Helping small
businesses win
Funding Circle Holdings plc
Annual Report and Accounts 2022
Funding Circle Holdings plc Annual Report and Accounts 2022
Small businesses are the
engine room of the
global economy.
Across the globe, SMEs aren’t given the finance they need to
grow. We’re here to change that, by making finance accessible,
quick and simple. Business owners are forward thinkers.
They’re determined. They stand up to make a difference and
work hard to make it happen. They create jobs, support local
communities and drive the economy forward.
That’swhywe care about helping them, and why we focus
100% on helping SMEs get the funding they need to win.
£bn
lent through our plat-
£.bn
loans under
management
>,
#
SME lending platform
Our story so far
We help them grow.
Contents
Strategic report
01 Highlights
02 Funding Circle at a glance
04 Why Funding Circle?
06 Chair’s statement
08 Chief Executive Officer’s statement
10 Our market
12 Technology and data
15 New products and capabilities
18 Our strategy
20 Key performance indicators
22 Our business model
24 Our people
28 Environment, social and
44 Engaging our stakeholders
47 Financial review
55 Risk management
59 Principal risks and uncertainties
70 Viability statement
Corporate governance
73 Introduction from the Chair
74 Board of Directors
76 Corporate governance report:
Key Board activity
Board effectiveness
88 Report of the Nomination Committee
91 Report of the Audit Committee
96 Report of the Risk and
98
100 Directors’ remuneration report
104 Annual report on remuneration
116 Report of the Directors
119
in respect of the financial statements
Financial statements
121 Independent auditors’ report
128 Consolidated statement of
comprehensive income
129 Consolidated balance sheet
130 Consolidated statement of changes
131 Consolidated statement of cash flows
132 Notes forming part of the consolidated
financial statements
179 Company balance sheet
180 Company statement of changes
181 Company statement of cash flows
182 Notes forming part of the Company
financial statements
190 Alternative performance measures
191
195
196 Company information
A year focused on enabling SMEs
toborrow, pay and spend
‡ £15.2 billion credit extended to more
than 135,000 SMEs across the UK
and the US since 2010
‡ SMEs accessed Funding Circle
finance through our loan product,
Marketplace offering and, in the UK,
our new product FlexiPay
‡ Continued to support SMEs through
uncertain economic environment
We continued to deliver an
unrivalled customer experience
powered by data and technology
‡ 70% of applications in the UK
receiving instant decisions
‡ Application in six minutes, decision in
as little as nine seconds and money
in borrower’s account in 24 hours
‡ Strong customer satisfaction with
Group NPS at 77 for 2022
Early execution against the three
strategic pillars of our plan
‡ Attract more businesses — through
the launch of Lending as a Service
(“LaaS”) in the US with two partners
‡ Say yes to more businesses — by
introducing super prime loans in the
US to serve lower risk customers,
and short-term loans in the UK for
younger businesses
‡ Become #1 in new products —
FlexiPay, including the beta launch
of the FlexiPay card feature to help
solve more SME problems
Resilient funding and
loanperformance
‡ Continued institutional investor
demand to fund loans – with new
forward flow agreements in the
‡ Loan returns remain robust
2022 financial performance in
linewith expectations
‡ Group: £6.8 million AEBITDA,
‡ UK Loans: £11.7 million AEBITDA,
£(3.7) million operating loss
‡ US Loans: £(3.7) million AEBITDA,
£(9.7) million operating loss
‡ Other Loans: £2.8 million AEBITDA,
£2.7 million operating profit
‡ FlexiPay: £(4.0) million AEBITDA,
£(4.0) million operating loss
Culture and diversity are
fundamental to our success
‡ 87% of Circlers would recommend
Funding Circle as a great place
‡ We maintained our highest-ever
employee engagement score of
‡ 92% of Circlers believe
‡ We launched our new value —
Obsess Over The Customer —
reinforcing our focus on the
customer across the organisation
The Strategic Report was approved by the Board on 2 March 2023.
Lisa Jacobs
Chief Executive Officer
Our performance
Operational
Originations
£.bn
2021: £2.3bn
Loans under management
£.bn
2021: £4.5bn
Highlights
Statutory financial
Total income
£.m
2021: £206.9m
£
(
.
)
m
2021: £64.1m
Alternative performance measures (APM)
AEBITDA
£.m
2021: £91.8m
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 01
Helping power
SMEs’ growth
Attract more
borrowers
Accumulate
more data
Develop better
machine learning
models
Say yes to
morebusinesses
(increased
conversion)
Greater
operating
leverage
New products
(Funding Circle
&Marketplace)
Our mission is to build the place where small businesses get
the funding they need to win.
We do this by delivering an unrivalled customer experience
powered by data and technology. Over the past decade,
SMEs in the UK can complete a lending application in minutes
and receive a lending decision in seconds, accessing funding
quickly and at an affordable rate.
To date we’ve helped over 135,000 SMEs access more than
£15 billion. This finance is helping to create jobs and power
the economy.
Our flywheel for growth
Our technology platform enables us to test, learn and adapt
more small business problems. We innovate and iterate
improvements in machine learning, technology and data.
We deliver an unrivalled
experience for small
businesses, powered
bydataand technology
>bn
data points in data
lake(Group)
x
better risk discrimination
thanbureau scores
min
application time (UK loans)
customer NPS (Group)
%
instant decision (UK loans)
.
Trustpilot score (UK)
“ We’ve taken out three term
loans with Funding Circle
and had a fantastic
experience. Thefunding
really helped us grow the
business, the application
process is quick and easy.
and since they introduced
us to FlexiPay, we love
using it.”
Nikola Southern,
Funding Circle at a glance
STRATEGIC REPORT
Funding Circle Holdings plc02
Borrow
Longer term
Spend
Daily
Pay
Monthly
United States
‡ Having entered the US
market in 2013, Funding
Circle has a material and
growing presence
‡ We’ve helped more than
40,000 businesses access
over $4 billion in finance
United Kingdom
‡ Founded in the UK in 2010,
Funding Circle is now the
leading lending platform
for SMEs
‡ We’ve helped more than
80,000 businesses access
over £11 billion in finance
What we do
Our channels
Direct
Customers come direct to
Funding Circle via our website
Partner
Customers are introduced to
Funding Circle by a third party
Broker
Customers are introduced to
Funding Circle by a broker
relationship with us
Lending as a Service
Partners leverage our lending
proposition to offer loans to
their customers
Our products
Prime loans
Business loans from £10,000
Super prime loans
A superior pricing proposition for
lower risk customers in the US
Near prime loans
Available to businesses that have
been trading for one year or
more in the UK
FlexiPay
Our new line of credit product
Marketplace
Connecting borrowers with
lenders in the market offering
Direct
Partner
Broker
LaaS
Technology platform
Data advantage
Institutional capital aggregation
Customer experience
Super prime loans
Prime loans
Near prime loans
FlexiPay
Marketplace
Where we operate
We enable small
businesses to borrow,
pay and spend
Thousands of
smallbusinesses
come to
Funding Circle
to get the funding
theyneed to win
Borrow
Longer term
Spend
Daily
Pay
Monthly
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 03
Why Funding Circle?
Funding Circle is a lending platform
where SMEs come to borrow and
institutional investors come to lend.
SMEs are a key driver of communities,
society and economies. Yet access to
the finance they need to support their
aspirations and operations is often
restricted, with SMEs making up around
half of UK and US GDP, but only a fraction
of bank lending (<2% in our markets).
For SME borrowers, Funding Circle
provides a leading-edge customer
experience (Group Net Promoter
(Trustpilot score of 4.6), delivered
through its technology, machine
learning, and data science, coupled with
a supportive human touch. Our term
loans and flexible credit solutions
continue to help customers access the
affordable funding they need to thrive,
both quickly and conveniently.
For banks, asset managers and other
institutional funding providers, supporting
SMEs is hard, due largely to the diversity
of SMEs, their wide-ranging and complex
risks, fragmented and unpredictable
data and significant credit exposure.
Our platform facilitates access to an
alternative asset class in an underserved
market, and delivers both robust and
attractive returns, as well as reduced
cost of funding for leveraged investments.
Established in the UK in 2010, and now
the leading lending platform to SMEs,
the Group also has a material and
growing presence in the US. Globally,
Funding Circle has already provided
over £15 billion of loans to c.135,000
businesses. With total addressable
markets for SME lending of >£100 billion
in the UK and >$300 billion in the US, the
opportunity is large.
Financially, we have demonstrated both
resilience and scalability through recent
cycles. We have a fee-based income
model, mainly derived from transaction
fees from borrowers (for loan
originations), servicing fees from
What makes
Funding Circle unique?
Our sustainable differentiation comes from our data and technology:
‡ A growing data
lake of over two
billion data
proprietary data
from over
applications, and
behavioural and
performance
190,000 loans
‡ Helping us to
develop and apply
ever more accurate
8th generation
‡ Leading to
lending decisions
borrower access
to finance
customer
experience
‡ While also
outperforming
traditional bureau
scores by as much
as three times, and
delivering strong
loan returns;
demonstrating a
proven platform
‡ Delivering a
competitive
advantage
%
Group Net Promoter
Score
.
Trustpilot score
c.£bn
Loans provided globally to date
>£bn
Total addressable market for
SME lending in the UK
>$bn
Total addressable market for
SME lending in the US
STRATEGIC REPORT
Funding Circle Holdings plc04
Our first sports
sponsorship
sponsorship with Premiership Rugby to increase brand
awareness and reach more potential borrowers.
support the rugby clubs and their local communities.
businesses and the entrepreneurial spirit of the players and
clubs is something that Premiership Rugby celebrates
across the league.
Funding Circle kicked off a two-year sponsorship across all
an opportunity to reach more potential borrowers and
increase consideration of Funding Circle as the place for
businesses to get the funding they need to win.
Focusing on how Funding Circle helps businesses get a
businesses, fronted by former England rugby union player
David Flatman. There will be competitions throughout the
businesses will win a business growth package including
rights at a local fixture.
Building brand
awareness
.m
Expected audience reach
over the 2022/23 season
%
of SMEs more likely to
consider Funding Circle as
Additionally, we earn investment income from
mainly legacy investments with our balance sheet
only used within strict guardrails to support our
business development.
The business is at an exciting inflection point.
fintech platform, improves profitability and returns
on equity from the strong growth opportunities
medium-term strategy, which focuses on three
‡ Attract more businesses — by extending our
lending distribution channels: including use of
embedded partner solutions and Lending as
‡ Say yes to more businesses — by improving
both SME coverage and borrower conversion:
including use of our Marketplace for lending
customer segments (such as super prime
‡ #1 in new products — leveraging the platform
through a multi-product approach, including our
FlexiPay product (line of credit and card).
Environmental, social and governance (“ESG”) and
sustainability are being further embedded into the
core of our business. With Board level oversight
and executive level ESG management incentives,
our global ESG framework is being driven by efforts
focused on four key areas:
‡
‡
‡
‡ governance and risk management.
Our strong balance sheet and conservative capital
structure allow us to fully execute our growth
strategy and to create value for all our stakeholders:
borrowers, institutional investors, communities,
governments and regulators, partners and
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 05
Chair’s statement
2022 in review
At the time of writing my annual
statement to shareholders in 2022, we
were looking forward to the return of
more normalised markets, after a
protracted period of uncertainty created
by Brexit and then the pandemic. At the
same time, I expressed concern about
that Annual Report writing time had
pivotal uncertainty for our country or
So, while elements of our markets
returned to normal with the winding
down of Covid-19-related government
support for SME financing, geopolitical
tensions instead took centre stage to
strain the macroeconomic outlook
leading to significant rises in the rate of
inflation. SMEs are often disproportionately
impacted by inflation, and their corporate
histories do not extend back to times
when inflation was the norm. It is
uncertainty that largely resulted from
the crisis in Ukraine led to hesitancy
customers as the year progressed.
In spite of the challenges, our SME
customers continued to demonstrate
their agility and resilience. In turn,
Funding Circle teams continue to work
hard to support our customers. This
community of effort and spirit has so
far resulted in low levels of default and
financial stress for our borrowers.
As a result, we have continued to
product, so our institutional investors
continue to support our model and
more are joining the community. I hope
that by the end of this period, our ability
to withstand recessionary periods and
to continue through the cycle to serve
the SMEs, which are so vital to the
success of the economy, is in no doubt.
Progressing our medium-term plan
Last year I referred to our medium-term
plan, and the enhancement of our core
strengths in term loan products through
new products and capabilities in both
the UK and the US. It is logical that with
our high Net Promoter Score, SMEs
trust and like to use Funding Circle, and
we in turn can offer more solutions to
those customers. It is equally apparent
that customers prefer a range of funding
solutions to address their short-term
needs or longer-term plans. Our plan,
starting with FlexiPay, will see our
customers not only being able to borrow
on our platform, but pay and spend too.
Another key component of our
medium-term plan is the development
of our Lending as a Service (“LaaS”)
business in the US. This embeds our
core skills in technology and credit data
into the highly fragmented US banks
sector – combining our skills with the
banks’ customer bases offers huge
potential for growth.
From a Funding Circle perspective,
these new products will not only enable
us to reach more SMEs, but also to add
incremental paths to grow our business.
It is still early days, but I am pleased
with the progress we have made to
confident that the Board is steering our
new product growth with an appropriate
balance of caution and ambition.
Thanks to the team
2022 saw a return to office life, for
some of our team for the first time
environment, my thanks go to all of our
Circlers who have helped to deliver this
set of results. Our people have shown
flexibility, creativity and resilience. They
are all dedicated and passionate about
the customer base that we support and
this dedication has again been much
economic times.
Our new CEO and the Board
This has been Lisa Jacobs’ first year
of the year there have been a number of
changes at the senior leadership levels
as Lisa has built a team around her,
including experienced new leaders of
our FlexiPay, Technology, US Loans and
Capital Markets teams. This whole
process has been one of evolution
rather than revolution and I commend
Lisa for the seamless and successful
transition that marked her first year
Samir Desai has stepped back from the
role of CEO and the Board welcomed
him as a Non-Executive Director. As one
would expect, Samir’s contribution has
been thoughtful and engaged – we have
been fortunate to draw on his expertise
and his perspectives encourage
productive discussion.
Continuing to support
SMEs and positioning
ourselves for growth
in 2023
STRATEGIC REPORT
Funding Circle Holdings plc06
History in the baking
Business partners Anna and Felix opened their first cake shop
and cafe in 2015. A Funding Circle loan is now helping them take
their business up a tier.
Anna Tyler started her career as a wedding cake designer, before
joining forces with Felix Harkness to open a cake shop and cafe
drinks and sweet treats, and at the same time give customers the
chance to watch wedding cakes being made before their eyes.
After five successful years, and despite the challenges faced
cookies, macarons and cupcakes, and expanded the
The pair’s success can be seen in the numbers, with turnover
To grow the business further, the duo recently came to Funding
Circle to secure a term loan to expand their kitchen, create more
baking for ANNA Cake Couture — watch this space!
Anna Tyler and Felix Harkness
ANNA Cake Couture
Supporting businesses
Another exciting year ahead
This is the first time since Funding
Circle went public when there are no
obvious new “known unknowns” in
The “knowns”, however, will be
challenging, especially in the UK market,
which is still forecast to be in recession
for much of the year ahead. We have
therefore prepared and planned for a
period of subdued economic activity
and we may even be in a place where
we are surprised on the upside in 2023.
I remain very optimistic in spite of the
obvious economic challenges. As we
enter a tough year for the economy, we
are in many ways stronger than ever
before. We have proven with our term
loans product that even through tough
times in the cycle it is attractive to both
borrowers and lenders. And we enter
2023 with a balanced and exciting mix
of an established, profitable business
FlexiPay and US Loans, which are really
well positioned for exciting growth.
We have a truly inspiring medium-term
plan and I am confident that 2023 will
see us continue to deliver on that plan.
Andrew Learoyd
Chair
2 March 2023
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 07
Chief Executive Ocer’s statement
2022 was my first year as Chief
Executive Officer of Funding Circle.
Having joined a decade ago (as Circler
number 42), I’ve been part of the team
of committed and passionate Circlers
building Funding Circle from a fintech
start-up to a company that has helped
more than 135,000 SMEs with over
has evolved, our mission remains the
same. We exist to help small businesses
get the funding they need to win. We do
this by delivering an unrivalled customer
experience powered by data and
technology. This has a big impact in
terms of job creation, economic growth
and tax receipts. This was why I joined
Funding Circle, and why our team of
Circlers are proud to come to work
every day.
But we’re just getting started. There are
thousands more SMEs that remain
underserved by the traditional financial
services market. In 2022, we set out
strategy, expanding the number of ways
we help small businesses win. We are
diversifying and expanding our products
and distribution channels beyond our
term loan and direct distribution. This
will enable SMEs to borrow, pay and
spend wherever they are — through
direct, intermediated and embedded
distribution channels.
Financial and operational overview
2022 was a challenging year given
We’ve been agile in responding —
ensuring that we are serving our SMEs
responsibly and delivering robust loan
returns. Importantly, we delivered
resilient loan returns and continued
In September, we set out our
expectation that Group income would
be in the range of £140—£155 million,
with positive AEBITDA. For 2022, we
reported total income of £149 million
and AEBITDA of £6.8 million. As expected,
total income was lower year on year due
to the economic environment and the
unwinding of the various government
loan schemes, which we supported
during the pandemic. Lower total income
level translated into an operating loss
net assets and cash of £284 million and
£178 million, respectively.
Market-leading technology
continues to deliver a superior
customer experience
Over the last 12 years we have innovated,
built and honed a platform to revolutionise
SME lending through our data and
technology. Our risk models are three
times better at discriminating risk than
standard bureau scores, and 70% of
decision. Our speed of lending decisions,
tailored customer propositions and
superior customer experience lead to
strong satisfaction scores and high
repeat rates among borrowers.
I’ve continued to enjoy spending time
with our borrowers this year and seeing
the impact our loans have on their
businesses. In the summer I met
borrower and founder of FlowerStation,
which celebrated its 20th anniversary
Before Christmas, I also visited Pure
Caffe — a coffee and coffee equipment
wholesaler — to learn more about the
business, and do a bit of Christmas
their stories of entrepreneurship, creativity
and resilience. Our credit products play
a small but very important part in their
stories — the fuel to their fire — whether
that is enabling their growth, or helping
them to manage their cash flow through
FlexiPay. I’d like to thank them for all
their support.
An exciting inflection point
Looking ahead, we will continue to
support the credit needs of the SMEs
we serve, through an expanded product
set, increased engagement and more
distribution channels in pursuit of
Our medium-term plan is focused around
‡ Attract more businesses:
strengthening existing distribution
channels and expanding into new
embedded and intermediated
channels to enable more businesses
‡ Say yes to more businesses: serving
more businesses through an expanded
set of personalised Funding Circle
products and further integration with
‡ Be #1 in new products: using
market-leading products.
We’ve already made good progress
executing against this strategy:
Attract more businesses – in the
Service with two financial services
in the UK, we signed our first sports
sponsorship deal with Premiership
We’re stronger than
ever before, and the
bestis yet to come
STRATEGIC REPORT
Funding Circle Holdings plc08
Rugby, to increase our brand awareness
and reach more potential borrowers.
Say yes to more businesses – in the
US, we’re offering a super prime product
UK, we now offer a near prime loan
product that also supports younger
businesses. We’ve also expanded our
Marketplace to refer businesses to other
third party lenders.
Be #1 in new products – following a
beta launch in Q4 2021, we’ve expanded
FlexiPay to new customer segments.
Engagement has been high and it
payments to date. At the end of 2022,
we beta launched our FlexiPay card,
which will enable SMEs to meet their
daily expenditure needs.
Thriving through economic
uncertainty
We expect the economic uncertainty
challenges for us and the SMEs that
We will continue to navigate this period
with agility to take advantage of
Our loan performance continues to be
stable and attractive. Both last year and
during the pandemic, we saw our SMEs
demonstrate incredible resilience. I am
confident that they will do so again.
We will maintain our core focus on
executing our medium-term strategy,
transforming our business into
something that is more important in
for our shareholders.
It’s been quite the adventure for Funding
Circle so far, but there is so much more
to come. We’re just getting started.
Thank you to all our Circlers for making
Lisa Jacobs
Chief Executive Officer
2 March 2023
Business in bloom
Grace & Thorn opened its flagship store in Hackney in 2011 with a
vision to help people see flowers differently. Today, a third Funding
Circle loan, together with a FlexiPay line of credit, is helping the
business flourish.
Business owner Nik was mesmerised by flowers and plants from a young
age. Her love for flowers began with a fiddle-leaf fig tree in the front room
a tree existed within the walls of a house rather than in a park. Tired of
seeing uninspiring rows of houseplants in plastic brown pots next to
The business initially kicked off in Nik’s living room, followed by a
main shop in Hackney, Nik also manages her studio in London Fields.
renowned for its off-beat approach to floral and plant styling. The florists
offer the community unusual, wild and abundant floral arrangements,
fresh and dried flowers, houseplants, pots and lifestyle products for
Nik was also one of the first customers to use a FlexiPay line of credit to
for events and workshops in advance, without worrying about upfront
financing. FlexiPay has also enabled the business to
focus on creative development, as the
team has more time to plan
efficiently and, ultimately, to
Nikola Southern
Grace & Thorn
Supporting businesses
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 09
Our market
UK market
SMEs: an important driver
oftheeconomy
Our customers may be small at the
individual level, but as a collective,
SMEs make a vital contribution to the
UK economy. Based on the results of
our 2022 UK SME survey, we estimate
Funding Circle’s outstanding lending
contributed £6.9 billion to UK gross
domestic product (GDP), supported
106,000 jobs and generated £1.4 billion
in tax receipts. Extrapolate these
numbers to include the wider SME
lending sector, and SMEs’ importance to
the UK economy is clear.
2022: a new set of economic challenges
The challenges of the pandemic provided
important lessons for UK SMEs, with
58% of SMEs reporting their experience
has made their businesses more resilient.
This tallies with data from the ONS
Business Insights and Conditions Survey
(BICS), which shows that businesses’
confidence of survival was ten percentage
points higher compared to H2 2021.
As the year progressed, 2022 presented
a new test for SMEs, including one that
has supplanted the pandemic as the
primary concern of smaller businesses
– increasing costs. In Q2 2022, 40%
major barrier to their businesses. The
impact of these challenges on SMEs
and their response to the threat they
pose can be broadly categorised using
the same three behaviour groups that
emerged during the pandemic:
‡ Survivors – those most
‡ Hedgers – those focused on
precautionary measures, such
‡ Thrivers – those which continued to
adapt, invest and grow their businesses.
These groups continued to respond to
2022’s challenges in different ways.
Survivors, Hedgers and Thrivers
SMEs have generally seen an
improvement in their income as the
effects of the pandemic have waned.
However, growing revenues for survivors
have largely been offset by rising costs.
This has meant some businesses,
particularly those at the smaller end of the
SME spectrum, are beginning to run their
savings down. Despite this, cash holdings
across the general SME population remain
high compared to pre-pandemic levels.
According to the ONS BICS Survey,
months’ cash reserves by the end of
2022, an increase of 2% from H2 2021.
Hedgers have typically delayed pressing
ahead with near-term investment activity
in response to the challenging economic
conditions, preferring instead to maintain
elevated cash balances and adopt a
wait-and-see approach with regards
taking action. Based on our survey
findings, 50% of SMEs said they had
paused, delayed or cancelled a business
investment in 2022 due to the macro
environment. This was mirrored by a
increase investment levels in the short
term to 22.7% in Q2 2022, down from
32.5% in Q4 2021.
As with the pandemic, a core cohort of
Thrivers remain committed to growing
their business, and medium-term
growth ambitions have remained stable.
Research by the Federation of Small
Businesses estimates two thirds of
SMEs were planning to invest in their
businesses by 2024, suggesting any
reining-in of short-term investment
activity will likely be temporary.
Overall, 2022 saw a thriver-to-hedger shift
in UK SME behaviour in response to the
economic conditions. As these pressures
recede and economic conditions
improve, this shift is likely to reverse.
SME credit conditions tightened
inthe second half of 2022
As the Bank of England base rate
increased throughout the year, SME
lenders tightened their lending criteria in
response to the economic environment.
Funding Circle was no different, with
rising interest rates and a prudent
approach to originations resulting in
fewer loans originated through the
platform than during the peak of
Government lending schemes. Even
funding was provided through Funding
Circle’s platform to SMEs located in
every corner of the UK, including
businesses located in each one of the
Small businesses have emerged from the pandemic with increased resilience,
and because of this are well-placed to navigate today’s challenging economic
environment. While for now many SMEs are adopting a wait and see approach with
regards to their immediate investment intentions, over the medium term, growth
ambitions remain largely intact.
Small businesses are
more resilient following
the pandemic
STRATEGIC REPORT
Funding Circle Holdings plc10
Funding good karma
Jeff took on US mobile app business PaperKarma in 2017.
PaperKarma is a mobile app that automatically and continuously
unsubscribes users from junk and unwanted catalogues. With over
to the app, and image recognition technology will identify the distributor
and remove them from the mailing list. The app helps users take back
control of their mailbox and cut clutter, while saving trees and positively
impacting the environment too.
features and redesign the app to drive greater conversion and revenue.
PaperKarma was introduced to Funding Circle through one of our
PaperKarma was able to continue to build and plan through uncertain
times, retaining its technology and product team throughout, and
what’s next for PaperKarma!
Jeff Treichel
PaperKarma
Supporting businesses
US market
American small business
remainoptimistic in the face
ofmarket challenges
The US economy rebounded in 2021 as
the pandemic subsided and restrictions
lifted, with GDP exceeding pre-pandemic
levels. The recovering economy has
presented US SMEs with several
challenges, including supply chain
disruptions, labour shortages, and rising
costs. Despite these tests, 2022 has
seen a record number of new US SMEs
created. This growth has been driven
and warehousing, accommodation and
food services, health care and social
assistance, and retail trade
1
.
While the interest rate outlook remains
uncertain, 2023 has started with strong
consumer demand, historically low
unemployment and easing supply
chains. While hiring remains a challenge,
SMEs are optimistic.
The rising interest rate environment has
seen some small business lenders exit
the market, and a general tightening of
credit criteria. Despite this, US borrower
demand for Funding Circle loans remains
strong and credit performance is stable.
Research suggests this demand is set
underserved by their primary bank and
are considering changing providers to a
digital alternative
2
, while 59% have
unmet funding needs
3
.
1. Economic Innovation Group.
2. Capgemini.
3. Fed Small Business.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 11
Technology and data
12+yearsof
experience
£15bn lent
toSMEs
>1m
applications
29m
businesses
inour
datalake
2bn data
points
8th
generation
UKrisk
models
Technology and data
areattheheart of our
SMElendingplatform
Our technology and data
have reinvented SME
lending. Thanks to our
platform, SMEs have been
able to secure the funding
they need to win. But we
can do more. That’s why
our platform is constantly
evolving so that it
delivers more solutions
toSMEs more quickly
andmore seamlessly.
A platform that has revolutionised
the SME lending market
Since Funding Circle was established
SMEs secure term loans. In total, over
£15 billion has been lent through our
platform and we’ve processed more
than one million applications. None of
this would have been possible were it
The above figures demonstrate the level
of demand there is among SMEs for
underserved by traditional lenders.
It is easy to see why this has been the
case. The number of SMEs is large.
Their business activities are diverse.
Their funding needs are varied.
understand these businesses is also
fragmented. This can make it difficult
models that are predictive and accurate.
The result? Banks tend to focus their
lending on larger businesses, those that
operate in specific areas and/or on their
existing customers.
Therefore, SMEs tend to experience
lengthy and bureaucratic application
processes, high decline rates and limited
loan sizes. In short, SMEs have found it
difficult to get funding.
That is until we launched our platform.
Combining technology, data and machine
learning, our platform overcomes the
issues that have historically held back
both the SME lending market and the
SMEs themselves.
Our unique capabilities are shaped by:
m
businesses
>bn
data points
Our data lake
NPS
across the UK and the US
STRATEGIC REPORT
Funding Circle Holdings plc12
Data
accumulation
Decision
engine
Data
engineering
Data
science
How our 4D system works
Data accumulation
We continue to gather a
proportion of our data from
publicly available sources.
What has changed over the
years is the ever-increasing
amount of bespoke data we
collect from our own analysis
and from our engagement
with customers. Put these two
sources together and our data
provides unique insights into
customer behaviours over
Data engineering
We’re not just data gatherers,
however. We put our data to
work so that our predictive
models can make accurate
risk decisions. All this data
therefore needs to be cleaned,
managed and maintained.
This is where our data
engineering tools and teams
come in.
Incoming data is absorbed
into our data lake in real time.
We use inputs gained from a
variety of sources such as
bank statements, financial
results and balance sheets.
The output is a digital and
structured database that is
Data science
The database is then
leveraged by our data
scientists who crunch the
numbers looking for patterns
and other insights that drive
our platform’s learning
capabilities and further
improves the accuracy of
models. As part of this
process, scenario simulation
is undertaken along with
back-testing, validation
Our latest generation models
are so advanced that they
have the capability to predict
whether a customer will
accept or reject a loan offer.
This is not just a “nice to have”
functionality, it informs
customer targeting initiatives.
Above all, however, the models
feed the decision engine.
Decision engine:
Powered by the data, the
models and the machine
learning, the decision engine
enables not only lending
decisions to be optimised
experience of the borrower
a customer journey that is
based around questions and
data that are specific to them.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 13
Technology and data continued
What our technology does
Today, we have the capability for SMEs
in the UK to receive an instant lending
decision. More than 70% of our UK
decision. Loan applications can be
made in as little as six minutes, a
decision can be received in as little as
nine seconds, and borrowers are able
Of course, it wasn’t always like this.
When we first started, we had to rely on
publicly available data. We too deployed
manual processes. But over time our
data pool has increased – today there
are 29 million businesses and over 2
billion data points in our data lake, giving
us one of the most established datasets
for a platform lender. Our technology
has evolved and grown too so that our
platform has become the increasingly
automated offering it is today, one that
is easy, fast and flexible for our customers.
We recognise, however, that there may
be applications that are more complex
than others or borrowers that may want
to discuss aspects of their application.
So, we have teams in place who add the
human touch – which when combined
with our powerful technology, data and
machine learning helps us say yes to as
many businesses as possible.
Data gathering is just the start
system is the enabler behind the Funding
Circle platform which, in a little over a
decade, has revolutionised SME lending.
It is a system that is centred around the
continual expansion of our decision
making capabilities. The more data
points we gather and the more our
technology manages and leverages the
data, the more our models learn. The
more our models learn, the more
accurate and predictive they become,
which enables us to innovate and
improve our offering further. This not
only helps attract more borrowers and
institutional investors to our platform,
but also expands our data and increases
our competitive advantage. This is what
Today, our UK platform is using 8th
generation risk models. Borrowers
benefit from having an easy, fast and
flexible experience, as evidenced by
and high repeat rates we consistently
see. Institutional investors benefit from
the positive and secure returns they
receive. Funding Circle benefits because
both borrowers and institutional investors
continue to come to us, enabling us to
grow as we help more SMEs.
And thanks to the ever-improving quality
of our data, alongside the development of
our new product capabilities, the Funding
Circle Flywheel is not only getting faster,
it is getting bigger and enabling us to
meet more borrower needs.
A platform that is evolving
todeliver more
We have achieved a lot, but there is
much more we can and want to do. In
addition to rolling out new iterations of
our risk models that are more powerful
and predictive than what came before,
we want to offer SMEs more products
that solve more of the problems they
face. We also want to continue to
improve the customer experience and
deliver the benefits of our solutions to
SMEs more quickly.
So, while 2022 saw our engineers enable
and support the roll out of our expanding
suite of FlexiPay new product features,
they also focused on projects that play
during the year, such as making
applications and SaaS providers, have
been designed to free up the time and
resources of our engineers so that they
can concentrate on further developing
our proprietary technology and software
delivery. The overarching aim is to
speed up the time it takes for the value
we create to reach our customers.
Putting more in the cloud offers other
benefits too – costs and security for
example. It allows us to be more agile so
that we are able to respond more quickly
when needed. But above all, it helps us
to focus on what we do best, delivering
proprietary technologies and solutions
to more and more SMEs.
Marketing optimisation
Predictive models lead to accurate
targeting and relevant offers; this
ensures our marketing is effective
and efficient, so we don’t waste
time, energy or money.
Increased conversion rates
predictive analysis, mean we can
say yes to more businesses.
Strong loan returns
we’re able to ensure a good return
on investment.
Long-term customer engagement
By personalising the customer
experience, we increase the
likelihood of repeat borrowing and
product use, leading to deeper and
longer-term relationships.
Together, these
processes and
components lead to:
%
of our applications receive
an instant decision
mins
application time
secs
decision time
UK loan applications
STRATEGIC REPORT
Funding Circle Holdings plc14
New products and capabilities
Our end-to-end SME lending solution for
partners is unique to the market
Marketing
‡ Data analytics
‡ Design support to identify target
market segments to drive customer
engagement through email, direct
mail, embedded application, landing
page, co-marketing and third party
customer contact
Underwriting
‡ Ten-year credit model performance
delivering attractive returns
‡ Advanced underwriting technology combines
risk models and expert human judgement
‡ Predicting future loan performance more
accurately than conventional credit scoring
Operations
‡ Optional in-house collections
and recoveries
‡ Automatic financial
Loan offer and fulfilment
‡ Fully digital loan document
delivery and execution
Funding
‡ Customers receive funding
‡ Partners generate attractive
revenue via interest income
Digital application
‡ Co-branded or white-labelled digital
application accessible via dedicated
landing page
‡ 6 minutes for borrower to complete
‡ Optional third party API integrations to
seamlessly augment customer data
Sales
‡ Customers provided a
dedicated Funding Circle
account manager
‡ One-on-one support provided
throughout the process
‡ Market leader in
Servicing
‡ Funding Circle can retain servicing
‡ Customers have access to online
portal for self-servicing
‡ Market leader in customer satisfaction
Customers
Key: l Funding Circle
l Financial institution
l Services other
providers offer
What is Lending as a Service?
Funding Circle’s offering allows financial institutions to give their
customers a fully integrated, digital end-to-end borrowing experience
without the significant investment and resources required to build or
expertise, financial institutions can quickly and easily enter the digital
lending market, offer loans to their business customers and earn
attractive interest and fee revenue.
Why institutions choose us:
‡ More than a decade’s experience originating SME lending
‡ Technology-enabled product delivers superior customer experience
with loan offers in <24 hours after document submission
‡ Minimal upfront cost or investment to launch a pilot
‡ Revenue share model drives profitability
‡ As simple as a turnkey solution to full integration
Introducing
Lending as
a Service
(
“LaaS”
)
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 15
New products and capabilities continued
FlexiPay is our new line of credit
and manage their short-term cash flow
launched FlexiPay to select customers,
allowing them to pay invoices, bills and
other business costs and repay over
up FlexiPay to a much broader base of
existing and new customers, and at the
end of the year we went on to beta
launch our FlexiPay card. The card is
another way for customers to use their
FlexiPay line of credit, helping them to
pay for everyday business expenses
and make purchases.
Funding Circle is becoming the
multi-product company we set out to
build, one that enables businesses to
not only borrow, but pay and spend as
well. Our term loan product covers the
make a longer-term investment in their
business. FlexiPay now gives customers
the ability to access credit to pay and
spend too.
Transforming into a
multi-product lending platform
for small businesses
Introducing FlexiPay
FlexiPay is a line of credit that allows
businesses to make purchases and
then spread the cost over three
monthly instalments. It’s designed to
give businesses access to short-term
cash flow when it’s needed, allowing
deal with late payments or supply
Customers can apply in minutes and
receive an instant decision, with credit
only pay when they use it. We charge
An easy, fast, flexible product, FlexiPay
enhances our reputation for designing
finance products around the needs of
access to credit to pay, and during
use FlexiPay to spend as we expand
our FlexiPay card beta trial too.
We’ve had great success as a primarily single-product category
company offering term loans – serving more than 135,000 SMEs over
the years. We want to do the same as a multi-product company, by
solving more of the funding challenges faced by SMEs and meeting
more of their needs. To do this, we need to add new products to our
offering and we made great progress in 2022 with FlexiPay.
STRATEGIC REPORT
Funding Circle Holdings plc16
Helping businesses
managetheir cash flow
Embedded finance and partnerships
To help attract more businesses to Funding Circle, we launched our embedded finance solution, via an API, enabling
Options and Tide. We also partnered with Handepay, which directs customers to Funding Circle via a partner landing
FlexiPay solves one of our
customers’ biggest pain points
We saw strong traction and growth with FlexiPay
tripled the value of cumulative transactions made,
with a growing base of both repeat and new
customer transactions. Through 2022, we saw
accounts by the end of the year.
FlexiPay has now been used to make more than
20,000 transactions with 1.4 transactions per month
for an active customer.
Looking ahead, we know that SME business-to-business
payments represent a huge market opportunity and
we see significant growth opportunity in this space.
investment in new product features and the
expansion of our FlexiPay card beta trial.
“ FlexiPay is a brilliant idea which
willhelp bridge the gap between
supplier payments and allow me to
negotiate better with my suppliers.
Theapplication was simple and easy.”
Carl Whetstone-Veitch, Director of Advanced Joinery
FlexiPay enables SMEs to manage
their cash flow by spreading the
cost ofpayments
How does it work?
Apply online: instant decision
1
FlexiPay: pay supplier now
3
Get an approved line of credit
2
Repay over three months with
0% interest and a flat fee
4
%
of SMEs say
cashflow is their
biggest issue
Bacs research
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 17
Our strategy
We are in a strongposition
An exciting
inflection point
‡ #1 in new products: using
markets where we can develop
market-leading products.
Three core foundations
‡ Technology and data to enable
innovation at pace: investing in our
technology and ever-expanding data
lake to deliver superior customer
service and better meet the needs
‡
serving more businesses through
Funding Circle products and further
integration with third party lenders.
‡ High-performing teams executing
brilliantly: investing in our people
and our culture to make our
business stronger and deliver
Attract more businesses
enables our financial services partners
to leverage our lending proposition to
offer their own customers. Over a third
relationship with one of the thousands of
but many of these institutions are unable
partners gain a capability with high
ease of implementation, and we gain
choose us for our end-to-end,
technology-enabled capabilities, with
robust and attractive returns and ease
of implementation. We have rolled out
the proposition with new partners in
the coming years.
We are driven by our purpose to help SMEs win, because we believe
they make a big difference to people, communities and the economy.
Yet when it comes to accessing finance, a key growth enabler, they
are underserved. Our mission is to build the place where SMEs get the
funding they need to win. In 2022, to support our mission and growth
strategy we launched a new medium-term plan focused on transforming
our business into one which enables businesses to borrow, pay and spend.
Consistently
strong customer
satisfaction with
high NPS
70% of UK
applications
receiving
instantdecisions
Market leadership
position in the UK
Increase in online
adoption and new
data sources
(Open Banking)
Strong and
diverse funding
relationships
still just getting started. We know that
so far we’ve just been scratching the
surface, and we have attractive
medium-term growth opportunities.
Our medium-term plan is focused on
delivering on these through a defined
set of three strategic pillars and three
core foundations.
Three strategic pillars
‡ Attract more businesses:
strengthening existing distribution
channels and expanding into new
embedded and intermediated
channels to enable more
businesses to reach us.
‡
Funding Circle products and further
integration with third party lenders.
STRATEGIC REPORT
Funding Circle Holdings plc18
S
c
a
l
e
p
r
o
d
u
c
t
s
a
n
d
p
r
o
c
e
s
s
e
s
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f
f
i
c
i
e
n
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o
v
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a
s
t
t
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r
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s
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p
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r
i
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c
h
a
n
d
d
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t
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h
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g
h
-
p
e
r
f
o
r
m
i
n
g
t
e
a
m
s
E
x
e
c
u
t
e
b
r
i
l
l
i
a
n
t
l
y
w
i
t
h
Attract more
businesses
Say yes
tomore
businesses
#1 in new
products
In the UK, we’ve launched an API
integrate Funding Circle loans within
their own website. We also launched
Premiership Rugby. Focusing on
alongside or behind the scenes of the
Say yes to more businesses
We attract lots of businesses and want
to help as many as possible secure
funding. In 2022, we identified pockets
of businesses we could better serve and
created products to meet their needs.
In the UK, we launched a near prime
product that also supports younger
businesses. We also expanded our
Marketplace offering — which connects
our borrowers with other lenders in the
market — to deliver products beyond our
current range. In the US, we launched
super prime loans, with a superior pricing
proposition for lower risk customers.
We will continue to identify opportunities
to serve more businesses through
product expansion and personalisation,
and third party integrations to meet
borrower needs beyond our current
range — such as larger loans, asset
finance and invoice finance.
investors to the platform, delivering
sustainable sources of capital to
finance future lending. We continue
#1 in new products
In 2022, FlexiPay, our new line of credit
product that empowers SMEs to pay
and spend, continued to grow strongly.
UK customers used FlexiPay to make
expanded into new customer segments.
We beta launched our FlexiPay card
feature in Q4 2022.
We have seen strong engagement
customers so far, and we know that
represents a huge market opportunity.
2023 — including investment in new
product features and the expansion
Technology and data to enable
innovation at pace
Technology and data are at the heart
investment in technology, we aim to
continually improve our capacity to
develop high-quality products, at pace,
and execute our strategic priorities.
We will also continue to develop our
data-centric culture and invest in the
right tooling for advanced analytics.
Simultaneously, we will enhance our
automation by increasing support for
data producers and analysts, ensuring
they can curate and leverage data to
optimise value for customers.
Scalable products and processes
Our aim is to lend, service, partner and
innovate at scale for our customers.
place, so that we can deliver our core
product at scale efficiently, while
remaining agile to deliver new products
that delight customers.
These efforts will ensure we deliver our
medium-term plan with improved cost
management, increased operational
agility, enhanced predictability and greater,
more efficient scaling potential.
High-performing teams that
executebrilliantly
what makes the business stronger
every day. We value our mission-led,
we believe it is crucial to attract, retain
and develop diverse high-performing
teams that have the knowledge, skills
and capabilities to execute against our
strategy and serve our customers.
We have three core areas of focus:
‡ Building for the future: ensuring our
organisational structure works and
‡ Building skills for success: defining,
acquiring and growing the right
‡ Building the Incredible: evolving our
compelling Circler proposition to
ensure we successfully compete for
and retain top talent, with a team that
is as diverse as the borrowers and
institutional investors that we serve.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 19
Key performance indicators
Total income (£m)
£148.7m
Loans under Management (£m)
£3,743m
(Loss)/profit before tax (£m)
(£12.9m)
Originations (£m)
£1,481m
Basic (loss)/earnings pershare (p)
(2.0p)
Marketing costs (%)
29%
2021
2021
2021 2021
2021 2021
2020
2020
2020 2020
2020 2020
2022
2022
2022 2022
2022 2022
Definition
The Group generates total income
principally from: transaction fees earned
servicing fees from servicing of loans
income net of investment expense.
Definition
This represents the total value of
outstanding principal and interest
Definition
(Loss)/profit before tax is defined as
income, costs and share of(loss)/profit
of associates.
Definition
This represents the monetary value
platform or through Marketplace
referrals in any given year. This is a
future expected servicing fees and
Definition
Basic (loss)/earnings per share is
defined as the(loss)/profit for the year
attributable to ordinary equity holders
weighted average number of ordinary
shares in issue during the year.
Definition
This represents the total cost of
Links to strategy:
1
2
3
4
Links to strategy:
1
2
3
4
Links to strategy:
1
2
3
4
Links to strategy:
1
2
3
4
Links to strategy:
1
2
3
4
Links to strategy:
1
2
3
4
Financial | Statutory
Operational
148.7
3,743
(12.9)
1,481
(2.0)
29
206.9
4,457
64.1
2,296
17.4
28
222.0
4,214
(108.1)
2,742
(31.2)
30
How we measure
ourperformance
STRATEGIC REPORT
Funding Circle Holdings plc20
Adjusted EBITDA (£m)
£6.8m
Free cash flow (£m)
(£14.4m)
2021 2021
2020 2020
2022 2022
Definition
Adjusted EBITDA represents the
operating profit/(loss) before
depreciation and amortisation, share-
based payments and associated social
security costs, foreign exchange gains/
(losses) and exceptional items. This is
the principal profit measure used by
performance in the Group’s
Definition
Free cash flow represents the net
assets, property, plant and equipment,
lease payments and interest received.
securitisation financing and funding
cash flows and lines of credit cash
flows. The Directors view this as a key
liquidity measure as it represents the
net amount of cash used or generated
to operate and develop the Group’s
platform each year.
Links to strategy:
1
2
3
4
Links to strategy:
1
2
3
4
Financial | Alternative performance measures (“APMs”)
(14.4)6.8
82.891.8
15.4(63.8)
Focus areas relevant to our KPIs
1
Attract more businesses and say yes to more businesses
2
#1 in new products
3
Technology and data to enable innovation at pace
4
Scalable products and processes and high-performing teams that execute brilliantly
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 21
Our business model
Small business borrower needs
Access to affordable finance
‡ SMEs’ access to finance can be restricted
‡ SMEs account for ~50% of GDP
but <2% bank lending
Fast, convenient applications
‡ Instant automated decision in the UK for
‡ Easy online applications in the US (six minute
Supportive customer experience
‡ 77 Group net promoter score
Institutional investor needs
Access to hard-to-reach asset class through
diversified loan book of multiple smaller loans
‡ Diverse SME population
‡ Wide-ranging and complex risks
‡ Significant credit exposure
‡ Fragmented and unpredictable data
Robust and attractive returns
‡ 4-7% loan returns track record
‡ Higher future returns targeted (higher base
rate environment)
‡ Active monitoring to ensure institutional
investor diversification and performance
Creating value
throughoutthecycle
Key inputs
Attract more
borrowers
Accumulate
more data
Develop better
machine learning
models
Say yes to
morebusinesses
(increased
conversion)
Greater
operating
leverage
New products
(Funding Circle
&Marketplace)
STRATEGIC REPORT
Funding Circle Holdings plc22
Obsess over the customer
serve them, create great experiences,
and build a trusting partnership.
Think smart
Find a better way: challenge
assumptions, seek insights, and make
informed decisions.
Make it happen
Take small steps fast and deliver: be
ambitious, take accountability, see it
through with grit.
Be open
Build trust through transparency and
integrity: be honest, seek feedback,
and communicate clearly.
Stand together
We win and lose as one team: celebrate
diversity, listen actively, and support
each other.
Live the adventure
Champion our culture: show curiosity,
embrace change, and bring your
passion every day.
Borrowers
supportive customer experience.
Institutional investors
Exposure to an attractive, hard-to-access asset class
Communities
We can make a difference to people, communities and the
economy through our support of small businesses, advocacy
of charitable causes and issues related to social impact and
community engagement.
Government and regulators
A trusted and reputable company, working alongside
regulators, industry and institutions to ensure best practice.
Partners and suppliers
A dependable customer, working in partnership
Employees (Circlers)
dedicated to learning and personal growth.
Shareholders
An attractive opportunity for sustainable shareholder
Our values Stakeholder value created
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 23
Building an incredible place
toworkandlearntogether
During a year of continued uncertainty,
one which saw us emerge from the
restrictions imposed by Covid-19 over
the past two years only to be confronted
by a challenging and volatile economic
climate, our people and culture have
remained central to everything we do at
Funding Circle. As we learned during the
pandemic, we came to re-define work
as no longer just a place we go to, but a
part of our day-to-day lives. Our culture
has remained central to our success,
particularly as we embraced a hybrid
working environment.
Hybrid model, embracing flexibility
As a largely office-based company prior
to the pandemic, our ways of working
underwent a huge and significant
transformation during lockdown. While
we embraced a hybrid approach following
the end of restrictions, there was equally
some uncertainty as to how successful
this would be for us. We formally
launched our “best of both” hybrid
working model in September 2021, and
just over a year later we can say with
some certainty it is a model that works
well for our Company, and more
importantly for our Circlers.
Empowerment has been at the heart of
the model, with individual teams setting
the appropriate cadence and working
pattern that makes most sense for
them. Moreover, while Circlers have
consistently told us they really enjoy the
greater flexibility hybrid working brings,
we continue to see healthy week-to-week
attendance in our offices.
Physical workspaces and in-person
collaboration remain a key tenet to
believe we are indeed taking forward
move forward.
Incredible people,
working together
Investing in our people
During 2022, we continued to invest in
our people – growing and embedding
our learning culture across the
economic uncertainty earlier in the year,
we placed an emphasis on ensuring the
proposition we offer Circlers is as
comprehensive as possible.
Anticipating the rising cost of living, we
doubled our budget for salary increases to
try and help offset rising costs. In addition,
we undertook a comprehensive benefits
review, replacing our existing private
health insurance with a superior offering.
We introduced several initiatives, including
enhanced care leave, a new electric car
scheme and the opportunity for Circlers
earn at least the Real Living Wage.
Finally, to recognise the efforts of all our
Circlers across the organisation and to
support our people during what is an
expensive time of the year, we awarded
an end-of-year bonus to junior Circlers
globally of up to £1,000.
A new value
Our values represent how we do things
at Funding Circle. They are the linchpin
that enables us to push for more. They
are how we challenge ourselves, and
how we hold ourselves and each other
to account, as we achieve our mission.
They are firmly part of our DNA. However,
we recognise that, as we evolve, our
values need to evolve with us. Therefore
in 2022, we ran a series of focus groups
to ask our Circlers what our values
meant to them and how they saw the
values showing up in day-to-day life at
Funding Circle.
The end result was refreshed definitions
for our existing values, and the introduction
of a new customer-focused value —
Obsess Over The Customer. Almost
everything we do at Funding Circle
starts with the customer.
Circlers visiting Funding Circle borrower, Grace & Thorn
STRATEGIC REPORT
Funding Circle Holdings plc24
Our people
It therefore made sense to all of us to
bring this to life through a new value.
of borrower visits — where a small group
of Circlers visit Funding Circle borrowers
to learn more about their business.
Diversity, Equity & Inclusion (DEI)
We continue to make progress on DEI,
and are incredibly proud of our Circler-led
strategy. This year saw the establishment
of another Circler-led group, focused on
neurodiversity. We were also pleased
recommend Funding Circle as a great
and 87% feel they can bring their whole
selves to work and feel respected at
Funding Circle. We also maintained
recorded at Funding Circle).
Our employment policy and philosophy
is to provide equal opportunities for all,
including any applications from disabled
persons, and to help individuals develop
skills and secure roles relevant for them
and their career ambitions. This includes
making reasonable adjustments to
both new and existing. Our recruitment
process ensures all applications, including
those from disabled persons, are
treated equally and fairly.
DEI statement
We’re here to build the incredible at
Funding Circle. We know we can only
achieve this through an inclusive and
diverse culture where Circlers of all
backgrounds feel confident in bringing
their whole selves to work, can contribute
their ideas, and have opportunities to
nurtured. Through empowering our
people we are not only building something
incredible for our customers, but an
incredible place to work too.
We live by our Company values and
cherish our diversity, be that culture,
gender, race or ethnicity, sexual
orientation, gender identity or expression,
disability, marital status, age, nationality,
religion, or diversity of thought, belief,
experience or expression. We Stand
Together, as one.
Gender pay gap
%
2021
2021
27.1%
34%
2022
2022
30.5%
33%
2021 18.5%
2022 22.4%
Mean pay gap
Median pay gap
Women in senior leadership
All Circlers
2021:
44% Female
40%
60%
2021:
38% Female
29%
71%
2021:
30% Female
70%
30%
Gender breakdown
as at 31 December 2022
Our values
Obsess over the customer
Think smart
Make it happen
Stand together
Be open
Live the adventure
Start with the customer: work hard to
serve them, create great experiences,
and build a trusting partnership.
Find a better way: challenge
assumptions, seek insights, and
make informed decisions.
Take small steps fast and deliver:
We win and lose as one team:
celebrate diversity, listen actively,
and support each other.
Build trust through transparency and
integrity: be honest, seek feedback,
and communicate clearly.
Champion our culture: show
curiosity, embrace change, and
My visit to Grace
&Thorn provided
realinsight into the
journey of an SME
borrower, helping us
build better products
to meet their needs.”
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 25
Our Circler groups
Women @ FC
Building a community where women
connect,thrive and win
We strive to improve women’s representation
across all levels in the business by spotlighting
women’s successes and challenges and building
us drive progress and engage the wider business.
In 2022, to support and empower women, we
started tracking representation of female
presenters at all Company events and improved
from 29% of women presenters to 47% at the
Company’s bi-annual all-hands event in the UK.
Parents @ FC
Providing a supportive space and
anetworkfor working parents
In August, we welcomed 30+ little Circlers to our
UK office for a “bring your kids to work” day and
teddy bears’ picnic during the school summer
holidays. Children were entertained with party
games, painting and crafting, singing and dancing,
and plenty of food. Parents enjoyed the opportunity
to connect and meet each other’s “mini-mes” and
little Circlers had lots of fun and got to see where
Neurodiversity @ FC
Spearheading the discussion on how
neurodifferences add value, and building
theinfrastructure for an equitable and
accessible workplace
In 2022 we set up this new global group to foster
the workplace, and provide resources to educate
the wider Funding Circle community. We marked
the launch with an impactful introductory video
showcasing what neurodiversity is all about and
featuring neurodivergent famous faces. We have
since focused on building a repository of content
for Circlers to refer to including information on
ADHD, OCD, dyslexia and dyspraxia, including
personal Circler stories.
STRATEGIC REPORT
Funding Circle Holdings plc26
Our people continued
Circle of Pride
Championing inclusion for all
through an LGBTQIA+ lens by
building an open communityand
celebrating LGBTQIA+ contributions
FC Impact
Coming together and giving back
to communities in need, raising
awareness for worthy causes, and
making an impact through charity
and volunteering projects
In 2022, we wanted to make a positive
change for those in need by launching
volunteering opportunities with the
SWAT, which serve free meals to
disadvantaged communities.
Let’s Talk About Race
Educating on the experiences of minorities,
celebrating racial diversity, and creating a
safe space to continue engaging in dialogue
Every October, our Let’s Talk About Race group
celebrates Black History Month. Every Monday
through the month we shared two spotlights —
another about a black culture we celebrate in
British history. We also hosted a Black History
Month “Sip n Paint” event where we invited talented
young artists to teach Circlers to recreate artwork
that was inspired by African culture. We also
enjoyed lots of delicious Afro-Caribbean food and
drink whilst learning about Black History Month
We welcomed a lot of new starters to the
group last year, and so to celebrate we
hosted one of our biggest events in June
— a Pride Month picnic. This created an
opportunity for many people in our
community and other Circlers to meet in
person for the first time and get to know
each other better. The sun was shining
and there was lots of delicious food,
music and fun — including a pub quiz to
test our LGBTQIA+ knowledge.
We welcomed a lot of new starters to the
group last year, and so to celebrate we
hosted one of our biggest events in June
— a Pride Month picnic. This created an
opportunity for many people in our
community and other Circlers to meet in
person for the first time and get to know
each other better. The sun was shining
and there was lots of delicious food,
music and fun — including a pub quiz to
test our LGBTQIA+ knowledge.
supplies, clean and hand out clothes.
Circlers volunteered across seven
sessions throughout the year and we
raised over £32k for the charity through
a variety of internal initiatives.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 27
Environment, social and governance (“ESG”)
Delivering on
ourcommitments
ESG framework
Our ESG framework has three pillars: 1. Diversity, Equity and Inclusion (“DEI”) and social impact, 2. environment and climate change,
People — Diversity, Equity & Inclusion” on page 25.
DEI and social impact
Our vision and level
ofourcommitment
‡ To be best in class in supporting a
jobs, fostering financial inclusion,
having a positive impact and providing
opportunities, whilst having a
multiplicative effect on the
‡ To be best in class and live by our DEI
statement to build an inclusive and
diverse culture
Climate change
andenvironment
Our vision and level
ofourcommitment
‡ To support key environmental
initiatives where we can have
meaningful impact, that make sense
for Funding Circle and its customers,
and achieve a good standard of
positive environmental impact
Governance and
riskmanagement
Our vision and level
ofourcommitment
‡ To meet shareholder and investor
expectations, and be viewed positively
Achievements in 2022
‡ Partnership with Hatch to support
underserved social entrepreneurs
and mentoring
‡
for support
‡
on corporate website
‡
Achievements in 2022
‡ Achieved carbon neutrality for
‡
loan books and engaged industry
‡
powered by Earthwatch Europe for
Achievements in 2022
‡
Terms of Reference to explain
ownership of strategic initiatives
‡ Improved governance and ownership
‡ Conducted annual risk and control
‡
Goals and roadmap for 2023
‡
approach and timeframe on social
impact initiatives in line with
‡
volunteer hours through corporate
engagement partnerships
‡
Goals and roadmap for 2023
‡
‡ Deliver training to Board and senior
‡
climate-related risk scenario analysis
in accordance with Task Force on
Climate-related Financial Disclosures
‡ Develop climate-related risks and
opportunities metrics and targets
Our core mission is to help small businesses win. In delivering this mission we
want to have a positive impact in our communities and on the environment, not
only through the lending we provide to our small business customers that often
struggle to find financing, but also through sound ESG practices that are key to
achieving our mission and strategic objectives.
Goals and roadmap for 2023
‡ Achieve carbon neutrality recertification
including Qualifying Explanatory
‡
emissions into footprint measurement
‡ Begin process to consider setting
science-based targets, aligning with
STRATEGIC REPORT
Funding Circle Holdings plc28
ESG governance
Our ESG governance framework has been structured to address risks related to
ambitions that we see when engaging with our diverse stakeholders. Please also
Risk and Compliance
Committee(“RCC”)
Responsible for oversight and
including climate-related risks
Environment, Social and Governance
Committee (“ESGC”)
commitments, stakeholder engagement
FCH PLC
Board
Management Risk
Committee (“MRC”)
Responsible for
implementation and
Group CRO
Executive owner of
management
Group CEO
Executive owner
Group
GC/CPO
Executive sponsor
implementation
GLT
Responsible for establishment, implementation
Management
p
p
Regulation,
Reputation and
Conduct Risk
Committee
(“RepCon”)
for governance of
reputation and
conduct risks,
including those
Operational
Risk Committee
(“ORC”)
forum for
governance of
operational risks,
including those
Credit Risk Management
Committee (“CRMC”)
of credit risks, including those
More information
on governance
More information
on risk
Business
unit
committees
Global Head of Legal leads delivery of ESG framework, working with local
teams to support various Board, management and local ESG initiatives
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 29
Environment, social and governance (“ESG”) continued
Compliance statement
This statement of compliance and the
information provided below have been
prepared on the basis of our materiality
assessment of climate-related risks and
opportunities to the business over the
short, medium and long term, which
generally has assessed these risks and
opportunities as not being material to
the business. Further details are provided
in the following table. This assessment
will remain subject to annual review
given the complexity of the issues, the
availability and quality of data, the evolving
practices in this area, the longer-term
implications of climate change on
strategic approach to climate-related
risks and opportunities. Currently, the
risk assessment process is undertaken
review. The conclusions based on this
understanding become available. The
Company has made climate-related
financial disclosures consistent with the
TCFD recommendations for the current
reporting year, or as explained
otherwise, in the following areas:
‡ Governance: all
‡ Strategy: (a) all recommended
‡ Risk Management: all
The Company has made disclosures
that are partially consistent with the
TCFD recommendations, in the
following areas:
‡ Strategy: (b) limited disclosures are
currently provided based upon our
materiality assessment and strategic
objectives, as set forth in more detail
limited qualitative assessments in
respect of this item are disclosed,
but based on our materiality
assessment and current data
availability, we have not fully
implemented the TCFD
recommendations regarding
‡ Metrics and Targets: (a), (b) and (c)
disclosures that are partially
consistent with the TCFD
recommendations in respect of items
(a) and (b) have been provided as set
forth in the following table. In respect
of item (c) additional work is necessary
to improve data availability and
accuracy to measure these risks,
regarding methods and approaches
to manage these risks in the medium
to longer term. In the short term,
opportunities are material and
established in this regard, as set forth
in more detail in the following table.
Task Force on Climate-related
Financial Disclosures (“TCFD”)
See the following table for more
information on our plan and expected
timings to address items where only
partial disclosures have been provided,
and please see “Risk management –
Principal risks and uncertainties” on
page 59 for a description of those risks
which we believe are material.
The Company has considered the TCFD’s
Implementing the Recommendations
Financial Disclosures (2021 update),
Guidance for All Sectors and Supplemental
Guidance for the Financial Sector (in this
regard we considered the Supplemental
Guidance for Banks in regard to lending
activity, noting, however, that Funding
Circle is not a bank and does not share
many of the risks that may arise in larger
banking institutions), as well as the
Financial Conduct Authority’s Review
Listed Commercial Companies and the
Financial Reporting Council’s CRR
Thematic Review of TCFD Disclosures
and Climate in the Financial Statements.
STRATEGIC REPORT
Funding Circle Holdings plc30
Governance Disclosure Cross reference
Disclosure
level
(a) Describe the
climate-related risks
The Board retains ultimate responsibility for providing the strategic focus, support
climate-related risks and opportunities. The Board delegates certain matters related
to climate-related risks and opportunities to two Committees:
‡ the ESGC is responsible for oversight of the Group’s overall ESG strategy,
‡ the Risk and Compliance Committee is responsible for oversight of risk
management related to ESG risks, including climate-related risks.
To date, climate-related risks have been deemed as not material in the short term.
Generally, climate-related matters do not form a significant area of consideration for
the Company at this time and have not been a regular item of consideration for the
Board. Nonetheless, given the complexity, stakeholder interest, regulatory focus and
longer-term implications of the TCFD recommendations and climate change more
broadly, the Board has nominated a champion for climate-related initiatives to work
with the Global Leadership Team and other senior leaders in the business to progress
the Group’s efforts on climate-related activities. Matthew King is the Board champion
in connection with our environment and climate change initiatives, and brings
experience as a Non-Executive Director of other more resource-intensive industries
where climate change is of critical focus. More generally, the Board and the ESG
Committee have substantial and varied experience with ESG-related issues, and
climate change in particular. Within the wider Board, Eric Daniels has been on the
Advisory Board of the Smithsonian Tropical Research Institute (“STRI”) for the past ten
years. STRI is recognised as one of the premier scientific institutions in the fields of
tropical life sciences and sustainability. Eric Daniels has also been an active supporter
of the Atkinson Center for Sustainability at Cornell University. Geeta Gopalan also
currently serves as Non-Executive Director and Chair of the risk committee for Virgin
Money plc where she has gained substantial experience in respect of ESG-related risk
management, including climate-related risk in the banking sector.
To further support the Board, we have sought expert advice on our environment and
climate change strategy, provided internal and external presentations to the ESG
Committee to increase the members’ awareness and understanding of our carbon
strategy and have proposed additional training for the Board specifically focused on
climate-risks and TCFD matters to be implemented in 2023. The Board has reviewed and
approved our ESG framework and our approach to climate change and the environment.
Please also see the
“Report of the ESG
Committee” on page 98
and the “Report of the
Risk and Compliance
Committee” on page 96
for more information on
oversight of climate-
related risks and
opportunities
Full
disclosure
(b) Describe
management’s role in
assessing and managing
climate-related risks
The GLT is responsible for implementing our ESG framework’s climate-related actions,
including strategy related to opportunities and climate-risk management in line with
our Enterprise Risk Management Framework (“ERMF”). Overall executive responsibility
for ESG-related matters, including climate-related risks and opportunities, is held by
our CEO, with GLT responsibility for strategy held by the CEO and for risk management
held by the Chief Risk Officer. Day-to-day management responsibility for climate-related
risk management and strategy execution related to opportunities sits with the Global
Head of Legal and Regulatory. Any material climate-related risk issues can be escalated
to the Chief Risk Officer, the Management Risk Committee and the RCC, as applicable.
For most projects, reporting and implementation of TCFD recommendations are
handled by subject matter experts and function managers. For example, implementation
of our overall ESG programme, as well as carbon neutrality, net zero and emissions
offsets and reporting, sits with the Global Head of Legal and Regulatory, while
implementation of any climate-related risk initiatives and reporting sits with the Global
Head of Enterprise Risk. See the table titled “ESG governance” for more information.
Given the assessment of limited materiality of climate-related risks and opportunities
identified in the short term, and also the limited size and complexity of the business,
there is currently limited formalised reporting to the GLT or the Board specifically in
respect of climate-related risks and opportunities. Generally, senior managers leading
various projects have reported to the GLT periodically to set strategy, maintain
alignment on goals, report on progress and identify areas of importance. GLT members
and senior managers also periodically report progress and provide updates to the ESG
Committee, local leadership teams and the wider business. To date, climate-related
matters have not formed a significant part of financial management, and have largely
been limited to costs related to reporting, carbon footprinting and carbon offsetting.
Climate-related risks are assessed in line with our ERMF, and reviewed on an annual
basis. As described in more detail throughout this table, climate-related risks and
opportunities are currently not considered material in the short term. In light of this,
there has been limited subject matter for consideration by the MRC, the RCC or other
opportunities have been considered through a strategic review carried out in 2022 to
establish areas of focus, level of commitment and priorities. The outcome of this review
was subject to approval of the GLT and ESGC. We continue to explore some limited
commercial strategies in respect of climate-related opportunities to gain more insights
into customer preferences around green finance for our SME segment in the UK.
Please see also
— Environmental, social
and governance risk”
Full
disclosure
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 31
Strategy Disclosure Cross reference
Disclosure
level
(a) Describe the
climate-related risks
organisation has
identified over the short,
medium, and long term
The Company does not consider climate-related risks and opportunities to be material
our loans and the nature of our business as set forth in more detail in (c) below. We have
nonetheless identified relevant climate-related risks and opportunities over the short
evolve and mature. These time periods are consistent with those used in respect of other
and has been informed by a variety of information sources in consideration of both risks
feedback from internal product teams, and risk assessments in line with our ERMF.
investor impacts.
While we believe our disclosure in respect of this item is consistent with the TCFD
more work is needed to better understand the risk and opportunity impacts in respect
SMEs to support more detailed quantitative analysis in respect of climate-related risks
explore ways to improve data quality and availability, and also continue to work with
‡ Reputation: short to medium-term failure to comply with climate change-related
regulations or to achieve goals may negatively impact our public perception,
increase stakeholder concern or negative stakeholder feedback.
‡ Strategic: short to medium-term lack of SME climate-related data or changes in
customer demand for green finance products, or increases in carbon offset costs,
climate reporting and regulatory compliance costs or transition costs may
adversely impact the business.
‡ Funding: medium to long-term changing investor demand or available capital as
‡ Credit: medium to long-term impact on higher carbon-emitting industries due to
climate-related regulations, carbon taxes, carbon pricing or transition costs, or
inadequate climate-related stress testing.
‡ Policy and legal: medium to long-term imposition of new climate-related
regulations or more onerous reporting obligations on our business, our customers,
or our products.
Potential financial impacts
‡ Reduced revenue due to lower demand for products and services, or higher
regulatory compliance cost.
‡ Reduced customer demand due to shift in customer preferences or increased
‡ Reduced revenue due to lower demand for products and services from SMEs or
‡ Write-offs, asset impairment, and early retirement of existing assets due to policy
changes or repricing of assets (e.g. loan valuations).
‡ Increased operating costs (e.g. higher compliance costs).
Full
disclosure
STRATEGIC REPORT
Funding Circle Holdings plc32
Environment, social and governance (“ESG”) continued
Strategy continued Disclosure Cross reference
Disclosure
level
(a) Describe the
climate-related risks
organisation has
identified over the short,
medium, and long term
continued
Physical risks
‡ Credit: short to medium term, risk of acute physical impacts from climate-related
weather events, and long-term climate change-related environmental damage may
impact SME borrowers’ operational and credit performance, or availability of
financing to SMEs more generally.
‡ Funding: long-term investor demand may be impacted acutely or more generally
impacted by physical effects of climate change, and overall investor liquidity may
be impacted by acute or chronic adverse environmental events.
Potential financial impact
‡ Reduced revenue from decreased borrower credit quality (for example,
deteriorating credit quality).
‡ Reduced revenue due to lower demand for products and services, write-offs and
early retirement of existing assets (for example, impacted borrowers and loan
assets in “high-risk” locations).
Opportunities (short to medium term)
‡ Strategic: green finance products to help to finance SME transition.
‡ Funding: institutional investor demand for green or sustainable loan portfolios.
Potential financial impacts
‡ Increased revenue through access to new and emerging markets.
‡ Increased access to capital and liquidity, and increased revenue through new
products and services related to ensuring resilience or adaptation.
(b) Describe the impact
of climate-related risks
and opportunities on
businesses, strategy,
and financial planning
To date, the impact of climate-related risks and opportunities on our business and
strategy has been limited and our efforts in this regard are at an early stage and
limited in scope. In the short to medium term, the Company does not consider
climate-related risks and opportunities to be material to the business, strategy or
financial planning. To date we have not quantified the potential short, medium or
long-term financial impacts in respect of transition or physical risks associated with
climate change, and we currently do not have any material strategic opportunities
related to climate change that are part of our strategic or financial plan.
The current financial impact on our business from climate-related risks and
opportunities has been primarily limited to fees and costs linked to carbon footprinting
and verification, neutrality certification, the purchase of carbon offsets and reporting.
material in the short to medium term and we have yet to carry out a detailed
forecasting of these costs.
In 2022, we completed a commercial strategy assessment in respect of climate-
related opportunities, pursuant to which we determined such opportunities are not
considered to be a material opportunity or priority in respect of business strategy
component of the business strategy in the short to medium term. This assessment
will be reviewed annually.
In respect of our general business operations, our priorities are developing a carbon
transition plan, including metrics and targets in respect of our own operations’ emissions
and reductions plan during the course of 2023. It is likely to take significantly longer
financed emissions related to our lending products.
To move towards full consistency with the TCFD recommendations in regard to this
item, more work is needed to better understand the strategic environment and the
related risk and opportunity over the medium to long term in respect of our SME
customers and institutional investors, and any associated financial planning impact
from a change in strategy, if any, that such understanding might give rise to. Over the
coming two to three years, we will continue to explore the strategic landscape, and
also continue to work with experts and policymakers to consider good practices in
See also “Viability
statement” on page
assessment of the
impact of environmental
stress relative to
Group in the near to
medium term
Partial (1/2)
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 33
Strategy continued Disclosure Cross reference
Disclosure
level
(c) Describe the
resilience of the
organisation’s strategy,
taking into consideration
different climate-related
scenarios, including a
2°C or lower scenario
We have not yet carried out a detailed quantitative climate-related scenario analysis.
In the short to medium term, the Company does not consider climate-related risks and
opportunities to be material to the business, strategy or financial planning in particular
relative to other risks applied under existing stressed assumptions and strategic
objectives over these time periods. We have started to engage with external advisers
regarding market practice and standards related to such scenario analysis and will
continue to review this on an annual basis.
Qualitatively, we believe our strategy should be resilient under different climate-related
scenarios over the short to medium term, including a 2°C or lower scenario. Given the
nature of our business, we believe that the longer-term risks identified in connection
with more severe climate-related risk scenarios are not currently material
considerations for the business in light of our relatively short to medium-term time
horizons. This conclusion will of course be subject to change as the transitional and
physical risks of climate change become more immediate, including any government
however, as of the time of this Annual Report, we believe our current strategic
approach is sufficient. As an online platform business, we have a limited physical
presence and we have very limited capital goods exposed to climate-related risks. In
respect of our loan products, our relatively short-term and data-driven products allow
us to implement changes to our products, credit strategy, marketing and contractual
terms relatively quickly. This means we can adapt to shifts resulting from climate
change and rapidly shift out of, or assist in the transition of, impacted industries.
years and, given the effects of portfolio composition by term, loan size, defaults and
prepayments, our portfolio of loans under management has a weighted average life of
approximately 10 to 24 months, varying by product type and vintage year of origination).
certain longer-term climate-related risks, including physical risks that could adversely
affect various forms of security, such as real estate, or which are currently beyond our
strategic or risk planning time horizon.
Our SME customer base is comprised of a large number of borrowers, that are broadly
distributed by industry sector and geography across the US and UK, and with loans of
relatively small size (i.e. is highly granular). Given this lack of concentration risk, except
in extreme scenarios, our overall borrower portfolio should be resilient to transition
risks, such as increased costs or regulation, or the localised or regional impacts of
physical risks. We have recently worked with a third party expert to complete an initial
measuring of the Scope 3 financed emissions of our loan book (GHG Protocol
Category 15) under the Partnership for Carbon Accounting Financials (“PCAF”)
methodologies. We have much more learning to do related to this exercise and the
meaningful conclusions from this data. For example, while we can identify, segment
and quantify borrowers by industry sector using assumptions to categorise borrowers,
in principle, into higher or lower emitting industries, we cannot identify if an individual
business is in fact higher or lower emitting, as we do not currently collect direct emissions
data from borrowers (and there currently is no industry standard or requirement for
businesses to measure, calculate or report this information). We also do not have any
information on the relative risks or opportunities posed to these businesses by climate
change given the products or services offered by these borrowers in a given industry.
Lastly, in respect of loan funding and platform liquidity, we draw on a diverse pool of
institutional investors to fund our loan products and we are able to adapt quickly to
changing investor needs, which improves our funding resilience. To date, loan investors
have not required any eligibility criteria or reporting related to emissions arising from
lending activities, nor has this been an active area of discussion among our investors
more generally. We expect this area to evolve over time as banks, asset managers and
other asset owners become subject to more reporting and regulatory requirements
related to their investment practices.
As part of our wider ESG strategy we have voluntarily set a number of strategic
ambitions in connection with our environmental impact, including in connection with
net zero, which are largely aimed at satisfying what we believe are evolving stakeholder
expectations on these matters and potential reputational risks associated with not
taking a proactive approach. Given the complexity and long-term nature of these
issues, we also believe it is prudent to start our journey to better understand our
impacts and our place within the climate crisis, even though we view climate-related
risks as being not material in terms of risks and opportunities to the business in the
short to medium term.
To move towards full consistency with the TCFD recommendations in regard to this
item, more work is needed to better understand the strategic environment and the
related risk and opportunity over the medium to longer term in respect of our SME
customers and investors, and any associated financial planning impact, taking into
consideration various scenarios associated with climate-related impacts. Over the
coming two to three years, we will continue to explore the strategic landscape, and
also continue to work with experts and policymakers to consider good practices in
Partial (1/4)
STRATEGIC REPORT
Funding Circle Holdings plc34
Environment, social and governance (“ESG”) continued
Risk management Disclosure Cross reference
Disclosure
level
(a) Describe the
organisation’s
and assessing
climate-related risks
Our ERMF describes our risk management approach and supports clear accountability
for managing risk across the Company. To date, climate-related risks are not considered
have been incorporated under other principal risks and are assessed in line with our
ERMF and reviewed on an annual basis. Climate-related risk is included as a strategic
risk, with responsibility and accountability for its management held by the CEO.
basis, and perform a risk and control self-assessment on an annual and half-yearly
basis in accordance with the ERMF. We have identified certain limited climate-related
risks as lower priority risks within other principal risk areas, primarily related to
funding, strategy, reputation, and credit risk.
We assess the materiality of climate-related impacts to Funding Circle using a risk
classification matrix to prioritise, classify and escalate risks and issues. This risk and
control self-assessment process assesses and rates the inherent likelihood of a given
risk occurring, ranging from unlikely (meaning an occurrence of once every two to
given risk on the business, based upon both financial impacts (ranging from “critical”
impacts defined as a financial impact of equal to or greater than £5,000,000 to
non-financial factors such as scope of impacts on quantity and type of customer or
product, reputation impacts such as media coverage, regulatory impacts ranging
litigation, operational impacts such as technology or business continuity impacts
causing business stoppages across varying time horizons. Controls are assessed by
evaluating design and effectiveness. The classification matrix is applicable to all risk
types and issues with a detailed methodology for the score computation. Ultimately,
risk exposure is sufficiently reduced by the control such that residual risk is considered
to be within risk appetite. This methodology ensures a consistent approach to rating
and prioritising key risk exposures across the Company. We applied a rating of low,
medium or high in regard to materiality, impact and likelihood to cause an actual or
potential negative impact on Funding Circle’s financial performance or reputation.
been a qualitative assessment based on anecdotal observation rather than a
quantitative assessment based on data metrics. We have also considered the nature
of the business and the factors noted in our qualitative scenario analysis above to help
inform our assessments. We currently review climate-related risks on an annual basis,
which we believe is in line with our materiality assessment of these risks and also
reflects the limited availability of data. The primary areas of uncertainty for the
business associated with climate-related matters are primarily related to the imposition
of regulations and reporting obligations, including with respect to our SME customers
and institutional investors, and customer preferences regarding our products
While we believe our disclosure in respect of this item is consistent with the TCFD
recommendations, during 2023 we intend to review TCFD climate-related risk
integration through our ERMF (including through the risk statement, risk taxonomy
and metrics), develop a short to medium-term roadmap for ESG risk management
example into new product and change management processes.
Please see the following table for a summary diagram of the risk and control self-
assessment matrix related to ESG risk, including climate-related risks. Our ESG risk
climate-related risks are aggregated with other risks associated with our ESG framework.
See “Risk Management”
for more information on
our risk management
practices and “Principal
risks and uncertainties”
for more information
about those risks we
deem more material
Full
disclosure
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 35
Environment, social and governance (“ESG”) continued
Inherent risk rating rationale
Likelihood Likely: meaning potential occurrence at least quarterly to half-yearly — this rating is based on various ESG areas that are
subject to reputational risk or formally regulated, for example climate-related reporting pursuant to the TCFD
Impact Moderate: based on potential financial impacts of £250,000—£500,000 in a 12-month period or the regulatory, legal,
reputational or operational risks noted above. The moderate rating is driven more by the potential impact or penalty of
not having a suitable culture, or internal communications, and any reputational impact that would have a financial cost
to remedy. In respect of climate-related impacts, the assessment reflects the impacts related to regulatory reporting
obligations and the associated costs to compliance.
Control environment rationale Satisfactory: the main controls being internal legal and regulatory review, management and risk oversight and controls
practices and internal compliance monitoring and testing.
Residual risk rating rationale
Likelihood Unlikely: meaning an occurrence of at least once every two to five years — controls in place very much reduce the risk
to very unlikely – risks are relatively simple to mitigate and it is relatively simple to implement controls to adequately
manage risk.
Impact Minor: based on potential financial impacts of £0—£250,000 in a 12-month period or the regulatory, legal, reputational
or operational risks noted above. These risks are not particularly systemic, automated or high frequency, nor are they
inherently high impact or high severity.
Funding Circle strategic risk appetite statement
Funding Circle will make efficient use of its available resources to build a sustainable,
Level 1 and 2 risk: Environment, social and governance
3
Likely
2
Moderate
2
Low-medium
1
Unlikely
1
Minor
1
Low
Satisfactory
Strategy
Chief
Executive
Officer, Lisa
Jacobs
Global Head
Regulatory
Definition
Risk & control self-assessment
Level 1 risk
Level 1
Level 2 risk
Inherent
likelihood
Inherent
impact
Inherent
Residual
likelihood
Residual
impact
Residual risk
rating
Control
environment
assessment
Level 2
ESG risk assessment
ESG risk ratings as of Q4 2022 (inclusive of climate-related risks)
ESG — climate-
related risk
An environment, social or
governance event, or events or
circumstances, that, if it occurs,
could cause an acute or potential
material negative financial or
reputational impact on the Company
STRATEGIC REPORT
Funding Circle Holdings plc36
Risk management
continued Disclosure Cross reference
Disclosure
level
(b) Describe the
organisation’s processes
for managing
climate-related risks
We are at a relatively early stage in our management of climate-related risks, and as
described throughout this table, these risks have been determined to be not material
in the short to medium term, and largely are not a significant current priority for the
business. As an initial step, we have formalised Board ownership of the overall ESG
risk agenda, including climate-related risks, and clarified ownership of climate-related
risk management through our ERMF, RCC and MRC.
As part of our ERMF review, we identified a number of areas for further development,
which we intend to progress starting in 2023 including:
‡
‡ develop a short to medium-term roadmap for ESG risk management, including
‡ begin review for embedding ESG-related elements into new product and
‡ review requirements around climate-related risk scenario analysis in accordance
with TCFD guidelines, and conduct such a scenario analysis if deemed
‡ develop climate-related risks and opportunities metrics and targets for TCFD reporting.
We review climate-related risks and opportunities on an annual basis and the risk and
control self-assessment process is undertaken on an annual basis with a half-yearly
review. The conclusions based on this assessment are subject to change as more and
better information and understanding become available.
Full
disclosure
(c) Describe how
processes for
identifying, assessing,
and managing
climate-related risks
organisation’s overall
risk management
We incorporate a limited number of climate-related risks into our ERMF, with a view to
identifying, measuring and monitoring these risks within our business. The Enterprise
Risk Management team reports to the Board and GLT on this subject in line with the
process identified in our ERMF. Additional work is needed to integrate climate-related
risk management into our first- and second-line teams, for example by embedding
climate-related risks into our product development, strategy and training, and
developing clearer metrics and targets to facilitate more frequent engagement to
review these risks and opportunities effectively. We intend to continue to make
progress on further integration in 2023 and over time in line with our overall materiality
assessment. Currently, we review climate-related risks and opportunities on an annual
basis and they are generally not considered a significant priority for the business in
the short to medium term.
While we believe our disclosure in respect of this item is consistent with the TCFD
recommendations, we believe more work is needed for us to better understand what
additional risk management practices may be applicable over the medium to longer
term as this area develops over time. Over the coming two to three years, we will
continue to explore the climate-related risks and opportunities, and also continue to
work with experts and policymakers to consider good practices in this area which is
still at a very early stage of development.
See “Risk management”
for more information
Full
disclosure
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 37
Metrics and targets Disclosure Cross reference
Disclosure
level
(a) Disclose the metrics
used by the organisation
to assess climate-related
risks and opportunities
in line with its
management process
We have limited available metrics to assess climate-related risks and opportunities,
and as we have determined that these risks and opportunities are not material in
terms of strategy or risk management in the short to medium term, we do not
currently engage with these metrics on a frequent basis, typically only on an annual
basis. We have begun to explore data that would afford us more opportunities to
review metrics related to our loans under management, for example by sector
classification code and our recent measurement of Scope 3 financed emissions
only limited information and requires further work for us to improve data quality and to
derive more decision-useful information. It is too early for us to draw any meaningful
conclusions from this data, but we believe it will help to inform our understanding of
climate-related risks and opportunities as data availability and quality improve. We do
expect to continue to develop further metrics to monitor climate-related risks and
be part of a longer-term process.
In respect of our general business operations, we anticipate developing further
metrics and targets in respect of our operational emissions and reductions plans
during the course of 2023 (in particular in connection with our carbon transition plan)
and in respect of our Scope 3 financed emissions (GHG Protocol Category 15), in
order to move towards greater consistency with the TCFD recommendations, in
particular the relevant aspects of the Supplemental Guidance for Banks, we plan to
continue to develop our understanding of the climate-related data availability, data
quality and methodologies to support those recommendations over the next one to
two years.
Partial (1/4)
(b) Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas (“GHG”)
emissions, and the
related risks
Our 2022 Scope 1 and 2, and limited Scope 3 (business travel and waste generated in
operations) GHG emissions are disclosed on pages 39-40. As noted above, we have
made progress on measuring our Scope 3 financed emissions for the first time and
we expect to better understand this area during 2023, with a view to being able to
wider Scope 3 emissions during 2023.
See “Our climate
impact” on page
Full
disclosure
(c) Describe the targets
used by the organisation
to manage climate-related
risks and opportunities
and performance
Currently, our targets are more qualitative than quantitative. We have not yet set
specific targets related to climate-related risks and opportunities, and more work is
required to set metrics and targets in connection with our carbon transition plan and
our net zero ambition, in particular in regard to Scope 3 financed emissions where we
are at a very early stage.
In 2022, we had hoped to begin to set more specific targets around reducing emissions,
we did not make meaningful progress on this. We did make significant progress on
measuring our Scope 3 financed emissions for the first time and we expect to better
understand this area during 2023, with a view to being able to disclose these
emissions in future periods.
Funding Circle’s ESG framework sets out the following short, medium and long-term
goals related to managing certain climate-related risks and opportunities:
‡ ambition of net zero by 2050 in line with the UK government’s commitment, while
‡ achieve carbon neutrality recertification for 2022 emissions for Scope 1 and 2 and
limited Scope 3 GHG emissions by 31 December 2023, including Qualifying
‡ begin to integrate other material Scope 3 GHG emissions categories
‡ develop a plan to better understand Scope 3 financed emissions and improve data
‡ review climate-related risks and opportunities, and develop metrics and targets
‡ consider a commitment to set science-based targets by 2024, in line with the
SBTi’s guidance for financial institutions.
See “Our climate
impact” and “Net zero”
on pages 39 and 42
respectively for more
information about our
emissions and progress
toward net zero
Partial (1/4)
STRATEGIC REPORT
Funding Circle Holdings plc38
Environment, social and governance (“ESG”) continued
Our climate impact
This section includes our mandatory
reporting of greenhouse gas emissions
(“GHG”) in line with The Companies Act
2006 (Strategic Report and Directors’
Report) Regulations 2013 and the
Streamlined Energy and Carbon
Reporting (“SECR”) under the
Companies (Directors’ Report) and
Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018.
To satisfy the requirement to show an
intensity ratio, we have determined that
the most appropriate for our business is
tonnes of CO
2
equivalent (“tCO
2
e”) per
£m of total income. Our GHG emissions
reporting period is 1 January to
The GHG accounting follows the
methodology set out by the WRI/
WBCSD Greenhouse Gas Protocol.
conversion factors for company
reporting (published by BEIS) in our
calculations. For US Scope 2 emissions,
we have used regional data from
Environmental Protection Agency
e-Grid. For Scope 3 Category 6 we have
also used Environmentally Extended
Input-Output (EEIO) Emission Factors.
The selected boundary includes
Funding Circle’s Scope 1 and Scope 2
emissions, and limited Scope 3 categories
covering waste generated in operations
and business travel. In accordance with
the SECR, we report our emissions data
using an operational control approach
to define our organisational boundary.
In line with our environmental reporting
criteria, we report on all significant
sources of GHG emissions from our
business that are under our operational
control. Our emissions disclosure
methodology remains largely consistent
with 2021. We did not undertake any
specific measures to reduce our emissions
during 2022. Our 2021 footprint is the
chosen baseline for our carbon
neutrality commitment.
Total emissions (market based) by geography
Total emissions (market based) by Scope 1, 2 and limited 3
Total emissions (market based) by emissions source by year
50%
43%
1%
15%
41%
47%
l London
l San Francisco
l Denver
l Scope 1
l Scope 2
l Scope 3 – Waste
l Scope 4 – Travel
l Business travel (tCO
2
e)
l Waste: Energy from waste generated in operations (tCO
2
e)
l Waste: Recycling generated in operations (tCO
2
e)
l
2
e)
l Steam emissions
l Electricity (Market Based)
l Refrigerants (tCO
2
e)
l Natural gas (tCO
2
e)
3%
2020 2021 2022
900
800
700
600
500
400
300
200
100
0
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 39
Global GHG emissions data for period
1 January to 31 December
2022
tCO
2
e
2021
tCO
2
4
2020
tCO
2
e
5
2019
tCO
2
e
Scope 1¹ 85 129 132 147
Scope 2
2
– location based 314 340 378 493
Scope 2
2
– market based 240 411 437 —
Scope 3 (business travel and waste)
3
231 116 222 —
399 469 509 640
325 540 569 —
630 585 731 —
556 656 790 —
Full-time employee (“FTE”) (average over the applicable reporting period) 1,035 929 1,002 —
Total income (£m) 148.7 206.9 222 17 7.3
Intensity ratio (Scope 1 and 2): tCO
2
e/FTE – location based 0.39 0.50 0.51 —
– market based 0.31 0.58 0.57 —
Intensity ratio (Scope 1 and 2): tCO
2
7
2.68 2.27 2.29 3.61
7
2.19 2.61 2.56 —
Intensity ratio (Scope 1, 2 and 3): tCO
2
e/FTE – location based 0.61 0.63 0.73 —
– market based 0.54 0.71 0.79 —
Intensity ratio (Scope 1, 2 and 3): tCO
2
7
4.24 2.83 3.29 —
7
3.74 3.17 3.56 —
1. Scope 1 includes combustion of fuels and operation of facilities, principally natural gas related to our leased office space.
2. Scope 2 includes electricity and steam purchased for use in connection with our leased office space. In respect of steam related emissions, the 2021 calculations have been
restated to include emissions data for steam, which was previously not available at the time of reporting. Steam related emissions are not included for 2019 and 2020.
3. Scope 3 includes business travel and waste generated in operations. Waste data for our San Francisco office was previously not included but has now been included from 2021.
4. We have updated some of the 2021 data to reflect data quality and calculation improvements, as relates to Scope 2 steam data and Scope 3 business travel data, which has
increased reported total 2021 emissions by 7% (market based).
5. Following a review of our emissions data and calculation methodologies in 2021, we identified a small number of inaccuracies in the data provided or calculations applied to the
data in our 2020 Annual Report, which we have updated in the figures shown in this report, and which we do not believe are material to the overall information provided.
Covid-19 impacts.
7. We are required to show an intensity ratio and have determined that the most appropriate for our growing business is tonnes of CO
2
equivalent (“tCO
2
e”) per £m of total income.
Regional breakdown of energy consumption data for period 1 January to 31 December
(Kilowatt-hour
Scope 1 Scope 2
2022 2021 2020
2
2019
1
2022 2021 2020
2
2019
1
Region
UK 417,998 554,366 349,552 380,719 402,758 359,638 326,315 954,078
US
3
— 79,469 295,981 421,159 545,219 643,284 686,193 855,662
CE (Germany and Netherlands)
4
N/A N/A N/A N/A N/A N/A 72,132 132,506
417,998 633,835 645,533 801,878 947,977 1,002,922 1,084,640 1,942,246
Covid-19 impacts.
2. Following a review of our emissions data and calculation methodologies in 2021, we identified a small number of inaccuracies in the data provided or calculations applied
3. During 2021, we moved to smaller office space in San Francisco and the new premises do not have any Scope 1 gas usage. In addition, steam usage data became available
4. Information was not available in 2019 and 2020, and we ceased to hold office space in Germany from the end of 2020 and in the Netherlands during 2021 (although the office
was unoccupied for all of 2021).
STRATEGIC REPORT
Funding Circle Holdings plc40
Environment, social and governance (“ESG”) continued
Our climate impact continued
forces with the mission to empower underrepresented
entrepreneurs to imagine, launch and grow sustainable and
impactful businesses through tailored support, community
Circle will train and mentor start-up businesses in learning
skills to help them launch, grow or scale their businesses.
entrepreneurs to tackle their challenges in constructive,
Hatch programme.
with a distinct lack of support, business skills and access
faced by underrepresented businesses. It has now increased
community-based support and tailored programmes. Today,
impact element to their business.
Funding Circle
partners with
HatchEnterprise
#fc-impact-uk volunteers
In 2022, we continued to engage with industry
experts to accurately measure and verify our
in-boundary emissions and to develop strategies to
reduce or offset these emissions. We are working
with a leading climate change advisory firm to
measure and verify our 2022 Scope 1 and Scope 2
emissions, as well as limited Scope 3 emissions
(related to waste and business travel) in accordance
with the GHG Protocol and ISO 14064, in order to
support the recertification of our carbon neutrality
statement in respect of our operational boundary
(excluding our wider Scope 3 emissions), which we
hope to complete in Q2 2023. Similar to 2021, we
expect to reach carbon neutrality through the
purchase of quality carbon offsets. We acknowledge
that there is ongoing debate regarding the use and
efficacy of carbon offsets and we will continue to
explore routes to emission reductions.
We saw a year-on-year reduction in our Scope 1
and 2 emissions, largely as a result of renewable
energy supplier certificates applied to UK electricity
under a market-based approach, as well as downsizing
our US offices during 2021. Overall reported
market-based emissions for 2022 were lower as a
result, although Scope 3 emissions increased year
on year, driven by a continued return of business
travel to pre-pandemic levels. We have used 2021
as our baseline year for carbon neutrality and net
pandemic restrictions led to a substantial reduction
in the use of our offices, resulting in overall lower
carbon emissions for the business compared to
the immediate pre-pandemic period. Circlers
gradually returned to the office in early 2022, but
with typically limited numbers of days in the office.
We have not yet measured employee home-working
within our Scope 3 emissions, which we intend to
undertake in 2023 (one year later than previously
stated in our 2021 Annual Report). Overall,
notwithstanding some improvements, data quality
available in respect of our GHG calculations is
relatively low reflecting a lack of standardised
processes to capture this data from third party
suppliers or in respect of office space where we
comprise a small portion of a given building.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 41
Net zero
We are committed to reducing our
impact on the natural environment.
a commitment to be net zero by 2030.
The interpretation of net zero for disclosure
purposes continues to evolve with the
development of available standards and
methodologies to define and understand
the term. In line with this evolution, we
have now reviewed our climate goals
towards more precise and realistic
objectives. Our ambition is now to reach
net zero by 2050 in line with the UK
government’s commitment, while
setting a stretch target to reach net zero
by 2030 for our operational emissions.
We define our operational emissions
categories which are under our operational
control, such as business travel and
waste from operations. As an interim
step, we have a commitment to carbon
neutrality (PAS 2060) for our operational
carbon emissions, which we achieved
for 2021 and intend to achieve for 2022
through the purchase of quality carbon
offset projects. We have not yet developed
an annual carbon transition plan or
journey to net zero by 2050 but we
continue to progress our carbon
strategy, with support from climate and
industry experts who are helping us to
understand and manage our full carbon
footprint. We are at an early stage of
understanding our largest sources of
Scope 3 emissions arising from our
financed emissions (GHG Protocol
Category 15), which we measured for
the first time in 2022 under the Partnership
for Carbon Accounting Financials
methodology. Similar to other asset
classes, there are a number of challenges
to measuring and meaningfully addressing
reductions in financed emissions for
SME lending. We recognise this is a
challenging task, and that the standards,
capabilities and expectations in this
area are evolving. We will seek to follow
best practice to reach this goal in a way
that is proportionate to our business
and the urgency that climate action
requires. We will avoid greenwashing
and will look to deliver accurate and
transparent information on our impacts
and our progress towards our carbon
neutrality commitment and net zero
Social impact
In 2022, we completed a review of our
social impact strategy to identify ways
to continue to support Circler-led
initiatives and also explore areas where
we can contribute positively as a
business in our communities. Social
impact forms a core component of our
ESG framework, with Board ownership
and oversight through the ESG
Committee. In 2022, we conducted an
SME survey to better understand drivers
to borrower engagement and to inform
our social impact programme, and we
started to add social impact and
climate-related content to our regular
online SME newsletters as a channel for
awareness raising. We also entered into
an arrangement with Hatch Enterprise
to support underrepresented social
entrepreneurs through which Circlers
volunteer their time to mentor or provide
other forms of support. See page 41 for
more information about Hatch. In 2022,
we also partnered with Tiny Forest to
co-sponsor a micro-forest project in
Peckham in South London. Tiny Forest
brings the benefits of a forest into cities
and urban spaces across the UK.
Through its programme of planting
small forests in ecologically deprived
areas it reconnects people with nature,
enhances wellbeing, helps mitigate the
impacts of climate change and provides
nature-rich habitat patches to support
urban wildlife.
In addition to the positive economic
impact our SME lending contributes to
jobs and economic growth, we continue
to engage in corporate ESG initiatives
and our employees are also working
through a wide variety of initiatives,
groups and events. We continue to offer
Circlers two paid volunteer “Impact
Days” a year so that they can positively
contribute to issues they feel passionately
about. And we continue to progress our
DEI initiatives as set out in more detail in
“Our people - Diversity, Equity & Inclusion”
on page 25.
Public policy and responsible lending
Our aim is for Funding Circle to continue
to be a trusted and reputable company,
working with governments, regulators
and industry to uphold the highest
industry standards. To this end, we
actively engage with local, national,
federal and supra-national government
agencies, legislators, policymakers and
industry groups. This engagement helps
us develop insight and policy leadership
on issues affecting SMEs, institutional
investors and the wider fintech
papers and participate in expert
hearings, consultations and other
In both the UK and US, Funding Circle
supported businesses during the
pandemic by providing loans through
government SME guarantee programmes
and a variety of forbearance measures.
In the UK, we continued our membership
with UK Finance, the trade association
for the financial services sector, and the
Confederation of British Industry, a
broader business advocacy group.
Through our membership of industry
body Innovate Finance, we also helped
to amplify the important role fintech
plays in the UK.
In the US, Funding Circle is a member
Coalition (“RBLC”), a network of
non-profit and for-profit lenders, investors
and SME advocates. Members of the
Coalition share a commitment to
innovation and responsible behaviour
to the Small Business Borrowers’ Bill of
Rights (“BBOR”), the first cross-sector
consortium supporting the rights of
SMEs, and we are a member of the
Innovative Lending Platform Association
(“ILPA”). We have also been appointed
Protection Bureau (“CFPB”) Small
Business Regulatory Enforcement
Fairness Act advisory review panel.
STRATEGIC REPORT
Funding Circle Holdings plc42
Environment, social and governance (“ESG”) continued
Financial inclusion and other commitments
As part of our broader commitments as
a responsible company, we have made a
number of voluntary commitments and
take a stand on the following issues:
‡ we have joined
the UN Global Compact to formalise
our alignment with its Ten Principles
on human rights, labour, the
environment and anti-corruption.
UNGC principles into our ESG
programme and leveraging this
framework to help guide our efforts
in the future. Our first Communication
on Progress report will be in 2023.
‡ Principles for Responsible
Investment: we are a signatory to the
Principles for Responsible Investment
(“PRI”), which we believe is an
important signal to our investors and
shareholders and we hope will drive
positive engagement and outcomes
with these and other stakeholders.
The PRI reporting obligations had
been extended during the Covid-19
pandemic, and the timing for
reporting is currently still under
‡ SME Finance Charter (UK).
‡ Borrower Bill of Rights (US).
‡ Responsible Business Lending
Coalition (US).
‡
Charter: Funding Circle UK is a
signatory to the UK government’s
Women in Finance Charter, and
progression of women into senior
roles in the financial services sector.
Our DEI strategy outlines our goals
and targets in this area.
‡
Funding Circle UK is a signatory to
HM Treasury’s Investing in Women
Code, and is committed to a culture
of inclusion and to advancing access
to capital for female entrepreneurs.
‡ UK gender pay gap reporting (UK).
Human rights
‡ We respect and promote human
rights through our employment
policies and practices.
‡ We apply these policies and
commitments equally to everyone
who works at, or is part of,
Modern slavery
‡ We have a zero tolerance
‡ We have published a Modern Slavery
Act Transparency Statement in
compliance with section 54 of the
Modern Slavery Act.
‡ As part of our procurement process
we ask suppliers for their Modern
Slavery Statement.
‡ In 2023 we will include training on
Modern Slavery as part of our
financial crimes training modules.
Code of Conduct
‡ We are dedicated to implementing
and maintaining the highest
standards of behaviour, ethics and
integrity among our workforce.
‡ We have created a culture where
adherence to these standards is
recognised and rewarded.
‡ Our Code of Conduct establishes
these standards and addresses
subjects such as integrity, conflicts
of interest and non-discrimination.
Employees are trained annually on
our Code of Conduct rules.
‡ We have whistleblowing policies
whistleblowing officers in each
Anti-money laundering, anti-corruption
and anti-bribery
‡ We recognise that our reputation
critical to our success.
‡ We uphold all laws relevant to
countering bribery and corruption in
each of our jurisdictions in accordance
with our global anti-bribery and
corruption policy.
‡ Circlers are trained and evaluated
annually on bribery, money
laundering and corruption risks.
Data protection and
‡ As an online lending platform,
data protection, data privacy and
information security, and we seek
protection laws.
‡ All employees complete data
protection, data privacy and
information security training at least
once a year, and extra training may
be required for people who handle
data more frequently or handle more
sensitive data.
Procurement
‡ We request significant suppliers to
share their environmental policies
corporate social responsibility with
responses factored into the overall
supplier rating.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 43
Our shared mission withborrowers, institutional investors, shareholders
and our people is to ensure that a vital, historically underserved part of
our economy can access the funding it needs to win. We are committed
tobuilding open and constructive relationships with all our stakeholders.
In 2022, we engaged with our stakeholders ina variety of ways to ensure
they continued tofeel connected and supported at all times.
We actively engage with
allourstakeholders
Borrowers
SMEs are the growth engine of the economy, and it is our
mission to help them fulfil their ambitions with access to
fast, hassle-free finance.
How we engage
‡ Constant monitoring of real-time customer insight from
data, and customer feedback from social media and
satisfaction surveys at every stage of applications
‡ Regular focus groups with existing and prospective SME
customers around product changes and new marketing
campaigns, alongside Circler visits to meet borrowers
‡ The Board reviews strategy and monitors performance in
light of customer feedback, with the aim of meeting the
needs of borrowers more effectively
‡ We provide regular email updates and communications,
including on the launch of our new products, changes to
government schemes and continued service
improvements and resources for borrowers
Outcomes of engagement
‡ We achieved an NPS of 77 and 78 for borrowers in the UK
and US respectively
‡ We introduced super prime loans in the US and near prime
loans in the UK
‡ We launched a new partnership with Premiership Rugby to
attract more businesses and increase brand awareness
‡ We launched our new campaign platform, Lending Hands,
‡ We were recognised as Unsecured Funder of the Year and
Institutional investors
Providing stable and attractive returns to a diverse range
How we engage
‡
– for example asset managers, banks, insurance companies,
services. This includes a tailored institutional investor
website, a dedicated statistics webpage, presence at key
global conferences, investor roadshows and
‡
Outcomes of engagement
‡
‡ Continued institutional investor demand to fund loans –
with an active forward-pipeline in the UK and US
STRATEGIC REPORT
Funding Circle Holdings plc44
Engaging our stakeholders
Shareholders
We maintain transparent and open engagement with our
shareholders. This enables the Board to clearly
communicate its strategy, provide updates on our
performance and receive regular feedback.
How we engage
‡ Regular shareholder communications such as full and
‡
‡
‡ The Chair, Chief Executive Officer, Chief Financial Officer
and Director of Investor Relations regularly communicate
with shareholders and analysts as required and provide
regular reports to the Board on shareholder interactions
Outcomes of engagement
‡ Incorporated our shareholders’ opinions throughout the
year into the shaping of Company strategy and other
Circlers
Our people are our business. We are committed to creating
a culture where Circlers thrive and share in our mission,
values and ambition.
How we engage
‡ Regular all-hands meetings and our bi-annual Full and
information and interact with senior management
‡ Regular meetings with Helen Beck, our workforce
engagement Non-Executive Director, and employee
‡
Circle of Pride, FC Impact, Parents @ FC and Neurodiversity
@ FC) that empower our people to deliver initiatives
important to them and our DEI agenda
‡ Regular engagement surveys, with results shared with the
Board, along with diversity reports and updates on diversity
and inclusion initiatives
Outcomes of engagement
‡ Further embedded our Circler promise, Build the Incredible
‡ Maintained our highest ever employee engagement score
of 73% in our 2022 employee survey
‡ Launched our new value, Obsess Over The Customer,
introduced following Circler feedback to reinforce our focus
on the customer across the organisation
‡ New Circler group, Neurodiversity @ FC, created to help
understand how different people think, process and
perceive information
‡ In the UK, our partner leave policy change was recognised
Section 172(1) statement
The Directors recognise that they have a duty to promote the success of the Company in accordance with s.172(1) of the
how the Directors have had regard to the factors set out in section 172(1)(a)–(f) when discharging their duties are on pages
78 and 79.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
45
Communities
The SMEs we serve are at the centre of our communities.
We are passionate advocates of charitable causes and
issues related to social impact and community engagement.
How we engage
‡
strategy. This process includes shaping our understanding
‡ Regular meetings with investors including discussions
‡ Circler group FC Impact co-ordinates our internal
Outcomes of engagement
‡
framework for operating as a responsible business and
‡ Further developed our carbon strategy, with support from
climate and industry experts. We have a carbon neutrality
commitment for our operational emissions, and are
developing an annual transition plan to map our ambition
to net zero by 2050
‡ Raised £32,000 during 2022 for our charity of the year,
volunteering activities for Circlers in support of a range
‡ Supported wider social initiatives by partnering with
charities, such as Hatch Enterprise which empowers
underrepresented entrepreneurs to launch and grow their
businesses. This partnership involves volunteers from
Funding Circle mentoring start-up businesses
Government and regulators
Our goal is for Funding Circle to always be known as a trusted
and reputable company, and to work with regulators and
industry to ensure best practice.
How we engage
‡ Engagement with local, national, federal and supra-national
government agencies, including regulators, legislators,
policy makers and industry groups. These interactions
provide insight and leadership on policy and rulemaking
related to issues affecting SME borrowers, institutional
investors or lending in the fintech industry
‡ Contribution to the discourse and debate on industry
issues, including submitting position papers and
participating in expert hearings, consultations, forums
‡ The Board ensures it uses the results of the above
engagement, as well as key legal and regulatory
Outcomes of engagement
‡ In the UK: Continued to work closely with the British
Business Bank as a provider of government-backed lending
‡ In the US: Supported the Philadelphia Federal Reserve and
Bank for International Settlements study into the impact
providing proprietary data. The study showed that fintech
SME lending platforms increase access to capital at a
lower cost for borrowers who are less likely to receive
credit from traditional banks
STRATEGIC REPORT
Funding Circle Holdings plc46
Engaging our stakeholders continued
Overview of the year ended
31December 2022
challenging UK economic environment,
our overall performance in 2022 was in
line with our expectations. It followed a
very strong prior year when our markets
were distorted by the continued
availability of various government-
guaranteed loan schemes in both the
UK and US which brought forward and
exaggerated demand for loans by SMEs
in H1 2021. This led to a drop in demand
for loans when these government
recovery in demand evident through H2
through our proactive monitoring, we
noticed increasing signs of stress in the
market and we therefore adjusted and
tightened our credit criteria accordingly.
This tightening is noticeable in the UK
originations profile below.
Originations
2022 2021
H1
£m
H2
£m
FY
£m
H1
£m
H2
£m
FY
£m
Loans
United Kingdom 641 454 1,095 1,381 591 1,972
United States 145 182 327 247
Other
1
— — — 7 1 8
786 636 1,422
FlexiPay
2
17 42 59 — — —
Total 803 678 1,481
A solid year
respondingwellto
evolving conditions
In the UK, the government-guaranteed
Recovery Loan Scheme (“RLS”) was
until May 2022. We continued to offer
our commercial loans alongside the
RLS, transitioning to operate solely our
commercial lending from June 2022
onwards. We now also offer our
commercial loans to near prime
businesses. In the prior year, we offered
government-guaranteed CBILS loans
until the processing of those loans
finished in June 2021. CBILS had
particularly high levels of demand, due
to the favourable terms for borrowers,
driving peak originations in H1 2021.
In the US, we have continued to
expanding our offering to also serve
super prime businesses. In the first
government-guaranteed loan scheme
During 2022, we have continued to grow
originations via our Marketplace, which
connects borrowers with other lenders
in the market, providing further products
beyond what Funding Circle currently
offers, such as larger loans, asset
finance and invoice finance, and we see
this growing further in the coming year.
Our new line of credit product offering,
FlexiPay, has been launched in the
market and continues to gain traction.
FlexiPay card is now in beta testing and
we will continue to expand this during
2023. We remain very excited about the
huge market opportunity for FlexiPay to
support SMEs with their shorter-term
financial needs.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
47
Financial review
Overview of the year ended 31December 2022 continued
Loans under Management (“LuM”)
31 December
2022
£m
31 December
2021
£m
Loans
United Kingdom 3,311 3,944
United States 375 425
Other 39 88
3,725 4,457
FlexiPay
1
18 —
Total 3,743 4,457
Loans under management declined
This was principally driven by:
‡ Early repayments on CBILS loans
which were expected as there were
no principal payments required in the
first year and the government was
borrower payments became due,
some borrowers repaid the loans
‡ Reduction in PPP loans as they were
forgiven by the US government,
provided certain borrower conditions
on usage were satisfied. No servicing
fees are charged on PPP loans. PPP
loans totalled £125 million at
‡ FlexiPay loans under management
continued to grow. Currently the
product features a revolving three-
month line of credit facility.
Funding Circle uses its balance sheet
where it makes the business stronger.
This has been through securitisation
programmes and private funds in
government-guaranteed loan schemes,
short-term funding as we onboard new
investors, and in funding the early
2022, Funding Circle’s equity invested in
the above Loans under Management
was c.2.5% at £97 million (31 December
2021: c.1.5% at £70 million). This is
described in further detail on page 53.
Characteristics of government
loanschemes
The loans under each of the
government schemes have different
income that Funding Circle earns on
them is different:
‡ CBILS – for loans issued under this
scheme, the British Business Bank
(“BBB”) provided an 80% guarantee
exchange for a fee from the funding
investors. The BBB paid the origination
fees (transaction fees) on behalf of
borrowers together with the interest
due on the loans for the first year. No
principal repayments were required in
the first year. Thereafter borrowers pay
the interest and principal repayments.
Funding investors continue to pay
servicing fees.
STRATEGIC REPORT
Funding Circle Holdings plc48
Financial review continued
Cheers to FlexiPay!
Since 2017, 8 Rocks Deli & Wine has been offering the local
Vik moved to the UK from Latvia in 2004 and spent 12 years working
his way up the career ladder in the hospitality sector. However, Vik
always wanted to run his own business and in 2017, 8 Rocks opened in
Loughton, Essex.
Starting with just sandwiches, the cafe soon became a deli by day and
a wine bar by evening, fuelled by Vik’s enthusiasm to bring fine wine to
the local community. However, as the business got into its stride, the
pandemic brought challenges to the hospitality sector. While initially
closed for six weeks, Vik seized the opportunity to introduce takeaway
and delivery services, and behind the scenes he refurbished the shop
Having initially received a government-backed RLS loan from Funding
Circle during the pandemic, Vik learned about new product FlexiPay
from his Funding Circle Account Manager, and in April 2022 was one
8 Rocks has used FlexiPay to help set the business up for success in
the future by being better able to plan ahead. Vik has used the approved
line of credit to buy stock, such as wine, in bulk in advance of upcoming
events. This enables him to negotiate better prices from suppliers and
he typically secures around a 10% discount. Vik has also been able to
purchase much-needed equipment, spreading the cost into three
instalments rather than having to pay everything upfront.
As a result of Vik’s ongoing investment in the business, 8 Rocks
continues to grow and develop as a multi-functional community space.
When the shop is closed, Vik offers the space for private events, team
bonding exercises and more. He has recently hired a marketing team
benefits with footfall into 8 Rocks on the up once again. It’s going to be
a wine-derful 2023!
8 Rocks Deli & Wine
Supporting businesses
‡ RLS – for loans under this scheme,
guarantee to lenders to ensure that there
was sufficient availability from lenders to
support SMEs, again in exchange for a
fee from the funding investors (which in
Funding Circle’s case, as with CBILS, was
shared proportionately among Funding
Circle and its applicable funding
investors, with Funding Circle’s share
approximately 1% of the total). The loans
then had characteristics similar to our
core commercial loan product with
borrowers paying the origination fees,
interest and repayments and funding
investors paying the servicing fees.
However, the borrower, not the BBB, pays
the fees and interest in the first year.
‡ PPP – the loans issued under the PPP
scheme have very different
characteristics to those under CBILS or
RLS. Under this scheme, Funding Circle
earns an origination fee, paid by the
associated with the loans. This is
because borrowers are allowed to apply
expenses such as payroll costs
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
49
Segmental highlights
31 December 2022 31 December 2021
Loans Total Loans FlexiPay Total
Net income/(loss)
United
Kingdom
£m
United
States
£m
Other
£m
United
Kingdom
£m £m
United
Kingdom
£m
United
States
£m
Other
£m
United
Kingdom
£m £m
Operating income 107.2 21.1 1.6 1.5 131.4 137.7 25.1 2.7 —
Net investment income 9.8 7.5 — — 17.3 21.7 19.7 — — 41.4
Total income 117.0 28.6 1.6 1.5 148.7 159.4 44.8 2.7 —
(2.4) 7.2 — — 4.8 10.5 18.1 — —
Net income 114.6 35.8 1.6 1.5 153.5 2.7 — 235.5
Segment profit
Adjusted EBITDA 11.7 (3.7) 2.8 (4.0) 6.8 28.4 1.5 — 91.8
Depreciation and amortisation (11.7) (5.2) (0.1) — (17.0) (9.7) (4.1) (0.1) — (13.9)
Share-based payments and
social security costs (3.9) (0.8) — — (4.7) (1.3) — — (8.9)
0.2 — — — 0.2 (0.3) — — (0.9)
Exceptional items — — — — — — (3.9) — — (3.9)
Operating (loss)/profit (3.7) (9.7) 2.7 (4.0) (14.7) 44.3 18.5 1.4 —
Operating AEBITDA
1
4.3 (18.4) 2.8 (4.0) (15.3) 29.7 (9.4) 1.5 — 21.8
Investment AEBITDA
1
7.4 14.7 — — 22.1 32.2 37.8 — — 70.0
United Kingdom
During the year we continued to originate
loans under RLS until the scheme ended
in June 2022 as well as providing
commercial loans throughout the year.
initial demand when the RLS scheme
ended, consistent with CBILS ending,
appetite for SMEs to take out loans.
Demand has largely returned, although
general credit quality has weakened and
accordingly our conversion levels are
lower than they were before the pandemic.
With the increasing economic uncertainty
in the UK, we tightened our credit
criteria in July 2022 and introduced
interest rate increases on our loans
(which are all fixed rate) to align with
increasing base rates.
Throughout 2022 there remained strong
appetite from institutional investors to
invest in both the RLS and commercial
loans. Four forward flow agreements
were signed totalling £2.4 billion and
agreement was signed in January 2023.
retail funders was closed at the start of
the pandemic as they were not allowed
to participate in the government loan
schemes. We closed the retail platform
to new investment altogether in March
2022 and retail investors now represent
only 2% of the overall LuM.
The UK delivered total income of
(2021: £137.7 million) and net
investment income of £9.8 million
(2021: £21.7 million).
The reduction in operating income
servicing fees (reflecting higher LuM
experienced during the peak of CBILS
lending in early 2021).
The reduction in net investment income
resulted from a reduction in the SME
loans held on balance sheet. This was
driven by the exit of the UK warehouse
in November 2021, loans continuing to
be paid down, and the wind down and
subsequent sale in 2022 of the majority of
loans held in the UK securitisation vehicle.
£4.3 million, lower than the £29.7 million of
the prior year when CBILS was operating.
(2021: profit of £44.3 million).
operating profit was driven by the lower
levels of income generated post-CBILS
United States
The US transitioned away from
government-guaranteed loans in May
2021. We restarted commercial lending in
July 2021, and although demand started
at a low level this has gradually and
consistently increased month on month.
We also see continued demand from
institutional investors to lend although,
with increasing macro uncertainty and
rising base rates, concluding funding
deals with institutions is taking longer.
We anticipate adding further new
institutional investors during 2023.
In H2 2022, we funded c.£20 million of
originations directly whilst concluding
shortly after the year end. The majority of
these loans were sold in February 2023.
Originations for the year were £327 million
have continued to grow since PPP ceased
in May 2021 with H2 2022 originations
STRATEGIC REPORT
Funding Circle Holdings plc50
Financial review continued
(2021: £44.8 million) comprising
operating income of £21.1 million
income of £7.5 million (2021: £19.7 million).
Yields on PPP loans were nearly 40%
higher than those on commercial loans,
driving the fall in operating income
relative to originations year on year.
Similar to the UK, the reduction in
investment income reflects the
amortising nature of the investment
months of interest on the US warehouse
which was sold in June 2021.
(2021: £37.8 million) principally
reflecting the amortising loan book and
warehouse sold in June 2021 together
with large fair value gains in 2021
following the investments delivering
strong returns, lower levels of default
and an improved economic outlook at
that time.
(2021: positive £28.4 million) and
operating loss was negative £9.7 million
(2021: profit of £18.5 million).
Finance review
Overview
Net income is total income plus fair value movements on SME loans held for sale and investments in trusts. The fair value gain in
2021 reflected a strong performance from the consolidated SME loans with lower defaults and higher recoveries than expected.
Profit and loss
31 December 2022 31 December 2021
Total
£m
Before
exceptional
items
£m
Exceptional
items
£m
Total
£m
Transaction fees 77.5 115.0 — 115.0
Servicing fees 47.9 47.0 — 47.0
Interest income 1.9 — — —-
Other fees 4.1 3.5 — 3.5
Operating income 131.4 —
Investment income 22.0 53.7 — 53.7
Investment expense (4.7) (12.3) — (12.3)
Total income 148.7 —
Fair value gains 4.8 —
Net income 153.5 235.5 — 235.5
People costs (85.9) (77.7 ) — ( 77.7 )
Marketing costs (38.4) —
Depreciation, amortisation and impairment (17.0) (13.9) (3.9) (17.8)
1.5 (1.2) — (1.2)
Other costs (28.4) (27.7) — (27.7)
Operating expenses (168.2) (3.9) (171.3)
Operating (loss)/profit (14.7) (3.9)
Operating income includes transaction
fees, servicing fees, interest income
from loans held at amortised cost and
other fees and was £131.4 million
‡ Transaction fees, representing fees
earned on originations, decreased to
£77.5 million (2021: £115.0 million).
The overall decrease in transaction
fees was driven by lower trading
away from the government-guaranteed
loan schemes in the UK and the US.
In line with increasing base rates,
loans in the prior year were fixed at
4.75%. Yields in the US averaged
experienced in the prior year as PPP
loans had higher yields on small
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
51
Finance review continued
Profit and loss continued
‡ Servicing fees, representing income
for servicing Loans under
Management, were £47.9 million
(2021: £47.0 million). Whilst Loans
under Management have fallen in
2022, it peaked at the end of the
CBILS lending in June 2021 and, with
yields on CBILS, RLS and commercial
loans at c.1.25% (higher than the
c.1.0% of older loan cohorts), servicing
fees remained similar to 2021 levels.
There is no servicing fee earned on
PPP loans.
‡ Interest income represents interest
earned on loans held at amortised
cost. This predominantly relates to
FlexiPay, where we charged a flat
borrower repayments.
‡ Other fees arose principally from
collection fees we recovered on
defaulted loans and from fee
premiums we received from certain
institutional investors in the year
defaulted loans under a historical
Net investment income represents the
investment income, less investment
expense, on loans within Funding
Circle’s investment vehicles and was
£17.3 million (2021: £41.4 million).
and November 2021 respectively,
together with the effect of continued
amortisation on the remaining
consolidated loans.
simplify the balance sheet and wound
June 2022, subsequently selling the
majority of remaining loans in October
October 2022 and anticipate doing the
same for the remaining US securitisation
Net income, defined as total income
after fair value adjustments, was
This reflects the reduction in operating
income from the higher levels in 2021
when CBILS was operating together with
a reduction in net investment income.
The fair value gain in 2021 reflected
consolidated SME loans with an
improved economic outlook, lower
defaults and higher recoveries than
expected. The consolidated SME loans
have continued to perform well, and
ahead of our expectations in 2022,
however, due to the amortising nature
that have occurred and higher discount
rates (affected by higher base rates)
utilised in valuations, the total fair value
gains are much lower than 2021.
Operating expenses
inflation) being largely offset by reduced marketing spend (driven particularly by the effect of reduced originations on broker
commission levels).
People costs (including contractors),
headcount rise of 10%, largely due to increased investment in the technology and FlexiPay teams, and wage inflation.
The share-based payment charge for the year, included in people costs, was £4.7 million (2021: £8.9 million) with the reduction
driven predominantly by lapses of share awards from leavers.
31 December
2022
£m
31 December
2021
£m
Change
%
People costs 98.4 85.9 15
Less capitalised development spend (“CDS”) (12.5) (8.2) 52
People costs net of CDS 85.9 77.7 11
1,035 929 11
Year-end headcount (incl. contractors) 1,075 979 10
Marketing costs reduced in the year to
by lower broker commissions from
reduced origination volumes, together
with strong cost control from spend
optimisation. Marketing spend overall
was 29% of operating income (2021:
(direct mail and online) which were
required less when the government
schemes were operating.
Depreciation, amortisation and
impairment costs of £17.0 million
(2021: £17.8 million) largely represent
the amortisation of the cost of the
development and the depreciation and
impairment of right-of-use assets related
(2021: £3.9 million) on its San Francisco
office and associated assets.
STRATEGIC REPORT
Funding Circle Holdings plc52
Financial review continued
Balance sheet and investments
on its US business and the recognition of deferred tax assets.
certain SME loans, either directly or through investment vehicles, and in the FlexiPay lines of credit.
31 December 2022
31 December
2021
Operating business Investment business
Trading
1
£m
£m
Securitisation
£m
Securitisation
loan buyout
£m
US funding
2
£m
CBILS/RLS/
Commercial
£m
Private
funds
£m
Total
£m
Total
£m
SME loans 24.8 16.0 27.3 18.5 19.8 32.2 2.7 141.3 273.8
Cash and cash
equivalents 174.9 — 2.8 — — — — 177.7 224.0
(liabilities) — — 0.9 — — — — 0.9 (0.5)
(22.6) — (23.7) — — — — (46.3) (213.5)
Cash and net
investments
177.1 16.0 7.3 18.5 19.8 32.2 2.7 273.6 283.8
Other assets 64.1 — — — — — — 64.1
Other liabilities (53.7) — — — — — — (53.7)
Equity 187.5 16.0 7.3 18.5 19.8 32.2 2.7 284.0 288.0
1. Trading business includes £22.4 million of PPP loans together with the associated Federal Reserve borrowings which we expect will both reduce as the remaining PPP loans
are forgiven.
2. US funding loans includes £19.8 million of loans funded temporarily whilst it was onboarding a new investor. The majority of these were sold in February 2023.
The table below provides a further breakdown of Funding Circle’s net equity invested in products and vehicles:
31 December
2022
£m
31 December
2021
£m
1. Securitisation SPVs
1
7 21
1
32 39
3. Securitisation loan buyout 19 —
4. Private funds 3 8
5. US funding loans 20 —
Net investment equity 81
16 2
Total net equity 97 70
1. These vehicles are bankruptcy remote.
securitisation loans of £19 million, and these are presented in “3. Securitisation loan buyout” above.
exposure is limited. However, where some of the investment is via warehouses, the increase in base rates have increased
borrowing costs in combination with a revision to default stress expectations growing gradually and being longer lasting
3. Securitisation loan buyout – This relates to loans held following the closure of certain consolidated securitisation SPVs
4. Private funds – There are a small amount of other loans, comprising seed investments in private funds held as associates.
5. US funding loans – £20 million of loans in the US where we directly funded the loans for a brief period whilst finalising
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
53
Finance review continued
Cash flow
of the reduction was due largely to the funding of our US and FlexiPay operations and the purchase of own shares by the EBT,
offset by foreign exchange gains on cash held in the US business.
Free cash flow, which is an alternative performance measure, represents the net cash flows from operating activities less the cost
of purchasing intangible assets, property, plant and equipment, lease payments and interest received. It excludes the investment
vehicle financing and funding cash flows together with FlexiPay lines of credit. The Directors view this as a key liquidity measure
2022
£m
2021
£m
Adjusted EBITDA 6.8 91.8
Fair value adjustments (4.8)
Purchase of tangible and intangible assets (13.9) (9.4)
Payment of lease liabilities (6.1) ( 7.9)
3.6
Free cash flow (14.4) 82.8
Net distributions from associates 5.4 3.9
Net movement in trusts and co-investments 3.6 (18.8)
Net originations of lines of credit (16.0)
Net movement in other SME loans (22.4) (0.4)
Net movement in warehouses and securitisation vehicles — 53.4
Purchase of own shares (8.7) —
Other 2.4 0.5
Effect of foreign exchange 3.8 0.9
Movement in the year (46.3) 120.7
Cash and cash equivalents at the beginning of the year 224.0 103.3
Cash and cash equivalents at the end of the year 177.7 224.0
STRATEGIC REPORT
Funding Circle Holdings plc54
Financial review continued
Managing through a
volatile environment
to deliver superior
risk-adjusted returns
among economists was for a year of
recovery post-pandemic. This was
expected to generate more opportunities
for SMEs after two years of reduced
consumption as well as short-term
inflation shocks due to backlogged
demand and cluttered supply chains.
Unfortunately, this outlook did not last
long. Events in Ukraine in February led
to an energy cost crisis that rendered
the inflationary pressure unsustainable,
thereby forcing central banks to act at a
pace never seen before. This resulted in
the quick erosion of confidence and a
slowdown in investment, which was
further exacerbated in the UK by a political
crisis within the governing party. The
overall result has been a significant
revision downwards of growth prospects
in most major economies, with the UK
being more adversely impacted than the
US. 2023 is already being seen as a
transitional year during which inflation
of the year.
Despite this environment, Funding Circle
posted a strong credit performance in
2022 with a robust repayment profile in
both the UK and US. On the back of this
performance, we have revised our return
expectations upwards over the course
of 2022 and maintained a strong outlook
to date. This reflects the remarkable
resilience and integrity of SMEs
entrepreneurs, the credit quality of the
loan portfolio and the effectiveness
Since Funding Circle’s inception, we
have always sought to maximise the
adaptability of our credit capabilities
capability to set and implement credit
and underwriting strategies, our ongoing
engagement with our investors, and the
relation to changes in the risk-free rate all
enable us to support SMEs continuously
through the cycle while continuing to
generate relatively superior rewards
for our loans in the UK and US, and we
also diversified our product range with
shorter-term, lower-value loans for
those businesses with different risk
profiles or those seeking shorter
repayment periods. We also recognised
the more negative economic outlook
approach for originations, as announced
in September 2022.
granularity of our monitoring, but also
how our risk models and fraud defences
continue to perform and adapt through
periods of heightened volatility and how
our change management and testing
capabilities are effective.
The credit environment is likely to
remain uncertain and volatile in 2023,
although our two geographies will be
impacted differently. From an economic
risk perspective, the consensus is
prolonged recession, with unemployment
gradually going up but stabilising and
improving as we move towards 2024.
Investment and demand for loans may
therefore remain subdued for some time.
However, we are well placed to navigate
such an environment given the quality of
our monitoring, the learning pace of our
credit models and our flexibility. We aim
to maintain a very focused and prudent
approach to credit risk management.
Furthermore, with the learnings from
the Covid-19 crisis, we remain confident
that our products and processes are
resilient and adequate to continuously
support SMEs through 2023, and in the
process help the economy as it moves
towards a full recovery.
In addition to managing credit risk, we
have also been able to make further
progress with the strengthening of our
broader risk management and control
environment in 2022, notably:
‡ the overall performance of our
government-guaranteed origination
is well within expectations and we
maintained a strong compliance
track record with only one guarantee
‡ we continued to evolve FlexiPay
following its beta launch in 2021,
data driven strategies around credit
risk and operational capabilities
including banking data or collection
‡ we continued to strengthen our
defences against cyberattacks
Belkacem Krimi
Global Chief Risk Officer
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
55
Risk management
‡ we continued to progress the
implementation of new reconciliation
and strengthen our client money
controls, with the system intended
‡ we continued to monitor and
strengthen financial crime controls
and ensured compliance with
anti-money laundering and sanctions
‡ we continued to implement
Management Framework.
Overall, we are proud of the good work
accomplished in 2022 across the
organisation to keep our employees,
borrowers and investors safe and at
society and the economy. The near
future remains uncertain, but we are
confident we have the right tools and
the determination to navigate the
uncertain environment successfully.
Risk management overview
Risk management sits at the heart of
our business. We recognise that effective
management of all key risks is critical to
meeting our strategic objectives and to
achieving sustainable long-term growth.
These key risks need to be identified,
understood and appropriately addressed
to protect our Company, shareholders,
customers, Circlers, community and
regardless of their position, play their
part in managing risk within the
us to manage the risks inherent in our
business activities seamlessly, every
all. Our Enterprise Risk Management
Framework (“ERMF”) defines a common
approach to risk management, with
clear roles and responsibilities, and
provides the foundations for a strong
control environment.
Our approach to risk management
consists of:
‡ putting our culture at the heart
‡ investing in robust risk capabilities,
including advanced data and risk
‡ doing the right thing for our
customers, shareholders
the Risk team oversees risk management
across the Company, in conjunction
with the Legal and Compliance teams.
We also support our first line of defence
employees in their risk management
activities – for example by providing
training and expert support for centralised
risk information management or complex
credit analysis.
Risk culture
and strong risk culture encourages ethical
behaviour and professional conduct. We
promote our risk culture as part of our
ongoing effort to reinforce our Company
values and encourage all our Circlers to
“Do the Right Thing” every day for our
customers, employees, environment,
community and other stakeholders.
Direct access to FC Board
Three Lines of Defence
Compliance
Monitoring
ERM
and Credit
Quality
Decision
Science
Global CRO
General
Counsel
US
Compliance
UK
Compliance
Internal Audit
US CROUK CCO
UK MD CFO
BoardCEO
FirstSecondThird
US MD
STRATEGIC REPORT
Funding Circle Holdings plc56
Risk management continued
Board role
The Board is responsible for setting the
strategy, corporate objectives and risk
appetite. The Board has delegated
responsibility for reviewing the
effectiveness of the risk management
framework to the Board Risk and
Compliance Committee (“RCC”). On the
advice of the RCC, the Board approves
the level of risk acceptable under each
principal risk category, whilst providing
oversight to ensure there is an adequate
framework in place for reporting and
managing those risks.
Chief Risk Officer and the
leads the Risk function, which is
independent of the business and has a
direct reporting line to the Board. He is
responsible for developing, maintaining
and implementing the ERMF. He is also
responsible for providing assurance to
the Board that the principal risks are
appropriately managed and that Funding
Circle is operating within risk appetite.
Risk management policies
We have formalised and implemented
risk management policies defining
mandatory requirements to mitigate the
principal risks that we face, with clear
risk limits and requirements to monitor
risks and adherence to limits. The Risk
and Compliance teams regularly review
these policies and controls to verify
compliance and to adapt to changes
Risk appetite
Our risk appetite is defined as the level of
risk that we, as a company, are prepared
to accept whilst pursuing our core
business strategy, recognising a range
of possible outcomes as business plans
are implemented. The Board sets the
risk appetite and reviews the Company
risk profile against risk appetite. Risk
appetite provides a guideline for shaping
business strategies and defining the
level of controls needed. It also provides
a basis for ongoing dialogue between
management and the Board with
respect to Funding Circle’s current and
evolving risk profile, allowing strategic
and financial decisions to be made on
an informed basis.
Risk governance
Funding Circle has a risk governance
framework that is documented in the
ERMF. Responsibility for defining and
approving the ERMF lies with the Board.
The risk governance framework includes
Board, the UK Board and Principal Risk
Committees as appropriate.
We operate a Three Lines of Defence
model across all markets in which we
operate. Funding Circle’s Three Lines
structure have been designed to manage
our principal risks in a consistent manner
The Board Risk and Compliance
Committee (“RCC”) is supported by
Leadership Team. The ERC has
sub-committees focused on each
principal risk, as set out below.
Risk governance structure
Business Unit Committees
Board Committees
Group Committees
Funding Circle Holdings Board
Board
Risk and Compliance Committee
Board
Audit Committee
Board
Disclosure Committee
Balance Sheet
Management Committee
Management Risk Committee
Regulatory, Reputation and
Conduct Risk Committee
Credit Risk
Management Committee
Operational
Risk Committee
Technology Security and
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
57
Risk assessment framework
carried out by those individuals, teams and departments that are best placed to
identify and assess potential risks. They are supported in this process by our Risk and
Compliance teams.
Enterprise risk
management
1
3 2
1. Evaluate
‡ Identify key risks
‡ Set risk appetite
‡
‡ Estimate residual risk
2. Respond
‡ Design control improvement plans
‡ Prioritise remediation work and
assign responsibilities
3. Monitor
‡ Track business performance vs.
risk appetite
‡ Report, analyse and escalate
‡ Identify new or emerging risks
‡ Track delivery of agreed
Risk culture continued
Management Risk Committee
The MRC reviews all principal risks
environment, social and governance
risks are managed by the leadership
team of each Business Unit and
reviewed at the MRC.
Balance Sheet
The Balance Sheet Management
Committee is responsible for oversight
Credit Risk Management Committee
The Credit Risk Management
Committee’s focus is on ensuring that
the credit risk of each Business Unit’s
loan portfolio is adequately managed.
Regulatory, Reputation and Conduct
Risk Committee
The Regulatory, Reputation and
Conduct Risk Committee focuses
reputation and conduct risks, and
oversees new product approvals.
Operational Risk Committee
The Operational Risk Committee’s focus
is to ensure that operational controls are
effective and that operational and
financial crime risks are adequately
managed in each Business Unit.
Technology Security and
The focus of the Technology Security
and Risk Sub-Committee is to ensure
effective governance and controls are
risks that could impact the performance,
stability, information security and
resilience of the technology infrastructure
and operations that support our key
business and compliance processes.
Evaluate
ERMF the Board has formally recognised
a series of risks that are continuously
present at Funding Circle and can
materially affect the achievement of
Funding Circle’s objectives. These risks
have been organised under a consistent
and simple taxonomy with a hierarchy
of risk categories, which facilitates
management of these risks is assigned
to designated business owners who
formally assess on a regular basis
Respond
The appropriate risk response ensures
Circle we have four types of possible
risk responses:
‡
‡ take mitigation actions (such as
additional risk controls) to reduce
‡
the proposed activity to remove the
‡ continue the activity and transfer the
risk to another party (e.g. insurance).
Monitor
Monitoring and reporting on Funding
Circle’s risk exposures are undertaken
through risk governance structures. The
RCC receives a consolidated risk report
no less than three times a year detailing
plans, as well as risk outlook. The RCC
is also provided with metrics and regular
reports about the activities of the Risk
and Compliance functions.
Risk assurance
Defence model including the Internal
annual controls assurance reports (e.g.
1 Type 2) certified by auditors.
STRATEGIC REPORT
Funding Circle Holdings plc58
Risk management continued
The Board confirms that throughout 2022 a robust assessment of the
principal risks facing Funding Circle was completed. A comprehensive
list of Group-wide risks and emerging risks was reviewed and monitored
throughout the year. The most significant risks and uncertainties faced by
Funding Circle are listed in the table below, categorised by principal risk:
Strategic risk
Strategic risk is defined as the failure to build a sustainable, diversified and profitable business that can successfully adapt
to environment changes due to the inefficient use of Funding Circle’s available resources.
Risk appetite Funding Circle will make efficient use of its available resources to build a sustainable, diversified and profitable
change risks.
Key risks Management of risk Change in risk in year
Strategic risk
The risk that Funding
Circle does not achieve
its key business
its competitive advantage
and business operations.
strategic planning process based on risk appetite,
financial considerations, strategic themes and
manage strategic risk by:
‡ performing an in-depth business strategy
‡ reviewing financials, strategic plans for
‡ reviewing the strategic risk implications of
‡ the Board providing oversight of strategic risk and
approving business strategic plans at least annually.
Strategic risk continues to be high given
the current macroeconomic climate, and
its impact on SMEs. This is likely to lead
to fluctuations in borrower and investor
demand over the near to mid-term. There
is also material uncertainty in the interest
rate environment and from inflation,
which continue to affect loan return
expectations and the pricing of
Funding Circle has also launched new
products such as FlexiPay for which
performance and demand may be
uncertain until they reach scale.
Funding Circle is monitoring these trends
carefully and is continuously adjusting
product offerings to fit market conditions
and meet evolving demand.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
59
Principal risks and uncertainties
Strategic risk continued
Key risks Management of risk Change in risk in year
Economic environment
Financial risk that
macroeconomic or
political factors that
Circle’s financial and/or
credit performance.
We continually monitor the health of our loan
portfolios and perform stress test simulations to
help ensure that loan returns remain resilient in the
context of risk volatility. Key mitigating actions
include (but are not limited to):
‡ annual stress testing of loan portfolios in
‡ resilient credit strategy and continuous tuning of
risk and pricing parameters to correct for possible
‡ independent validation and continuous monitoring
‡ monthly monitoring of internal and external
signals as part of the Credit Risk Management
‡ agile capability to rapidly deploy pricing and credit
‡ experienced in-house collections and recoveries
capabilities with built-in scalability.
recovery, most of the world economies
entered a cycle of high inflation
exacerbated by the Ukraine war and the
following energy shock. This led to a fast
deteriorating economic outlook as central
banks went onto multiple increases of
interest rates to tame the inflationary
pressure, with moderate success so far.
stabilisation and potential improvement
in the US with divergences about the
probability of a recession, the economic
outlook for the UK remains recessionary
for 2023 and 2024, exacerbated by other
factors such as political turmoil and Brexit.
In this context, we are continuously
adjusting our credit strategies to ensure
that returns meet investors’ hurdles in an
environment of increasing risk-free rates
and constantly monitor credit
performance to adjust our underwriting
framework and models as needed.
We are doing so tactically, taking into
account the risk dynamics of our different
products and the different dynamics
between the US and the UK.
STRATEGIC REPORT
Funding Circle Holdings plc60
Principal risks and uncertainties continued
Strategic risk continued
Key risks Management of risk Change in risk in year
Environmental, social and governance risk
Environment, social and/
or governance events or
circumstances could
cause an actual or
potential material
negative impact on
Funding Circle’s financial
performance or reputation.
‡
‡ The Board retains ultimate responsibility for
providing the strategic focus, support and
and opportunities. The Board delegates certain
matters related to climate-related risks and
opportunities to two Committees:
‡
including climate-related opportunities and
‡ the Risk and Compliance Committee
Climate change risk
Funding Circle is committed to managing the
transition and physical risks of climate change,
to align to net zero.
The Board has reviewed and approved our strategy
related to climate change and the environment.
the UK government’s commitment, while setting a
stretch target to reach net zero by 2030 for our
operational emissions. We have not yet developed
an annual transition plan or set science-based
targets but we continue to progress our strategy
with support from climate and industry experts,
Protocol Category 15). We will avoid greenwashing
and will look to deliver accurate and transparent
information on our impacts and progress (including
through our TCFD disclosure).
part of our ERMF and mature our
them into day-to-day practices and
first-line teams.
In 2021 we disclosed a commitment to
be net zero by 2030. The interpretation
continues to evolve with the development
of available standards and methodologies
to define and understand the term. In line
with this evolution, we have now reviewed
our climate goals towards more precise
and realistic objectives.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
61
Funding and balance sheet risk
Funding and balance sheet risk is defined as the risks associated with platform funding (matching borrower demand and
supply of funding), capital commitments and corporate liquidity through normal and stress scenarios.
Risk appetite Funding Circle will make efficient use of its balance sheet and optimise and diversify funding and liquidity sources
to enable a balanced funding strategy whilst limiting downside risk.
Key risks Management of risk Change in risk in year
Funding risk
The risk that demand
from borrowers for loans
cannot be fulfilled when
and where they fall due
economic attractiveness
of Funding Circle loans as
an investment, the level
of diversification of
funding sources and the
level of resilience of
these funding sources
through economic cycles.
Funding Circle’s business model is to be a lending
platform that efficiently matches the supply of
capital to the demand of SME borrowers.
We carefully manage this matching by:
‡ building long-term relationships with investors
and developing a forward-looking pipeline of
‡ actively managing concentration risk and
‡ managing Funding Circle’s lending activities
whether through direct lending capacity,
securitisation capacity or investment fund
‡ monitoring a broad range of management
information and key performance indicators
‡ leveraging a seasoned team for capital markets
sales and transactions structuring.
In the UK in 2022, we returned to non-
government-guaranteed lending following
the end of the RLS scheme. This coincided
with a material downturn in the economic
environment as the risk of a recession
increased, while inflation resulted in a
sharp increase in market interest rates.
Despite this worsening environment, we
experienced demand from institutional
investors to fund new loans. This
demonstrates the trust our funding
partners place in the soundness of our risk
management, and the experience they had
with previous investments that delivered
positive returns despite the Covid-19 crisis,
but it did result in FC requiring to raise
rates to maintain loan returns, transactions
taking longer to execute, and investors
requesting increased protection.
We have onboarded new investors,
continuing the trend from the previous
years, with new asset managers, and we
have strong institutional relationships
providing a good basis for our future
funding needs.
Similar to the UK, the US has been
navigating a deteriorating economic
environment and a challenging rate
environment. In addition, increased
regulatory scrutiny of bank and fintech
relationships has created a number of
challenges for a subset of investors.
Despite the above, new investors
continued to be added to the platform
commitments were lower than initially
expected. In early H2 institutional
investors were increasingly cautious
STRATEGIC REPORT
Funding Circle Holdings plc62
Principal risks and uncertainties continued
Funding and balance sheet risk continued
Key risks Management of risk Change in risk in year
Balance sheet risk
The risk that Funding
Circle investment
positions reduce in value
The risk that Funding
Circle liabilities cannot
they fall due or can
uneconomic price.
We carefully manage this risk by:
‡ setting clear guardrails for Funding Circle balance
sheet exposures and following a set of agreed
‡ maintaining a prudent level of liquidity to cover
unexpected outflows to ensure that we are able
‡ considering a broad range of management
information and key performance indicators at
the Balance Sheet Management Committee and
‡ leveraging a dedicated and experienced Balance
Sheet Management team.
Our overall approach to having a robust
balance sheet and prudent management
of liquidity remains unchanged.
We have simplified our balance sheet in
the year and successfully unwound two
one in the UK and one in the US, resulting
in us holding SME loans directly instead
bonds. We have sold the majority of the
related UK SME loans (securitised) at a
viable price and expect quick amortisation
or opportunities for sale of the related
We have temporarily utilised our balance
sheet to originate SME loans to ensure
continuity of funding while onboarding
new investors. We sold the majority of
these loans in February 2023.
We have sufficient disposable cash to
cover our liquidity needs, including when
tested against stressed liquidity scenarios,
and to fund our medium-term plan
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
63
Credit risk
Credit risk is the risk of financial loss to an investor should any borrower fail to fulfil their contractual repayment obligations.
Credit risk management is the sum of activities necessary to deliver a risk profile at portfolio level in line with Funding Circle
Risk appetite Whether or not Funding Circle owns any credit risk, credit risk of loans will be managed with the utmost care and
attention to deliver credit performance and returns in line with expectations.
Key risks Management of risk Change in risk in year
Credit risk
Borrower acquisition
Credit performance and
returns of new loans can
due to several factors:
changes in credit quality
of incoming applications,
calibration of risk models
or strategy parameters,
and control gaps
Portfolio risk
management
Credit performance
portfolio can deviate
deterioration of credit
environment, increased
competition driving
higher prepayment rates,
effectiveness of portfolio
monitoring, collections
and recoveries.
Funding Circle’s aim is for well balanced loan
portfolios that generate positive returns for investors
through the economic cycle.
We are actively managing credit risk by:
‡ formulating credit risk policies (covering credit
assessment and risk grading, portfolio monitoring
and reporting, collections and recoveries) and
‡ recruiting, training and managing expert risk
professionals with the adequate skills, objectives
‡ establishing the formal mandates and
authorisation structure for setting risk
‡ performing independent quality control of
‡ limiting concentration risk to counterparties
‡ actively monitoring the performance of the
‡ implementing adequate procedures and controls
for model risk (including the independent validation
‡ performing annual stress tests with high-quality
‡ with regards to government programmes, tightly
controlling adherence to eligibility criteria.
Whilst our portfolios in the US and UK
performing better than expectations —
its inflationary pressure as a significant
challenge to our borrowers and are adopting
a more prudent approach to credit risk and
lending volumes.
Funding Circle is entering 2023 in a strong
position from a credit risk standpoint,
capitalising on our data and experience
since our inception. Our credit risk
‡ adequately staffed and well trained
‡ forbearance tools and policies
‡ constant portfolio monitoring with credit
models and flexible decisioning
‡ regular pricing reviews to ensure adequate
risk-adjusted returns for our investors in
STRATEGIC REPORT
Funding Circle Holdings plc64
Principal risks and uncertainties continued
Regulatory, reputation and conduct risk
Regulatory, reputation and conduct risk is defined as engaging in activities that detract from Funding Circle’s goal of being
way that will not cause customer detriment or regulatory censure.
Risk appetite Funding Circle will not engage in activities that detract from its goal of being a trusted and reputable financial
services company with products, services and processes designed for customer success and delivered in a way that will not
cause customer detriment or regulatory censure.
Key risks Management of risk Change in risk in year
Regulatory risk
The risk that Funding
Circle’s ability to
effectively manage its
regulatory relationships
is compromised or
diminished, that the
is not satisfactory given
business growth, or
interruption by reason
regulation or the
introduction of business-
impacting regulation.
‡ We remain vigilant to proposed changes affecting
our business and we engage with policy makers
where relevant. We have continued to invest time
and resources in external relations, including
educating policy makers, regulators and other
influencers on the features, benefits and impact
of platform lending.
‡ We continue to implement and maintain business
practices and controls focused on regulatory risk,
including controls designed to comply with the
Senior Managers and Certification Regime.
‡ We continue to focus on governance and controls
and train all employees in such matters as are
relevant to their role.
‡
assist with emissions measurement, verification
and disclosure.
In the UK, there is continued regulatory
attention regarding the viability of firms and
the possible consumer harm in the event of
firm failure. The amortisation of the UK
retail investor product has reduced this risk
materially, although the persistent level of
client money held continues to be of
interest to regulators.
increased regulation, for example in the
form of mandatory disclosures (including
on net zero transition plans reporting by
product labels). Proactive monitoring
continues as this area evolves.
In the US, an increase in regulatory scrutiny
in connection with the occurrence of fraud
in the legacy Payment Protection Program
however, Funding Circle does not believe
this poses a material risk as we maintained
our standard fraud risk management
practices in respect of the PPP and the
incidence of fraud experienced by Funding
Circle during the PPP was broadly in line
with expectations and materially lower than
some other participants that have received
most attention.
In addition, various bank regulators in the
US have expressed concern with regard
connection with partnerships with fintechs.
While this concern is focused on the banks
themselves rather than fintechs individually,
this increased scrutiny may result in
changes to bank practices and increased
operational requirements and burdens in
relation to their fintech partnerships.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
65
Regulatory, reputation and conduct risk continued
Key risks Management of risk Change in risk in year
Reputation risk
Operational or
performance failures
could lead to negative
publicity that could
adversely affect our
brand, business, results,
operations, financial
condition or prospects.
We continue to implement and maintain business
practices and controls focused on reputation
management, including:
‡ ensuring RCC consideration of new or iterated
‡ engaging fully with regulators when required, and
external advisers in relation to any new or iterated
products and initiatives that might impact on
‡ undertaking specific projects to address
identified risk topics and issues, including
retrospective reviews, internal audit reviews and
‡ updating and refining our approach to issue and
risk identification and management.
The introduction of the FlexiPay product in
the UK will add additional complexity and
risks related to operations and performance
as the product scales. We are closely
monitoring the operational and product
performance as it scales. However, further
improvement and iteration may be required
as the product matures.
Conduct risk/treating customers fairly
Funding Circle’s activities
(or the failure to
satisfactorily perform its
activities) could impact
the delivery of fair
customer outcomes.
‡ We perform regular quality assurance reviews at
a product level, conduct monitoring and testing
periodically in regard to compliance with specific
regulatory requirements, and undertake regular
management reporting to identify potential
performance weaknesses and customer impacts
for review by senior management for oversight
through various risk committees.
‡ Conduct rules training has been developed and
rolled out across the UK business.
‡ Compliance Monitoring and Testing and
and processes are designed to deliver fair
customer outcomes.
‡ We have a dedicated Business Support Team
incorporating our Complaints Handling Team and
a specific team focused on vulnerable customers.
Complying with applicable laws and
regulations and ensuring positive customer
outcomes continue to be fundamental
priorities for Funding Circle.
Despite the challenges of oversight and
monitoring of employees and controls in a
hybrid environment, we do not consider this
risk to have increased.
STRATEGIC REPORT
Funding Circle Holdings plc66
Principal risks and uncertainties continued
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from
external events.
Risk appetite Funding Circle will operate well managed processes with reliable performance and effective controls preventing
significant and non-anticipated operational risk losses.
Key risks Management of risk Change in risk in year
Process risk
Failure to originate and
service loans in line with
Funding Circle internal
policies, investor
guidelines and third party
loan guarantees (e.g. the
British Business Bank
and Small Business
Administration) may
result in Funding Circle
repurchasing loans
The risk of operational
incident could impact the
ability to originate new
loans or the ability to
service loans through
collections from
borrowers and return
We actively manage process risk by:
‡
‡ performing robust first-line quality assurance
‡
‡ reviewing key risk indicators as part of the
‡ reporting, reviewing and resolving
‡ performing independent quality control checks
‡
‡ providing training and education on risk culture
‡ performing supplier due diligence and
undertaking ongoing performance monitoring
We continued to actively manage process
risk with robust first line of defence
controls which is reflected in fewer loan
repurchases from investors, upheld
complaints and operational errors.
We have robust controls in place, as well
as independent quality checks to ensure
that all loans originated (unsecured and
government schemes) are compliant with
loan eligibility requirements.
The forecasted growth in Funding Circle’s
FlexiPay product potentially increases
operational risk and there is also a higher
intrinsic risk of the product relative to
SME loans.
In 2022, we piloted a controls library to
manage FC key controls, which we will
continue to mature as part of our internal
control environment.
We also perform external assurance over
our internal controls with satisfactory
reports for FY 2022:
‡ United Kingdom — PwC tested internal
controls over the loan servicing
processes of Funding Circle Ltd (“FCL”)
in accordance with the International
‡
internal controls over the loan
servicing processes of Funding Circle
Service Organisations Control
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
67
Principal risks and uncertainties continued
Operational risk conti nued
Key risks Management of risk Change in risk in year
Information security
Failure to protect the
confidential information
of Funding Circle’s
borrowers, investors
reputational damage
‡ Our Director of Information Security is
responsible for managing information security by:
identifying threats and protecting Funding Circle
recover from incidents.
‡ Information security is a priority for Funding
we maintain in-depth defence with a multi-layered
control infrastructure.
‡ Information security has a direct line of sight to
the Board via the Technology Security and Risk
Sub-Committee, Operational Risk Committee and
Executive Risk Committee which feed into the
Board Risk and Compliance Committee.
In 2022, we continued to see improvements
in our information security infrastructure
with a strong focus by the FCH Board.
We improved our incident response
preparedness by testing our triage and
reaction to cyber incidents at various
points during the year. Further improving
our information security controls will
remain a key focus as the threat
environment continues to evolve.
In addition, we achieved a 2% failure rate
for phishing tests for the Company
compared to the industry global average
failure rate of 4%.
Technology risk
Failure of the technology
platform could have a
material adverse impact
on Funding Circle’s
business, results of
operations, financial
condition or prospects.
‡ We have robust risk governance structures in
place with direct oversight for technology risk to
ensure that they are within risk appetite – Board
Risk and Compliance Committee, Executive Risk
Committee, Operational Risk Committee and
Technology Security and Risk Sub-Committee.
‡ We continue to make significant investments
platform is resilient and scalable to support
business growth.
Technology risk and technical resilience
continue to improve with more robust
testing capabilities in place to support
changes before production implementation.
We have also improved our technology
automation, alerting and incident response
capability to maintain a stable platform to
enable business growth, scalable products
and services.
Data risk
Failure in our ability to
acquire, use, secure and
transform our data assets
could result in adverse
material impacts across
Funding Circle.
‡ Our data risk management framework is aligned
to the Funding Circle ERMF.
‡ Data risks are appropriately managed based on
materiality and are escalated to the Business Unit
Operational Risk Committee as appropriate.
We continue to mature and embed
organisational structure to manage data
risk including the implementation of
Protecting our customer and employee
data, in particular PII, is a high priority for
Funding Circle, and we take appropriate
measures to prevent loss or breach of data.
STRATEGIC REPORT
Funding Circle Holdings plc68
Operational risk conti nued
Key risks Management of risk Change in risk in year
Financial crime
Risk of regulatory breach,
financial loss or
reputational damage
arising from a failure
laundering, terrorist
financing, bribery and
corruption, or to comply
with sanctions regulations.
‡ Complying with the laws and regulations
designed to counter money laundering, terrorist
financing, corruption and bribery is fundamental
to Funding Circle’s operations.
‡ The Board has adopted policies to address
financial crimes that have been implemented
‡ We have a dedicated Financial Crime Operations
team within the first line of defence that is
advised, challenged and monitored by the
second-line Financial Crime Compliance team.
In the UK, the introduction of the FlexiPay
product will add additional complexity
and risks related to money laundering and
fraud as the product scales. We continue
to undertake rigorous fraud, anti-money
laundering and Know Your Customer
further improvement and iteration may be
required as the product matures. We
continue to closely monitor the incidence
of fraud with this product so that we may
implement additional controls if required.
Client money risk
Failure of Funding Circle
to adequately protect and
segregate client money
may lead to financial loss,
reputational damage and
regulatory censure.
Funding Circle holds funds for retail and institutional
investors in segregated client money bank accounts
regulations. We continue to manage the risk through:
‡
focused on providing oversight and challenge
regarding the effectiveness of client money
controls, making decisions in relation to client
money and reviewing management information
and regulatory returns, as well as reviewing risks
and mitigating controls when introducing new
‡ oversight from the Funding Circle Ltd Board
management information, prepared for and
approved by the Senior Manager with
responsibility for the firm’s compliance with
‡
‡ periodic internal audit reviews covering
‡
In 2022, we have maintained a robust
control environment in relation to payment
creation, payment authorisation,
reconciliation review and monthly reporting.
The controls created for the money flows
related to trust structures needed to
participate in the UK government schemes
(CBILS, BBLS and RLS) are embedded in the
control environment alongside the controls
for non-government-guaranteed lending.
Funding Circle returned to commercial
lending following the end of the participation
in the RLS scheme in 2022.
Funding Circle continued to enhance its
forbearance offering for borrowers, building
the capability to process partial payments
from borrowers whose loan moved into late
status. New controls were implemented for
the late payment money flow. Monitoring of
controls for partial payments from borrowers
on payment plans and in late status continued
throughout the period to ensure controls
were operating as expected and fully
embedded within the control environment.
continued during 2022 and the considerations
given to the published “Dear CEO” letter in
2020, addressing the increased client money
balances, continued to be monitored by the
UK Board. Proactive contact continued to
be made with our retail investors to create
awareness of funds available to withdraw
and we have seen the balance held continue
to reduce throughout 2022.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
69
Assessment of prospects
The Directors have determined that a
three-year period to 31 December 2025
constitutes an appropriate period over
which to perform the assessment as:
‡
‡ it represents a period over which
there is a reasonable degree of
confidence in the reliability and
‡ periods beyond this point in a
high-growth business like Funding
Circle are significantly harder to
business model, as set out on pages 18
to 19, and 22 to 23, are fundamental in
driving the growth of the business and
therefore its future prospects. The key
factors that are likely to affect the future
macroeconomic factors, include the
ability to:
‡ develop and introduce new
‡ grow awareness of the Funding
Circle brand in order to attract more
‡ diversify and increase funding from a
variety of investors in order to meet
‡ continue to invest in data analytics
and technology leading to innovation,
expanded datasets, enhanced credit
models, better customer experience
and a greater conversion rate
Funding Circle’s future prospects are
planning process. The strategic
planning process involves a detailed
review of the medium-term plan by the
CEO and CFO. This is done in
Team, consisting of regional and
functional leaders, together with a
review and discussion by the Board.
The strategic plan starts with the
subject to reforecasting periodically
through the year. The budget is
extended into the second and third year
drivers and expected growth rates
Progress against the financial budget
and forecasts is then reviewed each
and reported to, and challenged by,
Key assumptions
The key assumptions underpinning
plausible scenarios) include:
‡ there is sufficient investor funding
‡ levels of marketing spend, the
number of applications, conversion
rates, average loan sizes and mix
originations and loans under
‡ levels of repayments, prepayments,
defaults and recoveries which drive
‡ expected yields on loans originated
and service fee charges which drive
‡ interest income receipts and interest
expenses related to our investment
vehicles which drive net investment
‡ costs across geographies with
specific focus on fixed costs and
those that fluctuate with income
‡ headcount consideration across
functions and departments given
‡ an assumption of continued
infrastructure and its product set
fundamental breakdown in the IT
‡ review in the context of indicative
market share in each geography.
Following the disruption to all SMEs
caused by various macroeconomic
events such as the war in Ukraine,
energy prices and inflation, we expect
that the economy and SMEs do recover
from the current market conditions but
not starting until in 2024.
We have not assumed further
government stimulus packages over the
medium term.
Assessment of viability
The output of the medium-term plan
reflects the Directors’ best assessment
over the next three years.
Directors have considered and carried
out a robust assessment of the principal
In accordance with the UK Corporate Governance Code (the “Code”),
the Directors have assessed the future prospects and viability of
the Group for a period significantly longer than 12 months from the
approval of the financial statements.
STRATEGIC REPORT
Funding Circle Holdings plc70
Viability statement
impact of the risks on the viability of the
liquidity needs and its availability,
including liquidity currently tied up in
together with £97 million equity
invested in loans.
The financial plan was subject to differing
scenarios to assess those risks and
quantify the financial impact on the
and capital guardrails that it monitors
which are of particular importance in
the shorter term.
The scenario that represented the most
severe but plausible scenario was
modelled as described below. This
sensitivity took into account the likely
mitigating actions to the operations.
The scenario is hypothetical and severe
but designed to stress the business
Severe but plausible scenario
Under a severe downturn it is
‡ there would be a short-term period
significantly reduced transaction
fees earned, gradually normalising
‡ following a further severe global
downturn there would be a
significant increase in the number of
borrowers defaulting impacting LuM
‡ the returns for investors would be
negatively affected resulting in a
‡ this in turn would reduce the level
were offered to investors to
reduction in trust from both borrowers
and investors, has also been considered
within this scenario. We considered
whether environmental stress would
consider the existing stresses above
would be more material to the near to
medium term.
The mitigating actions that would be
taken by management include a
reduction in the overall marketing and
salary spend, a tightening of the credit
models to improve the levels of return
for investors and increased costs of
borrowing for SMEs. Our medium-term
plan assumes we continue to be the
sole equity funder of FlexiPay.
In a stressed scenario, a further
management action is that we would
curtail the growth of FlexiPay and this
would reduce the level of investment
required by Funding Circle.
Links to principal risks and
uncertainties
‡ Strategic risk
‡ Credit risk
‡ Liquidity risk
Going concern and viability
The stress testing confirmed that the
remained positive and that none of the
scenarios would threaten the viability of
regulatory capital requirements.
In all cases including the severe but
plausible scenario above, with
appropriate management actions, the
scenarios were controllable to mitigate
the broader assessment of the
The shorter term projections within the
million, together with unrestricted cash
invested capital, some of which could
be monetised if liquidity needs arise.
institutional investors for servicing
agreements for which there are
unrestricted cash, tangible net worth
and debt to tangible net worth ratios.
remains within the required levels.
Based on this assessment, the Directors
have a reasonable expectation that the
operation and meet its liabilities and
obligations as they fall due over the
period to 31 December 2025 as well
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
71
Corporate
governance
Funding Circle Holdings plc72
73 Introduction from the Chair
74 Board of Directors
76 Corporate governance report:
Key Board activity
88 Report of the Nomination Committee
91 Report of the Audit Committee
96
98 Report of the ESG Committee
100 Directors’ remuneration report
104
116 Report of the Directors
119
I am delighted to introduce Funding Circle’s Corporate Governance
Report for the financial year ended 31 December 2022.
As I have written in the Strategic Report, this coming year
uncertainty is a strong and resilient corporate governance
foundation that ensures Funding Circle is a successful,
We have refreshed our Corporate Governance Report this
Corporate Governance Code 2018 (the “Code”) and the reasons
for any non-compliance.
You will find more information in this report on how we have
used statute, regulation, the Code and our values to ensure we
have good governance that demonstrates the right behaviours
and culture that we wish to see throughout the organisation.
Our Committees do much of the heavy lifting to ensure that we
Circle. Our reputation, our sustainability and our impact depend on
compliance, regulation, financial controls, people and environment.
The Committees are responsible for this oversight; they report
strategic direction.
Andrew Learoyd
Chair
2 March 2023
Introduction
from the Chair
Andrew Learoyd
Chair
We know that a key
element to navigating
through uncertainty is
a strong and resilient
corporate governance
foundation that
ensures Funding
Circle is a successful,
sustainable business”
Annual Report and Accounts 2022 73
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
1. Andrew Learoyd
R
D
N
E
Chair of the Board
Term of office:
Independent: On appointment.
Skills and experience:
External appointments:
Learning Ltd which provides educational services for children with special
learning disabilities.
2. Lisa Jacobs
D
Chief Executive Officer
Term of office:
on 1 January 2022.
Independent:
Skills and experience: Lisa joined Funding Circle in 2012 and was
External appointments:
3. Samir Desai CBE
Founder, Non-Executive Director
Term of office: Samir co-founded Funding Circle in 2010 and was
Director role in January 2022.
Independent:
Skills and experience:
External appointments:
4. Oliver White
D
Term of office:
Independent:
Skills and experience: Oliver has spent the majority of his 30 years’
External appointments:
1
5
9
2
6
10
3
7
11
4
8
Funding Circle Holdings plc74
CORPORATE GOVERNANCE
Board of Directors
5. Eric Daniels
A
RC
Non-Executive Director
Term of office:
Committee in September 2018.
Independent: Yes.
Skills and experience:
range of management positions.
External appointments:
Research Institute. He also advises on a number of private companies.
6. Geeta Gopalan
RC
A
N
D
Senior Independent Director
Term of office:
May 2021.
Independent: Yes.
Skills and experience:
External appointments:
7. Hendrik Nelis
Non-Executive Director
Term of office:
Director in September 2013.
Independent:
Skills and experience:
software, fintech and consumer internet companies. He led Accel’s
External appointments:
or Member at a number of Accel entities, as well as a Director or
supervisory board member of several other companies.
8. Neil Rimer
E
Non-Executive Director
Term of office:
Director in March 2011.
Independent:
Skills and experience:
Holdco Limited, Supercell Oy and The Climate Corporation.
External appointments:
of Human Rights Watch.
9. Helen Beck
E
N
R
Non-Executive Director
Term of office:
Director in June 2021.
Independent: Yes.
Skills and experience:
previous roles in her career, Helen was Global Head of Reward at Standard
resources at Fidelity International.
External appointments:
10. Matthew King
E
A
Non-Executive Director
Term of office:
Director in May 2021.
Independent: Yes.
Skills and experience:
External appointments: Matthew is also the Chair of Funding Circle Ltd’s
11. Lucy Vernall
D
Term of office:
Independent:
Skills and experience:
Compliance functions of the business, in addition to being Company
External appointments:
Board Committees
Audit Committee
Remuneration Committee
Committee
Committee
Committee Chair
A
R
N
RC
E
D
Annual Report and Accounts 2022 75
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Corporate governance report
Key Board activity
Attendance and schedule of meetings for 2022/23
Attendance for the Committee meetings can be found in each of the Committee reports on pages 88 to 100.
Director Attendance
Andrew Learoyd 100%
Lisa Jacobs 100%
Oliver White 100%
100%
Geeta Gopalan 100%
71%
100%
100%
Samir Desai 100%
Matters reserved for the Board
CORPORATE GOVERNANCE
Funding Circle Holdings plc76
Q1 2022 (January – March):
‡ Full-year results announcement
‡ Review of Annual Report and Accounts
‡ Investor relations update
‡
‡
‡ Retail platform discussion
‡
Q3 2022 (July – September):
‡ Half-year results (including reforecast)
‡ GLT update
‡
‡ Contingency planning
‡
Q2 2022 (April – June):
‡
‡ Corporate strategy and M&A review
‡ Investor relations update
‡
‡
‡ AGM
Q4 2022 (October – December):
‡ Strategy “off-site”
‡ Investor relations update
‡
‡ 2023 budget and plan
‡
‡ Technology update
‡
‡
Standing agenda
items at all Board
meetings include:
‡ Governance
‡ Committee reports
‡ CEO report including
trading updates
‡ Financial and
operational review
Activities of the Board
Our corporate governance framework
through which it can be effectively directed and controlled. The Global Leadership Team (“GLT”) provides leadership in the
its Committees, more information on this can be found on pages 88 to 100. There is a flow of information both ways between
Annual Report and Accounts 2022 77
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Corporate governance report continued
The role of our Committees
You can find all the information you need about the role and activities of our Committees including their governance,
‡
‡
‡ Remuneration Committee on page 100;
‡
‡
Market Disclosure Committee
Division of responsibilities
Board decision making and section 172(1) duties
annual basis). In discharging these duties, the Directors have regard to the factors set out in section 172(1)(a)-(f) of the
the Directors have had regard to the matters set out in section 172(1)(a)-(f) when discharging their duties during the year.
Principal
decision
Stakeholders
considered
Board’s decision making process
To permanently
close the
Retail investors
Institutional
investors
Shareholders
Circlers
permitted by the government to participate. With some major changes within the industry
including the closure of other peer to peer lending platforms, proposed regulatory
retail platform.
‡
resources that were already focused on delivering the borrower roadmap and investing
‡ Sources of funding across non-retail lenders had been significantly diversified
the medium term-plan and beyond without retail.
purchases
Shareholders
Circlers
approved the proposal on the basis that it mitigated the dilutive impact on shareholders of
the Company’s employee share plans and was a good and efficient use of cash in light of
CORPORATE GOVERNANCE
Funding Circle Holdings plc78
Principal
decision
Stakeholders
considered
Board’s decision making process
Committee
Compliance
Committee
Terms of
Reference
Investors
Shareholders
Circlers
Government
Communities
to update the Terms of Reference. Amendments to the Terms of Reference of the two
community and the environment is a positive one and the review and amendment to the
Committees’ Terms of Reference ensured each Committee’s remit covered the appropriate
Appointment
members
Investors
Shareholders
Circlers
medium-term plan.
All appointments were made following an in-depth search process and were considered to be
shareholders and Circlers.
Investors
Shareholders
Circlers and
Communities
enable them to spend and pay as well borrow longer term with our term loan product; our
strategic pillars of our medium-term plan so the decisions around how to progress and
Monitoring
effects of
environment
Investors
Shareholders
Circlers
Government
Communities
decisions made in regard to the direction of the business on its customers and Circlers.
personal lives of Circlers across the Group. Supportive customer service is even more
important in challenging economic times. We have a dedicated business support team
incorporating our complaints handling team and a specific team focused on vulnerable
customers. We have also been able to serve more borrowers responsibly by introducing
Annual Report and Accounts 2022 79
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Corporate governance report continued
The UK Corporate Governance Code 2018
long-term sustainable success and its wider objectives. With this in mind, the Company was compliant with all the provisions of
needed by the Company with the current macro economic environment and the delivery of the medium-term plan. The
principles of the Code.
CORPORATE GOVERNANCE
Funding Circle Holdings plc80
Board leadership and company purpose
Principle 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.
process which is always in the long-term sustainable interests of the Company
Principle B.
The board should establish the
company’s purpose, values and
strategy, and satisfy itself that these
and its culture are aligned. All directors
Information on the Company’s purpose, values and strategy are set out in the
Funding Circle is dedicated to implementing and maintaining the highest standards
where adherence to these standards is recognised and rewarded. All Directors
outlines these standards. The Code of Conduct supports our mission and
complements our values against which performance is appraised, providing
Principle 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.
to meet its objectives and measure performance against them. As the Company
across the whole business.
Principle 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,
engagement with shareholders.
The Directors have full regard to their duties set out under section 172 of the
be found on page 78.
Principle 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.
Company’s values and support its long-term sustainable success.
Circlers are encouraged and feel safe to freely raise issues of concern. We have
communicate and report issues of concern. Our Audit Committee receives
regular whistleblowing updates. Further information can be found in the Audit
Application of the principles of the Code
Annual Report and Accounts 2022 81
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Division of responsibilities
Principle 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
In addition, the chair facilitates
constructive board relations and
non-executive directors, and ensures
that directors receive accurate, timely
and clear information.
members and continues to demonstrate effective leadership and objective
judgement, promoting a culture of openness and debate, by giving each Director
an opportunity to voice their opinion.
The Senior Independent Director also leads an annual review of the Chair’s
through a challenging economic environment.
Principle 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.
is confident that the current composition is appropriate for the present needs of
the Company.
board-responsibilities.
Principle H.
Non-executive directors should have
sufficient time to meet their board
responsibilities. They should provide
constructive challenge, strategic
guidance, offer specialist advice
attendance as part of the Committee reports on pages 88 to 100.
Principle 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.
presented and the resources it needs to function effectively and efficiently.
processes to ensure they are fit for purpose and support the smooth functioning
Corporate governance report continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc82
Composition, succession and evaluation
Principle J.
Appointments to the board should
effective succession plan should
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.
The Company’s policy is that no individual should be discriminated against on any
of the grounds of race, ethnicity, religious belief, political affiliation, gender, age,
Funding Circle’s ‘Stand Together’ value cements our commitment to creating and
Principle K.
The board and its committees
experience and knowledge.
Consideration should be given to
page 88.
Principle L.
Annual evaluation of the board should
consider its composition, diversity
together to achieve objectives.
Individual evaluation should
demonstrate whether each director
continues to contribute effectively.
process and an evaluation of the Chair is carried out by the Senior Independent
Annual Report and Accounts 2022 83
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Corporate governance report continued
Audit, risk and internal control
Principle M.
The board should establish formal and
transparent policies and procedures to
ensure independence and effectiveness
of internal and external audit functions
completed during the year which included an evaluation of professional integrity
and independence. Further details of the evaluations can be found in the
narrative statements to the Audit Committee. Further detail can be found on pages
Principle N.
The board should present a fair,
balanced and understandable
assessment of the company’s
financial and corporate reporting and internal financial controls of the Company
and its subsidiaries. This includes reviewing the content of the Annual Report and
and understandable. Details of this process and the focus of the review and of the
responsibilities on pages 121 to 127
Principle O.
The board should establish procedures
to manage risk, oversee the internal
control framework, and determine
risks the company is willing to take
establishment and operation of prudent and effective controls in order to assess
and monitoring the operation of the systems of internal control and for providing
The Internal Audit function provides independent and objective assessment on
CORPORATE GOVERNANCE
Funding Circle Holdings plc84
Remuneration
Principle 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.
long-term sustainable success of the Company. The policy was approved at the
results-reports-presentations.
Further information on our remuneration policies and practices can be found in
the Directors’ Remuneration Report on page 102 and in the 2021 Directors’ Report
values, culture and strategy.
Principle Q.
A formal and transparent procedure
remuneration and determining director
and senior management remuneration
should be established. No director
should be involved in deciding their
own remuneration outcome.
Principle R.
Directors should exercise independent
judgement and discretion when
authorising remuneration outcomes,
taking account of company and
individual performance, and
outcomes to the Remuneration Committee. All decisions relating to remuneration
Remuneration Report on page 100.
Annual Report and Accounts 2022 85
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Board effectiveness performance evaluation
results. As the neutral party, the Company Secretarial team oversaw the process of collecting responses and analysing and
Section 1 – The past 12 months
Section 2 – Leadership and purpose
Section 3 – Division of responsibility and composition
Section 4 – Meeting process
Section 5 – Board behaviours
Section 6 – Board development and support
provided to them and whether this was sufficient for them to carry out their roles.
Section 7 – Risk and controls
Section 8 – Stakeholders and culture
Company’s culture.
Corporate governance report continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc86
Outcomes
Ratings were good across all sections of the evaluation but there was some slight variation in scores since 2021 with some
areas scoring lower and some areas improving on the score they had achieved the previous year. The evaluation outcomes were
and the Directors were pleased that the scores in this area had improved in 2022.
‡
‡
ensures a deep dive review of essential areas of our business, including technology, products, people and customers.
‡
by bringing the voice of Circlers more prominently into the boardroom.
‡
business model and strategic direction.
‡
delivery of the agreed medium-term plan and strategic direction.
External evaluation
decided that it was not needed at this time as the internal evaluation was rigorous with full engagement and candid responses
Annual Report and Accounts 2022 87
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
2022 Nomination Committee activity
February
‡ Committee Terms of Reference review
‡
and Committees
‡
commitment review
‡ GLT succession planning
‡ Recommendation for Director
re-election at AGM
‡
June
‡
changes proposed and agreed
‡
and Committees
‡
Key activities for 2023
‡ Drive forward the process of
succession planning for the Chair of
succession planning for the recently
appointed members of the Global
Leadership Team
‡ Continue to assess and evaluate the
consideration of whether the
Board composition
and as part of its role in succession
planning, the Committee is mindful of
diversity in the broadest sense which
objective criteria as well as promoting
diversity of gender, social and ethnic
considers the guidance published by the
Review) on gender diversity in the
Code in relation to composition and
Furthermore, in response to the new
recommendations published by the
that it meets the recommendation to
have at least one woman in the Chair
Geeta Gopalan holding our SID role
respectively. For further details relating
more widely at Funding Circle please
Introduction from the Chair
31 December 2022.
The Committee met twice in 2022
which enabled us to cover all our duties
and responsibilities. With several new
appointments to the Global Leadership
Team, the Committee has focused
particularly on succession planning
needs of the Company as well as
succession planning for my role as
In this report, we have provided
information on the activities of the
Committee in 2022 as well as the
succession planning, diversity and
evaluation. Where we have diverted
Code 2018, we have provided a clear
approach for Funding Circle at this time.
responsibilities are clearly defined in its
Terms of Reference which can be found
on our website at corporate.fundingcircle.
Report of the
NominationCommittee
Members and attendance
Member Meetings Attendance
Andrew
Learoyd (Chair) 100%
100%
100%
Andrew Learoyd
Chair
CORPORATE GOVERNANCE
Funding Circle Holdings plc88
Succession planning
Board succession
There have been no changes to our
in 2022 where the shareholders approved
Lisa Jacobs election as Director of the
re-elected by the shareholders as
Committee has discussed in depth the
continue to do so in 2023 (please see
the Corporate Governance Report on
The Committee believes that the
appropriate to provide consistency
which saw a number of changes in
Appointment
As mentioned above, there have been
since those disclosed in our 2021
Annual Report and Accounts. When it
additional Directors, the Committee
leads a formal, rigorous and transparent
process for appointments. The Committee
is responsible for preparing the role
description which includes defining the
time commitment of the role. The
Committee may engage the services of
for a candidate and always insists on
The Committee follows a clear process
for meeting with short-listed candidates
Director roles and decides whether a
candidate may be recommended to the
Induction
Director induction programmes to the
the Company Secretarial team and
They are designed to provide Directors
The Committee, with the support of
development areas and training needs
of Directors that are relevant to the
business, including those that arise
Senior management succession
appointments to senior management
needs of the Company and its Group
under review, with a view to ensuring
they continue to compete effectively in
been busy this year evolving succession
planning for senior leadership roles due
to a number of new appointments on
the GLT including the appointment of a
new Chief Technology Officer, Managing
Group diversity statistics
levels to ensure all individuals feel
Committee to support and oversee the
implementation of diversity goals across
throughout this report including in the
Diversity statistics for the Funding Circle
Group can be found in the Strategic
done at a senior leadership level and
done to improve diversity at recruitment
empowerment programme and
emerging leaders programme to
through the Company.
Skills and experience
Directors. The Committee recognises
that, as the business continues to evolve,
review on an ongoing basis and may be
met through recruitment of additional
Annual Report and Accounts 2022 89
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Group Board evaluation outcomes
Full details about the methodology
effectiveness performance evaluation
Committee arose as part of the
‡
continue to review the composition
planning in particular the balance of
independent and non-independent
of the Code.
‡
whether it would be useful to have
Directors with more technology
should be invited to present to the
on specific topics where a subject
Nomination Committee effectiveness
performance evaluation
The Company Secretarial team
facilitated an effectiveness review of the
was distributed to all the Committee
constitution, composition and set-up;
process including support from the
appointments, succession planning
Committee’s role in setting and meeting
diversity objectives. All members of
evaluation process.
Conclusion and recommendations
Overall, scores were good across all
particular strengths highlighted were
‡ The Committee is well constituted
with clear Terms of Reference.
‡ Committee members participate
fully and effectively at meetings and
are well prepared.
‡
circulated in plenty of time with
Secretarial team.
‡ The Committee members have
competencies and professional
The evaluation highlighted some areas
for development and actions going
forward into 2023 which included,
‡ The Committee needs to spend
further time reviewing the length
establish a clear plan for rotating
‡ Committee members should spend
some time in 2023 meeting with
direct reports of the GLT.
‡ A proactive plan for the Chair’s
succession should be further
developed and carried forward in 2023.
Re-election
was closely reviewed during the year as
part of the consideration of succession
Committee evaluation process. The
Committee is satisfied that there is a
future development and, accordingly,
Director stand for election at the
forthcoming AGM.
Andrew Learoyd
Chair of the Nomination Committee
2 March 2023
Chair performance and tenure
“ The Committee is conscious that
there is non-compliance with
Provision 19 of the Code which
provides that the Chair should
notremain in post beyond nine
years from the date of their
firstappointment to the Board.
Anexplanation as to why the
Board does not currently comply
with this Provision of the Code
can befound in the Corporate
Governance Report on page 80.
The matter of Andrew’s tenure on
the Board was discussed at length
by the Committee and, with
several executive management
changes in 2022, the Committee
and the Board unanimously agree
that Andrew continues to provide
critical stability of leadership and
support. The Committee has
commenced the search process
for Andrew’s successor with
theappointment of an external
adviser and plans to appoint a
newChair in the next two years.
The Committee intends to have a
smooth transition between Chair
roles to ensure the right level of
support and stability of leadership
is maintained throughout.”
Geeta Gopalan
Senior Independent Director
Report of the Nomination Committee continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc90
‡
consultation on ‘Audit and Financial
Reporting Governance’ reform and
changes to the Group’s practices
‡ Completing in-depth evaluations on
the effectiveness of the Internal Audit
‡
2023 priorities
‡ Continue to assess accounting
judgements and estimates,
particularly in relation to valuations
of loans which are heavily impacted
by the macro economic environment.
‡ Continue to review the Group’s
internal financial controls and
internal control systems to ensure
they continue to develop in line with
the Group’s business.
‡ Continue to monitor and oversee
Committee composition, skills
andexperience
The membership of the Committee
responsibilities of the Committee,
please see our Terms of Reference at
board-committees.
All members of the Committee
demonstrating competency relevant to the
sector in which Funding Circle operates.
Committee for the year ended
2022 was a time of change and
progression in the role of the Audit
Committee, as it adjusted to increasing
demands for assurance within both
financial and non-financial reporting.
The Committee remains satisfied that
the Company has appropriate controls,
systems and processes in place and
continues to be managed well through an
The Committee met four times
completing a wide scope of activity
Key highlights 2022
‡ Reviewing the integrity of the
half-year and full-year financial
statements, ensuring they were fair,
balanced and understandable,
considering significant accounting
judgements, estimates and disclosures,
the impact of the macro economic
environment and the Group’s ability
‡ Challenging, monitoring and evaluating
the Company from an internal and
‡ Receiving regular whistleblowing
updates, and continuing to review
arrangements available to Circlers
Report of the
Audit Committee
Geeta Gopalan
Chair of the Audit Committee
Members and attendance
Member Meetings Attendance
(Chair) 100%
100%
Matthew King 100%
We build into every Committee agenda
the opportunity for Committee members
to privately discuss matters with the
attended all our meetings in 2022,
without management present.
As Funding Circle Ltd (“FCL”) is
authorised and regulated by the
Financial Conduct Authority, it has its
own Audit Committee, chaired by the
The FCL Audit Committee meets at
The following report details the
Committee’s activities throughout
Annual Report and Accounts 2022 91
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Report of the Audit Committee continued
Significant issues considered in relation to the financial statements
and accounting judgements considered by the Committee in respect of the half year ended 30 June 2022 and year ended
Reporting issue Audit Committee action
Going concern and viability
The period over which the Directors have determined
the viability assessment is three years. While the
has receded over the year, inflationary pressures and
The Committee reviewed reports from management that set out its
view on both the shorter-term going concern and longer-term viability
‡
‡
‡ Reviewing the Group’s short and medium-term plan, its cash, capital
‡ Reviewing the outcomes of stress testing after applying a severe
‡
on scenarios, uncertainties, sensitivities and management actions
Having challenged and considered the outcomes of management’s
assessment, the Committee recommended the Viability Statement
sufficiently clear and transparent.
Valuation of financial instruments
The Group holds financial instruments at fair value on
its balance sheet. These instruments are valued using
cash flow analysis and valuation models. These values
are sensitive to the assumptions underpinning the
cash flows leading to increased estimation uncertainty.
The Committee received and reviewed the assumptions and
methodologies used to value the financial instruments together
Committee considered the disclosures within the Annual Report and
after due challenge concluded that the valuations were reasonable
Carrying value of investments in the Parent Company
The Group evaluated the carrying values of the
Company for indicators of impairment.
along with an update to the Group’s income and cost
forecasts, the underlying projected cash flows of the
Following the restructuring, the cash flow forecasts
arrangements have been implemented that provide
reverse the impairment was made.
The Committee reviewed papers from management during the year
reversal assessment and the sensitivity to those assumptions, the
financial projections of which were based on the medium-term plan
management’s medium-term plan assumptions.
After due challenge and discussion, the Committee was comfortable that
there remained sufficient levels of certainty over the projected cash flows
accounts were supportable.
CORPORATE GOVERNANCE
Funding Circle Holdings plc92
Reporting issue Audit Committee action
Fair, balanced and understandable reporting and
Alternative Performance Measures (APMs)
contents of the 2022 Annual Report and Accounts,
measures are used to provide insight into the
underlying performance of the business. They also
defined within the segmental information note on
information contained within the Annual Report. This assessment
included discussions with management on the underlying financial
processes, and confirmation from the management team of their
review of the Annual Report being fair balanced and understandable.
The Committee also discussed the contents of the Annual Report
and other measures used by the Group and agreed that these supported
the understanding of the financial performance of the Group and
facilitated a better understanding of the business. The Committee was
satisfied that there was sufficient disclosures of the same with the
appropriate balance and reconciliation between these and statutory
measures in the accounts.
Having considered all of the available information including previously
published information about the business and press releases through
the year the Committee has concluded that, in its judgement, the 2022
and understandable.
Internal controls
The Committee receives updates on the findings of Internal Audit’s investigations at each meeting.
Internal audit
‡
‡
‡
‡
‡
‡
‡ Technology function;
‡
‡ Cyber security; and
‡
Annual Report and Accounts 2022 93
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Internal Audit effectiveness review
An effectiveness review was conducted
by the Committee to evaluate the
performance of the Internal Audit team
previous year so that the results could
be compared and contrasted with the
prior results.
The review evaluated the overall
effectiveness of the Internal Audit team
of reporting; interaction with the
Committee and other areas of the
business; support of strategic priorities;
and independence and objectivity.
The outcomes of the evaluation overall
were very good with high scores
demonstrating that the Internal Audit
team remained independent, objective
and effective, with sufficient resources
available to provide the necessary
assurance across the Group. There
were a small number of areas
highlighted for further enhancement
that will be appropriately progressed
during 2023.
External auditors*
8 years
(appointed
Total audit fees payable to
* This data is correct as at 2 March 2023
External auditors
effectivenessreview
The annual effectiveness review
of the lead audit partner; independence
and objectivity; openness, integrity and
the audit plan; communication between
and constructive challenge.
Summary recommendations were
made and discussed by the Committee
which included, but were not limited to,
‡ Continuously review the audit plan
throughout the year to maintain
areas that may need focus; and
‡ Assess the balance between reliance
on management and internal audit
testing and more substantive testing
be reappointed as the Company’s
ending 31 December 2023. A resolution
be put to shareholders at the Company’s
contract will be put out to tender at least
The Committee confirms that the Group
is in compliance with The Statutory
Audit Services for Large Companies
Audit Committee Responsibilities)
Non-audit services
firm to provide non-audit services to the
Group can impact on the independence
assessment and the Company has,
therefore, adopted a policy which
non-audit services. This policy is in line
gives me, as Chair of the Committee,
delegated authority from the Committee
to approve individual non-audit services
services have been approved
services policy), with a summary of
During the year ended 31 December 2022,
Description
Interim review of half-year
results announcement
CASS reporting 132.7
Other
Total 388.0
The Audit Committee concluded that it
was in the best interests of the Group to
the basis that they were independent
and were considered to be the right
certain non-audit services to safeguard
auditor objectivity and independence,
including but not limited to internal
that they remained independent during
the year.
Whistleblowing
to feel able to raise concerns when they
arise. This is emphasised in the Code
reviewed annually. The Committee
the Group’s whistleblowing arrangements
which included additional signposts to
Circlers highlighting the importance
received regular whistleblowing updates
The whistleblowing process is well
advertised to all employees, who are
made aware of the importance of it.
There was one potential whistleblowing
incident that was investigated in 2022
and it was concluded that there were
Report of the Audit Committee continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc94
As part of the Committee’s commitment
to ensuring the whistleblowing process
of the highest standards, the Committee
plans to complete a deep dive as part
Committee effectiveness
The Committee completed an
effectiveness review for 2022 using
year so that the outcomes could be
progress made and identify any gaps
composition and set-up of the Committee,
it sufficiently reviews and challenges
the activities and findings of the internal
also assessed whether the Committee
sufficiently safeguarded auditor
independence and objectivity.
Overall, the results of the evaluation
were positive with the Committee
agreeing that the composition and
set-up of the Committee and meetings
were satisfactory and there was good
support from the Company Secretarial
team. The Committee agreed that,
amongst other things, it would give
further focus to resilience and
contingency planning in 2023.
Geeta Gopalan
Chair of the Audit Committee
2 March 2023
Annual Report and Accounts 2022 95
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
The unpredictability of the macro
environment in 2022, which will
continue into 2023, posed many
challenges for us. The Committee’s
‡ Overseeing a more prudent
effective change in an increasingly
volatile environment.
‡ Receiving regular updates and
indicators of major change and
and rising interest rates, including
‡
included a review of the Terms of
Reference of the Committee to
ensure that the roles of this Committee
‡ Applying scrutiny to information
vulnerabilities were flagged and
prioritised accordingly.
‡
robust discussion on the proactive
attrition. This included recognising
talent that was critical to Funding
Circle’s success and supporting
and the higher cost of living.
‡ Receiving an update from the
Collections and Recoveries team in
the current macro environment
and what we were doing for
vulnerable borrowers.
Compliance Committee for the year
ended 31 December 2022.
The Committee met three times in 2022
to carry out its role of monitoring and
macro environment. In addition to
formal meetings, the Committee also
received regular reports and updates on
credit performance. For in-depth
information relating to the Group’s
please refer to the Strategic Report on
Report of the Risk and
Compliance Committee
Eric Daniels
Chair of the Risk and
Members and attendance
Member Meetings Attendance
(Chair) 100%
100%
(appointed
8 March 2022) 100%
(resigned
8 March 2022) 100%
‡
‡ Reviewing the controls in place to
press coverage about the epidemic
‡ Receiving a report on the
implementation of the controls
library pilot which completed in
October 2022. The pilot provided
new information on the Company’s
control environment through the
improved and structured data which
was available for is controls.
‡ Approving amendments to the
guaranteed loans and core products.
that could, if not monitored carefully,
ensure commitment to the strategic
plan whilst remaining mindful of increased
need for agility and precision when
that affect our business. In particular,
the challenging macro, our proven ability
to deploy fast and effective change to
our credit strategy to navigate a volatile
borrowers demonstrated by our
collections team.
CORPORATE GOVERNANCE
Funding Circle Holdings plc96
In summary, I have been pleased with
the continued development of the
and overall controls and remain confident
and optimistic about the Group’s ability
to successfully navigate a continued
uncertain and volatile economic
environment in 2023.
Key activities for 2023
‡ The Committee will continue to
attention to the macro environment
in a more volatile environment than
originally anticipated for 2023, with
continued focus on inflation, interest
rates and geopolitical tension.
‡ The Committee will continue to
remains appropriate and effective
Group’s business.
‡ The Committee will continue to
particularly in relation to technology,
data and information security.
‡
a close monitoring of the funding
funding sources.
‡ As the Group continues to embrace
new products and increased
automation, the Committee will
focus on one product to a number
‡
continue to be closely monitored by
the Committee.
Role of the Committee
For information regarding the
please see the Terms of Reference on
our website at corporate.fundingcircle.
Committee effectiveness evaluation
An effectiveness review of the
Committee’s performance was
completed at the end of the year.
Committee’s overall performance,
composition and set-up and, importantly,
role in reviewing and challenging the
compliance systems and appetite for
members of the Committee and the CRO.
Overall the scores were positive. The
addressed process of the Committee
and included evaluation of the timeliness
recommendation for the Committee
length of papers could be improved.
for the Committee to ensure discussions
adapt to the evolving environment and
for the Committee to continue to review
and challenge the Company’s control,
systems to support the Company
objectives. Additional agenda items of
impact of the new FCA Consumer Duty.
In addition to the Committee’s own
management as it pertains to the Group’s
and effective controls was in place which
appropriately. For further information on
evaluation please see page 87.
Eric Daniels
Committee
2 March 2023
Annual Report and Accounts 2022 97
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
The Committee met three times this
year and, to ensure momentum
Committee has agreed to maintain the
same cadence of meetings in 2023. The
For more detailed information on
disclosures and environmental impact
governance section of our Strategic
Key activities for 2023
‡ Achieve carbon neutrality
recertification for 2022 and continue
to progress environmental strategy
and stretch target of operational net
zero by 2030.
‡ Continue to incorporate and embed
Environmental
In 2022 the Committee continued to
oversee the progress made on the Group’s
environmental strategy in partnership with
and spent considerable time focusing
on Climate-related Financial Disclosures
(“TCFD”) recommendations. The Group’s
TCFD Report can be found in the
section on page 30.
I am pleased that we have continued to
advance our environmental strategy to
achieve carbon neutrality certification
ahead of schedule in the first part of
printing verification for Scope 1 and 2
and part of Scope 3 emissions for
business travel and waste generated
for the year ended 31 December 2022.
2021 was largely a year of scoping,
Committee and the past 12 months
have seen initial implementation of the
plan that emerged from 2021. Across all
we have made significant progress in
setting our objectives, simplifying the
chosen methods to achieve them and
initiating the steps on that path. More
detail on our progress in each of these
areas is outlined below.
In terms of its role, the Committee has
focused on clarifying responsibility for
is properly managed.
We also received our first internal audit
report in 2022 which evaluated the
progress made on the implementation
in highlighting our strengths and areas
in relation to governance, reporting and
Report of the
ESGCommittee
Andrew Learoyd
Chair of the ESG Committee
Members and attendance
Member Meetings Attendance
Andrew
Learoyd (Chair) 100%
Matthew King 100%
100%
100%
We continue to drive forward our aim to
reduce our carbon emissions year on
year and are focusing on recertification
to achieve carbon neutrality for 2022 in
early 2023.
It’s important to the Committee that the
Group has science-based targets to
achieve our long-term goal of being net
the financed emissions from our
lending activities.
Social
As reported in our 2021 report, the
Committee allocated budget and resource
to further develop the approach to
social impact as it was identified as an
strategy. In 2022, social impact and
community engagement were driven
approaches that met the needs of each
local community whilst also leveraging
to support entrepreneurship. In 2022,
the Company launched a partnership
with Hatch (an organisation supporting
under represented entrepreneurs) in
FC Impact, a number of Circler led
volunteering opportunities were
launched, more details of which are
The team has also engaged with our
borrowers with social impact related
understand areas where Funding Circle
could add more value. This will help
efforts in 2023.
CORPORATE GOVERNANCE
Funding Circle Holdings plc98
awareness of TCFD as it relates to
obligations on climate change related
disclosures, the Committee introduced
be completed by Directors in early 2023.
Governance Code and engaged with
Circlers across the Group on a number
of projects throughout the year
including informal lunch and coffee
events. These provided an open forum
to gain Circler insight on strategy,
organisational design around new
products, the impact of the economic
environment and other issues of
importance to Circlers, which Helen
been impressed with the passion and
openness of the Circlers she has spent
time with and the value that their insight
ESG Committee effectiveness
performance evaluation
The Company Secretarial team
facilitated an effectiveness review at
constitution, composition and set up
opportunities. Scores were generally
high with a number of strengths
highlighted and some areas for
development identified which are due to
be carried forward as actions into 2023.
Andrew Learoyd
Chair of the ESG Committee
2 March 2023
Diversity, equity and inclusion
(“DEI”)
to obtain better data to measure our
diversity. In 2022 we were pleased to
see great progress achieved towards
more detail).
commitments into the FC Code of
Company and continues to challenge
senior management to identify where
improvements can be made to improve
it at these levels. For further information
Governance
The Committee has made great
progress on governance using its
conduct of the business and approach
to good corporate behaviour in
Compliance Committee to ensure the
and Compliance Committee while the
further information relating to the duties
and responsibilities of each Committee,
Terms of Reference, the Committee
changed the roles of individual Committee
members who had originally been
allocated an area of focus to support
the early set up of the Committee and
on social and governance, the Committee
his focus on environmental strategy and
Annual Report and Accounts 2022 99
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Directors’ remuneration report
Executive Director remuneration
arrangements for 2023
The Committee has determined a
salary increase for Lisa Jacobs of 3.5%
taking her salary from £400,000 to
£414,000. In approving the increase,
which is below the Circler salary review
pot of 5% for 2023, the Committee took
into account several factors, including
internal relativities and external
comparative data (her salary being
lower quartile vs. the FTSE SmallCap).
The Committee will continue to keep
Lisa’s salary under review and may
increase it (at a rate higher than the
Circler average) if it considers this to
be justified and aligned with Funding
Circle’s remuneration principles,
recognising the need to retain and
incentivise a highly-talented individual
Oliver White’s salary was set at
£400,000 when he joined in 2020 and
has been unchanged since then. For
2023, the Committee has determined
that his salary will increase by 2.5%,
which the Committee considered
appropriate for a high-calibre CFO with
the experience required for the scale
and complexity of the business.
The annual bonus measures will
remain a combination of financial and
non-financial, but given the strategic
importance of FlexiPay, in line with our
policy, will move to financial measures
being 60% and strategic/non-financial
being 40%. We feel this provides a
medium-term plan.
In accordance with our Policy the
same number of Restricted Shares
will be granted to the Executive
Directors in 2023 as was granted in
2021 and 2022, being 358,177 and
expanding FlexiPay to new customer
segments and beta-launching FlexiPay
card in the UK as well as introducing
a shorter-term lending product and
expanding the Marketplace offering to
say yes to more businesses. In the US,
the team launched Lending as a Service
and a super prime product for more
established businesses. Loan returns
have remained robust and attractive,
demonstrating Funding Circle’s
responsible lending and a prudent
approach to credit risk. Employee
engagement is at its highest ever level
of 73% for the second year in a row, with
87% of Circlers recommending Funding
Circle as a place to work.
In this overall performance context, the
Committee determined bonus payouts
equal to 45.0% of maximum for the
did not adjust the 2022 financial targets
for the annual bonus nor apply any
upwards discretion. 40% of the bonus
payout will be deferred into shares
for three years, in keeping with our
Remuneration Policy.
The Committee did not adjust the
2020 Long-Term Incentive Plan “LTIP”
vesting for Oliver White to reflect the
challenging economic environment
nor apply any upwards discretion. No
nil-cost options vested under the LTIP
as neither EPS nor Fee Income targets
(set in a very different environment in
2020) were achieved.
The Committee approved a one-off
allowance for Oliver White, who took on
additional responsibilities as interim US
Managing Director for a period of just
over three months. The allowance is in
line with our Policy, practice throughout
the Group and market practice.
On behalf of the Board, I am pleased
to present the Directors’ Remuneration
Report for the year ended 31 December
2022. I want to thank Geeta Gopalan, who
stepped down from the Remuneration
Committee on 8 March 2022, for her
service on the Committee. I’d also like
to thank the other Committee members,
Andrew Learoyd and Matthew King
(who joined on 8 March 2022, replacing
Geeta), and the Circlers who have
supported the Committee this year.
Review of 2022 and Executive
Directors’ Remuneration
As Andrew refers to in the Chair’s
Statement on page 6, 2022 was a
difficult year financially with economic
and political uncertainty, particularly
in the UK, impacting SMEs and the
financial performance of Funding Circle
in ways unanticipated when we set
stretching targets in December 2021
for the 2022 incentives. Despite the
challenging economic environment,
the team has achieved positive
financial results in line with market
expectations and made good progress
against our three strategic pillars. In
her first year as CEO, Lisa Jacobs has
laid the foundations to achieve the
medium-term plan and paved the way
for future growth by diversifying our
For the annual bonus, the 2022 AEBITDA
outcome was just below target but the
Total Income measure was missed as a
result of the tougher market conditions.
However, performance against the
strategic/non-financial elements of the
annual bonus was significantly above
target. In addition to transitioning the
business away from government-backed
funding, the team made good progress
towards achieving its medium-term plan,
Directors’
remuneration report
Helen Beck
Chair of the Remuneration Committee
CORPORATE GOVERNANCE
Funding Circle Holdings plc100
269,306 Restricted Shares for the CEO
and CFO respectively. As shown in
our “Illustration of the application of
Remuneration Policy in 2023” charts,
the grant date face value of 2023
Restricted Share awards will be c.25%
lower compared to 2022 Restricted
Share awards.
Vesting of the Restricted Shares will
continue be subject to a financial
underpin based on Total Income as well
as qualitative underpins. The financial
underpin has been set such that annual
Total Income must be on average
years 2023 to 2025. The Committee
retains the discretion to make any
adjustments to vesting it deems
necessary to maintain an appropriate
pay/performance relationship as with
the 2021 and 2022 grants.
Remuneration arrangements
forCirclers
During 2022, we continued to focus on
the Circler reward proposition. In March,
we increased the budget available
for salary increases in anticipation of
continued rising inflation and we also
did a comprehensive benefits review,
further details of which are set out in
our people section on page 24. I wish to
thank all of our Circlers for once again
delivering in difficult and trying times.
The Group annual bonus for 2022 is
being awarded in full to eligible Circlers,
with payment being based on AEBITDA
performance. Our People section at
pages 24 to 27 sets out how Funding
Circle has responded to the changing
employment environment following
To recognise junior Circlers for their
continued effort during 2022 we paid
a bonus of up to £1,000 in December
2022. In addition, we increased the
salary of any Circlers whose salary was
below the updated “Real Living Wage”
Remuneration Policy review in 2023
As 2023 is the last year of the
Remuneration Policy approved at
the 2021 AGM, the Committee is
undertaking a review and aims to
ensure that the new Policy, which will be
put to shareholders at the 2024 AGM,
supports both the short- and long-term
objectives of the business and aligns
with its Board-approved strategy.
The Committee’s view is that the
flexibility to reward and incentivise our
Executive Directors in line with their
performance, particularly since we no
longer have a founder CEO.
We will aim for the new Remuneration
Policy to include greater flexibility to
allow the Committee to appropriately
reward the Executive Directors, as well
as aligning with shareholder interests.
We will take into account market practice
and best practice, whilst making sure
that the Policy is fit-for-purpose for
Funding Circle.
As in the previous Remuneration
Policy review, we will be reaching out
to our shareholders to consult on our
proposals in the second half of the
year. The Committee is also conducting
a review of its advisers to ensure we
continue to receive appropriate advice
and a robust challenge where warranted.
The adviser review will be concluded
before we start our Policy review.
Conclusion
On behalf of the Remuneration Committee,
I would like to thank our shareholders
for their support in 2022. We were
delighted with the support received
from shareholders for our Annual
Report on Remuneration at the 2022
AGM. We hope to continue to receive
your support at our 2023 AGM, where
I will be available to respond to any
questions on this report or in relation
Helen Beck
Chair of the Remuneration Committee
2 March 2023
Annual Report and Accounts 2022 101
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Remuneration Policy
A full version of the Remuneration Policy can be found in the 2020 Annual Report and Accounts available on our website at:
https://corporate.fundingcircle.com/investors/results-reports-presentations. The Remuneration Policy was approved with 98%
support by a binding shareholder vote at the 2021 AGM, and will apply for a maximum of three years. Whilst the full Policy is not
reproduced in this report, the Committee believes that it is helpful to shareholders to publish an updated illustration of the potential
value of the proposed application of the Remuneration Policy in 2023 to the Executive Directors in different performance scenarios.
These charts are provided below:
Illustrations of the application of the Remuneration Policy in 2023
Directors’ remuneration report continued
Minimum Minimum
Fixed Annual Bonus Restricted shares
436
434
890
775
1,165
982
1,254
1,049
0 0
£200k £200k
£400k £400k
£1,000k £1,000k
£1,200k £1,200k
£800k £800k
£600k £600k
£1,400k £1,400k
Target TargetMaximum MaximumMaximum +
50% share price
increase
Maximum +
50% share price
increase
CEO CFO
100%
100%
Illustration assumptions
Element of pay Minimum Target Maximum
Maximum + 50% share
Fixed remuneration:
X Base salary – effective 1 March 2023
X Benefits – in line with the value of 2022 benefits disclosed in the single figure table
X Pension – 5% of salary
Annual bonus No payout 50% of maximum
Maximum payout
Restricted shares No vesting. Assumes
Grant value vests: 358,177 shares for the CEO
and 269,306 for the CFO. Assumes share price
of £0.498, which was the three-month average
Grant value multiplied by 1.5
CORPORATE GOVERNANCE
Funding Circle Holdings plc102
49.0%
30.9%
20.1%
37.4%
47.3 %
15.3%
34.8%
43.9%
21.3%
56.0%
26.7%
17.3%
44.2%
42.1%
13.7%
41.4%
39.4%
19.2%
Remuneration Policy for Circlers
The Committee receives regular updates on overall pay and conditions in the Group, and pay and employment conditions
generally in the Group are taken into account when setting Executive Directors’ remuneration.
The approach to annual salary reviews is consistent across the Group, with consideration given to the level of experience,
responsibility, individual performance and salary levels in comparable companies.
Nearly 60% of Circlers are eligible for either the annual bonus plan or other bonus arrangements. Opportunities vary by
organisational level and function. From inception, a key element of the remuneration philosophy has been to support share
ownership across the business. This has historically been achieved through making equity incentives available to Circlers
to encourage them to behave as owners – taking decisions that balance long-term value creation with achieving shorter-term
strategic priorities. The Remuneration Policy for Circlers is reviewed annually ensure it’s aligned with our strategy, valued by Circlers,
and provides value for money. Following feedback from Circlers, in 2023 we are removing the free shares that are granted to all
Circlers and replacing them with a cash bonus for junior Circlers, and enhancing the matching ratio of our Share Incentive Plan
The key elements to the incentive arrangements in 2023 are:
X The Global Leadership Team and other senior management and senior specialist roles participate in a discretionary
share-based LTIP with grant size increasing with seniority. The grants for Circlers in leadership roles include a multiplier
X The leadership team, managers and specialists participate in an annual bonus plan (and the majority of Circlers participate
for 2023 to include an element of Circlers’ individual performance as well as Funding Circle financial performance to align
with our strategic pillar of High Performing Teams Executing Brilliantly.
X All UK-based Circlers are eligible to participate in our Share Incentive Plan where, for every “Partnership share” that is
purchased, two “Matching shares” are awarded.
X Junior Circlers are eligible to receive a cash bonus each year, the size of which depends on their length of service and affordability.
Equity awarded to Circlers, including the existing Global Leadership Team (other than the Executive Directors), is subject
to continued employment for the two years following the grant date but is not otherwise normally subject to performance
conditions. Our workforce engagement Director (Helen Beck) frequently holds engagement sessions with Circlers. A range of
account when developing our Policy.
Alignment between Executive and Circlers’ remuneration
The Executive Directors’ Policy was designed to align Circler and Executive pay. We introduced an annual bonus plan for the
Global Leadership Team, managers and specialists in 2020 and then introduced an annual bonus for Executive Directors in 2021.
The introduction of Restricted Share awards for the Executive Directors also matches the introduction of equity schemes for
Circlers which are based on continued employment only. The main differences between how Executive Directors and Circlers are
remunerated are the longer time periods (vesting, holding and deferral), tougher performance criteria, and there being no share
price multiplier on the Restricted Share awards made to Executive Directors.
Annual Report and Accounts 2022 103
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual report on remuneration
This part of the report sets out how the Remuneration Policy has been applied in 2022 and how the Committee intends to apply the
Remuneration Policy in 2023. This part of the report will be subject to an advisory shareholder vote at the 2023 AGM.
Role of the Committee
The Committee’s primary role is to determine the remuneration of the Directors and Global Leadership Team and the Remuneration
Policy for the Executive Directors, as well as monitoring and reviewing its ongoing appropriateness and relevance. In doing so,
the Committee ensures that the Remuneration Policy is aligned with the Company’s key remuneration principles as well as
taking into account the principles of clarity, simplicity, risk, predictability, proportionality and alignment to culture set out in the
2018 UK Corporate Governance Code. How our remuneration is aligned with the principles of the Code is summarised in our
2021 Directors’ Report on Remuneration on page 106.
The key responsibilities of the Committee are summarised on page 85 and further details on the Committee’s roles and
responsibilities can be found in our Terms of Reference on our corporate website.
Committee composition
Geeta Gopalan stepped down from the Committee on 8 March 2022 and was replaced by Matthew King who joined on 8 March 2022.
None of the members who have served on the Committee during the year had any personal interest in the matters decided by
the Committee and they are all considered to be independent by the Company. The Company Secretary acted as Secretary to
Committee members Number of meetings attended
Helen Beck, Chair
4/4
Andrew Learoyd
4/4
Matthew King (appointed on 8 March 2022)
2/2
Geeta Gopalan, former member
2/2
The Executive Directors, Chief People Officer, other members of the senior management team and our external remuneration
consultants, Deloitte LLP, were invited to Committee meetings where it was deemed appropriate. No individuals were involved
2022 Committee workstreams
X determined the payout of the Executive Directors’ 2021 annual bonus;
X approved the payout of the 2021 annual bonus for Circlers;
X approved the design of the 2022 annual bonus for Circlers and the equity plans;
X set the 2022 annual bonus targets for Executive Directors;
X set the 2022 Restricted Share Plan underpin and approved the grants for Executive Directors; and
X approved reward decisions relating to members of the Global Leadership Team and reviewed Circler compensation.
2023 Committee priorities
X approve the remuneration arrangements for the Global Leadership Team, including their equity grants;
X approve the design of the 2023 annual bonus for Circlers and the equity plans;
X set the 2023 annual bonus targets, ensuring they align with Funding Circle’s strategy as well as its ESG priorities;
X set the 2023 Restricted Share Plan underpin and approve the grants for Executive Directors;
X conduct a comprehensive review of the Remuneration Policy, which will include consultation with our shareholders,
X continue to monitor remuneration practices across the Company as a whole, keeping abreast of current and evolving
Committee effectiveness
As noted on page 86, the Committee undertook an effectiveness review during 2022, whereby each Committee member and,
by invitation, the Chief People Officer, completed a tailored questionnaire. The questionnaire covered topics such as the quality
of the remuneration support provided to the Committee and the appropriateness of the remuneration policies and practices
implemented in 2022. The positive scores and comments demonstrated that the Committee is working well. The Committee
agreed to implement the recommendations including a review of advisers to ensure the Committee receives appropriate advice
and challenge and a review of below-Board bonuses not forming part of the Group annual bonus.
Annual report on remuneration
CORPORATE GOVERNANCE
Funding Circle Holdings plc104
External advisers
The Committee is satisfied that the advice it has received from its appointed adviser Deloitte LLP as remuneration consultants
is independent, and that the engagement partner and team that have provided remuneration advice do not have connections
with the Company that might impair their independence. Deloitte was appointed by the Committee in 2019. Deloitte is a founder
member of the Remuneration Consultants Group and, as such, voluntarily operates under its Code of Conduct in relation to
executive remuneration matters in the UK.
The fee paid to Deloitte LLP in 2022 in relation to advice provided to the Committee was £18,650. Deloitte also provided advice
Letters of appointment and service contracts
Director
Commencement date
Expiry of current term
Notice period
From Company From Director
Executive Directors
Lisa Jacobs 1 January 2022 n/a Twelve months Twelve months
Oliver White 15 June 2020 n/a Six months Six months
Non-Executive Directors
Andrew Learoyd 10 September 2021 10 September 2024 One month One month
Samir Desai 1 January 2022 1 January 2025 One month One month
Eric Daniels 18 September 2021 18 September 2024 One month One month
Geeta Gopalan 1 November 2021 1 November 2024 One month One month
Hendrik Nelis 5 September 2021 5 September 2024 One month One month
Neil Rimer 5 September 2021 5 September 2024 One month One month
Matthew King 19 May 2021 19 May 2024 One month One month
Helen Beck 1 June 2021 1 June 2024 One month One month
The Executive Directors’ service contracts are on a rolling basis. All Non-Executive Directors have letters of appointment with
the Company. The appointments of each of the Non-Executive Directors are for an initial term of three years, and have been
extended for those Non-Executive Directors whose original term has since expired. The appointment of each Non-Executive
Director is subject to annual re-election at the AGM.
Shareholder voting
The Committee’s resolutions at the Company’s 2021 AGM (in respect of the Remuneration Policy) and the 2022 AGM (in respect of the
Annual Report on Remuneration) received the following votes from shareholders:
Annual Report on Remuneration
(2022 AGM)
Remuneration Policy
(2021 AGM)
Number of votes
Votes cast in favour 242,440,714 99.96% 226,078,928 98.17%
Votes cast against 89,361 0.04% 3,229,853 1.40%
Votes withheld 9,147 0.00% 977,804 0.43%
Total votes cast (including withheld) 242,539,222 100.00% 230,286,585 100.00%
Annual Report and Accounts 2022 105
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Single total figure of remuneration (audited)
The following tables set out the aggregate emoluments earned by the Directors in the year ended 31 December 2022 and 2021
respectively.
2022
Salary
and fees
£000
Taxable
benefits
£000
Bonus
£000
Pensions
£000
Long-term
incentives
£000
Total
£000 Other
Total
fixed
£000
Total
variable
£000
Executive Directors
Lisa Jacobs 400 2 20 — 661 — 422
Oliver White
4
400 180 20 — 28
4
451 180
Non-Executive Directors
Andrew Learoyd 206 — — — — 206 — 206 —
Eric Daniels 69 — — — 72 — 72 —
Geeta Gopalan 79 — — — — 79 — 79 —
Helen Beck 69 — — — — 69 — 69 —
Matthew King 67 — — — — 67 — 67 —
Samir Desai
(appointed 1 January 2022) 55 55 55
Hendrik Nelis
6
— — — — — — — — —
Neil Rimer
6
— — — — — — — — —
2021
Executive Directors
Samir Desai
5
210 2 417 — — 629 — 212 417
Oliver White 400 5 319 20 — 74 4 — 425 319
Non-Executive Directors
Andrew Learoyd 200 — — — — 200 — 200 —
19 May 2021) 23 — — — — 23 — 23 —
Eric Daniels 65 3 — — — 68 — 68 —
Bob Steel (stepped down 19
May 2021) 33 — — — — 33 — 33 —
Cath Keers (stepped down
19 May 2021) 33 — — — — 33 — 33 —
Geeta Gopalan 71 — — — — 71 — 71 —
Helen Beck (appointed 1
June 2021) 38 — — — — 38 — 38 —
Matthew King (appointed
19 May 2021) 30 — — — — 30 — 30 —
Hendrik Nelis
6
— — — — — — — — —
Neil Rimer
6
— — — — — — — — —
1. Taxable benefits for Executive Directors principally include private medical cover and life assurance cover. Taxable benefits for Non-Executive Directors relate to reimbursement
of travel to the workplace. The Company ensures that the Non-Executive Directors are kept whole by settling the expense and any related tax. The figures shown include the
cost of the taxable benefit plus the related tax charge.
2. Executive Directors were eligible for a 5% of base salary pension contribution. Samir Desai, in his previous role as CEO, opted not to take up his right to the pension contribution.
3. No nil-cost options vested under the 2020 LTIP as neither EPS nor Fee Income targets were achieved. No long-term incentives vested in respect of 2021.
4. Oliver White took on the interim US Managing Director role from 21 September 2022 in addition to his usual responsibilities. Funding Circle covered the costs of working
in the US such as accommodation, flights, and car hire, however, he was paid an additional payment of £27,500 to compensate him for the material additional work and
responsibilities undertaken. This additional allowance is in keeping with our shareholder-approved Remuneration Policy, under which: “The Committee may determine that
Executive Directors should receive additional reasonable benefits if appropriate, taking into account typical market practice and practice throughout the Group”. A one-off
payment (which is not pensionable nor bonusable) was preferred to an uplift in salary due to the multiplicative impact of salary on total remuneration and the interim nature
5. As disclosed in the 2020 Directors’ Remuneration Report, Samir Desai was awarded a salary increase from £210,000 to £400,000 effective from 1 January 2021, however,
6. Hendrik Nelis and Neil Rimer, who are not independent Non-Executive Directors, have waived their entitlement to a fee.
Annual report on remuneration continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc106
2022 annual bonus
2022 was the second year that we have operated an annual bonus for the Executive Directors. The maximum opportunities were
133% of salary for the CEO and 100% of salary for the CFO. Two thirds of the annual bonus was based on financial measures
with the remainder based on strategic/non-financial measures. The measures were set by the Committee and are in line with
Funding Circle’s strategy. Stretching financial targets were set by the Committee at the start of the year, taking into account our
2022 budget and broker forecasts at the time. An on-target bonus could be earned for achieving 2022 budget performance.
Structure of the 2022 bonus
Element (weighting %)
Threshold
(0% payout)
Target
(50% payout)
Maximum
(100% payout) Outcome
Implied payout
CEO CFO
AEBITDA (one third) £0m £8.8m £17.6m £6.8m 38.6%
Total Income (one third) £152.8m £172.8m £192.8m £148.7m 0%
Strategic/non-financial measures (one third)
See below 96.3% 96.3%
Total (% of maximum) 45.0% 45.0%
Total (% of salary)
59.8% 45.0%
Final outcome (£k)
239.2 179.9
Strategic/non-financial measures
Category Details on objectives
Performance
assessment
Stakeholders –
Doing the right
thing for our
customers and
shareholders
Customers
X Our Net Promoter Score remained strong in 2022 at 77.
X Over 2022, Funding Circle dealt with customer complaints in line with expectations.
Growth
X FlexiPay was launched to new and existing borrowers in the UK with more than £60m spent
across more than 17,000 transactions. Beta testing of our FlexiPay card was launched to a
small number of existing borrowers.
X LaaS was launched with two partners in the US.
X Super prime loans were introduced in the US to serve lower risk customers with better rates,
which resulted in originations of $110m.
X Near prime short-term loans were introduced in the UK which enabled Funding Circle to
support younger businesses for the first time, aligning with our strategic pillar to “say yes
Shareholders
X Funding Circle laid the foundations for improving its shareholder diversification through the
appointment of an experienced Director of Investor Relations and evolving its approach to
prospective shareholder engagement. Of particular note in 2022, Funding Circle received
Annual Report and Accounts 2022 107
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Category Details on objectives
Performance
assessment
Circlers –
incredible place
Employees
X Employee engagement remained at an all-time high of 73%, exceeding our target of 70%, in
addition to 87% of Circlers recommending Funding Circle as a great place to work, exceeding
our target by 7%.
Gender and Diversity
X Continued progress was made in 2022 across diversity, equity and inclusion at Funding Circle.
The highest ever inclusion scores were recorded at the Company with 92% of Circlers stating
they believe Funding Circle values diversity, and 88% believing people from all backgrounds
have equal opportunities to succeed. Key highlights of the year included the delivery of a
female empowerment programme to support women earlier in their career at the Company,
and the establishment of our sixth Circler led support group focused on Neurodiversity.
X 2022 was a year that Funding Circle was recognised externally for its DEI efforts. In the UK,
named as one of Built In’s Inaugural LGBTQIA+ Advocacy Award Winners and in its 2022 Best
Places to Work Awards.
X Funding Circle has embedded DEI practices throughout the Circler life-cycle, from ensuring
that interview panels are diverse, targeting recruiting efforts in teams with lower diversity
statistics with significant progress in the Capital Markets team, and reviewing our talent with
to achieve their potential at Funding Circle.
X Senior gender diversity is reported at 33%, which is flat to last year however, we continue to
progress towards our stretch goal of 40% representation. Excluding technology roles, we are
now above the 40% target.
Risk and
sustainability –
Building a resilient
and sustainable
business to
support all of
ESG goals
X As the interpretation of net zero continues to evolve, Funding Circle’s ambition to reach net zero
has changed to 2050 in line with the UK government’s commitment, with a stretch goal to reach
net zero by 2030 for our operational emissions, and good progress has been made on our
carbon management plan (we anticipate developing a formal carbon transition plan, including
metrics and targets in respect of our own operations, emissions and reductions plan during
the course of 2023). Most significantly, the first measurement of Scope 3 financed emissions
was completed for the US and UK loan books and a new carbon foot-printing firm was engaged
to begin wider Scope 3 measurement in 2023, both of which are pre-requisite steps to target
setting. Scope 3 financed emissions will be Funding Circle’s largest emissions component by
Credit quality/net loan returns of loan cohorts
X Credit risk metrics have been assessed as “Green” for the entire year across both the UK and US.
X Our portfolios in the US and UK are showing resilience and generally performing better than
expectations, with returns expectations improving.
Control environment and change management
X Audits carried out on behalf of British Business Bank and other investors have received positive
feedback and no material issues found; only one guarantee was rejected.
X Continued to strengthen defences against cyberattacks and ransomware, and achieved our “road to
amber” plan.
X Transitioned smoothly from RLS to only core lending; launched other new products including
super prime and near prime lending.
X Continued to evolve FlexiPay, following its beta launch in 2021, with continuously optimised
data driven strategies around credit risk and operational capabilities.
CEO personal
performance
In her first full year as CEO, she has executed well against both the short- and long-term agenda.
She has launched a growth and profit-focused medium-term plan and has strengthened the
leadership team with new hires in order to deliver against this in the US, FlexiPay and Technology.
In a year when the macro environment has been challenging, she has led the business into
new product areas whilst also ensuring a disciplined approach to risk and cost management.
Annual report on remuneration continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc108
Category Details on objectives
Performance
assessment
CFO personal
performance
The CFO has put clear succession plans in place for the Finance department, has retained
key Circlers, and has created a culture that has led to high engagement in the department. He
maintains a focus on cost management discipline. He has provided calm, thoughtful, open and
transparent leadership, input and challenge to the Board, management team and CEO where
needed. He manages many relationships with shareholders independently. In addition, in 2022,
he stepped in to fill a temporary leadership gap in the US team in Q4, relocating temporarily to
Denver. He has also absorbed our Capital Markets team, providing leadership on both a tactical
and strategic basis to the team.
Based on the performance against all of the non-financial objectives and personal performance, the Committee determined that
the CEO and CFO would receive 96.3% of maximum of the non-financial element.
Long-term Incentive Plan “LTIP” vesting in respect of 2022
Oliver White was granted a performance based LTIP award on 19 June 2020 with a face value of 200% of salary (equivalent
to an award of 925,390 nil-cost options) under our previous Remuneration Policy. The vesting was based on performance to
the stretching targets set in 2020.
Targets
Measure Weighting
Threshold
(25% vesting)
Target
(50% vesting)
Maximum
(100% vesting)
Actual
performance
Vesting
(% of element)
2022 EPS 50% -1p 0p 3p -2p 0%
UK Fee Income CAGR 2020-2022 40% 5% 10% 15% 1% 0%
US Fee Income CAGR 2020-2022 10% 0% 2.5% 7.5% -20% 0%
Total vesting (% of maximum) 0%
Total vesting (no. of shares) 0
Total vesting (£k) 0
Restricted Share awards granted during 2022
Restricted Share awards were granted to the Executive Directors on 24 March 2022 under our Policy. Details of the awards are
set out below:
Type of award Number of shares
1
Grant date Vesting date Holding period
Lisa Jacobs Nil-cost option 358,177 £239,979 24 March 2022 24 March 2025
24 March 2025
to 24 March 2027
Oliver White Nil-cost option 269,306 £180,435 24 March 2022 24 March 2025
24 March 2025
to 24 March 2027
1. Based on a grant date share price of £0.67.
Vesting will be subject to a financial underpin based on Total Income as well as qualitative underpins to ensure that Executive
Directors are not rewarded where the Committee considers there to have been a failure in performance, including serious
breaches of regulation, material reputational damage or gross misconduct. The financial underpin was set such that annual
assess whether the actual performance of the Company and Executive Directors warrants the vesting of awards, to guard against
payment for failure or windfall gains. The Committee retains the discretion to make any adjustment to vesting it deems necessary.
Annual Report and Accounts 2022 109
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Directors’ shareholding and share interests (audited)
Table of Directors’ share interests as at 31 December 2022
Beneficially
owned shares
Vested but
unexercised
awards
Unvested
awards
(not subject to
performance
conditions)
Unvested
awards
(subject to
performance
conditions) Total
Executive Directors
Lisa Jacobs 285,296 589,646 246,302 358,177 1,479,421
Oliver White 25 7,062 75,883 159,664 1,464,002 1,956,611
Non-Executive Directors
Andrew Learoyd 1,689,991 100,000 — — 1,789,991
Samir Desai (appointed 1 January 2022) 16,397,164 1,881,250 461,320 —
Eric Daniels — 383,204 — —
Geeta Gopalan 33,216 — — —
Helen Beck 9,235 — — —
Matthew King 15,400 — — — 15,400
Hendrik Nelis — — — — —
Neil Rimer — — — — —
1. Includes shares owned by connected persons.
The Company’s share ownership requirements are that Executive Directors shall (subject to personal circumstances) build and
maintain a shareholding equivalent to at least 200% of salary over five years from their appointment. At the end of the 2022
financial year, the CEO (who was appointed to the Board on 1 January 2022), held 1,121,244 shares, equal to 139.6% of salary
based on the three-month average share price to 31 December 2022 of 49.8p. The CFO (who was appointed to the Board on
of 49.8p. Unvested awards subject to performance conditions are not taken into account in the assessment of the shareholding
until such time as they vest.
As an early-stage private company, which did not pay Directors’ fees, the Company historically granted options to certain
Non-Executive Directors under the Company’s pre-IPO share option plan. Although the options granted will continue to be held
by those Non-Executive Directors going forward, no further options have or will be granted to Non-Executive Directors post-IPO
under any of the Company’s share option plans. The options held by the relevant Non-Executive Directors are all vested.
Annual report on remuneration continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc110
Table of Directors’ vested and unvested share awards (audited)
Award type
1
No. of
awards at
1 January
2022
Awards
granted
in the year
Awards
lapsed
in the year
Awards
vested
in the year
Awards
exercised
in the year
No. of
awards at
2022
Date of
vesting
commenced
Exercise
price/
subscription
price
Market price
on exercise
Executive Directors
Lisa Jacobs 2018 LTIP 250,000 — — 62,500 — 250,000 11/03/2020 £0.00 n/a
162,500 — — 162,500 — 162,500 12/03/2022 £0.00 n/a
173,642 — — — — 26/03/2023 £0.00 n/a
Restricted
Shares — 358,177 — — — 24/03/2025 £0.00 n/a
Share
Incentive Plan 4,646 — — 4,646 — 4,646 15/04/2022 £0.00 n/a
2,341 — — — — 05/05/2023 £0.00 n/a
— 7,819 — — — 7,819 20/04/2024 £0.00 n/a
2011 EMI
Share Plan 175,000 — — — (175,000) — 26/09/2016 £0.02 £0.61
41,000 — — — — 41,000 19/03/2017 £0.02 n/a
44,000 — — — — 44,000 05/11/2017 £0.02 n/a
Unapproved 150,000 — — — — 150,000 01/03/2022 £0.44 n/a
Oliver White 2018 LTIP
2
925,390 — — — — 31/03/2023 £0.00 n/a
Share
Incentive Plan 4,991 — — 4,991 — 4,991 15/04/2022 £0.00 n/a
3,967 — — — — 18/01/2023 £0.00 n/a
— 7,819 — — — 7,819 20/04/2024 £0.00 n/a
2020 bonus
buyout 71,237 — — 71,237 — 26/03/2022 £0.00 n/a
Restricted
Shares 269,306 — — — — 19/05/2024 £0.00 n/a
— 269,306 — — — 24/03/2025 £0.00 n/a
2021 Deferred
bonus plan
— 147,5 3 3 — — — 25/03/2025 £0.00 n/a
Non-Executive Directors
Andrew Learoyd Unapproved 100,000 — — — — 100,000 18/06/2015 £0.32 n/a
Samir Desai Unapproved 2,150,000 — — 537,500 — 2,150,000 01/06/2020 £0.00 n/a
2021 Deferred
bonus plan
— 192,570 — — — 192,570 21/04/2025 £0.00 n/a
Eric Daniels
Unapproved 195,704 — — — — 195,704 22/04/2013 £0.03 n/a
Unapproved 187,50 0 — — — — 187,500 01/03/2016 £0.39 n/a
1. Other than in certain circumstances as set out in the 2021 Directors’ Report on Remuneration on page 102 (e.g. on termination of employment or change of control), vested
2. Oliver White 925,306 were granted under the 2018 Long-Term Incentive plan on 19th June 2020 and will lapse based on performance ending in the financial year 2022.
Payments for loss of office
There were no payments made for loss of office during the year.
Payments to former Directors
There were no payments made to former Directors during the year.
Annual Report and Accounts 2022 111
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Performance graph
The chart below illustrates the Company’s TSR performance compared with that of the FTSE AllShare Index. This index has
been chosen as the Company is a constituent and it is considered the most appropriate benchmark against which to assess
the relative performance of the Company. The chart shows the value of £100 invested in Funding Circle at the IPO offer price
Funding Circle plc
FTSE AllShare Index
£
0
20
40
60
80
100
120
Sep 2018 Dec 2018 Dec 2019 Dec 2022Dec 2020 Dec 2021
CEO remuneration table
The table below sets out the CEO’s single figure of total remuneration.
£000 2016 2017 2018 2019 2020 2021 2022
CEO Samir Desai Samir Desai Samir Desai Samir Desai Samir Desai Samir Desai Lisa Jacobs
CEO total remuneration
1
160 204 4,081 211 201 629 661
Annual bonus payout (% maximum)
2
n/a n/a n/a n/a n/a 78.4% 45.0%
Long-term incentives (% maximum)
3
n/a n/a n/a n/a n/a n/a n/a
1. The 2018 figure includes share options that were granted prior to IPO which were subject to continued employment only. In 2021 Samir Desai waived his salary increase from
£210,000 to £400,000.
2. The CEO received no bonus from 2016 to 2020.
3. Samir Desai did not participate in any long-term incentive. Lisa Jacobs’ first long-term incentive opportunity as CEO was the Restricted Share award made in March 2022.
Relative importance of spend on pay
The table below sets out our relative importance of spend on pay. There have been no dividends paid to date.
Total Income and Adjusted EBITDA (AEBITDA) have been presented as these are two key performance measures used by the
Directors in assessing Funding Circle’s performance.
2022 2021 % Change
Total Income £148.7m £206.9m (28)%
Adjusted EBITDA £6.8m £91.8m (93)%
Employee costs £86.4m £78.3m 10%
Average number of employees 804 11%
Annual report on remuneration continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc112
Percentage change in Directors’ remuneration compared with employees
The table below sets out the annual percentage change in remuneration from 2019 to 2022 for each individual who was a
Director during 2022, compared to that for an average employee. Data for former Directors during this timeframe can be found
Salary/fees
1
Benefits Annual bonus
2021 to
2022
2020 to
2021
2019 to
2020
2021 to
2022
2020 to
2021
2019 to
2020
2021 to
2022
2020 to
2021
2019 to
2020
Executive Directors
Lisa Jacobs
2
n/a n/a n/a n/a n/a n/a n/a n/a n/a
Samir Desai (CEO) n/a +5% -5% n/a +33.6%
3
0% n/a n/a n/a
Oliver White
4
— — n/a -22% +8.4% n/a -43.7% n/a n/a
Non-Executive Directors
Andrew Learoyd +2.9% +5% -5% n/a n/a n/a n/a n/a n/a
Samir Desai (NED) n/a n/a n/a n/a n/a n/a n/a n/a n/a
Eric Daniels +6.4% +5% -5% +21% n/a -100% n/a n/a n/a
Geeta Gopalan +11% +15% -5% n/a n/a n/a n/a n/a n/a
Helen Beck
5
+6.4% n/a n/a n/a n/a n/a n/a n/a n/a
Matthew King
6
+39.3% n/a n/a n/a n/a n/a n/a n/a n/a
Hendrik Nelis
7
n/a n/a n/a n/a n/a n/a n/a n/a n/a
Neil Rimer
7
n/a n/a n/a n/a n/a n/a n/a n/a n/a
Average employee
8
8.7% -13.3% -1.7% -4.0% +8.7% +1.8% +3.3% +17.1% +61.2%
1. The Board and the Global Leadership Team voluntarily reduced their salaries and fees by 20% over the period March to May 2020 in response to the Covid-19 pandemic. This is
the reason for the change in salaries and fees from 2019 to 2021 shown above. No Director received a salary or fee increase during 2020 or 2021. Samir Desai, as CEO, waived
his salary increase for 2021.
2. Lisa Jacobs was appointed to the Board on 1 January 2022.
3. Samir Desai’s benefits did not include a pension contribution or cash in lieu which he waived his right to.
4. Oliver White was appointed to the Board on 15 June 2020.
5. Helen Beck was appointed to the Board on 1 June 2021. For the comparison of 2021 to 2022, Helen’s 2021 fee has been annualised to permit meaningful comparison.
6. Matthew King was appointed to the Board on 19 May 2021. For the comparison of 2021 to 2022, Matthew’s 2021 fee has been annualised to permit meaningful comparison.
The increase reported in the table above reflects the introduction of an additional fee payable for chairing the Board of Funding Circle Ltd.
7. Hendrik Nelis and Neil Rimer, who are not independent Non-Executive Directors, have waived their entitlement to a fee.
8. The annual percentage change of the average remuneration of the Company’s employees, calculated on a full-time equivalent basis.
CEO pay ratio
Funding Circle is committed to remunerating its employees fairly and competitively. We calculate our CEO pay ratio using the
prescribed Methodology A, as shown in the table below. Methodology A was selected as this is considered the most accurate
approach and is generally the preferred approach by shareholders and proxy agencies.
Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio
2022 Option A 17.6 11.3 7.0
2021 Option A 18.4 11.6 6.9
2020 Option A 5.8 3.8 2.3
2019 Option A 6.8 3.9 2.5
There has been an slight decrease in the CEO pay ratio for 2022 due to Circler pay increasing at a higher rate than the change in
pay between Lisa Jacobs as CEO in 2022 and Samir Desai as CEO in 2021. The Board has confirmed that the ratio is consistent
with the Company’s wider policies on employee pay, reward and progression.
Annual Report and Accounts 2022 113
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Total pay and benefits used to calculate the ratios
The table below sets out the UK employee percentile pay and benefits used to determine the above pay ratios and the salary
component for each figure.
CEO 25th percentile Median 75th percentile
2022
Salary component £400,000 £31,007 £48,271 £81,441
Total pay and benefits £660,542 £37,429 £58,083 £94,385
The CEO remuneration is the total single figure remuneration for the relevant years and 2021 and 2022 are disclosed on page
106. The UK employee total remuneration has been calculated based on the amount paid or receivable for the relevant years.
Implementation of the Remuneration Policy for the year ended 31 December 2023
Salary
The table below shows the salaries for the Executive Directors as at 1 March 2023 in comparison to base salary as at 1 March 2022.
The below increases are below the budget for other Circlers of 5%.
1 March
2023
1 January
2022
% change
Lisa Jacobs £414,000 £400,000 +3.5%
Oliver White £410,000 £400,000 +2.5%
Annual bonus
The maximum opportunity for the CEO is 133% of salary and for the CFO is 100% of salary. The target opportunity for both is
50% of maximum opportunity. The annual bonus measures will be as follows:
2023 measure 2023 measure
AEBITDA 30%
Total Income 30%
FlexiPay (Financial/Strategic) 10%
Strategic/non-financial measures 30%
40% of any bonus earned will be deferred into shares for three years. The Board considers the actual targets for 2023 to be
commercially sensitive at this time, however, we will provide retrospective disclosure of these targets in next year’s report.
The Committee may apply its discretion to amend the bonus payout should any formulaic assessment of performance not
reflect the Committee’s assessment of overall business performance, the performance of the individual, or the experience
Annual report on remuneration continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc114
Restricted Share awards
In accordance with our Policy, the number of Restricted Shares granted to Executive Directors in 2023 will be equal to the
number granted in 2021 and 2022.
Accordingly, the CEO and the CFO will be awarded 358,177 and 269,306 Restricted Shares respectively in 2023. Application of
the Policy means that the face value of the award is formulaically reduced if there has been a fall in the share price, which aligns
with proxy agency guidance. As shown in our “Illustration of the application of Remuneration Policy in 2023” charts, the grant
date face value of 2023 Restricted Share awards would be c.25% lower compared to 2022 Restricted Share awards (assumes a
share price of 49.8p at the time the 2023 Restricted Share awards are granted, which was the three month average share price
Vesting will be subject to a financial underpin based on Total Income as well as qualitative underpins to ensure that Executive
Directors are not rewarded where the Committee considers there to have been a failure in performance, including serious
breaches of regulation, material reputational damage or gross misconduct. The financial underpin has been set such that annual
Total Income must be on average £130 million over the period of three years from 2023 to 2025. Prior to vesting, the Committee
will assess whether the actual performance of the Company and Executive Directors warrants vesting of the awards, to guard
against payment for failure or windfall gains. The Committee retains the discretion to make any adjustment to vesting it deems
necessary. Any vested awards will remain subject to a two-year post-vesting holding period.
Benefits and pension contributions
In line with our Policy, the benefits offered to Executive Directors are in line with those available to other employees in the Group.
All Circlers (including Executive Directors) are offered the opportunity to receive Private Medical Insurance, life assurance, dental
insurance, and a health cash plan paid for by Funding Circle. Circlers can upgrade their cover and include family members/
spouses/partners at their own cost. The Executive Directors, and all UK Circlers, are eligible to receive a pension contribution
2022 and 2023 Non-Executive Director and Chair fees
It has been determined that the Non-Executive Director fees will remain unchanged for 2023, as set out in the table below:
Fee 2022 2023
Chair fee £207,000 £207,000
Non-Executive Director base fee £55,000 £55,000
Senior Independent Director fee £10,000 £10,000
Committee Chair fees (other than the Nomination Committee) £15,000 £15,000
Chair of Funding Circle Ltd £15,000 £15,000
This report has been prepared in accordance with the Companies Act 2006, Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 (as amended), the 2018 UK Corporate Governance Code and the UK
Listing Authority’s Listing Rules.
Annual Report and Accounts 2022 115
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Report of the Directors
for the year ended 31 December 2022
The Directors present their report (the “Directors’ Report”) and the Annual Report and Accounts for the year ended 31 December 2022.
Information required to be part of the Directors’ Report either by statute, by Listing Rule 9.8 or by the DTRs can be found either in
this section or elsewhere in this document, as indicated in the table below. All information located elsewhere in this document is
incorporated into this Directors’ Report by reference:
Section of Annual Report Page reference
Information required by LR9.8/DTRs
Corporate Governance Statement Corporate Governance Statement (page 80)
Going Concern and Viability Statement Risk Management (page 71)
Directors’ interests Remuneration Report (page 110) and Directors’ Report (page 116)
Long-term incentive schemes Remuneration Report (page 109)
Waiver of emoluments Remuneration Report (pages 106)
Powers for the Company to buy back its shares Directors’ Report (page 117)
Allotment of shares during the year Note 17 to the financial statements
Significant shareholders Directors’ Report (page 118)
Related party agreements Note 25 to the financial statements
Diversity policy Strategic Report (page 25)
Climate-related financial disclosures Environment, social and governance (“ESG”) (pages 30 to 43)
Statutory information
Stakeholder engagement Strategic Report – Our stakeholders (pages 44 to 46). See also Board decision
making and section 172 duties on pages 78 to 79 of the Corporate
Governance Report.
Employee engagement Strategic Report – Our stakeholders (pages 44 to 46) and Our People
Policy concerning the employment of disabled persons Strategic Report – Our people (page 25)
Financial instruments Note 16 to the financial statements
Future developments of the business Strategic Report (pages 15 to 17)
Greenhouse gas emissions, energy consumption
Strategic Report – Environment, social and governance (pages 39 to 41)
Significant agreements Directors’ Report (page 116)
Non-financial reporting Strategic Report – see below
Management Report
This Directors’ Report, together with the
Strategic Report on pages 1 to 71, forms
the Management Report for the purposes
Strategic Report
Section 414A of the Companies Act
2006 (the “Act”) requires the Directors to
present a Strategic Report in the Annual
Report and Accounts. The information
can be found on pages 1 to 71.
The Company has chosen, in accordance
with section 414C (11) of the Act and as
noted in this Directors’ Report, to include
certain matters in its Strategic Report
that would otherwise be disclosed in this
Directors’ Report.
Section 414C of the Act requires the
Company to include within its Strategic
Report a non-financial statement
setting out such information as is
required by section 414CB of the Act.
Such information is set out in the Our
people section on pages 24 to 27, the
ESG section on pages 28 to 43, the Our
business model and Our strategy sections
on pages 18 to 19 and 22 to 23, our key
performance indicators on page 20, and
the Risk management and Going concern
and Viability statement sections on
pages 55 to 71.
Directors and their interests
Biographies of the Directors currently serving on the Board are set out on page 74 to 75. Our Articles of Association provide that
Details of Directors’ service contracts are set out in the Directors’ Remuneration Report on page 105. The interests of the
Directors in the shares of the Company are also shown on page 110 of that report. In the period between 31 December 2022
allotted to Lisa Jacobs or Oliver White under the Company’s Share Incentive Plan.
In line with the requirements of the Act, each Director has notified the Company of any situation in which they have, or could
have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company (a situational conflict).
The Board has formal procedures to deal with Directors’ conflicts of interest.
None of the Directors has a material interest in any significant contract with the Company or any member of its Group.
CORPORATE GOVERNANCE
Funding Circle Holdings plc116
Insurance and indemnities
The Company maintains appropriate insurance to cover Directors’ and Officers’ liability for itself and its subsidiaries. In addition
the Company indemnifies each Director under a separate deed of indemnity. The Company also indemnifies each Director under
its Articles of Association. Such indemnities are qualifying indemnities for the purposes of, and permitted under, section 234 of
the Act.
Results and dividends
The Group’s and the Company’s audited financial statements for the year are set out on pages 128 to 189.
The Directors do not recommend payment of a final dividend for 2022 (2021: £nil).
Authority to allot or purchase the Company’s shares
The Articles permit the Directors to issue or approve the purchase by the Company of its own shares, subject to obtaining
shareholders’ prior approval. The authority to issue or buy back shares will expire at the 2023 AGM, and it will be proposed at the
meeting that the Directors be granted new authorities to issue and buy back shares. The Directors currently have authority to
approve the Company’s purchase of up to 35,732,624 of the Company’s ordinary shares. The trustee of the Company’s Employee
Benefit Trust made market purchases of 17,660,340 (2021: nil) ordinary shares of nominal value of £0.001 in the Company
from March to August 2022, representing 4.89% of the issued share capital at 31 December 2022, for the purpose of satisfying
employee share option plans. The total cost of the market purchases was £8.7m with the average purchase price of each share
being £0.50. This represents the maximum number of purchased shares held during the year. 1,189,101 of the purchased shares
were utilised during the year to satisfy the exercise of employee share options. As at 28 February 2023 , the trustee holds 4.42%
of the Company’s issued share capital.
Share capital
Details of the shares held by the Group’s Employee Benefit Trust are disclosed in note 17 to the financial statements.
Rights attaching to shares
All shares have the same rights (including voting and dividend rights and rights on a return of capital) and restrictions as set
out in the Articles, described below. Except in relation to dividends and rights on a liquidation of the Company, the shareholders
have no rights to share in the profits of the Company. The Company’s shares are not redeemable. However, following any grant
of authority from shareholders, the Company may purchase or contract to purchase any of the shares on or off market, subject
Voting rights
All members who hold ordinary shares are entitled to attend and vote at the AGM. On a show of hands at a general meeting,
every member present in person shall have one vote and on a poll, every member present in person or by proxy shall have one
vote for every share of which he or she is the holder. No shareholder holds ordinary shares carrying special rights relating to the
control of the Company and the Directors are not aware of any agreements between holders of the Company’s shares that may
result in restrictions on voting rights.
Shares held by the Company’s Employee Benefit Trust rank pari passu with the shares in issue and have no special rights.
Voting rights and rights of acceptance of any offer relating to shares held in trust rest with the Trustees and are not exercisable
by employees, although the Trustees will exercise such rights arising from allocated shares in accordance with the relevant
Restrictions on transfer ofsecurities
The Articles do not contain any restrictions on the transfer of ordinary shares in the Company other than the usual restrictions
applicable where any amount is unpaid on a share. All issued share capital of the Company at the date of this report is fully paid.
Certain restrictions are also imposed by laws and regulations (such as insider dealing and market requirements relating to closed
periods) and requirements of the Disclosure Guidance and Transparency Rules, as well as the Company’s own dealing codes,
whereby Directors, persons connected to the Directors and certain employees of the Company require approval to deal in the
Change of control
Certain LTIP awards held by members of the GLT (excluding the Executive Directors) and an award made to the CEO in 2019
contain additional protections in the event of termination of employment due to a takeover bid where such termination is deemed
to be connected with the change of control. Save in respect of these awards, there are no agreements between the Company and
its Directors or employees providing for compensation for loss of office or employment (whether through resignation, purported
redundancy or otherwise) because of a takeover bid.
Annual Report and Accounts 2022 117
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Change of control continued
The Group is party to a limited number of funding and servicing agreements that include change of control provisions which, in
the event of a change of control undertaken not in compliance with the procedural requirements of the relevant arrangement,
could result in the termination of further loan origination and termination of servicing by the Group under the affected arrangement.
In addition, the Group participates in one or more lending schemes that benefit from a form of government-backed guarantee
and it is expected that, in the event of a change of control of the Company, the consent of the relevant loan guarantor would be
Significant shareholdings
As at 31 December 2022, the Company has been notified pursuant to DTR5.1, or is otherwise aware, of the following significant
interests in the issued ordinary share capital of the Company:
Name of shareholder
Number
of ordinary
shares as at
31 December
2022
Percentage
issued share
capital as at
31 December
2022
Index Ventures 58,618,351 16.22
Aktieselskabet af 2.7.2018 46,5 07,936 12.87
Accel London Management 26,906,743 7.4 5
T Rowe Price Global Investments 21,567,6 36 5.97
Funding Circle Employee Benefit Trust 16,726,515 4.63
DST Managers 16,505,378 4.57
JO Hambro Capital 16,403,932 4.54
Mr Samir Desai 16,397,164 4.54
Capital Group 14,713,073 4.07
In the period between 31 December 2022 and 28 February 2023 (the latest practicable date prior to the date of this report), the
Company received no further notifications pursuant to DTR5.1.
Research and development
The Group invests in the research and development of technology and software products that enable the Group to achieve its
key performance objective of growing lending to SMEs whilst delivering resilient returns to investors.
Political donations
There were no political donations made during the year or the previous year.
External branches
The Company has subsidiaries in the United Kingdom, the United States of America, Germany, Spain and the Netherlands and
has one UK branch of the Netherlands entity that was set up during the reporting period.
External auditors
PwC have confirmed their willingness to continue as external auditors and a resolution to reappoint them as the Company’s
external auditors, and to authorise the Directors to fix the auditors’ remuneration, will be proposed at the 2023 AGM.
Statement of disclosure of information to auditors
Each of the persons who is a Director at the date of approval of this report confirms that:
X so far as the Director is aware, there is no relevant audit information of which the Company’s external auditors are unaware; and
X the Director has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Act.
2023 AGM
The Company’s AGM will take place at 12:00 on 11 May 2023 at the Company’s offices at 71 Queen Victoria Street, London,
A separate circular, comprising a letter from the Chair of the Board, Notice of Meeting and explanatory notes on the resolutions
being proposed, has been circulated to shareholders and is available on our website, https:// corporate.fundingcircle.com/
investors/shareholder-meetings.
Report of the Directors continued
CORPORATE GOVERNANCE
Funding Circle Holdings plc118
Statement of Directors’ responsibilities
inrespectofthefinancialstatements
The Directors are responsible for
preparing the Annual Report and the
financial statements in accordance
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law the
Directors have prepared the Group
and Company financial statements
in accordance with UK-adopted
international accounting standards.
Under company law, 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 Company and of the profit
or loss of the Group for that period.
the Directors are required to:
X select suitable accounting policies
and then apply them consistently;
X state whether applicable UK-adopted
international accounting standards
have been followed, subject to any
material departures disclosed and
explained in the financial statements;
X make judgements and accounting
estimates that are reasonable and
prudent; and
X prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Company will continue
The Directors are also responsible
for taking reasonable steps for the
prevention and detection of fraud
The Directors are also responsible
for keeping adequate accounting
records that are sufficient to show and
explain the Group’s and Company’s
transactions and disclose with
reasonable accuracy at any time the
financial position of the Group and
Company and enable them to ensure
that the financial statements and the
Directors’ Remuneration Report comply
with the Companies Act 2006.
The Directors are responsible for
the maintenance and integrity of the
Company’s website. Legislation in
the United Kingdom governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual
Report and Accounts, taken as a whole,
is fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s and
Company’s position and performance,
business model and strategy.
Each of the Directors, whose names and
functions are listed in the Report of the
Directors confirm that, to the best of
their knowledge:
X the Group and Company financial
statements, which have been
prepared in accordance with
UK-adopted international accounting
standards, give a true and fair view
of the assets, liabilities and financial
position of the Group and Company,
and of the profit of the Group; and
X the Strategic Report includes a
fair review of the development and
performance of the business and the
position of the Group and Company,
together with a description of the
principal risks and uncertainties that
they face.
In the case of each Director in office
at the date the Directors’ report
X so far as the Director is aware, there
is no relevant audit information of
which the Group’s and Company’s
auditors are unaware; and
X they have taken all the steps that
they ought to have taken as a
Director in order to make themselves
aware of any relevant audit information
and to establish that the Group’s and
Company’s auditors are aware of
that information.
Approved by the Board and signed on
its behalf.
Lisa Jacobs
Chief Executive Officer
2 March 2023
Annual Report and Accounts 2022 119
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Financial
statements
Funding Circle Holdings plc120
121 Independent auditors’ report
128 Consolidated statement of comprehensive income
129 Consolidated balance sheet
130 Consolidated statement of changes inequity
131 Consolidated statement of cash flows
132 Notes forming part of the consolidated financial statements
179 Company balance sheet
180 Company statement of changes inequity
181 Company statement of cash flows
182 Notes forming part of the Company financial statements
190 Alternative performance measures
191 Glossary
195 Shareholder and Company information
196 Company information
Report on the audit of the financial statements
Opinion
In our opinion, Funding Circle Holdings plc’s Group financial statements and Company financial statements (the “financial statements”):
5 give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2022 and of the Group’s loss and
the Group’s and Company’s cash flows for the year then ended;
5 have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the
provisions of the Companies Act 2006; and
5 have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the
consolidated and Company balance sheets as at 31 December 2022; the consolidated statement of comprehensive income, the
consolidated and Company statements of changes in equity and the consolidated and Company statements of cash flows for the year
then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.
Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 4, we have provided no non-audit services to the Company or its controlled undertakings in the period
under audit.
Our audit approach
Overview
Audit scope
5 Our audit included full scope audits of the UK and US components. We performed audit procedures over specific balances in respect
of the Funding Circle Central Europe (“FCCE”) component at a Group level which together with the full scope audits accounted for 96%
of the Group’s total income and 99% of the Group’s loss before taxation.
5 The scope of the audit and the nature, timing and extent of audit procedures were determined by our risk assessment, the financial
significance of financial statement line items and qualitative factors (including history of misstatement through fraud or error). In
particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain.
Key audit matters
5 Valuation of SME loans (securitised) and investments and co-investments in RLS / CBILs trusts (Group).
5 Carrying value of the Company’s investment in the US subsidiary (Company).
Materiality
5 Overall Group materiality: £1,430,000 (2021: £1,800,000) based on 5% of the average of profit/loss before taxation for the previous
three years, adjusted for exceptional items and fair value gains and losses.
5 Overall Company materiality: £3,840,000 (2021: £3,400,000) based on 1% of total assets.
5 Performance materiality: £1,072,500 (2021: £1,350,000) (Group) and £2,888,000 (2021: £2,500,000) (Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Independent auditors’ report
to the members of Funding Circle Holdings plc
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 121
FINANCIAL STATEMENTS
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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)
identified by the auditors, including 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, and any comments we make on the results of our procedures
thereon, 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.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Valuation of SME loans (securitised) and investments and
co-investments in RLS / CBILS trusts (Group)
Refer to Report of the Audit Committee – Significant issues
considered in relation to the financial statements; note 1
(accounting policies); note 2 (critical accounting judgements and
key sources of estimation uncertainty); note 12 (investment in
SME loans); and note 16 (financial risk management) of the
Group financial statements.
The Group holds portfolios of investments in SME loans
(securitised) and investments and co-investments in RLS /
CBILS trusts and records them on the balance sheet at fair value
with resultant gains and losses recognised in the income
statement. As at the balance sheet date, the Group’s investment
in SME loans (securitised) and investments and co-investments
in RLS / CBILs trusts held at fair value totalled £74.5m
The estimation of the fair value of the SME loans (securitised)
and investments and co-investments in RLS / CBILS trusts
requires models which ultilise both observable and unobservable
inputs, with reasonable movements in the significant
assumptions resulting in material changes to fair value.
We performed sensitivity analysis to assess the susceptibility
ofchanges in key assumptions and identified the discount rate
inthe investments and co-investments in leveraged RLS / CBILS
trusts and the discount rate and default rates in the US SME
loans (securitised) as the significant assumptions.
As a result the valuation of the SME loans (securitised) and
investments and co-investments in RLS / CBILS trusts has been
an area of focus in our audit.
Our audit procedures comprised the following:
5 We understood and evaluated the design and implementation of controls
relating to the valuation of the Group’s portfolio of SME loans (securitised)
and investments and co-investments in RLS / CBILs trusts.
5 We engaged our valuation experts to assess the appropriateness of the
methodology used by management in determining the valuation of the
investments in SME loans (securitised) and investments and co-
investments in RLS / CBILs trusts which are held at fair value. This
included assessing the reasonableness of the significant assumptions
within the valuation models, which we considered to be the discount rate
and default rate for the US SME loans (securitised) and the discount rate in
the investments and co-investments in the leveraged RLS / CBILs trusts.
Our assessment of the reasonableness of the assumptions included
comparison to historical performance and third party data where available.
5 We derived our own independent estimate of the discount rates and
compared these to those used by management.
5 We built our own independent models to re-calculate the fair value using
management’s assumptions.
Based on the above procedures performed, and the evidence obtained, we
concluded that the estimated fair value of the SME loans (securitised) and
investments and co-investments in RLS / CBILS trusts were reasonable.
We evaluated the appropriateness of the related key sources of estimation
uncertainty disclosure in note 2 to the Group financial statements and the
disclosures on financial instruments in note 12 and note 16 and considered
these to be reasonable.
Carrying value of the Company’s investment in the
USsubsidiary (Company)
Refer to Report of the Audit Committee – Significant issues
considered in relation to the financial statements; note1
accounting policies including key sources of estimation
uncertainty); and note 5 (investments in subsidiary
undertakings) of the Company financial statements.
The Company holds an investment in the US subsidiary with a
carrying value of £80.5m after the reversal of impairment loss
of£45.3m in the year.
IAS 36 ‘Impairment of Assets’ requires that investments are subject
to an impairment review when there is an indication that an asset
may be impaired or where there may be an impairment reversal.
The main indicators that there may be a reversal of the impairment
in the carrying value of the investment in the US subsidiary are
the improvement in the forecast performance of the business as
well as the net asset value exceeding the carrying value at the
balance sheet date.
Management performed an impairment assessment and
estimated the recoverable amount using a value-in-use model.
This assessment identified an impairment reversal of £45.3m.
We performed sensitivity analysis to assess the susceptibility
ofchange in assumptions and identified the revenue growth
rate, transfer pricing arrangements between the US and the
UKand the discount rate as the key assumptions.
Given the magnitude of the carrying value of the investment in
the US subsidiary tothe Company this has been an area of focus
in our audit.
Our audit procedures comprised the following:
5 We understood the controls relating to the Company’s impairmentassessments.
5 We assessed the methodology used by management against the
requirements of the financial reporting framework and tested the
mathematical accuracy of the model.
5 We agreed the forecast financial information to budgets and forecasts
approved by senior management and the Board, including the
adjustmentsfrom the Medium-Term Plan.
5 We compared the forecast growth rates with those achieved by the
USbusiness in the past.
5 We identified the key drivers in management’s forecasts and assessed
their reasonableness by comparing them to historical results.
5 We assessed the appropriateness of the discount rate assumption by
using our valuation experts to derive an independent view on the rate and
compared this to the one used by management.
5 We engaged tax specialists to review and assess the reasonableness of
the Group’s transfer pricing policy and arrangements. We tested whether
transfer pricing adjustments were consistent with the policy and have
beenappropriately reflected within the model.
Based on the above procedures performed, and the evidence obtained, we
considered the Directors’ conclusion that there has been an indicator of a
reversal of the impairment in the carrying value and that the carrying value
ofthe US subsidiary had increased to £80.5m to be reasonable.
We evaluated the appropriateness of the related disclosures in note 1
(significant accounting policies including key sources of estimation uncertainty)
to the Company’s financial statements and note 5 (investments in subsidiaries)
and considered these to be reasonable.
Independent auditors’ report continued
to the members of Funding Circle Holdings plc
FINANCIAL STATEMENTS
Funding Circle Holdings plc122
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters continued
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
asa whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry
inwhich they operate.
1) Audit approach to Funding Circle’s operations: We performed a risk assessment, giving consideration to relevant external and internal
factors, including economic risks, climate change, relevant accounting and regulatory developments, and Funding Circle’s strategy.
We also considered our knowledge and experience obtained in prior year audits. We designed our audit approach for the products and
services that substantially make up Funding Circle’s businesses in the UK, US and CE, such as platform lending, marketplace referrals,
lines of credit and the origination of, and investment in, SME loan portfolios. The audit approach was designed by a partner and team
members who are specialists in the relevant areas. The risk assessment and audit approach were provided to the US audit team who
contributed to the Group audit.
2) Audit work for in scope components: Through our risk assessment and scoping we identified Funding Circle Limited and the US group
as full scope components due to being financially significant. We considered FCCE as a limited scope entity for specific balances
including loan repurchase liability and cash. We instructed our network firm in the US to perform a full scope audit of the US component.
The Group audit team performed the audit work for the UK components and the specific work over FCCE balances. We assigned
materiality levels to components reflecting the size of their operations. The performance materiality levels ranged from £750,000 to
£1,020,000. We determined the level of involvement we needed to have in their audit work to be able to conclude whether sufficient
appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole. This included
active and regular dialogue with the partner and team responsible for the audit of the US component, the issuance of instructions,
reviewing their audit plan and strategy and a review of their audit working papers and their findings in certain areas. Analytical review
procedures were performed over FCCE, a non-significant component with material balances, to mitigate the risk of material misstatement.
3) Audit procedures undertaken at a Group level and on the Company: We ensured that appropriate further work was undertaken for the
Group and Company. Certain account balances were audited centrally by the Group engagement team, including the Company’s
investment in subsidiary undertakings, investments in associates, valuation of SME loans, capitalisation of development costs, marketplace
fee revenue, operating expenses, leases, share based payments, the consolidation of the Group’s results, the preparation of the financial
statements, and certain disclosures within the Directors’ remuneration report and taxation.
4) Using the work of others: We used the evidence provided by our valuation experts and specialists for our work on certain assumptions
used in the impairment assessment over the Company’s investment in the US subsidiary, the valuation of the SME loans (securitised)
and investments and co-investments in RLS / CBILs trusts recorded at fair value, and the provision for expected credit losses on lines
ofcredit.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the
Group’sand Company’s financial statements, and we remained alert when performing our audit procedures for any indicators of the
impact of climate risk. Our procedures did not identify any material impact as a result of climate risk on the Group’s and Company’s
financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 123
Report on the audit of the financial statements continued
Our audit approach continued
Materiality continued
Financial statements – Group Financial statements – Company
Overall materiality £1,430,000 (2021: £1,800,000). £3,840,000 (2021: £3,400,000).
How we determined it 5% of the average of profit/loss before taxation for the previous
three years, adjusted for exceptional items and fair value gains
and losses.
1% of total assets.
Rationale for
benchmark applied
We determined materiality by applying 5% to the average
consolidated profit/loss before taxation for the previous three
years after adjusting for exceptional items and fair value gains
and losses. We consider profit/loss before taxation to be the most
appropriate benchmark used in assessing the performance of the
Group as the business is listed and profit orientated. Given the
volatility in the underlying performance, we consider it appropriate
to take an average of the results of the preceding three years. We
believe that profit/loss before taxation adjusted for exceptional
items and fair value gains and losses is an appropriate measure
as it eliminates the impact of one-off non-recurring items which
significantly impact comparability.
We consider total assets to be the most
appropriate benchmark to apply on the
basis that the Company is a non-trading
investment company that holds
investment in the Group’s subsidiaries.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range
of materiality allocated across components was between £1,000,000 and £1,358,500. Certain components were audited to a local
statutory audit materiality that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.
Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £1,072,500 (2021: £1,350,000) for the Group
financial statements and £2,880,000 (2021: £2,500,000) for the Company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £71,500 (Group
audit) (2021: 90,000) and £195,000 (Company audit) (2021: £95,000) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of
accounting included:
5 performing a risk assessment to identify factors that could impact the going concern basis of accounting, including the impact of
external risks such as an uncertain economic environment and climate change;
5 understanding and evaluating management’s financial forecasts and liquidity and regulatory capital over the going concern period
including the impact of new products such as FlexiPay and an evaluation of the stress testing performed by management;
5 review of management’s covenant compliance monitoring and the impact of the stress scenarios on the covenants;
5 substantiation of financial resources available to the Group and Company as at the balance sheet date including the unrestricted cash; and
5 reading and evaluating the adequacy of the disclosures made in the financial statements in relation to going concern.
Independent auditors’ report continued
to the members of Funding Circle Holdings plc
FINANCIAL STATEMENTS
Funding Circle Holdings plc124
Report on the audit of the financial statements continued
Conclusions relating to going concern continued
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 the 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 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.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the
Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have 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
thisreport.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related
Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform
procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Report of the
Directors for the year ended 31 December 2022 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did
not identify any material misstatements in the Strategic report and Report of the Directors.
Directors’ remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing
material to add or draw attention to in relation to:
5 the directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
5 the disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and
anexplanation of how these are being managed or mitigated;
5 the directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis
ofaccounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue
to do so over a period of at least twelve months from the date of approval of the financial statements;
5 the directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and
why the period is appropriate; and
5 the directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation
andmeet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 125
Report on the audit of the financial statements continued
Corporate governance statement continued
Our review of the directors’ statement regarding the longer-term viability of the Group and Company was substantially less in scope than
an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the
statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement
isconsistent with the financial statements and our knowledge and understanding of the Group and Company and their environment
obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
5 the directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;
5 the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
5 the section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Company’s compliance
with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review
by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements, the directors are responsible
for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true
and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue
asagoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations
related to the Group’s provision of regulated products and services under its Financial Conduct Authority (“FCA”) licence, and we considered
the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such as the Companies Act 2006 and corporate tax legislation. We
evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were related to bias in accounting estimates and judgments and the posting
of manual journal entries in respect of transaction, marketplace, servicing, interest income and other fees revenue streams. The Group
engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in
response to such risks in their work. Audit procedures performed by the Group engagement team and/or component auditors included:
5 review of correspondence with, and reports to, the FCA;
5 review of customer complaints to identify any indicators of breaches in laws and regulations;
5 assessing matters reported on the Group’s whistleblowing helpline and the results of management’s investigation of such matters;
5 enquiries of the Directors, the Chair of the Audit Committee, the Head of Internal Audit and management, including the Group’s
general counsel and the Group’s head of legal and regulatory, including consideration of known or suspected instances of non-
compliance with laws and regulation and fraud;
5 review of internal audit reports issued in the period to identify any indicators of breaches in laws and regulations;
5 identifying and testing journal entries and period end adjustments, including those with unusual account combinations including
entries made in respect of transaction, marketplace, servicing, interest income and other fees revenue streams; and
5 challenging significant assumptions and judgements made by management in its accounting estimates, in particular in relation those
used in the determination of the fair value of SME loans (securitised), investments and co-investments in RLS / CBILs trusts, the
provision for expected credit losses on loans held at amortised cost and the capitalisation of development costs.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance
with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Independent auditors’ report continued
to the members of Funding Circle Holdings plc
FINANCIAL STATEMENTS
Funding Circle Holdings plc126
Report on the audit of the financial statements continued
Responsibilities for the financial statements and the audit continued
Auditors’ responsibilities for the audit of the financial statements continued
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek
to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to
draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
5 we have not obtained all the information and explanations we require for our audit; or
5 adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
5 certain disclosures of directors’ remuneration specified by law are not made; or
5 the Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the directors on 4 August 2015 to audit the financial
statements for the year ended 31 December 2015 and subsequent financial periods. The period of total uninterrupted engagement
iseight years, covering the years ended 31 December 2015 to 31 December 2022.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form
part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance
with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual
financial report has been prepared using the single electronic format specified in the ESEF RTS.
Nick Morrison (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
2 March 2023
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 127
Consolidated statement of comprehensive income
for the year ended 31 December 2022
Note
31 December
2022
£m
31 December 2021
Before exceptional items
£m
Exceptional
items
1
£m
31 December
2021
£m
Transaction fees 7 7. 5 115 . 0 — 115 . 0
Servicing fees 4 7. 9 4 7. 0 — 4 7. 0
Interest income
2
Other fees 4 .1 3.5 — 3.5
Operating income 131. 4 16 5 . 5 — 16 5 . 5
Investment income 22 .0 5 3 .7 — 5 3 .7
Investment expense (4 .7 ) (12 . 3 ) — (12 . 3 )
Total income 14 8 .7 2 0 6 .9 — 2 0 6 .9
Fair value gains/(losses) 4.8 28.6 — 28 .6
Net income 3 15 3 .5 235 .5 — 23 5.5
People costs 4, 6 (8 5 .9 ) (7 7.7 ) — (7 7. 7 )
Marketing costs 4 (38 .4 ) (4 6 .9 ) — (4 6 .9 )
Depreciation, amortisation and impairment 4 (1 7. 0 ) (13 . 9 ) (3 .9 ) (1 7. 8 )
Credit/(provision) for expected credit losses
3
4, 15, 16 1. 5 (1. 2 ) — (1. 2 )
Other costs 4 (28.4 ) (2 7. 7 ) — (2 7. 7 )
Operating expenses 4 (16 8 . 2 ) (16 7. 4 ) (3 .9 ) (17 1. 3 )
Operating (loss)/profit (14 . 7 ) 6 8 .1 (3 .9 ) 6 4.2
Finance income 7 2.3 0 .1 — 0 .1
Finance costs 7 (0 .9 ) (1 .1 ) — (1.1 )
Share of net profit of associates 29 0.4 0 .9 — 0 .9
(Loss)/profit before taxation (12 .9 ) 6 8 .0 (3 .9 ) 6 4 .1
Income tax credit/(charge) 8 6.0 (2 .9 ) — (2 .9 )
(Loss)/profit for the year (6 .9 ) 6 5 .1 (3 .9 ) 61. 2
Other comprehensive income
Items that may be reclassified subsequently
toprofitand loss:
Exchange differences on translation
offoreignoperations 19 5.8 1. 4 — 1. 4
Total comprehensive (loss)/profit for the year (1 .1 ) 66 .5 (3 .9 ) 62.6
Total comprehensive (loss)/profit attributable to:
Owners of the Parent (1 .1 ) 66 .5 (3 .9 ) 62.6
(Loss)/earnings per share
Basic (loss)/earnings per share 9 (2 .0 )p 18 . 5 p
Diluted (loss)/earnings per share 9 (1. 8 )p 1 7.1 p 16 .0 p
1. Exceptional items are detailed within note 5.
2. Interest income recognised on assets held at amortised cost under the effective interest rate method.
3. The comparative year ended 31 December 2021 has been re-presented to present “credit/(provision) for expected credit losses” which was previously included within
“othercosts”.
All amounts relate to continuing activities.
The notes on pages 132 to 178 form part of these financial statements.
FINANCIAL STATEMENTS
Funding Circle Holdings plc128
Consolidated balance sheet
as at 31 December 2022
Note
31 December
2022
£m
31 December
2021
1
£m
Non-current assets
Intangible assets 10 28.2 2 4 .9
Property, plant and equipment 11 10. 0 14 .1
Investment in associates 29 2 .7 7. 6
Investment in trusts and co-investments 12 28. 7 3 9.1
SME loans (other) 12 24.8 74 . 2
Deferred tax asset 8 6 .9 —
Trade and other receivables 13 3.4 4 .1
Current assets
SME loans (warehouse) 12 2 .4 3.2
SME loans (securitised) 12 4 5.8 14 8 .1
SME loans (other) 12 2 0 .9 —
Lines of credit
1
12 16 .0 1. 6
Trade and other receivables 13 16 .5 25 .0
Cash and cash equivalents 22 17 7. 7 2 24 .0
Total assets 3 84 .0 5 6 5 .9
Current liabilities
Trade and other payables 14 3 1. 8 36 .4
Bonds 16 23 .7 14 0 . 3
Short-term provisions and other liabilities 15 1.0 3 .4
Lease liabilities 11 7. 2 6 .9
Non-current liabilities
Long-term provisions and other liabilities 15 1 .1 0 .7
Bank borrowings 16 2 2 .6 73.2
Lease liabilities 11 12 . 6 1 7. 0
Total liabilities 10 0 . 0 2 7 7. 9
Equity
Share capital 17 0.4 0.4
Share premium account 18 293. 1 293.0
Foreign exchange reserve 19 16 .9 11.1
Share options reserve 22.2 1 9 .1
Accumulated losses 20 (4 8 . 6 ) (35 . 6 )
Total equity 28 4.0 288 .0
Total equity and liabilities 38 4.0 5 65 .9
1. The comparative year as at 31 December 2021 has been re-presented to present FlexiPay drawn lines of credit within “lines of credit” which was previously included within “SME
loans (other)”.
The financial statements on pages 128 to 178 were approved by the Board and authorised for issue on 02 March 2023. They
were signed on behalf of the Board by:
Oliver White
Director
Company registration number 07123934
The notes on pages 132 to 178 form part of these financial statements.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 129
Consolidated statement of changes in equity
for the year ended 31 December 2022
Note
Share
capital
£m
Share
premium
account
£m
Foreign
exchange
reserve
£m
Share
options
reserve
£m
(Accumulated
losses)/
retained
earnings
£m
Total
equity
£m
Balance at 1 January 2021 0.3 29 2 .6 9.7 13 . 6 (98 .6 ) 2 1 7. 6
Profit for the year 20 — — — — 61. 2 61. 2
Other comprehensive income
Exchange differences on translation
offoreignoperations 19 — — 1.4 — — 1.4
Total comprehensive income — — 1. 4 — 61. 2 62.6
Transactions with owners
Transfer of share option costs 20 — — — (1. 8 ) 1.8 —
Issue of share capital 17, 18 0 .1 0.4 — — — 0 .5
Employee share schemes –
valueofemployeeservices
Balance at 31 December 2021 0.4 293.0 11 .1 19 .1 (35 .6 ) 28 8.0
Loss for the year 20 — — — — (6 .9 ) (6.9 )
Other comprehensive income
Exchange differences on translation
offoreignoperations 19 — — 5.8 — — 5.8
Total comprehensive income — — 5.8 — (6 .9 ) (1 .1 )
Transactions with owners
Transfer of share option costs 20 — — — (2 . 6 ) 2 .6 —
Purchase of own shares held
inemployeebenefittrust — — — — (8 .7 ) (8 .7 )
Issue of share capital 17, 18 — 0 .1 — — — 0 .1
Employee share schemes –
valueofemployeeservices
Balance at 31 December 2022 0.4 293. 1 16 .9 22 .2 (4 8 . 6 ) 284.0
The notes on pages 132 to 178 form part of these financial statements.
FINANCIAL STATEMENTS
Funding Circle Holdings plc130
Consolidated statement of cash flows
for the year ended 31 December 2022
Note
31 December
2022
£m
31 December
2021
£m
Net cash (outflow)/inflow from operating activities 22 (10 . 4 ) 98 .5
Investing activities
Purchase of intangible assets 10 (12 .7 ) (8 .6 )
Purchase of property, plant and equipment 11 (1. 2 ) (0 .8 )
Originations of SME loans (other)
1
16 (24 . 0 ) (2 0 9 .9 )
Cash receipts from SME loans (other)
1
16 5 9.5 161.7
Cash receipts from SME loans (warehouse phase) 16 2 .8 5 8.6
Proceeds from sale of SME loans (warehouse phase) 16 — 1 7 6 .1
Cash receipts from SME loans (securitised) 16 86.8 15 0 . 2
Proceeds from sale of SME loans (securitised) 16 3 9.5 —
Investment in trusts and co-investments 16 (6 . 4 ) (2 2 .1 )
Cash receipts from investments in trusts and co-investments 16 10 . 0 3.3
Redemption in associates 25, 29 5 .1 3 .9
Dividends from associates 25, 29 0.3 —
Interest received 7 2.3 0 .1
Net cash inflow from investing activities 16 2 . 0 3 12 . 5
Financing activities
Proceeds from bank borrowings 22 — 208.2
Repayment of bank borrowings 22 (5 7. 9 ) (3 3 1. 3 )
Payment of bond liabilities 22 (1 2 9 .1 ) (16 0 . 6 )
Proceeds from the exercise of share options 0 .1 0.4
Proceeds from subleases 1. 2 0.2
Purchase of own shares (8 .7 ) —
Payment of lease liabilities 22 (7. 3 ) (8 .1 )
Net cash outflow from financing activities (2 0 1.7 ) (2 9 1. 2 )
Net (decrease)/increase in cash and cash equivalents (5 0 .1 ) 1 19 . 8
Cash and cash equivalents at the beginning of the year 224.0 10 3 . 3
Effect of foreign exchange rate changes 3.8 0 .9
Cash and cash equivalents at the end of the year 22 17 7. 7 2 24 .0
1. As disclosed in note 1, FlexiPay drawn lines of credit have been re-presented within “origination of/cash receipts from lines of credit” within cash flows from operating activities
and were previously presented within “origination of/ cash receipts from SME loans (other)” in cash flows from investing activities in the year ended 31 December 2021.
The impact of exceptional items on the consolidated statement of cash flows is detailed in note 5.
The notes on pages 132 to 178 form part of these financial statements.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 131
FINANCIAL STATEMENTS
Funding Circle Holdings plc132
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 133
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc134
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 135
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc136
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 137
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc138
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 139
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc140
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 141
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc142
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 143
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc144
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 145
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc146
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 147
FINANCIAL STATEMENTS
Funding Circle Holdings plc148
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 149
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc150
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 151
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc152
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 153
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc154
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 155
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc156
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 157
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc158
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 159
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc160
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 161
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc162
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 163
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc164
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 165
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc166
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 167
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc168
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 169
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc170
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 171
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc172
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 173
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc174
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 175
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc176
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 177
Notes forming part of the consolidated financial statements continued
for the year ended 31 December 2022
FINANCIAL STATEMENTS
Funding Circle Holdings plc178
Company balance sheet
as at 31 December 2022
Note
31 December
2022
£m
31 December
2021
£m
Non-current assets
Investments in subsidiary undertakings 5 333.3 281.9
333.3 281.9
Current assets
Loans due from subsidiary undertakings 7 0.1 0.1
Trade and other receivables 6 0.5 0.3
Cash and cash equivalents 11 50.1 63.4
50.7 63.8
Total assets 384.0 345.7
Current liabilities
Trade and other payables 8 1.6 1.8
Total liabilities 1.6 1.8
Equity
Share capital 9 0.4 0.4
Share premium account 9 293.1 293.0
Share options reserve 22.2 19.1
Retained earnings 10 66.7 31.4
Total equity 382.4 343.9
Total equity and liabilities 384.0 345.7
The Company’s profit for the year was £41.4 million (2021: loss of £4.4 million).
The financial statements on pages 179 to 189 were approved by the Board and authorised for issue on 2 March 2023. They were
signed on behalf of the Board by:
Oliver White
Director
Company registration number 07123934
The notes on pages 182 to 189 form part of these financial statements.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 179
Company statement of changes in equity
for the year ended 31 December 2022
Note
Share capital
£m
Share
premium
account
£m
Share options
reserve
£m
Retained
earnings
£m
Total equity
£m
Balance at 1 January 2021 0.3 292.6 13.6 34.0 340.5
Loss for the year 10 — — — (4.4) (4.4)
Transactions with owners
Transfer of share option costs — — (1.8) 1.8 —
Issue of share capital 10 0.1 0.4 — — 0.5
Employee share schemes – value of
employee services
— — 7.3 — 7.3
Balance at 31 December 2021 0.4 293.0 19.1 31.4 343.9
Profit for the year 10 — — — 41.4 41.4
Transactions with owners
Transfer of share option costs — — (2.6) 2.6 —
Issue of share capital 10 — 0.1 — — 0.1
Purchase of own shares — — — (8.7) (8.7)
Employee share schemes – value of
employee services
— — 5.7 — 5.7
Balance at 31 December 2022 0.4 293.1 22.2 66.7 382.4
The notes on pages 182 to 189 form part of these financial statements.
FINANCIAL STATEMENTS
Funding Circle Holdings plc180
Company statement of cash flows
for the year ended 31 December 2022
Note
31 December
2022
£m
31 December
2021
£m
Net cash outflow from operating activities 11 (4.2) (2.4)
Investing activities
Loans advanced to subsidiary undertakings 7 — (10.0)
Loan repayment from subsidiary undertakings 7 — 19.8
Capital contribution to subsidiary undertakings 5 (10.0) —
Capital redemptions from subsidiary undertakings 5 8.9 27.3
Interest received 0.6 0.5
Net cash (outflow)/inflow from investing activities (0.5) 37.6
Financing activities
Proceeds on the issue of shares from the exercise of share options 0.1 0.4
Purchase of own shares (8.7) —
Net cash (outflow)/inflow from financing activities (8.6) 0.4
Net (decrease)/increase in cash and cash equivalents (13.3) 35.6
Cash and cash equivalents at the beginning of the year 63.4 27.8
Cash and cash equivalents at the end of the year 11 50.1 63.4
The notes on pages 182 to 189 form part of these financial statements.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 181
Notes forming part of the Company financial statements
for the year ended 31 December 2022
1. Significant accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that
Act, the separate financial statements have been prepared in accordance with UK-adopted International Accounting Standards
and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The
Company is a public company limited by shares and registered, incorporated and domiciled in England and Wales. The address
of its registered office is given on page 196.
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are carried
at fair value through profit and loss (“FVTPL”). The principal accounting policies adopted are the same as those set out in note 1
to the consolidated financial statements except as noted below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
The principal activities of the Company and the nature of the Company’s operations are as a holding company for a global SME
lending platform.
As permitted by the exemption in section 408 of the Companies Act 2006, the profit and loss account of the Company is not
presented as part of these financial statements. The Company made a comprehensive profit for the year of £41.4 million
(2021:comprehensive loss of £4.4 million).
The financial statements are prepared on a going concern basis as the Directors are satisfied that the Group has the resources
to continue in business for the foreseeable future (which has been taken as 12 months from the date of approval of the
financialstatements).
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment (see note 5 for further details).
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements requires the Company to make estimates and judgements that affect the application of
policies and reported amounts. Where a significant risk of materially different outcomes exists due to management assumptions
or sources of estimation uncertainty, this will represent a key source of estimation uncertainty. Estimates and judgements are
continually evaluated and are based on experience and other factors, including expectations of future events that are believed to
be reasonable under the circumstances. Although these estimates are based on management’s best knowledge of the amount,
event or actions, actual results ultimately may differ from those estimates. There were no critical accounting judgements in the
year ended 31 December 2022.
Key sources of estimation uncertainty
Reversal of impairment of investments in subsidiary undertakings (note 5)
The carrying value of investment in subsidiary undertakings is reviewed for impairment or impairment reversal on an annual
basis. The recoverable amount is determined based on the higher of value in use and fair value less cost to sell, with value in use
being applied for this assessment where an indicator of impairment or impairment reversal is identified. The use of this method
requires the estimate of future cash flows expected to arise from the continuing operation of the subsidiaries and the choice of
asuitable discount rate in order to calculate the present value. Actual outcomes could vary significantly from these estimates.
It was identified that there was an indicator of impairment reversal related to increased certainty of future profitability of the US
business, supported by the Group’s transfer pricing arrangements and reflected through the recognition of a deferred ta asset in
the Group’s accounts based on the expectation that losses will be utilised against future profits. As a result an assessment of the
value in use of the investment in Funding Circle USA, Inc. was undertaken.
An impairment reversal of £45.3 million was recognised in relation to Funding Circle USA, Inc. in the year ended 31 December 2022.
The investment remains subject to estimation uncertainty and its value could materially diverge from management’s estimate.
The Group prepares a five-year management plan for its operations, which is used in the value-in-use calculation. The management
plan was conservatively adjusted to reflect risk and uncertainty to the growth assumptions for the purpose of the impairment
assessment when benchmarking to historically achieved growth rates. The cash flow projections are based on the following
keyassumptions:
5 cumulative annual growth rate of 15%;
5 pre-tax discount rate of 16.8%;
5 the subsidiary will be able to distribute future cash flows to the Company without constraint; and
5 the impact of transfer pricing arrangements within the Group are considered and assumed to be cash settled, further
supporting cash flows of the US business.
The above assumptions are based on historical trends and future market expectations.
In light of the impairment reversal, if any of the key assumptions were to be stressed then the estimated value-in-use would be
sensitive to these for the year ended 31 December 2022, both favourably through further impairment reversal and unfavourably
through additional impairment.
FINANCIAL STATEMENTS
Funding Circle Holdings plc182
1. Significant accounting policies continued
Key sources of estimation uncertainty continued
Reversal of impairment of investments in subsidiary undertakings (note 5) continued
A 500bps increase or decrease in the cumulative annual revenue growth would increase/decrease the value-in-use estimate
by+£6.7 million/-£6.7 million.
A 100bps increase or decrease in discount rate would decrease/increase the value in use estimate by -£2.6 million/+£2.9 million.
The near-term cash flows of the US business are additionally supported by cash received back from the SME loans (securitised).
These cash flows are sensitive to estimation uncertainty with regards to estimated default rates which correlates with their
valuation as disclosed in note 2 of the Group’s financial statements.
After the reversal of impairment, cumulative impairment remains in relation to the investment in Funding Circle USA, Inc.
of£110.6 million.
2. Financial risk management
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.
The risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and
controls, and to monitor risks and ensure any limits are adhered to. The Company’s activities are reviewed regularly and potential risks
are considered.
Risk factors
The Company has exposure to the following risks from its use of financial instruments:
5 credit risk;
5 liquidity risk;
5 market risk (including currency risk, interest rate risk and other price risk); and
5 foreign exchange risk.
Principal financial instruments
The principal financial assets and liabilities of the Company, from which financial instrument risk arises, are as follows:
5 loans due from related undertakings;
5 trade and other receivables;
5 cash and cash equivalents; and
5 trade and other payables.
Categorisation of financial assets and financial liabilities
The table shows the carrying amounts and fair values of financial assets and financial liabilities by category as at 31 December 2022:
Carried at amortised cost Carried at fair value
Carrying
amount
£m
Fair value
£m
Based on
market
derived data
£m
Based on
individual
valuation
parameters
£m
Assets
Loans due from related undertakings 0.1 0.1 — —
Trade and other receivables 0.3 0.3 — —
Cash and cash equivalents 4.8 4.8 45.3 —
5.2 5.2 45.3 —
Liabilities
Trade and other payables (0.2) (0.2) — —
(0.2) (0.2) — —
IFRS 13 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair
value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 183
Notes forming part of the Company financial statements continued
for the year ended 31 December 2022
2. Financial risk management continued
Categorisation of financial assets and financial liabilities continued
Disclosure of fair value measurements by level is according to the following fair value measurement hierarchy:
5 level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date;
5 level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either
directly or indirectly; and
5 level 3 inputs are unobservable inputs for the assets or liabilities.
The Company’s financial assets measured at fair value are all categorised as level 1 in both the current year and prior year.
The table shows the carrying amounts and fair values of financial assets and financial liabilities by category as at 31December 2021:
Carried at amortised cost Carried at fair value
Carrying
amount
£m
Fair value
£m
Based on
market
derived data
£m
Based on
individual
valuation
parameters
£m
Assets
Loans due from related undertakings 0.1 0.1 — —
Trade and other receivables 0.1 0.1 — —
Cash and cash equivalents 14.1 14.1 49.3 —
14.3 14.3 49.3 —
Liabilities
Trade and other payables (0.1) (0.1) — —
(0.1) (0.1) — —
Financial instruments measured at amortised cost
Due to the short-term nature of the financial assets and liabilities measured at amortised cost, the carrying value approximates
their fair value.
The fair value of financial assets held at fair value, comprising cash and cash equivalents, approximates their carrying value.
Credit risk is mitigated as cash and cash equivalents are held with reputable institutions.
Financial risk factors
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial asset fails to meet its
contractual obligations, and arises principally from the Company’s receivables from related undertakings and cash and cash
equivalents held at banks.
The Company’s maximum exposure to credit risk by class of financial asset is as follows:
31 December
2022
£m
31 December
2021
£m
Non-current
Loans due from related undertakings — —
Current
Loans due from related undertakings 0.1 0.1
Trade and other receivables:
– Amounts due from related undertakings 0.2 0.1
– Accrued interest 0.1 —
Cash and cash equivalents 50.1 63.4
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s position.
The Company’s liquidity position is monitored and reviewed on an ongoing basis by the Directors.
The amounts disclosed in the below tables are the contractual undiscounted cash flows.
FINANCIAL STATEMENTS
Funding Circle Holdings plc184
2. Financial risk management continued
Financial risk factors continued
Liquidity risk continued
The maturity analysis of financial assets and liabilities at 31 December 2022 and 31 December 2021 is as follows:
At 31 December 2022
Less than
3 months
£m
Between
3 months
and 1 year
£m
Between 1
and 5 years
£m
Over
5 years
£m
Financial assets
Trade and other receivables 0.3 — — —
Cash and cash equivalents 50.1 — — —
Loans due from related undertakings 0.1 — — —
50.5 — — —
Financial liabilities
Trade and other payables (0.2) — — —
(0.2) — — —
At 31 December 2021
Less than
3 months
£m
Between
3 months
and 1 year
£m
Between 1
and 5 years
£m
Over
5 years
£m
Financial assets
Trade and other receivables 0.1 — — —
Cash and cash equivalents 63.4 — — —
Loans due from related undertakings 0.1 — — —
63.6 — — —
Financial liabilities
Trade and other payables (0.1) — — —
(0.1) — — —
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market
prices. The Company’s market risk arises from open positions in interest-bearing assets and liabilities, to the extent that these
are exposed to general and specific market movements.
a) Other price risk
The Company is not exposed to market risk with respect to financial instruments as it does not hold any marketable equity securities.
b) Cash flow and fair value interest rate risk
Interest on cash and cash equivalent balances is subject to movements in base rates. The Directors monitor interest rate risk
and note that rates have risen over the course of the year from their historical lows and are forecast to rise further over 2023.
A1.0% increase in base rates could increase the annual interest earned by c.£0.5 million (2021: 0.5% increase and c.£0.3 million).
c) Sensitivity analysis
IFRS 7 requires disclosure of sensitivity analysis for each type of market risk to which the entity is exposed at the reporting date
showing how profit or loss and equity would have been affected by changing the relevant risk variables that were reasonably
possible at that date.
As discussed above, the Company does not have significant exposure to interest rate risk, cash flow risk or other price risk and
therefore no sensitivity analysis for those risks has been disclosed.
d) Foreign exchange risk
The Company has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.
Foreign exchange risk is disclosed in note 16 to the consolidated financial statements.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 185
Notes forming part of the Company financial statements continued
for the year ended 31 December 2022
2. Financial risk management continued
Capital management
The Company considers its capital to comprise equity share capital, share premium, share options reserve and retained earnings.
The Directors’ objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to
provide returns for the shareholders and benefits for other stakeholders.
The Company is not subject to any externally imposed capital requirements.
The Directors monitor a number of KPIs at both the Company and individual subsidiary level on a monthly basis. As part of the
budgetary process, targets are set with respect to operating expenses in order to effectively manage the activities of the Company.
Performance is reviewed on a regular basis and appropriate actions are taken as required. These internal measures indicate the
performance of the business against budget/forecast and confirm that the Company has adequate resources to meet its
working capital requirements.
3. Company profit/(loss) for the year
The Company made a comprehensive profit for the year of £41.4 million (2021: comprehensive loss of £4.4 million).
4. Employees
The Company had no employees during the current or prior year other than Directors who numbered 8 (2021: 10). The Company did
not operate any pension schemes during the current or preceding year. Directors received emoluments in respect of their services
to the Company during the year of £2.1 million (2021: £1.3 million). For further information see the Remuneration Report on page 106.
5. Investments in subsidiary undertakings
2022
£m
2021
£m
Balance at 1 January 281.9 303.3
Capital contribution regarding employee services in subsidiaries 5.0 5.9
Capital additions 50.7 —
Return of capital (49.6) (27.3)
Reversal of impairment 45.3 —
Balance at 31 December 333.3 281.9
Investments in subsidiary undertakings, which are listed in note 29 of the Group financial statements, are all stated at cost less
any provision for impairment.
During the year the Company made capital contributions in the form of cash investments of £10.0 million (2021: £nil) to Funding
Circle USA, Inc. and non-cash investment of £40.7 million (2021: £nil) to Funding Circle Ltd. The Company received £8.9 million
cash (2021: £3.4 million) from Funding Circle Global Partners Limited and £40.7 million non-cash (2021: £23.9 million) from
Funding Circle USA, Inc. as capital redemptions.
In addition to the above, the Company recognised a capital contribution of £5.0 million (2021: £5.9 million) representing the
service cost for the employees of its subsidiaries, under the Company’s share option schemes.
During the year ended 31 December 2022 the Company identified a reversal of impairment of £45.3 million in relation to the
Company’s investment in Funding Circle USA, Inc. to a value of £80.5 million. No impairment or impairment reversal was
recognised in the year ended 31 December 2021 in relation to investment in subsidiary undertakings.
The cumulative amount of impairment losses in relation to investment in subsidiaries is £190.8 million (2021: £236.1 million).
6. Trade and other receivables
31 December
2022
£m
31 December
2021
£m
Amounts due from related undertakings 0.2 0.1
Prepayments 0.2 0.2
Accrued income 0.1 —
0.5 0.3
The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
FINANCIAL STATEMENTS
Funding Circle Holdings plc186
7. Loans due from subsidiary undertakings
31 December
2022
£m
31 December
2021
£m
Funding Circle USA, Inc. — —
Stichting Derdengelden Funding Circle 0.1 0.1
Current portion 0.1 0.1
Amount due from Group undertakings
During 2022, the Company operated a loan facility agreement with Funding Circle Ltd (subsidiary company). Under the terms of
the agreement, the Company provided an unsecured sterling revolving credit facility of a total principal amount not exceeding
£20.0 million (2021: £20.0 million) to Funding Circle Ltd which is repayable at the end of the facility term of five years on 5 August 2025.
Any drawn amount under the facility bears an interest of 3.5% above the base rate of the Bank of England.
During the year the Company has provided £nil (2021: £5.0 million) of additional funding under the facility agreement. Total
interest income of £nil (2021: £nil) has been recognised in the Company statement of comprehensive income.
In the current year, Funding Circle Ltd settled certain amounts due under the intercompany loan obligations cumulative of
interest of £nil (2021: £5.0 million) with the Company. £nil of this was settled via cash (2021: £5.0 million). The facility was drawn
by £nil (2021: £nil) at the balance sheet date.
During the year the Company operated a revolving credit facility to Funding Circle CE GmbH of up to €2.0 million (2021: up to
€2.0million). Any drawn amount under the facility bears an interest of 3.5% above the base rate of the Bank of England and is
repayable at the end of the facility term of five years on 18 July 2024. The facility was drawn by £nil (2021: £nil) at the balance
sheet date.
During the year, the Company continued to operate an unsecured sterling revolving credit facility for £1.0 million with its subsidiary
(Funding Circle Global Partners Limited (“FCGPL”)). Under the agreement, any drawn amount under the facility bears an interest
of 3.5% above the base rate of the Bank of England and is repayable with the principal amount at the end of the facility term of
five years on 30 June 2022. The facility was drawn by £nil (2021: £nil) at the balance sheet date. The carrying amount of this
receivable approximates to its fair value.
During the year, the Company continued to operate a term loan facility to Funding Circle USA, Inc. of up to £7.7 million. Any drawn
amount under the facility bears an interest of 3.5% above the base rate of the Bank of England and is repayable at the end of the
facility term of five years on 13 January 2025. In addition, the Company continued to provide a revolving credit facility to Funding
Circle USA, Inc. of up to $3.0 million. Any drawn amount under the facility bears an interest of 3.5% above the base rate of the
Bank of England and is repayable at the end of the facility term of five years on 27 January 2025.
In the current year, Funding Circle USA, Inc. cash settled certain amounts due under the intercompany loans cumulative of
interest of £nil and $nil (2021: £8.1 million and $3.1 million) with the Company. Total interest income of £nil (2021: £0.5 million)
has been recognised in the Company statement of comprehensive income. The facilities were drawn by £nil (2021: £nil) and
$nil(2021: $nil) at the balance sheet date.
During the year, the Company continued to operate a revolving credit facility to Funding Circle USA, Inc. of up to £10.0 million.
Any drawn amount under the facility bears an interest of 3.5% above the base rate of the Bank of England and is repayable at
theend of the facility term of five years on 21 January 2026.
During the year, the Company has provided £nil (2021: £5.0 million) of additional funding under the facility agreement. Funding Circle
USA, Inc. settled certain amounts due under the intercompany loan obligations cumulative of interest of £nil (2021: £5.0 million).
The facility was drawn by £nil (2021: £nil) at the balance sheet date.
8. Trade and other payables
31 December
2022
£m
31 December
2021
£m
Accruals 0.9 1.3
Taxes and social security costs 0.5 0.4
Other creditors 0.2 —
Amounts due to related undertakings — 0.1
1.6 1.8
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 187
Notes forming part of the Company financial statements continued
for the year ended 31 December 2022
9. Share capital and share premium account
The movement on these items is disclosed in notes 17 and 18 to the consolidated financial statements.
10. Retained earnings
£m
At 1 January 2021 34.0
Transfer of share option costs 1.8
Loss for the year (4.4)
At 31 December 2021 31.4
Transfer of share option costs 2.6
Purchase of own shares (8.7)
Profit for the year 41.4
At 31 December 2022 66.7
11. Notes to the Company statement of cash flows
Cash outflow from operating activities
Year ended
31 December
2022
£m
Year ended
31 December
2021
£m
Profit/(loss) before taxation 41.4 (4.4)
Adjustments for
Interest receivable (0.6) (0.5)
Non-cash employee benefits expense – share-based payments 0.7 1.5
Reversal of impairment charge (45.3) —
Changes in working capital
Movement in trade and other receivables — 0.7
Movement in trade and other payables (0.4) 0.3
Net cash outflow from operating activities (4.2) (2.4)
Cash and cash equivalents
2022
£m
2021
£m
Balance at 1 January 63.4 27.8
Cash flow (13.3) 35.6
Balance at 31 December 50.1 63.4
These comprise cash held by the Company, short-term bank deposits with an original maturity of three months or less and
money market funds. The carrying amount of cash balances approximates their fair value. As at 31 December 2022, money
market funds totalled £45.3 million (2021: £49.3 million).
12. Related parties
Amounts owed by related parties Amounts owed to related parties
31 December
2022
£m
31 December
2021
£m
31 December
2022
£m
31 December
2021
£m
Short-term payables/receivables
Funding Circle Ltd 0.1 — — 0.1
Funding Circle USA, Inc. 0.1 0.1 — —
Intercompany loans
Funding Circle USA, Inc. — — — —
Stichting Derdengelden Funding Circle 0.1 0.1 — —
0.3 0.2 — 0.1
During the year, the Company received payment of expenses for amounts of £0.3 million (2021: received payment of expenses
for amounts of £1.2 million) from Funding Circle Ltd.
FINANCIAL STATEMENTS
Funding Circle Holdings plc188
12. Related parties continued
During the year, the Company made a non-cash capital contribution to Funding Circle Ltd of £40.7 million in exchange for the
subsidiary’s intercompany payable to Funding Circle USA, Inc. and received a non-cash return of capital from Funding Circle
USA, Inc. of £40.7 million in consideration for the subsidiary’s intercompany receivable from Funding Circle Ltd. The intercompany
balance that was capitalised into the net investment in the subsidiary undertakings through this transaction primarily related to
the transfer pricing arrangements between the entities.
During the year the Company received return of capital of £8.9 million (2021: £3.4 million) from Funding Circle Global Partners
Limited and £nil (2021: £23.9 million) from Funding Circle USA, Inc.
During the year the Company made a capital contribution of £10.0 million (2021: £nil) to Funding Circle USA, Inc.
As at the year end, the Company was owed a cumulative amount of £0.1 million (2021: £0.1 million) from loans with Stichting
Derdengelden Funding Circle.
See note 14 in relation to remuneration of key management personnel.
13. Parent Company guarantee – exemption from audit for subsidiary companies
The following UK entities, all of which are 100% owned by the Group, are not subject to an audit by virtue of section 479A of the
Companies Act 2006 relating to subsidiary companies:
Company Registration number
Funding Circle Asset Finance Limited 07832868
Funding Circle BB Limited 12593368
Funding Circle Eclipse Lending Limited 12570773
Funding Circle Focal Point Lending Limited 12407296
Funding Circle Global Partners Limited 10554628
Funding Circle Midco Limited 11793162
Funding Circle Property Finance Limited 08896582
Funding Circle Horizon Lending Limited 13451185
Funding Circle Trustee Limited 07239092
The Company will guarantee the debts and liabilities of the above UK subsidiary undertakings at the balance sheet date in
accordance with section 479C of the Companies Act 2006. The Company has assessed the probability of loss under the
guarantee as remote.
The Company will guarantee the debt and liabilities of the European subsidiary Funding Circle CE GmbH and therefore meets the
requirements of section 264(3) HGB and the entity is not subject to audit by virtue of this guarantee. The Company has assessed
the probability of loss under the guarantee as remote.
The following UK entity, which is 100% owned by the Group, is exempt from the requirement to prepare accounts by virtue
ofsection 394A and section 448A of the Companies Act 2006 relating to the individual accounts of dormant subsidiaries:
Company Registration number
Made To Do More Limited 10575978
Funding Circle Polaris Lending Limited 13216286
14. Remuneration of key management personnel
The remuneration of key management personnel is disclosed in note 25 to the consolidated financial statements.
15. Ultimate controlling party
In the opinion of the Directors, the Group does not have a single ultimate controlling party.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 189
Alternative performance measures
The Group uses a number of alternative performance measures (“APMs”) within its financial reporting. These measures are not
defined under the requirements of IFRS and may not be comparable with the APMs of other companies. The Group believes
these APMs provide stakeholders with additional useful information in providing alternative interpretations of the underlying
performance of the business and how it is managed and are used by the Directors and management for performance analysis
and reporting. These APMs should be viewed as supplemental to, but not as a substitute for, measures presented in the financial
statements which are prepared in accordance with IFRS.
APM
Closest equivalent
IFRS measure
Adjustments to reconcile
to IFRS measure Definition
Income statement
Adjusted EBITDA EBITDA, while not defined
under IFRS, is a widely
accepted profit measure.
Refer to note 3. Operating profit/(loss) before finance income and
costs, taxation, depreciation and amortisation
(“EBITDA”) and additionally excludes share-based
payment charges and associated social security costs,
foreign exchange and exceptional items.
Investment
AEBITDAand
operating AEBITDA
EBITDA, while not defined
under IFRS, is a widely
accepted profit measure.
Refer to Finance Review. Investment AEBITDA refers to investment income,
investment expense and fair value adjustments and
operating AEBITDA represents AEBITDA excluding
investment AEBITDA.
Net investment
income
Net income. Refer to Finance Review. Net investment income represents investment income
less investment expense.
Exceptional items None. Refer to note 5. Items which the Group excludes from adjusted EBITDA
in order to present a measure of the Group’s performance.
Each item is considered to be significant in nature
orsize and is treated consistently between periods.
Excluding these items from profit metrics provides the
reader with additional performance information on the
business as it is consistent with how information is
reported to the Board and GLT.
Cash flow
Free cash flow Cash generated from
operating activities.
Refer to Finance Review. Net cash flows from operating activities less the cost
ofpurchasing intangible assets, property, plant and
equipment, lease payments and interest received.
Itexcludes the warehouse and securitisation financing
and funding cash flows and excludes cash flows on
draw downs and repayment of FlexiPay lines of credit.
FINANCIAL STATEMENTS
Funding Circle Holdings plc190
Glossary
Term Definition
8th generation We use generational factors at Funding Circle to describe the number of fundamental enhancements/revisions
that have been made to the credit modelling used to determine borrower creditworthiness for lending. In the UK
we are currently using an 8th generation credit model. In the US we are on our 5th generation.
Amortisation In lending terms, the process by which the outstanding balance on a loan reduces through repayments made
bythe borrower, until the loan is fully repaid. Not to be confused with the general accounting term relating to the
equivalent form of depreciation for intangible assets.
API Application Programming Interface. Term used to describe a technical solution facilitating customer access to
Funding Circle’s platform and capability via a partner website to create seamless provisioning of Funding Circle
products and services on its site. We also refer to this solution as an “embedded” route to reaching potential
newborrowers.
BBB British Business Bank. A state-owned economic development bank established by the UK government. Its aim
isto increase the supply of credit to small and medium-sized enterprises as well as providing business advice
services. The BBB has administered all the recent government-backed loan schemes in the UK on behalf of the
Secretary of State for BEIS.
BBLS Bounce Back Loan Scheme. A UK government-backed low fixed interest loan scheme intended to support
businesses through the Covid-19 pandemic. The scheme facilitated loans of a maximum of £50,000 for up to six
years, and these were 100% backed by a government guarantee for the lender. The borrower always remained
fully liable for the debt. All Funding Circle loans under BBLS were to existing core lending customers and Group
total lending under the scheme amounted to c.£35 million.
BEIS Department for Business, Energy & Industrial Strategy. A UK government department throughout the reporting
period. The ministerial department has been responsible for business, industrial strategy, science, innovation,
energy and climate change throughout FY 2022. The UK government subsequently announced the disbandment
of the department on 7 February 2023 into four new departments, the most relevant of which for Funding Circle
purposes is the new Department for Business and Trade.
Beta testing The second phase of testing a new product using real customers in a live, but restricted environment.
Board The Board of Directors of Funding Circle Holdings plc.
Borrowers Actual or prospective borrowers participating on the Group’s lending platform.
Capital Markets A functional division within Funding Circle that deals with all relations and activities associated with
institutionalinvestors.
CBILS Coronavirus Business Interruption Loan Scheme. UK government-backed loan scheme intended to provide
support for small businesses (up to £45 million annual turnover) through the Covid-19 pandemic. The scheme
facilitated loans from £1,000 to £5 million for up to six years, with the first 12 months of interest charges, and
lender levied fees covered by the government. The loans were initially 80% backed by government guarantee
forthe lender, reducing later to 70%, but the borrower always remained fully liable for the debt. CBILS closed to
new applications on 31 March 2021. Funding Circle was the third largest approver through the scheme among
90accredited providers, facilitating some c.£3 billion of loans. Transaction fee yields on CBILS loans were fixed
at4.75%.
CCDS Commercial Credit Data Sharing. Effectively a light version of Open Banking. A UK government initiative mandated
under the Small Business Enterprise & Employment Act 2015 with the aim of actively stimulating competition and
new entrants in SME lending markets. The scheme is run by HM Treasury and mandates the sharing of financial
data on SMEs by the nine designated banks which account for over 80% of SME lending in the UK.
CDFI Community Development Financial Institution. Specialised small bank-like institution in the US that provides
financial services in low-income communities and to organisations and people who lack access to financing.
Circlers Term used by the Group to refer to its employees.
Cohorts Term used to denote loan groupings. Loan cohorts are determined by their year of origination. Investor cohorts
denote loan groupings according to the loan funding institution.
Company When capitalised, “Company” refers to Funding Circle Holdings plc.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 191
Glossary continued
Term Definition
C&R Collections and Recoveries. A division of Funding Circle.
Credit Collection obtains payments from borrowers of debt classified as delinquent. This process is usually
managed in house across the lending industry.
Debt Recovery obtains payments from borrowers of debt classified as in default. Across the wider lending
industry this process is usually managed by a third party; at Funding Circle we have a dedicated function
managing this process.
Credit box A mostly internally used term that encapsulates both the SME database and credit modelling used by Funding
Circle to determine the criteria by which we lend to borrowers.
Credit bureau A company that collects information relating to credit ratings of companies and/or individuals and makes this
available to other financial institutions.
Credit model Mathematical model used to estimate the probability for a customer to default on a loan.
Default Term used to describe loans where the customer has failed to repay a loan in accordance with the terms of the
agreement. Loans are placed into default when it is deemed likely the customer can no longer meet the terms
ofthe scheduled loan repayments (e.g. due to company liquidations and insolvencies) or when the borrower has
consistently failed to pay in accordance with the terms and it has not been possible to arrange an alternative
repayment schedule. A default affects the credit score of the borrower.
Delinquencies Term used to describe loans where the borrower is late making payment(s). This need not affect a customer’s
credit score if the borrower is able to agree and meet a revised schedule for repayments.
Developing Markets The name formerly used for the primary reporting segment for the Group now referred to as “Other Loans”,
consisting of operations in Germany, the Netherlands and Spain (all of which the Group has now exited and are
inwind down).
Directors When capitalised, “Directors” refers to the Board Directors of Funding Circle Holdings plc, both Executive Directors
and Non-Executive Directors.
EBT Employee Benefit Trust. A trust under which shares in the Company are held on behalf of the employees.
EIB European Investment Bank. The lending arm of the European Union.
Employee
engagement
score/index
Employee engagement is a function of the relationship between the Group and its employees. We measure this
through surveys designed to help understand and improve the workplace and culture so that our employees feel
more connected and dedicated to the Group goals and values.
ERMF Enterprise Risk Management Framework.
Executive Directors When capitalised, “Executive Directors” refers to the executive directors of Funding Circle Holdings plc. Currently
the CEO and CFO of the Group.
FCA Financial Conduct Authority. The UK institution responsible for regulating financial institutions.
FlexiPay FlexiPay is Funding Circle’s new line of credit product that allows businesses to make purchases and then spread
the cost over three months, paying back in three equal monthly instalments. It’s designed to satisfy the working
capital needs of SME businesses and is currently available in the UK.
FlexiPay card FlexiPay card is another way for customers to use their FlexiPay line of credit, helping them to pay for everyday
business expenses and make purchases. Currently in beta launch phase in the UK.
Forward flow
agreements
Agreements made between Funding Circle and institutional investors that indicate the lending funds they intend
to provide for borrowers. Agreements generally stipulate the key lending terms, target borrower metrics, total
funds earmarked for lending and the period over which they will be deployed.
Institutional
investors
Actual or prospective institutional investors participating on the Group’s platform who provide the funds to lend
toSME borrowers, and who also take the credit risk associated with the loans.
Funding Circle
Continental Europe
Funding Circle CE GmbH and its subsidiaries and subsidiary undertakings. Combination of Funding Circle
operations in Germany, the Netherlands and Spain.
Funding Circle
Germany
Funding Circle Deutschland GmbH. Funding Circle operations in Germany.
FINANCIAL STATEMENTS
Funding Circle Holdings plc192
Term Definition
Funding Circle NL Funding Circle Nederland B.V. Funding Circle operations in the Netherlands.
Funding Circle UK Funding Circle Ltd. Funding Circle operations in the UK.
Funding Circle US Funding Circle USA, Inc. and its US subsidiaries and affiliates. Funding Circle operations in the US.
FVTPL Fair Value Through Profit or Loss. Term used to describe those securities where the business model under
whichthese investments are held by the Group remains for these to be sold; and hence the fair value of these
investments is reported through the P&L.
Government-backed
loan schemes
Term used to describe the various schemes deployed by governments to support their economies through
economic shocks, most recently the Covid-19 pandemic. These include CBILS, BBLS and RLS in the UK and PPP
in the US (see definitions). Invariably, government-backed loan schemes have conferred various advantages to
either or both the institutional investors and the borrowers making them more attractive products compared to
normal commercial lending. Lenders and lending platforms normally require formal accreditation to be able to
provide the loans under these schemes.
GDPR General Data Protection Regulation. EU regulation governing how personal data is gathered and used.
GPO Global Platform for Originations.
Group (or
FundingCircle)
Funding Circle Holdings plc and its subsidiaries and subsidiary undertakings.
IDL Instant Decision Lending. The part of our platform that facilitates automatic decisions on borrowers’ loan
applications. In the UK, the system enables applications to be completed easily in around six minutes, with
decisions in as little as nine seconds and the money in the borrower’s account in 24 hours.
IFRS International Financial Reporting Standards, as adopted by the European Union.
LaaS Lending as a Service. A distribution platform launched in the US. Funding Circle’s offering allows financial
institutions to give their customers a fully integrated, digital end-to-end borrowing experience without the
significant investment and resources required to build or buy their own platform. By leveraging Funding Circle’s
technology and expertise, financial institutions can quickly and easily enter the digital lending market, offer loans
to their business customers and earn attractive interest and fee revenue.
LuM Loans under Management. The total value of outstanding principal and interest to borrowers; includes amounts
that are overdue (delinquencies), but not loans that have defaulted.
LTIP Long-term Incentive Plan. A scheme used to reward employees.
MAR Market Abuse Regulation. EU regulation designed to combat market abuse in financial markets.
Marketplace Term used to describe our referral of borrowers (who fall outside our credit risk or service capability) to specialist
lenders who can meet their needs. Funding Circle generally receives a fee for such referrals.
MiFID II Markets in Financial Instruments Directive. EU regulation.
MTP Medium-term plan. Our operational and financial plans for delivering growth to FY 2025. This includes a focus
onthree key areas: attract more businesses; say yes to more businesses; and #1 in new products.
Mission The Funding Circle mission is to “build the place where small businesses get the funding they need to win”.
NPS Net Promoter Score. An index ranging from -100 to +100 that measures the willingness of customers to
recommend a company’s products or services to others. The more positive the score, the more likely a customer
is to recommend the service.
NED Non-Executive Director. When capitalised, “NED” refers to a non-executive director of the Board of Funding Circle
Holdings plc.
Open Banking An initiative led by the UK’s Competition and Markets Authority, intended to create more competition in the
banking industry and to encourage better services and more innovation to improve customers’ banking
experience. Using a set of technologies and standards Open Banking allows customers to safely and securely
share their bank account information. Users decide what information they allow to be shared and for how long.
Origination Term used to describe the process of obtaining and onboarding a new borrower.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 193
Glossary continued
Term Definition
P2P lending Peer-to-peer lending. A legacy service that facilitated retail investments in loans to SME businesses on a retail
platform. Funding Circle paused P2P lending in April 2020, and in March 2022 the Group confirmed that it would
permanently close the retail platform for new investments. Some legacy historical P2P lending remains on the
Group balance sheet, but this will reduce to £nil as the loans continue to amortise.
PPP Paycheck Protection Program. A US government (SBA)-backed loan scheme to help SMEs keep their workforces
employed during the Covid-19 pandemic. Borrowers are able to apply for forgiveness on these loans where they
can prove that the proceeds have been spent on payroll costs and other eligible expenses. The scheme closed
tonew business on 31 May 2021. Accounting for PPP loans differs to normal loans with transaction fees spread
over the expected life of the loans under IFRS9 (as the loans must be held on balance sheet at amortised cost
until forgiven, and with no servicing fees earned on PPP loans.
PPPLF The Paycheck Protection Program Liquidity Facility. The name of the funding facility used by the US Government
for PPP loans.
RLS Recovery Loan Scheme. A UK government-backed loan scheme to help businesses recover from the effects of
Covid-19. To date there have been three different RLS schemes, designed to support access to finance for UK
businesses as they looked to invest and grow. Term loans of up to £2 million and six months have been available
through the scheme at improved commercial terms. The government provided lenders under the scheme with
70% guarantees against the outstanding balance of the facility after normal recovery processes. The borrower
always remains fully liable for the debt.
SBA Small Business Administration. US governmental institution established in 1953 to help small businesses succeed
by providing counselling, capital, contracting expertise, information resources and a voice for small businesses.
SCRF
(formerly FCIF)
SME Credit Realisation Fund Limited. Originally the Funding Circle SME Income Fund (“FCIF”). A Guernsey
closed-ended investment company listed on the Main Market of the London Stock Exchange in 2015 (ticker: SCRF).
The company is in managed wind-down. Its investment objective is to realise all assets in its portfolio in a prudent
manner to achieve a balance between maximising the value from the realisation of the Company’s investments
and making timely returns of capital to shareholders. The fund includes assets in the UK, the US, the Netherlands
and Germany.
Securitisation The process by which multiple loans are pooled and packaged into interest-bearing securities (bonds).
Horizontal securitisation denotes the packaging of loans into cohorts ranked according to risk potential: from the
lowest risk, lowest reward, first receiver of loan yield, to the highest risk, highest reward bearer of first losses and
receiver of surplus yield on the loans. In terms of existing horizontal securitisations on the Group balance sheet,
Funding Circle temporarily holds the residual tranches with the intention to sell once seasoned.
Vertical securitisation denotes a packaging of loans where all investors take their share of the yield across the
entire pool of loans. In terms of existing vertical securitisations on the Group balance sheet, Funding Circle was
required by regulation to retain a 5% equal participation in all classes of bonds issued.
Segment The principal reporting segments of our operations, representing the divisional structure through which the
business is currently managed. Namely UK Loans, US Loans, Other Loans (formerly Developing Markets) and
NewProducts.
Servicing yield The ratio of the servicing fee (the fee charged to institutional investors for managing their loans) to the amortised
loan balance. Typically, the servicing yield is between 1% and 1.25% pa of the loan balance.
SMB Small and medium-sized businesses. Term used in the US to represent smaller businesses (the US equivalent
ofthe UK’s SMEs).
SME Small and medium-sized enterprises. Term used in the UK to represent smaller businesses (the UK equivalent
ofthe US’s SMB).
SONIA Sterling Overnight Index Average. A UK interest rate benchmark that came in as a replacement for LIBOR
(LondonInterbank Offer Rate).
SPV Special Purpose Vehicle. A subsidiary created by a company to isolate a financial risk. The Group has held
anumber of SPVs housing securitised loans.
TAM Total Addressable Market. An estimation of the total potential market value for which Funding Circle can compete.
Unrestricted cash Term used to describe the cash on the balance sheet that is available for use by Funding Circle. This excludes
cash balances being held on behalf of third parties, like governments and bondholders.
Warehousing Process whereby loans that have been issued to borrowers are pooled into a holding warehouse with the intention
that these are ultimately being held for packaging and reselling to a third party investor.
FINANCIAL STATEMENTS
Funding Circle Holdings plc194
Shareholder and Company information
Shareholder information
Receiving shareholder information by email:
You can opt to receive shareholder information from us by
email rather than by post. We will then email you whenever we
add shareholder communications to the Company website.
Toset this up, please visit www.shareview.co.uk and register
for electronic communications (“e-comms”).
If you subsequently wish to change this instruction or revert to
receiving documents or information by post, you can do so by
contacting the Company’s registrars at the address shown in
the Company information opposite. You can also change your
communication method back to post by logging in to your
Shareview account and going to “update my communication
preferences” within the “Quick links” section.
The registrars can also be contacted by telephone on
+44(0)371 384 2030 (non-UK callers +44 (0)121 415 7047)
or+44 (0)371 384 2255 (text phone). Calls to this number cost
no more than a national rate call from any type of phone or
provider. These prices are for indication purposes only; if in
doubt, please check the cost of calling this number with your
phone line provider. Lines are open 8.30 a.m.–5.30 p.m.,
Mon-Fri excluding public holidays in England and Wales.
Shareholder enquiries
If you have any queries relating to your shareholding, dividend
payments or lost share certificates, or if any of your details
change, please contact the Company’s registrars by visiting
www.shareview.co.uk or by using the contact details above.
Annual shareholder calendar
Final results announced 2 March 2023
Annual Report published 30 March 2023
Annual General Meeting 11 May 2023
Interim Report
As part of our e-comms programme, we have decided not to
produce a printed copy of our Interim Report. We will instead
publish the report on our website. It is expected that this year’s
report will be available on our website in September.
Cautionary statement
Certain statements included in our 2022 Annual Report, or incorporated by reference to it, may constitute “forward-looking
statements” in respect of the Group’s operations, performance, prospects and/or financial condition.
Forward-looking statements involve known and unknown risks and uncertainties because they are beyond the Group’s control and
are based on current beliefs and expectations about future events about the Group and the industry in which the Group operates.
No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of
risks and uncertainties facing the Group. If the assumptions on which the Group bases its forward-looking statements change,
actual results may differ from those expressed in such statements. The forward-looking statements contained in this report
reflect knowledge and information available at the date of this Annual Report and the Group undertakes no obligation to update
these forward-looking statements except as required by law.
This report does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase, any
shares or other securities in the Company, and nothing in this report should be construed as a profit forecast.
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Annual Report and Accounts 2022 195
Company information
Directors
Executive Directors
L Jacobs (Chief Executive Officer)
O J White (Chief Financial Officer)
Non-Executive Directors
A D Learoyd (Chair)
S Desai CBE (Founder)
J E Daniels
G Gopalan
H W Nelis
N A Rimer
H Beck
M J W King
Company Secretary
L K Vernall
Independent auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
Bankers
Barclays Bank UK plc
1 Churchill Place
London E14 5HP
Santander UK plc
2 Triton Square
Regent’s Place
London NW1 3AN
Lloyds Banking Group plc
25 Gresham Street
London EC2V 7AE
Solicitors
Freshfields Bruckhaus Deringer LLP
65 Fleet Street
London EC4Y 1HS
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Brokers
Goldman Sachs International
25 Shoe Lane
London EC4A 4AU
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Registered office
Registered number
07123934
FINANCIAL STATEMENTS
Funding Circle Holdings plc196
Funding Circle Holdings plc’s commitment to environmental issues is reflected in this
Annual Report, which has been printed on Amadeus Silk, an FSC
®
certified material.
This document was printed by Pureprint Group using its environmental print
technology, with 99% of dry waste diverted from landfill, minimising the impact
ofprinting on the environment. The printer is a CarbonNeutral
®
company.
Both the printer and the paper mill are registered to ISO 14001.
Funding Circle Holdings plc
71 Queen Victoria Street
London
EC4V 4AY
corporate.fundingcircle.com
Funding Circle Holdings plc Annual Report and Accounts 2022