptional
profit after tax divided by pre-exceptional equity.
Pre-exceptional RoE
2024 2023 2022
£m £m £m
Equity (net assets) 466.3 501.9 445.2
Exceptional items (5.5) 4.0 (10.5)
Pre-exceptional equity 460.8 505.9 434.7
Average pre-exceptional equity 483.4 470.3
Profit after tax 60.9 48.0
Exceptional items (5.5) 4.0
Pre-exceptional profit after tax 55.4 52.0
Pre-exceptional RoE 11.5% 11.1%
Return on required equity (RoRE) is calculated as annual pre-exceptional
profit after tax divided by required equity of 40% of average net receivables.
Pre-exceptional RoRE 2024 European home credit Mexico IPF Digital Group
home credit
£m £m £m £m
Closing net receivables 2024 459.6 159.4 251.0 870.0
Closing net receivables 2023 475.4 187.1 230.4 892.9
Average net receivables 467.5 173.3 240.7 881.5
Equity (net assets) at 40% 187.0 69.3 96.3 352.6
Pre-exceptional profit before tax 57.4 26.0 17.0 85.2
Tax at 35% (20.1) (9.1) (6.0) (29.8)
Pre-exceptional profit after tax 37.3 16.9 11.0 55.4
Pre-exceptional RoRE 19.9% 24.4% 11.4% 15.7%
Pre-exceptional RoRE 2023 European home credit Mexico IPF Digital
home credit Group
£m £m £m £m
Closing net receivables 2023 475.4 187.1 230.4 892.9
Closing net receivables 2022 496.3 158.5 214.0 868.8
Average net receivables 485.8 172.8 222.2 880.8
Equity (net assets) at 40% 194.3 69.1 88.9 352.3
Pre-exceptional profit before tax 67.7 23.1 8.1 83.9
Tax at 38% (25.7) (8.8) (3.1) (31.9)
Pre-exceptional profit after tax 42.0 14.3 5.0 52.0
Pre-exceptional RoRE 21.6% 20.7% 5.6% 14.8%
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