Annual Report and Financial Statements 2023

choice

experience

Better

Strategic Report

2023 highlights IFC

Better choice, better experience 1

At a glance 2

Our financial model 6

Chair’s statement 7

Our customers 8

Our products and services 10

Our business model 12

Market review 14

Chief Executive Officer’s review 16

A strong investment proposition 18

Our Next Gen strategy 20

Key performance indicators 26

Operational review 28

Financial review 36

Stakeholder engagement 42

Section 172 and Board decision making 44

Responsible business 46

Materiality assessment 47

Stakeholders in focus 48

IPF in society 59

Task Force on Climate-related

Financial Disclosures (TCFD) 67

Non-financial and Sustainability

Information Statement 77

Principal risks and uncertainties 78

Viability statement 83

Directors’ Report

Introduction to governance 84

Our Board and Committees 86

Governance at a glance 89

Role of the Board and its Committees 91

Nomination and Governance Committee Report 97

Audit and Risk Committee Report 104

Directors’ Remuneration Report 110

Statutory information 127

Directors’ responsibilities 131

Financial Statements

Independent Auditor’s report 133

Consolidated income statement 142

Statements of comprehensive income 142

Balance sheets 143

Statements of changes in equity 144

Cash flow statements 146

Notes to the Financial Statements 147

Alternative performance measures 185

Supplementary Information

Shareholder information 190

Find out more at www.ipfin.co.uk

Alternative performance measures

This Annual Report and Financial Statements

provides alternative performance measures

(APMs) which are not defined or specified under

the requirements of International Financial

Reporting Standards. We believe these APMs

provide readers with important additional

information on our business. To support this,

we have included an accounting policy note

on APMs on page 147, a reconciliation of the

APMs we use where relevant and a glossary

on pages 185 to 186 indicating the APMs that

we use, an explanation of how they are

calculated and why we use them.

Percentage change figures for all performance

measures, other than profit or loss before taxation

and earnings per share, unless otherwise stated,

are quoted after restating prior year figures

at a constant exchange rate (CER) for 2023,

in order to present the underlying performance

variance. International Personal Finance plc (IPF)

Company number: 6018973.

Customers (‘000)

1,700

(1.9%)

Customer lending (£m)

£1,150.6m

(3.5%)*

Closing net receivables (£m)

£892.9m

(0.2%)*

Profit before tax (£m)

£83.9m

+8.4%

Pre-exceptional earnings per share (p)

23.2p

+11.5%

Dividend per share (p)

10.3p

+12.0%

1,700

1,733

1,727

1,682

2,109

20.8

18.8

(24.0)

32.2

23.2

892.9

868.8

716.8

669.1

973.6

83.9

77.4

67.7

(40.7)

114.0

1,150.6

1,126.4

982.1

772.2

1,353.0

9.2

0.0

12.4

8.0

10.3

2023 highlights

Contents

* At constant exchange rates

IPF is a global financial services operator, helping millions of people

who often find it difficult to get credit from banks to be included

in the financial system. And in doing so, we are delivering on our

clear purpose to build a better world through financial inclusion.

We are advancing as a modern, multi-product, multi-channel

and digitally-enabled business, offering a unique and expanding

choice of affordable financial products and value-added services

to our customers. We are committed to accompanying them

throughout their financial journey while fostering loyalty through

excellent experience and delivering a more secure tomorrow

for everyone we serve.

choice

experience

Better

Annual Report and Financial Statements 2023 1

Many people have a bank

account but cannot access other

financial services from their bank.

Some have no account at all.

adults are unbanked or underbanked

around the world and

2bn

20%

It is estimated that over

of bank accounts are not

actively used for transactions.

Sources: World Bank and Global Findex Database Report

At a glance

International Personal Finance plc2

Strategic Report

people access credit and we

estimate there are

15m

c.70m

Over 26 years we have

helped millions of people

who are underserved.

We have helped nearly

underserved people in our markets.

3Annual Report and Financial Statements 2023 3

Our purpose

is to build a better world

through financial inclusion.

International Personal Finance plc

onto the credit ladder, and for many

of our customers this is the start

of a journey to build their credit profile.

Being part of the regulated financial system and

choosingto take fair-priced credit from a trusted

businesslike IPF, our customers find a way to pay for

schoolequipment, plan for a family event, deal with

anunexpected emergency or start a small business

thatcanprovide a livelihood. We have unrivalled

expertisein helping financially underserved

customerswhich puts us in a strong position

tofinanciallyinclude more customers, boost

economicgrowth and grow the business.

We often represent the first step

Our total addressable market

235m

population in our markets

70m+

underserved people in our markets

serving 2.5m

customers is our ambition

1.7m

customers served today

At a glance continued

International Personal Finance plc4

Strategic Report

– Well established, cash

generative business

– Increasingly digitised and

expanding product offering

– Delivering target returns of c.20%

– Significant growth prospects and

expanding geographic coverage

– Digitising to improve customer

experience

– Delivering target returns of c.20%

while investing in growth

– Strong brands, great growth

potential and rebuilding scale

– Single hub serving multiple countries

– Focused on delivering target returns

£483m

closing net receivables

Home credit Revolving credit lineHome credit

Hybrid loans Mobile walletHybrid loans

Credit card Instalment loansValue-added services

Value-added services Retail credit

Retail credit

Value-added services

closing net receivables closing net receivables

£187m £223m

Offering attractive long-term growth and

returnsprospects across our three divisions

European home credit Mexico home credit IPF Digital

Profitable and

growing

Annual Report and Financial Statements 2023 5

We operate with strong financial discipline to ensure our loans

are affordable while delivering an appropriate financial return

which balances the needs of all our stakeholders.

Our financial model for

targeting sustainable returns

– Fair, affordable and

transparent customer pricing

– Full compliance with all legal and

regulatory requirements

– Care for our colleagues

and communities

– Sustainable returns for

our shareholders

15 -20%

RoRE

All investment decisions

are based on delivering

Return on required equity

15 -20%

Supports

minimum

dividend

payout

ratio of

40%

Funds annual net

receivables growth

of up to

10%

Maintains

equity to

receivables

ratio at

40%

* Required equity = equity to receivables

ratio of 40%

The most integral part of our financial

model is that we must deliver a return

on required equity (RoRE) of between

15% and 20% that enables:

Our financial model

We believe that returns materially in

excess of 15% to 20% would result in us

not balancing the needs of all of our

stakeholders in delivering our purpose.

As we capture the significant growth

opportunities we see for the Group,

we aim to deliver sustainable earnings

whilst maintaining a strong balance

sheet, adopting a minimum return

to shareholders of 40% of post-tax

earnings and investing in the future

growth of the business.

International Personal Finance plc6

Strategic Report

Improving choice,

to enhance experience

Chair’s statement

Welcome to our 2023 Annual Report

I am delighted to report another year of strong operational

and financial performance, reflecting our commitment to our

simple but compelling purpose of including more people in

the financial mainstream.

Excellent progress in 2023

Regarding some of our main achievements in 2023,

we saw continued, controlled expansion to new geographies

in Mexico; profit contributions made by IPF Digital’s six territories

reflecting strong cost control and product innovation;

and the deft execution by our business in Poland

of a significant and innovative move into credit cards.

Other long-planned initiatives which gained traction during

the year included the growth of several retail partnerships,

and a transformation of the field forces in a number

of our markets to offering better control and improved

customer experience.

To make our purpose more tangible to yet more customers

we expanded our product portfolio, among my favourites

being education packages which are now available

to customers in Poland, and a growing range

of healthcare insurances.

We also continued our plan to put customers “in the driving

seat” by offering more choice of how they interact with us,

be it face to face, remotely by mobile or other devices,

or a mixture of both, tailored to reflect their needs

and history with us, and our own assessment of their

financial circumstances. Faster access to loans and cash,

one of the top requests coming through the numerous

and comprehensive surveys we carry out, is another frontier

we pushed hard on.

Together with these advancements, customers' responsiveness

to both speed of service and increased options is monitored

closely, not least by all Board members, to be sure that these

criteria align with the specific consumer types we excel

in serving, and which many competitors either overlook

or serve only sporadically.

Strong financial performance and dividend increase

This excellent execution of our strategy supported the delivery

of a strong set of results, and profit before tax increased by 8%

to £83.9m, despite the continued inflationary pressures and

cost-of-living challenges that both our customers and the

business faced.

Our ever closer attention to costs, particularly in our regional

hubs and at head offices, credit quality, loan size, funding

and the other determinants of profitability, helped underpin

yet another year in our progressive dividend policy.

In this regard, am pleased to announce a final dividend

of 7.2 pence per share, bringing the full-year dividend

to 10.3 pence per share, up 12% on 2022.

A dedicated team focused on purpose

As always, these achievements have only been possible

through the dedication and ingenuity of thousands

of colleagues across our nine territories. But they are also

a manifestation of something deeper - the successful pursuit

of our purpose. We have no difficulty in expressing that

purpose. As it was when IPF was established in 2007,

it is to offer affordable financial services to customers

who are ill served or indeed ignored by mainstream

finance companies or banks. This important contribution

to the wellbeing of the countries they live in is acknowledged,

often quietly, by many stakeholders there. We continue

to invest in understanding and often contributing expert

testimony to the parliamentary and regulatory debates

in each country, which to an extent also shape how

we go to market.

Outlook

To sum up, 2023 was another strong year, in terms of both

customer outcomes and operating results.

Notwithstanding the fact that it looks like we have more

regulatory change to deal with in Poland following a recently

received communication from our regulator (which is described

more fully on pages 16 and 30), the Board is confident that all

the hard work undertaken by our team and that I have alluded

to here – whether it be on customer service, technological and

product innovations, cost focus or funding – will continue to

reward us all for many years to come.

Thank you for your continued support.

Stuart Sinclair

Chair

14 March 2024

“I am delighted to report another year of

strong operational and financial performance,

reflecting our commitment to our simple

but compelling purpose.”

Stuart Sinclair

Chair

Annual Report and Financial Statements 2023 7

Our customers

Today’s customer demographics

c.60%

30-50

years old, and many have a family with children

of our customers are female

Many of our customers are

underserved by banks for a

number of reasons including:

Borrow and budget

very carefully

Low to medium

income

C/D socio economic groups

No or limited

credit history

Underserved

by other lenders

International Personal Finance plc8

Strategic Report

The next generation

See page 48 for more information

onour customers.

c.30%

of customers are

We are attracting new, younger customers

18-35

years old

How our customers use their loans

– Education and return-to-school

expenses.

– Healthcare and medical expenses.

– Smoothing their budgets and

managing unexpected expenses.

– Home improvements

and household goods.

– Supporting their micro business.

– Family celebrations and Christmas.

Typical loans across our three divisions

Our customers budget very carefully and want to borrow small

sums with transparent costs and regular, affordable repayments.

– They have low or medium

incomes with limited

or no savings.

– Most work but their income

often varies from month

to month.

– They have no formal

credit history.

– They may live in a rural area

or can’t easily reach a bank.

– They have defaulted on

a credit agreement resulting

in a damaged credit history.

– They are charged for

bank services.

Rent

their home

Often single

Full-time workers

Mostly located

in larger cities

Our customers manage their lives on tight budgets. They are not heavily indebted and have incomes

from various sources, including government support. Our customers also value a sympathetic service

and forbearance if, from time to time, they face challenges in repaying their loan.

£865 £360

£1,200

83 weeks 46 weeks £800

Typical loan Typical loan Average credit line

principal outstanding

Average term Average term Average instalment loan

European home credit Mexico home credit IPF Digital

See page 5 for more information on our divisions.

Annual Report and Financial Statements 2023 9

Cash

loans

Expanding our products and services

We serve our customers in a responsible way through a broad

suite of traditional and innovative products and services to suit

their preferences and different credit profiles.

CUSTOMER JOURNEY

Home credit

instalment loans

Hybrid loans

Credit card

Small-sum loans and a weekly

personal service with an

increasingly digital touch,

provided in customers’ homes

by our customer representatives.

A unique blend of customer

representative and digital

channels for those who do not

have a strong enough credit

profile to get a fully digital offer.

A convenient way for

customers to pay in store,

buy online, or obtain cash

from their customer

representative or ATM.

Digitisation has simplified processes and enabled quicker access to finance

Customer

representative

Data driven, technology

enabled and always

with a human touch

Our products and services

International Personal Finance plc10

Strategic Report

In response to changing consumer needs

we are also streamlining how we serve customers

through our Think Customer programme.

We have digitised a large part of our service and enhanced

the customer experience while retaining the personal interaction that

we know our customers value.

See pages 48-51 for more information.

Digital

instalment loans

Revolving

credit line

Mobile wallet

CREDIT PROFILE AND CUSTOMER PREFERENCE

Affordable, end-to-end

digital service with terms

up to three years and

monthly repayments.

Flexible access to money up

to a preset limit and when

customers pay down, more

credit becomes available.

Offering quick and easy

access for customers to

check a balance, make

payments, see our value-

added services and take

advantage of product offers.

Digital

We also offer value-added services

including healthcare and life insurances

Our brands

Annual Report and Financial Statements 2023 11

Lend

responsibly

Attract target

customers

Requests

for credit

Assess

affordability and

creditworthiness

Collect repayments

and manage

customers facing

difficulties

Generate

revenue

Reinvest and

deliver returns

Building a better

world through

financial inclusion

Responsible Respectful Straightforward

Our business model

Resilient, sustainable

and responsible business model

Our unique proposition helps underserved consumers access financial

services and creates long-term value for the communities we serve.

What we do

We play a vital role in society by helping underserved consumers in nine markets gain

access to affordable financial products and insurance services. We have built asuite

of products ranging from home credit and digital instalment loans through toa credit

card, digital credit lines and a mobile wallet. We also offer a range of insurances and

other value-added services which are underwritten by leading, reputable third-party

partners. These products are tailored to our customers’ financialcircumstances and

needs, and we deliver them in a responsible way.Indoing so we are increasing

financial inclusion for millions of people.

Underpinned by our values

Read more on page 20.

Our key relationships

Customers

Trusted, personal relationships help

us understand our customers, adapt

our business model and design new

products that meet their changing

needs in a responsible, affordable

and sustainable way.

Colleagues

Engaging our 21,000 employees

and customer representatives is

critical to delivering our increasingly

digitised business model whilst

retaining the human touch

through our unique personal

customer relationships.

Regulators and legislators

Regular, open dialogue with

regulators and legislators builds

their understanding of our

customers’ needs and our

essential role in society.

Suppliers

Collaboration with our business

partners is essential if we are to

continue to meet our customers

needs. Our suppliers embrace our

values and help our business grow,

improve efficiency and enhance

performance.

Communities

Our community investment

activities focus on financial

inclusion. In addition, our customer

representatives live and work in the

communities they serve, building

positive relationships with customers

and providing unique insights into

the needs of our communities.

Investors

Strong relationships with our

shareholders and funding partners

help us maintain a strong financial

profile. We generate capital to invest

in growth, enhancing financial

inclusion whilst delivering attractive

and sustainable returns to our investors.

International Personal Finance plc12

Strategic Report

Value created in 2023

What makes us different

Specialist lender

We are experts with deep market

knowledge gained over 26 years

of serving customers who are

underbanked and underserved.

Unique product offering

We are the only financial

services business to provide

both home credit and digital

offerings, plus a range of

insurances. We meet our

customers’ different credit

profiles and create a flexible

path for them to access our

products as their credit

history improves.

Close customer relationships

Knowing our customers so well

helps us make better

affordability assessments,

allowing us to approve more

loans and support financial

inclusion. Many of our

customer representatives

meet customers in their homes

every week. They build unique

personal relationships with our

customers, around 60% of

whom are female, and offer

high levels of contact which

helps them stay in control of

repayments. We are also in

regular dialogue with our

digital customers who we

reach across a range of

digital channels.

Competitive advantage

The home credit model, with its

large customer representative

infrastructure, is extremely difficult

to replicate, and takes years of

experience to manage effectively.

Profitable and highly

scalable business

We are a profitable and cash

generative business. Our home

credit divisions deliver target

returns and we are scaling up

our digital business to meet the

growing number of consumers

who want affordable credit

online, grow profit and deliver

our target returns.

Data insight

Our deep expertise in AI and

machine learning allows us to

incorporate more high-quality

data points into our analytics,

enhancing our risk models and

enabling smarter lending

decisions. For customers, this

means they only receive credit

that’s right for them at a level

that they can afford to repay. It

also has great scope to optimise

returns on marketing investment

and gain deeper insights into

our target consumers so we can

improve customer journeys and

ensure interaction with them is

more effective.

Read our investment proposition on page 18.

Customers

Giving access to affordable, regulated

credit helps customers buy the things

they want and build a credit history.

1.7m

customers included

in the financial mainstream

Colleagues

Providing employment in an inclusive

culture so colleagues are motivated to

serve customers well, achieve exciting

careers and deliver our growth plans.

21,000

colleagues

Communities

Enabling financial inclusion, supporting

community initiatives and providing

career opportunities.

£893,000

invested in our communities

Suppliers

Supporting thousands of businesses

and forming strong, professional and

sustainable partnerships with them.

2,700

suppliers globally

Regulators and government

Providing consumers with access

to regulated, affordable credit and

complying with all market regulations.

c.30

sector associations

Investors

Generating good returns, delivering

growth responsibly and capturing

market opportunities.

>£220m

dividends paid to shareholders

since listing in 2007.

Annual Report and Financial Statements 2023 13

1.9

3.3

1.9

2.3

2.7

2.1

1.5

0.5

3.4

Our marketplace

and key trends

Market review

Our business offers significant long-term growth opportunities. Our target

consumer sector is large and we estimate around 70 million adults are

financially underserved in our nine markets alone.

We operate in the highly-regulated non-bank financial sector with price caps and

affordability regulations in place in most of our markets. We track key consumer

and market trends, and use this deep insight to shape our strategy and respond

to the challenges and opportunities that arise.

Market uncertainty

– Inflation rate rises slowed in 2023 but are

forecast to remain elevated in 2024.

– Higher food and energy costs eroded

household purchasing power and

lower-income consumers felt the impact

on their disposable income.

– Increasing interest rates in 2023

impacted funding cost.

– We benefit from a diversified business

model in nine geographies.

– We serve loyal customers, even in

difficult times.

– We lend cautiously and will tighten credit

settings, if necessary.

– We always focus on cost efficiency and

process optimisation to mitigate inflation

and the rising cost of funding.

Source: Bloomberg Source: Forbes Advisor 2023

Growing customer expectations

– Good demand for affordable financial

services in our target segment.

– Consumers want a convenient, fast

and personal service driven by

technology innovations.

– Trusted brand status is increasingly

important.

– Negative customer experiences amplified in

social media heightening reputational risks.

– We are increasing our product,

channel and price choices

to serve more customers.

– Our ‘Think Customer’ programme

focuses on new ways to create

seamless customer journeys.

– Growing our digital Creditea brand.

53%

of consumers say experience

matters as much as the products

or services provided

Australia

Weighted Europe Mexico

Market trends

Our response

GDP growth forecasts (%)

International Personal Finance plc14

Strategic Report

Source: Goldman Sachs

Economics Research

Technology advances

– Adoption of digital technology is

widespread among our target consumers.

– The use of mobile and digital devices

and online customer service is

increasingly important.

– There is a growing requirement to keep

personal data secure.

– The use of Generative AI in financial

services and customer marketing is

increasing rapidly.

– We are using data to improve lending

decisions, optimise marketing investment

and improve the customer journey.

– We are exploring new ways to develop

innovative, user-friendly digital credit

solutions, improve marketing effectiveness

and deliver cost efficiencies.

$200bn

Global AI investment

forecast by 2025

Competition

–

All our markets remain very competitive.

– Banks tightened lending criteria in

response to the cost-of-living crisis.

– Some competition is being impacted by

increased regulation.

– Whilst not direct competition, Buy Now Pay

Later business models demonstrate that

consumers value point of sale finance.

– No major new entrants serving our

segment of consumers.

– We will continue to increase product

and channel choice and broaden

price options to help customers access

our credit.

– Our home credit model continues to offer

competitive barriers to entry.

– Our strong financial performance, robust

balance sheet and market-leading brands

mean we are well-placed to capitalise on

market share opportunities.

Key competitors Regulatory focus

Banks

Digital lenders

Home credit

operators

Price

Affordability

Responsible

lending

Credit unions

Pawn brokers

Point of sale

finance

Payday lenders

Financial

inclusion

Regulatory

compliance

Regulation

– Regulators and legislators continue to

focus on affordability, fair pricing and

consumer protection.

– Increasing bank-like regulation for

non-banking financial institutions.

– The EU Consumer Credit Directive (CCD),

published in 2023, requires changes

topre-contractual information,

creditworthiness assessments, training

andconsumer protection rules.

– We maintain open relationships with

regulators and legislators to ensure they

understand the important role we play in

extending financial inclusion.

– Most of the Groups’ businesses operate

within rate cap and affordability regulations.

– We are transitioning our Polish businesses

to operate under new pricing and

affordability regulations, and will adapt to

any changes necessary to comply with

the EU CCD.

Principal risks

Credit

Future legal and regulatory development

Funding, liquidity, market and counterparty

Reputation

Taxation

Change management

Product proposition

Technology

People

Information security and cyber

See pages 78-83 for more information.

Annual Report and Financial Statements 2023 15

Creating more choice to

deliver a better experience

Chief Executive Officer’s review

How would you sum up performance

in 2023?

At a very high level, I believe our business has had one of its most

successful years ever. Our strategy to regrow the portfolio at a

sensible pace is being very well executed and, during 2023, we

combined this growth with excellent operational effectiveness,

very strong cost control and good capital management. As a

result, we have outperformed our own expectations in terms of

portfolio quality and delivered profit before tax of £83.9m, well

ahead of our original plan for the year.

I want to record up front that the results we delivered in 2023

are due to the tremendous work of our colleagues, all of whom

are dedicated to providing greater financial inclusion for

underserved consumers in our markets. It is one thing to have

a clearly articulated strategy, but a good strategy is nothing

unless the appropriate skills, capabilities and dedication are

there to deliver it. I feel very fortunate to lead a business where

that is absolutely the case.

How are you delivering on your goal to

increase financial inclusion?

The short answer would be through a dedicated team of over

21,000 colleagues. The truth is that our purpose of building a

better world through financial inclusion is our raison d’être,

and so we focus everything we are doing on that outcome.

We have made it very clear that we are a specialist provider of

finance, and we therefore do not get distracted by areas that

do not help us achieve our purpose. From the products we

design and how we deliver them to our customers, to the

conversations we have with customers who may be having

difficulties with their repayments, we work as a team to provide

solutions that work for those we serve.

How is the transformation in

Poland progressing?

There is no doubt that adapting to new regulations in Poland

was our single biggest challenge of the year. In addition to the

much lower total cost of credit cap, which was effective for the

full year, we also needed to apply much more stringent

affordability regulations that came into effect in May 2023. The

response of our Group and Polish colleagues has been

nothing short of outstanding. Our new credit card product is

proving to be a huge success, and by the end of 2023 we had

issued 130,000 cards. What’s even more pleasing is that the

customer response to the credit card has been

overwhelmingly positive. For nearly two-thirds of our customers,

this is their first credit card, and they are now reaping the

benefits of being able to transact online and in retail outlets.

Right now, we are currently operating under what is known as

a small payment institution licence and are engaging with the

Polish financial supervision authority, the KNF, which is

assessing our application for a full payment institution licence.

This would enable our Polish business to issue more credit

cards in Poland.

Just as we were about to go to press with our 2023 results, we

received a communication from the KNF, setting out their

interpretation of how the existing rules on consumer finance

should be applied to credit cards provided by non-bank

financial institutions. In short, they suggest that the non-interest

related costs applicable to cards should be covered by one of

the existing caps that apply to instalment loans in Poland.

Applying a cap in this way could have a significant impact on

our Polish business, and we estimate that it could reduce the

Group’s profit before tax in future years by up to £10 million.

Clearly this is very unwelcome news and the KNF’s

interpretation does not align with the consistent legal advice

we have had as to how credit card costs should be governed.

We do have a very good track record of adapting to new

regulation, and I have no doubt that once we have clarity on

how this area should be regulated, we will adapt our products

and processes to both comply and deliver our target returns

for the business.

“Our relentless focus on meeting our customers’

needs combined with strong cost control and

good capital management drove a very positive

financial and operational performance in 2023.”

Gerard Ryan

Chief Executive Officer

International Personal Finance plc16

Strategic Report

How has the cost-of-living crisis impacted

customers and their need for credit?

Whenever I spoke with shareholders and other stakeholders

during the first half of 2023, I explained that we were positively

surprised at how consistent customer repayment behaviour

had been, and that to some extent we were still trying to

understand why. In the face of the worst inflation we have all

experienced for several decades, we were not seeing any

material change in our customers’ payment patterns. By the

end of quarter three, we reached the conclusion that the key

drivers for this were threefold: first, whenever we provide

finance, we always do so on the basis of affordability; second,

despite the fact that inflation is high, unemployment continues

to be at record low rates and pay is increasing, creating more

disposable income; and finally, our operational execution has

been excellent. As for our customers’ credit needs, I believe

they continue to be somewhat cautious, particularly in Europe,

where uncertainty caused by the war in Ukraine and high

inflation are having a negative impact on confidence levels.

Reflecting this, we will continue to maintain careful

management of our credit risk profile to ensure customers are

not overburdened. Taking all of this into account and

excluding Poland, where we expected lending to contract,

we delivered 8% growth in lending in 2023.

Is competition increasing?

Competition is certainly evolving, both geographically and in

terms of the propositions being offered. In Mexico, we have

seen the arrival of a number of international players, most of

which are operating payments services, but a few are now

beginning to look at the lending sector. I believe our Mexican

customers are unlikely to be their prime target, given their lower

disposable incomes and bank account penetration. In Europe,

we have observed the demise of a number of smaller players in

Poland due to regulatory changes, and more broadly, an

increased focus on payday lending, and Buy Now, Pay Later

businesses continuing to take market share but struggling to

make a profit.

A number of UK non-bank financial

institutions have failed due to regulation.

Is this likely to happen in your markets?

There were some very UK-specific circumstances that, in my

view, applied to almost all of these failures: new regulation that

was applied retrospectively, an ombudsman process with a

minimum tariff of more than £700 per reviewed case, and

claims management companies who looked at the

combination of these two factors and saw an opportunity to

create a completely new industry that would generate huge

profits for the owners at the expense of the financial institutions

and their customers. In addition, it is clear that some of these

institutions were making excessive returns based on lending to

some of the most disadvantaged consumers in the country.

If I contrast this context with our own experience, there are

striking differences: our regulators tend to introduce regulation

that is forward-looking, cases going to some form of

independent arbitration are either free or have a de minimis

fee, and the returns we are making balance the needs of all

our stakeholders. For these reasons, I believe we are unlikely to

see a repeat of the UK experience in our markets.

ProviSmart – our new credit card

Piotr was offered a ProviSmart credit card having been a

Provident home credit customer in the past.

“The new credit card is a very good

idea. I can withdraw cash anytime

and have used the card for shopping

in store. The credit I took recently

helped pay to redecorate my home

and I also bought some presents for

my grandchildren.”

Better choice

In addition to our credit card offering, customers

in Poland can access almost all of our full suite of products

from instalment home credit loans, fully-remote digital credit

and our value-added services including healthcare cover

and educational packages. Based on the initial success of

our credit card in Poland, we will explore the option of

introducing this product in our other home credit markets.

Better experience

Our new credit card has been designed specifically to meet

consumer and regulatory requirements in our Polish market.

Whilst most of our customers normally deal in cash, the

credit card provides very real benefits and a modern credit

offering. In addition to the initial cash draw down,

increasingly our customers are using their credit cards to

buy goods online, in stores and to take out cash at ATMs.

£500

average ProviSmart balance

953,000

ATM, retail and online transactions made

by our credit card customers in 2023

Strategy in action

Annual Report and Financial Statements 2023 17

Chief Executive Officer’s review continued

>£1bn

profit before tax delivered since listing in 2007

>£220m

dividends paid since listing in 2007

15 -20%

target RoRE

How are you making it easier for

customers to engage with IPF?

As part of our refreshed Next Gen strategy, more details

of which can be found on pages 20 to 25, our intention

is to increase our reach to appeal to more consumers

by expanding our geographic footprint, increasing our

product range and growing the number of channels

through which customers can access our offers. In 2023,

we established new areas in Mexico and we will continue

this expansion in 2024 by starting to serve new customers

in Mexicali. Our new credit card in Poland has proven

to be very popular with customers, as have the new value-

added services we included in our range. Based on our initial

success in Poland, we will look at the option of having a credit

card in our other home credit markets. As for distribution

channels, we are delighted that our retail partnerships model

is now established, and we are providing access to finance

for consumers at the point at which they are making

purchases retail outlets.

There is another key element to improving access to our

services for our customers, and that is through the use

of technology. We are investing in technology to improve

our customer journey, digitising as many of the steps of the

onboarding process as possible, and shortening the time from

when a prospective customer first approaches us to when they

get a decision on their app and get funds delivered to them.

In Mexico home credit, this has helped us reduce the “time

to yes” from 24 hours in 2021 to around five minutes in 2023.

In addition, we are converting more leads to loans through

instant messaging technology and building mobile apps

to allow our customers to take more control of their accounts,

whether that be looking at when their next payment

is due, or seeing if we have a new offer available for them.

The Providigital app has helped us improve loan approval

times from two days to around 15 to 20 minutes.

Are these investments making your

business more efficient?

Although our primary aim is to improve our customer’s

experience of interacting with us, there is no doubt that there

are significant internal spin-off benefits for us. For example,

our call centre colleagues are already able to dedicate

more time to speaking with new customers because existing

customers, who would have called us with their queries, are

self-serving via our mobile apps. Another example would be

digitising the onboarding process in Mexico, which has resulted

in a lot less paper being processed and, by definition, that can

only be good for the environment. We are firmly of the view that

investing in technology for the benefit of our customers

ultimately provides big benefits for the business as well.

How are you supporting

local communities?

An important part of delivering on our purpose is our

commitment to the communities where our customers

and colleagues live and work. We focus on the issues that

are important to our stakeholders, namely financial inclusion

and education, through our global community programme,

Invisibles, which supports underprivileged and excluded

people in society. These activities also provide a valuable

platform to engage with colleagues, customers, local

governments and NGOs. In 2023, we invested more than

A strong investment proposition

IPF is a global consumer credit business delivering financial

inclusion for millions of people and having a positive impact

on society. Our strategy combined with market-leading brands,

personal customer relationships and digital innovation, position

us uniquely to take advantage of increasing demand and

deliver a RoRE of between 15% and 20%.

Market leading and financially inclusive

Specialist financial services business providing a range

of credit products and value-added services to millions

of underserved consumers in a responsible way.

Substantial opportunities for

sustainable, long-term growth

Increasing consumer demand and a broad range

of products and distribution channels offer attractive,

sustainable growth prospects.

Effective risk management

Successful track record of managing key risks

including credit, regulation, competition and liquidity.

Well-developed risk management framework and

processes aligned to strategic objectives.

Strong financial profile

The Group is profitable, resilient and cash generative

with a robust balance sheet and funding position

to invest in our strategic plan and deliver growth.

Delivering attractive, sustainable returns

Our financial model focuses on sustainable portfolio

growth to deliver a RoRE of 15% to 20%, which supports

a progressive dividend payout ratio of at least 40%

of earnings.

Significant future value

A great value business comprising three profitable

divisions with attractive long-term growth prospects,

proven returns and higher valuation potential.

International Personal Finance plc18

Strategic Report

716,000

customers served by Mexico home credit

5 mins

to approve a customer

Expanding home credit in Mexico

Laura lives in Tijuana and was one of our first customers

to take a home credit loan to support her business shortly

after we launched in the region.

“I’ve found Provident to be a reliable

company and although I didn’t

believe it at first, I got my money very

quickly. It’s a great thing to have for

enterprising women who are looking

to own their own business.”

Better choice

Provident is the only home credit operator in Mexico.

Expanding our home credit offering into new regions

in this highly-underserved market offers a new financial

choice to consumers and supports our plan to capture

the significant growth potential in Mexico.

Better experience

Our customers in our new regions of Tijuana and Tampico

can take advantage of the benefits of home credit – small

sum loans repaid in affordable chunks over the course

of around 8 to 12 months, the convenience of a customer

representative visiting them at home to collect repayments,

and a sympathetic approach and no additional

fees charged if they take longer to repay their loan.

Our digitising strategy has also improved the time

it takes to approve a credit application and for

customers to receive their loan.

£893,000 in our communities. In Poland, our team created

an award-winning financial education programme for 200

Ukrainian women who are one of the most ‘invisible’ groups in

the financial sector in Poland. They were also recognised for

a financial fairy tale ‘Money does not grow on trees’ which

was distributed to 14,000 schools, youth clubs and childcare

centres. Each of our businesses also commissioned social

studies highlighting those groups in their particular markets

that are marginalised and used these findings as a platform

to engage with politicians and NGOs to build awareness

of the issues these people face. More details of our community

support can be found on pages 56 to 58.

How are you engaging colleagues?

Our colleagues are fundamental to achieving our strategy

and it is vital that they are engaged and understand the

positive impact they have on our customers and the business.

We create opportunities to develop skills and capabilities,

undertake feedback surveys, host conferences and business

updates and run an extensive global care plan to support

engagement. The results of our Global People Survey,

which we ran across the Group in May 2023, delivered very

positive results and, although I am a born optimist, even my

expectations were soundly beaten. We had a response rate

of 95% from our 21,000 colleagues and exceptionally high

scores around the four strands we align our culture to –

pride, care, challenged and inspired – details of which are

on page 54. Ithink any business would be justly proud of

these and for me it is a clear indication that we, as the IPF

community, believe in our purpose of building a better world

through financial inclusion. With an inspiring purpose and

consistent communication around our strategy and operational

execution, I believe high levels of engagement should be the

expected outcome. That’s not to say that it is easy, but it is

certainly worth all the time and effort we put into it.

What funding options are you exploring?

We run a very conservative balance sheet, and this has stood

to us in good stead when very testing times arrive, whether

that be the 2008 financial crisis or the pandemic in 2020.

We target an equity to receivables ratio of approximately 40%,

and at the year end that stood at 56%. Our team did an

excellent job of funding the balance sheet in 2023, successfully

extending around £146m of debt facilities, and we are

heading into 2024 feeling positive about our funding options.

Whilst our Eurobond is not due until November 2025, it is likely

we will refinance this earlier, and at that time we will look

at all available options. With a very clean portfolio and

a strong balance sheet, I’m confident that we will have

a number of choices as to our future funding structure.

What are your key priorities for the future?

We intend to stick to what we are excellent at, and that is

providing finance options to consumers who are underserved.

Our Next Gen strategy sets out the three pillars we will be

focused on for the coming years, namely, providing more

products and channels, becoming a smarter and more

efficient business, and finally, becoming a data driven,

technology-enabled provider to our customers.

Gerard Ryan

Chief Executive Officer

Strategy in action

Annual Report and Financial Statements 2023 19

Our Next Gen strategy

Responsible

Taking due care in all

our actions and decisions.

Treating others as they

would like to be treated.

Being open and transparent

in everything we do.

Respectful Straightforward

We aim to be the leading provider of financial services

for underserved communities around the world; data driven,

technology enabled and always with a human touch.

We are driven by our purpose to build a better world

through financial inclusion and guided by our financial

model in balancing the needs of our stakeholders.

Building the products,

channels and territories

to ensure our propositions

are attractive to the next

generation of customers

1. Next Gen

Financial inclusion

Becoming a smarter and

more efficient organisation

that makes a positive impact

on society

2. Next Gen

organisation

Investing in the capabilities

required to become a

data driven and technology

enabled partner for our

customers

3. Next Gen

Technology & data

Our Next Gen strategy

We are advancing as a modern, multi-product, multi-channel and

digitally-enabled business and our clear plan to become the leading

provider of financial services to underserved communities around

the world is captured through our Next Gen strategy. It encapsulates

our vision to serve 2.5 million customers by continually innovating,

digitising and connecting our business to deliver a better experience

to our customers whilst retaining the human touch that sets us apart

from our competitors.

A new vision

Three

strategic pillars

Driven by

our purpose

and guided by

our financial

model

Supported by

our values

Building the products,

channels and territories

to ensure our propositions

are attractive to the next

generation of customers.

1. Next Gen

financial inclusion

Becoming a smarter and

more efficient organisation

that makes a positive impact

on society.

2. Next Gen

organisation

Investing in the capabilities

required to become a

data driven and technology-

enabled partner for

our customers.

3. Next Gen

technology and data

International Personal Finance plc20

Strategic Report

We are driven by a shared

purpose and commitment to

growing the business to

create value for all our

stakeholders. We focus on

providing continuous learning

and exciting career

opportunities for our people,

introducing new ways to be

as efficient as possible, while

building goodwill and

stronger relationships in the

communities we serve.

We are enhancing our

data collection and insight

processes to develop new

products and services, enrich

credit scoring, accelerate

decision-making and improve

our customer journeys.

The need for appropriate and

responsibly provided credit

products and services is

increasing, and we are proud

to help people access

affordable credit when and

where they need it. In doing

so, we are delivering on

our purpose to increase

financial inclusion.

Next Gen

organisation

Next Gen

technology

and data

Next Gen

financial

inclusion

Our three strategic pillars

drive our response to unlock

substantial and sustainable

long-term growth opportunities

Deploy

product family

Be a great

place to work

Optimise,

standardise and

automate processes

Deliver more value

to customers

Upgrade

productivity

Establish open and

flexible architecture

Build distribution

channels through

partnerships

Be purposeful

and support our

communities

Use data to drive

decision making

Extend geographic

footprint

Upgrade our

external credentials

Leverage new tech

There are significant

growth opportunities to

extend our product family

across our nine markets.

We launch new products

selectively in markets

ensuring there is strong

consumer demand and

that we can deliver

sufficient returns.

We strive to be a great

place to work and a

business that cares about

and supports our

colleagues to develop

within a growing company.

We are strengthening our

technology leadership

and executing process

improvements to

drive consistency,

offer personalised

customer solutions

and ensure customer

data is always protected.

The great value of the

additional services we

provide, such as

healthcare insurances,

and our focus on

innovating to improve the

customer experience

through our Think

Customer programme help

us deliver more value to

customers beyond lending.

We have a strong focus on

cost efficiency to improve

customer experience,

mitigate the impact of

inflation and increase in

funding costs, and deliver

target returns.

We have a medium-term IT

road map that will simplify

processes, secure an

effective infrastructure and

develop our people to

support future technologies.

We are building the

foundations to create

more points at which

consumers can access

our credit offering through

retail partnerships to

deliver additional

growth momentum.

We have a very strong

social purpose and are

committed not only to

supporting our customers

in a responsible way but

also striving to have a

positive impact on the

communities we serve.

We are unlocking the

value of data analytics to

enhance business

performance, incorporate

data insights into business

processes and make more

effective decisions.

We are financially

including more consumers

in Mexico by expanding

into new locations with our

home credit business and

growing our digital offering

in this market.

Our Responsible Business

Framework and Code of

Ethics underpin the way

we operate as we strive to

be the leading business in

the sector.

We are investing in

technology, cloud

capabilities and

Generative AI in order

to remain relevant for

customers and support our

vision, as well as improve

resilience, scalability

and cost-efficiency.

Annual Report and Financial Statements 2023 21

We made excellent progress against our strategic priorities in 2023

– Grew our credit card offering in

Poland to 130,000 customers.

– Introduced digital lending in

Romania.

– Launched a new home credit

region in Tampico, Mexico.

– Launched our Creditea mobile

wallet in Mexico.

– Introduced a number of value-

added service products in

European home credit.

– Progressed new retail point of sale

partnerships in Romania.

– Upgraded talent with the

appointment of a Group Chief

Marketing Officer.

– Achieved 95% positive response

rate to our Global People Survey.

– Invested £893,000 in our

communities programmes.

– Extended our global Invisibles

community programme to reach

69,000 people.

– Delivered 500+ different training

programmes.

– Recognised with award wins for our

leading brands and approach to

financial education, diversity,

sustainability and ethics.

– Agreed and began implementing

our new Responsible Business

Framework and ESG strategy.

– Improved the cost-income ratio by

3.9 ppts to 57.0%.

Strategic progress at a glance

1. Next Gen

financial inclusion

2. Next Gen

organisation

3. Next Gen

technology and data

Priorities 2024

Progress in 2023

Strategic KPIs

1.7m

customers

12.2%

impairment rate

12%

year-on-year revenue growth

57. 0 %

cost income ratio

55.3%

revenue yield

£83.9m

profit before tax

– Delivered the next phase of our

customer contact centre upgrade.

– Integrated WhatsApp into the

Mexico home credit onboarding

journey to upgrade the customer

experience.

– Significantly reduced the time

to approve and deliver loans

in our digital and Mexico home

credit businesses.

– Applied leading-edge data

science techniques to improve

lending effectiveness.

– Upgraded talent with the

appointment of a Group Chief

Information Officer, and an IT

Director for European home credit.

– Explore the role of credit cards in

driving growth beyond Poland.

– Further develop retail partnership

opportunities.

– Grow our new digital channel

in Romania.

– Open one new area in Mexico

home credit.

– Extend IPF Digital’s value-added

services offering.

See pages 26 to 41 for more performance information.

– Support more communities through

our Invisibles programme.

– Continue investment in our

colleagues to ensure we remain a

great place to work.

– Obtain a full payment institution

licence in Poland to support our

credit card growth ambitions.

– Create strategic leadership hubs to

accelerate multi-market delivery.

– Progress towards establishing an

open and flexible IT architecture.

– Continue to develop the Group

data strategy.

– Further progress towards

technology and process

convergence in European home

credit businesses.

– Develop AI capabilities to deliver

incremental business value.

Our Next Gen strategy continued

International Personal Finance plc22

Strategic Report

Strategy in action in 2023

Next Gen

financial

inclusion

New retail partnerships

Hybrid channel growth

After concept tests in 2022, we expanded

our credit distribution in Romania with the

launch of a retail finance partnership with

Flanco, one of the country’s largest retailers

of electrical goods.

This collaboration offers Provident loans to

finance consumer purchases in Flanco’s

160 stores nationwide and has started well

in attracting customers to choose our credit

proposition. This venture sits alongside our

existing partnership with Romania’s eMAG

retail chain.

160

Flanco stores in Romania

offering Provident retail credit.

We offer both home credit and digital

credit in Poland and Mexico, which has

opened another opportunity to support our

goal of increasing financial inclusion and

business growth.

Our hybrid offer is a unique blend of

customer representative and digital channels

for those people who apply for a digital loan

but whose credit record is not strong enough

to warrant a fully digital service.

Working in partnership, our home credit

and digital businesses in these markets are

now servicing customers online initially

before completing the transaction through

a customer representative.

10,000

customers are being served

through our hybrid channel.

Annual Report and Financial Statements 2023 23

Next Gen

organisation

Engaged teams driving growth

Supporting our communities

Maintaining high levels of engagement

and collaboration among our colleagues is

critical to the IPF culture and growing the

business. The findings of our 2023 Global

People Survey once again generated a very

high response rate and positive feedback.

Our colleagues have a shared and

meaningful purpose, centred around our

customers, and feel cared for by the Group.

We are also building our development

programmes to enhance leadership

capability and create quality

development opportunities.

79%

of colleagues feel

proud to work for IPF

See page 51-55 for more details.

Our global flagship community initiative,

Invisibles, highlights the plight of

underprivileged, marginalised and

excluded members of society.

In 2023, we continued to expand the

programme by making invisibility visible

among public and government decision-

makers through independent studies which

identified key social groups and provided

insights into the challenges they face.

We also partnered with NGOs to create

financial educational programmes and

support key invisible groups in our markets.

Our teams in Poland and the Czech

Republic also won awards during the year

for the work achieved through their

Invisibles programme.

69,000

people supported by our

Invisibles programme in 2023

See page 56-58 for more details.

Our Next Gen strategy continued

International Personal Finance plc24

Strategic Report

Next Gen

technology

and data

Converting demand into lending

Improving efficiency with

machine-learning algorithms

We’re investing in technology to transform

our lead management processes and convert

customer demand into responsible lending.

Our Mexico home credit team has introduced

WhatsApp instant messaging to seamlessly

transition potential customers enquiring about

a loan via Facebook to an interactive

chat-bot which continues the application

process, before passing the lead to our field

team. The impact has been outstanding

with 2m+ WhatsApp conversations in 2023

and more than a 165% increase in leads via

Facebook. Application times are now down

to five minutes and we have reduced our

reliance on paper. The process of introducing

innovative call centre technologies in Europe

has also improved our speed of service with

72% of customers now contacted within

15 minutes of submitting an enquiry.

2m+

WhatsApp conversations in 2023

In 2023, we overhauled our operations by

incorporating advanced machine-learning

algorithms into the labour-intensive

process of ensuring contract compliance.

This previously involved manual verification

to match paper and electronic contracts,

and ensure all sections of customer contracts

were complete. The implementation of these

algorithms has halved the workload of our

contracts teams, liberating employees from

extensive paperwork and allowing them

to concentrate on areas crucial to business

growth. This transition has also streamlined

our operations, showcasing our robust data

science capabilities, and bolstered our risk

management strategies and process

enhancements significantly.

50%

reduction in colleague workload

enabling more focus on growth

Annual Report and Financial Statements 2023 25

51.9

48.1

49.8

59.2

55.3

868.8

716.8

669.1

973.6

892.9

8.6

4.9

18.6

16.2

12.2

Pre-exceptional return

on required equity (RoRE)

14.8%

Pre-exceptional return

on equity (RoE)

11.1%

Cost-income

ratio

57.0%

What we measure: The direct expenses

of running the business including customer

representatives’ commission as a percentage

of revenue.

Why it’s important: To ensure that we focus

on running our business in the most efficient

manner because the cost-income ratio

is a key driver of profitability.

How we performed: The cost-income ratio

improved in 2023 as we maintained stringent

focus on cost control while investing

in growth. Based on achieving greater

scale and the efficiency initiatives already

underway, we expect the ratio to continue

to improve to our target range of 49% to 51%

over the next two to three years.

What we measure: RoRE is pre-exceptional profit after tax divided by average required equity

of 40% of receivables. RoE is pre-exceptional profit after tax divided by average equity.

Why it’s important: RoRE and RoE are good measures of overall returns for shareholders.

We target 15% to 20%, as this is a return which we consider to be sustainable and balances

the needs of all our stakeholders.

How we performed: RoRE and RoE are lower than our target range of 15% to 20%, as we rebuild

scale and transition the Polish business to the new regulatory landscape. RoE is lower than RoRE

due to the additional capital held above our target level of 40%. We expect returns in 2024 to

moderate as we continue to adapt our Polish business to the evolving regulatory landscape,

refinance maturing fixed rate debt and accelerate receivables growth. We would then expect

returns to grow in 2025 onwards.

See our Financial review on pages 36 to 41 for more information.

60.9

67.6

58.6

52.7

57.0

15.1

14.6

(16.2)

18.3

14.8

11.4

11.5

(13.0)

16.5

11.1

Revenue yield

55.3%

Impairment rate

12.2%

Closing net receivables

£892.9m

What we measure: The closing amounts

receivable from customers translated

at constant exchange rates.

Why it’s important: This enables changes

in customer receivables to be compared

on a consistent basis, which is important

because it is a key driver of revenue growth.

How we performed: Closing receivables

increased by £24m in 2023 (a reduction

of 0.2% at CER), with all markets delivering

strong performances except Poland where

we are transitioning the business to meet

new pricing and affordability legislation.

We expect the Group’s closing receivables

to increase in 2024, as the contraction in

Poland reduces and other countries deliver

strong growth.

What we measure: Revenue divided

byaverage gross receivables.

Why it’s important: This metric reflects

therevenue we earn from receivables and

the amounts charged to our customers.

It is an important measure in ensuring

our pricing is fair and appropriate

to deliver our target returns.

How we performed: Revenue yield

strengthened in 2023 reflecting price

increases in some markets and a reduction

in promotional activity. We expect revenue

yield to improve in the medium term as we

continue with these actions.

What we measure: Impairment as a

percentage of average gross receivables

before impairment provision.

Why it’s important: Profitability is maximised

by optimising the balance between growth

and credit quality. Impairment rate helps

us assess the amount of principal we are

unable to collect.

How we performed: As expected, the

impairment rate increased as performance

normalises post-pandemic. Repayments

remained strong and despite the increased

costs of living, we did not see any discernible

impact on customer repayments. We expect

the impairment rate to increase towards our

target range of 14% and 16% in 2024 as Mexico

grows and becomes a larger proportion of

receivables.

Key performance indicators

We track progress against our purpose and strategic priorities using a mix of financial and

non-financial measures. We measure growth, efficiency and shareholder returns, which are all

underpinned by our focus on customer satisfaction, the engagement of our colleagues and our

contribution to the communities we serve.

Financial

Key performance indicators

International Personal Finance plc26

Strategic Report

Community

investment

£893,000

Customer recommendations

(Net Promoter Score)

+69

What we measure: Total value of our

contribution to supporting communities.

Why it’s important: This investment

demonstrates our contribution to the

communities where we live and work.

How we performed: In 2023, our investment in

local communities focused on our flagship

programme, Invisibles, and financial

education. In 2024, our focus will be to

enhance our Invisibles programme and create

more volunteering opportunities for colleagues

to support local community initiatives.

See page 56-58 for more information.

What we measure: The proportion of customers recommending our products

to others minus those who would not.

Why it’s important: Net Promoter Score is a measurement of customer loyalty and satisfaction

which are important drivers of future growth. We target a minimum score of +55 as part of our

commitment to delivering on our purpose.

How we performed: Our Group Net Promoter Score at December 2023 was +69, unchanged

on 2022 and well above our target of +55. Our focus in 2024 will be on maintaining this strong

score with continued emphasis on improving our customer experience and journey through

our Think Customer programme.

See page 48-51 for more information.

Customers

1.7m

What we measure: Total number

of customers across the Group.

Why it’s important: Customer numbers

demonstrate level of financial inclusion

and our scale in our markets.

How we performed: In 2023, customer

numbers reduced by 2%. However, excluding

the impact of the transition of our business

in Poland and the collect-outs of our

operations in Spain and Finland, customer

numbers increased by 2%. We expect

to return to customer growth in 2024

and our longer-term ambition is to serve

2.5m customers.

See page 48-51 for more information.

Employee and customer representative turnover and stability

Employees Customer representatives

1,733

1,727

1,682

2,109

1,700

What we measure: Moving annual turnover

(MAT) is the total leavers in the last 12 months

divided by the average headcount in the

same period. Stability is the number of

employees with more than 12 months’

service compared to the corresponding

number 12 months ago.

Why it’s important: Low and stable MAT

correlates with providing high levels of

customer service and strong employee

and customer representative engagement.

High levels of stability indicate that skills and

experience are being retained, and support

the maintenance of strong working

relationships, which in turn supports

high levels of customer service.

As part of our commitment to delivering

on our purpose, we target minimum stability

scores of 75% for employees and 70% for

customer representatives.

How we performed: Customer representative

and employee MAT were broadly in line with

2022. As expected, customer representative

and employee stability contracted modestly

as levels move back towards more

normalised, pre-pandemic rates but still

indicate very good colleague engagement.

See page 51-55 for more information.

MAT%

Stability %

Non-financial

Annual Report and Financial Statements 2023 27

Group performance review

2023

£m

2022

£m

Change

£m

Change

European home credit 65.1 65.6 (0.5) (0.8)

Mexico home credit 23.1 17.7 5.4 30.5

IPF Digital 10.7 8.8 1.9 21.6

Central costs (15.0) (14.7) (0.3) (2.0)

Profit before taxation 83.9 77.4 6.5 8.4

The detailed income statement of the Group, together with associated KPIs is set out below:

2023

£m

2022

£m

Change

£m

Change

at CER

Customer numbers (000s) 1,700 1,733 (33) (1.9) (1.9)

Customer lending 1,150.6 1,126.4 24.2 2.1 (3.5)

Average gross receivable 1,388.9 1,244.5 144.4 11.6 5.9

Closing net receivables 892.9 868.8 24.1 2.8 (0.2)

Revenue 767.8 645.5 122.3 18.9 11.7

Impairment (169.4) (106.7) (62.7) (58.8) (45.9)

Revenue less impairment 598.4 538.8 59.6 11.1 4.7

Costs (437.6) (393.3) (44.3) (11.3) (5.2)

Interest expense (76.9) (68.1) (8.8) (12.9) (7.6)

Reported profit before taxation 83.9 77.4 6.5 8.4

Revenue yield 55.3% 51.9% 3.4 ppts

Impairment rate 12.2% 8.6% (3.6) ppts

Cost-income ratio 57.0% 60.9% 3.9 ppts

Pre-exceptional EPS

23.2p 20.8p 2.4p

Pre-exceptional RoE

11.1% 11.5% (0.4) ppts

Pre-exceptional RoRE

1,2

14.8% 14.6% 0.2 ppts

1. Prior to an exceptional tax credit of £10.5m in 2022.

2. Based on required equity to receivables of 40%.

We made excellent progress against our strategic objectives in 2023 which resulted in a very strong operational and

financial performance for the year as a whole.

Group performance

We delivered a very strong full-year financial performance in

2023 as we continued to execute well against our strategy,

despite the ongoing challenging macroeconomic

environment and the ongoing transition of our Polish business.

We delivered profit before tax of £83.9m, up by 8% (£6.5m)

year on year, which was well ahead of our original plans,

reflecting our strong operational performance, consistent

execution of our strategy and a £6m benefit from favourable

exchange rates. All three of our divisions delivered a good

financial performance.

We are committed to increasing financial inclusion by offering

affordable and accessible financial products to those who are

often underserved by banks and traditional credit providers.

The strong execution of our strategy to capture growth

opportunities and meet consumer demand with our

broadening range of financial products supported an 8%

increase in customer lending year on year and 12% growth

(at CER) in closing net receivables, excluding Poland. As

expected, Poland’s lending in both our home credit and digital

divisions declined year on year as we transitioned the business

through 2023 to a credit card-focused business as well as

adapting to new affordability regulations. As a result, overall

Group customer lending reduced by 3.5% year on year and

closing net receivables contracted by 0.2% (at CER) to £893m.

Customer numbers increased by 2% to 1.7 million, excluding

the impact of the transition in Poland and the collect-outs of

our businesses in Spain and Finland which are now complete.

Our financial model requires us to deliver a RoRE of between

15% and 20%, which supports a minimum payout ratio of 40%

of earnings to shareholders and receivables growth of up to

10% per annum whilst maintaining a target equity to

receivables ratio of 40%. Delivery of our financial model is

underpinned by a stringent focus on revenue yield,

impairment rate and cost-income ratio, and we continued to

make very good progress towards our medium-term targets

in 2023.

The Group revenue yield continued to strengthen, increasing

by 3.4 ppts to 55.3% year on year, reflecting the positive

impacts of lower levels of promotional activity introduced

Operational review

International Personal Finance plc28

Strategic Report

during the second half of 2022 and price increases in some

of our markets. It is now just below our target range of 56%

to 58%, and we expect it to increase further in the medium

term as: (i) Mexico home credit, which carries a higher yield,

grows and represents a larger proportion of the Group’s

receivables portfolio; and (ii) continued lower promotional

activity in the receivables portfolio take greater effect.

The rate of inflation in our markets has remained elevated, and

whilst it is now reducing, there continues to be pressure on our

customers’ disposable incomes. Our disciplined approach to

granting credit in a responsible, affordable way for our

customers continues to be reflected in our good portfolio

quality and robust customer repayments and, to date, we

have not seen any discernible impact from the cost-of-living

crisis on customer repayment performance. The Group

delivered an impairment rate of 12.2% in 2023 (2022: 8.6%), in

line with our expectations as impairment rates continue to

normalise towards our target levels. The Group impairment

rate in 2023 includes a £6m downwards valuation in respect of

a reduction in expected future cashflows discounted at the

original effective interest rate as a result of the potential impact

from the recent KNF letter on credit card receivables in Poland

(see page 30). Reflecting continued caution in respect of the

pressure on customers’ disposable incomes, our balance

sheet remains very robust with an impairment provision

coverage ratio of 36.3% at the end of the year, which is in line

with 2022 and compares with a pre-Covid-19 ratio of 33.5% at

the end of 2019. The Group’s cost-of-living provision has been

reduced from £21m to £15m, reflecting strong credit quality

and operational execution as well as a reduction in inflation.

A key focus of our strategy is to become a smarter and more

efficient organisation through process improvement and the

deployment of technology. Our very strong cost control,

combined with the excellent growth in revenue, delivered

a significant 3.9 ppt improvement in the Group’s cost-income

ratio from 60.9% to 57.0% year on year. Based on achieving

greater scale and the efficiency initiatives already underway,

we expect the ratio to continue to show year-on-year

improvement as we build towards our target range of

49% to 51%.

Pre-exceptional EPS was 23.2p per share (2022: 20.8p),

showing year-on-year growth of 11.5%, a higher rate than the

8.4% growth in profit, due to a lower effective tax rate of 38%

compared with 40% last year.

The pre-exceptional RoRE for 2023 of 14.8% is broadly in line

with last year (2022: 14.6%). We continue to operate close to

the lower end of our target range of 15% to 20% as we rebuild

scale and transition the Polish business to the new regulatory

landscape. The Group’s pre-exceptional RoE, based on actual

equity, reduced to 11.1% at the end of 2023 (2022: 11.5%), due

to favourable exchange rate movements which have

increased equity.

For more information see the Financial review on pages 36 to 41.

Strategy and purpose

We play a vital role in society by providing access to affordable

credit products and insurance services to people who are

often excluded from day-to-day financial services by banks

and other lenders. We currently serve 1.7 million customers

in nine countries, and we have a clear ambition to grow our

business to 2.5 million customers as we deliver on our purpose

of building a better world through financial inclusion.

The evolution of the Group over the last five years has been

dramatic, as we have navigated through Covid-19, adapted

to the changing regulatory landscape and introduced an

increasing number of new products and channels to satisfy

ever-changing customer needs. IPF is now a more modern,

multi-product, multi-channel and digitally-enabled business

and we have therefore taken the opportunity to rearticulate

our strategy to reflect the Group as it is today. Our aim is to

be the leading provider of financial services for underserved

communities around the world; data driven, technology-

enabled and always with a human touch, and we are

now well positioned to deliver future growth. We call our

rearticulation “Next Gen” and, whilst the fundamentals

are unchanged, we now categorise our strategy into three

distinct pillars:

1.Next Gen financial inclusion: building products, channels

and territories to ensure our propositions are attractive to the

next generation of customers.

2.Next Gen organisation: becoming a smarter and more

efficient organisation that makes a positive impact on society.

3.Next Gen technology and data: investing in the capabilities

required to become a data-driven and technology-enabled

partner for our customers

In 2023, we made strong progress executing our strategy of

broadening our products and distribution channels to serve

more customers at the same time as driving improved cost

efficiency and delivering increased digital capability across

the Group. Some of the key highlights were:

The rollout of our new credit card in Poland has progressed

very well and, at the end of the year, we had issued more

than 130,000 cards to customers, up from just over 50,000

at the half year. The new offering is proving very popular

with our customers who value the utility provided by a credit

card to seamlessly shop online and in store as well as withdraw

cash at an ATM as their credit limit allows. The level of these

transactions has now grown to represent approximately half

of all transactions in December 2023, exceeding our own

expectations. It is also very encouraging that the impairment

performance of credit card customers is consistent with

instalment loans, benefiting from the ongoing discipline

provided through cash repayments being collected

by our customer representatives. See page 30 for information

regarding a regulatory communication from the KNF in

February 2024 regarding the application of non-interest

fees to credit cards.

In our Mexico home credit business, we continued our

successful expansion strategy, launching a new home credit

region in Tampico in March 2023 and we will continue to grow

our geographic footprint in 2024 with a new branch opening

in Mexicali, located in northern Mexico. Building on the

success of our digital onboarding process, which was

delivered in 2022, we transformed our lead management

process in 2023 by integrating WhatsApp instant messaging

technology with our Facebook marketing channel, which

increased leads by more than 165%. In the fourth quarter of

the year, we also launched a new mobile app for customers

which is currently being tested in three locations and has

received positive feedback to date.

We launched our mobile wallet to our digital customers

in Mexico in early 2023. We have been very encouraged by

the strong uptake in Mexico and, together with the continued

good traction in the Baltics, resulted in our IPF Digital division

ending the year with over 53,000 mobile wallet customers,

up from 14,000 at the start of the year.

Annual Report and Financial Statements 2023 29

Operational review continued

As part of our focus on capturing partnership opportunities,

we very recently launched a test of an interest-bearing Pay

Later product with retailers in Mexico to enable customers

to finance their purchases at point of sale.

Our Romanian business continues to be at the forefront

of innovation and a driver for growth within the Group.

Having launched a retail partnership with E-Mag in 2022,

we launched our second retail partnership in the fourth

quarter of 2023 with Flanco, one of the country’s largest

electrical goods retailers, providing access to finance for

consumers at the point at which they make a purchase.

In December, we also launched what we term a digital

“hybrid” loan product, which offers end-to-end digital

onboarding, disbursement and repayment functionality

with the opportunity for a customer representative to work

with the customer in the event of any financial difficulty.

We are pleased with how these new initiatives have started

and will look to expand them during 2024.

We continue to see a very good opportunity to serve our

customers with value-added services such as healthcare,

life and job insurances as well as access to educational

services at great value prices they would not be able

to obtain individually. During 2023, we further expanded our

value-added services in Poland, and also launched our first

insurance product in the Baltics within our IPF Digital division.

In total, around 800,000 of our customers are now enjoying

the benefit of one of our value-added services.

For more information on our strategy see pages 21 to 25.

Environment, social and governance (ESG)

As a global lending business, we have the responsibility

and opportunity to make a real difference to our customers’

financial futures and to contribute to the creation of a lower-

carbon, fairer and ethical society. We are committed not only

to supporting our customers by providing affordable and

transparent credit in a responsible way, but also striving

to create long-term, sustainable value for all our stakeholders

as we invest in promoting financial inclusion, develop the

capabilities of our team who serve millions of customers,

and implementing our climate change strategy.

In 2023, the Board approved our Responsible Business

Framework, a vision for how we will contribute to a more

sustainable world and deliver our purpose of building a better

world through financial inclusion. Our journey to embed ESG

throughout our operations aims to drive real change across

our markets and further details of the key initiatives undertaken

in the year can be found on pages 46 to 77.

Regulatory update

Consumer Credit Directive

The EU Commission’s review of the second Consumer Credit

Directive (CCD II) was published formally in November and

entered into force in December. EU Member States have

24 months to comply with CCD II. The key areas of change

relevant to the Group include rules on pre-contractual

information, creditworthiness assessments and underwriting,

documentation training and consumer protection rules.

Poland

From 1 January 2024, the Polish financial supervision authority,

KNF, began supervising all non-bank financial institutions in

Poland, which includes our home credit and digital businesses

in this market. We continue to engage with the KNF as they

assess our application for a full payment institution licence

which will enable our Polish business to issue a greater volume

of credit cards in Poland. In the meantime, we continue to

operate under a small payment institution licence where the

value of monthly credit card transactions, based on a

12-month rolling average, is limited to the maximum value

achieved in any one month in 2023 (in our case December

2023) until the full payment institution licence is granted.

In late February 2024, we received a letter from the KNF issued

to all regulated lenders operating in the Polish credit card

market setting out its current expectations on how charging

practices for credit cards should be subject to limits on

non-interest costs, the need to differentiate between different

costs charged by credit card issuers which are subject to caps

and those fees which are not subject to a cap and lastly how

issuers should approach more broadly the question of

calculating and assessing fees which are not subject to

specific legal limits.

The key expectations set out in the KNF’s letter are as follows:

i. Credit cards should be subject to the limits on non-interest

costs as set out in the Law on Consumer Credit and the Civil

Code. The Consumer Credit cap operates in a way that

allows lenders to charge up to 10% of the total amount of

credit issued up front, plus 10% of the total amount of credit

per annum, up to a maximum of 45% of the total amount of

credit issued (often referred to as “10+10”). The Group’s

Polish business issues its loan products based on this cap.

The Civil Code cap operates in a way allowing lenders to

charge up to 20% of the total amount of credit per annum,

taking into account the actual repayment period.

ii. The KNF differentiates between non-interest caps which are

“credit-related” and subject to a cap and “card-related”

costs which are not subject to a cap.

iii. Card-related costs (e.g. ATM usage fees), which are not

covered by either of these caps, should be proportionate,

not excessive and should be justifiable.

iv. The letter was not specific on when any changes would

need to be implemented and did not indicate any

retrospective application.

In addition to the above charges, lenders in Poland can also

charge interest on all credit products, including credit cards,

up to the limit on the interest rate cap which is calculated as:

2 x (National Bank Reference Rate + 3.5%).

Following detailed legal advice, the Group had previously

determined that non-interest cost caps did not apply to credit

cards and is therefore reviewing, with the assistance of

external counsel, what the impact of this communication

might be. We are also engaging with the KNF.

At present, the Polish business charges interest on its credit

cards in line with the current interest rate cap in Poland plus

an all-in 4.5% charge per month. The all-in monthly charge is

above the non-interest expectations set out in the KNF’s letter.

Our Polish credit card receivables portfolio amounts to £49m at

31 December 2023. This is stated after a £6m impairment

charge in respect of a reduction in expected future cashflows

discounted at the original effective interest rate as a result of

the potential impact from the KNF letter. Polish credit card

receivables represent just over 5% of the Group’s receivables

and approximately 25% of total receivables in Poland. The

Group’s Polish business has an excellent track record of

adapting to the evolving regulatory environment and has

developed a broad range of products and distribution

channels to meet the financial needs of underbanked and

underserved consumers in this market. We will continue to

International Personal Finance plc30

Strategic Report

2023

£m

2022

£m

Change

£m

Change

at CER

Customer numbers

(000s) 761 784 (23) (2.9) (2.9)

Customer lending 616.6 637.0 (20.4) (3.2) (7.1)

Average gross

receivables 801.6 747.5 54.1 7.2 3.0

Closing net receivables 483.0 501.0 (18.0) (3.6) (5.5)

Revenue 379.7 317.5 62.2 19.6 15.0

Impairment (39.4) (5.2) (34.2) (657.7) (720.8)

Revenue less

impairment 340.3 312.3 28.0 9.0 4.5

Costs (227.2) (203.9) (23.3) (11.4) (7.4)

Interest expense (48.0) (42.8) (5.2) (12.1) (7.6)

Reported profit

before taxation 65.1 65.6 (0.5) (0.8)

Revenue yield 47.4% 42.5% 4.9 ppts

Impairment rate 4.9% 0.7% (4.2) ppts

Cost-income ratio 59.8% 64,3% 4.5 ppts

Pre-exceptional RoRE 20.5% 21.3% (0.8) ppts

The year-on-year profit performance benefited by £4m from

more favourable exchange rates. Romania and Hungary

both performed very well, delivering good profit growth

and exceeding our original plans. As expected, Poland’s

profits reduced by around 40% in 2023 as we adapted

to the new affordability and revised rate cap regulations

introduced in 2022 and transitioned to a more credit

card-focused business. The Czech Republic saw a reduction

in profit due to higher impairment levels during the first nine

months of the year, but it was pleasing to see the business

gain improved momentum towards the end of the year.

Despite the ongoing cost-of-living pressures in Europe,

demand for consumer credit remained robust in all of our

markets, and we continued our commitment to supporting

our customers through both difficult periods as well as good

times. Overall, European home credit lending showed a 7%

contraction year on year due to the expected 27% reduction

in Poland. In contrast, Romania, Hungary and the Czech

Republic delivered a combined 10% increase in lending.

European

home credit

Our European home credit division delivered a strong

financial result in 2023, reporting profit before tax of

£65.1m, broadly in line with 2022, despite the ongoing

transition of our Polish business.

evolve our Polish business in order to ensure it delivers the

Group’s target returns of between 15% and 20% whilst building

financial inclusion in this important market.

The Group estimates that if the expectations set out in the KNF

letter are implemented in full in their current form, the non-

interest fees generated by the Group’s Polish credit card

business could be reduced by approximately 30% - 40%.

On an ongoing basis, after taking account of the Group’s

strong trading performance in 2023, this could reduce the

Group’s profit before tax by up to £10m per annum.

Further information is also set out in note 32.

Romania

In the first quarter of 2024, the Prime Minister of Romania

announced plans to prioritise implementing price caps

on loans from Non-Banking Financial Institutions (NBFIs)

in the upcoming parliamentary session. The proposed limits

include an 8% cap on the APR for NBFIs' mortgage loans and

a 25% cap for consumer loans, both compared to the National

Bank of Romania's interest rates. An exception is proposed for

small-value consumer loans (up to 15,000 lei or approximately

€3,000), where the total amount payable cannot exceed twice

the borrowed amount. We have been anticipating a potential

change in regulation for some time and do not expect the

impact to be material. However, we continue to actively

monitor the legislative process.

Outlook

Our aim is to provide underserved consumers with access

to simple, personal and affordable credit and insurance

services to help support and protect them and their families.

There is strong demand for affordable credit within our target

demographic, and we have a clear plan to capture the

substantial and sustainable long-term growth opportunities

for the Group.

We delivered a stronger-than-expected trading performance

in 2023 and this momentum has continued in early 2024.

Looking ahead, we will continue to focus on extending

financial inclusion by offering more product choices to

consumers within our existing markets, including credit card,

digital, retail partnership opportunities, value-added services

as well as expanding our geographic reach in Mexico.

We will also continue to deploy more digital solutions to

improve customer experience and cost efficiency in all our

markets, while retaining the personal contact with customers

that gives us a key competitive advantage.

We will continue to adapt and change our Polish business to

both customer needs and the evolving regulatory landscape.

As we continue to make the changes necessary to deliver

our target financial returns in Poland, we expect the Group’s

ongoing profit could be up to £10m lower per annum than

previously expected, after taking account of the Group’s

strong performance in 2023.

Our actions over the last two years to maintain tight credit

standards, improve revenue yields and drive cost efficiency

have been very successful in improving the Group’s returns

towards our target levels. Credit quality is excellent, we have

a robust balance sheet and strong funding position, and we

are progressing with plans to refinance the Eurobond maturing

in November 2025. As a result, we have a strong foundation on

which to build good quality customer and receivables growth

in 2024.

Annual Report and Financial Statements 2023 31

Operational review continued

Closing net receivables showed a year-on-year reduction of

5% (at CER) to £483m, driven wholly by the 25% reduction in

Poland, which was in line with the guidance we provided in

the fourth quarter of 2022. Romania and Hungary delivered

strong receivables growth of 15% in 2023 whilst the Czech

Republic was broadly stable as we took action to improve

field processes and set the business up for growth in 2024.

The Polish credit card receivables portfolio ended the year

at £49m. This is stated after a £6m downwards valuation

in respect of a reduction in expected future cashflows

discounted at the original effective interest rate as a result

of the potential impact from the KNF letter (see page 30).

Customer numbers ended the year at 761,000 (2022: 784,000),

due mainly to a 25,000 reduction in customers in Poland.

The revenue yield significantly strengthened year on year from

42.5% to 47.4%. This reflects the management actions taken

to bolster our returns, including reduced promotional activity

and modest price increases, some of which relate to local rate

caps which are linked to base rate movements.

We maintained tight credit standards in all markets during

2023 and customer repayment performance remained robust

in Romania, Hungary and Poland. We also saw another strong

performance on post charge-off recoveries, including debt

sales, similar to the levels achieved in 2022. As a result,

and despite a weaker performance in the Czech Republic,

European home credit delivered an impairment rate of 4.9%,

up from 0.7% in 2022. The cost-of-living provision has been

reduced from £15m to £9m, reflecting strong credit quality

and operational execution as well as a reduction in inflation.

The strong growth in revenue combined with very effective

cost control delivered a further significant improvement in the

cost-income ratio, which improved by 4.5 ppts year on year

to 59.8% (2022: 64.3%). We continue to drive more efficient

processes and deliver greater synergies across our four

countries, including through the deployment of technology

and sharing of best practice and resource. As part of this

programme of work, we have recently announced a

restructuring of the field force in our Polish business.

As expected, the pre-exceptional RoRE showed a modest

decrease to 20.5% (2022: 21.3%), as we rolled-out credit cards

in Poland and continued the transition to the new regulatory

landscape in which we now operate.

2023 was a successful year in the evolution of our European

home credit business. The rollout of credit cards in Poland has

progressed well and we will continue to adapt and change

the business to meet both customer needs and the evolving

regulatory landscape. We now expect ongoing profit from

European home credit could be up to £10m lower per annum

than our original plans as we continue to make the changes

necessary to deliver our target financial returns in Poland. We

will also expand our new digital and partnership offerings in

Romania in 2024 and grow our core home credit customers in

this market as well as in Hungary and the Czech Republic. Our

European home credit business remains the bedrock of our

Group returns but also, importantly, offers us continued good

growth opportunities.

Ivo and Garbriela live in Popricani, Romania, and over

the years have taken a number of loans to set up

a home where they are raising their two children.

“Provident gave us the chance to build

our home from scratch. We needed

money for materials and loans from

Provident and my brother-in-law as

well as a donation of windows from a

neighbour got us started. Step by step,

we added to our home and recently

we returned for a loan to surprise

our son with a TV for his birthday.”

Better choice

We have been serving home credit in Europe since 1997

and Ivo and Gabriela are two of the many millions of

customers we have supported over the years. In 2023,

as part of our strategy to offer more choice to consumers,

we launched our first digital credit offering in Romania,

rolled out our credit card in Poland and extended our

point-of-sale retail credit offering in Romania. In addition,

more than 9,000 customers in Poland purchased online

language classes as part of our value-added services.

Better experience

Our European home credit team is the driving force

behind our Think Customer programme which focuses

on understanding customer needs and pain points in order

to improve their experience with us. The programme takes

a data and measurement-driven approach to the customer

journey, then prioritises opportunities for improvement

and new ways to delight our customers. It is a continuous

journey, and we’re making great progress with high

customer satisfaction and response timelines.

91%

customer satisfaction

against our target of 85%

72%

of customers are now

contacted within 15 minutes

of submitting an enquiry

International Personal Finance plc32

Strategic Report

2023

£m

2022

£m

Change

£m

Change

at CER

Customer numbers

(000s) 716 696 20 2.9 2.9

Customer lending 302.8 257.4 45.4 17.6 4.8

Average gross

receivables 299.4 239.0 60.4 25.3 11.7

Closing net receivables 187.1 158.5 28.6 18.0 8.3

Revenue 261.6 210.9 50.7 24.0 10.8

Impairment (96.7) (75.5) (21.2) (28.1) (15.1)

Revenue less

impairment 164.9 135.4 29.5 21.8 8.3

Costs (129.7) (107.8) (21.9) (20.3) (7.5)

Interest expense (12.1) (9.9) (2.2) (22.2) (9.0)

Reported profit

before taxation 23.1 17.7 5.4 30.5

Revenue yield 87.4% 88.2% (0.8) ppts

Impairment rate 32.3% 31.6% (0.7) ppts

Cost-income ratio 49.6% 51.1% 1.5 ppts

Pre-exceptional RoRE 20.7% 19.2% 1.5 ppts

Our strong operational performance and successful

geographic expansion strategy coupled with good consumer

demand delivered a 5% increase in customer lending year

on year, despite the tighter credit settings introduced towards

the end of 2022 in the three regions of Mexico City, Norte and

Sureste which represent around 20% of the business. Following

corrective actions in these three regions, we expect customer

lending growth to improve in 2024. Customer numbers grew by

3% in 2023 to 716,000.

Mexico home credit

Mexico home credit continued to perform well in 2023,

delivering good growth and a 30.5% (£5.4m) increase

in profit before tax to £23.1m (2022: £17.7m). The

year-on-year profit performance benefited by £2m from

more favourable exchange rates.

Cristina lives in Tultitlan, Mexico and runs a

small online business

“Thanks to Provident I’ve been able

to get ahead. I use loans to buy stock

and because sales have been doing

very well I’ve been able to reinvest

in my business. I want to keep working

because running my business makes

me feel capable and productive even

though I’m elderly.”

Better choice

In addition to home credit loans, we enhance our

customers’ personal and financial resilience through

products like health insurance, life insurance and income

protection. Access to healthcare is a key concern for our

customers and we have a number of propositions that

reduce that worry. For example, in Mexico, more than

1,200 customers have used our eye wear benefit to

purchase new glasses. This shows that our commitment

to inclusion is not just about lending money, but rather

building overall resilience for our customers.

Better experience

We have introduced digital technology and automation

to improve our customer experience and productivity

significantly. From our digital application processes

and handheld technology used by customer

representatives to e-contracts and geolocation

technology, we have created a more modern experience

and streamlined our service process to offer quicker credit

decisions and deliver cash loans to customers in less time.

5 mins

to make a credit decision

compared with 24 hours in 2021

1,200

customers in Mexico have

used our eye wear benefit

Annual Report and Financial Statements 2023 33

Operational review continued

2023

£m

2022

£m

Change

£m

Change

at CER

Customer numbers

(000s) 223 253 (30) (11.9) (11.9)

Customer lending 231.2 232.0 (0.8) (0.3) (3.4)

Average gross

receivables 287.9 258.0 29.9 11.6 8.4

Closing net receivables 222.8 209.3 13.5 6.5 5.8

Revenue 126.5 117.1 9.4 8.0 4.5

Impairment (33.3) (26.0) (7.3) (28.1) (22.0)

Revenue less

impairment 93.2 91.1 2.1 2.3 (0.6)

Costs (65.8) (67.0) 1.2 1.8 4.5

Interest expense (16.7) (15.3) (1.4) (9.2) (6.4)

Reported profit

before taxation 10.7 8.8 1.9 21.6

Revenue yield 43.9% 45.4% (1.5) ppts

Impairment rate 11.6% 10.1% (1.5) ppts

Cost-income ratio 52.0% 57.2% 5.2 ppts

Pre-exceptional RoRE 7.6% 6.9% 0.7 ppts

We continued to see good demand for our digital offering

and, excluding Poland, year-on-year customer lending showed

strong growth of 9%, with the Baltics, Mexico and Australia all

performing well. Lending in Poland reduced by 34% as we

transition to the new lower total cost of credit cap and

affordability rules in this market. For the division as a whole,

IPF Digital’s customer lending in 2023 was therefore down

by 3% year on year. We expect IPF Digital to return to good

lending growth in 2024.

We continued to execute our growth strategy to rebuild

receivables to gain scale and deliver our target returns,

and this resulted in a 6% year-on-year increase in closing

net receivables to £223m (at CER) at the end of 2023.

Excluding Poland, receivables growth was very strong

in Mexico, Australia and the Baltics at 18%, which contrasted

with a contraction in Poland of 25%. Customer numbers ended

the year at 223,000. Mexico, Australia and the Baltics delivered

good growth, which was offset by Poland where, as expected,

customer numbers reduced by 26%.

IPF Digital

IIPF Digital delivered another good performance in 2023

and reported a 21.6% increase in profit before tax

to £10.7m (2022: £8.8m). All eight of our countries,

including the collect-outs in Spain and Finland which

have now been completed, delivered profitable

contributions in 2023.

Closing net receivables increased by 8% (at CER) to £187m

which supported strong revenue growth of 11% year on year.

The annualised revenue yield showed a modest reduction

from 88.2% at the end of December 2022 to 87.4% and we

expect it to remain close to this level going forward.

The annualised impairment rate in 2023 was 32.3%

(2022: 31.6%) higher than our target rate for Mexico of 30%.

This was as a result of the flow through of higher customer

write offs prior to the tightening of credit noted above. Credit

quality has now improved, and we expect the impairment rate

to reduce in 2024 whilst also delivering good growth.

We continued to invest in our expansion strategy, which is

progressing well, and we are pleased with the performance of

our two new regions in Tijuana and Tampico, launched in 2022

and March 2023 respectively. We will continue to grow our

geographic footprint in 2024 with a new branch opening in

Mexicali, located in northern Mexico. Despite the continued

investment in delivering geographic expansion, costs only

showed a year-on-year increase of 7% (at CER), broadly in line

with inflation levels, reflecting a strong cost and efficiency

focus within the business. As a result, the cost-income ratio

showed a 1.5 ppt improvement to 49.6% (2022: 51.1%).

Mexico home credit continues to be the benchmark

home credit operation for cost efficiency.

Overall, Mexico home credit delivered a RoRE of 20.7%

(2022: 19.2%), in line with our divisional target returns. As we

have indicated previously, investing in sustainable growth with

a relatively shallow “j-curve” is key to maintaining target returns

in this strong growth business.

The growth potential in our Mexico home credit business is

significant. Our expansion strategy to reach more consumers

both within our existing geographic footprint and new regions

is progressing well and we will continue to deliver sustainable

growth to ensure consistent returns. We plan to open a further

new branch in 2024, and we will continue to digitalise the

customer journey to ensure eligible, quality customers seeking

credit enjoy a speedy and convenient service. We also plan

to rollout our new customer app which is currently being

tested in three branches and which has had strong take-up

by customers. We will continue to build on the synergies

developed with IPF Digital, which is helping us to financially

include more people in Mexico. Together, Mexico home

credit and IPF Digital in Mexico already serve nearly 800,000

customers, and we remain confident of our potential to grow

to over one million customers in the medium term.

International Personal Finance plc34

Strategic Report

The revenue yield reduced by 1.5 ppts to 43.9% (2022: 45.4%).

This reflects the impact of a combination of factors including:

(i) the flow through of a tighter rate cap in Latvia in 2022; (ii)

the reduction in higher yielding Finland and Spain receivables

during the collect-outs, which are now complete; (iii) the

impact of the lower total cost of credit cap in Poland; and (iv)

the growth in Australia, which is relatively lower yielding. These

adverse variances have been offset partly by the growth in

Mexico which has a higher revenue yield.

Customer repayment performance has remained robust

in all our digital operations and portfolio quality is very good.

The impairment rate showed an expected increase year on

year from 10.1% to 11.6% due mainly to the growth in lending

in Mexico which carries a higher impairment rate, as well as

the rundown of the Finland and Spain receivables portfolios,

which incurred minimal impairment as it has already been

accounted for up front under IFRS 9.

Although we continued to invest in developing our product

offering and marketing to attract new customers and build

scale, tight control on expenditure delivered a 4.5% (at CER)

reduction in costs year on year and this was reflected in the

cost-income ratio which decreased significantly by 5.2 ppts

to 52.0% (2022: 57.2%). We expect the cost-income ratio

to further improve as we continue to rebuild the business

and benefit from economies of scale. As a fully digital

business, we are targeting a cost-income ratio of around

45% in the medium term.

IPF Digital’s RoRE improved by 0.7 ppts year on year to 7.6%

(2022: 6.9%) reflecting good growth and strong operational

discipline notwithstanding the adverse impact of the reduction

in returns within Poland. Although IPF Digital has lower scale

than we would wish following Covid-19 and the closure of

Finland and Spain, there are strong organic growth

opportunities in our existing markets, particularly Mexico,

Australia and in Poland as we rebuild the business. We will

also continue to consider inorganic opportunities to deliver

scale and increase returns to our target levels.

Our focus in IPF Digital in 2023 has been on increasing

automation, expanding our mobile wallet proposition,

maintaining tight credit standards and concluding the

collect-outs and closures of Finland and Spain. Following

strong execution, we now have a very solid foundation for

delivering significant growth in 2024 as we extend the reach

of our mobile wallet in the Baltics, Mexico and, in due course,

Australia. We also expect our Polish digital business to stabilise

in 2024 and we have recently transferred a nascent digital

business in the Czech Republic from European home credit

into IPF Digital which represents another exciting growth

opportunity. We plan to extend our range of value-added

services to IPF Digital customers, following the recent launch of

a new employment protection insurance product in the Baltics,

and continue our tests to provide point-of-sale revolving

credit facilities following the launch of a new Pay Later

product in Mexico in late 2023.

When 25 year old Jelena lost her job, we activated

our payment holiday service until she was able

to begin repaying again.

“I really like how friendly and positive

the service is, and because I’ve always

repaid on time, you helped me when

I needed support. When talking to

other lenders I didn’t get any support,

but it felt like your team actually

wanted to help. Thank you.”

Better choice

IPF Digital offers a range of products from our mobile

wallet and digital revolving credit line to instalment loans,

all of which are increasingly popular among consumers

who want an end-to-end digital customer journey and a

fast, efficient customer experience. In 2023, we launched

our mobile wallet in Mexico and as well as being a

convenient tool for consumers to manage their credit

offering, it offers our business a competitive advantage

within our consumer segment.

Better experience

Jelena’s story is one of many that demonstrate the

high-quality service IPF Digital provides. Not only do

our customers want a fast, digital service, they appreciate

our support if they face challenging times. We are also

improving customer experience through our product

offering. Our mobile wallet, for example, provides customers

with bank-like facilities on their mobile and the ability

to use their revolving credit to buy goods online or in stores.

They can see their day-to-day financial transactions,

pay bills and receive repayment reminders to help them

stay on track and keep their credit score in good standing.

53,000

mobile wallet customers

223,000

IPF Digital customers

Annual Report and Financial Statements 2023 35

I am pleased to report that the Group delivered a strong

financial performance in 2023. We continued to make good

progress on executing our strategy, improving cost efficiency,

diversifying our funding position and we maintain a very

conservatively capitalised balance sheet to mitigate any

further potential deterioration in the challenging

macroeconomic environment.

Financial model

Our business is well managed and operates with strong ethical

and financial disciplines. As we navigate our future growth

opportunities and business choices, we have a formal

financial model which underpins our Next Gen strategy

and balances the needs of our various stakeholders including

customers, colleagues, regulators, shareholders and debt

providers. It sets out the target returns we need to deliver

sustainable earnings, support our progressive dividend

policy, invest in the future growth of the business

and ensure we maintain a strong balance sheet.

Our financial model, details of which can also be found

on page 6, focuses on the following:

1. Return on required equity (RoRE)

The first, most integral part of our model is to deliver a target

RoRE of between 15% and 20%. We believe that returns

materially above this range would not balance the needs

of all of our stakeholders in delivering our purpose of building

a better world through financial inclusion. We calculate RoRE

as profit after tax over the average required equity of 40% of

receivables. This allows us to ensure comparability between

divisions and is more consistent with the financial model

which assumes a 40% equity to receivables ratio. We will also

continue to disclose our return on equity (RoE) on a Group

basis. We target each of our divisions to deliver a return

of at least 20% to ensure that we can deliver the Group RoRE,

after taking account of central costs.

Group pre-exceptional returns %

The pre-exceptional annualised RoRE for the year of 14.8%

is broadly in line with 14.6% at the end of 2022. We continued

to operate close to the lower end of our target range of 15%

to 20% as we rebuild scale and transition the Polish business

to the new regulatory landscape. The Group’s pre-exceptional

RoE, based on actual equity, reduced by 0.4 ppts to 11.1%

at the end of 2023 as a result of favourable exchange rate

movements which increased equity. We expect our Group

returns to moderate in 2024 as we continue the transition

of our Polish businesses in the evolving regulatory landscape,

refinance the Group’s fixed rate debt and accelerate

receivables growth elsewhere in the Group. We would

then expect returns to improve in 2025.

We firmly believe each of our businesses is capable of

delivering a 20% RoRE and the RoRE by division is set out below:

2023 2022

European home credit 20.5% 21.3%

Mexico home credit 20.7% 19.2%

IPF Digital 7.6% 6.9%

“Once again, we have delivered a strong

set of results in 2023, through a disciplined

approach to growth and tight cost control.

We continue to make good progress towards

our financial model targets.”

Gary Thompson

Chief Financial Officer

RoRE RoE

-10

2018 2019 2020 2021 20232022

Group pre-exceptional returns %

Financial review

International Personal Finance plc36

Strategic Report

European and Mexico home credit are already delivering

a RoRE slightly above the 20% threshold we set for each

division. IPF Digital’s RoRE improved by 0.7 ppts year on year

to 7.7% (2022: 6.9%) reflecting good growth and strong

operational discipline notwithstanding the adverse impact

of the reduction in returns within Poland. Although IPF Digital

has lower scale than we would wish following Covid-19 and

the closure of Finland and Spain, there are strong organic

growth opportunities in our existing markets as we rebuild the

business, particularly in Mexico, Australia and Poland. We will

also continue to consider inorganic opportunities to deliver

scale and increase returns to our target levels at the lower end

of the Group’s target range in 2025.

2. Distribution of earnings

The delivery of a RoRE of 15% supports the distribution

of a minimum of 40% of our post-tax earnings. A RoRE of nearer

20% would allow us to either distribute more than 40% of our

earnings to shareholders and/or deliver additional receivables

growth (see 3. Receivables growth below).

Our total dividend of 10.3 pence per share in 2023 represents

a pre-exceptional payout ratio of 44%. We anticipate our

payout ratio to be in excess of 40% of earning in 2024 as we

continue to transition our Polish businesses in the evolving

regulatory landscape.

3. Receivables growth

Returning capital of 40% of post-tax earnings allows us to fund

receivables growth in the following year by up to 10%. If we grow

in excess of 10% we will utilise any additional capital resources

over our target capital base. If we expect to grow at less than

10% we will either retain capital or increase the capital return

to shareholders above our 40% minimum threshold.

In 2023, receivables remained broadly in line with 2022,

as the expected reduction in Poland was offset by receivables

growth in all other markets. This growth is less than 10% and,

as a result, we generated additional capital over and above

our financial model during 2023 (see 4. Equity to receivables

ratio below).

4. Equity to receivables ratio

A target equity to receivables ratio of 40% is our current view

of an appropriate balance sheet, offering plenty of security

in both good and more difficult times. At the end of 2023,

the Group’s equity to receivables ratio was 56% (2022: 51%),

higher than our target of 40%.

We anticipate a reduction in the equity to receivables ratio

in 2024 (subject to foreign exchange movements) as we invest

in growth, continue to deliver our progressive dividend policy

and deliver returns below our target threshold as we continue

to transition our businesses in Poland.

Changes to financial model KPIs

Our financial model is underpinned by a stringent focus on

revenue yield, impairment rate and cost-income ratio. It is also

dictated by the cost of funding and the tax rate. We set targets

for each of these metrics at the half year in 2022 and, in light

of strong operational performance since then together with

the global rise in interest rates due to cost-of-living pressures,

we have re-evaluated and subsequently reset the targets for

each of these metrics in 2023 as follows:

Group KPI

target range

New, medium-term

target range

Annualised revenue yield 53% – 56% 56% – 58%

Annualised impairment rate 14% – 16% 14% – 16%

Annualised cost-income ratio 52% – 54% 49% – 51%

The revised targets are supported by our financial forecasts

and ongoing initiatives that are well progressed. They support

the delivery of our target returns of between 15% and 20% after

taking account of increasing funding costs and an ongoing

tax rate of approximately 40%.

Revenue yield – Our target range for revenue yield is 56%

to 58% which is based on our current product structure

and today’s regulatory landscape.

The Group revenue yield continued to strengthen, increasing

by 3.4 ppts to 55.3% year on year, reflecting the positive

impacts of lower levels of promotional activity introduced

during the second half of 2022 and price increases in some

of our markets. It is now just below our target range of 56%

to 58%, and we expect it to increase further in the medium

term as: (i) Mexico home credit, which carries a higher yield,

grows and represents a larger proportion of the Group’s

receivables portfolio; and (ii) continued lower promotional

activity in the receivables portfolio take greater effect.

Our financial model

Return on required equity

15-20%

Supports

minimum

dividend

payout

ratio of

40%

Funds annual

receivables growth

of up to

10%

Maintains

equity to

receivables

ratio at

40%

Annual Report and Financial Statements 2023 37

23.2p

Pre-exceptional

earnings pershare

10.3p

Dividend

per share

Financial review continued

Impairment rate – We have a target range of between

14% and 16% for our impairment rate.

The rate of inflation in our markets has remained elevated,

and, whilst it is now reducing, there continues to be pressure

on our customers’ disposable incomes. Our disciplined

approach to granting credit to our customers in a responsible,

affordable way continues to be reflected in our good portfolio

quality and robust customer repayments. I am very pleased

to report that to date we have not seen any discernible

impact from the cost-of-living crisis on customer repayment

performance. The Group delivered an impairment rate of

12.2% in 2023 (2022: 8.6%), in line with our expectations as

impairment rates continue to normalise towards our target

levels. We expect the Group impairment rate to rise closer to

our target range of 14% to 16% in 2024 as we continue to grow

the business and Mexico home credit, which carries a higher

impairment rate, represents a larger proportion of receivables.

Cost-income ratio – A key focus of our strategy is to become

a smarter and more efficient organisation through process

improvement and the deployment of technology. Our very

strong cost control, combined with the excellent growth in

revenue, delivered a significant 3.9 ppt improvement in the

Group’s cost-income ratio from 60.9% to 57.0% year on year.

Our actions, together with ongoing growth, will continue

to drive down this ratio to our target of 49% to 51% over

the next two years.

Funding rate – After taking account of the cost of hedging,

our funding rate was around 10% prior to the very volatile

market conditions we have seen since 2022. The funding rate

of 14% in 2023 is significantly higher than this rate, due to

increased interest rates in our markets as a result of the

cost-of-living crisis and higher hedging costs. We expect this

elevated cost of funding to persist in the short to medium term

as we refinance fixed-rate, fixed term debt and, as a result,

we have been focused heavily on bolstering the revenue yield

and maintaining tight control of costs to mitigate the impact

of higher funding costs. As noted earlier, we have revised

our targets for revenue yield and cost-income ratio to

accommodate the increased funding costs we are incurring.

Tax rate – We consider a tax rate of around 40% to be

reflective of the Group’s structure and we consider this

to be our normalised rate, albeit we continue to ensure that

we are as tax efficient as possible. Our tax rate in 2023 was

38%, modestly lower than our target but we expect it to return

to around 40% in 2024.

The target KPIs, taken together, will deliver our target RoRE

of 15% to 20%. Each of our countries has a different income

statement composition reflecting their credit risk and their

respective regulatory, funding and tax environments.

As mentioned earlier, we believe that each of our businesses

is capable of delivering a target RoRE of 20%, and we have

established similar KPI targets for each territory. We will

manage each business to deliver these targets in order

to deliver the target Group financial model.

Taxation

The pre-exceptional taxation charge on the profit for 2023

is £31.9m, which represents an effective rate for the year of

approximately 38% (2022: 40%). The lower tax rate in 2023

reflects a number of disparate elements, including a positive

tax ruling in Poland which secured an element of bad debt tax

relief arising on loans issued since our Polish business changed

its regulatory status at the start of 2022. We expect the effective

tax rate to return to around 40% in 2024.

Consistent with 2022, the 2023 results reflect an exceptional tax

charge of £4m (2022: exceptional tax credit of £10.5m, which

was stated net of a £5.1m tax charge in respect of Hungary)

relating to the “extra profit special tax” implemented by the

Hungarian government in 2022 and chargeable on the

financial sector including non-bank financial institutions.

The tax has been extended by one further year, and a further

tax charge of £2m is expected to arise in 2024.

Earnings per share (EPS)

Statutory EPS was 21.5 pence in 2023, compared with 25.6

pence per share in 2022. The 16% reduction wholly reflects

the benefit of an exceptional tax credit of £10.5m in 2022

compared with an exceptional tax charge of £4.0m in 2023

(see note 10 to the financial statements).

Excluding the impact of the exceptional items, pre-exceptional

EPS was 23.2p per share (2022: 20.8p), up 2.4p (11.5%) year

on year, at a higher rate than profit growth due to a lower

effective tax rate of 38% compared with 40% last year.

Dividend

Reflecting our confidence in executing the Group’s strategy

and realising the long-term growth potential of the business,

the Board is pleased to declare a 10.8% increase in the final

dividend to 7.2p per share (2022: 6.5 pence). This is in line

with our progressive dividend policy and brings the full-year

dividend to 10.3p per share (2022: 9.2p), an increase of 12.0%

on 2022 and representing a pre-exceptional payout rate of

44% (2022: 44%). As we previously communicated, the payout

rate is modestly above our target of 40% as we utilise our

strong capital base whilst rebuilding our RoRE to our target

level of 15% as the transition of our Polish business is completed.

Subject to shareholder approval, the final dividend will be

paid on 10 May 2024 to shareholders on the register at the

close of business on 12 April 2024. The shares will be marked

ex-dividend on 11 April 2024.

“Maintaining tight control of costs

and delivering process efficiency

improvements through the deployment

of technology are key to mitigating

the inflationary environment and driving

up our returns.”

International Personal Finance plc38

Strategic Report

“We continue to maintain a very well

capitalised balance sheet and robust

funding position to support our

ambitious future growth plans.”

Balance sheet, treasury risk

management and funding

Balance sheet

We continue to maintain a very conservatively capitalised

balance sheet, a strong funding position and robust financial

risk management.

At the end of 2023, the Group’s equity to receivables ratio

was 56% (2022: 51%) and this compares with our target of 40%.

Notwithstanding the Group’s returns being below the lower

target threshold of 15% and the dividend pay-out ratio in

excess of 40%, the ratio has increased during the year due to:

(i) foreign exchange gains of £23m (2022: £42m) being

credited to reserves in the year; and (ii) minimal receivables

growth of 2.8% compared with up to 10% in the financial

model. Excluding the benefit from exchange gains of £65m

over the last two years, the equity to receivables ratio would

have been around 49% at the end of 2023. We anticipate

a reduction in the equity to receivables ratio in 2024 (subject

to foreign exchange movements) as we invest in growth,

continue to deliver our progressive dividend policy and deliver

returns below our target threshold as we continue the two-year

transition of our Polish businesses.

The gearing ratio was 1.0 times (2022: 1.2 times),

comfortably within our covenant limit of 3.75 times.

Closing receivables in 2023 were £893m, which is a contraction

of 0.2% (at CER) compared with 2022. Excluding Poland which

saw an expected year-on-year reduction of 25%, closing

receivables showed good year-on-year growth of 12%. The

average period of receivables outstanding at the end of 2023

was 13.2 months (2022: 13.0 months) with 77% of year-end

receivables due within one year (2022: 76%). Reflecting the

continued caution in respect of the inflationary environment,

our balance sheet remains very robust with an impairment

coverage ratio of 36.3% at the end of the year, which is in line

with 2022 and compares with a pre-Covid-19 ratio of 33.5% at

the end of 2019. The Group’s impairment provision includes

£23.2m of post-model adjustments in respect of the cost-of-

living crisis and the moratorium in Hungary compared with

£24.9m held at the end of 2022 in respect of Covid-19 and the

cost-of-living crisis. The gross contractual cashflows supporting

the receivables valuation amounts to £1.7bn at the end of

2023 (2022: £1.7bn).

The business has a strong track record of cash generation,

even during adverse market and regulatory conditions.

During the outbreak of Covid-19 in 2020, the business restricted

lending to customers and had a strong focus on customer

repayments. Due to the short-term nature of the receivables

book, this action generated cash from operating activities

of £330m, which enabled the Group to reduce borrowings

by £184m and increase cash by £80m. In addition, when

a decision has been taken to withdraw from a territory due

to inadequate returns being available (e.g. Slovakia in

European home credit in 2015 and more recently Finland

in IPF Digital in 2020), we have demonstrated that the collect-

out takes around 2 to 3 years and the cash recoveries (net of

any costs) have typically been close to the value of the net

receivables from the time of the decision to cease the

operations. This represents 1.7 times to 2.0 times the value

of the debt funding supporting those receivables.

The strong cash generation of the Group has again been

highlighted in 2023. With receivables growth at a relatively

low level in 2023 due to the expected reduction in Polish

receivables, the Group generated cash of £193m compared

with £59m in 2022.

Treasury risk management

The Group has Board-approved policies to address the key

treasury risks that the business faces – funding and liquidity risk,

financial market risk (currency and interest rate risk), and

counterparty risk. The policies are designed to provide robust

risk management, even in more volatile financial markets

and economic conditions within our planning horizon.

Compliance with these policies is monitored monthly by the

Treasury Committee chaired by the Chief Financial Officer

and the Board receives a comprehensive funding and liquidity

overview through monthly reporting. Funding and liquidity

of the Group are managed centrally by the Group Treasurer

and qualified treasury personnel. The Group sets cash

management controls for operating markets that are

subject to independent annual testing.

Our funding policy requires us to maintain a resilient funding

position for our existing business and for future growth. We aim

to maintain a prudent level of headroom on undrawn bank

facilities. Our currency policy addresses economic currency

exposures and requires us to fund our receivables portfolios

with local currency borrowings (directly or indirectly) to

achieve a high level of balance sheet hedging. We do not

hedge the translational risk of foreign currency movements

on accounting profits and losses. Our interest rate policy

requires us to hedge interest rate risk in each currency

to a relatively high level. Our counterparty policy requires

exposures to financial counterparties to be limited to BBB-rated

entities as a minimum except as approved, or delegated

for approval, by the Board. In addition to these policies,

our operational procedures and controls ensure that funds

are available in the right currency at the right time to serve

our customers throughout the Group.

Annual Report and Financial Statements 2023 39

“Despite the difficult macroeconomic

backdrop, we successfully extended

around £146m in 2023 and have

a very solid financial foundation

to support our growth plans.”

Financial review continued

The currency structure of our debt facilities broadly matches

the asset and cash flow profile of our business. We have

multiple local currency bank facilities, and our main €341m

Eurobond provides direct funding to our markets using the

euro currency and to markets using other currencies via

foreign exchange transactions. For this reason, we do not

expect fluctuations in the value of sterling to have a major

impact on our funding position.

Debt funding is provided through a diversified debt portfolio

with acceptable terms and conditions. We have wholesale

and retail bonds denominated in euro, sterling, Swedish krona

and Polish zloty, with varying maturities, together with facilities

from a group of 18 banks that have a good strategic and

geographic fit with our business. The Group’s debt is senior

unsecured debt, with all lenders substantially in the same

structural position. We maintain our Euro Medium Term Note

programme as the platform for bond issuance across a range

of currencies.

Funding

At the end of December, the Group had total debt facilities

of £629m, comprising £433m of bonds and £196m of bank

facilities. Our borrowings stood at £516m and, together

with undrawn facilities and non-operational cash balances,

the Group’s headroom on debt facilities amounted to £126m

at the end of 2023. The Group’s current funding capacity,

together with strong business cash generation, is expected

to meet our funding requirements into the first half of 2025.

We note the improvement in market conditions as we actively

explore options to refinance the Eurobond due in November

2025 together with our advisors. A range of debt refinancing

options are available to the Group and we expect to continue

to engage with fixed income investors in 2024.

Despite the difficult macroeconomic backdrop,

we successfully extended around £146m of debt facilities

in 2023, including £84m of bank facilities and the issue

of £62m of bonds, including:

– a PLN 72m (£14.4m) 3-year floating rate Polish bond issued

in October;

– an €11.6m (£10.1m) 3-year Hungarian bond at a fixed

coupon of 11.5%;

– a £25.5m 4-year UK retail bond at a coupon of 12% issued

in December; and

– the issue of £11.8of retail bonds held in treasury. The debt

maturity profile of the Group stands at 2.0 years.

A full analysis of the maturity profile of the debt facilities

is set out in note 21 to the Financial Statements and is

summarised below:

Maturity profile of debt facilities

Group KPI

target range

New, medium-term

target range

Eurobond November 2025 295.9

Swedish krona bond October 2024 35.1

Sterling bond December 2027 77.4

Polish bond November 2026 14.4

Hungarian bond December 2026 10.1

Total bonds 432.9

Bank facilities 2024 to 2026 195.8

Total debt facilities 628.7

Total borrowings 516.5

Headroom against

debt facilities 112.2

Non-operational

cash balances 13.8

Headroom and non-

operational cash balances 126.0

Our blended cost of funding in 2023 was 14.0%, up from

13.3% in 2022. This increase was due to a significant step-up

in interest rates across our markets which resulted in higher

costs of bank funding and the cost of hedging. Our hedging

policy is to match our local currency receivables with

borrowings in the same denomination to provide certainty

of cashflows and avoid significant volatility in the income

statement from movements in exchange rates. Accordingly,

our borrowings denominated in sterling and euro are

swapped through forward contracts into local currency

when we onward lend to our markets. As a result, the margin

on the sterling/euro bond is effectively added to the local

base rate for determining the cost of funding for that market.

We anticipate an increase in the overall Group cost of funding

in 2024 as we refinance maturing fixed interest rate funding.

An analysis of our interest cost and funding rate is set

out below:

2023 £m 2022 £m

Bond costs 44.4 40.7

Bank funding cost 12.7 8.2

Hedging costs 16.8 16.7

Other 3.0 2.5

Total interest 76.9 68.1

Average gross borrowings 548.9 509.3

Cost of funding % 14.0% 13.3%

International Personal Finance plc40

Strategic Report

Our credit ratings remained unchanged in 2023. We have

a long-term credit rating of BB- (Outlook Stable) from

Fitch Ratings and Ba3 (Outlook Stable) from Moody’s

Investors Services.

As a result of maintaining a strong financial profile, we operate

with adequate headroom on the key financial covenants

in our debt facilities, as set out in the table below:

Covenant 2023 2022

Gearing

Max 3.75x 1.1x 1.3x

Interest cover Min 2x times 2.5x 2.3x

1. Borrowings adjusted for lease liabilities, unamortised arrangement

fees and issue discount. Net assets adjusted for pension assets

and derivative financial instruments, in accordance with the debt

funding covenant definitions.

Foreign exchange on reserves

The majority of the Group’s net assets are denominated

in our operating currencies and, therefore, the sterling

value fluctuates with changes in currency exchange rates.

In accordance with accounting standards, we have restated

the opening foreign currency net assets at the year-end

exchange rate and this resulted in a £23m (2022: £42m)

foreign exchange movement, which has been credited

to the foreign exchange reserve.

Contingent liabilities – Poland regulatory communication

In February 2024, we received a letter from the KNF issued to

allregulated lenders operating in the Polish credit card market

setting out the KNF’s views on how existing laws and

regulations relating to lending activities should be interpreted

by credit card issuers. The letter sets out the KNF’s current

expectations on how charging practices for credit cards

should be subject to limits on non-interest costs, the need to

differentiate between different costs charged by credit card

issuers which are subject to caps and those fees which are not

subject to a cap and lastly how issuers should approach more

broadly the question of calculating and assessing fees which

are not subject to specific legal limits.

The Group, following legal advice, had previously determined

that non-interest cost caps did not apply to credit cards and

is therefore reviewing, with the assistance of external counsel,

what the impact of this communication might be and whether

it constitutes a significant change to the existing approach

taken by the Polish regulatory authorities.

It is currently not possible to predict the ultimate impacts

of the letter, including the scope or nature of remediation

requirements, if any, or any related challenges to the

interpretation or validity of the Polish business’s application

of non-interest costs applied to its credit card portfolio since

its launch in the third quarter of 2022.

The KNF’s letter was not specific on when any changes would

need to be implemented and did not indicate whether any

retrospective application would be required. Considering this,

alongside the legal advice obtained to date, the Group has not

recognised a provision for this matter as at 31 December 2023.

The Group’s Polish business has been issuing credit cards since

late 2022. Polish credit cards receivables of £49m at

31 December 2023 represent just over 5% of the Group’s

receivables and approximately 25% of overall receivables

in Poland.

Going concern

In considering whether the Group is a going concern,

the Board has taken into account the Group’s 2024 business

plan and its principal risks (with particular reference to

macroeconomic and regulatory risks). The forecasts have

been prepared for the three years to 31 December 2026 and

include projected profit and loss, balance sheet, cashflows,

borrowings, headroom against debt facilities and funding

requirements. These forecasts represent the best estimate

of the Group’s expected performance, and in particular the

evolution of customer lending and repayments cashflows.

The financial forecasts have been stress tested in a range

of downside scenarios to assess the impact on future

profitability, funding requirements and covenant compliance.

The scenarios reflect the crystallisation of the Group’s principal

risks, with particular reference to macroeconomic and

regulatory risks, including crystallisation of the contingent

liabilities disclosed in note 32. Consideration has also been

given to multiple risks crystallising concurrently and the

availability of mitigating actions that could be taken to reduce

the impact of the identified risks. In addition, we examined a

reverse stress test on the financial forecasts to assess the extent

to which a macroeconomic scenario would need to impact

our operational performance in order to breach a covenant.

This showed that net revenue would need to deteriorate

significantly from the financial forecast and the Directors

have a reasonable expectation that it is unlikely to deteriorate

to this extent.

At 31 December 2023, the Group had £126m of non-

operational cash and headroom against its debt facilities

(comprising a range of bonds and bank facilities),

which have a weighted average maturity of 2.0 years.

The total debt facilities as at 31 December 2023 amounted

to £629m of which £98m (including £33m which is

uncommitted) is due for renewal over the following 12 months.

A combination of these debt facilities, the embedded business

flexibility in respect of cash generation and a successful track

record of accessing funding from debt capital markets over

a long period (including periods with challenging

macroeconomic conditions and a changing regulatory

environment, tested in both 2020 and 2022), are expected

to meet the Group’s funding requirements for the foreseeable

future (12 months from the date of approval of this report).

Taking these factors into account, together with regulatory

risks set out on page 80 of the Annual Report, the Board

has a reasonable expectation that the Group has adequate

resources to continue in operation for the foreseeable future.

For this reason, the Board has adopted the going concern basis

in preparing the Annual Report and Financial Statements.

Gary Thompson

Chief Financial Officer

14 March 2024

Annual Report and Financial Statements 2023 41

Customers Colleagues

Investors and rating

agencies

Generating value for all our stakeholders

Understanding the views of our stakeholders and delivering on what is important to them is a key part of our Next

Gen strategy. It also reflects the fact that our Next Gen strategy is designed to deliver substantial and long-term

opportunities to increase financial inclusion, and therefore generate value for all our stakeholders. Set out below

are details of our engagement with our stakeholders in 2023 and how this aligns with our broader strategy.

Strategic pillars Strategic pillars Strategic pillars

Stakeholder engagement

Our aim

To provide affordable financial products

and services to those who are underserved

by mainstream lenders, always delivered

in a sustainable and responsible way.

What engagement gives us

Listening to our customers allows us to

build a greater understanding of their

needs and behaviours, so we can respond

and deliver compelling products and an

excellent customer experience.

What matters to our customers?

– Affordability and price

– Data protection

– Flexible repayments when things go

wrong

– Convenience

– Range of products to choose from

– Simple, personal and seamless

experience

– Trusted brands

How we engage

– Customer surveys and focus groups

– Product proposition and usability testing

– Website tools

– Complaints analysis

– Materiality assessment

– External reputation survey

Board engagement

– Board Stakeholder Update

– Customer metrics form part of the Chief

Executive Officer Report discussed at

every Board meeting

– Customer visits and meetings with

customer representatives in all markets

– “Deep dive” sessions with Chief

Marketing Officer twice annually

– Review of materiality assessment results

Our aim

To provide rewarding careers and

development opportunities for our 21,000

employees and self-employed customer

representatives.

What engagement gives us

Engaging with colleagues helps us attract,

retain and develop a talented workforce,

now and for the future.

What matters to our colleagues?

– Development opportunities

– Recognition and reward

– Wellbeing

– An ethical and customer-focused culture

– A safe working environment

How we engage

– Global People Survey

– Wellbeing surveys

– Annual engagement conferences

– Internal reputation survey

– Materiality assessment

Board engagement

– Board Stakeholder Update

– Directors meet with colleagues outside

formal meetings including “skip-level”

dinners

– The Remuneration Committee reviews

workforce policies and practices

– Workforce Engagement Director

programme

– Twice annual human resources strategy

sessions at Board meetings including

review of Global People Survey results

– Non-executive director participation in

our Annual Learning Festival

– Review of materiality assessment results

Our aim

To ensure we are well-financed, with the

ability to reward investors for their investment,

secure funding at a competitive rate and

provide the information and insight required

for our future prospects to be assessed.

What engagement gives us

Feedback on our strategy

and performance helps shape our

decision-making. Insights on our external

reporting ensure we are providing

the information required, so they can

understand our business and make

informed investment or rating decisions.

What matters to investors

and rating agencies?

– Performance and growth potential

– Risk management

– Cash generation

– ESG risks and reporting

– Executive remuneration

– Easily available information on the Group

– Share price growth

How we engage

– Results presentations and webinars

– Corporate website

– Investor meetings

– Market visits

– Materiality assessment

Board engagement

– Board Stakeholder Update

– Shareholder events

– Debt investor roadshows

– Chief Executive Officer and Chief

Financial Officer updates to the Board

– Investor feedback reports

– Annual general meeting

– Review of materiality assessment results

Links to our principal risks

– Information security and cyber

– Reputation

– Product proposition

– Credit

Links to our principal risks

– People

– Reputation

Links to our principal risks

– Funding, liquidity, market

and counterparty

International Personal Finance plc42

Strategic Report

Regulators, politicians

and non-governmental

organisations (NGOs)

Communities Suppliers

Strategic pillars Strategic pillars Strategic pillars

Links to our principal risks

– Technology

– Information security and cyber

– Change management

– Product proposition

– Reputation

Links to our principal risks

– Reputation

– People

Links to our principal risks

– Future legal and regulatory development

– Reputation

– Information security and cyber

Our aim

To engage with decision makers who

have the influence and power to change

the way we do business and impact the

lives of consumers. We aim to build

their understanding of the needs of

our customers, our important role in

extending financial inclusion and how

we support people in making informed

borrowing decisions.

What engagement gives us

We understand the perspectives

of those bodies which regulate us as

well as the views of those organisations

which have an interest in what we do,

ensuring our business practices reflect

these expectations.

What matters to our regulators,

politicians and NGOs?

– Regulatory compliance

– Control and supervision

– Responsible lending

– Social inclusion

– Tax contribution

– Community engagement

– Ethical business policies and practices

How we engage

– Membership of trade associations

– Contributing to public consultations

– Engagement on draft regulations with

decision makers

– Partnerships with NGOs

– Materiality assessment

Board engagement

– Board Stakeholder Update

– Regulatory updates via the Chief

Executive Officer Report and to

the Audit and Risk Committee

– Review of materiality assessment results

Our aim

To engage with the communities we

impact through our operations, and where

our customers and colleagues come from,

to enhance their social capital.

What engagement gives us

We forge meaningful relationships in our

communities to support local causes and

address issues that colleagues and

customers care about. This empowers

communities and helps attract people

to work with us.

What matters to our communities?

– Community investment

– Financial literacy

– Social wellbeing

– Volunteering

How we engage

– Our Invisibles programme

– Other community programmes

– Colleague volunteering

– Materiality assessment

Board engagement

– Board Stakeholder Update

– Visits to community investment projects

– Updates in Chief Executive Officer Report

– Review of materiality assessment results

Our aim

To engage with the organisations

we do business with to help us deliver

our products to our customers and

support our colleagues in a way which

is mutually beneficial.

What engagement gives us

We develop policies and improve

practices with our key suppliers to minimise

sustainability risk within our supply chain

and ensure we work to the highest ethical

standards. Our interactions also help

extend their expertise and innovation

to our business.

What matters to our suppliers?

– Business performance

– Payment practices

– Ethical business policies and practices

How we engage

– Supplier feedback

– Supplier surveys

– Materiality assessment

Board engagement

– Board Stakeholder Update

– Approval of key supplier contracts

– Chief Financial Officer Report highlights

any material non-performance

by suppliers

– Review of materiality assessment results

– Review of modern slavery strategy and

how these risks are managed in our

supply chain

Strategic Pillars Key Financial inclusion Organisation

Technology and data

Annual Report and Financial Statements 2023 43

Throughout 2023 the Board sought to ensure

that it understood the views of stakeholders

when making decisions.

Section 172(1) statement

In this statement, we describe how our directors have had

regard to the matters set out in section 172(1) (a) to (f)

of the Companies Act 2006 (section 172) when performing

their duty to promote the success of the Company.

This engagement, both directly and through regular reports

from individual business areas and various Group functions,

ensures the Board is made aware of key issues to enable the

Directors to comply with their legal duty under Section 172(1).

Members of the Board as a whole and individually are

bound by their duties under S172(1) of the Companies

Act 2006 (the Act). This statement, and the information

covering our stakeholders on pages 42 and 43,

summarise how the Group promotes its success

for the benefit of its six key stakeholder groups

by having regard to:

– the likely consequences of any decisions

in the long term;

– the interests of the Group’s employees;

– the Group’s relationships with customers,

suppliers and other stakeholders;

– the impact of the Group’s operations on communities

and the environment;

– the desirability of the Group maintaining a reputation

for high standards of business conduct; and

– the need to act fairly between members

of the Company.

We believe that to progress our Next Gen strategy

and to deliver substantial sustainable long-term growth

opportunities, the Board should consider all stakeholders

relevant to a decision and satisfy themselves that any

decision upholds our values of being responsible,

respectful and straightforward.

The Board reviews and confirms its key stakeholder groups

for the purposes of section 172 annually. In 2023, they were

confirmed as customers, investors and ratings agencies,

regulators, politicians and NGOs, colleagues, communities

and suppliers.

The Board recognises that stakeholder engagement

is essential to understand what matters most to our

stakeholders and the likely impact of our key decisions.

More details of how we have engaged with our stakeholders

throughout 2023 can be found on pages 42 and 43.

This year we have also completed a materiality assessment

to allow us to understand and focus on what matters most

to our stakeholders. More details can be found on page 47.

The Board is focused on how the Group can generate value

for all its stakeholders. Our Matters Reserved to our Board and

our Committee Terms of Reference reinforce the importance

of considering stakeholder views. At each Board meeting,

the Chief Executive Officer reports on how the Group has

delivered for our key stakeholders. A more detailed report

on our stakeholders is also presented to the Board twice

a year to ensure that it has sufficient oversight of how the

Group has provided value to our key stakeholders during

the year. Our Board and Committee paper template includes

a section for authors to include an assessment of the relevant

stakeholder impacts to aid the Board’s decision-making.

The Board is aware that in some situations stakeholders’

interests will be conflicted, and they may have to prioritise

some stakeholders’ interests. The Board, led by the Chair,

ensures that as part of its decision-making process,

the directors are aware and discuss the impacts of their

decisions on the Group’s key stakeholders, which is facilitated

by ensuring that all board papers consider the impact

of any decisions made by the Board on our stakeholders.

On page 45 we have set out some of the key decisions made

by the Board in 2023 and how it considered our stakeholders

throughout the decision-making process.

Board engagement with stakeholders

Section 172 and Board decision making

International Personal Finance plc44

Strategic Report

Here we highlight how stakeholder considerations informed decisions by the Board in 2023, including Section 172 considerations.

The directors confirm that the deliberations of the Board incorporated appropriate consideration of the matters detailed in Section

172 of the Companies Act 2006. As stewards of the Company, the Board recognises that having regard to the needs and

expectations of stakeholders is crucial, as it ensures that the Group is well positioned to deliver long-term sustainable growth for the

benefit of all its stakeholders.

Moving to our Next Gen strategy

Background

The process of reviewing the Group’s strategy in 2023

included a thorough assessment of the challenges and

opportunities arising in the post-pandemic period. This

involved reviewing which elements of the strategy should

remain the same, and which elements should evolve to

reflect changed external conditions and broader societal

trends. The resulting revised Next Gen strategy was

approved by the Board in the second half of 2023.

Stakeholder considerations

The creation of a refreshed strategy and approval by the Board

took into account feedback and input received from the

Group’s principal shareholders and other members of the

investor community. This included detailed consideration of the

changing behaviours and needs of consumers, and how the

Group could evolve its activities to better serve this stakeholder

group. The Board also looked explicitly at the impacts on the

Group’s employees and how these could be enhanced

through the opportunities provided by the revised strategy.

Stakeholders and Board decisions

Reviewing the materiality assessment

Background

In 2023, the Group created its first materiality assessment,

which is covered in more detail on page 47. The process

included the Board identifying what issues were

important to our stakeholders and a dedicated

discussion on whether the proposed strategy for the

Group sufficiently reflected the views of stakeholders.

Stakeholder considerations

The output of the materiality assessment was reviewed

in detail by the Board. As well as approving the proposed

materiality matrix, the exercise enabled the Board to

derive greater insight into the views of stakeholders and

consider these perspectives when approving the Group’s

strategic plan.

See more on page 47.

Approving the Responsible

Business Framework

Background

A priority for 2023 was the development of a holistic

approach to sustainability, which reflected both the

Group’s purpose and covered external stakeholder

expectations in a credible way. Creating such a strategy

involved extensive internal discussions and review prior

to formal Board approval being obtained.

Stakeholder considerations

The creation and approval by the Board of our

Responsible Business Framework included a review of the

specific impacts the Group has on, and the differing

needs of, each of our stakeholders. The Framework

identifies steps which could be taken to ensure that we

are a force for good within each stakeholder group.

Annual Report and Financial Statements 2023 4545

Our Responsible Business Framework

As a global lending business, we have the responsibility and opportunity to make a real difference to our customers’

financial futures and to contribute to the creation of a low-carbon, fairer and more ethical society. We aim to ensure

that our business serves the interests of all our stakeholders, from investors to local communities. By placing the

safety and wellbeing of our people and the planet at the centre of our business, we also consider the needs of

society at large and deliver returns for all.

2023 highlights

In 2023, our Board approved our Responsible Business

Framework, an overarching vision for how the Group should

contribute to a more sustainable world and how we can

contribute to the objectives of the United Nations Global

Compact. Our Responsible Business Framework is also an

important part of how we deliver our purpose of building

a better world through financial inclusion. Our Board endorsed

a vision for our Responsible Business Framework which sets out

how we are committed to improving the social, economic and

environmental wellbeing of the communities of which we form

part. The vision states that we will conduct our business

in a socially responsible and ethical manner, and we

respect the law, support universal human rights, protect the

environment and benefit the communities where we operate.

We have sought to drive real change in the markets in which

we operate and those sustainability topics where we can

make a difference. In this section you can read more about

how we performed in 2023 for our stakeholders and the areas

we will be focusing on in 2024.

500+

training programmes

delivered to over

21,000 colleagues

Global workforce Our Global People Survey results

2050

net zero

target

approved

£177m

total tax

contribution

in2023

£893,000

total

community

investment

69,000

people assisted

through our global

Invisibles programme

16,000

customer representatives

attended our Learning

Academies

Focused on being a responsible business

Responsible business

80%

Female

80%

feel inspired

working at IPF

79%

of colleagues

feel cared for

International Personal Finance plc46

Strategic Report

Where we want to make a difference

In 2023, we conducted our first materiality assessment to

engage formally with our internal and external stakeholders

toidentify the sustainability topics that were most important to

them. This work is the foundation of our Responsible Business

Framework and was designed to ensure that our efforts remain

focused on those areas where we can have the greatest

impact and which are most important to our stakeholders.

Ourfirst materiality assessment has been used by the Board

and our senior leadership team to inform strategic decision-

making, including reviewing our 2024 strategic plan, and

prioritising themes in our external reporting.

Completing the materiality analysis

We have a large number of stakeholders, each with

differentexpectations. We adopted a systematic approach

tomateriality to ensure all perspectives could be included.

Wereviewed a range of external ESG risks and defined

topicsas being material if they have a substantial likelihood of

influencing the judgement and decisions of key stakeholders

and impacting business performance significantly. This formed

the basis of our stakeholder engagement exercise which

included consulting with customers in each division, suppliers,

colleagues (including our Board and senior leadership team)

and our top ten shareholders. The resulting output was our

materiality matrix detailed below.

1 2 3 4 5 6

Desk

research

Stakeholder

identification

Management

input

Materiality

surveys

Analysis and

interpretation

Results

report

Reviewed external

reporting standards

and other relevant

sources to create

long list of

potential topics.

Identified our

stakeholders

- customers,

colleagues,

suppliers, NGOs

and investors.

Reviewed the long

list of potential

topics to determine

shortlist of topics

to share with

stakeholders.

Quantitative

online surveys

undertaken

anonymously

by internal

and external

stakeholders.

Results were

weighted to reflect

the appropriate

level of importance

to the Group.

Outputs discussed

as part of Board

strategy process

and internal

stakeholders

informed to assist

decision-making.

Key takeaways

Access to financial services is the Group’s most material theme

and was shown consistently across all stakeholder groups. This

aligns with our purpose and the work we do on financial

inclusion. Similarly, financial education underlines the fact this is

a topic where we can have a significant societal impact through

our community investment activities.

Health and safety is a highly material topic reflecting the

importance of customer representatives to our business and

their unique role in connecting with customers where they live.

Responsible governance and board independence, human

rights and labour standards, and anti-corruption and ethics

reflect the expectations to demonstrate transparency in all our

activities and maintain high governance standards.

Overall, this exercise indicated there is strong alignment

between our Responsible Business Framework, our 2024 strategy

and the material sustainability themes identified.

Each of the topics set out on the materiality matrix is covered in

more detail on pages 48 to 66.

Materiality assessment

Materiality matrix

Materiality to IPF

Materiality to our stakeholders

Responsible

governance

andboard

independence

Responsible

taxation

Financial

education

Human rights

and labour

standards

Customer

privacy and

data protection

Ethical marketing

and consumer

protection

Employee

engagement

and development

Anti-corruption

and ethics

Health

and safety

Access to

financial

services

Climate

change

Cybersecurity

Social inclusion

and diversity

How we did it

Annual Report and Financial Statements 2023 47

In this section, we provide insight into how we worked with four key stakeholder group in 2023;

our customers, colleagues, suppliers and communities.

Think Customer programme

Our Think Customer programme enables the delivery of our customer vision. It is a programme dedicated to putting our customers

at the heart of the business and the decisions we make, enabling our colleagues to deliver superior customer experience. The

programme is now well established in our home credit businesses and will be extended to our digital businesses in 2024. Through

this programme we have:

– mapped our customer journeys and use this insight

to help us focus on where we can improve the

current customer experience;

– identified the moments that really matter to our

customers, to ensure we are there at these times

to respond to their needs;

– clearly communicated our customer promises and ensure

we deliver on them every time, for every customer;

– focused behaviours and relationships to make sure we can

truly empathise with our customers; and

– sought to measure our performance from our customers’

perspective, using a voice-of-the-customer programme

to understand and improve how we operate.

Our customers

Our products and services are aimed primarily at the financial

inclusion of underserved consumers. We offer our customers

a range of digital and face-to-face lending and credit solutions

as well as associated insurance products, with multiple options

for disbursements and collections.

Who we are serving

People in need of affordable

consumer finance loans and

value-added services to help

support their everyday lives.

Our customer value proposition

A family of simple, affordable and

accessible consumer finance

products and channels.

Our markets

Countries with high

proportions of low to medium

income communities.

Promises

Capabilities

Products and

services

Channel

Products

and services

Customer

representative

Instalment

loans

Flexible

Credit

cards

Transparent

Revolving

credit lines

Valued

Mobile

wallet

Supported

Insurances

Personal

Other value-

added services

Timely

Communication

Hybrid

Great

processes

Digital

Customer

experience culture

Call centre

Systems, tech

and data

Retail

partnerships

Our customer vision

A community of customers choosing a

range of affordable consumer finance

and value-added services.

Stakeholders in focus

Our customer vision

Whilst each of our markets is unique and our strategy reflects

this, our overarching theme is our vision of a community of

customers choosing a range of affordable consumer finance

and value-added services across all our markets. Achieving

this goal means ensuring that we meet customer expectations

with products that are affordable, flexible and transparent.

We also want to make customer experience an additional

reason for our customers to choose, and then stay, with us.

We look to achieve these ambitious objectives through

our ‘customer vision’, the building blocks of which

are detailed below.

Our customer vision

Responsible business continued

International Personal Finance plc48

Strategic Report

Our commitment to our customers

In 2023, we launched our “Customer Promise”, which sets out

the standards for how we engage with our customers and is

based on what we understand matters most to our customers.

The Customer Promise aligns to the broader lending cycle and

governs our actions at every stage of the process. Put simply,

making promises and keeping them is a great way to improve

customer satisfaction.

In 2023, we introduced training for all our customer-facing

colleagues focused on our customer service standards. These

standards bring to life for our front line colleagues how they

can deliver the Customer Promise. This training is delivered via

our e-learning platform after which every member of the team

must pass a competency test.

The training and development focused on:

– product and sales training with a specific emphasis on

responsible sales practices for all customer-facing roles

including customer representatives, sales leaders and

contact centre colleagues; and

– training on compliance and regulatory matters relevant

to specific markets for all customer-facing roles.

Our Customer Promise

Flexible

You want access to a loan that

meets your personal circumstances

Our promise: Our dedicated team will work with you

to understand your needs and find products and

services tailored to your circumstances. You can

choose different loan terms and repayment options

to meet your personal situation.

Valued

You want to be recognised

and appreciated for your custom

Our promise: We value our relationship with you

and will go the extra mile to appreciate your

commitment. We will communicate with you

in a relevant and timely way. We do our best

to give you access to additional services, rewards,

discounts and special offers.

Personal

You want a trusted partner

Our promise: We treat you with humanity.

We don’t hide behind jargon and difficult language.

Our colleagues will explain the terms of your credit

agreement, the repayment terms and any risks

connected with missed repayments in an

easy to understand way.

Transparent

You want clear information

and no surprises

Our promise: We won’t hide behind the small print.

We will provide you with clear terms and conditions

in an easy-to-understand way. You will know all the

costs and borrowing options available to you from

the beginning to the end of your relationship with us.

Your repayment instalments and total amount owed

won’t change during the contract.

Supported

You want us to be flexible and adapt our

services when your circumstances change

Our promise: Our dedicated team are here to help

and support you whenever you need us. We care

about understanding your situation and your needs.

If there are changes in your circumstances, we will

be flexible and work with you to find a solution to

help you and keep you in control.

Timely

You want a convenient and

effortless application process

Our promise: Our flexible application processes

mean you can choose the one that is right for you.

You can apply online, by calling our contact centre

or have one of our customer representatives visit you

at home. After signing the contract, you will receive

the funds quickly in cash, by cheque or payment into

your bank account.

Annual Report and Financial Statements 2023 49

Responsible business continued

Customer Appreciation Week

Our customers want to feel valued and appreciated.

We have designed a programme of activities to show our

customers that we care. During Easter 2023, we visited

770 customers and gave them a gift as part of our first

European home credit Customer Appreciation Week.

Think Customer Heroes

Think Customer Heroes is a recognition programme

for employees and customer representatives which

has been designed to reward exceptional commitment

to customers. Colleagues are nominated for various

categories including excellent customer service,

initiatives to improve our customer experience

and best service quality measurement. This recognition

programme is also a great way of highlighting best

practices to other colleagues.

Monitoring what our customers think

In 2023, we evolved the way in which we track our customer

experience with the introduction of a revised set of metrics.

A single Think Customer dashboard for each market is

published and reviewed monthly by senior management,

and actions taken where required. We also monitor our

performance with customers using a series of measures

including transactional satisfaction with our products, and

satisfaction with customer representatives and call centre

colleagues. In addition, we review and monitor satisfaction

with key processes such as issuing loans, and engaging with

our website and colleagues. There are also specific customer

surveys focusing on our customers post-sale understanding

of the products and services they have chosen. The level

of service we provide continued to be excellent in 2023 as

demonstrated by our Net Promoter Score (NPS) benchmarking

assessments which, at December 2023, was +69 for the Group

and unchanged compared to 2022.

Meeting our customers’ changing needs

Increasingly, consumers want easy, fast access to their

finances and to be able to use online and mobile channels

when they interact with their financial providers. We have

responded by building our product and channel range

to reflect this trend. In 2023, we significantly increased the

roll out of our new credit card offering in Poland, launched

our mobile wallet in Mexico and introduced digital lending

in Romania.

Investment in our digital capabilities throughout 2023 enabled

us to improve customer engagement as well as deliver on our

customers’ increased expectations to be able to self-serve

through our mobile wallet or customer apps. Following a

successful test in 2022, we extended our retail partnership

strategy to expand our reach in Romania by linking with

leading retailers eMAG and Flanco.

See page 23 for more information.

Acting ethically

We are proud that so many of our customers are from groups

that have historically been excluded from access to financial

services. Around 60% of customers are female and around 40%

of our home credit customers live in rural locations.

Our overall approach to customers, products and services is

owned at a Group level by our Chief Marketing Officer, who

works closely with Heads of Marketing in each market.

Consideration of new products and assessment of the

performance of existing products from a customer satisfaction

perspective is reviewed regularly by Local Product Development

Committees, which are established in each of our markets.

More significant product, promotion and pricing changes

are reviewed by the Global Product Development Committee,

which is chaired by the Chief Marketing Officer. Product risk

is one of the key risks in our Group Enterprise Risk Framework

which enables this risk category to be monitored and

appropriate mitigation measures undertaken where required.

Ultimately, the Board oversees the management of customers

and receives regular market intelligence tracking the Group’s

performance on a range of customer-related metrics.

In every market, all our marketing communications are

prepared with the objective of meeting relevant legal and

regulatory standards, and to ensure our customers understand

the credit commitment they are choosing. Our advertisements,

promotions and product information are created in a way that

they are easily understood, accurate, do not mislead and

comply with applicable regulation. We are always very clear

when it comes to the price of our products with all cost

information explained clearly in our contracts with consumers.

Our Global Pricing and Promotions Policy sets out how we

ensure fair advertising policies and procedures globally,

which are complemented by market guidelines on this topic.

International Personal Finance plc50

Strategic Report

As part of our commitment to responsible lending, we

emphasise prudent practices at the credit underwriting stage

to proactively mitigate potential debt-related challenges.

Our approach includes a thorough examination of internal

and external data and a comprehensive assessment of

customers’ income and expenses to ensure loan affordability.

In the home credit businesses, where our customer

representatives establish a direct relationship with customers,

we benefit from early insights into potential repayment issues.

This personalised interaction allows us to address concerns

proactively. In instances where a customer encounters

difficulties, we allow borrowers to miss or make reduced

repayments, although we are careful to ensure that extended

use of this option does not lead to financial difficulty.

Should a customer go into arrears, we demonstrate

forbearance by collaborating on short-term arrangements

tailored to their circumstances. It is important to note that

we do not restructure debts to bring customers back into

compliance, as this could distort our impairment metrics and

potentially mislead other lenders, given the lack of appropriate

markers in credit bureaux across all our markets. In cases

where customers find themselves in arrears, we exhibit flexibility

to try and come to a mutually acceptable repayment solution

with them. In fact, around 95% of our customers in arrears are

not charged late fees. If a customer successfully repays the

loan, and their repayment levels align with our minimum loan

instalment requirements, we are open to rewriting a loan to

better suit their financial situation. This reflects our commitment

to supporting customers on their journey to financial stability.

Handling complaints

We recognise the pivotal role of an effective complaints

handling process in fostering transparency, trust and ongoing

improvement. All complaints are handled in accordance with

our complaints policies and relevant legal and regulatory

requirements and are designed to be easily accessible

for our clients.

We seek to enable customers to make complaints through

a range of channels, including online, via the telephone or

in-person visits. Each complaint is logged and categorised,

based on severity and complexity considerations.

Straightforward complaints are resolved promptly at this initial

stage. For more complex cases, a formal investigation is

undertaken involving our dedicated complaints team, with

appropriate actions taken to address complaints which are

upheld. Our approach extends beyond reviewing individual

cases to include root cause analysis and actions to address

any potential systemic issues which have been identified.

As is the case with all financial institutions, we do receive

complaints from customers, but the level of complaints

received by the Group in 2023 was low. In 2023, the total

number of complaints received from customers by our home

credit businesses in Europe and Mexico was approximately

60,000 which equates to around 4% of the total number of

active home credit customers in the year. In these home credit

businesses, the average complaint resolution time was 10

days. Our digital business globally received approximately

5,700 customer complaints in 2023, a figure equating to

approximately 3% of total customers and the resolution of

complaints typically took between 14 and 21 days. In 2024,

we will continue to monitor complaints trends and address

underlying root causes when identified.

Our colleagues

We believe passionately that the power of our people

and our strong culture are key drivers of business performance.

Our people strategy continues to focus on ensuring that

we recruit, develop, reward and retain the high-performing

people required to deliver our purpose. Throughout 2023,

we continued to provide high-quality learning and personal

development opportunities, and enhanced our value

proposition and experience for our customer representatives.

We also continued to maintain strong levels of engagement,

as demonstrated by the results of our 2023 Global People

Survey which is covered in more detail on page 54.

As at 31 December 2023, we had around 21,000 colleagues

globally and in 2023 we recruited approximately 9,000 people

across our different markets.

Diversity and inclusion

The Group is an equal opportunities employer. It is our policy

that no job applicant, employee, or customer representative

will receive less favourable treatment because of their race,

colour, nationality, ethnic or other national origin, gender,

sexual orientation, marital status, age, disability or religion.

The purpose of this policy is to ensure that recruitment and

progression opportunities are open to all and are based purely

on merit, with all employees having the same access to

training and career development. We also give full and fair

consideration to applications for employment from disabled

people. If an employee becomes disabled, we make every

effort to ensure their employment with the Group continues

and reasonable adjustments are arranged where necessary.

We undertake a wide range of activities to promote gender

diversity across the organisation. This includes creating specific

groups for women and offering training and mentoring

designed specifically to encourage internal mobility, so that

pathways for promotion are accessible to all employees.

Power of Inclusion conference

In March 2023, we held our second Power of Inclusion

conference. This global online event covered a range of

inclusion-related topics including how our purpose is

designed to support being an inclusive employer and how

neurodiversity impacts the workplace. The conference was

attended by around 1,400 colleagues and featured all

markets globally sharing best practice on a wide spectrum

of diversity topics.

Annual Report and Financial Statements 2023 51

Responsible business continued

The gender split of our employed workforce is set out in the

chart on page 55. The overall gender balance across the

Group including all employees and customer representatives

is approximately 80% female and 20% male. This reflects our

large and unique customer representative workforce which

is predominantly female and the fact that the majority of our

front-line management roles, known as Business Relationship

Managers (BRMs), are also held by women. In our European

home credit business around 80% of BRMs are female.

In our Mexico home credit business equivalent roles are

approximately 50% held by women, up from around 11%

in 2018. This improvement has been achieved through

specific programmes that have sought to encourage greater

gender diversity. The proportion of female senior management

including direct reports of the Chief Executive Officer across

the Group was 26% in 2023.

80%

of Business Relationship

Managers are female

As a result of our activities to promote gender

diversity,we were recognised for our efforts in

several of our markets in 2023.

Our digital business in Mexico was

recognised as a Best Workplace™

for Women by Great Place to Work.

Our business in Poland received

the title of Fair to Women, awarded

to organisations for promoting

equal treatment and equal

opportunities for women.

Our business in the Czech Republic

is a Golden Signatory to the

European Diversity Charter and

was awarded a silver medal by the

European Commission’s Diversity

Charter in recognition of its

commitment to advancing diversity

and inclusion in the workplace.

Fair pay and reward

Our comprehensive total reward approach is designed

to attract, retain and engage our employees. It comprises

a combination of monetary and non-monetary rewards,

encompassing all aspects of our colleagues’ experience

with the organisation. Our pay and benefits are competitive

and equitable to attract and retain talent capable of

delivering the Group’s strategy. Our performance pay and

recognition have been developed to motivate and reward

sustainable performance and the achievement of specific

personal objectives aligned to our Next Gen strategy.

More details are available in the Directors’ Remuneration

Report starting on page 110.

A key aspect of our approach is in ensuring that regular

performance appraisals and feedback take place.

Our performance management approach, ‘Let’s Talk Me’,

has been in place for more than 10 years and is a people-

focused process that covers all employees and brings

together a review of individual performance and

development on an annual basis. These assessments

drive development opportunities for employees across

our markets.

Annual Learning Festival

In October 2023, we held our third global annual

Learning Festival. The week-long festival comprised

a mix of local and global events, and attracted 11,500

individual participations, both virtually and in person.

The Festival’s virtual global sessions were hosted by 21

internal and external speakers including Amazon Web

Services, who brought their insight on creating a culture

of innovation. Local stages were tailored to our individual

markets and attracted over 9,500 attendees to 90+

sessions hosted by 120 speakers. Topics covered

included personal development; technology and

innovation; AI; psychological safety; and diversity.

International Personal Finance plc52

Strategic Report

The table below sets out the number of colleagues provided with training and development opportunities in 2023

European

home credit

Mexico

home credit IPF Digital UK Total

Number of people

trained in 2023

Customer representatives 7,605 9,683 n/a n/a 17,288

All other employees 2,616 2,783 143 130 5,672

Number of training

programmes delivered

in 2023

Customer representatives 110 5 n/a n/a 115

All other employees 324 19 16 32 391

Care and wellbeing for our people

We place substantial emphasis on ensuring that our people

are safe and connected, and feel a true sense of wellbeing,

both because it is the right thing to do and also because our

ability to serve our customers well relies on having highly

engaged and skilled colleagues who adhere to our values

and ethics. CARE is how we describe our approach towards

our people, and it sits at the heart of our culture.

In 2023, our CARE plan focused on four key pillars:

– engaging with our colleagues to understand which

elements of wellbeing are most important to them;

– mental health;

– activities to improve physical health; and

– social events to increase togetherness.

Highlights in 2023 included our Romanian business being

recognised as a Top Wellbeing Employer of the year; a number

of colleagues becoming accredited as mental health first

aiders across the business; a range of health screening

campaigns; and many social events created to bring

colleagues together.

From a policy perspective we support freedom of association,

fair terms of employment, safe working conditions for our

employees and collective bargaining, consistent with

our position as a signatory of the UN Global Compact.

We also have flexible working policies in place in all markets

for all employees encouraging a healthy work-life balance.

In addition to these policies, we also have part-time roles

and maternity/paternity options.

Investing in personal development

Our human resources function includes a dedicated talent

and development team which has responsibility for supporting

colleagues’ personal and career development needs.

All colleagues are required to undertake specific mandatory

training throughout the year covering areas such as health

and safety and data protection to ensure that they have the

capabilities necessary to undertake their roles. Beyond

compulsory training elements, we also support our colleagues

by providing access to high quality and relevant development

opportunities – ensuring that we improve performance,

increase engagement, and develop future leaders.

Development opportunities are available for

all colleagues, both employed and self-employed.

In 2023, we continued to evolve our career development

programme for our customer-facing colleagues, building

on our established learning academies by providing

structured development pathways for over 16,000

customer representatives. The academies cover topics

such as professional skills, personal development,

and financial education.

We created dedicated leadership development pathways

for our sales leaders through our ‘MyBusiness’ programme,

which aims to equip future sales leaders with the skills to thrive

in new roles. The programme covers areas such as building

a commercial mindset and sales leadership. It also includes

workshops delivered by our finance function, individual

development sessions with internal development consultants

and leadership assessment tools from external providers.

Using our global learning management system, we created

and shared global development opportunities, whilst also

partnering with LinkedIn Learning, Pluralsight, and Harvard

Business School to provide development materials and

experiences for colleagues throughout the Group.

Developing customer representatives

We work with over 16,000 customer representatives who

serve our home credit customers across five different

countries. They are critical to our business and delivering

financial inclusion. Following an extensive process of

engagement including a comprehensive series of focus

groups, we refreshed our customer representative

experience in 2023. We created seven programme

streams from recruitment and onboarding to recognition

and communication. The result was the creation

of dedicated learning pathways and refreshed

communications processes – including new customer

representative forums and more recognition schemes

for high-performers.

The results of our 2023 Global People Survey demonstrate

that this initiative has contributed to a material uplift in

positive sentiment among customer representatives – with

a 95% participation rate, improved outcomes in 3 of the 4

areas covered by the survey and a 10% increase in their

“Cared” score. See page 54 for more details.

Annual Report and Financial Statements 2023 53

Responsible business continued

In 2023, we completed our programme of establishing

formal employee and customer representative forums

for all our home credit markets. These forums are

designed to be representative of the entire workforce

in terms of location, business division, length of service

and seniority and are designed to enable the views

of colleagues on a range of key matters to be heard.

Another key method for understanding the views of colleagues

is our Global People Survey, which informs our people strategy

and was undertaken in 2023. The survey assesses cultural

alignment under four dimensions – pride, cared, challenged

and inspired. We received a total of 20,605 responses,

equating to a 95% completion rate, which is 2% higher than

in 2021 when we last ran this survey. The overall positive

responses were 81% for our customer representative

population, and 77% for our employee group.

Pride Cared

Challenged Inspired

Our view

There is a strong positive

correlation to our purpose

of building a better world

through financial inclusion

and colleague pride.

As a result, we will continue

to ensure that everyone

understands their role

in delivering our purpose

and build on our employee

value proposition.

Our view

A key theme is ensuring

that we have the right

management capability

and tools to lead our teams

and business. Colleagues

appreciate the investment

in their careers and personal

growth and development,

and it is important that

we continue to invest to

ensure our people have

the right capabilities.

Our view

Our people appreciate the

focus that the Group places

on wellbeing and the

attention placed on caring

for people. As a result, we will

continue to evolve the work

we are doing, building a

strong programme of activity

around psychosocial risk and

wellbeing throughout 2024.

Our view

Our people believe strongly

in our values of being

responsible, respectful

and straightforward, and we

need to continue to maintain

awareness and ensure

alignment with our values for

existing and new colleagues.

2023 Global People Survey results

The key themes emerging from the survey and subsequent

focus groups were:

73%

positive

responses

79%

positive

responses

77%

positive

responses

80%

positive

responses

International Personal Finance plc54

Strategic Report

Gender split of all colleagues including self-employed

customer representatives

Total

Male Female

Count % Count %

Senior management 56 74% 20 26%

All other employees

(except customer representatives) 2,369 47% 2,708 53%

Customer

representatives 2,008 13% 14,053 87%

Senior management includes two executive directors

Our suppliers

Our goal is to co-operate with informed and engaged

suppliers who understand how their products and services

contribute to the delivery of our purpose and business goals

and who also act according to our values and culture.

Our supply chain

In 2023, we spent around £181m on a broad range of

products and services with almost 2,700 suppliers globally.

We categorise our suppliers into four tiers – strategic, critical,

leverage and routine, depending on an assessment of defined

business risk factors and spend. Of our global suppliers

approximately 120 are deemed strategic or critical. The major

areas of expenditure within our supply chain are marketing,

property services, professional services and IT.

Doing business responsibly with suppliers

Our procurement and supplier management activities are

provided by an internal procurement function, which is part

of the Group’s broader finance function. The procurement

function is responsible for managing risks relating to supplier

relationships including potential breaches to approved

sourcing processes. Their actions are overseen in each of our

markets by a Local Procurement Committee, which comprises

members of the local board and procurement function, and

which meets every quarter. Important matters, including any

suppliers evaluated as high risk, are reported subsequently to

the Global Procurement Committee which meets on a

quarterly basis and comprises members of the Group’s

procurement, finance, legal, and internal audit functions.

The Group’s Global Responsible Procurement Policy and

Global Procurement Standards document the minimum

standards for our engagement with suppliers, including

sourcing, supplier selection, supplier risk management,

contract requirements and supplier management and

evaluation processes. The Group’s Global Responsible

Procurement Policy is approved by the Chief Financial Officer.

Creating a sustainable supply chain

Our Global Responsible Procurement Policy and Global

Procurement Standards detail our approach to managing our

supply chain sustainably. Our supplier due diligence process

involves identifying, assessing and monitoring supplier

practices in the areas of human and labour rights, the

environment, health and safety and anti-corruption. This is

achieved through the undertaking of a risk assessment with

suppliers against relevant standards in each of these areas.

This effort is designed to ensure that relevant principles and

standards are upheld throughout our supply chain and is in

line with our commitment to the UN Global Compact.

Our Board recently approved our updated Code of Ethics

which will be shared with all our strategic and critical suppliers

who are required to adhere to equivalent behaviours and

standards. Suppliers can raise any matters of concern through

our whistleblowing channels.

We pay suppliers promptly and within contracted periods.

5,2952,901

2056

Male

Senior management

All other employees

Board

Female

Gender split of employees at 31 December 2023

* All other employees* include customer representatives in Hungary and

Romania where they are employed to meet local legislation

Age split

Total

Senior management 76

Under 30 0

30 to 50 54

50+ 22

All other employees* 5,077

Under 30 849

30 to 50 3,697

50+ 531

Customer representatives 16,061

Under 30 2,814

30 to 50 8,992

50+ 4,255

Colleague turnover and stability

Total

Stability of employees* 80%

Turnover of employees* 22%

Stability of customer representatives 68%

Turnover of customer representatives 41%

* Employees excludes customer representatives in Hungary and

Romania. These are included in the customer representative category.

Our colleagues in numbers

Annual Report and Financial Statements 2023 55

Responsible business continued

We believe that given the markets we operate in, modern

slavery and human rights remain the most significant

potential sustainability risks within our supply chain. In 2023,

we undertook a comprehensive human rights and modern

slavery assessment process which identified suppliers of

cleaning, maintenance and facilities services to be the

greatest potential risks areas in our supply chain. Following

this assessment, we amended our supplier segmentation

procedure to include these risks in our evaluation criteria

and extended our definition of critical suppliers to include

relevant suppliers. This will mean that over the next 12 months

all suppliers in these categories will be evaluated for human

rights and modern slavery risk.

Engaging with suppliers

The procurement function engages with suppliers to better

understand their perspectives on the Group. Those suppliers

which are assessed as strategic or critical are the focus

of our engagement activity. Engagement takes place through

multiple channels, from discussing with specific suppliers

when at the point of contract renewal or termination, tender

processes with existing and potential suppliers and dedicated

supplier relationship management activities. The discussions

with existing suppliers address their performance including

on sustainability matters. The materiality assessment process,

which is explained in more detail on page 47, was another

source of useful insight on what matters to our suppliers.

In 2024, we intend to build on the progress made in 2023

and plan to work with suppliers to reduce their greenhouse

gas emissions, extend the number of suppliers covered by

our risk management evaluation procedures and continue

to integrate sustainability considerations into our Global

Procurement Standards.

Our communities

We are committed to contributing to the social and economic

development of the communities in which we operate.

Our main focus is on helping those groups who struggle

with financial inclusion, by ensuring their stories are heard

and supporting financial education activities, both directly

and via NGOs.

We also invest in a broad range of community activities which

are important to our colleagues and communities. By fostering

financial inclusivity and social equity, we aim to create more

sustainable and resilient communities. Our community strategy

comprises three elements - our Invisibles programme, financial

education and colleague volunteering opportunities.

There are several ways in which we support our communities:

financial contributions, in-kind contributions and employee

involvement. Our total financial community investment in 2023

was £893,000.

The Invisibles programme

We recognise that financial vulnerability, stemming primarily

from economic disparities, poses a significant challenge and

that we have an important role to play in addressing this issue.

Our Invisibles programme was created to ensure those

segments of society that currently struggle to access financial

services become visible to stakeholders and are also provided

with practical help. The programme has four elements:

1. Identify: Studies commissioned by independent third parties

to identify the underbanked groups in each of our markets

provided meaningful insights concerning the specific

challenges they face.

2. Highlight: Publish the results of the study to highlight

the insights we have gathered and what it means

for that market.

3. Engage: Initiate dialogue with relevant stakeholders on what

practical steps would improve the situation of the identified

invisible groups.

4. Help: Identify a relevant NGO partner to enable joint working

to offer help to one or more selected invisible groups.

The programme allows us to focus on the most vulnerable

groups in society and help to address their specific needs.

By the end of 2023, all four elements had been established

across all our European markets and the programme had

been launched in Mexico. The total number of people we

helped through the programme during the year was

approximately 69,000.

In 2024, we plan to extend our efforts to reach new invisible

groups and we remain dedicated to advancing our social

initiatives to make a lasting and positive impact on financially

vulnerable people.

International Personal Finance plc56

Strategic Report

Colleague volunteeringFinancial education

£893,000

invested in

our communities

3,295

colleagues volunteered

in their communities

Colleagues in Poland getting props ready to host

a workshop for children to discuss finances, savings

and entrepreneurship.

Our team in Romania dedicated time to help renovate

properties at Motivation Camp, an initiative supporting

people with disabilities in learning how to adapt to using

their motorised wheelchair.

We are supporting children in Hungary to develop their

financial literacy skills.

“Financial literacy is a crucial life skill

that empowers individuals to make

informed decisions about their finances,

plan for the future, and secure their

financial wellbeing. In most markets

where we operate a significant

proportion of the population lack the

knowledge necessary to make sound

financial choices.”

Our research into financial wellbeing suggests many people

in our markets do not receive a formal financial education

and would value the opportunity to learn more about

financial management.

We have implemented comprehensive financial literacy

programmes targeted at empowering financially vulnerable

individuals. These initiatives, include workshops, webinars

and educational materials aimed at improving financial

knowledge, developing budgeting skills and supporting

long-term financial planning

They also provide volunteering opportunities for our colleagues

to impart their knowledge and expertise on these topics for the

benefit of financially vulnerable individuals.

Thousands of our colleagues make a difference in their

communities through volunteering in both company time

and their own.

In 2023, they donated their time and skills to support

a range of community projects from financial education

to environmental causes. Our volunteering programme also

helps improve teamwork, engagement and motivation.

Our focus for volunteering is brought together with our annual

Volunteer and Financial Inclusion Month, which we organise

each May. This exciting international effort brings colleagues

together from ten countries to take positive action in the

communities they serve and to support local causes through

volunteering and fund raising. In 2023, some of the events

were linked to our Invisibles programme while others supported

environmental and local charity fund raising efforts.

For the year as a whole, around 3,295 colleagues volunteered

to support charities and people in need.

Annual Report and Financial Statements 2023 57

Responsible business continued

Invisibles and financial literacy in action

Mexico: Funding provided to Save the Children by our Mexico

home credit business was used to help ‘invisible’ young adult

migrants access the labour market. The partnership was aimed

at developing their employability skills and around 1,000 people

participated in the programme.

We also ran five financial education programmes during 2023 in

conjunction with a number of NGOs which enabled around 15,000

students from Puebla, Nuevo León, Guanajuato and Guadalajara

to build their financial knowledge.

Educating the next generation

IPF Digital: Our digital

business in Mexico

collaborated with leading

NGO, AMFE (Mexican

Association of Financial

Entities), to create engaging

and easily accessible

financial literacy content

including a comic to help

our customers develop their

financial skills.

In Hungary, as part of our long-term financial literacy

programme, we supported a financial literacy summer

camp for 30 children whose families live in extreme

poverty.Organised with our established community

partner, HungarianInterchurch Aid (HIA), the children

developed newskills ranging from sport to learning

about money and basic finances.

“The Invisibles programme addresses

thefinancial vulnerability and

illiteracy ofour clients which impedes

them fromprogressing with their lives.

Thispartnership allows us to offer

financial education in a sustainable

andimpactful way.”

Laszlo Lehel,

Chair and CEO of Hungarian Interchurch Aid.

Poland: We partnered with the Polish Federation of Consumers

andUkrainian Women in Poland to launch our ’Don’t be

invisible’ financial and customer education programme.

We organised workshops for 200 female refugees from Ukraine

to build their knowledge of financial and consumers’ rights in

Poland. The programme was also recognised with a Golden

Laurel Award. Wealso created an award-winning fairy tale for

children focused on personal finance in conjunction with the

Zaczytani Foundation. The book, which was also recorded by

our employees and customer representatives to create an

audio version, was distributed to 14,000 schools, youth centres

and childcare organisations across Poland.

Hungary: We partnered with a leading Hungarian

charity that helps families living in poverty to provide

a programme on financial education. We also began

working with the Semmelweis Medical University to undertake

a roadshow around the country offering financial and health

education to seniors.

Czech Republic: We highlighted the lack of support for social

workers, who can be financially vulnerable and often have limited

mental health support. We worked with a local NGO to help address

these challenges.

Romania: We created an online education platform to help

economically marginalised groups re-enter the workforce, which

was used by more than 15,000 visitors to the site during the year.

We also provided workshops on employability, financial education

and change management which were attended by over 600 people.

International Personal Finance plc58

Strategic Report

Our Code of Ethics

Our Code of Ethics is designed to ensure everyone working for

the Group understands how we deliver on our purpose and

how to act ethically and with integrity at all times. Our Board

recently approved our updated Code of Ethics which can be

viewed on the policies section of our website at www.ipfin.co.

uk. The Chief Legal Officer has Board responsibility for oversight

of ethical issues.

The Code communicates the minimum standards which we

expect from all colleagues. We take breaches of our Code of

Ethics very seriously and they could result in disciplinary action.

If our colleagues have any concerns about the provisions of

the Code not being followed, we encourage them to report

this at the earliest opportunity. Whistleblowing processes are

available if for any reason reporting to line management is not

appropriate or preferred.

In 2023, we held our ninth annual global Ethics Week which is

a series of events, training and communications for all full and

part-time employees and customer representatives on topics

relating to ethics. 97% of all employees and customer

representatives globally completed our online annual ethics

training in 2023.

Our updated Code of Ethics will be translated into local

language and communicated to all employees and customer

representatives throughout 2024 to ensure all of our people

understand its requirements fully and the part they have to

play in upholding the Code. The Code will underpin all

activities planned for our 2024 Ethics Week.

Human rights

The Group is a member of the UN Global Compact. Our

commitment to this initiative, together with the standards of the

United Nations Universal Declaration of Human Rights and the

United Nations Guiding Principles on Business and Human

Rights, is set out in our Corporate Sustainability Policy and our

specific approach to human rights is set out in our Human

Rights Policy. Both policies can be accessed on the policies

section of our website and are approved by our Board.

Our Human Rights Policy sets out our commitment across the

entire Group to respecting internationally recognised human

rights standards and codifies our responsibility to take

appropriate steps to identify, prevent and mitigate human

rights risks and to take action to remedy any adverse impacts

we identify. This Policy sets out our risk assessment procedures

and controls to detect and mitigate human rights risk in our

business and supply chain together with our approach to raise

awareness of these absolute and fundamental rights. In 2024,

we plan to undertake additional targeted due diligence on

suppliers we assess to be as high risk for potential modern

slavery and human rights violations.

Combating financial crime

We are committed to combating fraud, bribery, extortion,

collusion, money laundering, tax evasion, terrorist financing

and all forms of financial crime and corruption and have a

zero-tolerance approach to these matters.

The Group Fraud Manual and the Group Anti-Money

Laundering (AML) Framework define minimum standards and

controls for all markets on fraud, AML, terrorist financing and

financial crime. Our markets can create additional

requirements to reflect local legislative requirements. The

Group Fraud Risk and AML Manager has overall responsibility

for the development and implementation of these controls

and standards and leads a dedicated loss prevention

function, which operates in all of our markets and ensures

adherence to the Group standards. Management information

is monitored to track trends and patterns of behaviour relating

to fraud and AML risks. Suspected frauds and instances of

money laundering are investigated by the loss prevention

function and, where identified, appropriate steps taken to

address underlying control weaknesses.

Compliance with these standards is overseen on a market

basis by local Loss Prevention Committees, comprising senior

management in each market, which reviews management

information to track trends and patterns of fraud. The output of

this activity is then monitored at Group level via the Group

Credit Committee. The Group’s Audit and Risk Committee has

oversight of these systems and controls and receives bi-annual

updates on this topic.

The Group Fraud Risk and AML Manager carries out annual

reviews of each market’s systems and controls to ensure

compliance with the minimum standards detailed in the

Group Fraud Manual and the Group AML Framework as well

as reporting quarterly to the Group Risk Assessment Group as

risk owner of the fraud and AML risk category.

In 2023, incidents of fraud remained low and within risk

appetite. Continued improvements in the fraud control

environment were also evident following the implementation of

new technology solutions. In 2024, we intend to leverage this

technology further to improve efficiencies and effectiveness in

our fraud detection capabilities.

To ensure that the Group is not used to launder the proceeds

of criminal activity and/or facilitate the financing of terrorist

organisations, a variety of methods are used to ensure

compliance with legislative requirements. These include

automated processes to perform checks against sanctions lists

and high-risk countries, and transaction monitoring against

defined thresholds at the point of credit application and

during the lifetime of a loan.

IPF in society

Annual Report and Financial Statements 2023 59

Bribery and corruption

Our commitment to countering bribery and corruption is

detailed in our Anti-Bribery and Corruption Policy, which is

approved by our Board and available on the policies section

of our website. This Policy seeks to ensure the Group complies

with anti-bribery and corruption laws in all markets where we

do business as well as complying with the requirements of the

UK Bribery Act. To ensure compliance with the policy, we

conduct market-level anti-bribery risk assessments annually.

Corruption risks are managed by an established framework

including first line functional controls, second line oversight

and specialised risk management with control assurance and

investigations conducted by subject matter experts and third

line independent assurance provided by the Group’s internal

audit function.

In 2023, we revised our Anti-Bribery and Corruption Policy to

formalise the Group’s zero-tolerance approach to corruption

and our mechanisms and controls to combat bribery and

corruption including risk assessments and annual compliance

checks, along with our processes for recording and assessing

conflicts of interest and gifts and hospitality. Training on this

topic was provided for employees and customer

representatives in 2023 and relevant functions received

additional targeted training. There were no substantiated

reports of bribery or corruption in 2023 across the Group.

Whistleblowing

The Group has mechanisms to enable individuals to raise

concerns about wrongdoing or breaches of the law in the

Group’s operations or business relationships. These internal

and external mechanisms for seeking advice and reporting

concerns about unethical or unlawful behaviour and

organisational integrity are formalised in the Group

Whistleblowing Policy which is approved annually by the

Board and available on the policies section of our website.

This Policy, which is implemented in local language in all the

markets in which we operate, states that there should be no

retaliation against whistleblowers, sets out how to raise

a concern and details processes for ensuring reports are

handled properly.

Anyone, including all employees, customer representatives,

customers and suppliers, can raise concerns through

the whistleblowing processes which the Group has in place.

Reports can be made to independent services which are

available at any time and enable concerns to be raised

in a variety of languages, and anonymously if preferred.

All whistleblowing matters, however reported, come under

the governance processes set out in the Group’s

Whistleblowing Policy.

The Whistleblowing Policy and relating processes are owned

by the Chief Legal Officer and maintained by the Group legal

function. These whistleblowing systems and investigation

processes are overseen by the Group Ethics Committee, which

comprises the Chief Executive Officer, Chief Financial Officer,

Chief Human Resources Officer and Chief Legal Officer. The

Committee receives quarterly updates on outstanding

whistleblowing cases and acts as an immediate escalation

point for any cases assessed as “significant”. The Group’s

Audit and Risk Committee receives bi-annual reports from the

Chief Legal Officer covering statistical data on whistleblowing

reports and a summary of notable cases and key follow-up

activity from the previous reporting period.

We perform an annual compliance check to ensure that

whistleblowing policies and processes are embedded

in all our markets, governance is in place for escalation,

investigation and reporting of cases, local boards

are engaged in the importance of whistleblowing, the service

is well communicated across the business and whistleblowers

are protected from retaliation. Our whistleblowing processes

comply with all requirements of the EU Whistleblowing Directive

and local implementing legislation.

In 2023, we updated our Group Whistleblowing Policy and

processes to reflect developing best practice in this area.

We continued to embed processes and raise awareness

through internal communications to our employees and

customer representatives and our annual ethics training,

which included the importance of this issue. We appointed

our legal directors to champion the importance of speaking

up and the value that this transparency brings to our business.

In 2023, a total of 438 whistleblowing reports were received.

All of these concerns were, or are being, investigated and

resolved. 69 of the reports made (16%) were found to be

unsubstantiated.

Managing conflicts of interest

Our Conflicts of Interest Policy provides colleagues in every

market with the guidance necessary to know how to identify

and declare potential conflicts as well as setting out

requirements to manage any such conflicts ethically and in

line with best practice. Our Responsible Procurement Policy

and Global Procurement Standards include processes to

ensure conflicts in our supplier relationships are managed

appropriately.

In 2023, there was a renewed focus on ensuring the Group’s

policies for managing conflicts of interest were effective and

reflected best practice. In 2024, we plan to provide training on

managing conflicts of interest to those areas of our business

where this is a particularly relevant issue and will embed our

processes for recording and managing of potential conflicts

across the Group.

Modern slavery and child labour

We take the steps required to ensure that no forms of modern

slavery including forced labour, child labour, human trafficking

or any practices detrimental to employment rights are taking

place in our business.

The Group’s position on modern slavery is set out in our

Modern Slavery Policy, which is approved by our Board

and available on the policies section of our website. It includes

specific prohibitions against the use of forced, compulsory or

trafficked labour, or anyone held in slavery or servitude,

whether adults or children, and states that the Group expects

the same high standards from all of its contractors, suppliers

and business partners.

Oversight of compliance with the policy is managed by the

legal function, which works closely with the human resources

function and procurement function. As well as overseeing the

Group’s Modern Slavery Policy, the Board receives an annual

update showing how processes to combat this risk have

performed through the year.

Responsible business continued

International Personal Finance plc60

Strategic Report

To address the risk of modern slavery in our own workforce,

the Group’s Human Resources Control Framework and

relevant human resources policies are designed to ensure

a safe, fair and inclusive workplace for all our employees

and customer representatives. All employees are provided

with a written contract of employment and steps taken to

ensure that anyone employed has a right to work. The Group

does not employ children and has processes in place to

ensure that there are no incidents of withholding wages,

confiscating documents or similar. Our annual ethics training

includes modern slavery to ensure our colleagues are aware

of the issues involved, understand how to identify signs of

modern slavery and what to do in response.

In 2023, we updated our Global Procurement Standards to

ensure that an annual risk assessment process for modern

slavery is embedded across all our suppliers to identify those

in a location and/or industry with a high prevalence of

modern slavery risk, and carry out further due diligence

on any potential coercive or exploitative practices. We include

an anti-modern slavery clause in all negotiated supplier

contracts and/or obtain alternative assurance on suppliers’

policies and processes. There were no suspected cases of

modern slavery reported in 2023.

In 2024, we will continue to enhance the measures in our

supply chain designed to deal with this area. We will also

update our annual e-learning training to ensure it is relevant

and provide targeted training for employees involved in

recruitment or procurement on this topic.

Health and safety

We are fully committed to the health, safety, and wellbeing

of our colleagues. The Board has overall responsibility for this

area and receives an annual safety report on performance.

The Group Credit and Risk Director is the executive responsible

for health and safety. The Group Safety Manager leads

a global team of health and safety professionals across

each of our markets, all of whom are responsible for the

implementation of our Global Health and Safety Framework.

Oversight, governance and assurance is also provided in each

home credit business through Quarterly Safety Management

Review Committees at market board level. Additionally, annual

self assessments of compliance

with safety management system protocols are performed

by the second line control function trained to perform these

reviews. Oversight is provided by the Group Safety Manager.

The Group’s internal audit function also performs periodic

reviews of the Group’s Health and Safety Control Framework.

The training programme is supplemented with periodic

communications and safety campaigns reminding colleagues

of the information, guidance and instructions required to

maintain personal safety.

In 2023, ISO 45001 accreditation was gained by our Mexico

home credit business for its occupational health and safety

management system. This means that all our home credit

business have now attained this standard which ensures best

practice standards drive continual improvement in health

and safety performance. Due to the ‘low risk’ office working

environment within our IPF Digital operations, there is no

requirement to gain ISO 45001 accreditation. However,

the approach to safety management within IPF Digital

follows the ISO 45001 standard principles of best practice

safety management.

In 2023, we undertook a broad programme of work

to support the business through the provision of

health and safety information, advice, education,

and training.

These included:

– campaigns to raise awareness of the impact of the

cost-of-living crisis on our customers and wider society

as financial pressures may lead to an increased risk of

customer representatives experiencing a safety incident

e.g. verbal threats and/or physical assaults;

– refresher training on maintaining personal safety

including conflict de-escalation techniques, performing

situational and dynamic risk assessments, and cash

management controls;

– the provision of financial wellbeing education and

awareness initiatives to support colleagues in dealing

with the stresses of current economic conditions including

basic financial concepts related to budgeting and

managing debts;

– continued focus on psychological health and safety

risk management through stress awareness training

campaigns, the appointment of around 40 Mental Health

First Aiders in our Romanian business and a further 17

individuals to this role in our UK head office; and

– a comprehensive psychosocial risk assessment

performed for all employees in the Mexico home credit

business resulting in the development of corrective and

preventative measures to support around 500 colleagues

identified at elevated risk of mental ill health.

Mental health support

mental health first

aiders trained in 2023

Annual Report and Financial Statements 2023 61

The importance of reporting all health and safety-related

events is crucial and colleagues are reminded continually

of this requirement within their training and safety

communications. All events are recorded and investigated

systematically by trained personnel to determine root causes,

lessons to be learned, and corrective and preventative actions

to minimise the risk of reoccurrence. The table below captures

the total number of workers who experienced a work-related

safety event during 2023 and the harm caused by this event.

Work related safety events and harm caused 2023

% of

colleagues

Total work-related safety events 1,065 4.6%

Worker Injury Type

No injury 696 3.0%

Minor injury 201 0.9%

Moderate injury 134 0.6%

Serious injury (requiring hospital treatment) 34 0.1%

Life-threatening injury 0 0.0%

Fatalities 0 0.0%

A key highlight in 2023 was the development of the Group’s

Global Framework for the Management of Psychological

Health, Safety and Wellbeing. This was defined based on ISO

45003, the first global standard guiding employers on

managing mental health and wellbeing in the workplace.

The Group Safety Manager led a cross-functional,

cross-business working group to define the best practice

requirements which will be provided to all markets for review

and implementation during 2024. This year we will focus

on the implementation of the Group’s Global Framework for

the Management of Psychological Health, Safety and Wellbeing

with the view to attain ISO 45003 certification in 2025.

Data privacy

The data security of our customers, colleagues and partners is

paramount. We process large amounts of personal information

every day and take our data protection responsibilities seriously.

We are committed to protecting the privacy of our stakeholders.

Our approach to data protection reflects the following principles:

– We only collect data that is relevant, we use it solely for the

purpose for which it was collected and we apply further

minimisation rules.

– We are transparent on how we use personal data.

– We process data lawfully, including by obtaining consent

from individuals including in accordance with local law

when processing personal data.

– We correct inaccurate information when requested and

respect individual legal rights.

– We keep personal data confidential and secure.

Compliance with data protection and privacy legislation is

achieved through our Group Data Protection Policy which is

reviewed annually and documents the risks that need to be

managed and control standards that need to be adhered to,

to ensure all personal information is protected and individuals’

data protection rights are observed. Breaching of the policy

may result in disciplinary action including contract termination.

This policy is aligned not only to our purpose, but also to the

data protection legislation which applies to the Group.

Data privacy is a key part of our Code of Ethics so that every

employee is clear on what they need to do on this area.

The policy is supported by more detailed Group Data

Protection Standards. The Policy and Data Protection

Standards are owned and overseen by the Group Data

Protection Officer (GDPO) and Board accountability is owned

by the Chief Legal Officer.

The GDPO is supported by a data privacy team which

comprises Data Protection Officers appointed in each

of our markets who provide advice and support for the wider

business on data protection matters and provide assurance

on this area. They also act as a contact point for the data

protection authorities and individuals in our markets who

request information regarding the processing of personal

information. A data protection compliance monitoring

programme is in place aiming to monitor effectiveness of

our controls and oversight measures and enable corrective

actions, if required.

The policy requires the production of a group data privacy

plan annually under the leadership of the GDPO. The Data

Protection Officers in our markets report regularly to the GDPO

and to their market boards on how the data privacy plan is

being implemented in their market. The Group Audit and Risk

Committee provides oversight of the delivery of the Group

Data Privacy Plan globally.

All our employees and customer representatives are required

to complete data protection training annually to ensure they

understand the obligations placed on them in relation to data

protection. In addition, customised data protection training

is delivered for specific business areas where required.

To ensure appropriate personal data protection and

information security safeguards are in place, we expect

our suppliers to follow data protection principles which we

implement through due diligence and contracting processes.

Management of data breaches is governed through a Data

Breach Policy documenting the plan to undertake together

with roles and responsibilities. Data breaches can occur in the

form of a malicious attack or accidental error and can be

widespread or impact one individual. We operate a robust

process to ensure data breaches are identified, reported

and resolved appropriately.

Whilst errors occur from time to time, in 2023 we experienced

only one significant case of which we notified both the

competent data protection authority and the impacted

data subjects. This case was caused by human error and we

undertook appropriate follow-up actions to resolve this incident.

In 2024, we will look to further enhance our privacy

compliance monitoring and ensure the impact of external

data protection developments are managed appropriately.

Responsible business continued

International Personal Finance plc62

Strategic Report

Cybersecurity

Our Cybersecurity Governance Framework is designed to

ensure accountability, oversight and protection of the Group

against cyber risks. These are formalised in our Group

Information Security Framework and our Information and

Cybersecurity Standards which apply the standards required in

all our markets and are owned by the Group Chief Information

Officer. To ensure these requirements are met, there is a

dedicated cybersecurity team in every market, responsible for

implementing and maintaining local cybersecurity measures

in line with our Group Standards. These teams are tasked with

local adaption and enforcement of the Standards, conducting

regular risk assessments and ensuring compliance with Group

and local regulatory requirements. Our security monitoring

systems are supported by a 24/7 Security Operations Centre

(SOC), a crucial role in early breach detection. We have

security incident management procedures in place.

Employee awareness is a critical component of our

cybersecurity strategy. Mandatory training programmes

and regular awareness campaigns are conducted to ensure

that all colleagues are familiar with cybersecurity principles.

Each employee receives mandatory training before accessing

the Group’s information and later undergoes refresher training

on an annual basis. The effectiveness of these initiatives is

assessed regularly through targeted phishing test campaigns.

Across the business we apply personal data security measures

reflecting the risks, and follow best practices in managing

information security, for example, ISO 27001 specifications

and the National Institute of Standards and Technology (NIST)

framework.

Particular areas of focus in 2023 included improving security

monitoring capabilities, strengthening security controls in

relation to cloud processing and enhancing employee training

and awareness. In 2024, we will focus on further improvements

in detecting breaches, testing incident management

procedures and aligning risk management processes in this

area to DORA (Digital Operational Resilience Act) requirements.

Anti-competition

We are committed to the principles and spirit of competition

law and similar laws in all markets in which we operate.

We recently updated our Competition Law Policy to ensure

employees understand these principles and do not engage

in anti-competitive behaviour. A copy of our policy is available

to view on the policies section of the website.

The Group was not subject to any regulatory findings or legal

action relating to anti-competitive behaviour or breach of

anti-trust or monopoly legislation in 2023.

Compliance with law and regulation

We comply with all relevant laws and regulations in all markets

in which we operate. We support regulation which protects

consumers and ensures that only responsible businesses are

permitted to provide financial products. The Group’s Consumer

Protection Regulatory Compliance Management Framework

sets out the policies, procedures, structures and responsibilities

required to be implemented in all markets to identify and

manage compliance obligations across the Group. The focus

of the framework is to provide assurance that the Group’s

consumer credit products and services are transparent

and ethical as well as compliant with applicable regulatory

standards and legislation. The Group oversees the effectiveness

of management of the risk of non-compliance and provides

guidance on necessary mitigation measures including

adjustment to monitoring and controls appropriate for

increased regulation. The assurance activities performed in 2023

did not identify any significant instances of non-compliance.

We maintain good relationships with regulators, legislators and

governments who play a key role in shaping the consumer

finance sector. We respond constructively to all regulatory

audits and investigations to address any findings and

continuously improve our business practices in line with

changing regulation. There have been no material adverse

regulatory findings, sanctions or fines against the Group in 2023.

Engagement with government, trade

bodies and regulators

We actively contribute to policy developments relevant to the

provision of lending products for underserved communities,

in particular to drive policy change that enables our purpose

of building a better world through financial inclusion.

We advocate for change on the issues that matter most

to our customers with governments, non-governmental

organisations and regulatory bodies. We are a member

of the following trade associations:

– Poland: Foundation for Financial Development;

Confederation Lewiatan, Employers of Poland; Association

of Employers and Entrepreneurs; Federation of Polish

Employers; British-Polish Chamber of Commerce in Poland.

– Hungary: Association of Non-Banking Financial Institutions;

Hungarian Business Leaders Forum; Business Council for

Sustainable Development in Hungary; Association of

Hungarian Manufacturers; Joint Venture Association;

Association of Hungarian Executives.

– Romania: Association of Financial Enterprises; American

Chamber of Commerce in Romania; British-Romanian

Chamber of Commerce; Foreign Investors Council;

Association of Credit and Leasing Employers; Aspen Institute

Romania; National Association of Treasurers.

– Czech Republic: Czech Finance and Leasing Association;

Association of Non-Banking Financial Institutions.

– Mexico: Employers Confederation of the Mexican Republic;

Prodesarrollo; Fintech Mexico.

– Estonia: Finance Estonia; Estonian Chamber of Commerce.

– Latvia: Fintech Latvia.

– Lithuania: FINCO.

Annual Report and Financial Statements 2023 63

All of our public policy engagements and lobbying are aligned

with the Paris Agreement for all direct activities and none of

the trade associations of which we are a member, as far

as we are aware, has taken a position not aligned to the Paris

Agreement on climate. In 2023, we did not undertake any

public policy advocacy activity concerning climate change.

The Group is a politically neutral organisation. This approach

is formalised in our Political Lobbying Policy, which is overseen

by the Group Nominations and Governance Committee.

We comply with legal requirements on disclosing political

donations and we do not provide financial support to political

parties. Consistent with this policy, in 2023, the Group made

no political contributions directly or indirectly, including in-kind

contributions. In 2023, the total monetary value of financial

assistance received by the Group from any governmental

body was zero. No governmental body has any ownership

stake in the Group.

In 2023 our key areas of focus with governmental and

regulatory bodies comprised responsible lending, financial

inclusion and the regulation of consumer loans to consumers.

A particular focus for our advocacy efforts is our annual

Financial Wellbeing Report which surveys around 4,500

consumers in nine markets. This exercise provides extensive

insights on the views of consumers on a range of important

financial and economic issues including savings and

borrowing habits, and knowledge about personal finances.

We use this research to advocate for the needs of consumers

to key groups of decision-makers.

In 2024, our focus will be on continuing to collaborate with

key stakeholders to ensure legislation and regulation takes

account of the need for responsible lending for all groups

of customers as well as engaging on our Invisibles

and financial education programmes.

Tax management

We are a responsible taxpayer, committed to ensuring

compliance with tax law and practice in all of the territories

in which we operate, including the UK, and to operating

in a straightforward and transparent manner in our dealings

with tax authorities whilst recognising our responsibility

to protect shareholder value.

The Group has a publicly available tax strategy which is

available in the policies section of our website. This strategy

is approved by the Board annually and the Chief Financial

Officer has Board responsibility for this area. Our tax strategy

focuses on ensuring that we pay the right amount of tax, in the

right place, at the right time. Transactions between Group

companies are effected for tax purposes in accordance with

the arm’s length principle as enshrined in the OECD’s Transfer

Pricing Guidelines. The Group does not seek to reduce its

effective tax rate through cross-border profit shifting or similar

artificial arrangements and we do not seek to transfer value to,

or otherwise undertake transactions with, tax havens. In the

absence of a globally-recognised definition of tax havens,

the Group has adopted the EU’s list of non-cooperative tax

jurisdictions for this purpose.

Our tax affairs are managed by a global team of experienced,

qualified tax professionals supplemented, where necessary,

by advice from external specialist tax advisors. Where there

are uncertainties regarding the treatment of the Group’s

activities, transactions or products, we seek to engage in an

open, transparent and constructive dialogue with the relevant

tax authority where this is available and seek to obtain rulings

in advance where appropriate.

In order to give effect to the principles contained in the

tax strategy there is a Group-wide tax policy and control

framework which is implemented in all operating entities.

Tax risk is one of the principal risks in the Enterprise Risk

Framework and is therefore reported and reviewed regularly

by the Risk Advisory Group and the Audit and Risk Committee.

Our overall approach to tax is included in our Code

of Ethics and reinforced in the global ethics training which is

undertaken annually by all colleagues. Specific anti-facilitation

of tax evasion training is provided to colleagues identified

as working in roles where there is a relevant consideration.

£177m

Total tax contribution in 2023*, supporting the wider economy.

*The total tax contribution in 2023 comprised £83m taxes

paid representing a cost to the Group (including profit taxes,

employer payroll taxes and irrecoverable VAT/sales taxes)

and £94m taxes collected from employees and customers

on behalf of governments (including taxes collected

on employee salaries and net VAT collected).

Environment

Addressing climate change is an urgent and complex

challenge but also an opportunity. It requires a fundamental

transformation of the global economy. At IPF we are

determined to play our part consistent with our purpose

and relevant business and risk considerations.

In our 2022 Annual Report, we made it clear that

we would approach the climate challenge thoughtfully

and transparently, engaging with our shareholders

and other stakeholders. In doing so, we recognise the

importance of supporting a just transition considering

the social risks and opportunities inherent in the move

to a decarbonised economy.

Since then, the Board has agreed an ambition to be a net zero

institution by 2050, across all our operations and supply chain.

This is a natural progression of the actions we have taken over

the last ten years since we first began reporting our Scope 1

and 2 GHG emissions. It also reflects the focus we have had

on this area throughout 2023 as we are now starting to make

a real difference through a proactive approach on the

environmental impact we have and engagement with

our colleagues and suppliers.

Responsible business continued

International Personal Finance plc64

Strategic Report

Our approach to addressing the climate

change challenge

The recent Conference of the Parties to the United Nations

Framework Convention on Climate Change (COP 27)

concluded that to reach net zero emissions and keep the

global temperature increase to 1.5°C would require an

enormous increase in low-carbon technologies, infrastructure

and capacity as well as a co-ordinated reduction in carbon-

intensive activity, including fossil fuel consumption. Whilst we

are committed to aligning our strategy with the 2015 Paris

Agreement on climate, we believe that IPF has a limited role in

either reducing financed emissions or financing this transition.

In respect of our financed emissions, the lending we

undertake, consisting of originating unsecured consumer

loans, is not covered by any global methodology dealing with

the measurement of financed emissions. This reflects the fact

that, as a lender, we cannot know what our customers use

the funds we lend to them for. We will continue to monitor

guidance on this topic from credible international bodies

to determine if our approach to financed emissions should

change and will provide further updates on this point

in future Annual Reports.

In respect of contributing to the financing of the transition,

the scope for introducing dedicated lending products

designed to help our customers in this area was discussed

by our Country Management Team in 2023. Their assessment

was that the Group’s current and potential future products

are not likely to be suitable for helping finance transition efforts

for our customers in a way which would be aligned to our

purpose or customer needs. They reached this determination

by considering the requirements of the segment of customers

we serve and the amount lent on average to each customer.

Given these factors we currently do not consider it feasible

to offer lending products in a way that is consistent with our

purpose for transition-related expenditure. We will continue

to review this topic periodically to ensure that the position

does not change across our markets.

Given these assumptions we believe our activities in relation

to the environment should be focused on addressing our

own emissions which arise from our operations, driving

educational efforts with our colleagues centred on reducing

their environmental footprint and addressing the broader

adverse environmental impacts we create such as waste

and recycling.

Managing our operations

Our Environment Policy sets out our commitment to

environmental management and can be found on our

website. This policy covers our environmental management

strategy and sets out how this area is overseen by the Chief

Executive Officer and the Board. This reflects the fact we have

sought to reduce our environmental impacts over the last

three years through:

– ensuring our new head offices improve energy efficiency

through incorporating energy saving technology,

such as LED lighting;

– our core data infrastructure activities including greater

deployment of cloud-based services, which use less

energy than conventional data storage;

– removing single use plastic cutlery and cups internally

and issuing colleagues with sustainable alternatives;

– recycling materials wherever possible, collecting used

paper and general waste such as plastic bottles

and empty aluminium or tin cans; and

– working towards using paper and printed materials more

sparingly. We currently produce over 115 million sheets of

paper across our European home credit business annually.

In 2023, we launched a dedicated cross functional project,

championed at a senior level to reduce this number

by over50%.

Greenhouse gas emissions (GHG)

We report Scope 1 and Scope 2 emissions in line with current

regulations as detailed below and which comprise electricity,

district heating, gas andfuel for cars. Of this, transport by car

is our most material GHG emission.

We report annually on the most material carbon emission

sources required under the Companies Act 2006 (Strategic

Report and Directors’ Report) Regulations 2013 – Scope 1 and

2 greenhouse gas emissions and energy consumption data.

We have applied the Greenhouse Gas (GHG) Protocol

Corporate Accounting and Reporting Standard to calculate

our emissions data and have used emission factors from the

UK Government’s latest GHG conversion factors and the

current edition of the IEA emission factors for non-UK electricity.

The emission data covers all our offices across the globe.

These sources fall within our Consolidated Financial

Statements. Where data was incomplete, we have

extrapolated data in line with this methodology.

In 2023, the Group’s GHG emissions for Scope 1 and 2

decreased by 3.5% year on year. We are also pleased to report

that overall emissions have reduced by more than 25% since

2019. This positive trend is due primarily to the gradual

replacement of diesel and petrol cars with lower emission

LPG vehicles in the Company’s fleet.

In 2023, in accordance with the Large and Medium-sized

Companies and Groups (Accounts and Reports)

Regulations 2008:

i. the Group’s Scope 1 and 2 emissions in the UK

represent 0.2% of the Group’s total (2022: 0.2%);

ii. the Group used 4.5m kWh of electricity (2022: 4.2m

kWh) with the UK representing approximately 2.7%

of the Group’s total (2022: 3.0%); and

iii. no actions were taken during the year with the express

purpose of increasing the Company’s energy efficiency.

For Scopes 1 and 2, transport by car will remain our priority

in 2024 and we plan to continue replacing our petrol and

diesel car fleet with LPG and hybrid cars where possible.

Scope 3 (indirect emissions) have not been included in our

2023 reporting. However, we intend to assess how best to

measure indirect emissions (Scope 3) in 2024. In line with best

practice, we have restated our Scope 1 and 2 emissions for

2022 in the table on page 66.

Our GHG emissions report has been reviewed and verified

byBe Sustainable Limited and the statement of verification

canbe found in the sustainability section of our website

atwww.ipfin.co.uk.

Annual Report and Financial Statements 2023 65

We do not believe that as a Group we pose particularly

significant risks to the environment through our business

activities. As detailed above, our greatest source of emissions

relates to the transport by car undertaken by our customer

representatives. Given the nature of our supply chain and the

types of goods and services we purchase, we have not

identified any specific material risks arising from our supply

chain other than the need to work with suppliers to reduce

emissions in order for us to achieve our net zero target by 2050.

Focus on our colleagues

In support of our net zero operations ambition, we are

engaging with colleagues and will be implementing initiatives

to reduce our individual environmental footprints. In particular,

we will continue to utilise tools to reduce the impacts from our

company car fleet in 2024, including using tailored fleet

management software.

Looking to the future

Our focus in 2024 will be to establish base year data and

develop a credible strategy for how we will meet our targets.

We will also track progress against our targets, monitor relevant

scientific trends, and regularly review and adjust our strategy

and targets as needed. We intend to report our progress

against our environmental plans in future Annual Reports.

We will also keep our policies, targets and progress under review

in light of the rapidly changing external environment and the

need to support an orderly transition. The trajectory for our

markets’ transition varies significantly and is influenced by a

number of external factors, including market developments,

advances in technology, the public policy environment,

geopolitical developments and regional variations as well as

behavioural change in society. Over the coming years, our

strategy will continue to evolve and adapt to reflect external

factors effecting the shape and timing of the transition to

a low-carbon economy. Progress is likely to vary year to year

and we need to be able to adapt our approach to respond

to external circumstances and to manage the effectiveness and

impact of our support for the transition, whilst remaining focused

on our ambition of becoming a net zero organisation by 2050.

We are still at an early stage in our journey. We recognise

there is a huge amount of progress still to be made, but we are

committed to achieving our ambition. Over the coming years,

we aim to increase our momentum as well as continuing to be

transparent about our progress and developing appropriate

metrics to track our progress to net zero by 2050.

Responsible business continued

Eco November

Eco November is our annual month-long initiative which

brings colleagues together from across the Group to

improve their environment. Our team in Estonia volunteered

their time to plant more than 14,000 trees in the Kose area,

and 2,100 saplings were planted in Leeds, UK, as part of

a forest development project. Colleagues from our home

credit and digital divisions in Poland joined forces and

planted 25,000 trees in the Drewnica Forest District near

Warsaw and a thriving woodland has been extended

thanks to members of our team in Hungary who planted

more than 100 trees and shrubs in the Budakeszi

Wildlife Park.

Tonnes CO

GHG emission sources Travel and utilities 2019 2020 2021* 2022* 2023

Difference vs

2022

2023

difference

vs 2019

Scope 1 Gas 927 1,008 476 468 761 62.7% (17.9%)

Business travel

bycar

24,274 16,304 18,277 19,012 17,826 (6.2%) (26.6%)

Scope 2 Purchased

electricity and

district heating

3,236 2,664 2,494 1,944 2,079 6.9% (35.8%)

Scope 1 and2  28,437 19,976 21,247 21,424 20,666 (3.5%) (27.3%)

 CO

e emissions

bycustomer

0.013 0.011 0.013 0.013 0.013 - -

* 2021 and 2022 data were restated in February 2024.

International Personal Finance plc66

Strategic Report

Introduction

This Task Force on Climate-related Financial Disclosures (TCFD)

report serves as the Group’s 2023 disclosure of the climate-

related risks and opportunities to our business. It describes how

climate change scenarios may impact the Group and outlines

our strategy to mitigate these potential impacts to ensure our

resilience as a business.

The report is structured in accordance with the TCFD

recommendations. As such, it covers our governance

structures, strategy, risk management, and targets and metrics.

We recognise that the global financial system is connected

deeply to the health of the planet and that a changing climate

has profound implications for business and society. Therefore,

our approach concerns not only mitigating the transition and

physical risks of climate change to our business, but also our

actions to tackle climate change at source to help the

successful transition to a low carbon economy. While we

recognise that climate change poses risks to our business

model, we believe there may also be opportunities arising

from this trend which also require regular evaluation.

Governance

Governance is defined in the TCFD recommendations as

“aset of relationships between an organisation’s

management, its board, its shareholders, and other

stakeholders. Governance provides the structure and

processes through which the objectives of the organisation

are set, progress against performance is monitored, and

results are evaluated.” It is recommended that organisations

establish and disclose appropriate internal governance

processes for managing climate-related risks

and opportunities.

Sustainability considerations are embedded in the way we run

our business, with the objective of ensuring we align our

business priorities with society’s expectations on this topic. Our

commitment is outlined in the Group’s Corporate Sustainability

Policy which is available to view in the policies section of our

website. This Policy sets out our commitment to this area, in

particular, what is expected from the Group and those it does

business with in terms of responsible business conduct and

sustainable development. This commitment supports our

business decision making at all levels and provides a frame of

reference for how we want to deal with business opportunities

and risks in the context of direct and indirect sustainability

impacts.

Our Board and management-level governance structures and

oversight bodies incorporate climate considerations as part of

their responsibilities. We seek to ensure that oversight of

sustainability and climate-related risks and opportunities are

embedded across the Group.

In 2023, we continued to evolve our governance structures

with the objective of establishing effective and resilient

governance for climate- and sustainability-related issues.

Following the work described in the 2022 Annual Report

concerning formalising and enhancing the role of the Board

and its Committees in this area, we embedded oversight of

sustainability and climate-related risks and opportunities into

management governance structures at multiple levels of the

Group during 2023.

Board oversight of climate and

sustainability-related topics

The Group Board oversees our sustainability-related activity

including oversight of the risks and opportunities associated

with climate change, while the Chief Executive Officer (CEO)

has overall accountability for management of this area. This

activity has been delegated by the CEO to the Chief Legal

Officer (CLO), who has specific responsibility for the

management and implementation of measures detailed in our

Responsible Business Framework, including assessing risks and

opportunities from climate change, and also ensuring these

are identified and managed appropriately.

In 2023, the Board discussed the merits of introducing a

separate, dedicated board committee on this topic but

determined that direct oversight by the Board was preferable.

We will continue to monitor the effectiveness of these

arrangements in 2024.

Taskforce on Climate-related Financial Disclosures

TCFD Report

How our Board oversees sustainability

Board of Directors

Responsible for:

Reviewing financial and

non-financial disclosures

and risks related to

sustainability and climate.

2023 activity: The

Committee reviewed

trends in sustainability

reporting, in particular

at EU level, as well as

reviewing assessments

of the risks and

opportunities of climate

change relevant to the

Group and the results

of scenario analysis

undertaken to assess

exposure to physical

climate risk.

Responsible for:

Approving performance

measures, including

those relating to ESG for

senior management, and

ensuring employment

and pay practices are

appropriate and reflect

stakeholder views.

2023 activity: The

Committee reviewed

proposed ESG metrics

for inclusion in senior

management

compensation-related

decisions as well as

ensuring consistency of

approach between the

workforce and senior

management on

pay-related matters.

Remuneration

Committee

Audit and Risk

Committee

Responsible for: The Group’s strategy, organisation and

oversight of performance including in relation to climate-

related matters. It sets the strategic direction for

sustainability at the Group and has ultimate responsibility

for sustainability-related governance.

2023 Activity: The Board reviewed and approved key

policies in the area (e.g. Human Rights Policy, Corporate

Sustainability Policy) as well as reviewing and approving

the broader Responsible Business Framework, which

includes climate related matters. The Board monitors

progress towards the objectives detailed in this Framework

through review of management information on a quarterly

basis and periodic detailed updates on this topic.

Annual Report and Financial Statements 2023 67

Management oversight

In 2023, we have sought to build on the progress made

in 2022 in relation to Board oversight of climate-related risks

and opportunities by revising our management governance

structures to ensure these are better placed to support the

Group’s ambitions in this area.

There are two primary management roles designed to assign

responsibility for the delivery of the Group’s assessment and

management of climate-related matters. First, the Chief

Financial Officer (CFO) has overall responsibility for climate

change and environmental matters. Second, in 2023 the CLO

was assigned responsibility for overseeing the management

of climate change-related risk, and sponsors the Group’s

Responsible Business Framework (see page 46 for more

information). The CLO oversees, in a first line capacity,

the work of analysing the potential future impact of climate

change on the Group and the results of these scenario

assessments are submitted to the Audit and Risk Committee.

The CLO’s function is also responsible for the Responsible

Business Strategy on a day-to-day basis including providing

updates that include any climate-related issues of relevance

that can be communicated to the Executive Oversight Group

when required.

A further means of management oversight is the

incorporation for the first time of a specific climate-related

section in the 2024 budget process as well as the creation

of a dedicated climate resilience fund, which is held centrally

and available to each market to help reduce climate

impacts and enhance resilience.

The diagram below provides an overview of the Group’s

management governance bodies with climate-related

oversight responsibilities.

Responsible Business Framework Executive Oversight Group

Meeting frequency: Monthly

Risk Advisory Group

Meeting frequency: Quarterly

Country Management Team (CMT)

Meeting frequency: three times per year

Responsible Business Framework Steering Group

Meeting frequency: Monthly

Responsible Business Framework Champions Group

Meeting frequency: monthly

Audit and Risk

Committee

Responsible Business

Framework Executive

Oversight Group

Board of Directors

Governance body Escalation path

Taskforce on Climate-related Financial Disclosures continued

Comprises all members of the UK Executive and is chaired by the Chief Legal Officer.

Responsible for the overall execution of the Group’s Responsible Business Framework, which

covers climate-related issues, in alignment with the strategic direction set by the Board.

It oversees input to the Group’s strategic processes to ensure climate is given appropriate

consideration in long-term strategy and planning. It receives regular updates from the

Responsible Business Framework Steering Group to assist it with these objectives.

The Group-wide risk oversight body, comprising a mix of senior leaders from Group and

markets, is responsible for monitoring key risks, including climate risk. The Risk Advisory Group

receives updates at every meeting concerning the status of climate risk across all markets.

The Group-wide steering body, comprising the most senior leaders at Group and market

level, provides insight and challenge on key climate-related risks and opportunities.

Helps drive key climate initiatives, as part of the broader Responsible Business Framework. It

provides governance, strategic leadership and execution guidance, making

recommendations to the Executive Oversight Group.

Responsible for integrating and implementing the Responsible Business Framework and,

where applicable, sustainability best practices and climate strategy into the activities of each

of our markets.

International Personal Finance plc68

Strategic Report

Sustainability function

The Group’s sustainability function is led by the CLO, who is a

member of the executive team and attends the Group Board

meetings. The function works in collaboration with other

functions and markets to implement the Group’s Responsible

Business Framework on a day-to-day basis including

sustainability-related policies, carbon and climate change,

stakeholder engagement and reporting.

Next steps

Over the next 12 months we intend to further enhance

our activities in this area through:

– incorporating the use of scenario analysis data into

the Board strategy process;

– maturing the use of ESG metrics into executive

compensation; and

– ensuring the revised management governance

arrangements are embedded.

Strategy

Strategy is defined in the TCFD recommendations as:

“anorganisation’s desired future state. An organisation’s

strategy establishes a foundation against which it can

monitor and measure its progress in reaching that desired

state. Strategy formulation generally involves establishing

the purpose and scope of the organisation’s activities and

the nature of its businesses, taking into account the risks

and opportunities it faces and the environment in which

itoperates.” It is recommended that organisations disclose

the nature and impact of their material climate-related risks and

opportunities, as well as the resilience of their strategy under

each chosen climate scenario. We recognise that both climate-

related risks and opportunities have the potential to impact our

business. We have therefore taken the necessary steps

recommended by the TCFD to identify and assess the potential

materiality of the risks and the opportunities, so we can maximise

the positive impacts and minimise the negative impacts on our

business. We therefore seek to consider climate change

alongside other factors when developing our overall strategy.

We recognise that assessing and quantifying the level of

impact from climate change is an emerging practice. A

greater level of estimation and assumption is required to

address the long-term and forward-looking nature of climate-

related risks and opportunities, which causes limitations in

assessing how such trends impact our strategy.

In 2023, we undertook an exercise to engage our most senior

leaders directly in the process of refreshing our assessment of

climate-related risks and opportunities to ensure that we are

incorporating any new risks and opportunities appropriately.

Specific actions undertaken in this area in 2023 include

updating the time horizons for this year’s materiality review

compared to what we used for the previous year’s assessment:

(i) Reviewing time horizons

The time horizons to be used for assessing risks and

opportunities arising from climate change were reviewed by

the CMT in line with TCFD guidance, which indicates

companies should explain the rationale for such choices. It

was determined that the following time periods should be used

by the Group:

Time

period

Original

time

period

Revised

time

period Rationale

Short

term

0-2

years

0-3 years This time period reflects

the average term of our

loans and the flexibility in

both our credit strategies

and field operations that

allow us to adapt to

rapidly changing

scenarios.

Medium

term

2-5

years

3-10 years This time period reflects

the strategic planning

horizon used by

theGroup.

Long

term

5 plus

years

10 plus

years

This time period is based

on the useful economic

life of the majority of

Group assets.

A number of factors informed the selection of these periods,

including the rapid change which has been evident in relation

to new climate-related legislation, the volatility of energy prices

and the need to align closely with the periods considered in

the Group’s scenario analysis of climate-related risk, which

typically considers scenarios that span thirty years or longer

and is discussed in more detail below. The short-term time

horizon better aligns to our risk management framework.

Medium-term is more appropriately aligned to the timeframes

used internally for planning purposes. The long-term time

horizon was chosen to capture the impact expected from

countries in which the Group operates taking steps to meet its

commitments as detailed in the 2015 Paris Agreement. These

time periods are a change from those disclosed in 2022 and

reflect feedback from the CMT that assessments over the long

term should include a more extended timescale.

(ii) Defining risks and opportunities

Details of how we define climate risks and opportunities are set

out in the table on page 70.

In Q1 2023, a list of potential risks and opportunities was

presented to the CMT for feedback following a benchmarking

exercise of risks and opportunities used by peer organisations

and commentary from external regulatory bodies. This was the

start of a process of consultation and engagement with this

group of senior leaders. Following discussion and feedback, it

was noted that the attractiveness to employees of the Group’s

approach to this area should be regarded as a risk as well as

an opportunity. The opportunities arising from enhancing our

ability to manage transition risk well and move to more remote

working (with consequently lower costs and environmental

impacts) was also highlighted. This process resulted in the

following definitions being adopted by the CMT and approved

by the Board in terms of risks and opportunities which could be

relevant to the Group:

Annual Report and Financial Statements 2023 69

Principal risks

Risk type Potential effects

Physical risk

Physical risks are those

related to the physical

impacts of climate change.

Acute

Increased frequency and severity of extreme weather events affecting customers,

customer representatives and employees could impact the success of our business model.

Chronic

Permanent changes to sea, river or lake levels could impact our ability to conduct our business

in some areas.

Transition risk

Transition risks are those

related to the impact

arising from changes in

climate policies, or changes

in the underlying economy

due to decarbonisation.

These risks emerge from

policy, legal, technology,

and market changes as the

economy shifts towards

using less carbon.

Policy and Legal

(i) Exposure to litigation due to our inability to comply with new carbon-related requirements;

and (ii) Increased operating costs due to the increased cost of transport or carbon

pricing initiatives.

Market

Uncertainty around the costs incurred in moving to a net zero economy.

Reputation

(i) Increased stakeholder concern or negative stakeholder feedback relating to our ability to

transition effectively to a lower carbon economy; (ii) Increased shareholder concern or negative

shareholder feedback relating to our strategy to address climate related risks; and (iii) Employee

concern or negative feedback relating to our strategy to address climate-related risks.

Opportunity type Potential effects

Resource efficiency

(i) Reduced operating costs through reduced air and other travel; (ii) Reduced operating costs

through reduced paper consumption; and (iii) Potential for reducing costs and environmental

impacts through remote working.

Energy source

(i) Use of lower-emission sources of energy; (ii) Use of supportive policy incentives; and (iii) Use of

new technologies, which have the potential to reduce costs.

Products and services

Development of new products and services through innovation to address climate challenges.

Markets

Increased attractiveness of the Group to customers and employees by effective execution and

communication of the Group’s climate strategy.

Resilience

Enhanced access to funding at attractive pricing for organisations which are carbon

neutral/positive.

It is envisaged that this process of risk identification will be repeated annually.

(iii) Assessing materiality

For the purposes of assessing climate-related risks and opportunities, the definition approved by the Board and CMT was that

for a climate-related risk or opportunity to be deemed material for strategic planning purposes it would have a significant impact

on the profitability of the Group (e.g. through delayed customer repayments), expenditures (e.g. increased costs), assets

(e.g. closing branches), or financing (e.g. loss of investors due to legal breaches). “Significant” for these purposes means

a material impact on the Group’s ability to meet the targets detailed in our 2024 budget.

Taskforce on Climate-related Financial Disclosures continued

International Personal Finance plc70

Strategic Report

(iv) Determining climate risks and opportunities over different time periods

In 2023, we undertook a detailed evaluation of the climate risks and opportunities defined on page 70 with members of the

CMTand the Group Audit and Risk Committee. We reviewed each of the risks and opportunities and assessed how likely that they

would impact the Group materially over different time periods. Impacts were assessed as follows: (i) High Impact indicated

significant risk or opportunity on the Group. (ii) Medium Impact: indicated moderate influence on the Group. (iii) Low Impact

indicated minimal effect on the Group. The consensus was that most impacts would be low over the short and medium term

with higher impacts possible over the long term.

Risk type Risk Short term Medium term Long term

Impacts

Low

impact

Medium

impact

High

impact

Low

impact

Medium

impact

High

impact

Low

impact

Medium

impact

High

impact

Physical Acute-chronic

Transition

Policy and legal

Market

Reputation

Opportunity type Short term Medium term Long term

Impacts

Low

impact

Medium

impact

High

impact

Low

impact

Medium

impact

High

impact

Low

impact

Medium

impact

High

impact

Resource efficiency

Energy source

Products and services

Markets

Resilience

The process indicated material impacts from climate risks and

opportunities are not assessed as likely over the short and

medium term. Over the longer term, however, there was a

consensus that risks and opportunities were likely to be of

much higher relevance. This reflected the assessment we

made of physical climate risk through scenario planning and

our assessment of the broader market and regulatory trends

evident in each market. These activities confirmed that the risks

and opportunities identified remained largely unchanged from

the previous assessment.

(v) Integration with our strategic planning process

The work undertaken confirmed that the actual or potential

impacts of climate-related risks and opportunities on the

Group over the short or medium term are unlikely to

significantly influence the Group’s approach in its markets or

to its customers due to climate change. The results of the

scenario analysis undertaken and discussed in more detail

below provided further confirmation that climate change is not

expected to have a material impact on the Group’s current

strategy or financial viability for the time horizon of the next 10

years (i.e. the short and medium term) under the most likely

climate scenarios.

The completed assessments of risks and opportunities were

incorporated into the 2023 strategic planning process and the

conclusions were provided to the Board as part of the strategic

planning process for 2024 and beyond.

Next steps:

– incorporate scenario analysis results into the strategic

planning process;

– identify the strategic impacts of creating a credible transition

plan; and

– review in more detail the potential impact of transition risks

on the Group’s Next Gen strategy.

Risk management

Risk management is defined in the TCFD recommendations

as“a set of processes that are carried out by an

organisation’s Board and management to support the

achievement of the organisation’s objectives by addressing

its risks and managing the combined potential impact of

those risks.” It is recommended that organisations disclose

their processes for identifying, measuring and managing

climate-related risks, as well as describing how these processes

are integrated into the organisation’s overall risk management.

Since publishing the Group’s 2022 TCFD disclosures, we

continued to integrate climate-related risk into broader risk

management practices in 2023. As climate risk management

efforts were enhanced through the year, particularly with the

completion of scenario analysis, the Group gained deeper

insights into this risk category. We remain focused on

identifying and measuring climate-related risks relevant to our

business strategy and during 2023 revised our risk appetite

statement, key risk indicators and definitions to ensure these

reflect good practice.

(i) Definition of climate risks

In evaluating climate-related risks, we use definitions and

methodologies consistent with the principles of the TCFD, as

described in more detail above.

Annual Report and Financial Statements 2023 71

(ii) Risk framework

The Group uses an Enterprise Risk Management (ERM)

framework to identify, report and manage risks. The framework

is defined centrally and implemented in each of our markets.

This approach allows risk management and reporting to

balance the importance of having consistency of approach,

measurement and risk categorisation across the Group,

together with the value of having local expertise and risk

action plans.

Risks are identified collectively across the Group and are

classified against a taxonomy of 21 key risks. Each risk

category is assigned to a member of the Group’s senior

leadership team or one of their reports, who is accountable

for managing the identified risk as first line risk owner. For each

risk, the ERM requires the first line risk owner to ensure ongoing

measurement/monitoring as well as improvement plans and

training to enhance risk mitigation. Each first line risk owner

updates the Risk Advisory Group (RAG) on their respective risks

for discussion and oversight. Each risk is assessed to determine

probability and severity of the risk and assigned a score

accordingly. These risk scores allow the Group to determine

the relative significance of each risk in relation to other risks.

The RAG meets quarterly to consider these topics.

(iii) Processes for identifying and assessing

climate-related risks

Our climate-related risk management approach aims

to assess and manage the risks posed by climate change

to our business and seeks to integrate climate considerations

into risk management practices.

Climate risk is one of 21 key risks as defined in the ERM.

The first line risk owner is the CLO who engages with internal

stakeholders to understand the level of importance and

potential climate-related impacts on the Group and reports

a series of KPIs to the RAG to provide insight on this topic.

These KPIs include assessment on whether there have been

changes in the quarter to policy and legal issues, market trends

and reputational matters as well as physical risks crystallising.

In 2023, the Group continued to develop and implement

processes around climate-related risk identification and

assessment. As part of this, the climate change risk appetite

statement, which articulates the Group’s approach to risk

taking, was expanded to include additional detail on how

climate and environmental financial risks are evaluated

and monitored.

(iv) Scenario analysis

During 2023, we conducted scenario analysis, using the three

climate scenarios described opposite to explore and assess

the resilience of our business to the physical risks arising from

climate change. This helped us to better understand which

physical risks could potentially have the largest impact

on the Group across different time horizons and informed

our efforts to better manage and monitor these risks.

We used external datasets on climate trends and internal

datasets on the locations of our premises worldwide

to model the potential impact of such risks.

The objective was to assess the resilience of the Group’s

strategy under different climate scenarios. We used the

outputs of the high-level impact analysis for all material

climate-related risks identified under three different

Representative Concentration Pathways (RCP)

over different time horizons to better understand the

potential impact of climate-related risks and opportunities

on our business. These three scenarios were chosen as they

represented a suitably diverse range of pathways to be able

to understand the impact of physical climate risk.

The outcomes of these assessments were considered

by the Audit and Risk Committee. The output of this modelling

showed that in the short-to-medium term, there were no

immediate material risks and exposures that would impact

strategy, performance or liquidity.

The scenario analysis allowed us to be more targeted

in understanding the current resilience we have against

climate-related risks and will enable focus on developing

further mitigation strategies for the Group as well as in our

local markets where necessary.

The Group's overall assessment was that our business model

and strategy are resilient in light of these risks. To mitigate this

area of risk, the Group will continue to monitor regulatory

changes or changes to customer behaviour which would

require a reassessment of this decision.

Taskforce on Climate-related Financial Disclosures continued

IPCC RCP 2.6

is representative of a scenario that aims to

keep global warming likely below 2°C above

pre-industrial temperatures. It envisages

emissions peaking and then declining with

global temperatures increasing at below 2°C.

IPCC RCP 8.5

is the highest baseline emissions scenario

in which emissions continue to rise throughout

the 21

century. Therefore climate change

projected under RCP 8.5 will typically be more

severe than under the other two scenarios

considered by the Group.

Scenario analysis

The following scenarios have been used:

4°C

3°C

2°C

1°C

IPCC RCP 4.5

is described as a moderate scenario in which

emissions peak around 2040 and then decline,

limiting the global temperature increase to 2-3°C.

IPCC

RCP 4.5

IPCC

RCP 2.6

IPCC

RCP 8.5

International Personal Finance plc72

Strategic Report

Our focus in 2023 has been on defining and agreeing

specific and credible targets beyond initial scoping

discussions.

Our overall target is to be net zero across our operations

and supply chain by 2050. This commitment means

a public undertaking by the Group to achieve progress

in three areas: Firstly, the carbon emissions of our own

operations – our offices, branches and data centres;

secondly, the emissions resulting from the energy we

purchase to operate our business; and thirdly, the emissions

of our value chain, such as our suppliers’ emissions and our

business travel emissions.

After we have reduced our emissions as much as possible,

we will balance any remaining emissions through

high-quality offsetting solutions.

We define net zero operations as the state in which we

will achieve a GHG reduction of our Scope 1 and Scope 2

emissions by at least 90% against a 2023 baseline and use

carbon offsetting to eliminate any residual GHG emissions

through the removal of an equivalent amount of GHGs from

the atmosphere.

Scope 1 Scope 2 Scope 3

Emissions targets and metrics

Achieving our net zero target will require the following actions:

Operational

emissions

Low emission

alternatives

Energy

efficiency

Suppliers

Electrification

of buildings

and vehicles

Renewable

energy and

replacing

fossil fuels

Colleagues

Principles and

policies

Reduce our Scope 1 and 2 emissions through energy efficiency,

electrification of our buildings and vehicles, renewable energy sourcing

and replacing fossil fuels with low emission alternatives.

Reduce Scope 3 operational emissions by

engaging with our key stakeholders including

suppliers and colleagues to track, manage and

reduce their GHG emissions, while embedding

net zero principles across our policies and

contractual requirements.

assess and monitor climate-related risks and opportunities,

including their Scope 1, 2 and, if appropriate, 3 emissions.

We also believe it is important to seek to mitigate broader

environmental impacts. For the Group, this means reducing

our energy use and the amount of waste we generate as well

as looking to maximise the amount of waste we recycle and

reducing the impact of the paper we use.

Greenhouse gas emissions (GHG)

We are committed to measuring and reducing our share

of GHG emissions in line with the Paris Agreement. We make

disclosures on the Group’s direct Scope 1 and 2 emissions.

Our Scope 1 and 2 GHG emissions are disclosed on pages 65

and 66 of this report and have been determined in line with

the GHG Protocol methodology.

As part of the work we are carrying out to align our climate

disclosures with the TCFD recommendations, we are now

improving our processes and tools to ensure that emissions

data can be collected and managed with better consistency.

Mitigation and Resilience Measures

In 2023 the Group sought to implement credible mitigation

and resilience measures, including establishing targets

for energy efficiency measures, scenario analysis and

reporting transparency.

Next steps

– Continue to invest in climate-focused tools and data

to enable our scenario analysis to mature and provide

further insights.

– Look to mature the new arrangements put in place

in 2023 to oversee climate risk as part of our ERM.

– Develop the management information the Audit and Risk

Committee review on this topic.

Metrics and targets

Metrics and targets are used to assess and manage material

climate-related risks and opportunities. The TCFD recommends

that organisations disclose the metrics and targets they use to

Annual Report and Financial Statements 2023 73

Taskforce on Climate-related Financial Disclosures continued

Next steps

– collate accurate data on a broader range of environmental

impacts to enable credible targets to be set;

– establish and publish targets for environmental impacts; and

– create and publish a transition plan in line with UK

Government guidance.

Interim targets

Our Board has approved the following interim

targets to be delivered by 2034, using 2024

as a baseline

100%

renewable energy in our head

office locations globally

Transition 90%

of our global fleet to EV or ULEV

models where EVs are not viable

50%

of our vendors by addressable spend to set

their own 1.5° C aligned climate targets

Identify and pursue

opportunities

to reduce the distances travelled by our customer

representatives, thereby reducing this source of emissions.

Other environmental metrics and targets

The Group is committed to wider environmental improvements

as well as reducing its emissions.

The Board has agreed targets for the Group using 2024

as a baseline to:

– divert 90% of waste from landfill by 2034;

– source 100% of paper from sustainable sources; and

– reduce paper use by 50%.

Focus on our supply chain

Our target to be net zero in our operations by 2050 will be a

catalyst influencing our supply chain to deliver better services

and products. We have a real opportunity to drive down

emissions and we are focused on developing decarbonisation

pathways with our key suppliers to achieve this goal. We will

encourage our suppliers to sign up to robust emissions

reduction targets and are scaling up our engagement with

this stakeholder group. Our initial assessment is that our supply

chain emissions are concentrated in a small number of large

suppliers. Our initial focus on decarbonising our supply chain

will be on engaging key suppliers to adopt credible reduction

targets. In the medium term, our goal is to integrate carbon

pricing into sourcing and procurement decisions, alongside

net zero clauses into our tender processes.

International Personal Finance plc74

Strategic Report

TCFD compliance statement

The Group has complied with the requirements of LR 9.8.6(8)R by including climate-related financial disclosures consistent

with the TCFD recommendations and recommended disclosures.

The climate-related financial disclosures made by the Group also comply with the requirements of the Companies Act 2006

as amended by the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022. Details of how

the Group complies with these requirements are set out in the table below.

Governance

Summary Alignment Action in 2024 Reference

a. Describe the board’s

oversight of climate-related

risks and opportunities.

The Board has ultimate responsibility for

oversight of risks and opportunities from

climate change and receives updates on

this topic. It also delegates responsibility

for risk oversight to the Audit and Risk

Committee.

Aligned Enhance the use of scenario

analysis data as an input to

strategy formulation and mature

the use of ESG metrics in executive

compensation.

Page 67

b. Describe management’s role

in assessing and managing

climate-related risks and

opportunities.

Our Responsible Business Framework

Executive Oversight Group oversees

management of climate risks and

opportunities. These efforts are overseen

by our Chief Legal Officer, who is a

member of the UK Executive.

Aligned Ensure the revised management

governance arrangements for

climate are embedded.

Page 68

Risks and opportunities

Summary Alignment Action in 2024 Reference

a. Describe the climate-related

risks and opportunities the

organisation has identified

over the short, medium,

and long term.

Through our work with the Country

Management Team and other

stakeholders we identified the risks and

opportunities relevant to the Group and

the relevant timescales.

Aligned The climate related risks and

opportunities were discussed at a

senior level and an agreed

assessment produced.

Page 69-70

b. Describe the impact

of climate related risks

and opportunities on

the organisation’s

business, strategy,

and financial planning.

For the time horizon to 2030, we consider

the financial and operational impact of our

climate-related risks to be non-material.

Aligned We will increasingly incorporate

climate-related risks and

opportunities into our strategy,

operations and planning.

Page 70

c. Describe the resilience of the

organisation’s strategy, taking

into consideration different

climate related scenarios,

including a 2°C or lower

scenario.

The results of our scenario analysis and

internal assessments show that climate

change is not expected to have a

material impact on the Group’s current

strategy or financial viability for the time

horizon for the short or medium term.

Aligned Identify the strategic impacts of

creating a credible transition plan.

Review in more detail the potential

impact of transition risks on the

Group’s strategy.

Page 72

Risk Management

Summary Alignment Action in 2024 Reference

a. Describe the organisation’s

processes for identifying and

assessing climate-related risks.

The Enterprise Risk Management

Framework defines climate risk as a key

risk. The Country Management Team

reviewed in detail the assessment of

climate risk.

Aligned Embed the changes to risk appetite

and KPIs for climate risk category.

Page 72

b. Describe the organisation’s

processes for managing

climate-related risks.

The Group has an Enterprise Risk

Management Framework of which climate

risk is a part.

Aligned Continue to develop scenario

analysis capability.

Page 72

c. Describe how processes

for identifying, assessing and

managing climate-related

risk are integrated into the

organisation’s overall

risk management.

The Enterprise Risk Management

Framework provides structure to ensure

consistency of approach, alignment to the

risk appetite and monitoring of our risk

exposure across the Group.

Aligned As part of the Enterprise Risk

Management Framework process,

we will continue to assess on a

regular basis the most relevant

climate-related risks for the Group.

Page 72

Annual Report and Financial Statements 2023 75

Metrics and targets

Summary Alignment Action in 2024 Reference

a. Disclose the metrics used by

the organisation to assess

climate-related risks and

opportunities in line with its

strategy and risk

management process.

Metrics used to assess our climate-related

risks and opportunities include Scope 1, 2

emissions.

Aligned We will continue to strengthen our

monitoring metrics and mitigation

measures in 2024.

Page 74

b. Disclose Scope 1, Scope 2

and if appropriate, Scope 3

GHG emissions and the

related risk.

Details of our GHG emissions in 2023

(Scope 1, Scope 2) have been provided.

Aligned We will continue to strengthen our

monitoring metrics and mitigation

measures in 2024.

Page 65-66

c. Describe the targets used by

the organisation to manage

climate-related risks and

opportunities and

performance against targets.

By 2034, our targets using 2024 as a

baseline are (i) 100% renewable energy in

our head office locations globally; (ii)

transition 90% of our global fleet to EV or

ULEV models where EVs are not viable; (iii)

50% of our vendors by addressable spend to

set their own 1.5°C aligned climate targets;

and (iv) identify and pursue opportunities to

reduce the distances travelled by our

customer representatives, thereby reducing

this source of emissions.

Aligned Embed actions to deliver proposed

interim targets.

Page 73-74

Companies (Strategic Report)

(Climate-related Financial Disclosure) Regulations 2022

Disclosures to meet mandatory climate-related financial disclosure requirements under the Companies (Strategic Report)

(Climate-related Financial Disclosure) Regulations 2022 are set out below.

Requirement Summary Page

a. Description of the governance arrangements of the company

in relation to assessing and managing climate-related risks

and opportunities.

Governance arrangements for management of climate-

related risks and opportunities are detailed in the Governance

section of the TCFD Report.

Page 67-68

b. A description of how the company identifies, assesses, and

manages climate related risks and opportunities.

The process for identifying, assessing and managing

climate related risks are detailed in the Strategy section

of the TCFD Report.

Page 69

c. A description of how processes for identifying, assessing,

and managing climate-related risks are integrated into the

overall risk management process in the company.

A description of how climate-related risks are integrated into

the overall risk management process is set out at Section (iii)

of the Risk section of the TCFD Report.

Page 72

d. A description of:

i. the principal climate-related risks and opportunities

arising in connection with the operations

of the company; and

ii. the time periods by reference to which those risks

and opportunities are assessed.

A description of the principal risks and opportunities and time

periods is set out in the Strategy section of the TCFD Report.

Page 70-71

e. A description of the actual and potential impacts

of the principal climate-related risks and opportunities

on the business model and strategy of the company.

A description of these impacts is detailed in the Strategy

section of the TCFD Report.

Page 69-71

f. An analysis of the resilience of the business model

and strategy of the company or LLP, taking into

consideration different climate-related scenarios.

A description of these impacts is detailed in the Strategy

section of the TCFD Report.

Page 69-71

g. A description of the targets used by the company or LLP to

manage climate-related risks and to realise climate-related

opportunities and of performance against those targets.

A summary of the approach to targets is set out

in the Metrics and Targets section of the TCFD Report.

Page 73-74

h. The key performance indicators used to assess progress

against targets used to manage climate-related risks

and realise climate-related opportunities and a description

of the calculations on which those key performance

indicators are based.

There are currently no KPIs used to assess progress

against targets.

N/A

Taskforce on Climate-related Financial Disclosures continued

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Strategic Report

In line with the non-financial reporting requirements contained in sections 414CA and 414CB of the Companies Act 2006,

the table below contains references to non-financial and sustainability information intended to help our stakeholders

understand the impact of our policies and activities.

Reporting

requirement Relevant policies Relevant section of our report

Description of the

business model

Corporate Sustainability Policy

Environment Policy

Enterprise Risk Management Policy

Our business model – p12-p13

Key performance indicators – p26-p27

Principal risks and uncertainties – p80-p83

Responsible business – p46-p66

Employees Code of Ethics

Group Health and Safety Policy

Wellbeing Policy

Diversity Policy

Our colleagues – p51-p55

Our communities – p56-p58

Board diversity – p100-p101

Equal opportunities – p51

Principal risks and uncertainties: People risk – p82

Human rights Code of Ethics

Human Rights and Modern Slavery Policy

Responsible business – p59

Social matters Code of Ethics

Tax strategy

Our business model – p12-p13

Our customers – p48-p50

Principal risks: Reputation risk – p81

Responsible business – p46-p66

Anti-corruption

and bribery

Anti-bribery and Corruption Policy

Gifts and Hospitality Policy

Anti-facilitation of Tax Evasion Policy

Know Your Customer and

Anti-money Laundering Policy

IPF in society – p59-p66

Environmental

matters

Corporate Sustainability Policy

Environment Policy

TCFD – p67-p76

Environment – p64-p66

Principal risks Principal risks and uncertainties – p80-p83

Non-financial KPIs Non-financial key performance indicators – p27

Non-financial and Sustainability Information Statement

Non-financial and Sustainability

Information Statement

Annual Report and Financial Statements 2023 77

Principal risks

and uncertainties

Managing risk

Achieving the goals of our strategy depends on our ability to

manage risk, respond to emerging risks and take advantage

of business opportunities effectively. In turn this will help us

deliver further value for all our stakeholders.

Enterprise risk management approach

We manage risk strategically using the enterprise risk

management (ERM) methodology. This enables us to identify,

evaluate, manage, monitor and report on a wide range of

risks, uncertainties and opportunities across the Group in an

integrated way. Risk appetite is a core consideration within our

ERM approach and plays an important role in addressing the

Group’s key risks effectively.

The way we implement risk management also supports our

understanding and ability to address our capacity to sustain

risk over time, ensure risks are considered in decision-making

across the Group and enable the Board to perform its

supervisory role.

Our risk management approach and activities are aligned

to the UK Corporate Governance Code (2018).

Key risks to the Group

The ERM process covers a wide range of risks and uncertainties

that could have a significant impact on the Group’s objectives

or on key stakeholder expectations. The Group’s principal risks

are those that we believe have the potential to threaten our

business model, future performance, solvency or liquidity,

and reputation. On pages 80 to 83, we have summarised

the key risks that we monitor, how they developed in 2023

and how we are addressing them.

Risk appetite

The Group’s risk appetite is reviewed and approved

by the Board at least on an annual basis and is the central

component that prompts the arrangements we put in place

to organise and execute the ERM process.

Our risk management strategy involves mitigating, to the

maximum reasonable extent, those risks which are within

our control and therefore the internal control system is key

to how we manage risks. Externally-driven risks are monitored

to ensure a prompt response to further mitigate them should

the context become unfavourable, and are subject to

contingency planning to ensure business resilience.

Risk management roles and responsibilities Assured by three lines of defence

Risk ownership, governance, and oversight structure

We have defined a comprehensive structure of roles across the Group to ensure risks are managed effectively at all levels within

the business. This structure was built to align with the principles of ERM, including all-encompassing portfolio risk management,

butalso with the principles of the three lines of defence approach. Risk assurance is defined in alignment with the three lines

ofdefence principles.

Our framework for risk ownership, governance and oversight together with our three lines of defence approach is illustrated below:

Principal risks and uncertainties

Board of Directors

Determines the nature and extent of risks the Board iswilling to

take to achieve strategic objectives.

Audit and Risk Committee (ARC)

Reviews processes for the management of risks and internal

control systems on behalf of the Board. Makes recommendations

to the Board on Group risk appetite, Group risk profile, and the

effectiveness of the risk management system.

Risk Advisory Group (RAG)

Supports the ARC in reviewing risk exposure levels against risk

appetite and provides the ARC and the Board with an overall

view of the Group’s risk position.

Local risk committees

Supports the RAG in reviewing the risk profiles of the markets.

1. Operational management

Responsible for executing business processes,

delivering products or services, and managing

day-to-day risks by executing riskcontrol

measures.

2. Risk management

ERM function, compliance and other control

functions provide oversight, guidance, and

monitoring of risks and controls.

3. Internal audit

Provides an objective and independent

assessment of the adequacy and

effectiveness of risk management and internal

control systems.

International Personal Finance plc78

Strategic Report

We evaluate each risk at least quarterly based on the

likelihood and potential impact at both market and Group

level. In addition, we measure and monitor the key risk

indicators set for each principal risk. Using this assessment, we

then compare the level of current risk with the Board-approved

risk appetite and determine whether further actions are

required to mitigate the risk to fit within our Board-approved risk

appetite levels.

Risk assessment and response

We perform a quarterly risk assessment process across the

Group to update the level of risks facing the business, identify

any weaknesses in the internal control environment and take

additional actions to address risks which are outside appetite.

We maintain comprehensive risk registers in each market,

reflecting a bottom-up approach, and Group-level,

top-down view.

The Chair of the RAG challenges the assessments performed

by risk owners based on a wide range of assurance data from

first line control testing, risk management performance

indicated by key risk indicators or independent assurance

provided by internal audit.

Emerging risks

In our view, an emerging risk is an existing or future trend which could have a significant impact on the Group, where the

likelihood, timescale and/or materiality may be difficult to accurately assess.

Emerging risks are monitored to determine if they have become key risks and if any mitigating actions should be taken. When

we consider our response to emerging risks, we will classify these into two categories, based on the type of response required.

Those with a high velocity will be addressed as crisis events and crisis management protocols will be triggered. Those with a

moderate and low velocity will be monitored and reported until impacts are understood, and specific response actions and

contingency plans are developed.

Throughout 2023 we monitored the following emerging risks:

Our response to risk depends on its severity and ranking

against the Board-approved risk appetite. Internal controls are

defined and executed across the Group for all key risks to

ensure the inherent level of risk is mitigated to an acceptable

level. There are situations when the impact of the control

environment is not sufficient and the residual level of risk falls

outside our appetite. In these cases, additional actions are

taken. We also continuously identify and monitor those events

that, even after mitigation, could impact the business severely.

In these cases, we create and execute contingency plans to

respond to the crystallisation of the risk.

In addition to this process, risks are considered and addressed

as part of any new project, initiative or strategic plan across

the Group.

Review of the EU Consumer Credit Directive (CCD)

Wecontinued to monitor the CCD review as an emerging

risk throughout the year due to the frequent and numerous

amendments made during the process, and the

uncertainty as to how it would be transposed in our

markets. The review was completed and published in

November 2023. We have conducted an internal review

of the potential impacts of the updated legislation and

are well placed to make any changes necessary

in our business.

Economic conditions

Macroeconomic indicators showed that the global financial

system remains under pressure due to a high level of

consumer indebtedness combined with high interest rates

and pressure on the currencies of major western

economies. In response to the macroeconomic uncertainty

and cost-of-living crisis, we continued to make careful

lending decisions, tightened credit criteria for higher-risk

consumers and focused on repayments to control this risk.

Our balance sheet position remains robust.

Tax developments

We continued to monitor international tax developments,

including the European Commission’s initiative on debt-

equity bias reduction allowance (DEBRA), the potential

reform of the financial services VAT exemption and the

OECD’s minimum corporate income tax initiative (Pillar 2).

The prospective laws are still being developed and,

consequently, it has not been possible to assess the full

impact of these developments on the business at this stage.

Use of Artificial Intelligence (AI)

AI offers potential strategic opportunities for the business

and we are exploring how it can best support our growth

plans. However, the use of AI might also trigger risks to the

Group including data protection, fraud and consumer

protection compliance. The implications to the Group

arestill unclear and, therefore, we will monitor it as an

emerging risk.

Annual Report and Financial Statements 2023 79

Principal risks

Credit risk

The risk of the Group suffering

financial loss if our customers

fail to meet their contracted

repayment obligations; or the

Group fails to optimise

profitable business

opportunities because of our

credit, collection or fraud

strategies and processes.

Following a challenging start to 2023 due to high energy costs and double-digit inflation in the majority

of our markets, the economic environment stabilised during the summer. We have seen no discernible impact

of the cost-of-living crisis on customer repayment performance, credit losses are in line with our expectations,

and the impairment rate at the year-end of 12.2% is within our risk appetite.

Overall, the Group performed very well in 2023 although there was increasing pressure on customer

affordability towards the end of the year.

The transformation of our business in Poland to offer credit cards increased the inherent credit risk but good

execution has resulted in customer repayments being in line with expectations and tracking similarly to

instalment loans.

We remain cautious about the macroeconomic landscape and credit standards remain tight, and we are

ready to react if we become concerned that the environment is deteriorating.

How it is managed

– Detailed, regular monitoring of customer repayments to identify specific issues.

– Detailed analysis and enhancement of our credit scorecards and Credit Policy to ensure they remain optimal.

– Further tightening of lending rules as necessary, to protect customers and the quality of the portfolio.

– Careful regular assessment of the external environment.

– Ensuring repayments and arrears management activities remain a key part of customer representative

and field management incentive schemes.

Future legal and regulatory development risk (previously regulatory risk)

The risk that the Group suffers

loss as a result of a new or a

change in existing legislation

or regulation.

The second EU Consumer Credit Directive came into effect in Q4 2023 and is expected to be transposed

in all our EU markets within two years. The key areas of change relevant to the Group include rules on

pre-contractual information, creditworthiness assessments and underwriting, training and consumer protection.

The Digital Operational Resilience Act (DORA) and the Sustainability Reporting Directive also came into force

and plans are in place to deal with these impacts, including strengthening the operational risk management

framework and sustainability reporting.

In response to new affordability regulations that came into force in Poland in May 2023, we deployed new

processes and technology to assess customers in line with the new rules. IPF Digital introduced systems

to comply with the Payment Services Directive 2 (PSD2) ensuring customer authentication processes.

The implementation of credit regulations in Poland resulted in the Group’s businesses in this market being

regulated by the Polish financial supervision authority, KNF, from 1 January 2024. We continue to engage

with the KNF, as they assess our application for a full payment institution licence which will enable our Polish

business to issue a greater volume of credit cards in Poland.

In late February 2024, we received a letter from the KNF issued to all regulated lenders operating in the Polish

credit card market setting out its current expectations on how charging practices for credit cards should be

subject to limits on non-interest costs, the need to differentiate between different costs charged by credit card

issuers which are subject to caps and those fees which are not subject to a cap and lastly how issuers should

approach more broadly the question of calculating and assessing fees which are not subject to specific legal

limits. See page 30 for more details.

In the first quarter of 2024, the Prime Minister of Romania announced plans to prioritise implementing price

caps on loans from Non-Banking Financial Institutions (NBFIs) in the upcoming parliamentary session. See

page 30 for more details.

A more regulated and unified financial system may develop across European markets in future.

How it is managed

– Horizon–scanning, monitoring political, legislative and regulatory developments and risks.

– Engagement with regulators, legislators, politicians and other stakeholders.

– Active participation in relevant sector associations.

– Contingency plans in place for significant regulatory changes.

Funding, liquidity, market and counterparty risk

The risk of insufficient availability

of funding, unfavourable

pricing, or that performance

is impacted significantly by

interest rate or currency

movements, or failure of

a banking counterparty.

The uncertain global macroeconomic landscape, a banking crisis and the wars in Ukraine and the Middle

East impacted debt capital markets and investor confidence negatively in 2023. However, the Group maintained a

robust funding and liquidity position throughout the year, extending bank facilities of £84m and successfully

securing £62m of new funding. Our credit ratings remained unchanged in 2023. We have a long-term credit

rating of BB- (Outlook stable) from Fitch Ratings and Ba3 (Outlook stable) from Moody’s Investor Services.

Although high inflation and interest rates, supply chain disruptions and the wars continue to impact market

sentiment, the landscape has improved since Q4 2023 with headline inflation reducing in many of our

territories and interest rates expected to decrease going forward. For further information on funding see

the financial review on pages 36-41.

How it is managed

Board-approved policies require us to maintain a resilient funding position with a good level headroom

on undrawn bank facilities, appropriate hedging of market risk, and appropriate limits to counterparty risk.

– Compliance with these policies is monitored on a monthly basis by the Group’s Treasury Committee which

is chaired by the Chief Financial Officer.

– The Board receives a comprehensive funding and liquidity overview as part of the Chief Financial Officer’s report.

– The Group’s funding and liquidity is managed centrally by the Group Treasurer and qualified treasury personnel.

– The Group sets cash management controls for operating markets that are subject to independent annual testing.

Principal risks and uncertainties continued

International Personal Finance plc80

Strategic Report

Reputation risk

Risk of reputational damage

due to our methods of

operation, ill-informed

comment, malpractice,

fines or activities of some

of our competition.

High inflation, increasing energy costs and lower GDP growth in our markets resulted in negative sentiment

towards the financial sector. In addition, the financial sector is likely to remain under scrutiny and challenge

in the run-up to elections in a number of our markets in 2024.

We maintain strong relationships with key stakeholders to develop their understanding of our business model,

our purpose and role in society, and how we deliver services to our customers. We also maintain dialogue

with customers to enable continued access to credit and offer repayment support, where appropriate.

Our working practices are subject to tight control and oversight to ensure our products and services are

in line with legislation and customer expectations. This helps protect the business from unforeseen events

that could damage our reputation.

In 2023, we received awards recognising our business as a top employer, our high standards of customer

experience and for being a socially responsible business.

How it is managed

– Clearly defined corporate values and ethical standards are communicated throughout the organisation.

– Employees and customer representatives undertake annual ethics e-learning training.

– Regular monitoring of key reputation drivers both internally and externally.

– Strong oversight by the senior leadership team on reputation challenges.

Taxation risk

The risk of failure to comply with

tax legislation or adoption of an

interpretation of the law which

cannot be sustained together

with the risk of a higher future

tax burden.

We have seen a slight increase in tax rates going forward across various markets, including an extension

to the Hungarian extra profits special tax to 2024 and increases in the tax rates in the Czech Republic

to 21% from 2024 and Estonia to 22% from 2025. We continued to monitor international tax developments

during the year, including the EU’s DEBRA and BEFIT proposals, and the implementation of the directive on

public country-by-country reporting. In addition, UK legislation applying the Pillar Two income tax rules was

enacted during 2023, effective from 2024. An impact assessment has been performed and we do not expect

the Group to incur any material Pillar Two top-up tax liabilities. However, given the uncertainty regarding

forecast financial data and the potential for future changes in the tax environment in the markets in which

the Group operates, the actual impact of the Pillar Two legislation in the future may differ.

As at the end of 2023, the Group had ongoing tax audits in Mexico (home credit entity for 2017 and digital

entity for 2019).

For further information see the financial review on pages 36-41.

How it is managed

– Tax strategy and policy in place.

– Qualified and experienced tax teams at Group level and in market.

– External advice taken on material tax issues in line with Tax Policy.

– Binding rulings or clearances are obtained from authorities where appropriate.

– Appropriate oversight at Board level over taxation matters.

Change management risk

The risk that the Group suffers

losses or fails to optimise

profitable growth resulting from

change initiatives failing to

deliver to agreed scope, time,

cost and quality measures, or

failing to realise desired

benefits.

Effectively managing change and transformation risk is crucial for minimising negative financial impacts,

maintaining employee engagement, ensuring successful adaptation to evolving business needs and

maximising transformation benefits.

We continue to run a large and complex change agenda across the Group, driven by three factors:

i. regulatory-driven change, which is unpredictable and might have a significant business impact

if not addressed and prioritised;

ii. migration to ‘Next Gen’ platforms that mitigate technology debt or end-of-life risk; and

iii. business-driven changes which reflect wider strategic priorities across the Group, focused largely

on improving business performance.

Despite the challenging macroeconomic environment and regulatory challenges, we have taken significant

positive actions to prioritise and control the change portfolio, deliver the planned benefits, and run the

change delivery framework across the Group.

How it is managed

– Change management framework and monitoring process in place.

– Appropriate methods and resources used in the delivery of change programmes.

– Continuous review of change programmes, with strong governance of all major delivery activity including:

– alignment with Investment Appraisal Policy, owned by the finance function; and

– a Group change capability being established in 2024, focused on synergy and consistency across the

Group, and agreeing a Group-wide approach for oversight of change and transformation.

Risk environment and link to strategic pillars key

Risk environment improving Risk environment remains stable Risk environment worsening

Financial inclusion Organisation Technology and data

Annual Report and Financial Statements 2023 81

Product proposition risk

The risk of failure to offer

appropriate products in

response to market trends (e.g.

customer needs

or the macroeconomic,

regulatory or competitive

landscape) results in a lack

of profitable growth.

All our markets continue to be competitive, but we saw banks tightening their underwriting as the effects of

high inflation impacted consumers’ disposable income. We also saw some competition being impacted by

both caution in capital markets and increasing regulation. We believe that non-bank financial institutions will

remain a crucial source of finance for lower-income, underserved consumers, and we will continue to focus

on serving more customers in this demographic while maintaining lending quality.

In response to the competitive landscape and aligned with our strategy, we made significant improvements

to the control environment and strengthened our Product Policy and Oversight Committee. In addition,

we increased our focus on delivering positive impacts on customers as well as financial returns.

We continue to develop our propositions to improve financial inclusion, enhance customer value, improve

the customer experience, and extend our digital and mobile propositions to meet consumers’ changing

needs.

How it is managed

– Product development committees and processes in place to review the product development roadmap,

manage product risks and develop new products.

– Regular monitoring of competitors and their offerings, advertising and share of voice in our markets.

– Strategic planning and tactical responses on competition threats.

Technology risk

The risk of failure to develop

and maintain effective

technology solutions.

A proactive approach to technology risk management is essential for maintaining the currency and

capabilities of the Group in an increasingly digital landscape.

The focus in 2023 was on removing some components which were nearing technological obsolescence.

Our replacement of telephony systems for our customer service centres with a modern omni-channel solution

is close to completion. In addition, good progress was made to move away from a federated set of physically-

hosted data centres to a centralised cloud environment.

How it is managed

– Ongoing reviews of services and relationships with partners to ensure effective service operations.

– Annual review to prioritise investment in technology and ensure appropriateness of the technology estate.

– Appointment of a new Group Chief Information Officer.

People risk

The risk that achievement of the

long-term Group strategy,

and operational results is

impacted due to not having

sufficient capacity (number)

and capability (quality),

or an inability to either recruit

external talent or retain

and engage our people.

The challenging macroeconomic environment has had some impact on the turnover of customer

representatives, and we are experiencing a return to more “normal” turnover rates post-pandemic.

We take actions constantly to retain, develop and engage customer representatives to minimise

impacts on the customer experience or the Group’s performance.

Throughout 2023, we continued our global programme to re-engineer our customer representative employee

value proposition (EVP) and engaged with our colleagues through dedicated forums and our Global People

Survey, a culture monitoring tool.

For more information on our colleagues see pages 51-55.

How it is managed

Our human resources control environment identifies key people risks and controls to mitigate them covering:

– monitoring and action with regards to key people risks and issues; and

– appropriate distribution of strategy-aligned objectives.

Our people, organisation and planning processes ensure that we develop appropriate and significant

strength and depth of talent across the Group and we have the ability to move people between countries,

which reduces our exposure to critical roles being under-resourced.

Principal risks and uncertainties continued

Risk environment and link to strategic pillars key

Risk environment improving Risk environment remains stable Risk environment worsening

Financial inclusion Organisation Technology and data

International Personal Finance plc82

Strategic Report

Information security and cyber risk

The risk that the Group suffers

loss, theft or corruption

of information leading

to breaches of relevant

regulation, loss of reputation,

loss of commercial advantage

or other impacts on customers

and colleagues. The risk that

Group infrastructure, platforms

and applications are

compromised or damaged

such that customers

and colleagues cannot use

or access our products

and services.

We continued to deliver our three-year information security strategy that aims to detect and respond to

security breaches in a timely and reliable way, as well as having appropriate recovery arrangements in

place. However, the risk is highly dependent on the behaviour of people and advancements in technology.

Globally, the emerging threat of AI, which can facilitate a range of cyber attacks, is significant and we are

addressing it through appropriate web and device protection, controlling access to company networks and

delivering awareness training and education.

The number of attacks is substantial; however, we have addressed them in alignment with controls defined

in our three-year information security strategy, with no major information security incident leading to identified

loss and no reportable breach.

For more information on data protection and cybersecurity see pages 62-63.

How it is managed

– Group-wide information security strategy in place and information security awareness training

conducted regularly.

– European home credit information security committee oversees our approach.

– Working group and guidelines established to oversee the safe and ethical use of AI.

– A DORA programme is in place to comply with new European regulations.

Viability statement

The Directors have assessed the long-term prospects of the

business and taken into account:

– structural changes impacting business growth

and profitability;

– the beneficial portfolio effect of operating across a number

of different jurisdictions which mitigates concentration risk;

– the Group’s multi-channel strategy and strategic priorities;

– risk appetite, principal risks and risk management processes;

– that the Group provides access to regulated credit in a

responsible, transparent and ethical manner, for people

who might otherwise be excluded from mainstream credit

operators, acknowledging that it is possible to regulate

away the supply of credit but not the demand; and

– the historical resilience of the Group’s business

model over many years, including times of adverse

macroeconomic conditions and a changing competitive

and regulatory environment.

Assessment of continuing operations

The Group has a clear strategy to deliver its purpose and

long-term profitable growth. The Group has a robust capital

structure supported by significant equity and a balanced

portfolio of debt funding, the largest element of which matures

in November 2025, all of which together form the strong capital

foundations required to support business growth. Based on this

analysis, the Directors confirm that they have a reasonable

expectation that the Group will continue to operate and meet

its liabilities as they fall due for the period of three years from

the date of this report and that the Group has adequate

long-term prospects. This assessment has been made

with reference to the Group’s current financial position,

its prospects, its strategy and its principal risks, as set out

in the Strategic Report.

Business planning and stress testing

The Group undertakes an annual business planning and

budgeting process that includes updated strategic plans

together with an assessment of expected performance,

cash flows, funding requirements and covenant compliance.

The financial forecasts in the business plan have been stress

tested over a range of downside scenarios to assess the

impact on future profitability, funding requirements and

covenant compliance. The scenarios reflect the crystallisation

of the Group’s principal risks (with particular reference to

macroeconomic and regulatory risks) as outlined on pages

80-83. Consideration has also been given to multiple risks

crystallising concurrently and the availability of mitigating

actions that could be taken to reduce the impact of the

identified risks. In addition, the Group undertook a reverse

stress test on the financial forecasts to assess the extent to

which a recession would need to impact our operational

performance in order to breach a covenant.

Viability assessment

The Directors have determined that three years is an

appropriate period over which to provide the viability

statement because it aligns to the key period of the planning

process, and reflects the relatively short-term nature of our

business and our ability to change products, adjust credit

risk in the receivables book and flex our business model.

Delivery of the business plan is expected to require the Group

to access wholesale funding markets during 2024 and we

have a successful track record of accessing funding from

debt capital markets including during challenging periods.

As a result, the Directors have assumed that these markets

remain accessible to allow the Group’s existing arrangements

to be refinanced and further funding put in place if necessary,

and that the legal, taxation, and regulatory framework allows

for the provision of short-term credit to the markets in which

the Group operates.

For further information on funding see pages 36-41.

Approval of the Strategic Report

The Strategic Report has been approved by the

Board of Directors and signed on its behalf by:

Gerard Ryan

Chief Executive Officer

14 March 2024

Annual Report and Financial Statements 2023 83

Introduction to the

Corporate Governance Report

I am delighted to present this Corporate Governance Report to

our shareholders covering the year ended 31 December 2023,

which sets out the key areas considered by the Board and its

Committees during the year.

As outlined in my Chair’s statement on page 7, 2023 has been

a strong year for IPF, both in terms of customer outcomes and

operating results. Despite continued inflationary pressures and

cost-of-living challenges impacting our customers and the

business more widely, the Group has managed to deliver

strong results through excellent operational execution, tight

cost control and other initiatives to increase profitability.

Board composition and changes

The composition and size of the Board is reviewed regularly,

and the skills and experience our directors bring to the

business are summarised on pages 86 to 87 and 89.

Our Board is well balanced and diverse, with a good mix

of business knowledge, board experience, international

exposure and awareness of risk management matters. In 2023,

the composition of the Board remained consistent following

the appointment of Katrina Cliffe and Aileen Wallace to the

Board in 2022. Aileen underwent a detailed induction plan

throughout the first half of 2023, more details of which can be

found on page 99.

During the year, the Board’s composition met the requirements

set out in the 2018 UK Corporate Governance Code, with more

than half of our directors (excluding myself) deemed to be

independent non-executive directors and met the target set

out in Listing Rule 9.8.6(9)R for 40% female representation on

the Board. At the end of 2023, the Board comprised four men

and three women. For a Company such as ours, with a diverse

workforce and a global outlook, we believe this level of

diversity is key to ensuring that the Board can appropriately

oversee the success of the Group. Further detail on the

diversity of the Board and executive management can be

found on page 101.

In December 2023, Katrina Cliffe succeeded Richard Holmes

as senior independent director. I am confident that Katrina’s

previous experience as a Senior Independent Director will

allow her to continue Richard’s excellent work. This change

also supports the Board’s commitment to meeting the diversity

targets set out in Listing Rule 9.8.6(9). I would like to thank

Richard for his support as Senior Independent Director

and his continuing commitment to his role as Non-Executive

Director and Chair of the Audit and Risk Committee.

Katrina will also continue her excellent work as Board

Workforce Engagement Director alongside her new

role as Senior Independent Director.

Enhancing board processes

As a Board, we are committed to the highest standards

of corporate governance, believing it is a critical enabler

to delivering long-term, sustainable value to our stakeholders.

As Chair of the Board, I have ultimate responsibility for ensuring

that the Board and its Committees continue to remain effective

and operate to a high standard. We also recognise that in

order to maintain our effectiveness, we need to continually

review and evaluate our processes to ensure that they remain

in line with best practice and continue to support effective

decision-making by the Board. As such, with the assistance

of the Company Secretariat, I have focused in 2023 on

enhancing our board processes throughout the year.

Further information on the improvements made to our

Board processes can be found on page 93.

Engaging with our stakeholders

We have a diverse and global community of stakeholders

which includes our customers, employees and customer

representatives, communities, investors and rating agencies,

suppliers, and the regulators, politicians and NGOs relevant

to our businesses. The Board recognises the importance of

gaining insights into the views of our stakeholders in order to

understand better their needs and to inform decision-making.

The Board actively seeks opportunities to understand the views

of stakeholders. Further details of how the Board engages with

each of our key stakeholders and examples of how they have

been considered in the decisions made during the year are

included on pages 43 to 45 and 94. The Directors’ duties

under s172 of the Companies Act 2006 underpin the sound

governance at the centre of our decision-making and further

information regarding our s172(1) statement is on page 44.

“We remain committed to the highest standards

of corporate governance, believing it is a

critical enabler to delivering long-term,

sustainable value to our stakeholders.”

Stuart Sinclair

Chair

International Personal Finance plc84

Directors’ Report

In 2023, the Board sought to increase oversight of

engagement with stakeholders through the introduction

of a biannual update that sets out engagement activities

that have taken place during the previous six-month period

for each stakeholder group and any actions that were taken

by the Group following engagement with each of these

groups. The Board has also put stakeholders at the forefront

of decision-making by ensuring that every Board paper refers

to how any decisions made may impact our stakeholders.

During the year, we responded to stakeholder feedback

in respect of remuneration, following a vote of 77.05% votes

in favour of the advisory vote to approve the 2022 Directors’

Remuneration Report (excluding the Directors’ Remuneration

Policy) at the 2023 Annual General Meeting (AGM).

We released an update on this matter following the AGM

and six months later in accordance with the UK Corporate

Governance Code. A further update on engagement with

shareholders on remuneration can be found on page 111.

A materiality assessment was also completed during the year,

which engaged with stakeholders to identify the issues that

they believe are most relevant to our business. Further

information on the materiality assessment can be found

on page 47.

Whilst the Board strives to achieve the best outcome for all our

stakeholders, we recognise that it is not always practicable

to please all stakeholders all of the time. Therefore, a key part

of the Board process is to balance the sometimes conflicting

needs of our stakeholders to ensure all are treated consistently

and fairly.

Purpose, culture and values

Our purpose is to build a better world through financial

inclusion and our culture of doing the right thing for our

customers, colleagues and communities is integral to this.

As a Board, we set our purpose, culture and values as well

as ensuring these are aligned to our strategy and embedded

across the Group.

Further information on purpose, culture and values can be

found on page 95.

Board effectiveness

An important requirement of good governance is for

an annual Board effectiveness review to be carried out

to assess whether the Board continues to operate and

perform effectively.

At the end of 2023, an internal board effectiveness review

was conducted. The overall conclusions were that the Board,

its committees and each director continued to be effective

in their roles, and further details on the review findings,

recommendations and the actions agreed can be found

on pages 102 and 103.

Stuart Sinclair

Chair

Made progress on enhancing our product

propositions and distribution channels for the next

generation of customers.

Responded to changing consumer preferences

and the evolving regulatory landscape in Poland

by adapting our strategy and products to meet

customer needs, comply with new regulations

and mitigate impact on financial performance.

Successfully expanded into new geographies

in Mexico.

Grew profitability across IPF Digital’s six territories

reflecting strong product innovation and

cost control.

Continued progress on the Group’s purpose journey,

helping colleagues to understand how they

contribute to our purpose on a day-to-day basis.

2023 highlights

Annual Report and Financial Statements 2023 85

Richard Holmes

Independent

non-executive director

Deborah Davis

Independent

non-executive director

Our Board

and Committees

Length of service: 4 years

Responsibilities: Good corporate

governance and best practice,

leadingan effective Board with a

focuson strategic planning and

implementation. Chair of Nominations

and Governance Committee.

Key skills: Highly experienced Chair,

non-executive director and CEO

with abackground in consumer

financial services.

Contributions: A strong and effective

leader of the Board, his extensive

experience in retail banking, insurance

and consumer finance ensures a good

balance of strategic and operational

oversight. His insightful and inclusive

style encourages a culture of openness

and debate within the Board with

anappropriate level of challenge

tomanagement.

Length of service: 12 years

Responsibilities: Group strategy,

operational management, leadership

ofthe executive and senior leadership

team. Ensuring good relations with

employees, customer representatives,

customers, regulators and investors.

Key skills: Inspirational leadership

and effective, objective implementation

of strategy; over 30 years’ multi-country

experience in consumer financial

services.

Contributions: Acute market insight

which provides a real advantage in

driving the implementation of the

strategy, and identifying and pursuing

growth opportunities.

Length of service: 5 years

Responsibilities: Chair of the

Remuneration Committee.

Key skills: Experience in fintech,

consumer and technology businesses

undergoing digital transformation,

growth and geographic expansion.

Digital technology expertise including

omni-channel payments; over 25 years’

senior leadership experience

in high-growth companies

in international markets.

Contributions: Valuable strategic and

operational insights on growth and

expansion of digital capabilities as well

as customer experience, innovation and

governance throughout the Company.

Current directorships: Non-executive

director of Lloyds Banking Group/

Scottish Widows Insurance Board,

non-executive Chair of Diaceutics plc,

Length of service: 4 years

Responsibilities: Chair of the Audit and

Risk Committee

Key skills: A former senior executive

with over 40 years of broad international

financial services experience, including

20 years as CEO and board member

inprivate banking, wholesale banking,

capital markets, trading operations,

strategy and finance.

Contributions: Risk management and

how this interacts with strategy and

operations with technical expertise

valued in Board discussions.

Current directorships: Advisor to

Revolut UK Ltd, non-executive director

ofItau BBA International plc and a

trustee of the Barry and Peggy High

Charitable Foundation.

non-executive director of The Institute of

Directors in the UK (until April 2024), IDEX

Biometrics ASA in Norway (until May

2024), and a Trustee of Southern African

Conservation Trust in South Africa.

Former roles: Vice President of Global

Partnerships and Global Risk Operations

at PayPal, London, and Vice President

ofEuropean Operations for eBay

Marketplaces, Germany. Member of

TheDigital Banking Club Advisory Panel

and non-executive director of Which?

and IE Digital.

Qualifications: Chartered Director

(CDir), Diploma in Company Direction,

MSc in Management, BAppSc in

Electronics, and a fellow of the Institute

of Directors UK.

International expertise: EMEAs,

Americas, Asia Pacific

Former roles: Non-executive director

and member of the audit, risk and

sustainability committees for Ulster Bank

Ireland DAC Ltd; non-executive director

for Business Growth Fund and British

Bankers Association; Chair of Financial

Services Council at CBI; CEO, Europe at

Standard Chartered plc, Chair and CEO

of American Express Bank at American

Express Company and executive vice

president of private bank at Bank of

America Corporation.

Qualifications: Degree and Master’s

degree in Economics and a fellow of

theInstitute of Chartered Accountants.

International expertise: EMEAs,

Americas

Former roles: CEO for Citigroup’s

consumer finance businesses in Western

Europe, Middle East and Africa region, a

director of Citi International plc, Egg plc

and Morgan Stanley Smith Barney UK,

CFO of Garanti Bank, Turkey and CEO

ofGE Money Bank, Prague.

Qualifications: Fellow of the Institute of

Chartered Accountants in Ireland.

International expertise: EMEAs,

Americas

Stuart Sinclair

Chair

Gerard Ryan

Executive director

and Chief Executive Officer

Current directorships: Chair of Willis Ltd

and member of advisory board at the

Bradford Literature Festival.

Former roles: Non-executive director

and chair of remuneration committee

for Lloyds Banking Group plc and

council member of the Royal Institute

ofInternational Affairs. Non-executive

director roles at QBE Insurance (Europe)

Ltd, Provident Financial Group plc,

Swinton Group Ltd, PruHealth/Vitality Ltd

and Platinum Bank Ukraine. President

and COO at Aspen, President and CEO

at GE Capital, UK and China, Chief

Executive of Tesco Personal Finance

anddirector of UK Retail Banking at

Royal Bank of Scotland Group plc.

Qualifications: Master’s degree in

Economics and Master in Business

Administration from University of

California (UCLA).

International expertise: EMEAs,

Americas, Africa, Asia Pacific.

International Personal Finance plc86

Directors’ Report

Aileen Wallace

Independent

non-executive director

Audit and Risk Committee

Disclosure Committee

Nominations and Governance Committee

Remuneration Committee

Committee Chair

Katrina Cliffe

Senior independent

non-executive director

Gary Thompson

Executive director

and Chief Financial Officer

Length of service: 1 year

Key skills: Experienced non-executive

with a wealth of transformational

experience including business build-out

and digitally enabled growth.

Contributions: Enhancing Board

discussions focused on technology,

innovation and change.

Current directorships: Non-executive

director of Hodge Group Board and

Hodge Bank, and Chair of the

Innovation and the Remuneration

Committees and non-executive director

of Target Group Ltd, a Tech Mahindra

business, and Chair of the Group Risk

Committee and non-executive director

of Tandem Bank.

Length of service: 2 years

Responsibilities: Financial performance

and reporting; group funding and

debtinvestor relations, equity investor

relations; Board accountability for

internal audit and taxation; the

executive relationship with the external

auditor; leadership of the Group finance

team and other corporate functions;

and Chair ofthe Disclosure Committee.

Key skills: Strong financial leadership

with over 20 years’ financial experience

spent in both the accounting and

corporate sectors.

Contributions: Establishment and owner

of the Group’s financial model;

effectively supporting the Board, the

CEO and executive management in

driving optimum financial performance;

Length of service: 2 years

Responsibilities: Workforce

Engagement Director and SID.

Key skills: Extensive experience of

financial services with a breadth of

executive experience in retail financial

services, credit cards, customer service

and marketing.

Contributions: Expertise in retail

financial services, credit cards,

customer service and marketing.

Current directorships: Non-executive

director of DCC plc, acting Chair of the

Board and Chair of the Remuneration

Committee of Vue International.

Former roles: Executive director of

Co-operative Bank and Chair of ESG

Committee; executive director of

Yorkshire Bank Home Loans Board;

executive director of National Australia

Bank; and head of and director roles

atCYBG plc.

Qualifications: Chartered Banker

(MCBI), and various qualifications

fromthe Institute of Risk Management,

the Institute of Directors and the

BritishComputer Society.

International expertise: EMEAs,

AsiaPacific

diversifying the funding base; and

developing a more proactive investor

relations programme to increase

confidence and shareholder value.

Former roles: Finance Director of

Vanquis Bank Limited, the major

subsidiary of Vanquis Banking Group,

following a number of finance roles,

including Director of Group Finance and

Investor Relations, at Vanquis Banking

Group. Qualified as a Chartered

Accountant at PricewaterhouseCoopers

and spent 10 years working in

professional practice.

Qualifications: Fellow of the Institute

ofChartered Accountants in England

and Wales.

International expertise: EMEAs

Former roles: Senior Independent

non-executive director of Homeserve plc

until January 2023. Senior roles at

American Express, Lloyds TSB Group plc,

Goldfish Bank Ltd and MBNA

International Bank, and has been a

non-executive director at London and

County Mortgages Limited, Shop Direct

Finance Company Limited, Cembra

Money Bank AG and Naked Wines plc.

Qualifications: Degree in Archaeology

and Anthropology from the University

ofCambridge.

International expertise: EMEAs

Annual Report and Financial Statements 2023 87

Principle Board leadership and company purpose Pages

A A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term

sustainable success of the company, generating value for shareholders and contributing to wider society.

12 to 13,

20 to 21 and

89 to 94

B The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture

are aligned. All directors must act with integrity, lead by example and promote the desired culture.

4, 20, 29, 85

and 95

C The board should ensure that the necessary resources are in place for the company to meet its objectives and

measure performance against them. The board should also establish a framework of prudent and effective

controls, which enable risk to be assessed and managed.

78 to 83

D In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure

effective engagement with, and encourage participation from, these parties.

42 to 45

and 47

E The board should ensure that workforce policies and practices are consistent with the company’s values and

support its long-term sustainable success. The workforce should be able to raise any matters of concern.

51 to 55

and 60

Principle Division of responsibilities Pages

F The chair leads the board and is responsible for its overall effectiveness in directing the company. They should

demonstrate objective judgement throughout their tenure and promote a culture of openness and debate. In

addition, the chair facilitates constructive board relations and the effective contribution of all non-executive

directors, and ensures that directors receive accurate, timely and clear information.

93, 98

and 106

G The board should include an appropriate combination of executive and non-executive (and, in particular,

independent non-executive) directors, such that no one individual or small group of individuals dominates the

board’s decision-making. There should be a clear division of responsibilities between the leadership of the board

and the executive leadership of the company’s business.

86 to 87

and 92

H Non-executive directors should have sufficient time to meet their board responsibilities. They should provide

constructive challenge, strategic guidance, offer specialist advice and hold management to account.

97 and 105

I The board, supported by the company secretary, should ensure that it has the policies, processes, information,

time and resources it needs in order to function effectively and efficiently.

93, 98 and

106

Principle Composition, succession, evaluation Pages

J Appointments to the board should be subject to a formal, rigorous and transparent procedure, and an effective

succession plan should be maintained for board and senior management. Both appointments and succession

plans should be based on merit and objective criteria and, within this context, should promote diversity of gender,

social and ethnic backgrounds, cognitive and personal strengths.

97, 102 and

104

K The board and its committees should have a combination of skills, experience and knowledge. Consideration

should be given to the length of service of the board as a whole and membership regularly refreshed.

86 to 87 and

89 to 90

L Annual evaluation of the board should consider its composition, diversity and how effectively members work

together to achieve objectives. Individual evaluation should demonstrate whether each director continues to

contribute effectively.

98 and 106

Principle Audit, risk and internal control Pages

M The board should establish formal and transparent policies and procedures to ensure the independence

and effectiveness of internal and external audit functions, and satisfy itself as to the integrity of financial

and narrative statements.

104 to 109

N The board should present a fair, balanced and understandable assessment of the company’s position and

prospects.

109

O The board should establish procedures to manage risk, oversee the internal control framework, and determine

the nature and extent of the principal risks the company is willing to take in order to achieve its long-term

strategic objectives.

78 to 83 and

109

Principle Remuneration Pages

P Remuneration policies and practices should be designed to support strategy and promote long-term sustainable

success. Executive remuneration should be aligned to company purpose and values, and be clearly linked to the

successful delivery of the company’s long-term strategy.

113 to 116

Q A formal and transparent procedure for developing policy on executive remuneration and determining director

and senior management remuneration should be established. No director should be involved in deciding their

own remuneration outcome.

117

R Directors should exercise independent judgement and discretion when authorising remuneration outcomes,

taking account of company and individual performance, and wider circumstances.

112 and 118

to 119

Compliance with the UK Corporate Governance Code 2018 (the Code)

The Company complied with the relevant provisions set out in the 2018 version of the Code, which applied throughout the

financial year ended 31 December 2023. In our 2022 Annual Report and Financial Statements, we reported that we had not

undertaken activity to engage with employees in relation to remuneration in 2022. We are pleased to confirm that we have

complied with this provision in 2023.

The Code is available on the FRC’s website: www.frc.org.uk. The table below sets out how the Code principles have been applied.

International Personal Finance plc88

Directors’ Report

Governance at a glance

To build products, channels and territories to ensure our

offers are attractive to the next generation of customers.

To become a smarter and more efficient organisation

that makes a positive impact on society.

To invest in the capabilities required to become

a data driven and technology-enabled partner

for our customers.

Key priorities for 2024

Strategic pillars key

Financial inclusion Organisation Technology and data

= extensive experience

Gerard

Ryan

Gary

Thompson

Stuart

Sinclair

Richard

Holmes

Deborah

Davis

Katrina

Cliffe

Aileen

Wallace

Strategy

Financial services

Corporate

Finance and Treasury

Audit and financial

reporting

Risk management

Technology, data and

cyber security

Customer operations

and engagement

Regulatory

Sustainability

International

Remuneration

Board skills matrix

Our board skills matrix outlines the topics which we believe every director must be familiar with to be effective in their role and the

specific areas of expertise each director contributes to the Board.

Next Gen

organisation

Next Gen

technology

and data

Next Gen

financial

inclusion

For more

information

see page 20.

Our Next Gen strategy

Three

strategic pillars

Annual Report and Financial Statements 2023 89

Board attendance 2023

There were seven scheduled Board meetings during the year, with details of attendance set out in the table below. There were two

board strategy sessions.

Director Meetings

No. of

meetings

attended

% of meetings

attended

Stuart Sinclair 7 7 100%

Gerard Ryan 7 7 100%

Katrina Cliffe 7 7 100%

Deborah Davis 7 7 100%

Richard Holmes 7 7 100%

Gary Thompson 7 7 100%

Aileen Wallace

7 6 85%

1. The meetings that each individual was entitled to and had the opportunity to attend.

2. Aileen Wallace was unable to attend one meeting due to a schedule conflict which the Board was made aware of prior to her appointment.

Composition

Nominations and Governance Committee Remuneration Committee

■

Chair 14%

■

Non-executive directors 57%

■

Executive directors 29%

■

Executive directors 0%

■

Chair 25%

■

Non-executive directors 75%

Audit and Risk Committee

■

Executive directors

■

Chair

■

Non-executive directors 1

00%

■

Executive directors

■

Chair

33%

■

Non-executive directors

67%

Tenure

■

Under 3 years

43%

■

3-6 years

43%

■

6-9 years

■

Over 9 years

14%

Gender Diversity

■

Female

43%

■

Male

57%

Committee compositions

Board

Governance at a glance continued

International Personal Finance plc90

Directors’ Report

Role of the Board

and its Committees

The Board

The role of the Board is to represent shareholders and promote and protect the interests of the Group in the short and long term.

The Board considers the interests of the Group’s shareholders as a whole and the interests of other relevant stakeholders.

It is responsible for approving Group strategy consistent with the purpose of the business and for overseeing its implementation.

The Chief Executive Officer (“CEO”) is responsible for preparing and recommending the strategy and for the day-to-day

management of the Group. The Group’s senior management team implements the Group’s strategy and provides the CEO and the

Board as a whole with the information needed to make decisions that will determine the long-term success of the Group.

In carrying out their duties as a Board, the directors are fully aware of, and comply with, their responsibilities and duties under

Section 172(1) of the Companies Act 2006 (see page 44 for our s172(1) statement).

The Board controls the business but delegates day-to-day responsibility to the CEO. There are, however,

a number of matters which are required to be, or, in the best interests of the Group should be, decided by the Board of Directors.

These are known as the matters reserved for decision by the Board. The formal schedule can be found on our website at

www.ipfin.co.uk and includes: approval of strategy and determining the nature and extent of significant risks the Group is willing

to take; Board and Committee composition and Committee terms of reference; annual budgets, significant project expenditure

and funding strategy; and approval of the Annual Report and Financial Statements and regulatory announcements.

Any matters which are not set out in this schedule, nor in the terms of reference of a relevant Committee of the Board, are deemed to

have been delegated to the CEO. The CEO may delegate powers relating to these matters to such persons or Committees,

by such means and on such terms and conditions as he or she thinks fit.

The Board has established certain principal Committees to assist it in fulfilling its oversight responsibilities, providing dedicated focus

on particular areas, as set out below. Each Committee chair reports to the Board on the Committee’s activities after each meeting.

More information on the work of the Committees throughout the year can be found on pages 97 to 126.

Board Committees and their reserved matters

The Board delegates authority to the Board Committees which are responsible for maintaining effective governance. The specific

responsibilities of the Board’s Committees are set out in their terms of reference available on our website at www.ipfin.co.uk.

Disclosure Committee

Assist in the design and evaluation of disclosure

controls and procedures.

Monitor compliance with disclosure controls

and procedures.

Review requirements for, and content of,

regulatory announcements.

Audit and Risk Committee

Oversee and provide assurance to the Board on the integrity

of the Company’s financial reporting and statements.

Oversee and provide assurance to the Board on the

effectiveness of the Group’s internal controls and risk

management systems.

Oversee and provide assurance to the Board on the internal

and external audit processes.

Provide oversight of risk management across the Group

including overseeing and advising the Board in relation

to current and future risk exposures.

Read more on page 97.

Annual Report and Financial Statements 2023 91

Division of responsibilities

The roles of the Chair and Chief Executive Officer are defined clearly and the division of responsibilities is established and set out in

writing in the Board role profiles which were approved by the Board in 2023 and can be found at www.ipfin.co.uk. The principal

responsibilities of each role can be found below.

As well as these responsibilities, it is the responsibility of every director to lead the business in accordance with the Company’s

purpose – building a better world through financial inclusion.

Chief Executive Officer

Gerard Ryan

Chief Financial Officer

Gary Thompson

– To create and update, with approval of the Board, the Group

purpose, values and strategy ensuring that responsibilities to

shareholders, employees, other stakeholders and legislative and

regulatory bodies are met.

– To lead and develop the senior management group to develop and

implement the overall Group strategy and plans that deliver strong

performance and sustainable growth in shareholder value.

– Implement and uphold the Group’s purpose and values, whilst

ensuring appropriate plans are in place to identify, anticipate,

manage and mitigate risks to the business.

– Partner with the Chief Executive Officer in setting the future direction

of the Company, enhancing business performance and delivering

increased shareholder value.

– Ensure that the Group’s ambition for strong sustainable growth and

excellence in customer service is achieved through partnering with

senior management and providing constructive challenge to our

operational management teams.

– Ensure that business decisions are grounded in financial criteria

and market insight.

– Understand and manage risk through a commercial, as well as a

financial lens; enabling the business to execute on its strategy and

manage business complexity whilst minimising risk.

– Maintain a strong internal control environment and robust financial

reporting processes and provide assurance to the Board through

management of the Internal Audit function.

Chair

Stuart Sinclair

Senior Independent Director

Katrina Cliffe

Non executive director

Deborah Davis, Richard Holmes,

Aileen Wallace

– Manage and provide leadership

to the Board.

– Safeguard and promote the long-term

success and sustainability of the Company

to the benefit of its shareholders and the

Company’s other stakeholders.

– Serve as a sounding board for the Chair, to

act as an intermediary for the other directors.

– Lead the process for Chair succession

as required.

– Safeguard and promote the long-term

success and sustainability of the Company

for the benefit of its shareholders and the

Company’s other stakeholders.

– Safeguard and promote the long-term

success and sustainability of the

Company for the benefit of its

shareholders and the Company’s

other stakeholders.

International Personal Finance plc92

Directors’ Report

Board activities during 2023

The Board has ultimate responsibility for the overall leadership

of the Group, overseeing the development and delivery of a

clear Group strategy and ensuring the long-term sustainable

success of the Company for all stakeholders. It monitors

operational and financial performance against agreed

goals and objectives, and challenges the executive directors

on its proposals relating to the management of the business.

The Board ensures that appropriate controls and systems exist

to manage risk and that there are the financial resources and

people with the required skills to achieve the strategic goals

the Board has set. The information in this section summarises

the Board’s activities during 2023 and the discussions that

took place in the discharge of its duties to the Company.

Our s172(1) statement is on page 44.

The Chair sets the annual Board programme and agenda,

with support from the Chief Executive Officer and the

Company Secretary. The Chair also determines the number

of meetings to be held during the year, with this kept under

review, and ensures that enough time is devoted, during

meetings and throughout the year, to discuss all material

matters including strategic, financial, operational, business,

risk, ESG and human resource. The Board agendas are

structured to ensure there is an appropriate balance of time

allocated to strategic matters, management reporting and

governance-related items.

At each scheduled Board meeting, the Chief Executive

Officer and Chief Financial Officer present separate reports,

detailing business performance and progress against strategy.

These are supplemented by performance updates from each

of the divisional heads of the Group.

Other presentations and reports are given by the relevant

business or functional head on matters which are scheduled

to be presented in accordance with the annual board

planner, which is aligned to the Matters Reserved to the

Board. This provides the opportunity for a range of senior

and manager-level colleagues to gain experience

of attending and presenting to the Board.

In addition to the routine Board meetings, the Board

participated in an annual and mid-year strategy review.

During these sessions, the Board considered re-articulation

of the strategy, changes to the external environment,

strategic progress, and a vision statement which aligned

with the Group’s strategy. Additionally, the Board discussed

key topics affecting the Group including technology,

expanding our customer offering and growing our

customer base, and climate risks and opportunities.

The majority of the Board meetings were held in the Group’s

head office in Leeds, with a market-based Board meeting

held in Warsaw in October 2023. During their visit to Warsaw,

the Board attended presentations with our IPF Digital and

Provident teams, as well as visiting branches and joining

customer representatives on customer visits.

An overview of the range of matters that the Board considered,

discussed or approved where appropriate and the

stakeholders considered at its meetings during the year

are outlined on page 94.

Board processes

Throughout the year, there has been a focus on improving

our Board processes to ensure that the Board remains effective

and operates to a high standard at all times. Although there

have been a number of enhancements throughout the year,

the key improvements are set out below.

Firstly, the annual planners for the Board and its Committees

were reviewed and mapped against the Matters Reserved

for the Board and the Terms of Reference. This provided

assurance to the Board and its Committees that they would

be discharging all their responsibilities throughout the year

and that there would be sufficient time to discuss all the

required matters.

Secondly, work was undertaken to improve Board paper

structure and to ensure that the purpose of each Board

paper is clear. This has included developing a template

for all presenters to use. This incorporates a cover sheet

providing an executive summary and the purpose of the

paper, along with any previous and future considerations and

the next steps following the Board discussion. The cover sheet

also includes a section on stakeholder impact, which assists

the Board when considering how its decision-making may

affect key stakeholders. As well as improving the overall

Board paper template, updates have also been made

to the Chief Executive Officer and Chief Financial Officer

reports. In collaboration with the Chief Executive Officer,

a new template for the report has been developed which

covers the Chief Executive Officer’s insights into the reporting

month, an overview of stakeholder engagement, updates on

key strategic projects, market reports, macroeconomic and

regulatory updates, and Group management information.

On a quarterly basis, the Chief Executive Officer’s report also

includes the change dashboard, which provides insight into

the risks and opportunities related to IT and change projects,

as well as ESG metrics. Additionally, the Chief Financial

Officer’s report has been updated to include more charts

and signposting, which allows the Board to spot trends

in the data and challenge appropriately.

Finally, improvements were made to the internal Board

effectiveness review process to ensure that this now includes

an analysis of the Matters Reserved for the Board/Terms

of Reference. This allows the Board and its Committees

to be satisfied that they have discharged their responsibilities

during the year as part of reviewing their overall effectiveness.

Further information on the Board and Committee effectiveness

reviews can be found on page 102.

Annual Report and Financial Statements 2023 93

Matters

considered Outcome

Our

stakeholders

Links to

strategic

pillars

Strategy and

management

–

Reviewed and approved the Group’s Next Gen strategy at the annual and mid-year review meetings

and received updates at intervals during the year.

– Reviewed the Group’s operational and financial performance with regular presentations from the Chief

Executive Officer and Chief Financial Officer enabling oversight of business performance against targets,

budget and strategy.

– Supported the continuation of the strategic retail partnership initiative with the long-term aim of strengthening

our market position.

– Reviewed and approved the Responsible Business Framework (ESG Strategy). For more information,

see page 46.

– Received an update from the Chief Human Resources Officer on the human resources strategy.

– Received an update from the Chief Information Officer on the technology strategy.

– Considered the culture of the Group and how the Board sets the culture and maintains oversight.

– Considered the key themes of the 2023 Annual Report and Financial Statements.

– Approved the Group’s purpose, values and vision statement.

Board

composition

and

effectiveness

–

Reviewed Board composition regularly to ensure the right mix of skills, knowledge, experience

and diversity for the Board to continue to be effective.

– Reviewed and considered conflicts of interest, independence and time commitments

of the directors.

– Participated in a Board effectiveness review process and agreed key priorities following a review of findings.

– Received training including an annual session on the product roadmap and mobile wallet.

Financial

reporting

–

Approved the 2022 Annual Report and Financial Statements including the long-term viability and going

concern statements.

– Reviewed and approved the half- and full-year results announcements, quarterly trading updates and

presentations to investors and analysts.

– Approved the progressive dividend policy for 2023 and future years.

– Monitored the Group’s funding position and compliance with the Group’s financial covenants.

– Reviewed and approved Group treasury policies.

– Approved the update to the Euro Medium Term Note prospectus in August 2023.

– Approved the 2024 Group budget and business plan for 2024 to 2028, reviewing key assumptions, inputs

and risks, and monitored performance and variances against the 2023 budget and business plan.

Risk

management

and internal

controls

–

Reviewed and approved risk appetite proposals and the updated risk management policy.

– Reviewed and approved the assessment of principal risks, including climate risk and emerging risks.

– Received reports from the Audit and Risk Committee of the Group’s systems of risk management and internal

controls, and confirmed their effectiveness.

– Received regular updates through the Audit and Risk Committee in respect of internal and external audit

reviews, and agreed the internal audit programme for the year.

– Approved the reappointment of Deloitte LLP as auditor on the recommendation of the

Audit and Risk Committee.

– Received and considered updates on the tender process for the Group’s auditor.

Governance

–

Approved the resolutions to be put to shareholders at the 2023 AGM.

– Reviewed and approved the proposed rules of the Restricted Share Plan to be put to shareholders

at the 2023 AGM.

– Approved the appointment of Katrina Cliffe as Senior Independent Director.

– Approved updated Matters Reserved to the Board and Board Committees’ Terms of Reference.

– Reviewed and approved the Group’s tax strategy.

– Reviewed and approved the Modern Slavery Statement and Policy.

– Reviewed and approved the Group Capital Management Policy.

– Reviewed and approved the Human Rights Policy.

– Reviewed and approved the Corporate Sustainability Policy.

Stakeholder

engagement

–

Received bi-annual updates on engagement activities with all stakeholders undertaken throughout the year.

– Received updates on the general wellbeing and health and safety of colleagues, as part of routine reports

from the executive directors and management.

– Received an annual health and safety update from the Health and Safety Manager.

– Received updates on equity and debt investor sentiment in response to financial results and from bondholders

and potential bondholders as part of the Chief Executive Officer and Chief Financial Officer reports.

Our stakeholders key

Regulators and legislators Communities

Suppliers Investors and ratings agencies

Customers

Employees and

customer representatives

Strategic pillars key

Financial inclusion

Organisation Technology and data

International Personal Finance plc94

Directors’ Report

Board overview of purpose

Company purpose

The Board has overall responsibility for the Company’s

purpose, values and strategy to deliver long-term sustainable

success and generate value for its shareholders and other

stakeholders. It places great importance on ensuring that

these continue to be appropriate for the business and the

markets in which we operate, while continuing to be aligned

with our culture.

Having a clear purpose guides the Board and the executive

directors in managing the business and provides a common

goal. The Board reviews and approves the purpose, values

and vision statement annually to ensure that these remain

appropriate for the Group. By delivering on our purpose,

we serve and create value for our stakeholders. This supports

a strong culture which drives performance across the business

both in terms of financial and non-financial value. The Board

sets the strategy for the Group and throughout the year it

receives regular updates to ensure it is delivered in line with

our purpose.

Our purpose of building a better world through financial

inclusion explains why we exist and reminds us of who we

serve and why. We help consumers, who have lower to

medium incomes and often a limited credit history, access the

financial system. We are a responsible lender, well positioned

to provide an entry point to mainstream consumer finance,

serving customers with regulated credit products.

We continue to deliver on our purpose by removing barriers

that exclude the underserved from the financial sector by:

– responsibly serving more customers;

– providing appropriate products and services;

– offering solutions to underserved people;

– expanding our geographic reach; and

– supporting our customers who have financial difficulties.

During 2023, the Board focused on ensuring that purpose was

embedded in the strategic planning process, which included

approving the purpose and values of the Group following

the Board strategy day and giving consideration to our

purpose as part of the Group’s annual budget and business

plan process. The Board also refreshed the articulation of the

Group’s strategy to ensure that it was consistent with our

purpose and this was communicated to the Group as part

of a strategy roadshow by the Chief Executive Officer and the

Chief Strategy and Planning Officer.

Culture and values

The Board understands that the cultural tone of our business

comes from the top. The benefits of a strong culture are seen

in the success of delivering the strategy and in the

engagement, retention and productivity of our employees and

customer representatives. The Board monitors and assesses

the Group’s culture along with its purpose and values through

receiving regular updates from members of the senior

leadership team. The Board also assesses cultural indicators

such as management’s attitude to risk, behaviours and

compliance within the Group’s policies and procedures

as well as reviewing the results of employee surveys. The Board

specifically discusses its oversight of culture annually as a

checkpoint to ensure that it taking sufficient steps to ensure

its duty to oversee culture has been properly discharged.

In addition to the annual culture review, the Board also

reviewed the results of the 2023 Global People Survey, which

provides a real insight into the culture of the Group. The Chief

Human Resources Officer presented the findings to the Board

and identified follow up actions which included focus groups

and action plans to ensure that any areas of improvement

were followed up. Further information on the Global People

Survey can be found on page 54.

The Board also recognises that it is accountable to

stakeholders for ensuring that the Group is managed

appropriately and achieves its objectives in a way that is

supported by the right culture and behaviours. Our values,

responsible, respectful and straightforward, are regularly

reviewed and approved by the Board. They support our culture

and help colleagues understand the importance of how

we work together as a team and how we place customers

at the centre of what we do.

Technology and data

How does the Board oversee culture?

– Board reporting

– Workforce Engagement Director

– Branch/market visits

– Skip level meetings

– Board dinners with attendees

from various levels of

management

– Business plan approval

– Purpose approval

– Values approval

– Risk appetite

– Internal audit reports

– Whistleblowing updates

– Key recruitment

– Executive director

objectives and rewards

Annual Report and Financial Statements 2023 95

Directors’ Report continued

Building a better world through financial inclusion

Workforce

engagement

programme 2023

Customer

representative

forum – Mexico

Annual Learning

Festival

Customer

representative

forum – Poland

Learning and

development

global team

meeting

Women’s

network – Poland

Employee

forum – Poland

Women’s

network – UK

Global employee

forum - including

engagement on

executive

remuneration

Employee engagement

The Board routinely interacts directly with colleagues through a

programme of Board visits and dinners and indirectly through

the work of the Workforce Engagement Director, Katrina Cliffe.

These activities are designed to enable the Board to develop

a strong understanding of the Group and the different matters

which are important to colleagues globally. As part of this

activity, the Board is able to gain assurance that the Group’s

policies, practices and behaviour throughout the business is

aligned with the Company’s purpose, vision and desired

culture. The Workforce Engagement Director champions the

workforce voice within the Boardroom to strengthen the link

between the Board and colleagues. Throughout 2023, Katrina

undertook a number of engagement activities as part of the

workforce engagement programme as explained in more

detail above. Following this engagement with employees

and customer representatives, Katrina regularly provided

feedback to the Board including as part of regular updates

on stakeholder engagement on the insights she had

developed from her work in this area.

The Board also undertakes engagement activities as a whole,

including branch and market visits, presentations, dinners

and other ad-hoc interactions. This allows the Board to meet

a broad spectrum of individuals from different areas of the

Group including sales, marketing, IT, legal, compliance,

data protection, corporate affairs, human resources, finance,

health and safety, internal audit and risk.

More information on how the Group engaged with colleagues can be

found on page 42 and pages 51 to 55.

International Personal Finance plc96

Directors’ Report

Dear shareholder,

I am delighted to introduce this report for the year ended

31 December 2023, covering the vital part the Committee

played in ensuring that the Board is effective and the Group

is well governed.

Key responsibilities of the Committee

Details on the Committee’s key responsibilities can be found

below and in our Terms of Reference at www.ipfin.co.uk.

The Committee’s purpose is to:

– review the composition of the Board and lead the process on

proposed appointments to the Board and senior leadership

team. The Committee shall make recommendations to the

Board on this topic ensuring that both appointments and

succession plans are based on merit and objective criteria

and, within this context, promote diversity of gender, social and

ethnic background, cognitive and personal strengths;

– ensure that the Board and its Committees consist of directors

with the appropriate balance of skills, experience, diversity,

independence and knowledge to enable it to discharge its

duties and responsibilities effectively; and

– keep the Board’s governance arrangements under review and

make appropriate recommendations to the Board to ensure

that its arrangements are consistent with relevant corporate

governance standards and best practice.

Committee composition and changes

I chair the Committee and was regarded as independent

on appointment. I will not chair the Committee when it is

dealing with matters of succession to the Chair of the Board.

The Committee also comprises three other independent

non-executive directors, Deborah Davis, Richard Holmes

and Aileen Wallace. During the year, Gerard Ryan stepped

down from the Committee, but he continues to attend each

meeting of the Committee meetings.

Key areas of focus during the year

During 2023, the Committee sought to broaden its areas of focus

to ensure that the Group remained well governed.

Firstly, the Committee focused on ensuring that succession

arrangements will enable the Board to continue to lead the

Group effectively. This work included reviewing succession plans

to ensure that the Board has the right balance of skills, expertise

and knowledge, and to determine what actions would be taken

in the event of a planned or unplanned departure from the

Board. This activity was underpinned by an assessment of the

Board’s skills, knowledge and tenure in terms of the Company’s

Next Gen strategy overseen by the Chair. The skills matrix on

page 89 sets out the attributes we consider to be key for the

long-term success of the business as well as how these attributes

link to our strategy. The Committee also reviewed in detail the

skills and potential of the wider senior leadership team as part

of the broader talent management process led by the human

resources function.

Nominations and Governance

Committee Report

Committee members

Stuart Sinclair, Chair

Deborah Davis, Independent non-executive director

Richard Holmes, Independent non-executive director

Aileen Wallace, Independent non-executive director

The table below shows the number of meetings held

and the directors’ attendance during 2023.

Committee member

Scheduled

meetings

No. of

meetings

attended

% of

meetings

attended

Stuart Sinclair 5 5 100%

Deborah Davis 5 5 100%

Richard Holmes 5 5 100%

Aileen Wallace

5 4 80%

Gerard Ryan

3 3 100%

Notes

1. The scheduled meetings that each individual was entitled to and had the

opportunity to attend.

2. Aileen Wallace was unable to attend one meeting due to a schedule

conflict which the Board was made aware of prior to her appointment.

3. Gerard Ryan resigned as a member of the Committee in April 2023 but still

attends meetings, in line with best practice.

“During 2023, the Committee sought

to broaden its areas of focus to

ensure that the Group remained

well governed.”

Stuart Sinclair

Chair of the Nominations

and Governance

Committee

Annual Report and Financial Statements 2023 97

Nominations and Governance Committee Report continued

The second area of focus was on ensuring that the Board

continues to operate with a high degree of effectiveness.

This is a broad area of responsibility and in 2023 meant the

Committee reviewed detailed topics including the 2023 Board

training programme, membership of the Board committees and

role profiles for Board members. The Committee has also had the

opportunity to review external developments in corporate

governance to assess whether such developments required

changes in the Group’s Board governance arrangements.

Furthermore, the Committee reviewed the structure, size

and ways of working of the Board and oversaw the Group’s

compliance with the Corporate Code. Additionally,

the Committee oversaw the implementation of the

recommendations from the external Board evaluation review

that took place in 2022 and I am pleased to confirm that

all recommendations were implemented in 2023.

The Committee also focused on oversight of key policies dealing

with matters relevant to our Responsible Business Framework such

as Board diversity, political donations, access to independent

advice and conflicts of interest. The Committee has welcomed

the opportunity to oversee these important policies.

Finally, the Committee continued to review the external

appointments of the current directors. This work considered the

time commitments arising from current roles to ensure directors

are not over boarded and ensuring directors meet required

standards concerning independence as well as determining

whether new appointments would affect a director’s ability to

discharge their duties as a director of the Company effectively.

Committee effectiveness review

An internal effectiveness review of the Board and its Committees

was undertaken in 2023, which consisted of a questionnaire

completed by the Committee and its regular attendees, and an

analysis of compliance with the Committee’s Terms of Reference.

Overall, the Committee concluded that it had operated

effectively and complied with the Committee’s Terms of

Reference throughout the year.

Feedback from this process indicated that the Committee’s

main areas of focus in 2024 should be on succession planning,

including oversight of executive director performance and

ensuring development of key talent.

Annual re-election of directors

As in previous years, Board members will stand for re-election by

shareholders at the 2024 AGM. All non-executive directors are

considered independent in accordance with the requirements

detailed in the Code, and they continue to make effective

contributions, constructively challenge management and devote

sufficient time to their role. Accordingly, all directors are proposed

for re-election. Further details are contained in the Notice of

Meeting circulated to shareholders.

Recruitment and succession planning

The Committee recognises the importance of the Board to

anticipate and prepare for the future, and ensuring that the

skills, experience, knowledge and perspectives of the directors

and members of the senior leadership team reflect the

changing demands of the business. When considering

succession plans, the Committee and the Board are cognisant

of the need to ensure that a diverse range of individuals is

included and the Board’s diversity objectives, as set out in the

Board Diversity Policy on page 100, reflect how the Board

ensures that diversity is considered when recruiting new

directors to the Board and considering succession planning.

The Committee’s approach to succession includes

anticipating departures and allowing sufficient time for orderly

succession, ensuring appointments are made on merit against

objective criteria and taking into account the Company’s

strategic priorities and the main trends and factors affecting

the long-term success and future viability of the Company.

Succession plans are in place for the Chief Executive Officer,

Chief Financial Officer, Chair and Non-executive directors for

contingency, medium-term and long-term horizons.

On behalf of the Board, the Committee also leads on oversight

of executive talent and succession planning. As part of the

broader talent management process, the Committee receives

an annual and mid-year update from the Chief Human

Resources Officer on talent and succession planning,

considering the skills and potential of those in the central

management team.

During 2023, the Board also created and approved a Board

skills matrix, which sets out the skills of each Board member

and allows the Committee to identify skill gaps which will be

reviewed as part of the Board’s succession planning process.

The Board skills matrix can be found on page 89.

Progress in 2023

– Reviewed Board composition and succession

planning.

– Reviewed the governance framework and made

recommendations for improvement where

appropriate.

– Oversaw the induction of Aileen Wallace.

– Reviewed key policies relating to the Responsible

Business Framework.

– Reviewed and updated the Committee’s Terms

of Reference.

– Oversaw the implementation of the recommendations

from the external Board effectiveness review.

Key priorities for 2024

– Focus on succession planning in light of the Group’s

Next Gen strategy.

– Oversee the implementation of the recommendations

from the external Board

effectiveness review.

– Keep under review the governance framework

and make recommendations for improvement

where appropriate.

International Personal Finance plc98

Directors’ Report

Induction of new directors

Aileen Wallace induction programme

In the first six months of 2023, Aileen’s induction plan

focused on knowledge-based sessions with internal

functions and external advisors that covered:

– IPF’s culture, products, customers, colleagues,

business model, governance of the Group

and the markets in which we operate;

– the regulatory context in which each market operates;

– the role of the non-executive director at IPF;

– the processes for managing risk; and

– IPF’s stakeholders.

Following discussions with Aileen, these sessions were

supplemented by a site visit in Poland and additional

sessions with the Chief Information Officer and Chief

Marketing Officer when they joined the Group.

Following completion of the induction programme, the

Company Secretariat followed up with Aileen to check

whether she had any additional requirements to conclude

her induction. No further requests were made and the

induction was deemed complete. Further detail on

Aileen’s induction programme have been included below.

Desired outcome Topics covered Sessions with

About the Board – the incoming director has

a clear understanding of how the Group

operates and the current key topics for the

Board.

– Key Board discussion points

– The roles of the Committees and key

discussion points

– Board succession planning

– Board effectiveness

– Board workforce engagement

– Governance

– Chair of the Board

– Chief Executive Officer

– Committee chairs

– Workforce Engagement Director

– Deputy Company Secretary

About the business – the incoming director

gains the required level of understanding of

the Group’s performance, culture and

processes to be able to discharge the role of

director successfully.

– Purpose, culture, values

– Current strategy and strategic planning

process

– Strategic partnerships and data science

– Employee engagement, human resources

strategy, and performance management

and succession planning

– Key legal, compliance and privacy matters

– Key regulatory matters, external trends and

risks in the markets

– Credit risk performance and Group Risk

Framework and reporting

– Chief Executive Officer

– Chief Strategy Officer

– Corporate Development Director

– Chief Human Resources Officer

– Chief Legal Officer and Company Secretary

– Corporate Affairs Director

– Credit Director

About our markets – the incoming director

develops a strong understanding of our

different markets.

– Overview of the divisions and markets – Divisional directors

– Country Managers

About our IT and change activities – the

incoming director has an overview of the

Group’s IT and information security position

and key future priorities.

– IT estate and service

– Information security and privacy

– Key change projects

– Data Protection Officer

– Group Head of Information Security

– Chief Strategy Officer

Finance – the incoming director learns about

the recent and forecast financial performance

of the Group and its external funding activities.

– Current financial position and historic

performance including KPIs, current

challenges and future opportunities

– Financial reporting

– Funding, treasury and wholesale activity

including funding plans

– Chief Financial Officer

– Group Treasurer

Audit – the incoming director learns about

internal and external audit processes.

– External audit

– Internal audit

– External auditors

– Group Head of Internal Audit

Aileen Wallace

Independent

non-executive

director

All directors receive a comprehensive induction

programme, designed to ensure that they receive the

information, support and guidance, consistent with their

own experience and background, required to be able

to discharge their role as director.

Aileen Wallace was appointed to the Board in December

2022 and underwent a detailed induction programme

facilitated by the Company Secretary, details of which

can be found to the right and below.

Annual Report and Financial Statements 2023 99

Nominations and Governance Committee Report continued

Board diversity and policy

Diversity is built into the Group’s policies as appropriate and,

as a business operating in different countries, collaboration

between our international operations is a central dynamic

of our culture. Diversity and inclusion is about treating people

fairly, equitably and without bias, creating conditions that

encourage and promote respect, dignity and belonging.

This is embedded in our culture and values.

The Board Diversity Policy formalises its approach to this topic

andit can be accessed in the policies section of our website.

Thepurpose of the policy is to set out the Group’s approach

to diversity of the Board and its Committees. The policy aims

to drive balance and alignment with our purpose, strategy

and values, through measurable objectives which reflect the

actions the Board will take when considering membership

of the Board and its Committees. The Committee reviews the

policy, including objectives and progress, at least annually.

In setting the principles and objectives of the policy, the

Committee and Board acknowledge the external expectations

of stakeholders and the opportunities to drive change through

succession planning. The Parker Review, Hampton-Alexander

Review and the new requirements of Listing Rule 9.8.6(9)R are

supported fully by the Board.

The percentage of female representation for the senior

leadership team and their direct reports was 27%.

Board Diversity Policy objectives Implementation Progress against objectives

Consider candidates for appointment as

non-executive directors from a wider pool

including those with little or no listed

company board experience.

Ensure non-executive director ‘long lists’

include 50% female candidates.

The Board and the Committee recognise the

importance and benefits of greater diversity,

including gender, age, nationality, ethnic

origin, socio-economic background,

educational and professional background,

sexual orientation and disability.

On instruction of an executive search firm,

the specification will ensure that candidates

with no listed company Board experience

are fully considered.

The Board actively seeks diverse candidates.

Over the past two years, the Board has

appointed two female Board members, Katrina

Cliffe and Aileen Wallace. The Board will

continue to consider candidates from a wide

pool when completing future recruitment.

Engage only with executive search firms

which have signed up to the Standard

Voluntary Code of Conduct on both gender

and ethnic diversity and best practice.

The Board will continue to engage executive

search firms that have signed up to the

Standard Voluntary Code of Conduct.

When recruiting Katrina Cliffe, the Board

engaged with Ridgeway Partners. At the time

of engagement, Ridgeway Partners were, and

continue to be, a signatory of the Standard

Voluntary Code of Conduct.

Maintain a continuous level of at least 40%

female directors on the Board.

The Board will continue to ensure that

recruitment and succession planning for the

Board take consideration of these objectives,

whilst also ensuring that any succession plans

and appointments are made based on merit

and objective criteria.

As set out in the annual statement on board

diversity targets above, 43% of individuals on

the Board are women.

A female director is appointed to at least

one of the senior Board positions (Chair,

Chief Executive Officer, Senior Independent

Director, Chief Financial Officer).

In December 2023, Katrina Cliffe was

appointed Senior Independent Director

for the Board.

At least one director from an ethnic minority

background is appointed to the Board.

As set out in the annual statement on board

diversity targets above, one member of the

Board is from an ethnic minority background.

Annual statement on

Board diversity targets

On behalf of the Board, the Committee is pleased to confirm

that as at 31 December 2023, all three of the targets set out

in Listing Rule 9.8.6(9)R, and also included in the Board

Diversity Policy objectives, have been met. Further detail on

how these targets have been achieved can be found below.

As required by Listing Rule 9.8.6(10)R, detailed numerical

information on the gender and ethnicity representation on

the Board and our executive management as at

31 December 2023 is set out on page 101. There have been

no changes between 31 December 2023 and the date of this

report.

Data concerning gender and ethnicity representation was

collected directly from all the individual Board and senior

leadership team members through a Diversity and Inclusion

Monitoring Form (the “Form”). The Form asks the individuals

to disclose their gender and ethnicity using the options

included on the Form, which align with the detail in the

left-hand column of the tables on page 101 and therefore

includes the option to not specify an answer. The data was

collected on an anonymous basis by the Company

Secretariat and this process will be completed annually

going forward.

International Personal Finance plc100

Directors’ Report

Gender representation as at 31 December 2023

Number of

Boardmembers

Percentage of

theBoard

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage of

executive

management

Men 4 57.1% 3 11 78.6%

Women 3 42.9% 1 3 21.4%

Not specified/prefer not to say 0 0% 0 0 0%

Ethnic representation as at 31 December 2023

Number of

Board members

Percentage of

the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage of

executive

management

White British or other White

(includingminority-white groups) 6 85.7% 4 14 100%

Mixed/Multiple ethnic groups 0 0% 0 0 0%

Asian/Asian British 1 14.3% 0 0 0%

Black/African/Caribbean/Black British 0 0% 0 0 0%

Other ethnic group, including Arab 0 0% 0 0 0%

Not specified/prefer not to say 0 0% 0 0 0%

1. Per the definition within the Listing Rules, executive management at IPF is the senior leadership team, which includes the Company Secretary. The Chief

Executive Officer and Chief Financial Officer have not been included in the executive management data as they are included in the data for the Board.

Independence and

external commitments

The Committee reviews requests for external appointments

carefully, taking into account the directors other commitments

and their role on the Board. An executive director will be

permitted to hold one non-executive directorship (and to

retain the fees from that appointment) provided that the Board

considers this will not affect their executive responsibilities

adversely. The executive directors currently do not hold any

external directorships. A non-executive director should not

hold more than four other material non-executive directorships.

If they hold an executive role in a FTSE 350 company,

they should not hold more than two other material

non-executive directorships.

In line with the Code, non-executive directors are required

to seek Board approval prior to taking on any additional

appointments. In January 2023, the Committee recommended

to the Board the approval of Katrina Cliffe’s appointment

as a non-executive director of DCC plc, which took effect

from 1 May 2023. In October 2023, the Committee also

recommended the approval of Aileen Wallace’s appointment

as a non-executive director of Tandem Bank Limited and

Tandem Money Limited. In making these decisions the

Committee were assured that both Katrina and Aileen would

continue to be able to devote the appropriate time to their

roles as non-executive directors of the Company and the new

roles would not give rise to any conflict of interests. The external

commitments of the Chair and the other non-executive

directors were also reviewed and the Board is satisfied

that these do not conflict with their required commitment

to the Company.

The independent non-executive directors are appointed for

an period of three years initially, subject to annual re-election

by shareholders at the AGM. This period may be extended,

following recommendation by the Nominations and

Governance Committee, for two further three-year periods.

The Board will not normally extend the aggregate period of

service of any independent non-executive director beyond

nine years. Their letters of appointment may be inspected

at our registered office and copies are available from

the Company Secretary.

Each of the non-executive directors has been formally

determined by the Board to be independent for the purposes

of the Code and the Chair was considered to be independent

on appointment. Katrina Cliffe was appointed as the Senior

Independent Director on 1 December 2023. She will be

available to shareholders should they have concerns which

contact through the normal channels of Chair and Chief

Executive Officer has failed to address or for which such

contact is inappropriate. The Senior Independent Director will

review the performance of the Chair on an annual basis and

will consult with other Board members as part of the review.

They will also consider the relationship between the Chair

and the Chief Executive Officer.

Annual Report and Financial Statements 2023 101

Nominations and Governance Committee Report continued

Stage 1

September 2023

Proposals for the 2023 Board and Committee effectiveness review processes were reviewed and approved by the

Committee, following consultation with the Chairs of the Board and its Committees.

Stage 2

October 2023

Each director completed a questionnaire for the Board and the Committees of which they were a member of. Regular

attendees of each Board Committee were also invited to complete the questionnaire.

Stage 3

October 2023

The Chair and the non-executive directors met without the executive directors being present and provided feedback on

their performance throughout the year for the Chair to feed into their performance reviews.

Stage 4

December 2023

The Committees reviewed the results from the committee effectiveness questionnaire and the Terms of Reference

analysis. All Committees confirmed that they continue to operate effectively.

Stage 5

December 2023

The Chair completed performance reviews for all the non-executive directors. It was confirmed that all non-executive

directors continue to be effective in their roles.

Following discussion and feedback from the other non-executive directors, the Senior Independent Director, Katrina

Cliffe, completed the Chair’s performance review. It was confirmed that the Chair continues to be effective in his role.

Stage 6

January 2024

The Board reviewed the results from the Board effectiveness review, along with the Matters Reserved analysis, and the

confirmation from the Committees that they continue to operate effectively. They also received confirmation from the

Chair and the Senior Independent Director that all directors continue to be effective in their roles.

The conclusion of the Board effectiveness review was positive, and confirmed that the Board as a whole continues to

operate effectively. The composition of the Board was considered to be effective and it continued to provide successful

leadership to the Group, comprising the appropriate balance of experience, skills, knowledge and diversity of

background to implement the Group’s strategy. The Board places significant reliance on its Committees by delegating a

broad range of responsibilities and issues to them, and receives verbal updates from the Chairs of each of the

Committees at the Board. Following discussions, it was agreed that the performance of the Board, its Committees, the

Chair and each of the directors continues to be effective.

Following consideration of the results of the review, the Nominations and Governance Committee approved an action

plan to be implemented and monitored during 2024. The action plan addresses the main feedback received during the

effectiveness review process.

Year 1 – External

Externally facilitated

Board effectiveness review

Year 2 – Internal

Internal effectiveness review

facilitated bythe Chair and

Company Secretariat

Year 3 – Internal

Internal effectiveness review

facilitated bythe Chair and

Company Secretariat

Board effectiveness review

The Board undertakes a formal and rigorous evaluation of the performance of the Board, its Committees, the Chair and individual

directors on an annual basis. This process follows a three-year cycle, with the 2022 Board effectiveness review being facilitated

externally and the next externally facilitated effectiveness review being due to be undertaken in 2025.

International Personal Finance plc102

Directors’ Report

The Committee ensured that the following actions were taken during 2023, following on from the 2022 Board Evaluation. As part of the overall Board

effectiveness process, the Committee reviewed progress against the actions during the year.

Recommendations from 2022

Boardeffectiveness review Actions taken during 2023

Consider how Board discussions are

better able to contribute to the

development of strategy.

Throughout the year, the Chief Strategy Officer and the Chief Executive Officer engaged with the Chair

to develop the strategy process and ensure that strategic discussions were effective. This included

making sure strategy documents were provided to members in sufficient time.

New Chief Information Officer to

present regular updates to the Board

to provide clarity on the Group’s

technology strategy and to consider

the resource and capability required.

In December 2022, the Matters Reserved for the Board were amended to include updates from the Chief

Information Officer on the Group technology strategy. Following his appointment, the Chief Information

Officer will now present to the Board twice annually, which in 2023 included a presentation to the Board

in July providing oversight of the development of the strategic plan for technology across the Group.

Understand the risks and opportunities

relating to technology projects.

The risks and opportunities of technology projects are covered as part of the regular Chief Information

Officer updates. A change dashboard is also provided to the Board on a quarterly basis as part of the

Chief Executive Officer’s report which provides further insight into these risks over the year.

Review the information the

Board receives in order to monitor

ESG performance and how it is

incorporated into strategic

discussions.

Throughout the year, the Board received several papers on ESG matters including approving the

Responsible Business Framework. Additionally, the Board receives ESG metrics on a quarterly basis as

part of the Chief Executive Officer’s report which allows the Board to monitor ESG performance. As part

of the Strategy day in December, the Board also considered climate risks and opportunities for the

business and how this external force effects the Company’s strategy.

Spend more time considering the

wider stakeholder base including

communities, regulators and

politicians.

The Board now considers stakeholders in detail on a twice-yearly basis as part of a dedicated

stakeholder update. This covers how the Board and the Group have engaged with each particular

stakeholder group throughout the year and what actions have been taken since the previous update.

Additionally, stakeholders are also considered as part of every paper following the introduction of a

template for board papers. More information about our improvement to Board processes can be found

on page 93.

Seek shareholder views to inform

Board decision-making.

The Board continues to consider shareholder views to inform decision-making. At every Board meeting,

the Chief Executive Officer’s report includes an update on investor relations and the Chief Financial

Officer’s report also includes a more detailed update on shareholder engagement throughout the

period. Additionally, the Board’s new cover sheet template includes consideration of all stakeholders

for every paper.

Gain greater understanding around IT

and cyber risks through regular

deep-dive discussions.

In December 2022, the Matters Reserved for the Board were amended to include updates from the Chief

Information Officer on the Group technology strategy. The Chief Information Officer now attends the

Board bi-annually and covers IT and cyber risk in these regular updates. He has also been invited to

attend all Audit and Risk Committee meetings where internal audit actions, and IT and cyber risk are

discussed regularly.

A dedicated training session on cyber

risks will be arranged during the year.

The Chief Information Officer update which goes to the Board bi-annually covers cyber risk and will

continue to do so going forward.

Review board paper structure and

ensure the purpose of each paper

is clear.

In 2023, a template for board papers was introduced to assist with the structure of papers and to ensure

that the Board is clear on the purpose of each paper. More information about our improvement to Board

processes can be found on page 93.

Stuart Sinclair

Chair of the Committee

14 March 2024

Annual Report and Financial Statements 2023 103

Dear shareholder,

On behalf of the Committee, I am pleased to present the

Auditand Risk Committee’s Report for the year ended

31 December 2023, which explains our work and how we met

our audit, risk management and internal control responsibilities.

The year in review

This section of the Annual Report and Financial Statements sets

out how the Committee hasaddressed both routine and

emerging issues during the year.As mentioned elsewhere in this

Annual Report, the key challenges for the business and for the

Committee continued tobe the uncertain global

macroeconomic environment andcost-of-living crisis which

impacted our customers and our own cost-base, driven in part

by the wars in Ukraine and more recently the Middle East;

continuing regulatory challenge; and our approach to

ESG through the development of our Responsible Business

Framework strategy.

The Committee monitored the consequent impacts on the

Group’s Financial Statements closely and, despite continuing

uncertainty, was pleased to see the delivery of a very good

operational and financial performance.

The Committee also addressed a range of routine matters,

receiving regular updates from the internal audit team on internal

control matters, including the management of cyber threat,

information security and business continuity, and the continuing

development of the Group’s framework for internal non-financial

control. Where the Committee identified areas requiring

improvement, processes were put in place to ensure that the

necessary action was being taken and that progress wasbeing

monitored. The Committee also dedicated time to approving

Deloitte LLP’s plan for the 2023 external audit, and for the 2024

internal audit plan. A final focus for the Committee this year was

our oversight of the ongoing external auditor tender process.

Since receiving a letter from the Polish financial supervision

authority, KNF, in late February 2024, the Committee has provided

oversight on this matter including disclosures in this Annual Report

and Financial Statements. See page 30 for more information.

The year ahead

Although macroeconomic uncertainty continues to have

a significant impact on the sector in which we operate,

we will respond to the challenges and opportunities this brings.

The Committee will continue to oversee the development

of the Group’s systems of risk management and internal control,

and monitor developments in relation to the UK Government’s

internal control systems reforms. We will follow and respond to the

new requirements and the resulting impacts on the Committee’s

annual cycle of work. We are well placed to discharge our duties

in the year ahead.

Audit and Risk Committee Report

Committee members

Richard Holmes, Chair and non-executive director

Deborah Davis, Independent non-executive director

Katrina Cliffe, Senior independent non-executive director

The table below shows the number of meetings held and the

directors’ attendance during 2023.

Committee member

Scheduled

meetings

No. of

meetings

attended

% of

meetings

attended

Richard Holmes

6 6 100%

Deborah Davis 6 6 100%

Katrina Cliffe

6 6 100%

Notes

1. The scheduled meetings that each individual was entitled to, and had the

opportunity to, attend.

2. The Committee members’ expertise, qualifications and relevant

experience is set out in each of their biographies on pages 86 to 87.

3. Richard Holmes stepped down as Senior independent director on

1 December 2023 and on the same date was succeeded in that role

by Katrina Cliffe.

Richard Holmes

Chair of the Audit

and Risk Committee

“Throughout the year, we continued

to monitor the effectiveness of the

Group’s systems of internal control

and risk management, and provided

effective oversight and independent

scrutiny to ensure the presentation of

a balanced, true and fair view of the

Group’s performance during 2023.”

International Personal Finance plc104

Directors’ Report

Progress against 2023 key objectives

– Regularly received and reviewed reports

on regulatory developments.

– Continued to focus on the development and

execution ofthe Group’s ESG strategy.

– Kept under close review the Group’s responses

to developments in the macroeconomy

and cost-of-living crisis.

– Continued to monitor the ongoing alignment of the

Company’s purpose, values, strategy and culture.

– Provided oversight to the audit tender process.

Key objectives for 2024

– Respond to the impact ofchanges resulting from the

Audit Reform debate on assessments by the Committee

of the effectiveness of the risk management and

internal control systems.

– Receive and challenge as necessary regular reports

onthe continuing development of a three lines

of defence model.

– Review progress on the development of a control

framework for managing technology, change

management and inherent information security

risks fortheGroup.

– Continue to provide oversight to the audit

tender process.

Composition, role and responsibilities

The Committee consists of independent non-executive directors

and met six times during the year. Members and their

attendance at meetings can be found on page 104.

The external auditor, Deloitte LLP, the Chief Executive Officer,

Chief Financial Officer, Chief Information Officer,Group Financial

Controller, andthe Head of Internal Audit are invited to attend all

meetings.Periodically, senior management from across the

Group are invited to present on specific aspects of the business.

The members of the Committee meet on a regular basis outside

scheduled Committee meetings, and the Committee also meets

from time to time with the external auditor, without an executive

director or another member of the senior leadership team being

present.

Functionally, the Head of Internal Audit reports directly to the

Chair of the Committee. For routine administrative matters, the

Head of Internal Audit’s principal contact is the Chief Financial

Officer. The Head ofInternal Audit operates within a clearly

defined remit and has good linkage to the Chief Executive Officer

and to the rest of the organisation.

The Committee ensures shareholders’ interests are protected

andlong-term value is created. The Committee supports the

Board in fulfilling its responsibilities in relation to financial

reporting,monitoring the integrity of the Financial Statements

andreviewing and challenging any significant financial reporting

issues andjudgements in relation to the Financial Statements.

The Committee’s responsibilities are explained fully in its Terms of

Reference which are available on our website at www.ipfin.co.uk.

The Committee works to a structured programme of activities

and meetings to coincide with key events around our financial

calendar. Its main responsibilities are to:

– monitor the Group’s systems of internal control, including

financial, operational and compliance controls and risk

management systems, and to perform an annual review of

their effectiveness;

– monitor the integrity of the Financial Statements of the

Company and the formal announcements relating to the

Company’s financial performance, reviewing the significant

financial reporting judgements contained in them;

– provide advice to the Board on whether the Annual Report

andFinancial Statements, taken as a whole, are fair, balanced

and understandable, and provide the information necessary

for shareholders to assess the Group’s position and

performance, business model and strategy;

– make recommendations to the Board, for the Board to put to

shareholders in general meeting, relating to the

appointment, reappointment and removal of the external

auditor, and to approve its terms of appointment; review

and monitor the objectivity and independence of the

external auditor and theeffectiveness of the external audit

process, taking into consideration relevant UK professional

and regulatory requirements;

– review and approve the internal audit programme for the

year and monitor the effectiveness of the internal audit

function in the delivery of its plan;

– keep under review the work of the Risk Advisory Group, in

particular the Group schedule of key and emerging risks,

and consider the principal and emerging risks stated on

pages 78to 83 facing the Group and their mitigation; and

– review and approve risk appetite proposals, together

with themechanisms that will be used for monitoring

adherence tothem.

Committee effectiveness

An effectiveness review of the Board and its Committees was

undertaken internally at theend of 2023, which comprised a

questionnaire completed by the Committee and its regular

attendees together with an analysis of compliance with the

Committee’s Terms of Reference. Overall, the Committee

concluded that it had operated effectively and that the

Committee’s Terms of Reference had been complied with

throughout the year.

Feedback from this process indicated that the Committee’s

main areas of focus for 2024 should be on:

– ensuring the risks arising from credit are appropriately

managed, including ensuring any judgements made

on credit card receivables are appropriate;

– oversight of plans to address technology-related risks

and plans to address new EU regulatory requirements

such as DORA and CCD 2;

– ensuring an appropriate balance between reviewing risk

frameworks and policies and reviewing specific risks; and

– enhancing the integration of risk management

and strategic planning.

Annual Report and Financial Statements 2023 105

Activities in 2023

Financial reporting

The Committee reviewed and considered the following areas

in respect of the preparation of the half-year and full-year

Financial Statements:

– the appropriateness of accounting policies used;

– compliance with external and internal financial reporting

standards and policies;

– significant judgements made by management regarding

areas of uncertainty;

– disclosures and presentations; and

– whether the Annual Report and Financial Statements is fair,

balanced and understandable.

In carrying out this review, the Committee considered the work

and recommendations of management, and received reports

from the external auditor setting out its view on the accounting

treatments and judgements underpinning the Financial

Statements.

The significant accounting judgements considered by the

Committee were:

– Impairment of receivables: the application of IFRS9 to the

issues arising from the impact of the rising costs of living had

a significant impact on the impairment charge and the

calculation of provisions. The key areas of judgement in

respect of impairment provisions made against amounts

receivable from customers are the parameters used in the

expected loss models, the expected timing of future cash

flows and post-model overlays. The expected loss models

are driven by historical data in respect of probability of

default and exposure at default, together with loss given

default for each portfolio. At both the half-year and full-year

results, the Committee considered a paper prepared by

management summarising the work performed to update

parameters used in the expected loss and the cash flow

timing models, and the judgements applied in this process.

This paper also addressed the use of post-model overlays in

instances where the most recent trends in the data were felt

to be more relevant than some of the more historical

information. This was still relevant in 2023 due to the use of

rising costs-of-living post-model overlays arising from a full

assessment of expected repayment cash flows in order to

calculate the expected impact of these issues on the

Group’s impairment provisions. Further detail on the

post-model overlays considered is given in the key sources of

estimation uncertainty section of this Annual Report on page

153. The external auditor performed audit procedures on

impairment provisioning, challenging management on its

approach to the Group’s cost-of-living crisis provision and on

its planned accounting treatment for the Group’s new credit

card product. The external auditor reported its findings to

the Committee. The Committee concluded that the

receivables impairment provisioning in the Financial

Statements was appropriate.

– Revenue recognition: the judgement in respect of revenue

recognition is the methodology used to calculate the

effective interest rate. The calculation takes into account all

the contractual terms together with the extent and timing of

customer early settlement behaviour. The external auditor

performed procedures to assess management’s calculations

and assumptions used to calculate the effective interest rate

and reported its findings to the Committee. The Committee

concluded that revenue recognition in the Financial

Statements was appropriate.

– Accounting for credit card receivables: the Company

does not yet have sufficient historical credit card data in

order to calculate an expected loss provision for the credit

card receivables portfolio. At both the half-year and the

full-year results, the Committee considered a paper

produced by management summarising the approach

taken to determine the most appropriate expected loss

parameters for this portfolio, and the judgements applied

in this process. Further detail on the credit card valuation

methodology is given in the key sources of estimation

uncertainty section of this Annual Report and Financial

Statements on page 154. The external auditor performed

audit procedures on the credit card receivables valuation

and reported its findings to the Committee, who concluded

that the credit card receivables valuation in the Financial

Statements was appropriate

– Taxation: IPF operates in multiple jurisdictions where the

taxation treatment of transactions is not always certain.

Management is therefore required to make judgements,

based on internal expertise and external advice, on the

methodology to be adopted for accounting for uncertain

tax positions. Key areas of focus in 2023 included justification

of the Group’s deferred tax asset. The external auditor

performed procedures to assess management’s judgement

and reported its findings to the Committee. The Committee

concluded that the provision for uncertain tax risks included

in the Financial Statements was appropriate.

– Regulation: the business is subject to regulatory scrutiny

in multiple jurisdictions and at times it is appropriate

tomake provisions for potentially adverse rulings by

regulatory authorities. The Board was advised by the Chief

Legal Officer in relation to any enquiry it had on thisarea.

Audit and Risk Committee Report continued

International Personal Finance plc106

Directors’ Report

Internal control and risk management

While the Board is responsible for overseeing the Group’s systems

of internal control, including risk management, the review of

itseffectiveness is delegated to the Committee. The Group

recognises the importance of strong systems of internal control

inthe achievement of its strategy and objectives. It is also

recognised that any system can provide only reasonable and

not absolute assurance against material misstatement or loss.

The Committee reviews and approves the Group schedule of key

risks, which describes the principal risks and uncertainties facing

the business. The Board considers the schedule formally on a

six-monthly basis and approves risk appetite at least annually.

The Committee is supported in its work by the Risk Advisory

Group, which in 2023 comprised the Chief Executive Officer,

Chief Financial Officer, Group Credit Director and Chief Legal

Officer, together with othermembers of the senior leadership

team. The Risk Advisory Group meets four times a year.

It reports to the Audit and Risk Committee and considers

the risk assessments and risk registers produced in each country

and updates the Group schedule of key risks. It also considers

emerging risks, areas of specific risk, andparticular issues.

For further details, see pages 78 to 83.

The Committee challenged robustly the identification,

assessment and planned mitigation of the principal risks

facing the business, notably in the light of the cost-of-living crisis.

The Committee also continued to pay close attention to the

heightened information security and cyber risk of hybrid working

and to the threat of fraud, given the changed working

environment. The rapid rollout and uptake ofGenerative AI and

its utilisation by those with malicious intent has increased the

cyber threat, as well as the risk of inadvertent data loss from

colleagues and customers using these new tools. A new AI

Adoption Policy has been introduced and this will continue to be

an area of focus for the Committee. The implications of the new

Digital Operational Resiliency Act (DORA), which comes into full

force in January 2025, is also being monitored closely.

Regulatory developments in 2023 were in three important areas.

Firstly, market-specific regulatory changes driven by political

environments. These included a lower total cost of credit cap

and new affordability regulations which came into force in

Poland in December 2022 and May 2023 respectively, following

seven years of debate and discussion; changes in the areas

of responsibility of the Romanian Consumer Protection Office

and tightening of the price and affordability rules in the Baltics.

There were also positive changes such as an opportunity

to dedicate a part of tax paid to NGOs in Romania;

and the abolition of the personal identification system

in the Czech Republic.

Secondly, regulatory change was driven by high inflation and

low economic growth environments, which took theform of

increasing personal tax payments and minimum wages.

Finally, an increasingly important third area of regulatory

change was emerging regulation from the European Union,

including the conclusion of its review of the Consumer Credit

Directive, and a series of changes in the areas of distance

marketing of financial products, IT, business continuity and

information security, sustainability reporting, and open banking.

See pages 30 and 80 for more information on the Consumer

Credit Directive.

To ensure we are prepared sufficiently for regulatory

developments, we reviewed and refreshed the regulatory

change management framework which governs our responses,

from monitoring and appropriately influencing to

implementation and compliance.

Additionally, the Committee received regular updates on key

tax issues and ongoing tax audits within the Group, together

with OECD and European Union international tax initiatives that

could potentially impact the Group in the future. Details of the

current status of tax audits are included in our principal risks

and uncertainties on page 81.

The Committee will continue to assess the impact of these

matters on the business and will monitor management’s

response throughout 2024.

The internal control environments in place to manage the

impact of each risk are monitored by the Committee on

a regular basis, as are the principal actions being taken

to mitigate them. TheCommittee requests additional

presentations on key business areas, as necessary,

to supplement its understanding of control environments

in place. The areas covered by these in 2023 are referred

to in the ‘Training’ section on page 109.

Through the Committee, the internal audit function provides

independent assurance to the Board on the effectiveness of the

systems of internal control. The Committee provides oversight

anddirection to the internal audit plan, which is developed

usingan inherent risk-based approach, to ensure that it

provides independent assurance over the integrity of internal

controls andthe operational governance framework.

The Committee monitors the resolution of outstanding

actions from internal audits, with a focus on action-owner

accountability, and was pleased to note the solid rate of

completed actions during the year. In addition, the external

auditor communicates to the Committee any deficiencies

in the internal control environment it observes aspart of its audit

procedures. Deloitte LLP, identified a number of IT deficiencies in

the Company’s control environment. Despite these deficiencies,

the Committee remains confident that the overall control

environment remains sufficiently robust.

Annual Report and Financial Statements 2023 107

Internal audit

The internal audit function’s purpose, authority and

responsibilities are definedin its Charter, which is reviewed and

approved annually by the Committee. Internal audit is an

independent assurance function within the Group providing

services to the Committee and all levels of management. It has

no responsibility for operational business management and its

remit is to provide objective assurance over the design and

operating effectiveness of the system of internal control, through

a risk-based approach. It also provides insight, delivers value,

andhelps the organisation to achieve its priorities. The internal

audit function does this by bringing a systematic, disciplined

approach to evaluating and improving the effectiveness of risk

management, control and governance processes.

The Head of Internal Audit reports into the Chair of the

Committee with administrative oversight from the Chief

Financial Officer.

The internal audit function comprises teams across our markets

and at the Group head office in the UK, and has a high level of

qualified personnel with a wide range of professional skills and

experience. Co-sourcing agreements with the largest

professional services firms ensure access to additional specialist

skills and an advanced knowledge base.

The Committee has a permanent agenda item to cover internal

audit-related topics. Prior to the start of each financial year, and

at the half year, having considered the principal areas of risk

within the business, the Committee reviews and approves an

inherent risk-based internal audit plan, assesses the adequacy

of the available internal audit resources and considers the

team’s operational initiatives for its continuous improvement.

The Committee reviews progress against the approved internal

audit plan and the results of audit activities, with a focus on

unsatisfactory audit results which require timely attention.

Duringthe year, the internal audit function focused on the

Group’s efforts tocontrol its principal inherent risks which

included regulation, reputation, information security and cyber

threat, and the execution of projects and initiatives of strategic

importance. TheCommittee monitors progress on the

implementation of any action plans arising on significant audit

findings to ensure they are completedsatisfactorily.

Internal audit activities are based on a robust methodology

andare subject to an ongoing programme of internal quality

assurance reviews. The function has invested in several

initiatives to continuously improve its effectiveness, including a

third-party quality assessment which last reported in early 2019

and concluded positively on the effectiveness of the function.

Theaimis for a similar exercise to be undertaken in 2024.

Theteam measures its operational effectiveness and efficiency

via a set of key performance indicators which are reported at

each meeting of the Committee, and via individual post-audit

quality assessments by auditees, the results of which are also

reported to the Committee.

The Committee is satisfied that the quality, experience and

expertise of the function are appropriate for the business.

External auditor effectiveness

and independence

The Committee considered the external auditor’s assessment of

the significant risks in the Group’s Financial Statements set out in

its audit plan and approved the scope of the external audit that

addressed these risks. The Committee considered these risks

and the associated work undertaken by the external auditor

when forming its judgement on the Financial statements.

In line with its established practice, the Committee monitored the

effectiveness and conduct of the external auditor by reviewing:

– the experience and capabilities of the auditor and the calibre

of the audit firm;

– provision of non-audit services;

– robustness and perceptiveness of the external auditor

in its handling of key accounting and audit judgements;

– the interaction between management and the

external auditor;

– the delivery of its audit work in accordance with the agreed

plan; and

– the quality of its report and communications to the Committee.

The effectiveness of the external audit process continues to be

evaluated via a questionnaire which was completed by the

Committee members and attendees, and by business unit

finance directors across the Group. The results of the evaluation

were reviewed and considered by the Committee which

concluded that with the timely resolution of an identified

opportunity for improvement in one of the markets, the external

audit process is effective.

In order to confirm its independence and objectivity,

the external auditor issued a formal statement of independence

to the Committee. In addition, the Committee ensured

compliance with the Group’s policy on the use of the external

auditor for non-audit services.

The key requirements of this policy are:

– the external auditor is prohibited from providing certain

services which include the following: tax services; payroll

services; designing and implementing internal controls or risk

management procedures; legal services; internal audit

services; human resource services; valuation services; or

general management consultancy; and

– the Committee Chair must approve any individual non-audit

service over a specific fee level.

The policy of the Committee in respect of non-audit services is

that the external auditor is only appointed to perform a

non-audit service when doing so would be consistent with both

the requirements and overarching principles of the Financial

Reporting Council’s Revised Ethical Standard (2019), and when

its skills and experience make it the most suitable supplier.

The Committee believes that the Group receives a particular

benefit from certain non-audit services where a detailed

knowledge of its operations is important or where the auditor

has very specific skills and experience. Other large

accountancy practices are also used to provide services where

appropriate. Consequently the Committee is satisfied that

Deloitte LLP were independent throughout 2023.

Audit and Risk Committee Report continued

Non-audit services carried out by Deloitte LLP in 2023 Fee £000

Other assurance services 140

International Personal Finance plc108

Directors’ Report

Audit tender and auditor rotation

The Statutory Auditors and Third Country Auditors Regulations

2016 requires public interest entities to undertake a tender

exercise at least every 10 years and rotate auditors after at least

20 years. The Company last went out to tender in 2010 when

Deloitte LLP was appointed as Group auditor. In 2020, however,

the Group requested and received the approval of the

Financial Reporting Council to defer the tender process for up

to two years due to the challenges associated with the process

in the context of Covid-19 and other competing priorities for

management time arising from the pandemic. This deferral

period ended, and therefore the Company was required to

undertake a tender and audit rotation process for the 2023

financial year. The Company sought to run a tender process in

2022 and contacted nine firms to ascertain if they would

participate. All firms contacted indicated that they did not wish

to participate, due primarily tothe volume of auditing activity

they were undertaking for other clients or because of other

non-audit activity they had undertaken for the Group.

In January 2023, the Company notified the Financial Reporting

Council and the Registrar of Companies of this position

and its intention to run atender process in 2023 for the

2024 financial year.

During 2023, a formal and competitive audit tender process

was overseen by the Audit and Risk Committee, The objective of

the process was to ensure a fair and transparent tender process

and to appoint the audit firm that will provide the highest quality

in the most effective and efficient manner. An invitation to

tender was sent to a number of firms, following which two firms,

Deloitte LLP and PKF Littlejohn LLP, elected to submit a proposal

for providing audit services to the Group.

A selection committee, chaired by the Chair of the Audit and

Risk Committee, was established to run the audit tender process

and provide a recommendation to the Audit and Risk

Committee. The firms were assessed against detailed criteria

which considered audit approach, audit quality, capacity and

capability, understanding of the Group and our market,

independence and team and cultural fit. The process was

as follows:

– management meetings were held between the firms and

various members of Group management.

– formal tender proposal documents were issued in line with

the requirements set out in the invitation to tender.

– both firms presented to the selection committee, followed

by a meeting of the selection committee to discuss both

tender proposals.

– follow-up questions were issued to both firms.

– formal responses on the follow-up questions were submitted

by both firms.

– a final meeting of the selection committee was held to

discuss the results of the tender process and conclude on

which firm best met the detailed selection criteria.

– the selection committee submitted a proposal paper to the

Audit and Risk Committee which was discussed and

approved at the Committee meeting in February 2024.

Following this process, the Board agreed its intention to

recommend to shareholders for approval at the Company’s

2024 AGM the appointment of PKF Littlejohn LLP as external

auditor of the statutory audits of the Company for the financial

year ending 31 December 2024 and beyond.

Training

The Committee, with the Board, undertook a significant amount

of training during 2023. This included presentations on the

following key business areas:

– an update on licensing application progress

in our Polish home credit market;

– a clarification of arrangements in the Group in respect

of the three lines of defence model;

– an internal control update regarding the Group’s

whistleblowing arrangements;

– explanation of oversight arrangements in place in respect

of bribery, compliance and privacy;

– an assessment of the level of technology, information security

and change management risk to the Company was

presented by the new Chief Information Officer;

– the management of climate change risk;

– a European regulatory update;

– a recap by the external auditor on Audit and Risk Committee

responsibilities, focus areas and best practice; and

– calculation and oversight of revenue and impairment under

IFRS 9 in the continuing uncertain economic environment.

This training was complemented by discussions directly

with management teams in connection with specific

focus areas in the Group.

Review of the effectiveness of the internal

control and risk management systems

On behalf of the Board, with the assistance of the internal audit

function, the Committee monitored the Group’s internal control

and risk management systems, and its processes for managing

principal and emerging risks throughout 2023, and on the basis

of the work performed by the management team throughout

the year and reported to the Committee at each meeting, has

assessed that these are effective. In addition, the Committee,

where appropriate, ensures that necessary actions have been

or are being taken to remedy identified failings or weaknesses

in the internal control framework. These processes were in place

throughout 2023 and up to 14 March 2024.

Annual Report and Financial Statements

The Committee has reviewed and considered the Annual

Report and Financial Statements, in line with other information

the Committee has considered throughout the course of the

year. Itconcluded, and recommended to the Board, that the

Annual Report and Financial Statements 2023, taken as a

whole, are fair, balanced and understandable, and provide the

information necessary for shareholders to assess the Group’s

position and performance, business model and strategy.

Richard Holmes

Chair of the Committee

14 March 2024

Annual Report and Financial Statements 2023 109

Dear shareholder,

On behalf of the Board and as Chair of the Remuneration

Committee, I am pleased to present the Directors’ Remuneration

Report for the year ended 31 December 2023. The report explains

how the Committee carried out its duties during the year and the

rationale behind the decisions that were taken. The report is

divided into three sections:

1. Remuneration at a glance, illustrating the link between the

business strategy and our Remuneration Policy, and the link

between pay and performance;

2. A summary of the Directors’ Remuneration Policy (the 2023

Remuneration Policy), the full detail of which can be found on

pages 100-109 of the 2022 Annual Report and Financial

Statements; and

3. The 2023 Annual Remuneration Report, providing detail of

amounts paid during the reporting year, including incentive

outcomes and the planned implementation of the 2023

Remuneration Policy in 2024.

Overview

Role and composition

The Committee comprises two independent non-executive

directors and the Chair of the Board. Full biographical details

can be found on pages 86 and 87.

The Committee’s responsibilities include:

– approving the Remuneration Policy for executive directors and

the senior leadership team, and making recommendations to

the Board. The Committee takes account of the remuneration

of the wider workforce when setting policy for, and making

remuneration decisions in respect of, the executive directors;

– determining appropriate performance targets and incentive

outcomes; and

– engaging with shareholders on matters relating

to remuneration.

The Committee’s responsibilities are explained fully in its Terms of

Reference which are available on our website at www.ipfin.co.uk.

Our Remuneration Framework is intended to strike an appropriate

balance between fixed and variable pay components, and to

provide a clear link between pay and our key strategic priorities.

For example:

– profitable growth is recognised via the structure and operation

of our annual bonus plan, which carries an 80% weighting on

financial metrics;

– delivery of sustainable organisational performance and

shareholder value is reflected in a progressive dividend policy,

which underpins our Restricted Share Plan (see page 116); and

– our commitment to building a better world through financial

inclusion is reflected in the adoption of appropriate ESG

metrics in 2023, which align clearly to our purpose and reflect

issues of direct importance to our key stakeholders, including

our shareholders.

Directors’ Remuneration Report

Committee members

Deborah Davis, Chair and independent non-executive director

Richard Holmes, Non-executive director

Stuart Sinclair, Chair of the Board

The table below shows the number of meetings held and the

directors’ attendance during 2023.

Committee member

Scheduled

meetings

No. of

meetings

attended

% of

meetings

attended

Deborah Davis 4 4 100%

Richard Holmes 4 4 100%

Stuart Sinclair 4 4 100%

Notes

1. The scheduled meetings that each individual was entitled to and had the

opportunity to attend.

Deborah Davis

Chair of the

Remuneration

Committee

“We place paramount importance on

aligning executive remuneration with

the Company’s purpose and values,

rewarding strong performance

against a backdrop of external

challenges and ensuring fair and

competitive compensation structures

across the organisation. I would like to

thank our investors for their feedback

and support in implementing our

remuneration policy which is

designed to underpin the long-term

success of the business”

International Personal Finance plc110

Directors’ Report

Business context

The Committee’s remuneration decisions in 2023 were made

within the context of the business delivering a very strong

operational and financial performance which included:

– strong demand for our broad range of financial products;

– excellent operational execution delivering further

growth and continued good credit quality;

– robust customer repayments and impairment rates

in line with our expectations;

– significant progress made in executing our strategy to take

advantage of substantial and sustainable long-term

growth opportunities; and

– diversifying our funding position and generating significant

headroom on facilities to fund growth.

Shareholder context

In line with the Group’s progressive dividend policy, and as a

consequence of the executive directors’ successful execution of

our growth strategy and continued growth potential, a full-year

dividend of 10.3 pence per share is proposed, representing a

year-on-year increase of 12%.

Employee and customer representative context

In making its executive remuneration decisions, the Committee

continued to take into account wider workforce remuneration

and related policies, and the alignment of incentives and

rewards throughout the organisation. In line with Provision 41 of

the UK Code, the Committee supported the Workforce

Engagement Director to engage with a representative group of

the workforce to explain how executive remuneration aligns

with the wider company pay policy.

The significant cost-of-living challenges that we see in the UK

have also been felt in many of our markets, with high inflation

often coupled with skills shortages. Whilst it would be impossible

and counter-productive economically to respond to a high

consumer price index with equally high salary increases, the

Committee has noted the proportionate action taken to protect

earnings as far as possible and retain our people, whilst

maintaining an appropriate cost base.

The business continues to work hard to reward and recognise

our employees and customer representatives, and to provide

the best possible opportunities for learning and development.

This has been reflected in:

– continued building of our established learning academies,

providing structured development pathways for the Group’s

16,000 customer representatives;

– partnering with world class organisations, to build dedicated

leadership development pathways for our sales leaders

through our ‘MyBusiness’ programme;

– partnering with LinkedIn Learning, Pluralsight and Harvard

Business School to provide best-in-class virtual development

materials and experiences for colleagues throughout the

Group;

– holding our third annual Learning Festival, a week-long global

event which attracted over 11,500 participations to more

than 100 sessions and hosted by 120 speakers (see page 52

for more information); and

– the outcomes of the bi-annual Global People Survey which

were presented to the Committee as part of the wider

workforce annual update. The Committee was pleased to

see a participation rate of 95% of all colleagues with a very

positive response rate as described on page 54.

Progress in 2023

The Committee’s principal goals for 2023, in addition to the

effective implementation of the 2023 Remuneration Policy,

were to:

– ensure the adoption of appropriate ESG metrics in the

2023 annual bonus;

– consult with our major shareholders on the 77.05% vote in

favour of the 2022 Directors’ Remuneration Report; and

– continue to monitor broader market and governance

trends, paying particular attention to the ongoing

cost-of-living challenges faced by our colleagues in all

markets. See employee and customer representative

context section for more details.

For 2023, a number of specific ESG targets were included in

the executive directors’ personal objectives under the

purpose heading. These were weighted independently

within the 20% strategic leadership element of the bonus

construct. In respect of the 2024 annual bonus, the

Committee will focus on refining those measures further

and ensure consistency between the executive directors’

bonus priorities in this area, and those of the senior

management team below the Board.

At the Company’s AGM on 27 April 2023, the Board and

Remuneration Committee were pleased to note the strong

support given by shareholders to the 2023 Remuneration

Policy, with 99.33% of votes in favour. However, we

recognise that with respect to the 2022 Directors’

Remuneration Report (excluding the Directors’

Remuneration Policy), 77.05% of votes were received in

favour of Resolution 2, the advisory vote to approve the

Directors’ Remuneration Report. Therefore, and in

accordance with the provisions of the UK Corporate

Governance Code, the Company consulted further with

shareholders on the vote, and published within six months

of the AGM an update detailing the engagement that was

undertaken. The Committee and the Board recognise that

the use of upward discretion in respect of annual bonus

outcomes will always raise concerns, and would

emphasise that the decisions made by the Committee and

the Board reflect the strong underlying performance of the

Company in 2022. Having considered the feedback from

shareholders and with the support of the majority, the

Committee is satisfied that it acted in the best interests of

the Company and all of its stakeholders. The Committee

will maintain a regular dialogue with shareholders to ensure

continued alignment with their interests and will continue to

action the matters detailed in the Remuneration Policy

approved at the 2023 AGM.

Annual Report and Financial Statements 2023 111

Remuneration decisions made in 2023

As noted in the 2022 Directors’ Remuneration Report,

remuneration decisions included:

– a 5% increase in base salary was awarded to the Chief

Executive Officer and Chief Financial Officer in line with the

typical annual salary increase for the wider UK workforce and

less than the planned wider workforce pay budget of 7%, with

salaries increasing to £587,633 and £341,250 respectively.

– Financial year 2022 bonus awards of 98% of maximum for

both the Chief Executive Officer and for the Chief Financial

Officer (the explanation of which can be found on pages 111

to 114 of the 2022 Annual Report and Financial Statements).

– 2023 Restricted Share Plan awards of 80% of salary each for

the Chief Executive Officer and Chief Financial Officer.

These awards were in line with the normal level expected

under the 2023 Policy and are set at half the normal level

of the former LTIP.

Implementation of Remuneration Policy

in 2024

The Committee approved:

– an increase in base salary of 4.5% each for the Chief

Executive Officer and Chief Financial Officer, in line with

the typical annual salary increase for the wider UK workforce

and less than the planned wider workforce pay budget of

5.5%, with salaries increasing to £614,076 and £356,606

respectively.

– Financial year 2023 bonus awards of 100% of maximum for

the Chief Executive Officer and 100% for the Chief Financial

Officer within the context of the business delivering a strong

operational and financial performance (see page 111), and

each executive director performing exceptionally well against

their personal objectives (see pages 120 and 121);

– legacy 2021 PSP awards that have vested at 100% reflecting

strong TSR performance over the life of the scheme and

maximum achievement on both EPS and net revenue growth.

– 2024 Restricted Share Plan awards of 80% of salary for each

of the Chief Executive Officer and Chief Financial Officer.

Similar to last year, the Committee considered base salary

increases in the context of the macroeconomic environment,

including the impact of cost-of-living increases on our people.

Base salary increases have been tailored in each market to

address these issues; this has resulted in salary increases in most

markets being above the 4.5% award made to each of the

executive directors, and in particular, high increases to many of

our lower-paid employees, who have been especially hard hit

by economic circumstances. On that basis, the Committee is

comfortable that the 4.5% awards made to our executive

directors are fair and proportionate.

As Chair of the Committee I have greatly appreciated the

constructive feedback provided by shareholders throughout

2023, and am committed to maintaining this open dialogue

with you. I look forward to reporting on further positive progress

in 2024.

Deborah Davis

Chair of the Committee

14 March 2024

Directors’ Remuneration Report continued

Other priorities in 2024

In addition to continuing to monitor broader market and

governance trends, the priorities for the Committee will

include:

– Prioritising the successful embedding of ESG

considerations into remuneration.

– Ensuring appropriate focus on remuneration trends

in each of our markets.

– Working to continue to enhance oversight of

workforce-related policies and practices as part

of the Group’s broader purpose agenda.

International Personal Finance plc112

Directors’ Report

Remuneration at a glance

Our 2023 Remuneration Policy at a glance

Our Remuneration Policy Links to strategy Key features

2023

2024

2025

2026

2027

2028

Salary,

pension

and benefits

To attract and retain talent capable

of delivering the Group’s strategy.

Normally reviewed annually. Increases take into account salary

reviews across the Group and increases paid to UK employees.

Annual

bonus

Deferral of 50% to

25%

To motivate and reward sustainable

Group profit before tax and

the achievement of specific

personal objectives linked to

the Company’s strategy.

On-target performance delivers 50% of maximum. Maximum

opportunity 130% of base. 50% cash and 50% deferred for three

years until shareholding requirement met; thereafter 75% cash

and 25% deferred. Typically, 80% based on financial measures

and 20% on personal objectives, linked to strategy.

Malus on

deferral

Clawback

on cash

Long-term

incentive plan

Vest period

To motivate and reward longer-term

performance and support

shareholder alignment through

incentivising absolute shareholder

value creation.

Award normally equivalent to 80% of base salary at time of

grant (maximum 125%). Three-year performance period with

the extent of any vesting subject to satisfaction of an underpin

as determined by the Committee. Two-year post-vesting holding

period. Two-year post-cessation shareholding requirement.

Two-year post-vest holding

Clawback period

Our Remuneration Framework is intended to strike an appropriate balance between fixed and variable pay

components, and to provide a clear link between pay and our key strategic priorities. Executive director and senior

leadership remuneration are structured, so that individuals are rewarded only for the successful delivery of the

strategy over both the short and long term.

Our Next Gen strategy

Outcomes

Pay for performance

Chief

Executive

Officer

Chief

Financial

Officer

Base pay award 4.5% 4.5%

Bonus as % maximum 100% 100%

Restricted Share Plan awards 80% 80%

Legacy 2021 Performance Share Plan vested at 100% N/A

Profit before tax

£83.9m

+8.4%

Pre-exceptional earnings per share

23.2p

+11.5%

Group net receivables

£893m

Financial

inclusion

Organisation

Technology

and data

For more information see page 20.

Long-term

profitable growth

RoRE

15% to 20%

Strong capital

generation

– Annual bonus

aligned to in-year

objectives, with

80% weighting on

financial metrics

– Three-year deferral

of up to 50% of bonus

– RSP with underpin

aligned to progressive

dividend policy;

three-year vesting

plus two-year

holding period

Total business return for all our shareholders

Our remuneration outcomes for 2023

Remuneration outcomes

Annual Report and Financial Statements 2023 113

Directors’ Remuneration Policy 2023

The 2023 Remuneration Policy is included on pages 100-109 of the 2022 Annual Report and Financial Statements. A copy of the

Report can be found on our website in the Investors section at www.ipfin.co.uk together with all notes to the Policy. The 2023

Remuneration Policy was approved by shareholders at the 2023 AGM and took effect from 27 April 2023.

The Remuneration Policy table for the executive directors has been reproduced below:

Purpose and link to strategy Operation Maximum opportunity Metrics, weightings and period

Base salary

To attract and retain talent

capable of delivering the

Group’s strategy. Rewards

executives for their

performance in the role.

Base salary is paid in 12 equal

monthly instalments during the

year. Salaries are normally

reviewed annually; generally,

any changes are effective

from 1 April.

Salary levels are set considering

role, experience, responsibility

and performance, of both the

individual and the Company,

and also taking into account

market conditions and the

salaries for comparable roles

in other companies.

Salary increases take into

account salary reviews across

the Group and are usually in line

with increases awarded to UK

employees. Additionally, due

regard is given to any specific

external factors or events

relevant to the setting and

review of executive salaries. By

exception, higher awards may

be made at the Committee’s

discretion to reflect individual

circumstances. For example:

– changes to role which

increase scope and/or

responsibility;

– development and

performance in the role; and

– responding to competitive

market pressures.

There is no prescribed maximum

increase.

None, although overall

performance of the individual is

considered by the Committee

when setting and reviewing

salaries annually.

Pension

To provide retirement funding.

The Company operates

a stakeholder scheme;

at the discretion of the

Committee, this may be paid

as a cash allowance.

The Company has closed its

defined benefit scheme to new

members and future accrual.

Company contribution is set at

the most common rate for the

wider workforce, currently 12%.

Cash allowance is paid net of

employer’s NIC and other

employment taxes.

None.

Benefits

To provide market-

competitive benefits

that support the executive

directors to undertake

their role.

The Company pays the cost of

providing the benefits on a

monthly, annual or one-off basis.

All benefits are non-pensionable.

The standard benefits package

includes:

– life assurance of 4x salary;

– car allowance;

– long-term disability cover;

– private medical cover for

executive director and

immediate family;

– annual medical; and

– ability to participate in the IPF

Save As You Earn Plan (SAYE)

and any other all-employee

share plans on the same

terms as other employees.

Additional benefits may also be

provided in certain

circumstances, and may

include relocation expenses,

housing allowance and school

fees. Other benefits may be

offered if considered

appropriate and reasonable by

the Committee.

None.

Directors’ Remuneration Report continued

International Personal Finance plc114

Directors’ Report

Purpose and link to strategy Operation Maximum opportunity Metrics, weightings and period

Annual bonus

To motivate and reward the

generation of sustainable Group

profit before tax and the

achievement of specific personal

objectives linked to the

Company’s strategy.

Measures and targets are set

annually, and payout levels are

determined by the Committee

after the year end, based on

performance against those

targets. The Committee may, in

exceptional circumstances,

amend the bonus payout

should this not, in the view of the

Committee, reflect overall

business performance or

individual contribution. 50% of

the total amount is deferred for

three years in Company shares

through the Deferred Share Plan

(DSP) until the executive director

has achieved the shareholding

requirement of 200%, at which

point 25% of the total is deferred

on the same basis. The

remaining bonus (50% or 75%

depending on shareholding) is

paid in cash. Payments are

made around three months

after the end of the financial

year to which they relate.

There are provisions for

clawback adjustments on the

occurrence of certain events.

Executive directors remain

eligible to participate in,

and receive pro rata payment

under, the terms of the annual

bonus during notice, until their

date of leaving.

On target bonus: 50% of

maximum.

Maximum opportunity: 130% of

base salary.

Performance is measured

over the financial year

and is assessed using the

following criteria:

– typically 80% is based on

achievement of financial

measures; and

– typically 20% is based on

achievement of personal

objectives linked

to achievement of

Company strategy.

Although each of the annual

bonus metrics could pay out

independently, the Committee

will set a minimum threshold

profit target before any other

metrics are assessed.

Deferred Share Plan (DSP)

To strengthen the link between

short- and longer-term incentives

and the creation of sustainable

long-term value.

50% of the total bonus amount is

subject to compulsory deferral

for three years in Company

shares without any matching,

until the executive director has

achieved the shareholding

requirement of 200%, at which

point 25% of the total is deferred

on the same basis.

Following the vesting of awards,

executive directors receive an

amount (in cash or shares) in

respect of the dividends paid or

payable between the date of

grant and the vesting of the

award on the number of shares

that have vested.

The DSP has provision

for malus and clawback

adjustments on the occurrence

of certain events.

Awards may also be adjusted

in the event of a variation of

capital, in accordance with

the plan rules.

50% of the total bonus amount

received (or 25% once the

shareholding requirement has

been achieved) during the year.

None.

Annual Report and Financial Statements 2023 115

Purpose and link to strategy Operation Maximum opportunity Metrics, weightings and period

Restricted Share Plan (RSP)

Awards are designed to

incentivise executive directors to

successfully and sustainably

deliver the Company’s strategy.

Annual grant of awards, made

generally as conditional awards

or options. Awards vest at the

end of the three-year period

subject to:

– the executive directors’

continued employment at the

date of vesting; and

– the satisfaction of an

underpin as determined by

the Committee, whereby the

Committee can adjust vesting

for Company or individual

performance.

Executive directors will be

required to hold any shares

acquired on vesting (net of any

shares that may need to be sold

to cover taxes) for a two-year

period starting on the date of

vesting.

The RSP has provisions for malus

and clawback adjustments

on the occurrence of certain

events.

Awards granted under the RSP

may incorporate the right to

receive an amount (in cash or

shares) equal to the dividends

which would have been paid or

payable on the shares that vest

in the period up to vesting.

In normal circumstances, award

levels for executive directors

equivalent to 80% of base salary

at the time of grant.

Rules permit annual grants up to

individual limit of 125%.

There are no performance

conditions on grant, however

the Committee will consider prior

year business and personal

performance to determine

whether the level of grant

remains appropriate.

Central, quantifiable financial

RSP underpin will be adherence

to the Group’s dividend policy

throughout the three-year

vesting period of each annual

RSP grant. A further basket of

underpin factors will be

considered at the end of the

relevant three-year vesting

period. For 2024 awards, these

will be as follows:

1. the extent to which any

windfall gains have arisen as

a result of any marked

appreciation in share price;

2. whether there have been any

material sanctions or fines

issued by a regulatory body

(which may give rise to

allocation of individual or

collective responsibility);

3. any material damage to the

reputation of individual Group

Companies, or the Group

itself (which may give rise to

allocation of individual or

collective responsibility);

4. the level of employee and

customer representative

engagement over the vesting

period; and

5. the level of customer

engagement (as measured by

net promoter scores, Rep Track

or such other means as

determined by the Committee).

Shareholding requirement

Aligns executive and

shareholder interests.

Executive directors expected to

acquire a beneficial

shareholding over time.

Shares which have vested

unconditionally under the

Company’s share plans will be

taken into account with effect

from the date of vesting (but not

before).

50% of all share awards vesting

under any of the Company’s

share incentive plans (net of

exercise costs, income tax and

social security contributions)

must be retained until the

shareholding requirement is met.

The shareholding requirement

for executive directors is 200% of

base salary.

None.

Post-cessation shareholding

Aligns executive and

shareholder interests.

Post-cessation shareholding

policy is set at 1x the

shareholding requirement

(200%), or the number of shares

actually held, at leaving,

whichever is lower, for two years.

Requirement applies to any

shares held, including shares

acquired from the executive

director’s own funds, and any

vested shares subject to a

holding period.

The policy applies only to shares

acquired after the date on which

the 2020 Remuneration Policy

was introduced (30 April 2020).

Not applicable. Two-year post-cessation holding

period.

Directors’ Remuneration Report continued

International Personal Finance plc116

Directors’ Report

Annual Directors’ Remuneration Report 2023

Remuneration principles and alignment with strategy

As explained in the Chair’s opening statement on page 110,

our Remuneration Framework is intended to strike an

appropriate balance between fixed and variable pay

components, and to provide a clear link between pay

and key strategic priorities. For example:

– profitable growth is recognised via the structure

and operation of our annual bonus plan, which

carries an 80% weighting on financial metrics;

– delivery of sustainable organisational performance and

shareholder value is reflected in a progressive dividend policy,

which underpins our Restricted Share Plan (see page 116),

and has a three-year vesting period coupled with two-year

post-vesting holding requirements; and

– our commitment to building a better world through financial

inclusion is reflected in the adoption of appropriate ESG

metrics in the 2023 annual bonus, and reflects issues

of direct importance to our key stakeholders, including

our shareholders.

Remuneration governance

The Committee met four times in 2023, with consideration given to a range of issues as illustrated below:

Governance Annual bonus Share plan

Salary

Wider

Workforce ShareholderPolicy

Directors’

Remuneration

Report Design Performance Grant Performance

January

February

April

December

The Chief Executive Officer, Chief Human Resources Officer and Group Head of Reward attended meetings by invitation, to

provide advice and respond to questions. Other members of management may attend by invitation. All such attendees are

excluded when any matter concerning their own remuneration and performance is under discussion.

Advisor to the Committee

Willis Towers Watson, appointed in April 2016, provides independent remuneration advice to the Committee. During 2023, total

fees in respect of advice to the Committee (based on time and materials) totalled £40,500 (excluding VAT), (2022: £48,071).

Willis Towers Watson is a founding member of the Remuneration Consultants Group and is a signatory to, and abides by, the

Remuneration Consultants Group Code of Conduct. Further details can be found at www.remunerationconsultantsgroup.com.

The Committee is satisfied that the advice it receives is objective and independent, and that Willis Towers Watson does not have

any connections with the Company or any of the directors that may impair its independence.

Service agreements for executive directors

Copies of the service agreements of the Executive Directors and the Letters of Appointment of the Non-Executive Directors are

available for inspection at the Company’s registered office during normal business hours. All directors will retire at this year’s AGM

and submit themselves for re-election by shareholders at the AGM on 2 May 2024. Gerard Ryan and Gary Thompson have service

agreements which provide for a notice period of 12 months and 6 months respectively. Non-executive Directors do not have

service agreements as they have Letters of Appointment instead.

Executive director Date of service agreement Duration of service agreement

Gerald Ryan January 2012 No fixed term

Gary Thompson April 2022 No fixed term

Annual Report and Financial Statements 2023 117

Single figure of total remuneration (audited information)

The following table sets out the single figure of total remuneration for directors for the financial years 2022 and 2023.

Salary/Fees

£000

Benefits

£000

Bonus

£000

LTIP

£000

Pension

£000

Total £000

(A, B, C, D, E)

Total fixed

remuneration

£000

(A, B, E)

Total variable

remuneration

£000

(C, D)

2023 2022 2023 2022 2023 2022 2023

2022

2023 2022 2023 2022 2023 2022 2023 2022

Executive directors

Gerard Ryan

581 560 53 25 755 713 967 13 61 98 2,417 1,409 695 683 1,722 726

Gary Thompson

337 242 23 15 438 309 – – 37 18 835 584 397 275 438 309

Non-executive directors

Stuart Sinclair 200 200 – – – – – – – – 200 200 200 200 – –

Deborah Davis

65 65 – – – – – – – – 65 65 65 65 – –

Richard Holmes

88 90 – – – – – – – – 88 90 88 90 – –

Katrina Cliffe

57 23 – – – – – – – – 57 23 57 23 – –

Aileen Wallace

57 – – – – – – – – – 57 – 57 – – –

1. Bonus payable in respect of the financial year including any deferral element at face value, at date of award.

2. The value of the awards included in the table for 2023 relates to the PSP award granted in 2021, the performance period for which is the three financial years

ending 31 December 2023. The awards have been valued according to an estimate based on expected vesting and the 1-month average share price to

31 January 2024.

3. The value of the awards included in the table for 2022 has been reviewed to reflect the actual value of awards at date of vesting and any dividend

equivalents received in 2023 when the awards became exercisable. Due to rounding, the revised value has not resulted in a change to the total for 2022.

4. In accordance with Company policy, the benefits for Gerard Ryan in 2023 include additional costs of £27,000 related to expenses associated with an

extended period of business travel for which the Board agreed it was appropriate for his wife to accompany him. All costs associated with her travel were

borne by the Company.

5. Amounts shown for 2022 reflect the fact that Gary Thompson joined the Company with effect from 4 April 2022.

6. Deborah Davis was paid a fee of £10,000 in her capacity as Chair of the Remuneration Committee, in addition to her base fee of £55,000.

7. Richard Holmes stood down as Senior Independent Director on 1 December 2023 and received pro rata fees of £18,000, in addition to fees of £15,000 in his

capacity as Chair of the Audit and Risk Committee and his basic fee of £55,000.

8. Katrina Cliffe was appointed to the role of Senior Independent Director on 1 December 2023 and received pro rata fees in respect of the additional role, in

addition to her base fee of £55,000.

9. Aileen Wallace was paid a base fee of £55,000, in addition to pro rata fees from December 2022 when she was appointed, as non-executive directors are

paid in arrears, no payment was made during 2022.

Directors’ Remuneration Report continued

International Personal Finance plc118

Directors’ Report

Additional disclosures for the single figure of total remuneration

Base salary

The base salary of the Chief Executive Officer increased by 5% in 2023 to £587,633, in line with the typical annual salary increase of

the wider UK workforce.

The base salary of the Chief Financial Officer increased by 5% in 2023 to £341,250, in line with the typical annual salary increase of

the wider UK workforce.

Benefits

The benefits provided to the executive directors in 2023 included: private healthcare, life assurance, annual medical cover,

long-term disability cover, and a cash allowance in lieu of a company car. Gerard Ryan’s benefits in 2023 also include additional

costs of £27,000 related to expenses associated with an extended period of business travel for which the Board agreed it was

appropriate for his wife to accompany him. All costs associated with her travel were borne by the Company.

Determination of 2023 annual bonus

The maximum bonus opportunity for the Chief Executive Officer and Chief Financial Officer was 130% of salary, with 50% of the

maximum for on-target performance. During 2023, a balanced scorecard approach was used to ascertain annual bonus

outcomes whereby:

– 80% of total bonus opportunity was subject to achieving the profit before tax (PBT) element; and

– the remaining 20% of the bonus opportunity was subject to the achievement of personal objectives.

Qualifiers for the 2023 annual bonus were:

– for any bonus to be payable, the Group must first achieve the PBT threshold figure.

Group bonus targets

Group bonus targets were set considering the Company’s operating budget. Targets were designed to be stretching in support of

the Company’s strategic objectives, and to focus on metrics and personal targets that would deliver in line with this strategy, as

well as stretching and motivating participants. Bonus targets for the executive directors for 2023 were as follows:

Metric

Weighting in

Scheme Threshold Target Stretch Achievement

Bonus

payment % of

bonusable

base salary

Financial

Group PBT 80% £75.6m £78.4m £83.9m £83.9m 104%

1. Straight line between each point.

The Committee uses the annual bonus to focus on short-term targets that the Board agrees each year consistent with the Group’s

strategy and on individual performance against personal targets. Performance is assessed over each calendar year and at the

start of the following year. The Committee retains the right to exercise its judgement to adjust the formulaic bonus outcomes, to

ensure the final bonus outcome for executive directors reflects the broader performance of the Group and the experience of our

employees and shareholders over the reported year.

In 2023, the Group delivered a strong financial performance, with profit before tax up 8.4% year on year to £83.9m. In addition to

this improvement in profit before tax, each executive director performed exceptionally well against their personal objectives as

summarised on pages 120 and 121. As a result the Committee did not apply any discretion to the formulaic bonus outcomes.

Annual Report and Financial Statements 2023 119

Personal objectives

The following tables explain the objectives that were set for each executive director in 2023 and achievement against them.

Key

Criteria met

Criteria partially met

Criteria not met

Directors’ Remuneration Report continued

Gerard Ryan – Chief Executive Officer

Category Objective Weighting Results Achievement

Continue to

embed our

purpose within

the Group

– Ensure inclusion is at the heart

of our purpose.

– Align our ESG aspirations to

our purpose.

25%

– Building a better world through financial inclusion has

become part of the fabric of our business and is evident

in what we do on a day-to-day basis.

– The Global People Survey results confirmed that purpose

has been cascaded successfully throughout the

organisation.

– The Board approved our Responsible Business Framework

and ESG strategy - including short-, medium- and

long-term goals. ESG management information was

established and produced quarterly enabling regular

updates to the Board on ESG strategy progress.

– We revised guidelines and standards across a range of

key ESG issues including climate change, sustainability,

human rights, anti-corruption, and

modern slavery.

– Purpose and ESG objectives have been created for all

senior management in 2024.

Evolve the

Group strategy

– Evolve the next iteration of the

Group’s strategy, ensuring it is

clearly aligned to our purpose.

25%

– Our strategy has been articulated to reflect the Group’s

advancement to a more modern, multi-product,

multi-channel and digitally enabled business. It is

captured through our Next Gen strategy which sets out

a clear plan to become the leading provider of financial

services to underserved communities around the world.

Our Next Gen strategy has been communicated to

colleagues and is resonating well.

– We have created an operating rhythm to track the

progress of strategy delivery.

Develop better

choices and

experiences for

our customers

– Focus on innovation to drive

increased choice and

improved experiences for

our customers.

– Execute the rollout of credit

cards in Poland.

– Develop a thriving retail

partnership model.

25%

– Our Think Customer programme is established and

driving product and service innovation.

– The rollout of our Polish credit card has progressed very

well and is proving to be very popular with customers.

– Our retail partnerships model is now established, and we

are providing access to finance for consumers at the

point of sale in Romania and Mexico.

Develop our

people and

organisational

capability

– Determine a new vision and

strategy for IT and marketing.

– Ensure that we have the

required capability to take the

business forward and that

colleagues are fully engaged

in our purpose and strategy.

25%

– New Group Chief Marketing Officer and Group Chief

Information Officer recruited successfully, and delivering

very positive impacts across the business.

– A Group-wide IT strategy was approved by the Board and

execution is underway – including strategic adoption of

AI in value-adding areas.

– Exceptional results from our Global People Survey

demonstrate clear engagement from colleagues around

our purpose and IPF being a great place to work.

International Personal Finance plc120

Directors’ Report

Gary Thompson – Chief Financial Officer

Category Objective Weighting Results Achievement

Ensure that the

business

operates with

strong financial

discipline

– Ensure the long-term financial

health of the Group through

rigorous application of the

financial model.

– Diversify funding sources for

the Group.

– Maximise the value of the

Group’s strategic investments

and demonstrate use of data

in decision-making.

– Ensure delivery of cost

efficiencies in 2023.

25%

– Our financial model continues to be a central pillar of our

operations and is considered in all investment decisions

and budgets. All KPIs progressed towards our target

ranges in 2023.

– We successfully extended the Group’s debt facilities in

2023 by £50m more than our original target and have

significant headroom to fund growth.

– We deployed a refreshed commercial approach to

pricing that balances business performance, customer

outcomes, competitiveness, and relevant regulations.

– We improved our cost-income ratio by 3.9 ppts to 57%.

– We delivered a tax rate of 38% for the year, down

from 40%.

Develop a clear

strategy for

shareholder

value creation

– Develop and embed a

framework for linking business

performance to the creation of

shareholder value.

– Enhance investor

communication to attract new

shareholders and retain

existing major shareholders.

25%

– We developed and rolled out a robust capital

expenditure framework to ensure that capital is deployed

only when it meets minimum returns criteria.

– We upgraded our approach to communication with

investors, to enable a better understanding of the Group.

– We have established one new entrant in our top ten

shareholder register.

– IPF was one of the top performing shares in the FTSE

in 2023.

Continue to

embed our

purpose within

the Group

– Continue to embed purpose

into business interactions,

decisions, and our internal

and external dialogue.

– Enhance ESG reporting and

transparency in the Group's

disclosures.

– Ensure responsible and

sustainable practices

throughout the supply chain.

25%

– We enhanced reporting of ESG matters, including TCFD

disclosures, and embedded ESG considerations into our

investor communications.

– We ensured the creation and delivery of our strategy for

sustainable procurement and focus on combatting

modern slavery, and we have ensured that supply chain

practices reflect ethical requirements.

– We created and obtained Board approval for our

Responsible Business Framework including short-,

medium- and long-term goals.

Develop our

people and

organisational

capability

– Invest in our people, build a

talented successor pipeline,

and improve our finance

function capability.

25%

– We upgraded the talent pipeline in the finance function

through targeted acquisition, organisation design and

internal development.

– We developed a new operating rhythm around

customer representative effectiveness to drive top

and bottom-line performance.

– We ensured the requisite budget was put in place to

enable 500+ training programmes to be delivered to over

21,000 colleagues.

Having reviewed the executive directors’ performance against their personal objectives, and in the context of the progress

made by the Group in 2023, the Committee determined that each executive director met all of his objectives. Consequently, the

bonus payout in respect of personal objectives is 26% for both the Chief Executive Officer and the Chief Financial Officer.

Key

Criteria met

Criteria partially met

Criteria not met

Annual Report and Financial Statements 2023 121

Bonus outcomes for 2023

For the year ending 31 December 2023, the Committee awarded bonuses to the executive directors as follows.

Name

Financial objectives

– achievement as %

of bonusable base

salary

Personal objectives

– achievement as %

of bonusable base

salary

Cash bonus

£000

DSP – face value of

shares due to vest

in 2027

£000

Total value of 2023

annual bonus

£000

Cash and DSP

shares awarded as

a % of maximum

available bonus

Gerard Ryan

104% 26% £566.12 £188.70 £754.82 100%

Gary Thompson 104% 26% £219.17 £219.17 £438.34 100%

1. Gerard Ryan has met the executive director shareholding requirement in 2023, therefore 25%, rather than 50%, of bonus is deferred in line with policy.

In accordance with the 2023 Policy, bonus is payable 50% in cash and up to 50% in deferred shares until the executive director

has met the shareholding requirement of 200% of salary at which time 25% of the total bonus is deferred on the same basis.

The deferred element will vest at the end of a three-year period, subject to the executive director not being dismissed for

misconduct. There are also provisions for clawback with respect to the cash element of the bonus, and malus and clawback

with respect to the deferred element of bonus.

Pension

The Company has two pension schemes, the International Personal Finance plc Pension Scheme (the pension scheme),

closed to future accrual, and the International Personal Finance Workplace Pension Scheme (the WPP).

The Company contribution rate for the Chief Executive Officer and the Chief Financial Officer is 12% of base salary (10.5% net).

These contribution rates are in line with the wider workforce. At the discretion of the Committee, this may be paid wholly, or in part,

as a cash allowance, net of employer’s NI contributions.

The Company’s contributions in respect of Gerard Ryan during 2023 amounted to £61,245, all of which was paid as a cash

allowance. The Company’s contributions in respect of Gary Thompson during 2023 amounted to £36,869, of which £26,036 was

paid as a cash allowance.

Long-term incentives

Awards estimated to vest during 2024 (included in 2023 single figure)

The LTIP amount included in the 2023 single figure table relates to the PSP awards granted in March 2021. The performance

achieved against the performance targets is shown below:

PSP

Performance Condition Weighting Threshold Maximum Achieved

Projected

vesting

Absolute TSR performance

50% 30% 60% 116% 100%

Cumulative EPS growth 25% 45.1 pence 54.8 pence 59.0 pence 100%

Net revenue growth 25% 11.60% 14.10% 14.20% 100%

Total    100%

1. Based on TSR from 1 January 2021 and 31 December 2023.

Awards granted in 2023

Executive directors were granted long-term incentive plan awards structured as RSP conditional awards in May 2023, in line

with the 2023 Remuneration Policy. The resulting number of RSP conditional awards and associated performance underpins

are set out below.

Name

Number of RSP

conditional

awards

Face value

Percentageof

base salary

End of performance

period

Performance

underpin

Gerard Ryan 481,338 £470,106 80% 31 December 2025

Adherence to the Group’s dividend policy

and a further basket of underpin factors

for the relevant three-year vesting period

(see page 116)

Gary Thompson 279,523 £273,000 80% 31 December 2025

Adherence to the Group’s dividend policy

and a further basket of underpin factors

for the relevant three-year vesting period

(see page 116)

1. The face value was calculated using the mid-market closing price for the day preceding the date of grant, being 98 pence per share.

Directors’ Remuneration Report continued

International Personal Finance plc122

Directors’ Report

DSP

In 2023, half the annual bonus award earned by the Chief Executive Officer and Chief Financial Officer in respect of 2022 was

deferred into shares. There are no further performance conditions attached to the vesting of the deferred shares. The following

table sets out details of awards of nil-cost options made in the year under the DSP:

Date of award

Face value

Gerard Ryan 3 April 2023 £356,600

Gary Thompson 3 April 2023 £154,276

1. The face value was calculated using the mid-market closing price for the day preceding the date of grant, being 98 pence per share.

Save As You Earn (SAYE)

UK-based executive directors are entitled to participate in the Company’s all-employee SAYE plan. The executive directors did not

participate in the plan, therefore no options were granted to them under the plan in 2023.

Loss of office payments

No loss of office payments were made in 2023.

Payments to past directors

As previously disclosed in the 2021 Annual Report and Financial Statements, the Committee determined Justin Lockwood a good

leaver at the time he ceased employment as Chief Financial Officer on 23 July 2021. Mr Lockwood’s 2021 PSP award was subject

to achievement of the performance targets outlined on page 122 and pro rated for time served during the performance period.

As the performance targets were achieved in full, the pro rated number of shares vesting is 51,513. The shares will be subject to a

two-year holding period.

Annual percentage change in the remuneration of directors and employees

The table below shows how the percentage change in each director’s salary, benefits and bonus compared with the average

percentage change in each of those components for employees, on a full-time equivalent basis. The table will build over time to

show five years’ data. Leavers during the year are excluded.

2020 vs. 2019 2021 vs. 2020 2022 vs. 2021 2023 vs. 2022

Percentage change in

the relevant period

Base

salary Benefits

Bonus

Base

salary Benefits

Bonus

Base

salary Benefits

Bonus

Base

salary Benefits

Bonus

Executive directors

Gerard Ryan

1% 0% -100% 0% 0% 100% 5% -1% 5% 5% 110% 6%

Gary Thompson

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Non-executive directors

Deborah Davis 0% N/A N/A 12% N/A N/A 5% N/A N/A 0% N/A N/A

Richard Holmes

N/A N/A N/A N/A N/A N/A 15% N/A N/A -2% N/A N/A

Stuart Sinclair N/A N/A N/A N/A N/A N/A 0% N/A N/A 0% N/A N/A

Katrina Cliffe

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Aileen Wallace

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Employees 1% 3% -100% -2% -2% 100% 15% 3% 1% 8% 0% -16%

1. Non-executive directors are ineligible for any benefits.

2. Non-executive directors are ineligible for any bonus.

3. Gerard Ryan’s benefits in 2023 include additional costs of £27,000 related to expenses associated with an extended period of business travel for which the

Board agreed it was appropriate for his wife to accompany him. All costs associated with her travel were borne by the Company.

4. Gary Thompson joined in April 2022 and received pro rata salary benefits and bonus in that year; therefore the percentage change is not reflective of a

normal year-on-year comparison.

5. Richard Holmes stood down from the role of Senior Independent Director on 1 December 2023 and received pro rata fees for the year in respect of that role.

As such, the percentage change is not reflective of a normal year-on-year comparison.

6. Katrina Cliffe was appointed to the Board with effect from 1 August 2022, receiving pro rata fees in 2022, and was subsequently appointed to Senior

Independent Director from 1 December 2023. As such, the percentage change is not reflective of a normal year-on-year comparison.

7. Aileen Wallace was appointed to the Board on 20 December 2022 but received no payment in 2022. As such, the percentage change is not reflective of a

normal year-on-year comparison.

Annual Report and Financial Statements 2023 123

TSR performance

The graph below compares the TSR of the Company with the companies comprising the FTSE 250 Index for the 10-year period

ended 31 December 2023. This index was chosen for comparison because it is the index in which IPF was listed originally, and to

which it continues to compare itself. TSR data is presented in tandem with Chief Executive Officer single figure total remuneration

for the same period to highlight the relationship between remuneration and shareholder returns.

TSR performance vs Chief Executive Officer single figure of total remuneration

120

160

200

TSR

£500

£1,000

£1,500

£2,000

£2,500

CEO Single Figure £ 000

31 Dec 2014 31 Dec 2015 31 Dec 2016 31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021 31 Dec 2022 31 Dec 2023

CEO single figure (£’000) International Personal Finance FTSE 250

The table below shows the corresponding Chief Executive Officer remuneration, as well as the annual variable element award

rates and long-term vesting rates against maximum over the same period:

Year Chief Executive Officer

Chief Executive

Officer single figure

of remuneration

£000

Annual bonus

payout

(as % of maximum

opportunity)

LTIP vesting

(as % of maximum

opportunity)

2023 Gerard Ryan 2,417 100.0% 100.0%

2022 Gerard Ryan 1,409 98.0% –

2021 Gerard Ryan 1,353 98.3% –

2020 Gerard Ryan 677 – –

2019 Gerard Ryan 1,260 72.3% 33.0%

2018 Gerard Ryan 1,158 98.0% –

2017 Gerard Ryan 1,130 96.6% –

2016 Gerard Ryan 838 16.0% 23.3%

2015 Gerard Ryan 1,197 45.0% 58.8%

2014 Gerard Ryan 2,172 74.2% 100.0%

Relative spend on pay

The table below shows the expenditure and percentage change in overall spend on employee remuneration and dividend:

2023

£m

2022

£m

Percentage

change

Overall expenditure on pay 198.4 168.4 18%

Dividend paid in the year 21.5 18.9 14%

1. The percentage change at a constant exchange rate is 12.7%.

Directors’ Remuneration Report continued

International Personal Finance plc124

Directors’ Report

Other directorships

Neither executive director currently holds any external directorships or external appointments.

Directors’ shareholdings and share interests (audited information)

The interests of each person who has served as a director of the Company during the year as at 31 December 2023 (together

with interests held by his or her persons closely associated) are shown in the table below. Katrina Cliffe and Aileen Wallace

are currently within the three-year period to build their shareholding. Stuart Sinclair, however, has served the Company for more

than three years and his shareholding is therefore currently below the required quantum. This will be rectified as soon as

practicable. Executive directors are required to retain half of any vested Company share plan options until the shareholding

requirement is met.

Shares held Executive directors’ interests in Company share plans

Owned

outright

Unvested and

subject to

performance

conditions

Unvested

and subject

to deferral

only

Unvested

and subject

to continued

employment

Vested but

not yet

exercisable

and subject

to continued

employment

Vested and

exercisable,

but not yet

exercised

Shareholding

required (%

salary/fee)

Shareholding

(% salary/fee)

Requirement

met

Executive directors

Gerard Ryan 1,549,411 2,470,387 741,579 – – – 200 314 Y

Gary Thompson 150,000 662,628 157,425 24,000 – – 200 52 N

Non-executive

directors

Katrina Cliffe 40,000 – – – – – 100 63 N

Deborah Davis 60,000 – – – – – 100 110 Y

Richard Holmes 275,133 – – – – – 100 468 Y

Stuart Sinclair 86,944 – – – – – 100 52 N

Aileen Wallace 21,443 – – – – – 100 46 N

1. Based on a share price of 119 pence, being the closing price on 29 December 2023 and using the non-executive directors’ base fee. Any vested but

unexercised shares are included in the shareholding requirement calculation net of tax and national insurance.

2. Executive directors are expected to acquire a beneficial shareholding over time, with 50% of all share awards vesting to be retained until the requirement

is met. Of the 1.5 million shares held by Gerard Ryan, 0.9 million were purchased outright by him using his own funds.

3. Non-executive directors are expected to acquire a beneficial shareholding equivalent to 100% of their director fee within three years of appointment.

There were no changes to these interests between 31 December 2023 and 14 March 2024, with the exception of Stuart Sinclair

who purchased 21,553 shares on 1 February 2024, and an additional 21,553 shares on 2 February 2024. Following these

purchases, Stuart's total shareholding in the Company was 130,050 shares.

No director has notified the Company of an interest in any other shares, transactions or arrangements which requires disclosure.

The current shareholding requirements for executive and non–executive directors are described in the 2023 Remuneration Policy

which can be found on pages 100 to 109 of the 2022 Annual Report and Financial Statements, available in the Investor section of

the Company website at www.ipfin.co.uk.

Executive directors’ interests in Company share plans (audited information)

Date of

award

Awards held at

31 December

2022

Awarded

in 2023

Exercised

in 2023

Lapsed /

Surrendered

in 2023

Awards held at

31 December

2023

Performance

condition

period

Market price

at date of

grant (p)

Exercise

price (p) Exercise period

Gerard

Ryan

PSP 23 Mar 21 810,185 – – – 810,185

01 Jan 2021

– 31 Dec

2023 104 –

23 Mar 2024 –

22 Mar 2031

10 Mar 22 1,178,864 – – – 1,178,864

01 Jan 2022

– 31 Dec

2024 97 –

10 Mar 2025 –

9 May 2032

RSP 10 May 23 – 481,338 – – 481,338

01 Jan 2023

– 31 Dec

2025 99 –

10 May 2026 –

09 May 2033

Deferred 28 Feb 20 119,608 – (119,608) – – – 146 1.1 –

Deferred 10 Mar 22 377,701 – – – 377,701 – 97 – –

Deferred 3 Apr 23 – 363,878 – – 363,878 – 103 – –

SAYE 30 Aug 19 20,930 – (20,930) – – – – 86

1 Nov 2022 –

31 May 2023

Total 2,507,288 845,216 (140,538) – 3,211,966

Annual Report and Financial Statements 2023 125

Date of

award

Awards held at

31 December

2022

Awarded

in 2023

Exercised

in 2023

Lapsed /

Surrendered

in 2023

Awards held at

31 December

2023

Performance

condition

period

Market price

at date of

grant (p)

Exercise

price (p) Exercise period

Gary

Thompson

PSP 05 Apr 22 383,105 – – – 383,105

01 Jan 2022

– 31 Dec

2024 106 –

05 Apr 2025 –

04 Apr 2032

RSP 10 May 23 – 279,523 – – 279,523

01 Jan 2023

– 31 Dec

2025 99 –

10 May 2026 –

09 May 2033

Deferred 03 Apr 23 – 157,425 – – 157,425 – 103 – –

SAYE 26 Aug 22 24,000 – – – 24,000 – – 75

01 Nov 2025 –

31 May 2026

Total 407,105 436,948 – – 844,053

Share dilution

The Company manages dilution rates within the standard guidelines of 10% of issued ordinary share capital in respect of the

all-employee share plan and 5% in respect of discretionary plans.

Shareholder voting

The table below summarises the total voting outcomes at the 2023 AGM, including the percentage of total votes cast and number

of votes withheld:

AGM Votes for Votes against Withheld

2023 Annual Remuneration Report 143,779,893 77.05% 42,827,128 22.95% 247,993

2023 Directors’ Remuneration Policy 185,597,585 99.33% 1,246,936 0.67% 10,493

1. Votes withheld are not counted in the votes for or against a resolution but would be considered by the Committee in the event of a significant number of

votes being withheld.

Statement of Remuneration Policy implementation for 2024

The base salary for the Chief Executive Officer will increase by 4.5% to £614,076.

The base salary for the Chief Financial Officer will increase by 4.5% to £356,606.

Maximum bonus opportunity will be 130% of base salary (on target 50% of maximum), in line with the 2023 Policy, with

performance measures weighted 80% financial and strategic and 20% personal, also in line with the 2023 Policy. Annual bonus

targets are not disclosed on a forward–looking basis because they are considered by the Board to be commercially sensitive but

will continue to be disclosed retrospectively to ensure transparency.

The Committee expects to make 2024 RSP awards prior to the 2024 AGM in accordance with the 2023 Remuneration Policy;

awards will be at 80% of base salary for the Chief Executive Officer and 80% for the Chief Financial Officer, in line with the 2023

Remuneration Policy.

The central, quantifiable financial underpin for 2024 RSP awards will be adherence to IPF’s dividend policy throughout the vesting

period of the RSP grant. To ensure a robust assessment, the Committee will consider a further basket of underpin factors at the end

of the three-year vesting period, as follows:

1. the extent to which any windfall gains have arisen as a result of any marked appreciation in share price;

2. whether there have been any material sanctions or fines issued by a regulatory body (which may give rise to allocation of

individual or collective responsibility);

3. any material damage to the reputation of individual Group Companies, or the Group itself (which may give rise to allocation of

individual or collective responsibility);

4. the level of employee and customer representative engagement over the vesting period; and

5. the level of customer engagement (as measured by Net Promoter Score, our Rep Track survey or other such means as determined by

the Committee).

Approved by the Board

Deborah Davis

Chair of the Committee

14 March 2024

Directors’ Remuneration Report continued

International Personal Finance plc126

Directors’ Report

The Directors’ Report for the year ended 31 December 2023

comprises pages 84 to 130 of this report, together with the

sections of the Annual Report incorporated by reference.

In addition to the Code, we are required to comply with

the Companies Act 2006 (the Act), the Disclosure Guidance

and Transparency Rules (DTR) and the Listing Rules (LR).

Where not covered elsewhere, these requirements are

included in this section.

In accordance with DTR 4.1.5R, the Strategic Report and the

Directors’ Report together are the management report for the

purposes of DTR 4.1.8R.

The Board has taken advantage of section 414C(11) of the

Companies Act 2006 to include disclosures in the Strategic

Report including:

– An indication of likely future development in the business

of the Company (see pages 1 to 83).

– The financial position of the Group (see pages 39 to 41).

– Greenhouse gas emissions (see pages 65 to 66).

– Employee engagement and involvement (see page 96

and 42).

– Engagement with suppliers, customers and others in a

business relationship with the Company (see pages 42

to 43).

– A summary of the principal risks facing the Company

(see pages 78 to 83).

– The S172(1) statement (see pages 44).

– Information on Political Donations (see page 64).

Disclosures required under Listing Rule 9.8.4R can be found

on the following pages:

Listing Rule Topic Page

Sub-para (1) Interest capitalised Not applicable

Sub-para (2)

Publication of unaudited

financial information Not applicable

Sub-para (4) Details of long-term

incentive schemes

Not applicable

Sub-para (5)

and (6)

Waiver of emoluments

and future emoluments

by a director

Not applicable.

Sub-para (7)

and (8)

Non pre-emptive issues

of equity for cash

Not applicable.

Sub-para (9) Parent participation in a

placing by a listed

subsidiary

Not applicable.

Sub-para

(10)

Contracts of significance Not applicable.

Sub-para

(11)

Provision of services by a

controlling shareholder

Not applicable.

Sub-para

(12)

Shareholder waiver of

dividends and future

dividends

Statutory information,

page 129

Sub-para

(14)

Agreements with

controlling shareholders

Not applicable.

Articles of Association (Articles)

The Articles may only be amended by a special resolution at a

general meeting of the shareholders. The Articles are available

on our website at www.ipfin.co.uk or direct from Companies

House, UK.

At the 2024 annual general meeting (“AGM”), we will propose

to shareholders to amend the current Articles. The Articles

have not been updated since 2014 and to ensure that they

continue to reflect current and best practice a number of

amendments are being proposed to shareholders. Further

details on the proposed amendments can be found in the

separate notice of meeting.

Appointment and replacement of directors

The Articles provide that the Company may, by ordinary

resolution at a general meeting, appoint any person to act as

a director, provided that written notice is given of the intention

to propose such person and that the Company receives

written confirmation of that person’s willingness to act as

director if he or she has not been recommended by the

Board. The Articles also empower the Board to appoint

as a director any person who is willing to act as such.

The maximum number of directors under the Articles is fifteen.

The Articles provide that, at every annual general meeting,

the following directors must retire: (i) any director appointed

by the Board since the Company’s previous annual general

meeting; (ii) any director who has held office at the time of the

Company’s two preceding annual general meetings and who

did not retire at either of them; and (iii) any director who has

held office with the Company (other than employment or

executive office) for a continuous period of nine years or

more at the date of the meeting.

The Articles further provide that the Company may, in addition

to any powers of removal conferred by law, by special

resolution remove any director before the expiration of his or

her period of office. The Articles also set out the circumstances

in which a director shall vacate office.

Commitment

The Chair and the non-executive directors should have

sufficient time to fulfil their duties and directors’ other

commitments are kept under review to ensure that

they have sufficient time to dedicate to the business.

As part of our annual review of responsibilities,

the Nominations and Governance Committee considered

the time non-executive directors are required to give

to their roles. The Committee was satisfied that each director

continues to contribute the time required to fulfil their duties

to the Company and its shareholders. Based upon the

evaluation of the Board, its Committees and the continued

effective performance of individual directors, the Nominations

and Governance Committee reported to the Board that, in the

Committee’s view, each of the individuals putting themselves

forward for re-election met the required standard for their

appointment to be recommended at the 2024 AGM.

In line with the Code, non-executive directors are required

to seek Board approval prior to taking on any additional

appointments following recommendation from the

Nominations and Governance Committee. Further details

on additional appointments can be found on page 101.

In reviewing such appointments the Committee reviews the

total time commitment which an additional time commitment

would create and whether the proposed appointment would

create conflict of interest.

Statutory information

Annual Report and Financial Statements 2023 127

Development

The Board recognises the importance of ongoing training for

the directors. As well as a dedicated annual Board training

session, all directors are given the opportunity to update their

skills and knowledge on a regular basis and new directors are

provided with a tailored induction programme. See page 99

for a case study of Aileen Wallace’s induction. The non-

executive directors also undertake to keep themselves briefed

and informed about current issues and to deepen their

understanding of the business. Any individual development

needs are discussed with the directors on an ad-hoc basis

and at their annual performance evaluation. Board training

received during the year included:

– an overview of the product innovation roadmap in the

context of external developments;

– an overview of the mobile wallet product in IPF Digital;

– an overview of purchase finance, lending process

automation and digital marketing in IPF Digital; and

– an explanation of political and regulatory developments in

the markets in which the Group operates.

The Board visited Warsaw in Poland for its October Board

meeting, which included visiting a branch and attending

customer visits. Further detail on Board training can be found

on page 109.

All directors are able to consult with the Company Secretary,

who also updates the Board on corporate governance

developments. The appointment and removal of the Company

Secretary is a matter for the Board. The Company Secretary

acts as Secretary to the Board and its Committees. Any

director may take independent professional advice at the

Company’s expense relating to the performance of their duties

in line with the access to independent advice policy overseen

by the Nominations and Governance Committee.

If directors have concerns about the running of the Company,

which cannot be resolved, their concerns are recorded in the

Board minutes. No such concerns were raised during the

period under review.

Effectiveness review

Towards the end of 2023, an effectiveness assessment of the

performance of the Board, its Committees and the directors

was carried out. The Board directors and Committee

attendees completed a questionnaire, the results of which

were collated, reviewed and presented for discussion at the

January 2024 Board meeting. An analysis of compliance with

the Matters Reserved to the Board and Terms of Reference was

also completed as part of the effectiveness review. Further

details on the board effectiveness review process and the

principal outcomes of the review can be found in the

Nominations and Governance Committee report on page 102.

Election or re-election of directors

All directors are subject to election or re-election at the AGM,

in accordance with the Code. All directors will seek re-election

at our AGM on 2 May 2024. Details of the directors can be

found on pages 86 and 87.

Shares in issue

As at 31 December 2023, the issued share capital was

234,244,437 ordinary shares of 10 pence each of which

10,094,838 are held as treasury shares for the purpose of

satisfying options under the Group’s share option plans.

Details of share capital are shown in note 29 to the

Financial Statements.

Share class rights

The share class rights, which are set out in the Company’s

Articles, are summarised as follows. The ordinary shares are

listed on the London Stock Exchange.

Restrictions on shareholders’ rights

Any share may have rights attached to it as the Company may

decide by ordinary resolution or the Board may decide, if no

such resolution has been passed. Such rights and restrictions

shall apply to the relevant shares as if the same were set out in

the Articles.

Restrictions on transfer of shares and limitations

on holdings

There are no restrictions on the transfer or limitations on the

holding of ordinary shares other than under the Articles or

under restrictions imposed by law or regulation. The Articles

set out the directors’ rights of refusal to effect a transfer

of any share.

Interest in voting rights

As at 31 December 2023, we had been notified, pursuant to

DTR 5.1.2, of the following interests in voting rights in our issued

share capital. The information provided below was correct at

the date of notification; however, the date of receipt may not

have been within the current financial year. It should be noted

that these holdings are likely to have changed since the

Company was notified. A notification of any change is not

required until the next notifiable threshold is crossed.

Name Date notified

% of issued

share capital

Aberforth Partners LLP 21/12/2023 13.61

abrdn (Standard Life)/

Standard Life Aberdeen plc 17/11/2023 10.00

Marathon Asset Management LLP 23/08/2021 8.41

Schroder Investment Mgt/

Schroders plc 08/09/2022 7.36

Pendal Group Limited 27/02/2022 6.20

FMR LLC 10/01/2018 5.28

Janus Henderson Group plc 24/03/2023 5.20

Artemis Investment

Management LLP 12/10/2021 5.04

Old Mutual Asset Managers

(UK) LTD 12/04/2010 4.88

Blackrock, Inc. 16/07/2009 4.54

BNP Paribas Investment Partners 08/07/2015 3.02

Mr Hendrik Marius van Heyst 09/11/2020 3.02

Oppenheimer Funds Inc/Baring Asset

Management Limited 20/06/2009 2.02

1. The percentage of issued share capital in the table above is based on the

Company’s issued share capital at the point of notification.

There have been no further notifications since the year end.

Statutory Information continued

International Personal Finance plc128

Directors’ Report

Voting rights

There are no restrictions on voting rights except as set out

inthe Articles. Electronic and paper proxy appointments,

andvoting instructions must be received by the Company’s

registrar not less than 48 hours before a general meeting

(orsuch shorter time as the Board may determine) and the

Board may exclude non-working days in its calculation.

TheCompany is not permitted to exercise any right in

respectof treasury shares, including any right to attend

orvoteatmeetings.

Variation of rights

This covers the rights attached to any class of shares that from

time to time may be varied either with the written consent of

the holders of not less than three-quarters in nominal value of

the issued shares of that class or with the sanction of a special

resolution passed at a separate general meeting of the

holders of those shares.

Authority to purchase own shares

At the 2023 AGM, we received shareholder authority to buy

back up to 22,274,916 of the Company’s shares until the earlier

of the conclusion of the 2024 AGM or 28 June 2024. Shares

purchased can be cancelled or held in treasury. This authority

was not exercised in 2023. A further authority to purchase our

own shares will be sought at the 2024 AGM.

Authority to issue shares

At the 2023 AGM, an ordinary resolution was passed

authorising the directors to issue new shares up to an

aggregate nominal amount of £7,424,972, representing

approximately one-third of the issued share capital of the

Company (excluding treasury shares) and allot further new

shares in the case of a rights issue only up to an aggregate

nominal amount of £7,424,972 representing approximately

a further one-third of the issued share capital. Further special

resolutions were passed to effect a disapplication of pre-

emption rights in certain circumstances.

Resolutions to renew these authorities will be proposed at the

2024 AGM. Further details can be found in the separate notice

of meeting.

Directors

Details of all persons who were directors of the Company at

any time during the financial year can be found on pages

86 to 87.

Indemnities

Our Articles permit us to indemnify our directors (or those of

any associated company) in accordance with the Act.

However, no qualifying indemnity provisions were in force in

2023 or at any time up to the date of this report. We have

appropriate directors’ and officers’ liability insurance and this

was in force when the Directors’ Report was approved.

Directors’ conflicts of interest

To take account of the Act, the directors adopted a policy

on conflicts of interest and established a register of conflicts.

The directors consider that these procedures have operated

effectively in 2023 and up to the date of this report.

Powers and proceedings of directors

The directors are responsible for the management of the

Company and may exercise all the powers of the Company,

subject to the provisions of the relevant statutes and the

Articles. The Articles contain specific provisions and restrictions

regarding the following: the Company’s powers to borrow

money; provisions relating to the appointment of directors

(subject to subsequent shareholder approval); and delegation

of powers to a director or Committees. They also provide that,

subject to certain exceptions, a director shall not vote on or be

counted in a quorum in relation to any resolution of the Board

in respect of any contract in which they have an interest which

they know is material.

Agreements on change of control

We do not have any agreements with any director or

employee that would provide compensation for loss of office

or employment resulting from a takeover.

We are not party to any significant agreements that would

take effect, alter or terminate upon a change of control

following a takeover bid, apart from:

– our bank facility agreements, which provide for

a negotiation period following a change of control

and the ability of a lender to cancel its commitment

and for outstanding amounts to become due and payable;

– our Euro Medium Term Note

programme, which entitles any

holder of a note to require us to redeem such holder’s notes

if there is a change of control

and, following such change

of control, the notes are downgraded; and

– provisions in our equity share incentive plans may cause

awards granted to directors and employees to vest

on a takeover.

1. The Euro Medium Term Note programme was established in 2010.

The following notes (listed on the London, Euronext Dublin or Nasdaq

Stockholm stock exchanges) have been issued under the programme and

are outstanding as at the date of this report: €341.2m with a 2025 maturity

and a 9.75% coupon; £80m with a 2027 maturity and a 12.00% coupon;

SEK450m Swedish krona bond with a 2024 maturity and a coupon of

three-month STIBOR plus a margin of 7.00%; PLN72m with a 2026 maturity

and a coupon of six-month WIBOR plus a margin of 8.50%; and €11.6m

with a 2026 maturity and a 11.50% coupon.

2. This provision is not applicable to the €11.6m notes with a 2026 maturity

and a 11.50% coupon.

Related party transactions

Related party transactions are set out in note 33 to the

Financial Statements.

Financial instruments

Details of the Group’s financial instruments are set out in note

22 to the Financial Statements. The information in note 22 is

incorporated by reference into, and forms part of, this

Directors’ Report.

Dividends

A final dividend of 7.2 pence per share has been proposed

bringing the full year dividend to 10.3 pence per share. Subject

to approval by shareholders at the 2024 AGM, the final

dividend will be payable on 10 May 2024 to shareholders on

the register of members on 12 April 2024. The deadline to elect

for the Dividend Reinvestment Plan (DRIP) is 19 April 2024.

Branches

The Company has a UK branch (registered number: BR021979)

of its Irish subsidiary, IPF Management Unlimited Company

(registered number: FC036891). Further information on the

Company’s subsidiaries can be found in note 13.

Annual Report and Financial Statements 2023 129

Employee benefit trust

We operate a Jersey resident employee benefit trust with an

independent trustee, Apex Financial Services (Trust Company)

Limited, to hold shares on behalf of employees pending

entitlement to them under our equity share incentive plans. All

withdrawals from the trust to UK resident employees are subject

to employee income tax and social security on vesting.

As at 31 December 2023, the trustees held 114,994 shares in

International Personal Finance plc. The trust waives its dividend

entitlement and abstains from voting at general meetings.

Any shares to be acquired through our share plans do not

have special rights and rank pari passu with the shares

already in issue.

Employee equity incentive plans

UK eligible employees are able to participate in our equity

share incentive plans, details of which are shown below.

Awards granted to the executive directors in 2023 are set out

in the Directors’ Remuneration Report on page 125 to 126.

Plan

Abbreviated

name

Eligible

participants

The IPF Deferred Share Plan DSP Executive directors

and senior managers

The International Personal

Finance plc Approved

Company Share Option Plan

CSOP Executive directors

and senior managers

The IPF Performance Share

Plan

PSP Executive directors

and senior managers

The IPF Save As You Earn Plan SAYE Executive directors

and UK employees

The International Personal

Finance plc Discretionary

Award Plan

DAP Employees other than

executive directors

The International Personal

Finance plc Restricted Share

Plan

RSP Executive directors

and senior managers

Details of outstanding awards are included in note 28 to the

Financial Statements.

External oversight

The Group’s activities in Mexico are subject to general

trade licences and under the supervision of the Consumer

Protection Agency.

Our other operations in Europe and Australia are subject

to certain licensing provisions or supervision by a financial

authority as detailed below.

European home credit

Czech Republic – operates under the supervision of the Czech

National Bank and subject to an operating licence issued by

the Czech National Bank.

Hungary – operates under the supervision of the National Bank

of Hungary and subject to an operating licence issued by the

Hungarian National Bank.

Poland – (i) as a loan institution: registered in the special

registry of the Komisja Nadzoru Finansowego (KNF), the Polish

Financial Supervision Authority, and operating under the

supervision of this body; and (ii) as a payment institution:

licensed and registered in the Small Payment Institutions

Romania - (i) as a non-banking financial institution: holding

a lending licence and registered in the Special Registry

of Credit Providers maintained and subject to supervision

by the National Bank of Romania; and (ii) as an insurance

intermediary: overseen by the Romanian Financial

Supervisory Authority.

IPF Digital

Australia – holds a credit licence issued by the Australia

Securities and Investment Commission.

Estonia – holds an e-money licence and creditor licence issued

by the Estonian Financial Supervision Authority.

Finland – in a register of credit providers maintained by the

Finnish Financial Supervision Authority.

Latvia – operates under a licence from the Consumer Rights

Protection Centre.

Lithuania – in a register of credit providers maintained by the

Bank of Lithuania.

Poland – registered in the special register of Loan Institutions

maintained by the KNF, and supervised in relation to loans

by the KNF; registered in the Payment Institutions register kept

and supervised of the KNF.

Budgetary process and financial reporting

The Board approves annually a detailed budget for the year

ahead. Actual performance against budget is monitored

regularly and reported monthly for review by the Board.

The Board requires the Group’s subsidiaries to operate

in accordance with corporate policies.

The Financial Statements for the Group are prepared by

aggregating submissions from each statutory entity. Prior to

submission to the Group finance reporting team, each country

submission is reviewed and approved by the finance director

of the relevant business. When the submissions have been

aggregated and consolidation adjustments made to remove

inter-company transactions, the consolidated result is reviewed

by the Group Financial Controller and the Chief Financial

Officer. The results are compared with the budget and prior

year figures, and any significant variances are explained.

Checklists are completed by each statutory entity and by the

Group finance reporting team to confirm that all required

controls, such as key reconciliations, have been performed

and reviewed.

The Financial Statements, which are agreed directly to the

consolidation of the Group results, are prepared by the Group

finance reporting team and reviewed by the Group Financial

Controller and the Chief Financial Officer. The supporting notes

to the Financial Statements are prepared by aggregating

submission templates from each market and combining them

with central information where applicable. The Financial

Statements and all supporting notes are reviewed, approved

and signed by the Chief Financial Officer. For further details

on our risk and internal control processes, see page 107.

Research and development activities

In accordance with The Accounts Regulations (Sch 7, para

7(1)(c)) and DTR 4.1.11 the Company undertakes certain

research and development activities, including strategic

planning, new geographic markets and M&A activity, product

development and competitor analysis and IT development.

Statutory Information continued

International Personal Finance plc130

Directors’ Report

Annual Report and Financial Statements

International Personal Finance plc presents its Annual Report and Financial Statements and its consolidated Annual Report

and Financial Statements as a single Annual Report.

Directors’ responsibilities in relation to the Financial Statements

The directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable

law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors are required

to prepare the Group Financial Statements in accordance with United Kingdom adopted International Accounting Standards (UKIAS)

and Article 4 of the International Accounting Standard (IAS) Regulation and have also chosen to prepare the Parent Company

Financial Statements under UKIASs. Under company law, the directors must not approve the Financial Statements unless they are

satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group

and the Company for that period. In preparing these Financial Statements, IAS 1 requires that directors:

– properly select and apply accounting policies;

– present information, including accounting policies, in a manner that provides relevant, reliable, comparable and

understandable information;

– provide additional disclosures when compliance with the specific requirements in UKIASs are insufficient to enable users to

understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial

performance; and

– make an assessment of the Company’s ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s

transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure

that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the

Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the

Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from

legislation in other jurisdictions.

Post-balance sheet events and future developments

There are no post-balance sheet events. Information on indications of future developments is provided in the Strategic Report.

Responsibility statement under the Disclosure and Transparency Rules

Each of the persons who is a director at the date of approval of this report (and whose name and function is set out

on pages 86 and 87 confirms to the best of his/her knowledge that:

– the Financial Statements, prepared in accordance with UKIASs, give a true and fair view of the assets, liabilities,

financial position and profit/loss of the Company and the undertakings included in the consolidation taken as a whole;

– the Strategic Report and Directors’ Report contained in this report include a fair review of the development and performance

of the business and the position of the Company and the undertakings included in the consolidation taken as a whole,

together with a description of the principal risks and uncertainties that they face; and

– the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for

shareholders to assess the Company’s position and performance, business model and strategy.

Directors’ responsibilities

Annual Report and Financial Statements 2023 131

Report review process for the Annual Report

The Board came to this view following a rigorous review process throughout the production schedule. The statements are drafted

by appropriate members of the reporting and leadership teams and co-ordinated by the Investor Relations Manager to ensure

consistency. A series of planned reviews is undertaken by the reporting team, leadership team and executive directors. In

advance of final consideration by the Board, they are reviewed by the Audit and Risk Committee.

Disclosure of information to the auditor

In the case of each person who is a director at the date of this report, it is confirmed that, so far as the director is aware, there is

no relevant audit information of which the Company’s auditor is unaware; and he/she has taken all the steps that ought to have

been taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the

Company’s auditor is aware of that information.

Going concern and viability statement

The Board statement on its adoption of the going concern basis in preparing these Financial Statements and the viability

statement concerning the assessment of the Company’s long-term prospects are given on pages 41 and 83.

The Board’s review of the system of internal control

The Board is responsible for the Group’s overall approach to risk management and internal control and, on the advice

of the Audit and Risk Committee, has reviewed the Group’s risk management and internal controls systems for the period

1 January 2023 to the date of this Annual Report and Financial Statements, and is satisfied that they are effective.

By order of the Board

Tom Crane

Company Secretary

14 March 2024

Directors’ responsibilities continued

International Personal Finance plc132

Directors’ Report

Independent Auditor’s Report to the

members of International Personal

Finance plc

Annual Report and Financial Statements 2023

133

Report on the audit of the Financial Statements

1. Opinion

In our opinion:

– the Financial Statements of International Personal Finance plc (the ‘parent company’) and its subsidiaries (the ‘Group’) give a true

and fair view of the state of the Group’s and of the parent company’s affairs as at 31 December 2023 and of the Group’s profit for

the year then ended;

– the Group Financial Statements have been properly prepared in accordance with United Kingdom adopted international

accounting standards;

– the parent company Financial Statements have been properly prepared in accordance with United Kingdom adopted

international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and

– the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the Financial Statements which comprise:

– the consolidated income statement;

– the consolidated statement of comprehensive income;

– the consolidated and parent company balance sheets;

– the consolidated and parent company statements of changes in equity;

– the consolidated cash flow statement; and

– the related notes 1 to 33.

The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted

international accounting standards and, as regards the parent company Financial Statements, as applied in accordance with the

provisions of the Companies Act 2006.

2. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities

under those standards are further described in the auditor’s responsibilities for the audit of the Financial Statements section of our report.

We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit

of the Financial Statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public

interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services

provided to the Group and parent company for the year are disclosed in note 4 to the Financial Statements. We confirm that we have

not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the parent company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Summary of our audit approach

Key audit matters The key audit matters that we identified in the current year were:

– Revenue recognition;

– Impairment of receivables; and

– Legal and regulatory matters.

Within this report, key audit matters are identified as follows:

Similar level of risk

Newly identified

Materiality The materiality that we used for the Group Financial Statements was £5.7 million which was determined on the basis of 1.1% of

net assets.

Scoping We focused our Group audit primarily on the key components based in seven locations, five of which were subject to a full audit,

with the remaining two subject to testing of specified account balances.

Significant changes

in our approach

In the prior year, we performed full scope audits of the Group’s UK components. In the current year, we reassessed their

significance at the Group-level and performed testing of specified account balances that were material. Further details are

included in section 7.1 of our report.

In the prior year, we placed reliance on the relevant controls in place over the revenue recognition, customer lending and

model impairment processes. In the current year, we did not place reliance on these controls and our audit was therefore fully

substantive. Further details are included in section 7.2 of our report.

In response to changes in the Group’s legal and regulatory environments in 2023, which impact the judgments made by

management when preparing the financial statements, we identified an additional key audit matter over ‘legal and regulatory

matters’ in the current year. Further details are included in section 5.3 of our report.

There have been no other significant changes in our audit approach from the prior year.

Annual Report and Financial Statements 2023 133

Financial Statements

Independent Auditor’s Report to the members of International Personal Finance plc continued

134

International Personal Finance plc

4. Conclusions relating to going concern

In auditing the Financial Statements, we have concluded that the directors’ use of the going concern basis of accounting in the

preparation of the Financial Statements is appropriate.

Our evaluation of the directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern basis

of accounting included:

– obtaining an understanding of the relevant controls performed at the Group level in relation to the going concern and forecasting

processes;

– assessing the availability and terms of the Group’s current and forecast financing arrangements, evaluating whether management’s

forecasts could result in a breach of banking covenants in the future;

– testing the mechanical accuracy of management’s future forecasts, and evaluating the reasonableness of assumptions made with

reference to our understanding of the Group’s performance in prior periods, and how changes in its legal, regulatory and economic

environments are expected to impact its material components;

– assessing the adequacy and completeness of stress testing performed by management with reference to the principal risks and

uncertainties described in the going concern disclosure and the contingent liabilities disclosed in note 32;

– challenging the likelihood that the reverse stress test scenario prepared by management, which resulted in the Group breaching its

banking covenants, will crystalise during the going concern period through comparing the directors’ assumptions with the Group’s

financial performance in previous periods, our understanding of the Group’s business and the economic outlook in each of its

significant components; and

– evaluating the disclosures relating to going concern, included on page 41, in order to assess their consistency with our understanding

of the Group’s forecast performance and position.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually

or collectively, may cast significant doubt on the Group’s and parent company’s ability to continue as a going concern for a period of at

least twelve months from when the Financial Statements are authorised for issue.

In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw

attention to in relation to the directors’ statement in the Financial Statements about whether the directors considered it appropriate to

adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of

this report.

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements

of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we

identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the

audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

5.1. Revenue recognition

Key audit matter

description

The Group recognises revenue on loans using the effective interest rate (“EIR”) method applicable under IFRS 9 Financial

Instruments, with revenue totalling £767.8m (2022: £645.5m) being recognised in 2023. This method involves the application of

significant judgement that is potentially susceptible to being manipulated, in particular over ensuring that early redemptions

experience and all contractual terms are reflected in management’s calculation of the EIR for each product issued.

Specifically, we identified a key audit matter around the accuracy and completeness of cash flows included in management’s

calculation of the EIR for each product, in order to ensure that evidence of early settlement behaviour, including early settlement

rebates where applicable; had been appropriately considered.

Revenue recognition is described further in the audit and risk committee’s report on page 106 and within the key sources of

estimation uncertainty note on page 153. The revenue balance for the period is disclosed in the consolidated income statement

and note 1 to the Financial Statements.

How the scope of our

audit responded to

the key audit matter

We tested the relevant controls to the revenue recognition cycle, including those performed in the component markets, and tested

the accuracy and completeness of cash flow data used in management’s revenue calculations.

We worked with our IT specialists to re-calculate a sample of product and cohort EIRs, based on an independent extract of source

data from core lending systems, and tested the mechanical accuracy of models used by management, increasing the extent of

our re-calculations and testing in response to the control deficiencies outlined in section 7.2.

We assessed the appropriateness of the directors’ key judgements used to calculate the EIR by reference to recently observable

repayments phasing and early redemption behaviour of the Group’s loan portfolios.

We also assessed whether the revenue recognition policies applied to all material loan types offered by the Group were appropriate

and in accordance with IFRS 9 and other applicable accounting standards.

Key observations

As a result of our audit testing, we found that the methodology used for calculating the EIRs is appropriate in the context of the

Group’s accounting policies and the requirements of the relevant accounting standards.

International Personal Finance plc134

Financial Statements

Annual Report and Financial Statements 2023

135

5.2. Impairment of receivables

Key audit matter

description

Determination of impairment provisions against customer receivables is highly judgemental, requiring estimates to be made

regarding the future losses that are expected to accrue on the Group’s loan portfolios. Key judgements applied include

determination of an individual loan’s probability of default, exposure at default and loss given default. These estimates are based

on a combination of historically observable repayments performance and post-model overlays made to account for emerging risks

that are not yet fully observable in the Group’s data.

Increases in inflation rates across the components in which the Group operates during 2022, coupled with the compound impact

of inflation on the price of basic goods during 2023, has led to rises in the cost of living and potentially impacted the ability of the

Group’s customers to make repayments as scheduled. This, in turn, has affected management’s estimates regarding future losses

expected to accrue on the Group’s loan portfolios, with post-mode overlays totalling £21.2m (2022: £20.7m) being recognised

as at 31 December 2023 to estimate the impacts that the rising cost of living will have on future customer repayments,

We therefore focused a key audit matter over the valuation of this post-model overlay due to the significant directors’ judgment

when valuing this overlay, as well as its materiality to the financial statements of the Group and the potential for this judgment to be

manipulated.

The key audit matter is described further in the audit and risk committee’s report on page 106 and within the key sources of

estimation uncertainty on page153. Please also see note 17 for further information.

How the scope of our

audit responded to

the key audit matter

We obtained an understanding of the relevant controls performed at a Group level, in relation to the determination of post-model

overlays. We also tested the relevant controls performed in the component markets to assess whether the cash flow data used within

the Group’s impairment models was complete and accurate.

We challenged management’s rationale for recognising a post-model overlay in the current year through analysis of recent

repayment performance, the economic outlook of the Group’s significant components and through involving our internal credit risk

and macroeconomic specialists.

In addition, we challenged the valuation of management’s cost-of-living post-model overlay, evaluating the reasonableness of

assumptions made by management and producing independent estimates using alternative data sets and professional judgment.

We also challenged whether the directors’ judgments were free from evidence of fraud or bias.

We also assessed the consistency of the directors’ estimate with third-party economic forecasts for each of the Group’s significant

components and evaluated whether the impact of credit restrictions implemented by management and the expected withdrawal

of fiscal support in certain components, had been appropriately factored into management’s analysis.

In relation to the Group’s impairment models, we involved credit risk specialists to evaluate whether the impairment provisioning

methodology was consistent with the requirements of IFRS 9 and evaluated the appropriateness of the probability of default,

exposure at default and loss given default assumptions used with reference to our understanding of recently observable

repayments performance. We also challenged the appropriateness of using historical data to predict future repayments

performance, with reference to our understanding of internal and external factors affecting the Group’s components.

We tested a sample of these assumptions from independent extracts of customer receivable data and re-performed the year-end

impairment calculations on a sample basis to confirm the mechanical accuracy of the Group’s impairment models, increasing the

extent of our re-calculations and testing in response to the IT control deficiencies outlined in section 7.2. Furthermore, in response

to these deficiencies, we performed additional analysis on the customer receivable data to evaluate whether any inappropriate

changes had been made in the current year.

Key observations As a result of our testing, we concluded that the rationale for post-model overlays proposed by management was appropriate

and that the valuations applied were reasonable.

5.3. Legal and regulatory matters

Key audit matter

description

The Group operates in a number of legal and regulatory environments, changes in which could lead to it becoming subject

to complaints, regulatory investigations or customer remediation programmes. In the current year, this has included recent

communications by the Komisja Nadzoru Finansowego (‘KNF’), the Polish Financial Supervision Authority, regarding the level

of non-interest costs that may be charged on credit cards in Poland, with a post-model overlay of £6m (2022: £nil) being

recorded against the Group’s customer receivables.

The directors have concluded that the KNF letter represents an adjusting post balance sheet event. Given the nature of

these matters, there is significant judgment involved in determining whether a provision is required to be recognised in

accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, whether any contingent liabilities are

adequately disclosed and whether the valuation of any of the Group’s assets (such as customer receivables, deferred tax

assets and intangible assets) is impacted.

The Group’s exposure to legal and regulatory matters is described further in the principal risks and uncertainties section on

page 80, within the key sources of estimation uncertainty note on page 154 and within note 32.

How the scope of our

audit responded to

the key audit matter

We challenged the directors’ conclusions regarding the recognition of a provision, or disclosure of a contingent liability, in

the context of the requirements of IAS 37. We also evaluated whether these matters impacted other areas of the financial

statements, such as the impairment of receivables, the recoverability of intangible and deferred tax assets, and going

concern assumptions.

We inspected correspondence between the Group, its regulators and external legal advisors, making direct inquiries of the

Group’s internal legal counsel to assess the consistency of the financial statements with the relevant facts. With the

involvement of internal legal specialists, we evaluated the reasonableness of advice received and relied upon by the

directors and evaluated the competence, capabilities and objectivity of management’s external advisors.

We tested the mechanical accuracy of the directors’ updated forecasts for future periods, as well as the models used to

assess the recoverability of the Group’s assets and the adjustments made to the financial statements.

We also evaluated the disclosures made in the Financial Statements to determine whether they appropriately reflected the

underlying facts and key sources of estimation uncertainty.

Key observations

As a result of our testing, we concluded that the judgments made when determining whether a provision should be

recognised, whether the valuation of any of the Group’s assets have been impacted, as well as the related disclosures in

note 32, were reasonable and consistent with the requirements of IAS 37 and IFRS 9.