REG - Manx Financial Group - Final accounts for the year ended 31 December 2024
Wed 10:00
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RNS Number : 3527O Manx Financial Group PLC 25 June 2025
Manx Financial Group PLC
(the "Group")
Report and accounts for the year ended 31 December 2024
Manx Financial Group PLC (LSE: MFX), the financial services group which
includes Conister Bank Limited, Conister Finance & Leasing Ltd, Payment
Assist Limited, Blue Star Business Solutions Limited, Edgewater Associates
Limited and MFX Limited presents its audited final results for the year ended
31 December 2024.
Jim Mellon, Executive Chair, commented:
"I am pleased to report another record set of results for the Group. Profit
before tax for the year increased by £2.9 million to £9.9 million - a gain
of 41%."
The 2024 Audited Annual Report and Accounts will be posted to Shareholders and
will be available from the Company's website www.mfg.im (http://www.mfg.im/)
shortly. Details concerning the 2025 Annual General Meeting will be
announced in due course.
Douglas Grant, Group Chief Executive Officer, and James Smeed, Group Finance
Director, will host a live presentation for retail investors relating to the
FY24 Results via Investor Meet Company on 27 June 2025 at 11:30am UK time.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
09:00 on 26 June or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and register to meet
Manx Financial Group PLC via:
https://www.investormeetcompany.com/manx-financial-group-plc/register-investor
(https://www.investormeetcompany.com/manx-financial-group-plc/register-investor)
.
Investors who already follow Manx Financial Group PLC on the Investor Meet
Company platform will automatically be invited.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU No. 596/2014) AS IT FORMS PART OF UK DOMESTIC LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS
SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
For further information, please contact:
Manx Financial Group PLC Beaumont Cornish Limited Tavistock Communications Limited Greentarget Limited
Denham Eke Roland Cornish/ Simon Hudson/ Jamie Brownlee
James Biddle Kuba Stawiski
Tel: +44 (0) 1624 694694 Tel: +44 (0) 20 7628 3396 Tel: +44 207 920 3150 mfg@tavistock.co.uk Tel: +44 (0) 20 3307 5726
Nominated Adviser
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.
Introduction
I am pleased to report another record set of results for the Group. Profit
before tax for the year increased by £2.9 million to £9.9 million (2023:
£7.0 million) - a gain of 41.0%. This delivered a 49.7% growth in basic
earnings per share to 6.87 pence (2023: 4.59 pence) with profit attributable
to shareholders of £8.1 million (2023: £5.3 million). Turning to the balance
sheet, loans and advances to customers increased to £372.4 million (2023:
£362.6 million) and total assets rose to £497.8 million
(2023: £480.7 million). Return on equity increased by 3.2% to 23.8% (2023:
20.6%). Further detail on the financial performance of the Group's
subsidiaries is contained in the Operating Subsidiary Review section below.
As a result, the Board will recommend returning 10.0% of the Group's profit
available to shareholders in the form of cash and/or shares. This year the
total dividend available for payment is £0.810 million (2023: £0.529
million). Thus, the amount recommended for shareholder approval will be 0.6768
pence per share (2023: 0.4553 pence per share), a 48.6% uplift, as we continue
to reward our loyal shareholders.
The material increases in operating income, profit before tax, earnings per
share and return on equity have been achieved against a background of subdued
economic activity in the Isle of Man and UK and is a testament to the
resilience of our growth strategy.
Our strategy is set and refined by making the best possible use of our sources
of competitive advantage. Chief among these is the strong and stable liquidity
base provided by our loyal depositor customers on the Isle of Man and now also
in the UK. This has allowed us to carefully grow our loan book to small and
medium sized enterprises (SME) which gives us valuable visibility of the
issues SME face in securing financing as well as gaps in the market for niche
products overlooked by our much larger peers. Our knowledge of the SME sector
has enabled us to build a portfolio of valuable subsidiaries - from start-ups
to selective and accretive acquisitions - which are creating significant value
for shareholders.
Our Isle of Man customer base is more diverse than that of the UK, with both
SME and retail customers being served. During the year, we have continued to
enhance and develop new products and entered the mortgage market for the first
time in Conister Bank Limited's 90‑year history. We continue to be a market
leader in our home territory as we strategically grow both our lending and
deposit balances.
This strong set of results demonstrates our ability to grow our portfolio and
improve earnings through prudently increasing our lending activities supported
by our access to significant deposit markets.
Operating Subsidiary Review
The Group's operating subsidiaries continued to make progress during the year
by executing their growth strategy, including launching new products and
accessing new markets, all underpinned by Conister Bank Limited's stable
access to liquidity and each operating unit's drive to deliver excellent
customer service. The figures below are as reported in each entities'
statutory accounts and are before the adjustments and eliminations undertaken
to complete the Group consolidated statutory accounts.
Payment Assist Limited
2024 2023 Movement
£'000 £'000 %
Gross profit 10,049.7 9,762.4 +2.9
Operating profit 4,718.3 2,662.9 +77.2
Operating expense (327.0) (300.0) +9.0
Profit before tax 4,391.3 2,362.9 +85.8
Equity 3,370.9 1,785.7 +88.8
Payment Assist Limited nearly doubled its profitability to £4.4 million in
the period due to improved customer acquisition (now with more than 100,000
active customers), together with improved yields and a significant one-off
release of provisions following the full integration withing the Group and an
enhancement to expected credit loss modelling and arrears management actions.
Operating costs which include impairments, were carefully managed to ensure
there was no deterioration as the lending book continued to grow.
The remaining minority interest in this company was acquired in September
2024, and with the Group now wholly owning this subsidiary, the entire profit
of the company from 2025 onwards will be attributable to our shareholders,
further supporting the dividend growth we hope to continue to deliver.
Conister Bank Limited
2024 2023 Movement
£'000 £'000 %
Gross profit 12,578.3 12,766.0 -1.5
Operating profit 17,329.3 14,927.0 +16.1
Operating expense (15,449.2) (12,434.3) +24.2
Profit before tax 1,880.1 2,492.7 -24.6
Equity 45,893.9 41,498.1 +10.6
Conister Bank Limited continues to provide the Group access to competitive and
reliable liquidity from which other subsidiaries benefit. As a result, total
assets increased to £474.1 million whilst profitability reduced to £1.9
million. The major contribution towards the increase in operating expenses was
loan impairment provisioning by £1.6 million, caused in part by the direct
funding of the Payment Assist portfolio and increase in administration
expenses by £1.9 million, caused by the continued investment in setting up
the UK Branch and setting aside a £0.2 million provision for discretionary
commission schemes.
The Bank remains very liquid, increasing cash and cash equivalents and debt
securities by £6.4 million to £91.1 million (2023: £84.7 million). Focus
remains on shorter term lending, which allows a one-year deposit to be used
multiple times and therefore driving improved liquidity efficiencies. Despite
this focus on shorter term lending, loans and advances still increased by
£6.0 million to £366.1 million (2023: £360.1 million) with deposits from
both our UK and Isle of Man licenses increasing by £14.8 million to £405.2
million (2023: £390.4 million). Total assets for the Bank have reached a
record high of £474.1 million (2023: £451.8 million).
MFX Limited
2024 2023 Movement
£'000 £'000 %
Gross profit 1,040.3 1,048.5 -0.8
Operating profit n/a n/a n/a
Operating expense (296.0) (370.9) -20.0
Profit before tax 743.7 677.6 +9.8
Equity 300.9 257.2 +17.0
Profitability increased by 9.8% to £0.7 million. The business operates at a
71.5% net profit margin due to its lean operational structure. All operating
expenses are invested in our staff to ensure that the FX division provides
high levels of care to our customers. The available equity in the company is
regularly distributed to the Group, further enhancing returns to the wider
Group.
Our FX broker continues to perform well in the current economic environment
and requires very little overhead to support. The team will seek to expand
their customer base with a complementary offering during 2025.
The Business Lending Exchange Limited
2024 2023 Movement
£'000 £'000 %
Gross profit 2,041.1 1,628.0 +25.4
Operating profit 1,592.1 1,321.0 +20.5
Operating expense (954.2) (639.8) +49.1
Profit before tax 637.9 681.2 -6.4
Equity 1,087.3 1,023.6 +6.2
Profitability reduced slightly to £0.64m due to increased provisioning seen
within this financial year, £0.4 million. This was offset by the growth in
the loan book, with total assets increasing by 7.9% to £7.6 million,
generating higher interest returns, 25.4% increase to £2.0 million and
thereby nullifying the adverse impact from credit impairments.
Our lending businesses operate within separate credit markets which provides
resilience to the Group through their diversity. The Business Lending Exchange
Limited operates in the credit broker introduced sub-prime market in which our
management team has extensive history. This business has the opportunity to
grow substantially in this economic environment.
Edgewater Associates Limited
2024 2023 Movement
£'000 £'000 %
Gross profit n/a n/a n/a
Operating profit 2,047.8 2,034.3 +0.7
Operating expense (1,660.0) (2,069.9) -19.8
Profit before tax 387.8 (35.6) +1,189.3
Equity 1,236.3 1,298.6 -4.8
This business was restructured in September 2023 and so the year under review
was the first full year post its re-structure. Ultimately, this led to £0.4
million savings in operating expenses whilst delivering on the same level of
turnover seen in the year before.
Thus, improvement has been achieved through operational efficiencies without
any detriment to the high levels of service given to our clients. Further
organic growth is anticipated in 2025, and further accretive acquisitions are
being sought.
Manx Ventures Limited
2024 2023 Movement
£'000 £'000 %
Gross profit 1,507.4 916.2 +64.5
Operating profit 1,497.5 737.5 +103.1
Operating expense (17.9) (194.9) -90.8
Profit before tax 1,515.4 932.4 +62.5
Equity 1,774.3 258.9 +585.3
Manx Ventures Limited continues to expand its investment holdings held within
the Group and this led to £1.1 million of dividend receipts in the period.
Currently, Manx Ventures Limited holds shares and options in six financial
services companies, with another one added post year-end (CAM Wealth) and
holds three more investments in other financial services companies with
warrants to acquire a greater shareholding as these companies grow.
Manx Ventures Limited continues to seek acquisition opportunities that will
continue to expand the Group's customer base, much like Payment Assist
Limited, which has clearly benefitted the Group since take‑on. It is the
company's intention to continue to invest in financial services companies,
generating dividends and investment income.
Key Objectives
The change in UK Government in May 2024 has led to an increase in public
borrowing and business taxation which has resulted in interest rates remaining
higher for longer and inflation remaining stubbornly higher than the Bank of
England's 2.0% target. Despite this, I remain cautiously optimistic in the
robustness of both the Isle of Man and the UK economy and believe we will move
to a more normalised interest rate and inflation rate environment over the
next 24 months. During this period, our key objective will continue to be to
safely grow shareholder value. Thus, our strategic focus remains unchanged,
namely to:
§ Provide the highest quality of service throughout our operations to all
customers, ensuring that their treatment is both fair and appropriate;
§ Continue adopting a pro-active strategy to managing risk, including
credit and climate risk, within a structured and compliant manner;
§ Concentrate on developing our core business by considered acquisitions,
increasing prudential lending, and augmenting the range of financial services
we offer;
§ Prudently progress the implementation of our IT infrastructure to better
service the operational requirements of a growing Group without the
requirement for a disproportionate increase in headcount and other associated
operational costs;
§ Continue to develop our Treasury management to improve the return on the
liability side of our balance sheet; and
§ Manage our balance sheet to exceed the regulatory requirements for
capital adequacy.
To continue to grow shareholder value, we will deploy our regulatory capital
in its most efficient manner by taking advantage of the opportunities this
economic and regulatory environment brings. We will continue to focus on the
SME sector with our Structured Finance offering, and on the consumer sector
with market leading, technologically driven, shorter term lending products.
This organic growth will be supported by our non-dilutive acquisition
strategy. Further details of our strategic objectives will be found in the
Corporate Governance Report, together with our observance on the QCA Code
requirements.
Environmental, Social and Corporate Governance
The Board plays a key role in supporting and challenging the Group's long-term
strategic planning. This includes the responsibility to provide effective
governance and a rigorous assessment of all risks, including climate.
The addition of new subsidiary, Payment Assist Limited, within in the
operational boundary has contributed to significant increases in absolute
scope 1 (+77%) and scope 2 (+37%) emissions in 2024.
It now accounts for over 25% of the Group's total building-energy consumption
and total scope 1 and 2 footprint and is also a key driver behind the
increases in electricity and gas consumption.
The Group's carbon footprint for 2024 will be restated in 2025 (in line with
the criteria included within the restated Green House Gas Protocol Corporate
Standard), when a more complete set of scope 1 and 2 primary activity data has
been obtained for Payment Assist Limited.
In relative terms, however, the Group's carbon intensity ratios show less
impact, with scope 1 and 2 emissions per Full Time Employee at around 5% lower
compared to 2023.
Outlook
The Group made significant progress in 2024 towards delivering its key
objectives, while maintaining a prudent approach to growth. This was achieved
despite the much-discussed challenging economic environments across the world.
But this environment will drive opportunities, for example, in the
short‑term lending space for short-term loans, such as Buy Now Pay Later,
premium finance and overdrafts. This short‑term loan sector, normally with a
term of between four and 12 months, is taking market share from the
traditional credit card market due to its little to no interest charge and its
longer repayment period. Your Group has subsidiaries, such as Payment Assist
Limited (the leading UK Buy Now Pay Later lender to the automotive industry),
Conister Bank Limited and The Business Lending Exchange Limited, who are well
placed to serve these markets.
The Group will not be immune from the findings of the Supreme Court on
discretionary commission payments whose judgement is due to be released in
July 2025 after which the FCA will announce what remediation lenders will be
required to undertake. However, the Board believe that our exposure is
limited. At the year-end Conister Bank Limited and its auditors assessed the
position as currently known and set aside £0.2 million to remedy the
position. I will be able to provide a more detailed report on this topic in my
2025 Interim statement.
Also, the Group continues to develop its offering to acquire market share in
underserved credit markets in both the UK and the Isle of Man, and in new
jurisdictions. To this end, the Group has commenced a project to obtain a
consumer credit licence in the Republic of Ireland which, longer term, will be
helpful in passporting to other credit markets within the EU as the Group
expands its reach.
Board Changes
Having loyally served the shareholders for 18 years, Alan Clarke has decided
to retire from his positions as a non-executive director of both Manx
Financial Group PLC and Conister Bank Limited, and the Chair of our Audit,
Risk & Compliance Committee and the Chair of our Remuneration Committee. I
wish to take this opportunity to thank Alan on behalf of the directors,
shareholders and, in particular, myself for all his loyal support and advice
over the years and to wish him well in whatever he decides to undertake in his
next chapter of life. The next Chairs for the Remuneration Committee and the
Audit, Risk & Compliance Committee will be communicated at the upcoming
AGM.
Thank You
Our people are at the heart of our success. On behalf of the Board, I would
like to thank all of our staff for their efforts to exceed customer
expectations and continuing to deliver value for our loyal shareholders.
Jim Mellon
Executive Chair
24 June 2025
Consolidated Statement of Profit or Loss and Other Comprehensive Income
2024 2023
For the year ended 31 December Notes £000 £000
Interest revenue calculated using the effective interest method 55,930 46,891
Interest expense (23,139) (14,530)
Net interest income 9 32,791 32,361
Fee and commission income 10 3,923 3,997
Fee and commission expense 10 (7,181) (7,327)
Net trading income 29,533 29,031
Other operating income 585 364
Gain on financial instruments 19 18 195
Realised gain on debt securities 18 4,266 1,893
Operating income 34,402 31,483
Personnel expenses 11 (12,495) (12,170)
Other expenses 12 (9,053) (6,627)
Provision for impairment on loans and advances to customers 13 (1,752) (4,135)
Depreciation 22 (949) (825)
Amortisation and impairment of intangibles 23 (340) (683)
Share of profit of equity accounted investees, net of tax 30 119 -
Profit before tax payable 14 9,932 7,043
Income tax expense 15 (1,384) (903)
Profit for the year 8,548 6,140
2024 2023
For the year ended 31 December Notes £000 £000
Profit for the year 8,548 6,140
Other comprehensive income:
Items that will be reclassified to profit or loss
Unrealised (loss)/gain on debt securities 18 (395) 324
Related tax 40 (32)
Items that will never be reclassified to profit or loss
Actuarial gain on defined benefit pension scheme taken to equity 28 67 29
Related tax (7) (3)
Other comprehensive (loss)/gain, net of tax (295) 318
Total comprehensive income for the period attributable to owners 8,253 6,458
Profit attributable to:
Owners of the Company 8,102 5,288
Non-controlling interests 32 446 852
8,548 6,140
Total comprehensive income attributable to:
Owners of the Company 7,807 5,606
Non-controlling interests 32 446 852
8,253 6,458
Earnings per share - Profit for the year
Basic earnings per share (pence) 16 6.87 4.59
Diluted earnings per share (pence) 16 5.39 3.51
Earnings per share - Total comprehensive income for the year
Basic earnings per share (pence) 16 6.62 4.86
Diluted earnings per share (pence) 16 5.20 3.71
The Directors believe that all results derive from continuing activities.
Company Statement of Profit or Loss and Other Comprehensive Income
2024 2023
For the year ended 31 December Notes £000 £000
Interest income calculated using the effective interest method 998 862
Interest expense (89) -
Dividend income 450 1,200
Other income 700 584
Operating income 2,059 2,646
Personnel expenses 11 (40) (62)
Administration expenses (74) (61)
Depreciation expense 22 (128) (63)
Amortisation expense 23 (2) (57)
Profit before tax payable 1,815 2,403
Tax payable - -
Profit for the year 1,815 2,403
Total comprehensive income for the year 1,815 2,403
The Directors believe that all results derive from continuing activities.
Consolidated Statement of Financial Position
2024 2023
As at 31 December Notes £000 £000
Assets
Cash and cash equivalents 17 16,199 12,107
Debt securities 18 79,140 76,129
Equity held at Fair Value Through Profit or Loss 33 154 138
Loans and advances to customers 20 372,358 362,653
Trade and other receivables 21 7,312 8,227
Property, plant and equipment 22 6,433 6,410
Intangible assets 23 5,301 4,268
Investment in associates 30 317 197
Goodwill 34 10,576 10,576
Total assets 497,790 480,705
Liabilities
Deposits from customers 24 405,166 390,421
Creditors and accrued charges 25 9,679 14,409
Deferred consideration 26 - 20
Loan notes 27 45,292 39,317
Pension liability 28 46 162
Deferred tax liability 15 294 392
Total liabilities 460,477 444,721
Equity
Called up share capital 29 19,626 19,384
Profit and loss account 17,632 15,544
Revaluation reserve 22 - 15
Non-controlling interest 32 55 1,041
Total equity 37,313 35,984
Total liabilities and equity 497,790 480,705
Company Statement of Financial Position
2024 2023
As at 31 December Notes £000 £000
Assets
Cash and cash equivalents 17 718 373
Trade and other receivables 21 130 123
Amounts due from Group undertakings 35 14,421 10,694
Property, plant and equipment 22 87 139
Intangible assets 23 1,983 861
Investment in subsidiaries 31 31,097 28,097
Subordinated loans 35 14,228 14,228
Total assets 62,664 54,515
Liabilities
Creditors and accrued charges 25 1,603 544
Amounts due to Group undertakings 35 - 608
Loan notes 27 45,292 39,317
Total liabilities 46,895 40,469
Equity
Called up share capital 29 19,626 19,384
Profit and loss account (3,857) (5,338)
Total equity 15,769 14,046
Total liabilities and equity 62,664 54,515
Consolidated and Company Statements of Changes in Equity
Attributable to owners of the Company
Profit Non-
Share and loss Revaluation controlling Total
capital account reserve Total interests equity
Group £000 £000 £000 £000 £000 £000
Balance as at 1 January 2023 19,195 10,371 15 29,581 189 29,770
Profit for the year - 5,288 - 5,288 852 6,140
Other comprehensive income - 318 - 318 - 318
Transactions with owners
Dividends declared (see note 29) - (342) - (342) - (433)
Scrip dividend shares (see note 29) 91 (91) - - - 91
Share issue (see note 29) 98 - - 98 - 98
Balance as at 31 December 2023 19,384 15,544 15 34,943 1,041 35,984
Profit for the year - 8,102 - 8,102 446 8,548
Other comprehensive income - (295) - (295) - (295)
Transactions with owners
Dividend declared (see note 29) - (337) - (337) (1,817) (2,154)
Scrip dividend shares (see note 29) 193 (193) - - - -
Share options exercised (see note 29) 49 - - 49 - 49
Share-based payment expense (see notes 16 and 29) - 196 - 196 - 196
Revaluation loss - - (15) (15) - (15)
Acquisition of NCI net without change of control - (5,385) - (5,385) 385 (5,000)
Balance as at 31 December 2024 19,626 17,632 - 37,258 55 37,313
Profit
Share and loss Total
capital account equity
Company £000 £000 £000
Balance as at 1 January 2023 19,195 (7,308) 11,887
Profit for the year - 2,403 2,403
Transactions with owners
Issue of share issue (see note 29) 98 - 98
Dividends declared (see note 29) - (342) (342)
Scrip dividend shares (see note 29) 91 (91) -
Balance as at 31 December 2023 19,384 (5,338) 14,046
Profit for the year - 1,815 1,815
Transaction with owners
Dividend declared (see note 29) - (337) (337)
Scrip dividend shares (see note 29) 193 (193) -
Share options exercised (see note 29) 49 - 49
Share-based payment expense (see notes 16 and 29) - 196 196
Balance as at 31 December 2024 19,626 (3,857) 15,769
Consolidated Statement of Cash Flows
2024 2023
For the year ended 31 December Notes £000 £000
Reconciliation of profit before taxation to operating cash flows
Profit before tax 9,932 7,043
Adjustments for:
Depreciation 22 949 825
Amortisation of intangibles 23 340 683
Impairment of loans and advances to customers 13 1,752 4,135
Net interest income (35,614) (34,726)
Realised gains on debt securities (4,266) (1,893)
Share of profit of Equity Accountant Investees (119) -
Lease interest 132 93
Contingent consideration interest expense 6(ii) - 4
Pension charge included in personnel expenses 28 8 11
Gain on financial instruments 19 (18) (195)
(26,904) (24,020)
Changes in:
Trade and other receivables 21 915 (4,016)
Creditors and accrued charges 25 (5,432) 1,953
Net cash flow from trading activities (31,421) (26,083)
Changes in:
Loans and advances to customers 20 (13,691) (75,590)
Deposits from customers 24 16,818 88,116
Pension contribution 28 (57) (57)
Cash used in operating activities (28,351) (13,614)
2024 2023
For the year ended 31 December Notes £000 £000
CASH FLOW STATEMENT
Cash from operating activities
Cash used in operating activities (28,351) (13,614)
Interest received 58,164 47,168
Interest paid (22,389) (14,059)
Income taxes paid (1,095) (1,337)
Net cash from operating activities 6,329 18,158
Cash flows from investing activities
Acquisition of property, plant and equipment, excluding right-of-use assets 22 (228) (1,280)
Acquisition of intangible assets 23 (1,373) (2,248)
Proceeds from sale of property, plant and equipment 22 - 759
Purchase of debt securities (860) (33,237)
Deferred consideration on acquisition of subsidiary 6(ii),26 (20) (67)
Net cash used in investing activities (2,481) (36,073)
Cash flows from financing activities
Receipt of loan notes 27 5,975 7,985
Acquisition of non-controlling interest 34 (5,000) -
Payment of lease liabilities 37 (443) (349)
Dividend paid 29 (337) (342)
Proceeds from issue of share 29 49 98
Net cash from financing activities 244 7,392
Net increase / (decrease) in cash and cash equivalents 4,092 (10,523)
Cash and cash equivalents at 1 January 12,107 22,630
Cash and cash equivalents at 31 December 16,199 12,107
Company Statement of Cash Flows
2024 2023
For the year ended 31 December Notes £000 £000
Reconciliation of profit before taxation to operating cash flows
Profit before tax 1,815 2,403
Adjustments for:
Depreciation 22 128 63
Amortisation 23 2 57
Interest income (998) (862)
RSU expense taken to reserves 196 -
Dividend income (450) (1,200)
693 461
Changes in:
Amounts due from group undertakings 35 (3,727) (787)
Trade and other receivables 21 (7) 439
Creditors and accrued charges 25 1,206 312
Amounts due to Group undertakings (608) 486
Cash (used in) /from operating activities (2,443) 911
CASH FLOW STATEMENT
Cash from operating activities
Cash (used in) / from operating activities (2,443) 911
Interest received 998 862
Dividends received 450 1,200
Net cash (used in) / from operating activities (995) 2,973
Cash flows from investing activities
Acquisition of property, plant and equipment 22 (76) (1)
Acquisition of intangible assets 23 (1,123) (893)
Issue of subordinated loans - (6,500)
Increase in investment in group undertakings (3,000) (4,500)
Net cash used in investing activities (4,199) (11,894)
Cash flows from financing activities
Proceeds from issue of loan notes 27 5,975 7,985
Payment of finance lease liabilities 37 (148) (117)
Proceeds from issue of shares 29 49 98
Dividend paid 29 (337) (433)
Net cash from financing activities 5,539 7,533
Net increase / (decrease) in cash and cash equivalents 345 (1,388)
Cash and cash equivalents at 1 January 373 1,761
Cash and cash equivalents at 31 December 718 373
Notes to the Consolidated and Company Financial Statements
For the year ended 31 December 2024
1. Reporting entity
Manx Financial Group PLC ("Company") is a company incorporated in the Isle of
Man. The Company's registered office is at Clarendon House, Victoria Street,
Douglas, Isle of Man, IM1 2LN. The consolidated financial statements of the
Company for the year ended 31 December 2024 comprise the Company and its
subsidiaries ("Group") including Conister Bank Limited (the "Bank"). The Group
is primarily involved in the provision of financial services.
The Company's financial statements are the separate financial statements of
the Company.
2. Basis of accounting
The consolidated and the separate financial statements of the Company have
been prepared in accordance with international accounting standards in
accordance with UK-adopted international accounting standards ("UK-adopted
IFRS" or "IFRSs"), on a going concern basis as disclosed in the Directors'
Report.
3. Functional and presentation currency
These financial statements are presented in pounds sterling, which is the
Company's functional currency. All amounts have been rounded to the nearest
thousand, unless otherwise indicated. All subsidiaries of the Group have
pounds sterling as their functional currency.
4. Use of judgements and estimates
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties at year-end that
have a significant risk of resulting in a material adjustment to the carrying
amounts of assets and liabilities in the next financial year is included in
the following notes:
§ Note 45(G)(vi) and Note 7(A) - key assumptions of Expected Credit Loss
("ECL") allowance for loans and advances to customers and assessment of
impairment allowances where loans are in default or arrears.
5. Financial instruments - Classification
For description of how the Group classifies financial assets and liabilities,
see note 45(G)(ii).
The following table provides reconciliation between line items in the
statement of financial position and categories of financial instruments.
FVOCI - Total
Designated debt Amortised carrying
Group as at FVTPL instruments cost amount
31 December 2024 £000 £000 £000 £000
Cash and cash equivalents - - 16,199 16,199
Debt securities - 79,140 - 79,140
Equity held at Fair Value Through Profit or Loss 154 - - 154
Loans and advances to customers - - 372,358 372,358
Trade and other receivables - - 7,312 7,312
Total financial assets 154 79,140 395,869 475,163
Deposits from customers - - 405,166 405,166
Creditor and accrued charges - - 9,679 9,679
Loan notes - - 45,292 45,292
Total financial liabilities - - 460,137 460,137
FVOCI - Total
Designated debt Amortised carrying
Group as at FVTPL instruments cost amount
31 December 2023 £000 £000 £000 £000
Cash and cash equivalents - - 12,107 12,107
Debt securities - 76,129 - 76,129
Equity held at Fair Value Through Profit or Loss 138 - - 138
Loans and advances to customers - - 362,653 362,653
Trade and other receivables - - 8,227 8,227
Total financial assets 138 76,129 382,987 459,254
Deposits from customers - - 390,421 390,421
Creditor and accrued charges - - 14,409 14,409
Deferred consideration 20 - - 20
Loan notes - - 39,317 39,317
Total financial liabilities 20 - 444,147 444,167
At 31 December 2024 and 31 December 2023, all financial instruments were
carried at amortised cost in the separate financial statements.
6. Financial instruments - Fair values
For description of the Group's fair value measurement accounting policy, see
note 44(G)(v).
The following table shows the carrying amounts and fair values of Group
financial assets and financial liabilities, including their levels in the fair
value hierarchy. It does not include fair value information for financial
assets and financial liabilities not measured at fair value if the carrying
amount is a reasonable approximation of fair value.
Carrying Fair value
amount
Total Level 1 Level 2 Level 3 Total
31 December 2024 £000 £000 £000 £000 £000
Financial assets measured at fair value
Debt securities 79,140 - 79,140 - 79,140
Equity held at Fair Value Through Profit or Loss 154 - - 154 154
79,294 - 79,140 154 79,294
Carrying Fair value
amount
Total Level 1 Level 2 Level 3 Total
31 December 2023 £000 £000 £000 £000 £000
Financial assets measured at fair value
Debt securities 76,129 - 76,129 - 76,129
Equity held at Fair Value Through Profit or Loss 138 - - 138 138
76,267 - 76,129 138 76,267
All Company financial assets and liabilities carrying amounts are reasonable
approximation of fair value.
Measurement of fair values
i. Valuation techniques and significant unobservable inputs
Type Valuation technique Significant unobservable inputs Inter-relationship between
significant unobservable inputs
and fair value measurement
Debt securities Market comparison / discounted cash flow: The fair value is estimated Not applicable. Not applicable.
considering a net present value calculated using discount rates derived from
quoted yields of securities with similar maturity and credit rating that are
traded in active markets.
Equities at Fair Value Through Profit or Loss Net asset value Expected net cash flows derived from the entity The estimated fair value would increase (decrease) if the expected cash flows
were higher (lower).
ii. Level 3 recurring fair values
Reconciliation of Level 3 fair values
The following table shows a reconciliation from the opening balances to the
closing balances for Level 3 fair values.
2024 2023
£000 £000
Balance at 1 January 20 262
Finance costs 0 4
Net change in fair value (unrealised) - (179)
20 87
Payment (note 26) (20) (67)
Balance at 31 December - 20
Sensitivity analysis
For the fair value of contingent consideration, reasonably possible changes at
the reporting date to one of the significant unobservable inputs, holding
other inputs constant would have the following effects.
Profit or loss
Increase Decrease
31 December 2024 £000 £000
Expected cash flows (10.0% movement) - -
Risk-adjusted discount rate (1.0% movement) - -
Profit or loss
Increase Decrease
31 December 2023 £000 £000
Expected cash flows (10.0% movement) 2 (2)
Risk-adjusted discount rate (1.0% movement) - -
7. Financial risk review
Risk management
This note presents information about the Group's exposure to financial risks
and the Group's management of capital. For information on the Group and
Company's financial risk management framework, see note 43.
A. Group Credit risk
For definition of credit risk and information on how credit risk is mitigated
by the Group, see note 43.
i. Credit quality analysis
Loans and advances to customers
Explanation of the terms 'Stage 1', 'Stage 2' and 'Stage 3' is included in
note 44(G)(vi).
An analysis of the credit risk on loans and advances to customers is as
follows:
Group 2024 2023
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
£000 £000 £000 £000 £000 £000 £000 £000
Grade A 327,561 3,968 - 331,529 341,953 - - 341,953
Grade B - 19,836 5,932 25,768 - 7,822 3,700 11,522
Grade C - 5 35,268 35,273 - 2 28,791 28,793
Gross value 327,561 23,809 41,200 392,570 341,953 7,824 32,491 382,268
Allowance for impairment (688) (36) (19,488) (20,212) (184) (6) (19,425) (19,615)
Carrying value 326,873 23,773 21,712 372,358 341,769 7,818 13,066 362,653
Loans are graded A to C depending on the level of risk. Grade A relates to
agreements with the lowest risk, Grade B with medium risk and Grade C relates
to agreements with the highest of risk.
The following table sets out information about the overdue status of loans and
advances to customers in Stage 1, 2 and 3:
Group 2024 2023
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
31 December £000 £000 £000 £000 £000 £000 £000 £000
Current 314,542 - - 314,542 333,740 - - 333,740
Overdue < 30 days 13,019 - - 13,019 8,213 - - 8,213
Overdue > 30 days - 19,851 45,158 65,009 - 7,824 32,491 40,315
327,561 19,851 45,158 392,570 341,953 7,824 32,491 382,268
For Stage 3 loans and advances, the Bank holds collateral with a value of
£11,982,000 (2023: £13,410,000) representing security cover of 66.0% (2023:
66.0%).
Debt securities, cash and cash equivalents
The following table sets out the credit quality of liquid assets:
Group 2024 2023
£000 £000
Government bonds and treasury bills
Rated A to A+ 79,140 76,129
Cash and cash equivalents
Rated A to A+ 16,199 12,107
Trade and other receivables
Unrated 7,312 8,227
102,651 96,463
The analysis has been based on Standard & Poor's ratings. The above debt
securities, cash and cash equivalents are considered to be Stage 1 as there is
no evidence of significant deterioration in credit quality and hence no
material expected credit loss allowance is observed.
ii. Collateral and other credit enhancements
The Group holds collateral in the form of the underlying assets (typically
private and commercial vehicles, plant and machinery) to loan arrangements as
security for HP, finances leases, vehicle stocking plans, block discounting,
wholesale funding arrangements, integrated wholesale funding arrangements and
secured commercial loan balances, which are sub-categories of loans and
advances to customers. In addition, the Group will take debentures, mortgages,
personal and corporate guarantees, fixed and floating charges on specific
assets such as cash and shares.
The terms of enforcing such security can only occur on default, and when
realised can only be used to settle the amount of debt and related collection
fees. On occasion the Bank may realise a surplus if the defaulting party loses
title to the underlying security as part of enforcement. In addition, the
commission share schemes have an element of capital indemnified.
As at 31 December 2024, 28.7% of loans and advances had an element of capital
indemnification (2023: 13.0%). At the time of granting credit within the
sub-categories listed above, the loan balances due are secured over the
underlying assets held as collateral.
At the time of granting credit within the sub-categories listed above, the
loan balances due are secured over the underlying assets held as collateral
(see note 20 for further details). Collateral is valued at the time of
borrowing, and is not individually valued at each reporting date but fair
value groups of similar collateral are considered as part of the impairment
testing model.
For portfolios where the Group has never had a default in its history or has
robust credit enhancements such as credit insurance or default indemnities for
the entire portfolio, then no IFRS 9 provision is made. At 2024 year-end,
31.0% had such credit enhancements (2023: 28.0%).
The following table sets out the principal types of collateral held against
different types of financial assets.
Group 2024 2023
% % Principal type of collateral held
HP balances 100 100 Property and equipment
Finance lease balances 100 100 Property and equipment
Unsecured personal loans - - None
Vehicle stocking plans 100 100 Motor vehicles
Wholesale funding arrangements 100 100 Floating charges over corporate assets
Block discounting 100 100 Floating charges over corporate assets
Secured commercial loans 100 100 Floating charges over corporate assets
Secured personal loans 100 100 Property
Government backed loans 70 - 100 70 - 100 Government guarantee
Property secured 100 100 Property
There have been no significant changes in the quality of collateral as a
result of a deterioration or changes to the Group's collateral policies during
the reporting period.
iii. Amounts arising from ECL
Inputs, assumptions and techniques used for estimating impairment
See accounting policy in note 45(G)(vi).
Significant increase in credit risk
When determining whether the risk of default on a financial instrument has
increased significantly since initial recognition, the Group considers
reasonable and supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Group's historical experience and
expert credit assessment and including forward looking information.
▪ A Significant Increase in Credit Risk ("SICR") is always
deemed to occur when the borrower is 30 days past due on its contractual
payments. If the Group becomes aware ahead of this time of non-compliance or
financial difficulties of the borrower, such as loss of employment, avoiding
contact with the Group then a SICR has also deemed to occur.
▪ A receivable is always deemed to be in default and
credit-impaired when the borrower is 90 days past due on its contractual
payments or earlier if the Group becomes aware of severe financial
difficulties such as bankruptcy, individual voluntary arrangements, abscond or
disappearance, fraudulent activity or other similar events.
Credit risk grades
The Group allocates each exposure to a credit risk grade based on a variety of
data that is determined to be predictive of the risk of default and applying
experienced credit judgement. Credit risk grades are defined using qualitative
and quantitative factors that are indicative of risk of default. These factors
vary depending on the nature of the exposure and the type of borrower.
Credit risk grades are defined and calibrated such that the risk of default
occurring increases exponentially as the credit risk grade deteriorates. Loans
are graded A to C depending on the level of risk. Grade A relates to
agreements with the lowest risk, Grade B with medium risk and Grade C relates
to agreements with the highest of risk.
Each exposure is allocated to a credit risk grade on initial recognition based
on available information about the borrower. Exposures are subject to ongoing
monitoring, which may result in an exposure being moved to a different credit
risk grade. The monitoring typically involves the use of the following data:
Corporate exposures Retail exposures All exposures
Information obtained during periodic review of customer files - e.g. audited Internally collected data on customer behaviour - e.g. repayment behaviour Payment record - this includes overdue status as well as a range of variables
financial statements, management accounts, budgets and projections. Examples about payment ratios
of areas of particular focus are: gross profit margins, financial leverage
ratios, debt service coverage, compliance with covenants
Data from credit reference agencies Affordability matrix Requests for and granting of forbearance
External data from credit reference agencies, including industry-standard Existing forecast changes in business, financial and economic conditions
credit scores
Definition of default
The Group considers a financial asset to be in default when:
▪ the borrower is unlikely to pay its credit obligations to the
Group in full, without recourse by the Group to actions such as realising
security (if any is held);
▪ the borrower is more than 90 days past due on any material
credit obligation to the Group; or
▪ it is becoming probable that the borrower will restructure the
asset as a result of bankruptcy due to the borrower's inability to pay its
credit obligations.
In assessing whether a borrower is in default, the Group considers indicators
that are:
▪ qualitative: e.g. breaches of covenant;
▪ quantitative: e.g. overdue status and non-payment on another
obligation of the same issuer to the Group; and
▪ based on data developed internally and obtained from external
sources.
Inputs into the assessment of whether a financial instrument is in default and
their significant may vary over time to reflect changes in circumstances. The
definition of default largely aligns with that applied by the Group for
regulatory capital purposes.
Incorporation of forward-looking information
The Group incorporates forward looking information into the measurement of
ECL.
The Group has identified and documented key drivers of credit risk and credit
losses within its financial instruments and using an analysis of historical
data, has estimated the relationship between macroeconomic variables and
credit risk and credit losses. The key drivers for credit risk for corporate,
retail and wholesale portfolios include gross domestic product (GDP) growth,
unemployment rates and consumer price index (CPI) inflation. The Group
estimates each key driver for credit risk over the active forecast period of
three years. The table below lists the UK macroeconomic assumption used in the
base scenarios over the three-year forecast period:
31 December 2024 2025 2026 2027
GDP growth rate 2.0 1.0 1.3
CPI inflation 4.2 2.4 1.8
Unemployment rate 4.8 4.9 4.9
31 December 2023 2024 2025 2026
GDP growth rate 0.5 1.0 1.3
CPI inflation 4.2 2.4 1.8
Unemployment rate 4.8 4.9 4.9
Predicted relationships between the key indicators and default and loss rates
on various portfolios of financial assets have been developed based on
analysing historical data over the past 8 years.
iv. Concentration of credit risk
Geographical
Lending is restricted to individuals and entities with Isle of Man, UK or
Channel Islands addresses.
Segmental
The Bank is exposed to credit risk with regard to customer loan accounts,
comprising HP and finance lease balances, unsecured personal loans, secured
commercial loans, block discounting, vehicle stocking plan loans and wholesale
funding agreements. In addition, the Bank lends via significant introducers
into the UK. There was one introducer that accounted for more than 14% of the
Bank's total lending portfolio at the end of 31 December 2024 (2023: 20.0%).
Advances to a single counterparty is restricted to 25% of the Bank's Large
Exposure Capital Buffer (LECB) in line with FSA direction.
B. Group Liquidity risk
For the definition of liquidity risk and information on how liquidity risk is
managed by the Group, see note 43.
i. Exposure to liquidity risk
The key measure used by the Group for managing liquidity risk is the ratio of
net liquid assets to deposits from customers and short-term funding. The Group
aims to maintain the ratio at no less than 13.7% compared to FSA requirement
of not less than 10%. For this purpose, net liquid assets includes cash and
cash equivalents and investment-grade debt securities for which there is an
active and liquid market.
Details of the reported Group ratio of net liquid assets to deposits from
customers at the reporting date and during the reporting year were as follows:
2024 2023
At 31 December 24.0% 23.0%
Average for the year 23.0% 19.0%
Maximum for the year 27.0% 23.0%
Minimum for the year 20.0% 15.0%
ii. Maturity analysis for financial liabilities and financial assets
The table below shows the Group's financial liabilities classified by their
earliest possible contractual maturity, on an undiscounted basis including
interest due at the end of the deposit term. Based on historical data, the
Group's expected actual cash flow from these items varies from this analysis
due to the expected re-investment of maturing customer deposits.
Residual contractual maturities of financial liabilities as at the reporting
date (undiscounted):
Sight- >8 days >1 month >3 months >6 months >1 year >3 years
31 December 2024 8 days - 1 month - 3 months - 6 months - 1 year - 3 years - 5 years >5 years Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Deposits 9,016 13,010 44,111 97,353 166,118 79,123 16,561 - 425,292
Other liabilities 71 204 8,073 4,246 13,657 24,402 9,719 340 60,712
Total liabilities 9,087 13,214 52,184 101,599 179,775 103,525 26,280 340 486,004
Sight- >8 days >1 month >3 months >6 months >1 year >3 years
31 December 2023 8 days - 1 month - 3 months - 6 months - 1 year - 3 years - 5 years >5 years Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Deposits 17,261 13,767 29,718 77,801 122,719 125,205 24,076 - 410,547
Other liabilities 55 257 1,407 6,395 18,997 18,188 13,108 554 58,961
Total liabilities 17,316 14,024 31,125 84,196 141,716 143,393 37,184 554 469,508
The table below shows the carrying amount of the Group's assets and
liabilities by their expected maturities.
Expected maturity of assets and liabilities at the reporting date:
Sight- >8 days >1 month >3 months >6 months >1 year >3 years
31 December 2024 8 days - 1 month - 3 months - 6 months - 1 year - 3 years - 5 years >5 years Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Assets
Cash 16,199 - - - - - - - 16,199
Debt securities 4,997 16,461 47,624 - 4,993 - 5,065 - 79,140
Loans and advances 21,559 35,642 45,541 48,415 57,042 125,667 37,316 1,176 372,358
Other assets 154 - - - 9,063 - 4,682 16,194 30,093
Total assets 42,909 52,103 93,165 48,415 71,098 125,667 47,063 17,370 497,790
Liabilities
Deposits 8,639 11,993 41,477 93,949 161,428 72,352 15,328 - 405,166
Other liabilities - - 7,600 3,597 12,427 22,002 9,345 340 55,311
Total liabilities 8,639 11,993 49,077 97,546 173,855 94,354 24,673 340 460,477
Sight- >8 days >1 month >3 months >6 months >1 year >3 years
31 December 2023 8 days - 1 month - 3 months - 6 months - 1 year - 3 years - 5 years >5 years Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Assets
Cash 12,107 - - - - - - - 12,107
Debt securities 3,499 7,976 28,275 36,379 - - - - 76,129
Loans and advances 17,720 23,854 41,805 42,293 54,800 131,666 49,445 1,070 362,653
Other assets 180 - - - 9,580 - 5,057 14,999 29,816
Total assets 33,506 31,830 70,080 78,672 64,380 131,666 54,502 16,069 480,705
Liabilities
Deposits 16,884 12,750 27,084 74,397 118,029 118,434 22,843 - 390,421
Other liabilities - 100 1,000 5,800 18,421 16,160 12,265 554 54,300
Total liabilities 16,884 12,850 28,084 80,197 136,450 134,594 35,108 554 444,721
Company
All the Company's assets (excluding Investment in subsidiaries, Property,
plant and equipment, Intangible assets, Investment in subsidiaries and
Subordinated loans) are due within one year. The Subordinated loans are due in
more than five years.
All the Company's creditors (excluding Loan notes) are due within one year.
The maturity profile £16 million of loan notes are due within one year, £27
million within 3 years and £2 million within five years.
iii. Liquidity reserves
The following table sets out the components of the Group's liquidity reserves:
2024 2024 2023 2023
Carrying Fair Carrying Fair
amount value amount value
£000 £000 £000 £000
Balances with other banks 16,199 16,199 12,107 12,107
Unencumbered debt securities 79,140 79,140 76,129 76,129
Total liquidity reserves 95,339 95,339 88,236 88,236
C. Group Market risk
For the definition of market risk and information on how the Group manages the
market risks of trading and non‑trading portfolios, see note 43.
The following table sets out the allocation of assets and liabilities subject
to market risk between trading and non-trading portfolios:
Market risk measure
Carrying Trading Non-trading
31 December 2024 amount portfolios portfolios
£000 £000 £000
Assets subject to market risk
Debt securities 79,140 - 79,140
Equity held at Fair Value Through Profit or Loss 154 - 154
Total 79,294 79,294
Market risk measure
Carrying Trading Non-trading
31 December 2023 amount portfolios portfolios
£000 £000 £000
Assets subject to market risk
Debt securities 76,129 - 76,129
Equity held at Fair Value Through Profit or Loss 138 - 138
Total 76,267 - 76,267
i. Exposure to interest rate risk
The following tables present the interest rate mismatch position between
assets and liabilities over the respective maturity dates. The maturity dates
are presented on a worst-case basis, with assets being recorded at their
latest maturity and deposits from customers at their earliest.
Sight- >1 month >3 months >6 months >1 year >3 years Non-
Interest
1 month - 3 months - 6 months - 1 year - 3 years - 5 years >5 years Bearing Total
31 December 2024 £000 £000 £000 £000 £000 £000 £000 £000 £000
Assets
Cash & cash equivalents 16,199 - - - - - - - 16,199
Debt securities 21,458 47,624 - 4,993 - 5,065 - - 79,140
Loans and advances to customers 57,201 45,541 48,415 57,042 125,667 37,316 1,176 - 372,358
Other assets - - - - - - - 30,093 30,093
Total assets 94,858 93,165 48,415 62,035 125,667 42,381 1,176 30,093 497,790
Liabilities
Deposits from customers 20,632 41,477 93,949 161,428 72,352 15,328 - - 405,166
Other liabilities - 7,600 3,597 4,540 22,002 9,345 46 8,181 55,311
Total liabilities 20,632 49,077 97,546 165,968 94,354 24,673 46 8,181 460,477
Interest rate sensitivity gap 74,226 44,088 (49,131) (103,933) 31,313 17,708 1,130 21,912 37,313
Cumulative 74,226 118,314 69,183 (34,750) (3,437) 14,271 15,401 37,313
Non-
Sight- >1 month >3 months >6 months >1 year >3 years Interest
31 December 2023 1 month - 3 months - 6 months - 1 year - 3 years - 5 years >5 years Bearing Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Assets
Cash & cash equivalents 12,107 - - - - - - - 12,107
Debt securities 11,475 28,275 36,379 - - - - - 76,129
Loans and advances to customers 41,574 41,805 42,293 54,800 131,666 49,445 1,070 - 362,653
Other assets - - - - - - - 29,816 29,816
Total assets 65,156 70,080 78,672 54,800 131,666 49,445 1,070 29,816 480,705
Liabilities
Deposits from customers 29,634 27,084 74,397 118,029 118,434 22,843 - - 390,421
Other liabilities 100 1,000 5,800 5,370 16,160 12,265 162 13,443 54,300
Total liabilities 29,734 28,084 80,197 123,399 134,594 35,108 162 13,443 444,721
Interest rate sensitivity gap 35,422 41,996 (1,525) (68,599) (2,928) 14,337 908 16,373 35,984
Cumulative 35,422 77,418 75,893 7,294 4,366 18,703 19,611 35,984 -
The Bank monitors the impact of changes in interest rates on interest rate
mismatch positions using a method consistent with the FSA required reporting
standard. The methodology applies weightings to the net interest rate
sensitivity gap in order to quantify the impact of an adverse change in
interest rates of 2% per annum (2023: 2.0%). The following tables set out the
estimated total impact of such a change based on the mismatch at the reporting
date:
Non-
Sight- >1 month >3 months >6 months >1 year >3 years Interest
1 month - 3 months - 6 months - 1 year - 3 years - 5 years >5 years Bearing Total
31 December 2024 £000 £000 £000 £000 £000 £000 £000 £000 £000
Interest rate sensitivity gap 74,226 44,088 (49,131) (103,933) 31,313 17,708 1,130 21,912 37,313
Weighting - 0.003 0.007 0.014 0.027 0.054 0.115 - -
- 132 (344) (1,455) 845 956 130 - 264
Non-
Sight- >1 month >3 months >6 months >1 year >3 years Interest
31 December 2023 1 month - 3 months - 6 months - 1 year - 3 years - 5 years >5 years Bearing Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Interest rate sensitivity gap 35,422 41,996 (1,525) (68,599) (2,928) 14,337 908 16,373 35,984
Weighting 0.000 0.003 0.007 0.014 0.027 0.054 0.115 - -
- 126 (11) (960) (79) 774 104 - (46)
The interest rate profile of the Group's interest-bearing financial
instruments as reported to the management of the Group is as follows;
2024 2023
£000 £000
Fixed-rate instruments
Financial assets 467,697 450,889
Financial liabilities 452,296 431,278
15,401 19,611
The Group does not account for any fixed-rate financial assets or liabilities
at FVTPL. A change of 1% in interest rates would have increased or decreased
equity by £306,000 (2023: £280,000). This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.
D. Group Capital Management
i. Regulatory capital
MFG and its subsidiaries maintain sufficient capital stock to cover risks
inherent in their principal operating activities. The lead regulator of the
Group's wholly owned subsidiary, the Bank, is the FSA. The FSA sets and
monitors capital requirements for the Bank. The Bank maintains a capital base
to meet the capital adequacy requirements of the FSA. There have been no
changes to its approach to capital management from the prior year.
The Bank's regulatory capital consists of the following elements.
▪ Common Equity Tier 1 ("CET1") capital, which includes ordinary
share capital, retained earnings and reserves after adjustment for deductions
for goodwill, intangible assets and intercompany receivable.
▪ Tier 2 capital, which includes collective impairment
allowances up to the level set by the FSA, subordinated loan liabilities and
gains on financial instruments carried at fair value.
The Bank's Tier 1 and Total Capital regulatory ratios stood at 12.50% (2023:
11.52%) and 17.00% (2023: 15.90%) respectively as at 31 December 2024. The
Bank complied with all capital requirements externally imposed on it in the
year with minimum Tier 1 and Overall Capital ratio of 8.73% (2023: 8.73%) and
15.29% (2023: 15.29%) respectively.
The FSA's approach to the measurement of capital adequacy is primarily based
on monitoring the relationship of the capital resources requirement to
available capital resources. The FSA sets individual capital guidance ("ICG")
for the Bank in excess of the minimum capital resources requirement. A key
input to the ICG setting process is the Bank's internal capital adequacy
assessment process ("ICAAP").
The Bank is also regulated by the FCA in the UK for credit and brokerage
related activities.
ii. Capital allocation
Management uses regulatory capital ratios to monitor its capital base. The
allocation of capital between specific operations and activities is, to a
large extent, driven by optimisation of the return achieved on the capital
allocated. The amount of capital allocated to each operation or activity is
based primarily on regulatory capital requirements.
E. Company Financial Risk Review
i. Credit risk
The Company is exposed to credit risk primarily from deposits with banks and
from its financing activities of Group entities. These balances include Trade
and other receivables, Amounts due from Group undertakings, Investment in
subsidiaries and Subordinated loans. Cash balances are held with institutions
with a credit rating of A to A+. The Group's primary credit exposure is to the
Bank. The Investment in subsidiary and subordinated loan balance
counterparties are disclosed in Notes 31 and 35 respectively. Amounts due from
Group undertakings relate to balances advanced to the Group's subsidiary (MVL)
for the acquisition of other subsidiaries including PAL, BBSL, BLX and NRF.
The Group manages its credit risk by ensuring that sufficient resources are
allocated to credit management and capital allocation and using reputable
financial institutions to hold its cash balances.
ii. Liquidity risk
The value and term of short-term assets are monitored against those of the
Company's liabilities. The Company maintains sufficient liquid assets to meet
liabilities as they fall due either by retaining Interest income from the
Subordinated loan, Dividend income from subsidiary companies or raising funds
through the issue of Loan notes. Amounts due to / from Group undertakings are
unsecured, interest-free and repayable on demand. The capital on subordinated
loan notes is repayable to the Company in more than 5 years. £16.0m
(2023:£12.3m) of loan notes are repayable within one year.
iii. Market risk
The Company does not have exposure to foreign exchange risk as transactions
are made in, and balances held in, Sterling. The Company has both
interest-bearing assets and liabilities. In order to manage interest rate
risk, the Companies Subordinated loans and Loan notes are charged exclusively
at fixed rates.
8. Operating segments
Segmental information is presented in respect of the Group's business
segments. The Directors consider that the Group currently operates in one
geographic segment comprising of the Isle of Man, UK and Channel Islands. The
primary format, business segments, is based on the Group's management and
internal reporting structure. The Directors consider that the Group operates
in three (2023: three) product orientated segments in addition to its
investing activities: Asset and Personal Finance (including provision of HP
contracts, finance leases, personal loans, commercial loans, block
discounting, vehicle stocking plans and wholesale funding agreements);
Edgewater Associates Limited (provision of financial advice); and MFX Limited
(provision of foreign currency transaction services).
Asset and
Personal Edgewater MFX Investing
For the year ended 31 December 2024 Finance Associates Limited Activities Total
£000 £000 £000 £000 £000
Interest revenue calculated using the effective interest method 55,930 - - - 55,930
Interest expense (23,044) - - (95) (23,139)
Net interest income 32,886 - - (95) 32,791
Components of Net Trading Income (6,341) 2,048 1,035 - (3,258)
Net trading income 26,545 2,048 1,035 (95) 29,533
Components of Operating Income 4,818 11 5 35 4,869
Operating Income 31,363 2,059 1,040 (60) 34,402
Depreciation (715) (23) (1) (210) (949)
Amortisation and impairment of intangibles (256) (78) (4) (2) (340)
Share of profit of equity accounted investees, net of tax 119 - - - 119
All other expenses (20,586) (1,570) (1,020) (124) (23,300)
Profit / (loss) before tax payable 9,925 388 15 (396) 9,932
Capital expenditure 401 1 - 1,199 1,601
Total assets 446,771 1,614 310 49,095 497,790
Total liabilities 428,540 377 9 31,551 460,477
Asset and
Personal Edgewater MFX Investing
For the year ended 31 December 2023 Finance Associates Limited Activities Total
£000 £000 £000 £000 £000
Interest revenue calculated using the effective interest method 45,356 - - - 45,356
Other interest income 1,535 - - - 1,535
Interest expense (14,538) - - 8 (14,530)
Net interest income 32,353 - - 8 32,361
Components of Net Trading Income (6,410) 2,032 1,048 - (3,330)
Net trading income 25,943 2,032 1,048 8 29,031
Components of Operating Income 2,450 2 - - 2,452
Operating Income 28,393 2,034 1,048 8 31,483
Depreciation (739) (22) (1) (63) (825)
Amortisation and impairment of intangibles (545) (76) (5) (57) (683)
Share of profit of equity accounted investees, net of tax - - - - -
All other expenses (20,294) (1,972) (364) (302) (22,932)
Profit / (loss) before tax payable 6,815 (36) 678 (414) 7,043
Capital expenditure 2,627 6 - 895 3,528
Total assets 438,916 1,578 267 39,944 480,705
Total liabilities 418,794 279 10 25,638 444,721
All revenues are earned from the entity's one geographic segment. All
non-current assets are located in the entity's one geographic segment.
9. Net interest income
2024 2023
£000 £000
Interest income
Loans and advances to customers 55,930 45,356
Total interest income calculated using the effective interest method 55,930 45,356
Operating lease income - 1,535
Total interest income 55,930 46,891
Interest expense
Deposits from customers (20,184) (12,072)
Loan note interest (2,823) (2,361)
Lease liability (132) (93)
Contingent consideration: interest expense - (4)
Total interest expense (23,139) (14,530)
Net interest income 32,791 32,361
10. Net fee and commission income
In the following table, fee and commission income from contracts with
customers in the scope of IFRS 15 - Revenue from Contracts with Customers is
disaggregated by major type of services. The table includes a reconciliation
of the disaggregated fee and commission income with the Group's reportable
segments. See note 45D regarding revenue recognition.
2024 2023
£000 £000
Major service lines
Independent financial advice income 2,048 2,032
Foreign exchange trading income 1,035 1,049
Asset and personal finance: Brokerage services income 267 421
Debt collection 573 495
Fee and commission income 3,923 3,997
Fee and commission expense (7,181) (7,327)
Net fee and commission income (3,258) (3,330)
Fee and commission expense relates to commission paid to Brokerages which
introduce new business to the Bank.
11. Personnel expenses
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Staff gross salaries (9,309) (9,060) - -
Executive Directors' remuneration (615) (569) - -
Non-executive Directors' fees (244) (259) (40) (62)
Executive Directors' pensions (49) (45) - -
Executive Directors' performance related pay (131) (99) - -
Staff pension costs (545) (537) - -
National insurance and payroll taxes (1,050) (1,134) - -
Staff training and recruitment costs (300) (354) - -
Equity Settled Restricted Stock Units - key management personnel (206) (67) - -
Equity Settled Restricted Stock Units - employees (46) (46) - -
(12,495) (12,170) (40) (62)
The Company's personnel expenses consist exclusively of Directors remuneration
and fees for services rendered to the Company.
12. Other expenses
2024 2023
£000 £000
Professional and legal fees (2,478) (1,586)
Marketing costs (429) (452)
IT costs (1,987) (1,534)
Establishment costs (655) (635)
Communication costs (326) (177)
Travel costs (283) (319)
Bank charges (1,394) (936)
Insurance (321) (338)
Irrecoverable VAT (492) (383)
Other costs (688) (267)
(9,053) (6,627)
13. Impairment on loans and advances to customers
The charge in respect of allowances for impairment comprises, excluding loss
allowances on financial assets managed on a collective basis.
2024 2023
£000 £000
Impairment allowances made (4,076) (6,998)
Release of allowances previously made 3,771 2,837
(305) (4,161)
The credit in respect of allowances for impairment on financial assets managed
on a collective basis comprises:
2024 2023
£000 £000
Collective impairment allowances made (1,475) (656)
Release of allowances previously made 28 682
Total charge for allowances for impairment on financial assets managed on a (1,447) 26
collective basis
Total charge for allowances for impairment (1,752) (4,135)
14. Profit before tax payable
The profit before tax payable for the year is stated after charging:
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Fees payable to the Company's auditor for the audit of the Group's financial (92) (85) 59 (58)
statements
Other fees payable to the Company's auditor: - (4) - -
Audit of the Company's subsidiary undertakings (280) (221) - -
Other assurance service fees (7) (10) - -
Other services - tax compliance (4) (4) - -
Pension cost defined benefit scheme (8) (11) - -
Expenses relating to short-term leases and low value assets (92) (81) - -
15. Income tax expense
Group 2024 2023
£000 £000
Current tax expense (1,482)
Current year (899)
(1,482) (899)
Deferred tax expense
Origination and reversal of temporary differences 98 (4)
Tax expense (1,384) (903)
Group 2024 2023
% £000 % £000
Reconciliation of effective tax rate
Profit before tax 9,932 7,043
Tax using the Bank's domestic tax rate (10.0) (993) (10.0) (704)
Effect of tax rates in foreign jurisdictions (7.1) (702) (5.9) (416)
Origination and reversal of temporary differences in deferred tax 1.0 98 3.1 217
Tax exempt income 2.2 213 - -
Nondeductible expenses - - - -
Tax expense (13.9) (1,384) (12.8) (903)
The main rate of corporation tax in the Isle of Man is 0.0% (2023: 0.0%).
However, the profits of the Group's Isle of Man banking activities are taxed
at 10.0% (2023: 10.0%). The profits of the Group's subsidiaries that are
subject to UK corporation tax are taxed at a rate of 25% (2023: 25.0%). The
Company is subject to 0.0% tax.
The value of tax losses carried forward reduced to nil and there is now a
temporary difference related to accelerated capital allowances resulting in a
£294,000 liability (2023: £392,000 liability). This resulted in a reversal
of an expense of £98,000 (2023: £4,000 expense) to the Consolidated Income
Statement.
16. Earnings per share
2024 2023
Profit for the year attributable to owners of the Company £8,101,700 £5,288,000
Weighted average number of Ordinary Shares in issue (basic) 117,923,558 115,330,589
Basic earnings per share (pence) 6.87 4.59
Diluted earnings per share (pence) 5.39 3.51
Total comprehensive income for the year attributable to owners of the Company £7,807,000 £5,606,000
Weighted average number of Ordinary Shares in issue (basic) 117,923,558 115,330,589
Basic earnings per share (pence) 6.62 4.86
Diluted earnings per share (pence) 5.20 3.71
The basic earnings per share calculation is based upon the profit for the year
after taxation and the weighted average of the number of shares in issue
throughout the year.
As at: 2024 2023
Reconciliation of weighted average number of Ordinary Shares in issue between
basic and diluted
Weighted average number of Ordinary Shares (basic) 117,923,558 115,330,589
Number of shares issued if all convertible loan notes were exchanged for 35,138,889 37,916,667
equity
Dilutive element of share options if exercised 399,352 2,460,929
Weighted average number of Ordinary Shares (diluted) 153,461,799 155,708,185
Reconciliation of profit for the year between basic and diluted
Profit for the year (basic) £8,101,700 £5,288,000
Interest expense saved if all convertible loan notes were exchanged for equity £171,415 £171,415
Profit for the year (diluted) £8,273,115 £5,459,415
The diluted earnings per share calculation assumes that all convertible loan
notes and share options have been converted / exercised at the beginning of
the year where they are dilutive.
As at: 2024 2023
Reconciliation of total comprehensive income for the year between basic and
diluted
Total comprehensive income for the year (basic) £7,807,000 £5,606,000
Interest expense saved if all convertible loan notes were exchanged for equity £171,415 £171,415
Total comprehensive income for the year (diluted) £7,978,415 £5,777,415
The weighted average number of ordinary shares and earnings per share have
been adjusted retrospectively.
17. Cash and cash equivalents
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Cash at bank and in hand 16,199 12,107 718 373
Fixed deposit (less than 90 days) - - - -
16,199 12,107 718 373
Cash at bank includes an amount of £nil (2023: £1,653,000) representing
receipts which are in the course of transmission.
18. Debt securities
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Financial assets at fair value through other
comprehensive income:
UK Government treasury bills 79,140 76,129 - -
79,140 76,129 - -
UK Government Treasury Bills are stated at fair value and unrealised changes
in the fair value are reflected in other comprehensive income. There were
realised gains of £4,266,000 (2023: £1,893,000) and unrealised loss of
£395,000 (2023: £324,000 unrealised gain) during the year.
19. Financial assets
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Financial assets at FVOCI:
Gain on deferred consideration (See note 6(ii)) - 179 - -
Gain on equity instrument 18 16 - -
18 195 - -
20. Loans and advances to customers
2024 2023
Gross Impairment Carrying Gross Impairment Carrying
Amount Allowance Value Amount Allowance Value
Group £000 £000 £000 £000 £000 £000
HP balances 115,403 (4,503) 110,900 119,533 (4,143) 115,390
Finance lease balances 23,163 (3,033) 20,130 24,878 (3,050) 21,828
Unsecured personal loans 119,209 (10,936) 108,273 88,647 (10,833) 77,814
Vehicle stocking plans 1,714 - 1,714 1,973 - 1,973
Wholesale funding arrangements 23,851 - 23,851 21,503 - 21,503
Block discounting 40,845 - 40,845 47,520 - 47,520
Secured commercial loans 30,940 (575) 30,365 25,788 (516) 25,272
Secured personal loans 901 - 901 1,075 - 1,075
Government backed loans 25,760 (1,165) 24,595 41,283 (1,073) 40,210
Property secured 10,784 - 10,784 10,068 - 10,068
392,570 (20,212) 372,358 382,268 (19,615) 362,653
Collateral is held in the form of underlying assets for HP, finance leases,
vehicles stocking plans, block discounting, secured commercial and personal
loans and wholesale funding arrangements.
Allowance for impairment 2024 2023
£000 £000
Balance at 1 January 19,426 15,962
Allowance for impairment made 4,076 6,998
Release of allowances previously made (3,771) (2,837)
Write-offs (1,155) (697)
Balance at 31 December 18,576 19,426
Collective allowance for impairment 2024 2023
£000 £000
Balance at 1 January 189 215
Collective allowance for impairment made 1,475 656
Release of allowances previously made (28) (682)
Balance at 31 December 1,636 189
Total allowances for impairment 20,212 19,615
The following table provides an explanation of how significant changes in the
gross carrying amount of financial instruments during the period contributed
to changes in loss allowance:
2024 2023
£000 £000
Loans and advances to customers
Unsecured personal loans originated during the period 5,138 5,551
The contractual amount outstanding on financial assets that were written off
during the reporting period and are still subject to enforcement activity are
£nil (2023: £nil). Advances on preferential terms are available to all
Directors, management and staff. As at 31 December 2024 £2,211,000 (2023:
£1,699,794) had been lent on this basis. In the Group's ordinary course of
business, advances may be made to Shareholders, but all such advances are made
on normal commercial terms (see note 36).
At the end of the current financial year 12 loan exposures (2023: 8) exceeded
10.0% of the capital base of the Bank:
Outstanding Outstanding Facility Facility
Balance Balance Limit Limit
Exposure 2024 2023 2024 2023
£000 £000 £000 £000
Block discounting facility 40,845 47,520 83,700 78,088
Wholesale funding agreement 23,851 21,503 26,330 26,005
HP and finance lease receivables
Loans and advances to customers include the following HP and finance lease
receivables:
2024 2023
£000 £000
Less than one year 84,500 72,372
Between one and five years 67,875 72,039
Gross investment in HP and finance lease receivables 152,375 144,411
The investment in HP and finance lease receivables net of unearned income
comprises:
2024 2023
£000 £000
Less than one year 77,007 68,767
Between one and five years 61,559 68,451
Net investment in HP and finance lease receivables 138,566 137,218
21. Trade and other receivables
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Other debtors 6,649 7,730 1 -
Prepayments 663 497 129 123
7,312 8,227 130 123
22. Property, plant and equipment and right-of-use assets
Buildings and
Leasehold IT Furniture and Motor Right-of-use
Group Improvements Equipment Equipment Vehicles(1) assets Total
£000 £000 £000 £000 £000 £000
Cost
As at 1 January 2024 838 730 5,893 217 1,960 9,638
Revaluation (30) - - - - (30)
Recognition of Right-of-use asset - - - - 836 836
Additions - 8 181 39 - 228
Disposals (393) (679) (1,158) (58) (136) (2,424)
Reclassification - 390 (390) - - -
As at 31 December 2024 415 449 4,526 198 2,660 8,248
Accumulated depreciation
As at 1 January 2024 483 553 1,489 96 607 3,228
Charge for year 38 466 60 9 376 949
Disposals (393) (679) (1,158) (58) (74) (2,362)
As at 31 December 2024 128 340 391 47 909 1,815
Carrying value at 31 December 2024 287 109 4,135 151 1,751 6,433
Carrying value at 31 December 2023 355 177 4,404 121 1,353 6,410
(1) Included in motor vehicles are operating leases with the Group as lessor.
Depreciation on leasing assets was £nil (2023: £nil).
Buildings with an original cost of £144,000 were revalued by independent
valuers Vospers Limited to £175,000 on the basis of market value as at 15
September 2021. The valuation conforms to International Valuation Standards
and was based on recent market transactions on arm's length terms for similar
properties. During the year ended 31 December 2024, an offer to buy the
building at £140,000 was received hence a revaluation loss of £35,000 has
been recorded of which £30,653 has been offset against existing reserves and
£4,347 included in administration expenses.
Leasehold IT Furniture and Right-of-use
Company Improvements Equipment Equipment assets Total
£000 £000 £000 £000 £000
Cost
As at 1 January 2024 234 21 18 424 697
Additions - - - 76 76
As at 31 December 2024 234 21 18 500 773
Accumulated depreciation
As at 1 January 2024 234 7 13 304 558
Charge for year - - 1 127 128
As at 31 December 2024 234 7 14 431 686
Carrying value at 31 December 2024 - 14 4 69 87
Carrying value at 31 December 2023 - 14 5 120 139
23. Intangible assets
Intellectual IT Software
Customer Property and Website
Contracts Rights Development Total
Group £000 £000 £000 £000
Cost
As at 1 January 2024 2,937 2,002 4,033 8,972
Additions - 72 1,301 1,373
As at 31 December 2024 2,937 2,074 5,334 10,345
Accumulated amortisation
As at 1 January 2024 1,375 741 2,588 4,704
Charge for year 95 132 113 340
As at 31 December 2024 1,470 873 2,701 5,044
Carrying value at 31 December 2024 1,467 1,201 2,635 5,301
Carrying value at 31 December 2023 1,562 1,261 1,445 4,268
IT Software
and Website
Company Development Total
£000 £000
Cost
As at 1 January 2024 925 925
Additions 1,123 1,123
As at 31 December 2024 2,048 2,048
Accumulated amortisation
As at 1 January 2024 63 63
Charge for year 2 2
As at 31 December 2024 65 65
Carrying value at 31 December 2024 1,983 1,983
Carrying value at 31 December 2023 862 862
24. Deposits from customers
2024 2023
£000 £000
Retail customers: term deposits 386,526 377,899
Corporate customers: term deposits 18,640 12,522
405,166 390,421
25. Creditors and accrued charges
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Other creditors and accruals 7,032 12,623 1,541 453
Commission creditors 333 174 - -
Lease liability 1,792 1,358 62 91
Taxation creditors 522 254 - -
9,679 14,409 1,603 544
26. Deferred consideration
Deferred consideration relates to contingent payments due to the sellers on
the acquisition of BBSL and BLX respectively.
On the acquisition of BLX on 11 October 2021, the Group agreed that a further
conditional consideration of up to £483,663 is payable to the sellers in
addition to the cash consideration paid. The total amount payable is
contingent on the recovery of certain loans and advances found to be in
default at acquisition. The fair value on acquisition date was determined to
be £387,000. The Group made a payment of £20,000 (2023: £67,000) to the
sellers during the period. The contingency period has ended and there are no
additional payments due as at 31 December 2024.
2024 2023
£000 £000
BLX - 20
- 20
27. Loan notes
Group Company
2024 2023 2024 2023
Notes £000 £000 £000 £000
Related parties
J Mellon JM 1,750 1,750 1,750 1,750
Burnbrae Limited BL 3,200 3,200 3,200 3,200
Culminant Reinsurance Ltd CR 1,000 1,000 1,000 1,000
John Spellman JS 400 - 400 -
Ian Morley IM 250 - 250 -
Alan Clarke AC 100 - 100 -
6,700 5,950 6,700 5,950
Unrelated parties UP 38,592 33,367 38,592 33,367
45,292 39,317 45,292 39,317
JM - Two loans, one loan of £1,250,000 maturing on 26 February 2025 with
interest payable of 5.4% per annum, convertible to ordinary shares of the
Company at a rate of 9.0 pence, one of £500,000 maturing on 31 July 2027,
paying interest of 7.5% per annum and convertible to ordinary shares of the
Company at a rate of 8.0 pence. The above loan with initial maturity of 26
February 2025 has been renewed with interest payable of 7.5% and a new
maturity date of 26 February 2030.
BL - Three loans, one of £1,200,000 maturing on 31 July 2027, paying interest
of 7.5% per annum, convertible to ordinary shares of the Company at a rate of
8.0 pence, one of £1,000,000 maturing 25 February 2025, paying interest of
5.4% per annum, and one of £1,000,000 maturing 28 September 2025 paying
interest of 6.0% per annum. Jim Mellon is the beneficial owner of BL and
Denham Eke is also a director. The above loan with initial maturity of 25
February 2025 has been renewed with interest payable of 7.5% and a new
maturity date of 25 February 2030.
CR - One loan consisting of £1,000,000 maturing on 12 October 2025, paying
interest of 6.0% per annum. Greg Bailey, a director, is the beneficial owner
of CR.
JS - One loan consisting of £400,000 maturing on 3 May 2029, paying interest
of 8.5% per annum.
IM - One loan consisting of £250,000 maturing on 3 June 2026, paying interest
of 8.0% per annum.
AC - Two loans consisting of £100,000 maturing on 6 May 2025, paying interest
of 7.75% per annum.
UP - Fifty-four loans (2023: Forty), the earliest maturity date was 3 February
2025, and the latest maturity is 23 August 2029. The average interest payable
is 6.71% (2023: 5.87%)
With respect to the convertible loans, the interest rate applied was deemed by
the Directors to be equivalent to the market rate at the time with no
conversion option.
28. Pension liability
The Conister Trust Pension and Life Assurance Scheme ("Scheme") operated by
the Bank is a funded defined benefit arrangement which provides retirement
benefits based on final pensionable salary. The Scheme is closed to new
entrants and the last active member of the Scheme left pensionable service in
2011.
The Scheme is approved in the Isle of Man by the Assessor of Income Tax under
the Income Tax (Retirement Benefit Schemes) Act 1978 and must comply with the
relevant legislation. In addition, it is registered as an authorised scheme
with the FSA in the Isle of Man under the Retirement Benefits Scheme Act 2000.
The Scheme is subject to regulation by the FSA but there is no minimum funding
regime in the Isle of Man.
The Scheme is governed by two corporate trustees, Conister Bank Limited and
Boal & Co (Pensions) Limited. The trustees are responsible for the
Scheme's investment policy and for the exercise of discretionary powers in
respect of the Scheme's benefits.
Exposure to risk
The Company is exposed to the risk that additional contributions will be
required in order to fund the Scheme as a result of poor experience. Some of
the key factors that could lead to shortfalls are:
▪ investment performance - the return achieved on the Scheme's
assets may be lower than expected; and
▪ mortality - members could live longer than foreseen. This
would mean that benefits are paid for longer than expected, increasing the
value of the related liabilities.
In order to assess the sensitivity of the Scheme's pension liability to these
risks, sensitivity analysis have been carried out. Each sensitivity analysis
is based on changing one of the assumptions used in the calculations, with no
change in the other assumptions. The same method has been applied as was used
to calculate the original pension liability and the results are presented in
comparison to that liability. It should be noted that in practice it is
unlikely that one assumption will change without a movement in the other
assumptions; there may also be some correlation between some of these
assumptions. It should also be noted that the value placed on the liabilities
does not change on a straight-line basis when one of the assumptions is
changed. For example, a 2.0% change in an assumption will not necessarily
produce twice the effect on the liabilities of a 1.0% change.
Exposure to risk
No changes have been made to the method or to the assumptions stress-tested
for these sensitivity analyses compared to the previous period. The investment
strategy of the Scheme has been set with regard to the liability profile of
the Scheme. However, there are no explicit asset-liability matching strategies
in place.
Restriction of assets
No adjustments have been made to the statement of financial position items as
a result of the requirements of IFRIC 14 - IAS 19: The Limit on a Defined
Benefit Asset, Minimum Funding Requirements and their Interaction, issued by
IASB's International Financial Reporting Interpretations Committee.
Scheme amendments
There have not been any past service costs or settlements in the financial
year ending 31 December 2024 (2023: none).
Funding policy
The funding method employed to calculate the value of previously accrued
benefits is the Projected Unit Method. Following the cessation of accrual of
benefits when the last active member left service in 2011, regular future
service contributions to the Scheme are no longer required. However,
additional contributions will still be required to cover any shortfalls that
might arise following each funding valuation.
The most recent triennial full actuarial valuation was carried out at 31 March
2022, which showed that the market value of the Scheme's assets was
£1,432,000 representing 65.2% of the benefits that had accrued to members,
after allowing for expected future increases in earnings. As required by IAS
19: Employee Benefits, this valuation has been updated by the actuary as at
31 December 2024.
The amounts recognised in the Consolidated Statement of Financial Position are
as follows:
Total underfunding in funded plans recognised as a liability 2024 2023
£000 £000
Fair value of plan assets 1,361 1,359
Present value of funded obligations (1,407) (1,521)
(46) (162)
Movement in the liability for defined benefit obligations 2024 2023
£000 £000
Opening defined benefit obligations at 1 January 1,521 1,526
Benefits paid by the plan (80) (77)
Interest on obligations 71 74
Actuarial gain (105) (2)
Liability for defined benefit obligations at 31 December 1,407 1,521
Movement in plan assets 2024 2023
£000 £000
Opening fair value of plan assets at 1 January 1,359 1,289
Interest on plan assets 63 63
Contribution by employer 57 57
Return on plan assets (38) 27
Benefits paid (80) (77)
Closing fair value of plan assets at 31 December 1,361 1,359
Expense recognised in income statement 2024 2023
£000 £000
Net interest cost recognised in the statement of profit and loss 8 11
Actuarial gain / (loss) recognised in other comprehensive income 2024 2023
£000 £000
Return on plan assets (38) 27
Actuarial gain on defined benefit obligations 105 2
67 29
Plan assets consist of the following 2024 2023
% %
Equity securities 44 45
Corporate bonds 18 20
Government bonds 27 28
Cash 6 2
Other 5 5
100 100
The actuarial assumptions used to calculate Scheme liabilities under IAS19 are
as follows:
2024 2023
% %
Rate of increase in pension in payment:
Service from 6 April 1997 to 13 September 2005 3.1 3.1
Service from 14 September 2005 2.1 2.1
Rate of increase in deferred pensions 5.0 5.0
Discount rate applied to scheme liabilities 5.7 5.0
Inflation 5.0 3.2
Life expectancy 2024 2023
Current pensioner aged 65 (male) 21.2 21.3
Current pensioner aged 65 (female) 23.8 23.8
Future pensioner aged 65 in 10 years (male) 21.7 21.8
Future pensioner aged 65 in 10 years (female) 24.5 24.5
The assumptions used by the actuary are best estimates chosen from a range of
possible assumptions, which due to the timescale covered, may not necessarily
be borne out in practice.
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant
actuarial assumptions, holding other assumptions constant, would have affected
the defined benefit obligation by the amounts shown below.
2024 2023
Effect in £'000 Increase Decrease Increase Decrease
Discount rate (0.5% movement) (70) 77 (76) 84
Inflation rate (0.5% movement) 18 (17) 20 (18)
Life expectancy (1 year movement) 53 (53) 58 (58)
29. Called up share capital
Ordinary shares of no par value available for issue Number
At 31 December 2024 233,388,000
At 31 December 2023 200,200,000
Issued and fully paid: Ordinary shares of no par value Number £000
At 31 December 2024 119,715,757 19,626
At 31 December 2023 116,191,936 19,384
A. Analysis of changes in financing during the year
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Balance at 1 January 60,059 52,141 58,792 50,735
Issue of loan notes 5,975 7,985 5,975 7,985
Issue of shares via scrip dividend 193 91 193 91
Issue of shares 49 98 49 98
Payment of lease liabilities (433) (256) (148) (117)
Balance at 31 December 65,843 60,059 64,861 58,792
The 2024 Group closing balance is represented by £19,626,000 share capital
(2023: £19,384,000), £42,292,000 of loan notes (2023: £39,317,000) and
£1,085,000 lease liability (2023: £1,358,000).
The 2024 Company closing balance is represented by £19,626,000 share capital
(2023: £19,384,000), £42,292,000 of loan notes (2023: £39,317,000) and
£62,000 lease liability (2023: £91,000).
B. Dividends
On 25 April 2024, MFG declared a dividend of £530,000 (2023: £433,000) which
could either be taken up in cash or new ordinary shares. 1,013,821 new shares
(2023: 418,993 new shares) were admitted to the Alternative Investment Market
("AIM") at 19 pence per share (2023: 21.8974 pence per share), at a total cost
of £193,000 (2023: £91,000).
C. Convertible loans
There are three convertible loans totaling £2,950,000 (2023: £2,950,000)
(refer to note 27).
D. Share options and Restricted Stock Units
On 5 July 2022, 27 October 2022 29 November 2023 and 16 December 2024 MFG
granted Restricted Stock Units ("RSUs") under its 2022 RSU Plan. The Group has
issued, in total, RSUs over 4,887,500 ordinary shares representing 4.08% of
the issued share capital of the Group, including 2,400,000 to certain
directors and 2,487,500 to certain employees. The RSUs issued before 2024 have
a 2-year term while those issued in 2024 will have a 3-year term and are
subject to certain vesting conditions based upon an overall growth in
profitability. Any RSUs granted will fall away should the recipient leave
employment before the 2-year or 3-year term expires. Should the individual
vesting conditions be satisfied at the end of the term, the stock will be
exercised at nil cost.
The Group directors who received RSUs are as follows:
§ Douglas Grant, Group Chief Executive Officer, was issued 1,925,000 RSUs.
On 14 November 2024, he transferred 1,631,138 Ordinary Shares of no par value
in the Company held in his own name to the Doonhamer Personal Pension Scheme
at 15.0p per share. The Doonhamer Personal Pension Scheme is a Self-Invested
Personal Pension of which Douglas Grant is the sole member and beneficiary.
Following this transfer, the total number of Ordinary Shares held by Mr Grant
remains at 2,347,904, representing 1.96% of the issued ordinary share capital
of the Company;
§ James Smeed, Group Finance Director, was issued 475,000 RSUs.
On 16 July 2024, Douglas Grant and James Smeed exercised their options and
were issued with 925,000 and 175,000 New Ordinary Shares of no par value
respectively at nil cost. The terms and conditions of the grants are as
follows: and will be settled by the physical delivery of shares.
Grant date/employees entitled Number of Units Contractual life of options
RSUs granted to key employees at 5 July 2022 1,020,000 2 years
RSUs granted to directors at 5 July 2022 1,100,000 2 years
RSUs granted to key employees at 27 October 2022 165,000 2 years
RSUs granted to directors at 27 October 2022 150,000 2 years
RSUs granted to directors at 29 November 2023 1,150,000 2 years
RSUs granted to key employees at 29 November 2023 1,102,500 2 years
RSUs granted to key employees at 16 December 2024 200,000 3 years
Total RSUs 4,887,500
Lapsed RSUs (425,000)
Exercised (2,160,000)
Remaining RSUs 2,302,500
The fair value of employee services received in return for restricted stock
units granted is based on the fair value of them measured using the
Black-Scholes formula. Service related and non-market performance conditions
were not taken into account in measuring fair value. The inputs used in
measuring the fair values at the grant of the equity-settled restricted stock
unit payment plans were as follows.
Grant at Grant at Grant at
Fair value of restricted stock units and assumptions 5 July 2022 27 October 2022 29 November 2023
Share price at grant date 8.5 pence 14.0 pence 17.5 pence
Exercise price nil nil nil
Expected volatility * ^ 55.14% 107.71% 638.12%
Expected life (weighted average) 2 years 2 years 2 years
Risk-free interest rate (based on government bonds) * ^ 1.65% 3.15% 4.43%
Forfeiture rate 0.00% 0.00% 0.00%
Fair value at grant date 8.5 pence 14.0 pence 17.5 pence
^ Based on past 3 years
* Annual rates
The expected volatility is based on both historical average share price
volatility and implied volatility derived from traded options over the group's
ordinary shares of maturity similar to those of the employee options.
The charge for the year for share options granted was £163,000 (2023:
£113,000).
The fair value of services received in return for share options granted is
based on the fair value of share options granted, measured using a binomial
probability model with the following inputs for each award:
On 26 April 2024, a Group employee exercised options over 350,000 ordinary
shares of no par value in the Company at an exercise price of 14 pence for an
aggregate consideration of £49,000.
Of the 1,750,000 share options issued, nil (31 December 2023: 350,000) remain
outstanding.
23 June 2014
Fair value at date of grant £0.08
Share price at date of grant £0.14
Exercise price £0.14
Expected volatility 55.0%
Option life 3
Risk-free interest rate (based on government bonds) 0.5%
Forfeiture rate 33.3%
30. List of associates
Set out below is a list of associates of the Group:
Group Group
2024 2023
£000 £000
Payitmonthly Ltd ("PIML") 260 155
Lesley Stephen & Co Limited ("LSC") 57 42
317 197
In August 2018, 30% of the share capital of PIML was acquired for £90,000
consideration. The Group's resulting share of the associate's total
comprehensive income during the year was £119,000 (2023: £nil).
As part of the Bank providing loan finance to LSC, on 29 June 2023 the Group
acquired 10% of its issued share capital for nil consideration. The receipt of
the issued share capital is considered to be linked to the loan facilities
financed and therefore its term and interest rate implicit in the finance
agreement have been used as the basis to discount the fair value of the gratis
shares issued.
The Group possesses the capacity to engage in policy-making processes within
LSC through its right to designate an individual to attend all board meetings
as an observer. Via its representative, the Group also holds the ability to
introduce topics for discussion on the agenda, although it does not have
voting rights in this regard. Moreover, the Group has introduced constraints
on LSC's board, effectively preventing specified significant actions from
being taken without the Group's consent. The fair value of the financial
instrument received has been determined as £42,000 at initial recognition
based on the proportionate share of the net asset value of LSC. As part of the
transaction, the Group has been granted two warrants to acquire further
shares. The first warrant is for 10% of the share capital and the second
warrant is for a further 10% of the share capital. The two warrants are
exercisable dependent upon the profit before tax achieved by LSC relative to
target profit before tax for the relevant financial period. The fair value of
the two warrants has been determined to be nil due to the significant
uncertainty that exists at acquisition date of achieving such targets. For
these reasons, the financial instrument is accounted for as an Associate in
accordance with IAS 28. The Group's resulting share of the associate's total
comprehensive income during the year was £nil (2023: £nil).
31. List of subsidiaries
Set out below is a list of direct subsidiaries of the Group:
31 December
2024 Date of 2024 2023
Carrying value of investments Nature of Business % Holding Incorporation £000 £000
Conister Bank Limited Asset and Personal Finance 100 05/12/1935 29,092 26,092
Edgewater Associates Limited Wealth Management 100 24/12/1996 2,005 2,005
TransSend Holdings Limited Holding Company 100 05/11/2007 - -
Manx Ventures Limited Holding Company 100 15/05/2009 - -
31,097 28,097
All subsidiaries are incorporated in the Isle of Man.
Set out below is a list of indirect significant subsidiaries of the Group:
Cost of Cost of
investment investment
Carrying value of investments Nature of Principal place Country of 2024 2023
business of business incorporation % Holding £000 £000
Conister Finance & Leasing Limited Asset and Personal Finance UK IOM 100.0% 1 1
MFX Limited Foreign exchange advisory IOM IOM 100.0% 1 1
Payment Assist Limited Point of Sale Lender UK UK 100.0% 9,244 4,244
Blue Star Leasing Limited SME Asset Finance UK UK 100.0% 2,275 2,275
Ninkasi Rentals & Finance Limited SME Asset Finance UK UK 90.0% 1,275 1,275
The Business Lending Exchange Limited ME Asset Lender UK UK 100.0% 2,186 2,186
32. Non-controlling interests in subsidiaries
The following table summarises the information about the Group's subsidiary
that has material NCI, before any intra-group eliminations.
31 December 2024 NRF Total
£'000
NCI percentage 10%
Cash and cash equivalents 309
Loans and advances to customers -
Trade and other receivables 1,863
Property, plant and equipment 3,725
Intangible assets 12
Loans and borrowings (547)
Creditors and accrued charges (4,569)
Deferred tax (244)
Net assets 549
Carrying amount of NCI 55 55
Revenue 1,539
Profit 20
OCI -
Total comprehensive income 20
Profit allocated to NCI 2 2
OCI allocated to NCI - -
Operating activities cashflows 40
Investing activities cashflows (151)
Financing activities cashflows
Net (decrease) in cashflows (111)
In September 2024, the Group acquired the remaining 49.9% interest in PAL,
increasing its ownership to 100%. The movement in NCI in relation to the
acquisition is explained below.
2024 2023
£000 £000
NCI brought forward (49.9%) 987 -
Pre-acquisition profits in the year 445 -
Dividends paid (1,817) -
(385) -
Carrying amount of NCI acquired (385) -
Consideration paid to NCI (5,000) -
Decrease in equity attributable to owners of the Company (5,385) -
31 December 2023 PAL NRF Total
£'000
NCI percentage 49.9% 10%
Cash and cash equivalents 1,249 369
Loans and advances to customers 15,965 -
Trade and other receivables 1,013 1,133
Property, plant and equipment - 4,275
Intangible assets 380 23
Loans and borrowings (4,036) (145)
Creditors and accrued charges (12,593) (4,884)
Deferred tax - (232)
Net assets 1,978 539
Carrying amount of NCI 987 54 1,041
Revenue 10,822 1,478
Profit 1,700 42
OCI - -
Total comprehensive income 1,700 42
Profit allocated to NCI 848 4 852
OCI allocated to NCI - - -
Operating activities cashflows 973 339
Investing activities cashflows (185) (151)
Financing activities cashflows (2,122) -
Net (decrease) / increase in cashflows (1,334) 188
33. Financial Instruments
Rivers Finance Group PLC ("RFG")
On 9 June 2021, the Group acquired 10% of the issued share capital of RFG for
nil consideration. The receipt of the issued share capital is considered to be
a commitment fee receivable by the Group in order to originate loan facilities
in aggregate not exceeding £6,250,000 to RFG. The commitment fee is an
integral part of the effective interest rate of the associated loan facilities
issued to RFG.
The Group is not considered to have a significant influence over RFG as it
holds less than a 20% shareholding and is not considered to participate in the
policy making decisions of the entity. The 10% shareholding has thus been
classified as a financial instrument.
The Group continues to obtain information necessary to measure the fair value
of the shares obtained. The fair value of the financial instrument received
has been determined as £154,000 (2023: £138,000) based on the proportionate
share of the net asset value of RFG.
As part of the transaction, the Group has been granted two warrants to acquire
further shares. The first warrant is for 5% of the share capital and the
second warrant is for a further 5% of the share capital.
The two warrants are exercisable dependent upon the Group's banking
subsidiary, the Bank, contracting with RFG, for a larger facility. The fair
value of the two warrants has been determined to be nil due to the significant
uncertainty that exists at acquisition date and the period end in issuing a
further debt facility.
34. Goodwill
Group Group Company Company
2024 2023 2024 2023
Cash generating unit £000 £000 £000 £000
PAL (see below) 4,456 4,456 4,456 4,456
EAL 1,649 1,649 1,649 1,649
BLX 1,908 1,908 1,908 1,908
BBSL 1,390 1,390 1,390 1,390
NRFL 678 678 678 678
Manx Collections Limited ("MCL") 454 454 454 454
Three Spires Insurance Services Limited ("Three Spires") 41 41 41 41
10,576 10,576 10,576 10,576
Management has determined that a reasonably possible change in the key
assumptions would not result in the carrying amount to exceed the recoverable
amount of the following CGU's and accordingly no impairment of goodwill.
Payment Assist Limited ("PAL")
On 16 May 2022, the Group (through MVL) announced that it entered into an
agreement to acquire 50.1% of the shares and voting interests in UK focused,
point of sale lender PAL for a total consideration of £4.244 million payable
in cash. The acquisition was completed in September 2022. On 16 September
2024, Manx Ventures Limited ("MVL") brought forward the acquisition of the
remaining 49.9% of Payment Assist Limited ("PAL") for a consideration of £5
million. MVL now owns 100% of PAL and its results have been fully consolidated
in these financial statements. The carrying amount of PAL's net assets in the
Group's consolidated financial statements on the date of acquisition was
£1.6m.
General
The key assumptions used in the estimation of the recoverable amount are set
out in this note. The recoverable amount of the CGUs discussed in this note
were each based on value in use. The values assigned to key assumptions
represents management's assessment of future trends in the relevant industries
and have been based on historical data from both external and internal
sources.
The estimated recoverable amount in relation to the goodwill generated on the
purchase of PAL is based on 10-year forecast cash flow projections and then
discounted using a 15.3% (2023: 14.0%) discount factor. The sensitivity of the
analysis was tested using additional discount factors of up to 20.0% on single
interest income growth rates.
The estimated recoverable amount in relation to the EAL CGU (including also
goodwill generated on acquisition of EAL) is based on 10-year forecast cash
flow projections using a 2.0% annual increment and then discounted using a 13%
(2023: 13.9%) discount factor. The sensitivity of the analysis was tested
using additional discount factors of 15.0% and 20.0% on stable profit levels.
An impairment loss on EAL goodwill of £200,000 was recognised in 2022.
The estimated recoverable amount in relation to the goodwill generated on the
purchase of BLX is based on 10-year forecast cash flow projections using a 0%
annual increment and then discounted using a 15.3% (2023: 14.2%) discount
factor. The sensitivity of the analysis was tested using additional discount
factors of up to 20.0% on single interest income growth rates.
The estimated recoverable amount in relation to the goodwill generated on the
purchase of BBSL is based on 10-year forecast cash flow projections using a 2%
annual increment, with a terminal value calculated using a 2.0% growth rate of
net income and then discounted using a 15.3% (2023: 14.2%) discount factor.
The sensitivity of the analysis was tested using additional discount factors
of up to 20.0% on single interest income growth rates.
The estimated recoverable amount in relation to the goodwill generated on the
purchase of NRFL is based on 10-year forecast cash flow projections using a 0%
annual increment and then discounted using a 15.3% (2023: 14.2%) discount
factor. The sensitivity of the analysis was tested using additional discount
factors of up to 20.0%. On the basis of the above reviews no impairment to
goodwill has been made in the current year.
The estimated recoverable amount in relation to the goodwill generated on the
purchase of MCL is based on 10-year forecast cash flow projection using a 2.0%
annual increment and then discounted using a 15.3% (2023: 14.2%) discount
factor. The sensitivity of the analysis was tested using additional discount
factors up to 20.0%.
The goodwill generated on the purchase of Three Spires has been reviewed at
the current year end and is considered adequate given its income streams
referred to EAL. Based on the above no impairment to goodwill has been made in
the current year.
35. Loans and amounts due from Group undertakings
Amounts due from and to Group undertakings
Amounts due from and to Group undertakings relate to intra-group transactions
and are unsecured, interest-free and repayable on demand. The amounts will be
settled either through cash or net settlement.
Subordinated loans
MFG has issued several subordinated loans as part of its equity funding into
the Bank and EAL.
Interest rate 2024 2023
Creation Maturity % p.a. £000 £000
Conister Bank Limited
11 February 2014 11 February 2034 7.0 500 500
27 May 2014 27 May 2034 7.0 500 500
9 July 2014 9 July 2034 7.0 500 500
17 September 2014 17 September 2026 7.0 400 400
22 July 2013 22 July 2033 7.0 1,000 1,000
25 October 2013 22 October 2033 7.0 1,000 1,000
23 September 2016 23 September 2036 7.0 1,100 1,100
14 June 2017 14 June 2037 7.0 450 450
12 June 2018 12 June 2038 7.0 2,000 2,000
23 March 2023 23 March 2043 7.0 6,500 6,500
Edgewater Associates Limited
21 February 2017 21 February 2027 7.0 150 150
14 May 2017 14 May 2027 7.0 128 128
14,228 14,228
36. Related party transactions
Cash deposits
During the year, the Bank held cash on deposit on behalf of Jim Mellon
(Executive Chair of MFG) and Douglas Grant (Group CEO). Total deposits
amounted to £36,280 (2023: £4,502) and £24,898 respectively, at normal
commercial interest rates in accordance with the standard rates offered by the
Bank.
Key management remuneration including Executive Directors
2024 2023
£000 £000
Remuneration - executive Directors 615 558
Remuneration - non-executive Directors 243 219
Performance Related Pay 131 99
Pension 49 45
Equity Settled Restricted Stock Units (see note 11) 113 67
1,151 988
Employment benefits include gross salaries, performance related pay, employer
defined contributions and restricted stock units (See note 29D). At 31
December 2024, Douglas Grant had three amortising loans outstanding to
Conister Bank Limited with capital outstanding of £285,072 (2023: £315,524).
The maximum original term of the three loans is 61 months and the average
interest is 2.57% (2023: 2.57%). James Smeed had an amortising loan
outstanding to Conister Bank with capital outstanding of £nil (2023:
£10,847). The original term of the loan is 49 months, and the average
interest is 3.01% (2023: 3.01%). No impairment is held in respect of these
amounts.
Intercompany recharges
Various intercompany recharges are made during the course of the year as a
result of the Bank settling debts in other Group companies.
Loan advance to PIML
At 31 December 2024, £5,000,000 (2023: £2,677,000) had been advanced to PIML
and interest is charged at commercial rates. No impairment is held in respect
of these amounts. This loan facility is repayable in cash.
Loan advance to Lesley Stephen & Co Limited ("LSC")
A total £11 million loan facility is available to LSC to provide the finance
required to expand its operations. Interest is charged at commercial rates. At
31 December 2024, £10,783,914 (2023: £10 million) had been advanced to LSC.
As part of a finance arrangement between the Bank and LSC, Manx Ventures
Limited ("MVL") (a related entity) acquired a 10% shareholding in LSC This
loan facility is repayable in cash.
Subordinated loans
The Company has advanced £13,950,000 (2023: £13,950,000) of subordinated
loans to the Bank and £278,000 (2023: £278,000) to EAL as at 31 December
2024. See note 35 for more details.
37. Leases
A. Leases as lessee
The Group leases the head office building in the Isle of Man. The lease's term
is 10 years with an option to renew the lease after that date. Lease payments
are renegotiated every 10 years to reflect market rentals.
The Group leases an office unit in the United Kingdom and IT equipment with
contract terms of 2 to 3 years. These leases are short‑term and / or
low-value items. The Group has elected not to recognise right-of- use assets
and lease liabilities for these leases.
Information about leases for which the Group is a lessee is presented below.
i. Right-of-use assets
Right-of-use assets related to leased properties that do not meet the
definition of investment property are presented as property, plant and
equipment.
Land and
Buildings Total
Group £000 £000
Cost
As at 1 January 2024 1,960 1,960
Additions 836 836
Disposals (136) (136)
As at 31 December 2024 2,660 2,660
Accumulated depreciation
As at 1 January 2024 607 607
Charge for the year 376 376
Disposals (74) (74)
As at 31 December 2024 909 909
Carrying value at 31 December 2024 1,751 1,751
Carrying value at 31 December 2023 1,353 1,353
ii. Amounts recognised in profit or loss
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Interest on lease liabilities 132 93 17 -
Depreciation expense 351 222 126 60
Expenses relating to short-term leases and low-value assets 81 81 - -
iii. Amounts recognised in statement of cash flows
Group Company
2024 2023 2024 2023
£000 £000 £000 £000
Interest paid 132 93 17 -
Capital paid 311 256 131 117
Total cash outflow for leases 443 349 148 117
38. Regulators
Certain Group subsidiaries are regulated by the FSA and the FCA as detailed
below.
The Bank and EAL are regulated by the FSA under a Class 1(1) - Deposit Taking
licence and Class 2 - Investment Business licence respectively. The Bank is
also regulated by the UK's Prudential Regulatory Authority ("PRA") and the
UK's Financial Conduct Authority ("FCA").
39. Contingent liabilities
The Bank is required to be a member of the Isle of Man Government Depositors'
Compensation Scheme which was introduced by the Isle of Man Government under
the Banking Business (Compensation of Depositors) Regulations 1991 and creates
a liability on the Bank to participate in the compensation of depositors
should it be activated.
The possibility of an outflow of resources embodying economic benefits for all
other contingent liabilities of the Group are considered remote and thus do
not require separate disclosure.
40. Provision for Discretionary Commission Arrangements
Following the Financial Conduct Authority's (FCA) Motor Market review in 2019
which resulted in a change in rules in January 2021, the Group has to date
received a small number of complaints in respect of motor finance commissions
and is actively engaging stakeholders in its assessment of these complaints.
The Group believes that its historical practices were compliant with the law
and regulations in place at the time and is willing to cooperate with FCA
through its industry review. However, the Group recognises that costs could
arise in the event the FCA concludes there has been industry wide misconduct
and customer loss that requires redress. In response to this, the Group has
recognised a provision of £202,920 as best estimate of the expenditure
required at 31 December 2024. In establishing the provision estimate, the
Group has made various considerations to address uncertainties around a number
of key assumptions. The assumptions include commission models, potential
levels of complaints, validity of the complaints and uphold rate of similar
cases by the Financial Ombudsman Service. The ultimate financial impact could
be materially different as a result of uncertainty surrounding the assumptions
and will therefore be monitored and updated as new information becomes
available.
41. Non-IFRS measures
Non-IFRS measures included in the financial statements include the following:
Measure Description
Net trading income Net trading income represents net interest income and contributions from
non-interest income activities.
Operating income Operating income represents net trading income, other operating income and
gains or losses on financial instruments.
42. Subsequent events
There were no subsequent events occurring after 31 December 2024.
43. Financial risk management
A. Introduction and overview
The Group has exposure to the following risks from financial instruments:
§ credit risk;
§ liquidity risk;
§ market risk; and
§ operational risk.
Risk management framework
The Board has overall responsibility for the establishment and oversight of
the Group's risk management framework. The Board has established the GARCC,
which is responsible for approving and monitoring Group risk management
policies. The GARCC is assisted in its oversight role by Internal Audit.
Internal Audit undertakes both regular and ad hoc reviews of risk management
controls and procedures, the results of which are reported to the GARCC.
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls, and
to monitor risks and adherence to limits. The risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the
Group's activities. The Group, though its training and management standards
and procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and obligations.
B. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's loans and advances to
customers and investment debt securities. Credit risk includes counterparty,
concentration, underwriting and credit mitigation risks.
Management of credit risk
The Bank's Board of Directors created the Credit Committee which is
responsible for managing credit risk, including the following:
§ Formulating credit policies in consultation with business units, covering
collateral requirements, credit assessments, risk grading and reporting,
documentary and legal procedures, and compliance with regulatory and statutory
requirements;
§ Establishing the authorisation structure for the approval and renewal of
credit facilities. Authorisation limits are allocated in line with credit
policy;
§ Reviewing and assessing credit risk: The Credit Committee assesses all
credit exposures in excess of designated limits before facilities are
committed to customers. Renewals and reviews of facilities are subject to the
same review process.
§ Limiting concentrations of exposures to counterparties, geographies and
industries, by issuer, credit rating band, market liquidity and country (for
debt securities);
§ Developing and maintaining risk gradings to categorise exposures according
to the degree of risk of default. The current risk grading consists of 3
grades reflecting varying degrees of risk of default;
§ Developing and maintaining the Group's process for measuring ECL: This
includes processes for:
o initial approval, regular validation and back-testing of the models used;
o determining and monitoring significant increase in credit risk; and
o the incorporation of forward-looking information; and
§ Reviewing compliance with agreed exposure limits. Regular reports on the
credit quality of portfolios are provided to the Credit Committee which may
require corrective action to be taken.
C. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. Liquidity risk arises from
mismatches in the timing and amounts of cash flows, which is inherent to the
Group's operations and investments.
Management of liquidity risk
The Group's approach to managing liquidity is to ensure, as far as possible,
that it will always have enough liquidity to meet its liabilities when they
are due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group's reputation. The key
elements of the Group's liquidity strategy are as follows:
§ Funding base: offering six-months to five-year fixed term deposit structure
with no early redemption option. This means the Bank is not subject to
optionality risk where customers redeem fixed rate products where there may be
a better rate available within the market;
§ Funding profile: the Bank has a matched funding profile and does not engage
in maturity transformation which means that on a cumulative mismatch position
the Bank is forecast to be able to meet all liabilities as they fall due;
§ Monitoring maturity mismatches, behavioural characteristics of the Group's
financial assets and financial liabilities, and the extent to which the
Group's assets are encumbered and so not available as potential collateral for
obtaining funding;
§ Liquidity buffer: the Bank maintains a liquidity buffer of 10.0% of its
deposit liabilities, with strict short-term mismatch limits of 0.0% for sight
to three months and -5.0% for sight to six months. This ensures that the Bank
is able to withstand any short-term liquidity shock; and
§ Interbank market: the Bank has no exposure to the interbank lending market.
The Bank has no reliance on liquidity via the wholesale markets. In turn, if
market conditions meant access to the wholesale funding was constrained as per
the 2008 credit crisis, this would have no foreseeable effect on the Bank.
The Bank's liquidity position is monitored daily against internal and external
limits agreed with the FSA and according to the Bank's Liquidity Policy. The
Bank also has a Liquidity Contingency Policy and Liquidity Contingency
Committee in the event of a liquidity crisis or potential liquidity disruption
event occurring.
The Treasury department receives information from other business units
regarding the liquidity profile of their financial assets and financial
liabilities and details of other projected cash flows arising from projected
future business. Treasury then maintains a portfolio of short-term liquid
assets, largely made up of short-term liquid investment securities, loans and
advances to banks and other inter-bank facilities, to ensure that sufficient
liquidity is maintained within the Group as a whole.
Regular liquidity stress testing is conducted under a variety of scenarios
covering both normal and more severe market conditions. The scenarios are
developed considering both Group-specific events and market-related events
(e.g. prolonged market illiquidity).
D. Market risk
Market risk is the risk that of changes in market prices; e.g. interest rates,
equity prices, foreign exchange rates and credit spreads (not relating to
changes in the obligor's / issuer's credit standing), will affect the Group's
income or value of its holdings of financial instruments. The objective of the
Group's market risk management is to manage and control market risk exposures
within acceptable parameters to ensure the Group's solvency while optimising
the return on risk.
Management of market risks
Overall authority for market risk is vested in the Assets and Liabilities
Committee ("ALCO") which sets up limits for each type of risk. Group finance
is responsible for the development of risk management policies (subject to
review and approval by the ALCO) and for the day-to-day review of their
implementation.
Foreign exchange risk
The Bank is not subject to foreign exchange risks and its business is
conducted in pounds sterling.
Equity risk
The Group has investment in associates which are carried at cost adjusted for
the Group's share of net asset value. The Bank has access to these accounts.
The Bank's exposure to market risk is not considered significant given the low
carrying amount of the investment.
The Group does not hold any investments in listed equities.
Interest rate risk
The principal potential interest rate risk that the Bank is exposed to is the
risk that the fixed interest rate and term profile of its deposit base differs
materially from the fixed interest rate and term profile of its asset base, or
basis and term structure risk.
Additional interest rate risk may arise for banks where (a) customers are able
to react to market sensitivity and redeem fixed rate products and (b) where a
bank has taken out interest rate derivate hedges especially against
longer-term interest rate risk, where the hedge moves against the bank.
However, neither of these risks apply to the Bank.
Any interest rate risk assumed by the Bank will arise from a reduction in
interest rates, in a rising environment due to the nature of the Bank's
products and its matched funded profile. The Bank should be able to increase
its lending rate to match any corresponding rise in its cost of funds,
notwithstanding its inability to vary rates on its existing loan book. The
Bank attempts to efficiently match its deposit taking to its funding
requirements.
E. Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide
variety of causes associated with the Group's processes, personnel, technology
and infrastructure, and from external factors other than credit, market and
liquidity risks - e.g. those arising from legal and regulatory requirements
and generally accepted standards of corporate behaviour. Operational risks
arise from all of the Group's operations.
Management of operational risk
The Group's objective is to manage operational risk so as to balance the
avoidance of financial losses and damage to the Group's reputation with
overall cost effectiveness and innovation. In all cases, Group policy requires
compliance with all applicable legal and regulatory requirements.
The Group has developed standards for the management of operational risk in
the following areas:
§ Business continuity planning;
§ Requirements for appropriate segregation of duties, including the
independent authorisation of transactions;
§ Requirements for the reconciliation and monitoring of transactions;
§ Compliance with regulatory and other legal requirements;
§ Documentation of controls and procedures;
§ Periodic assessment of operational risks faced, and the adequacy of
controls and procedures to address the risks identified;
§ Requirements for the reporting of operational losses and proposed remedial
action;
§ Development of contingency plans;
§ Training and professional development;
§ Ethical and business standards;
§ Information technology and cyber risks; and
§ Risk mitigation, including insurance where this is cost-effective.
Compliance with Group standards is supported by a programme of periodic
reviews undertaken by Internal Audit. The results of Internal Audit reviews
are reported to the GARCC.
44. Basis of measurement
The financial statements are prepared on a historical cost basis, except for
the following material items:
Items Measurement basis
FVTPL - Trading asset Fair value
FVOCI - Debt securities Fair value
Land and buildings Fair value
Deferred consideration Fair value
Net defined benefit liability Fair value of plan assets less the present value of the defined benefit
obligation
45. Material accounting policies
A. New currently effective requirements
The Group has adopted the following new standards and amendments to standards,
including any consequential amendments to other standards, with a date of
initial application of 1 January 2024:
§ Lease Liability in a Sale and Leaseback - Amendments to IFRS 16 Leases
§ Classification of liabilities as Current or Non-Current and Non-current
Liabilities with Covenants - Amendments to IAS 1 Presentation of Financial
Statements
§ Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures - Supplier Finance Arrangements
No significant changes followed the implementation of these standards and
amendments.
B. Forthcoming requirements
The Group has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective. New standards and amendments to
standards, not yet effective:
§ Amendments to IAS 1 - Lack of Exchangeability.
§ Classification and Measurement of Financial Instruments - Amendments to
IFRS 9 and IFS 7
§ Annual improvements to IFRS Accounting Standards - Volume 11
§ IFRS 18 Presentation and Disclosure in Financial Statements
The Group has assessed and is still assessing the impact of these amendments
on the Group Financial Statements.
The Group has consistently applied the following accounting policies to all
periods presented in these financial statements.
Set out below is an index of the material accounting policies, :
Ref. Note description
A. Basis of consolidation of subsidiaries and separate financial statements of
the Company
B. Interest in equity accounted investees
C. Interest
D. Fee and commission income
E. Leases
F. Income tax
G. Financial assets and financial liabilities
H. Cash and cash equivalents
I. Loans and advances
J. Property, plant and equipment
K. Intangibles assets and goodwill
L. Impairment of non-financial assets
M. Employee benefits
N. Share capital and reserves
O. Earnings per share ("EPS")
P. Segmental reporting
A. Basis of consolidation of subsidiaries and separate financial statements of
the Company
i. Business combinations
The Group accounts for business combinations using the acquisition method when
control is transferred to the Group.
Any contingent consideration is measured at fair value at the date of
acquisition. Contingent consideration is remeasured at fair value at each
reporting date and subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss.
ii. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an
entity if it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its control over the entity. The Group reassesses whether it has
control if there are changes to one or more of the elements of control. This
includes circumstances in which protective rights held (e.g. those resulting
from a lending relationship) become substantive and lead to the Group having
power over an investee. The financial statements of subsidiaries are included
in the consolidated financial statements from the date on which control
commences until the date on which control ceases.
iii. Non-controlling interests ("NCI")
NCI are measured initially at their proportionate share of the acquiree's
identifiable net assets at the date of acquisition.
Changes in the Group's interest in a subsidiary that do not result in a loss
of control are accounted for as equity transactions.
iv. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements. Unrealised losses are eliminated in the
same way as unrealised gains, but only to the extent that there is no evidence
of impairment.
v. Separate financial statements of the Company
In the separate financial statements of the Company, interests in
subsidiaries, associates and joint ventures are accounted for at cost less
impairment.
B. Interests in equity accounted investees
The Group's interests in equity accounted investees may comprise interests in
associates and joint ventures.
Associates are those entities in which the Group has significant influence,
but not control or joint control, over the financial and operating policies. A
joint venture is an arrangement in which the Group has joint control, whereby
the Group has rights to the net assets of the arrangement, rather than rights
to its assets and obligations for its liabilities.
Interests in associates and joint ventures are accounted for using the equity
method. They are initially recognised at cost, which includes transaction
costs. Subsequent to initial recognition, the consolidated financial
statements include the Group's share of the profit or loss and OCI of equity
accounted investees, until the date on which significant influence or joint
control ceases.
C. Interest
Interest income and expense are recognised in profit or loss using the
effective interest method.
i. Effective interest rate
The effective interest rate is the rate that exactly discounts estimated
future cash payments or receipts of the financial instrument to the gross
carrying amount of the financial asset or amortised cost of the financial
liability. When calculating the effective interest rate for financial assets,
the Group estimates future cash flows considering all contractual terms of the
financial instruments, including origination fees, loan incentives, broker
fees payable, estimated early repayment charges, balloon payments and all
other premiums and discounts. It also includes direct incremental transaction
costs related to the acquisition or issue of the financial instrument. The
calculation does not consider future credit losses.
ii. Amortised cost and gross carrying amount
The amortised cost of a financial asset or financial liability is the amount
at which the financial asset or financial liability is measured on initial
recognition minus the principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between
that initial amount and the maturity amount and, for financial assets,
adjusted for any expected credit loss allowance.
The gross carrying amount of a financial asset is the amortised cost of a
financial asset before adjusting for any expected credit loss allowance.
iii. Calculation of interest income and expense
In calculating interest income and expense, the effective interest rate is
applied to the gross carrying amount of the asset (when the asset is not
credit-impaired) or to the amortised cost of the liability.
However, for financial assets that have become credit-impaired subsequent to
initial recognition, interest income is calculated by applying the effective
interest rate to the net carrying amount of the financial asset. If the asset
is no longer credit-impaired, then the calculation of interest income reverts
to the gross basis.
D. Fee and commission income
The Group generates fee and commission income through provision of independent
financial advice, insurance brokerage agency, introducer of foreign exchange
services and commissions from brokering business finance for small and medium
sized enterprises.
Independent financial advice and insurance brokerage agency
Income represents commission arising on services and premiums relating to
policies and other investment products committed during the year, as well as
renewal commissions having arisen on services and premiums relating to
policies and other investment products committed during the year and previous
years and effective at the reporting date. Income is recognised on the date
that policies are submitted to product providers with an appropriate discount
being applied for policies not completed. As a way to estimate what is due at
the year-end, a "not proceeded with" rate of 10.0% for pipeline life insurance
products and 0.0% for non-life insurance pipeline is assumed. Renewal
commissions are estimated by taking the historical amount written pro-rata to
3 months.
Other income other than that directly related to the loans is recognised over
the period for which service has been provided or on completion of an act to
which the fee relates.
E. Leases
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
i. As a lessee
At commencement or on modification of a contract that contains a lease
component, the Group allocates the consideration in the contract to each lease
component on the basis of its relative stand-alone prices. However, for the
leases of property the Group has elected not to separate non-lease components
and as a result, accounts for the lease and non-lease components as a single
lease component.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term, unless the
lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right-of-use asset reflects that the Group
will exercise a purchase option. In that case the right-of-use asset will be
depreciated over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. Generally, the Group uses
its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest
rates from various external financing sources and makes certain adjustments to
reflect the terms of the lease and the type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the
following:
§ Fixed payments, including in-substance fixed payments;
§ Variable lease payments that depend on an index or a rate, initially
measured using the index or rate as at the commencement date;
§ Amounts expected to be payable under a residual value guarantee; and
§ The exercise price under a purchase option that the Group is reasonably
certain to exercise, lease payments in an optional renewal period if the Group
is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate
early.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Group's
estimate of the amount expected to be payable under a residual value
guarantee, if the Group changes its assessment of whether it will exercise a
purchase, extension or termination option or if there is a revised
in‑substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the right-of-use asset, or is recorded in
profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
The Group presents right-of-use assets that do not meet the definition of
investment property in 'property, plant and equipment' and lease liabilities
in 'loans and borrowings' in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease
liabilities for leases of low-value assets and short-term leases, including IT
equipment. The Group recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.
ii. As a lessor
At inception or on modification of a contract that contains a lease component,
the Group allocates the consideration in the contract to each lease component
on the basis of their relative stand-alone prices.
When the Group acts as a lessor, it determines at lease inception whether each
lease is a finance or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the
lease transfers substantially all of the risks and rewards incidental to
ownership of the underlying asset. If this is the case, then the lease is a
finance lease; if not, then it is an operating lease. As part of this
assessment, the Group considers certain indicators such as whether the lease
is for the major part of the economic life of the asset.
Finance leases and HP contracts
When assets are subject to a finance lease or HP contract, the present value
of the lease payments is recognised as a receivable. The difference between
the gross receivable and the present value of the receivable is recognised as
unearned finance income. HP and lease income is recognised over the term of
the contract or lease reflecting a constant periodic rate of return on the net
investment in the contract or lease. Initial direct costs, which may include
commissions and legal fees directly attributable to negotiating and arranging
the contract or lease, are included in the measurement of the net investment
of the contract or lease at inception.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Payments made
under operating leases (net of any incentives received from the lessor) are
charged to profit or loss and other comprehensive income on a straight-line
basis over the period of the lease.
F. Income tax
Current and deferred taxation
Current taxation relates to the estimated corporation tax payable in the
current financial year. Deferred taxation is provided in full, using the
liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts. Deferred tax is not
recognised for taxable temporary differences arising on the initial
recognition of goodwill and temporary differences related to investments in
subsidiaries and associates to the extent that the Group is able to control
the timing of the reversal of the temporary differences and it is probable
that they will not reverse in the foreseeable future.
Deferred taxation is determined using tax rates, and laws that have been
enacted or substantially enacted by the reporting date and are expected to
apply when the related deferred tax is realised. Deferred taxation assets are
recognised to the extent that it is probable that future taxable profit will
be available against which the temporary differences can be utilised.
G. Financial assets and financial liabilities
i. Recognition and initial measurement
The Group initially recognises loans and advances, deposits, debt securities
issued and subordinated liabilities on the date on which they are originated.
All other financial instruments, including regular-way purchases and sales of
financial assets are recognised on the trade date, which is the date on which
the Group becomes party to the contractual provisions of the instrument.
A financial asset or financial liability is measured initially at fair value
plus, for an item not at FVTPL, transaction costs that are directly
attributable to its acquisition or issue.
ii. Classification
Financial assets
On initial recognition, a financial asset is classified as measured at
amortised cost, FVOCI or FVTPL.
A financial asset is measured at amortised cost if it meets both of the
following conditions and is not designated as at FVTPL:
§ The asset is held within a business model whose objective is to hold assets
to collect contractual cash flows; and
§ The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest ("SPPI").
A debt instrument is measured at FVOCI only if it meets both of the following
conditions and is not designated as FVTPL:
§ The asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets; and
§ The contractual terms of the financial asset give rise on specified dates
to cash flows that are SPPI.
On initial recognition of an equity investment that is not held for trading,
the Group may irrevocably elect to present subsequent changes in fair value in
OCI. This election is made on an investment-by-investment basis.
All other financial assets are classified as measured at FVTPL.
In addition, on initial recognition, the Group may irrevocably designate a
financial asset that otherwise meets the requirements to be measured at
amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Business model assessment
The Group makes an assessment of the objective of a business model in which an
asset is held at a portfolio level because this best reflects the way the
business is managed and information provided to management.
Assessment of whether contractual cash flows are solely payments of principal
and interest
For the purposes of this assessment, 'principal' is defined as the fair value
of the financial asset on initial recognition. 'Interest' is defined as
consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period of time and
for other basic lending risks and costs (e.g. liquidity risk and
administrative costs), as well as profit margin.
In assessing whether the contractual cash flows are SPPI, the Group considers
the contractual terms of the instrument. This includes assessing whether the
financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition.
Financial liabilities
The Group classifies its financial liabilities, other than financial
guarantees and loan commitments, as measured at amortised cost.
iii. Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the
cash flows from the financial asset expire, or when it transfers the rights to
receive the contractual cash flows in a transaction in which substantially all
of the risks and rewards of ownership of the financial asset are transferred
or in which the Group neither transfers nor retains substantially all of the
risks and rewards of ownership and it does not retain control of the financial
asset.
On derecognition of a financial asset, the difference between the carrying
amount of the asset (or the carrying amount allocated to the portion of the
asset derecognised) and the sum of (i) the consideration received (including
any new asset obtained less any new liability assumed) and (ii) any cumulative
gain or loss that had been recognised in OCI is recognised in profit or loss.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations
are discharged or cancelled, or expire.
iv. Offsetting
Financial assets and financial liabilities are offset and the net amount
presented in the statement of financial position when, and only when, the
Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted under
IFRS, or for gains and losses arising from a group of similar transactions
such as in the Group's trading activity.
v. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date in the principal or, in its absence, the most
advantageous market to which the Group has access at the date. The fair value
of a liability reflects its non‑performance risk.
The Group recognises transfers between levels of the fair value hierarchy as
of the end of the reporting period during which the change has occurred.
The Group measures fair values using the following fair value hierarchy, which
reflects the significance of the inputs used in making the measurements:
§ Level 1: inputs that are quoted market prices (unadjusted) in active
markets for identical instruments;
§ Level 2: inputs other than quoted prices included within Level 1 that are
observable either directly (i.e. as prices) or indirectly (i.e. derived from
prices). This category includes instruments valued using: quoted market prices
in active markets for similar instruments; quoted prices for identical or
similar instruments in markets that are considered less than active; or other
valuation techniques in which all significant inputs are directly or
indirectly observable from market data; and
§ Level 3: inputs that are unobservable. This category includes all
instruments for which the valuation technique includes inputs not based on
observable data and the unobservable inputs have a significant effect on the
instrument's valuation. This category includes instruments that are valued
based on quoted prices for similar instruments for which significant
unobservable adjustments or assumptions are required to reflect differences
between the instruments.
The fair values of financial assets and financial liabilities that are traded
in active markets are based on quoted market prices or dealer price
quotations. For all other financial instruments, the Group determines fair
values using other valuation techniques.
For financial instruments that trade infrequently and have little price
transparency, fair value is less objective, and requires varying degrees of
judgement depending on liquidity, concentration, uncertainty of market
factors, pricing assumptions and other risks affecting the specific
instrument.
vi. Impairment
A financial instrument that is not credit-impaired on initial recognition is
classified in 'Stage 1' and has its credit risk continuously monitored by the
Group.
If a SICR since initial recognition is identified, the financial instrument is
moved to 'Stage 2' but is not yet deemed to be credit impaired.
§ An SICR is always deemed to occur when the borrower is 30 days past due on
its contractual payments. If the Group becomes aware ahead of this time of
non-compliance or financial difficulties of the borrower, such as loss of
employment, avoiding contact with the Group then an SICR has also deemed to
occur; and
§ A receivable is always deemed to be in default and credit-impaired when the
borrower is 90 days past due on its contractual payments or earlier if the
Group becomes aware of severe financial difficulties such as bankruptcy,
individual voluntary arrangement, abscond or disappearance, fraudulent
activity and other similar events.
If the financial instrument is credit-impaired, the financial instrument is
then moved to 'Stage 3'. Financial instruments in Stage 3 have their ECL
measured based on expected credit losses on a lifetime basis.
Loss allowances for lease receivables are always measured at an amount equal
to lifetime ECL.
12-month ECL are the portion of ECL that result from default events on a
financial instrument that are possible within the 12 months after the
reporting date. Financial instruments for which a 12-month ECL is recognised
are referred to as 'Stage 1 financial instruments'.
Lifetime ECL are the ECL that result from all possible default events over the
expected life of a financial instrument. Financial instruments for which a
lifetime ECL is recognised but which are not credit-impaired are referred to
as 'Stage 2 financial instruments'.
Measurement of ECL
After a detailed review, the Group devised and implemented an impairment
methodology in light of the IFRS 9 requirements outlined above noting the
following:
§ The Group has identified and documented key drivers of credit risk and
credit losses its financial instruments and using an analysis of historical
data has estimated the relationship between macroeconomic variables and credit
risk and credit losses;
§ The ECL is derived by reviewing the Group's loss rate and loss given
default over the past 8 years by product and geographical segment; and
§ If the Group holds objective evidence through specifically assessing a
credit-impaired receivable and believes it will go on to completely recover
the debt due to the collateral held and cooperation with the borrower, then no
IFRS 9 provision is made.
ECL are probability-weighted estimates of credit losses. They are measured as
follows:
§ Financial assets that are not credit-impaired at the reporting date: as
the present value of all cash shortfalls (i.e. the difference between the cash
flows due to the entity in accordance with the contract and the cash flows
that the Group expects to receive);
§ Financial assets that are credit-impaired at the reporting date: as the
difference between the gross carrying amount and the present value of
estimated future cash flows; and
§ Undrawn loan commitments: as the present value of the difference between
the contractual cash flows that are due to the Group if the commitment is
drawn down and the cash flows that the Group expects to receive.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at
amortised cost and debt financial assets carried at FVOCI, and finance lease
receivables are credit-impaired (referred to as 'Stage 3 financial assets'). A
financial asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset
have occurred.
Evidence that a financial asset is credit-impaired includes the following
observable date:
§ Significant financial difficulty of the borrower or issuer;
§ A breach of contract such as a default or past due event;
§ The restructuring of a loan or advance by the Group on terms that the
Group would not consider otherwise;
§ It is becoming probable that the borrower will enter bankruptcy or
another type of financial reorganisation; or
§ The disappearance of an active market for a security because of
financial difficulties.
A loan that has been renegotiated due to a deterioration in the borrower's
condition is usually considered to be credit-impaired unless there is evidence
that the risk of not receiving contractual cash flows has reduced
significantly and there are no other indicators of impairment. In addition, a
retail loan that is overdue for 90 days or more is considered credit-impaired
even when the regulatory definition of default is different.
In assessing of whether an investment in sovereign debt is credit impaired,
the Group considers the following factors:
§ The market's assessment of creditworthiness as reflected in the bond
yields;
§ The rating agencies' assessments of creditworthiness;
§ The country's ability to access the capital markets for new debt
issuance;
§ The probability of debt being restructured, resulting in holders
suffering losses through voluntary or mandatory debt forgiveness; and
§ The international support mechanisms in place to provide the necessary
support as 'lender of last resort' to that country, as well as the intention,
reflected in public statements, of governments and agencies to use those
mechanisms. This includes an assessment of the depth of those mechanisms and,
irrespective of the political intent, whether there is the capacity to fulfil
the required criteria.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for ECL are presented in the statement of financial position
as follows:
§ Financial assets measured at amortised cost: as a deduction from the
gross carrying amount of the assets;
§ Loan commitments: generally, as a provision; and
§ Debt instruments measured at FVOCI: no loss allowance is recognised in the
statement of financial position because the carrying amount of these assets is
their fair value. However, the loss allowance is disclosed and is recognised
in the fair value reserve.
Write-off
Loans and debt securities are written off (either partially or in full) when
there is no reasonable expectation of recovering a financial asset in its
entirety or a portion thereof. This is generally the case when the Group
determines that the borrower does not have assets or sources of income that
could generate sufficient cash flows to repay the amounts subject to the
write-off. This assessment is carried out at the individual asset level.
Recoveries of amounts previously written off are included in 'impairment
losses on financial instruments' in the statement of profit or loss and OCI.
Financial assets that are written off could still be subject to enforcement
activities in order to comply with the Group's procedures for recovery of
amounts due.
H. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents
comprise cash and deposit balances with an original maturity date of three
months or less.
I. Loans and advances
Loans and advances' captions in the statement of financial position include:
§ Loans and advances measured at amortised cost (see note 44 (G)). They
are initially measured at fair value plus incremental direct transaction
costs, and subsequently at their amortised cost using the effective interest
method; and
§ Finance lease receivables (see note 44 (E)).
J. Property, plant and equipment
Items of property, plant and equipment are stated at historical cost less
accumulated depreciation (see below). Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Buildings are
carried at a revalued amount, being fair value at the date of revaluation,
less subsequent depreciation and impairment.
If an asset's carrying amount is increased as a result of a revaluation, the
increase shall be recognised in other comprehensive income and accumulated in
equity under the heading of revaluation surplus. However, the increase shall
be recognised in profit or loss to the extent that it reverses a revaluation
decrease of the same asset previously recognised in profit or loss.
If an asset's carrying amount is decreased as a result of a revaluation, the
decrease shall be recognised in profit or loss. However, the decrease shall be
recognised in other comprehensive income to the extent of any credit balance
existing in the revaluation surplus in respect of that asset. The decrease
recognised in other comprehensive income reduces the amount accumulated in
equity under the heading of revaluation surplus.
The assets' residual values and useful economic lives are reviewed, and
adjusted if appropriate, at each reporting date. An asset's carrying amount is
written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.
When parts of an item of property, plant and equipment have different useful
lives, those components are accounted for as separate items of property, plant
and equipment.
Depreciation and amortisation
Assets are depreciated or amortised on a straight-line basis, so as to write
off the book value over their estimated useful lives. The estimated useful
lives of property, plant and equipment and intangibles are as follows:
Property, plant and equipment
Leasehold improvements to expiration of the lease
IT equipment 4 - 5 years
Motor vehicles 2 - 5 years
Furniture and equipment 4 - 10 years
Plant and machinery 5 - 20 years
K. Intangible assets and goodwill
i. Goodwill
Goodwill that arises on the acquisition of subsidiaries is measured at cost
less accumulated impairment losses.
ii. Software
Software acquired by the Group is measured at cost less accumulated
amortisation and any accumulated impairment losses.
Expenditure on internally developed software is recognised as an asset when
the Group is able to demonstrate: that the product is technically feasible,
its intention and ability to complete the development and use the software in
a manner that will generate future economic benefits, and that it can reliably
measure the costs to complete the development. The capitalised costs of
internally developed software include all costs directly attributable to
developing the software and capitalised borrowing costs, and are amortised
over its useful life. Internally developed software is stated at capitalised
cost, less accumulated amortisation and any accumulated impairment losses.
Software is amortised on a straight-line basis in profit or loss over its
estimated useful life, from the date on which it is available for use.
Amortisation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate.
iii. Other
Intangible assets that are acquired by an entity and having finite useful
lives are measured at cost less accumulated amortisation and any accumulated
impairment losses.
Intangible assets with indefinite useful lives that are acquired or built are
carried at cost less accumulated impairment losses. Intangible assets with
indefinite useful lives are not amortised but instead are subject to
impairment testing at least annually.
The useful lives of intangibles are as follows:
Customer contracts and lists to expiration of the agreement
Intellectual property rights 4 years - indefinite
Website development costs indefinite
IT Software and website development costs 5 years
Included in intellectual property rights is capitalised costs for acquiring a
UK Banking licence. The banking licence is assumed to have an indefinite life
as there is no foreseeable limit to the period over which the asset is
expected to generate benefits for the business. Costs related to obtaining
this asset are held at cost and are not being amortised.
L. Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its
non-financial assets (other than deferred tax assets) to determine whether
there is any indication of impairment. If any such indication exists, the
asset's recoverable amount is estimated. Goodwill and indefinite useful life
intangible assets are tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that is largely
independent of the cash inflows of other assets or Cash Generating Units
("CGUs"). Goodwill arising from a business combination is allocated to CGUs or
groups of CGUs that are expected to benefit from the synergies of the
combination.
The recoverable amount of an asset or CGU is the greater of its value in use
and its fair value less cost to sell. Value in use is based on the estimated
future cash flows, discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and
the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU
exceeds its recoverable amount.
The Group's corporate assets do not generate separate cash inflows and are
used by more than one CGU. Corporate assets are allocated to CGUs on a
reasonable and consistent basis and tested for impairment as part of the
testing of the CGUs to which the corporate assets are located.
Impairment losses are recognised in profit or loss. They are allocated first
to reduce the carrying amount of any goodwill allocated to the CGU, and then
to reduce the carrying amounts of the other assets in the CGU on a pro rata
basis.
An impairment loss in respect of goodwill is not reversed. For other assets,
an impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been
recognised.
M. Employee benefits
i. Long-term employee benefits
Pension obligations
The Group has pension obligations arising from both defined benefit and
defined contribution pension plans.
A defined contribution pension plan is one under which the Group pays fixed
contributions into a separate fund and has no legal or constructive
obligations to pay further contributions. Defined benefit pension plans define
an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and
remuneration.
Remeasurements of the net defined benefit liability, which comprise actuarial
gains and losses, the return on plan assets (excluding interest) and the
effect of the asset ceiling (if any, excluding interest), are recognised
immediately in OCI. The Group determines the net interest expense (income) on
the net defined benefit liability (asset) for the period by applying the
discount rate used to measure the defined benefit obligation at the beginning
of the annual period to the then-net defined benefit liability (asset), taking
into account any changes in the net defined benefit liability (asset) during
the period as a result of contributions and benefit payments. Net interest
expense and other expenses related to defined benefit plans are recognised in
profit or loss.
The statement of financial position records as an asset or liability as
appropriate, the difference between the market value of the plan assets and
the present value of the accrued plan liabilities. The defined benefit pension
plan obligation is calculated by independent actuaries using the projected
unit credit method and a discount rate based on the yield on high quality
rated corporate bonds.
The Group's defined contribution pension obligations arise from contributions
paid to a Group personal pension plan, an ex gratia pension plan, employee
personal pension plans and employee co-operative insurance plans. For these
pension plans, the amounts charged to the income statement represent the
contributions payable during the year.
ii. Share-based compensation
The Group maintains a share option programme which allows certain Group
employees to acquire shares of the Group. The change in the fair value of
options granted is recognised as an employee expense with a corresponding
change in equity. The fair value of the options is measured at grant date and
spread over the period during which the employees become unconditionally
entitled to the options.
At each reporting date, the Group revises its estimate of the number of
options that are expected to vest and recognises the impact of the revision to
original estimates, if any, in the income statement, with a corresponding
adjustment to equity.
The fair value is estimated using a proprietary binomial probability model.
The proceeds received, net of any directly attributable transaction costs, are
credited to share capital (nominal value) and share premium when the options
are exercised.
N. Share capital and reserves
Share issue costs
Incremental costs that are directly attributable to the issue of an equity
instrument are deducted from the initial measurement of the equity
instruments.
O. Earnings per share ("EPS")
The Group presents basic and diluted EPS data for its Ordinary Shares. Basic
EPS is calculated by dividing the profit or loss that is attributable to
ordinary Shareholders of MFG by the weighted-average number of Ordinary Shares
outstanding during the period. Diluted EPS is determined by adjusting profit
or loss that is attributable to Ordinary Shareholders and the weighted-average
number of Ordinary Shares outstanding for the effects of all dilutive
potential Ordinary Shares, which comprise share options granted to employees.
P. Segmental reporting
A segment is a distinguishable component of the Group that is engaged either
in providing products or services (business segment), or in providing products
or services within a particular economic environment (geographical segment),
which is subject to risks and rewards that are different from those of other
segments. The Group's primary format for segmental reporting is based on
business segments.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses relating to transactions with any of the Group's other
components, whose operating results are regularly reviewed by the CEO who is
the chief operating decision maker ("CODM") to make decisions about resources
to be allocated to the segment and assess its performance, and for which
discrete financial information is available.
Segment results reported to the CEO include items that are directly
attributable to a segment as well as those that can be allocated on a
reasonable basis.
Shareholder Notes
Appendix:
Glossary of terms
ALCO Assets and Liabilities Committee
BBSL Blue Star Business Solutions Limited
BL Burnbrae Limited
BLX The Business Lending Exchange Limited
Bank Conister Bank Limited
Bank's Board The Bank's Board of Directors
BOE Bank of England
CEO Chief Executive Officer
CET1 Common Equity Tier 1
CFL Conister Finance & Leasing Ltd
CGU Cash Generating Unit
CODM Chief Operating Decision Maker
Company Manx Financial Group PLC
EAL Edgewater Associates Limited
ECF ECF Asset finance PLC
ECL Expected Credit Loss
ESG Environmental, Social and Governance
EPS Earnings Per Share
FCA UK Financial Conduct Authority
Fraud risks Risk of Material Misstatement Due to Fraud
FSA Isle of Man Financial Services Authority
FVOCI Fair Value Through Other Comprehensive Income
FVTPL Fair Value Through Profit or Loss
GARCC Group Audit, Risk and Compliance Committee
Group Comprise the Company and its subsidiaries
HP Hire Purchase
IAS International Accounting Standard
ICAAP Internal Capital Adequacy Assessment Process
ICG Individual Capital Guidance
IFA Independent Financial Advisors
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
Interim financial statements Condensed consolidated interim financial statements
IOM Isle of Man
ISA International Standards of Auditing
JM Jim Mellon
LSE London Stock Exchange
MCL Manx Collections Limited
MFG Manx Financial Group PLC
MFX Manx FX Limited
MFX.L Manx Financial Group PLC ticker symbol on the LSE
MVL Manx Ventures Limited (previously Bradburn Limited)
NOMCO Group Nomination Committee
NRFL Ninkasi Rentals & Finance Limited (previously Beer Swaps Limited)
OCI Other Comprehensive Income
PAL Payment Assist Limited
PIML Payitmonthly Limited
QCA Quoted Companies Alliance
REMCO Group Remuneration Committee
RFG Rivers Finance Group Plc
RMF Risk Management Framework
Scheme The Conister Trust Pension and Life Assurance Scheme
SICR Significant Increase in Credit Risk
SPPI Solely Payments of Principal and Interest
SR Southern Rock Insurance Company Limited
Subsidiaries MFG's subsidiaries being Bank, BBSL, BLX, CFL, ECF, EAL, MFX, MVL, NRFL, PAL
TCF Treating Customers Fairly
Three Spires Three Spires Insurance Services Limited
UK United Kingdom
UP Unrelated parties
Clarendon House
Victoria Street
Douglas
Isle of Man
IM1 2LN
Tel: (01624) 694694
Fax: (01624) 624278
www.mfg.im
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